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[Music] merit pay increases and lump sum bonuses reward employees based on their past performance efforts in contrast piecework incentive plans are more forward-looking because they reward employees for their future performance levels lets take a look under a straight piece work plan employees receive a certain rate of pay for each unit they produce calculating a straight piece work plan is very simple under a differential piece work plan the pay employees receive per unit produced or delivered changes at certain levels of output a key advantage of piece work plans is that they focus employees efforts directly on the tasks that are valuable for companys success piece work plans also very clearly tell employees what types of behaviors they need to exhibit they know that if they perform well theyll receive higher levels of compensation the simplicity of these plans in the ease of computing the anticipated compensation for different levels of productivity makes them easy to communicate
