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2 pages/≈550 words
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APA
Subject:
Business & Marketing
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Essay
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English (U.S.)
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Topic:

Harvard Business Review Incentives and Performance

Essay Instructions:

Address all questions below: W. Edwards Deming, often referred to as the leading quality guru in the United States, and psychologist Alfie Kohn support the idea that incentive pay is not a motivator for individuals to do a good job. Yet economists argue that incentive compensation does work and as economist George Baker notes in his 1993 article in the Harvard Business Review titled "Rethinking Rewards," "The problem is not that incentives can't work but that they work too well." What does Baker mean? Discuss the importance of a well-developed compensation plan in attracting and retaining good employees and how to keep those plans from "working too well." In most cases, economic agents respond to incentives, and incentives are used at different scales. In the economy, incentives are used to promote economic development and growth. In commerce, incentives are used to enhance trade and sales. In corporations, incentives are used to motivate employees, alter behaviors, or resolve conflicts of interests. Incentive pay can be based on individual performance factors or group performance factors. Incentives can be monetary or non-monetary. People respond to an incentive with different levels of sensitivity. It is imperative to understand what incentives the persons whom we want to motivate would respond to and respond well. Firms use incentive programs as a part of the total compensation plan to attract and retain specific type of employees and motivate them to make decisions in the best interest of the firm. Do you believe in incentive pay as a motivator? What does George Baker mean when he said, “The problem is not that incentives can't work, but that they work too well."? What is the importance of a well-developed compensation plan in attracting and retaining good employees? How can firms keep incentives from "working too well"?

Essay Sample Content Preview:

Incentives and Performance
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Work place incentives have been part of the business strategies for quite a long time. From time to time, the staffs are likely to lose site of the corporate goals and slack on their objectives to achieve them. Job categories such as in the sales departments, which are characterized with high turnover and immense pressure to produce results; have been found to be affected by incentives, where staffs increase their focus on achieving the corporate goals(Stewart et al., 1993).However, there are opposing schools of thought on the subject, with some of the scholars stating that the incentives do not work, while others cite the positive effects that the incentives have on the staffs. Charity workers have been found to be motivated even without incentives, while staffs working for profit making organizations require incentives often. This raises the question as to whether the incentives are a genuine performance improvement tool among the staffs.
A close consideration of the incentives shows that the incentives do work and have been proven to increase the level of performance among the staffs. Most of the jobs are associated with routines that can sometimes take away the level of creativity and excitement among the staffs. At the same time the field work associated job groups also present a number of challenges; while some of the staffs may view this as a good thing due to the frequency of challenges and new experiences, there is also a high likelihood that the challenges will at one pint take toll on the staffs’ performance (Baer, 2014).Long-term incentives have been found to have more impact on the level of performance than the short-term ones. It is also common that the incentives driven at teams other individuals have higher results. The secret to getting the staffs to increase their level of performance relates to the choice of combinations and implementation strategies. Relying on monetary incentives will only be as limited as the choice itself. It is important to note that different staffs have different motivation levels and achieving the balance is the unlocking mechanism(Tibergien, 2013).
According to George Baker, incentives work but they work too well. Ideally there is a level of performance that is ass...
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