Most organizational managers were delighted with the idea of pay-for-performance when it first surfaced into organizational management theory. The concept that every employee would be paid according to the volume of work they have done was congratulated upon by all kinds of managers to each other. Many managers thought that they had found the reins to control each employee and they no longer had to pay the employees unnecessarily.
They were right for all this: it is true that pay-for-performance schemes result in greater productivity since managers have complete justification to reward an employee (whether it is high or low) based on the amount of productive work they have done. The fact that pay-for-performance reward systems motivate employees to work harder and achieve high productivity is itself a positive point for the manager and the organization. However, there are some serious disadvantages that are related to this scheme which make this reward system suitable for a very idealistic situation.
The drive for greater productivity does not necessarily ensure quality and integrity: employees have been known to forego the quality checks that are deemed necessary by the organization in order to do as many “numbers” as they can. In a bid to munch
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It is a well-known concept in the business field that the positive characteristics of an organization or product often go un-discussed and uncommented, however, the negative characteristics, regardless of their relevance or specificity, are highly discussed amongst the consumers in the market. This means that “once a thief, always a thief” is the correct analogy that consumers apply onto the organization’s who neglect their quality process checking once – and sadly entail the faltering label for a good time till they are able to reverse these notions through extra-ordinary efforts.
Although pay-for-performance rewarding schemes may sometimes turn out to be successful and favorable for both the organization and the employees – they may be producing quality work with high quantity – it often slows down the workers after a considerable period has passed through. This is particularly true for employees in the service industry: the dearth for new clients often is not satisfied due to market saturation. Hence, this results in employee de-motivation and dampened spirits causing the firm other potential customers.
It is therefore, necessary to draw the line in situations where pay-for-performance reward schemes should be implemented and where other schemes are more appropriate. Generally production lines are most suited for pay-for-performance reward schemes only if they have a rigorous quality checking procedure. For the service industry this is a highly useful tool which managers use effectively for employee and organizational success (Daft 2001). In conclusion, pay-for-performance reward schemes are suitable and advantageous only in certain situations where there are serious requirements for such a reward system to replace the existing pay scheme.
Furthermore, it is the duty of the managers to ensure that they understand the advantages and disadvantages of pay-for-performance reward schemes and are able to distinguish the situations in which they should be implementing these reward schemes weighing the implications of these implementations on the employees’ work behavior, their locus of control and eventually the organizational success in the long run. Works Cited Daft, R. (2001). Organization Theory and Design, 9th ed. Chicago: South-Western.