discussion 5 chapter 9 & 10
Pay-for-performance systems rely on assumptions about motivation and behavior. Identify one assumption underlying pay-for-performance that you find questionable or context-dependent.
- Explain the assumption.
- Describe a situation where it may not hold.
- Suggest one way a compensation system could be adjusted to reduce this risk.
examples:
1. A popular assumption linked with the pay for performance system is the idea that employees are motivated by financial rewards. If an employee knows their pay depends on results, they will work harder to achieve those results (Gerhart 2014 Chp 9) The goal is to associate compensation with results in other to increase profit and meet goals.
The assumption above does not always pan out the way it is designed as the employees end up focusing only on the aspects of their performance that are measured and rewarded employees may focus on only those aspects of their performance that are measured and rewarded (Gerhart 2014, Chp 9, pp, 314) As a former retail employee, I have witnessed where employees unethically reach goals in other to receive an incentive attached to a goal which impacts team effort.
To lower the risk, the textbook explains that companies shouldnt reward employees based on just one target. Instead, they should look at different aspects of performance that support the companys bigger goals. it is better to pay people fairly and then reward both individual effort and teamwork. This keeps employees motivated and a successful company.
References
Gerhart, B. (2026). Compensation (14th ed.). McGraw Hill.
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