Managing Human Resources, Eight Edition

Summary and Conclusions

Pay-for-Performance: The Challenges

Pay-for-performance (incentive) programs can improve productivity, but managers need to consider several challenges in their design and implementation. Employees may be tempted to do only what they get paid for, ignoring those intangible aspects of the job that are not explicitly rewarded. Cooperation and teamwork may be damaged if individual merit pay is too strongly emphasized. Individual merit systems assume that the employee is in control of the primary factors affecting his or her work output, an assumption that may not be true. Individual performance is difficult to measure, and tying pay to inaccurate performance measures is likely to create problems. Pay incentive systems can ...