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what is the best way to develop the pay system that are understandable workable at all levelAlmost 70% of employees feel that their firms' incentive plans or pay systems are ineffective. Even the best pay plans fail. Therefore, we should know that why pay plans fail. There are many reasons as follows:

- Performance Pay can't replace good management.

- You get only what you pay for.

- Pay does not work as an effective motivator.

- Sometimes rewards punish.

- Rewards rupture relationships.

- Rewards can have unintended consequences.

- Rewards may undermine responsiveness.

- Rewards undermine intrinsic motivation

- etc. etc.

What then can we do to make an effective pay plan? Some guidelines follow:

- Ask yourself: Are performance levels inadequate due to motivation?

- Link the incentive with your strategy.

- Make sure the program is motivational.

- Make the plan easy for employees to understand.

- Set effective standards.

- View the standard as a contract with employees.

- Get employees' support for the plan.

- Use good measurement systems.

- Use a complete set of standards.

- Make the incentive plan part of a comprehensive, commitment-oriented approach.

You should clarify ahead of time what measures or metrics you intend to improve by instituting your pay system/plan. A statistical analysis may help.

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