BU288 Lecture Notes - Lecture 9: Merit Pay, Job Design, Profit Sharing
Document Summary
Money as a motivator: how important is pay for you. The motivation theories suggest that pay is a very important motivator. Potential problems with wage incentives: wage incentives have some potential problems when they are not managed with care: Lowered quality: wage incentives can increase productivity at the expense of quality, requires a system to monitor and maintain quality. Reduce cooperation: wage incentives that reward individual productivity might decrease cooperation among workers, workers might hoard raw materials or refuse to engage in peripheral tasks (e. g. , keeping the shop clean). Incompatible job design: the way jobs are designed can make it very difficult to implement wage incentives, on an assembly line it is almost impossible to identify and reward individual contributions to productivity. Potential problems with merit pay plans: merit pay plans have several potential problems if employers do not manage them carefully, low discrimination, small increases, pay secrecy.
