Journal of Navigation and Port Research 2013;37(5):471-480.
Published online October 31, 2013.
Theoretical Examination of the Pay-for-Performance Practice: Case of a Shipbuilding Company
Gyung-Ju Jun
Pay-for-performance plans are some of widely used human resource practices in many firms, including shipbuilding, for productivity and motivational improvement purposes. Such plans play an important role in industries that are highly labor-intensive, and where effective management of human resources is critical to business operations, such as the shipbuilding industry. Those practices can have large impact on employee performance and ultimately company competitiveness. Research studies that show how such incentive plans improve productivity and reported pattern of adoption by firms have spurred the use and adoption in many firms. However, there are also researchers who point out that there are negative consequences to using incentive plans. Therefore it is important for companies to carefully consider the practices they use. In this paper, I discuss research findings that support the practices and critical viewpoints related to pay-for-performance plans. Research findings from Korean literature are, then, discussed. The shipbuilding industry is chosen because proper human resource management is critical in reducing turnover and increasing employee satisfaction. Through a shipbuilding company case, problems related to using pay-for-performance incentive plans and how they affect work-related issues of employee morale, cooperation, and teamwork will be discussed. While positive aspects have been emphasized to drive greater adoption among firms, the resulting consequences of the pay plans need to be seriously considered and improvements upon the plans made by firms. Improvement suggestions are discussed in the conclusions and implications.
Key Words: shipbuilding;pay-for-performance evaluation practice;compensation

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