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Pros and Cons of Incentive pay


Prosand Cons of Incentive pay

Paymenthas always formed a fundamental component of a large number oforganizations production process. This is especially considering theeffects that it has on the motivation of workers and, consequently,their productivity. In an effort to enhance productivity,organizations have come up with ways of rewarding performance throughincentive pays. This pay is specifically designed to direct,energize, as well as control the behavior of employees (Noe et al,2011). Its influence is based on the fact that the amount that ispaid is directly connected to certain predefined outcomes andbehaviors. This structure of payment, like all other, comes withcertain advantages and disadvantages.

Oneof the key advantages pertaining to incentive pays revolves aroundits capacity to enhance motivation and productivity among workers.The knowledge that they may make some extra money for meeting certainobjectives of the company gives employees an impetus to put moreeffort and become more creative in their performance of companyduties (Noe et al, 2011).

However,variable or incentive pay may foster unhealthy competition in theworkplace thereby disrupting working relationships and resulting intension among colleagues. This is especially in cases where employeesdisclose the amount of money they have made to their colleagues,which may result in unhealthy competition and increase the difficultyof reengaging workers in workgroups that are collaborative.

Inan effort to prevent the occurrence of such a thing, it is imperativethat organizations lay down and enforce policies that ensure strictconfidentiality and prohibit discussions pertaining to compensation.A large number of employers favor teamwork as a way of accomplishingorganizational goals. However, it is difficult or even impossible fora team-centered workforce to exist inindividual-performance-based-work environment.


Noe,R. A., Hollenbeck, J. R., Gerhart, B., &amp Wright, P. M. (2011).Fundamentals of human resource management (4th ed.). Chicago, IL:McGraw-Hill.