But not everyone is singing its praises. Critics say it creates too many compensation disparities, pitting workers against one another. On the rise The new method of pay is based on individual performance plans rather than seniority and rank, and it's a concept that's on the rise. A study by benefits and human resources consulting firm Hewitt Associates found that more than 40 percent of companies now use the method, a significant leap from the 17 percent who relied on new pay in 1996. Bosses praise the new pay method as a tool that better enables them to motivate employees and bring about desired results, but not everyone is convinced.
Some employees say it spurs pay envy because income is no longer based on years of service.
Others say employers are tying pay to goals that workers have scant control over, such as the performance of a team or managers' abilities to retain workers in today's taut labor market. Some critics say that the new methods of paying employees may spawn rancor and discourage collaboration, since one employee's success could come at another's peril. In fact, the National Education Association in July rejected proposals to pattern pay systems after performance-based compensation in part due to fears that it would discourage teamwork and sharing between teachers. New pay involves paying employees based on a combination of the work of their team, their skills, individual one-time incentive awards, cash profit sharing, and stock options. Ill. However, such differential pay structures can raise questions among co-workers about why some are getting fatter checks.