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Linking compensation and total quality: Paying for Quality

Summary: The author argues that organizations seeking to implement a total quality approach must make a connection between quality and employee compensation. A review of four trends in employee compensation systems--guaranteed contracts for executives, gainsharing, pay for performance, and profit-sharing bonuses--shows how organizations have attempted to connect compensation and rewards to quality and customer satisfaction. Additionally, practices of Baldrige recipients provide examples of success with rewarding employees for quality. A four-step approach for improving the link between compensation and total quality is proposed.

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  • Topics: Human Resources
  • Keywords: Incentive systems, Customer satisfaction, Quality improvement, Pay for performance, Knowledge-based pay, Gainsharing, Profit sharing, Compensation systems, Total quality management (TQM), Employee satisfaction
  • Author: Brown, Mark Graham
  • Journal: Journal for Quality and Participation