Rewarding behavior directly correlates to compensation so I have linked compensation to performance, whether at the individual or team or organizational level. Compensation for incentive pay is intended to motivate people through monetary or nonmonetary rewards tied to professional performance targets which have been established ahead of time. This technique is important for the fast-paced and competitive business environment, as it increases productive working hours and ensures cost control.” Things like piecework or spot bonuses which reward people directly for their performance are also individual-based incentives that give people a sense of control, and build a high-performance environment. Though, if not careful, they can cause rigidity or unattainable standards. In contrast, gainsharing as a type of team-based incentive promotes cooperation while enhancing the cohesiveness and productivity of teams. However, it can also face challenges such as the free-rider effect where contributions of individuals in a team will remain unobserved. Example: Organizational or company-based incentives, like profit sharing or stock option as they align employee interests with the success of the organization and engenders a sense of ownership that encourages long term commitment. But they tend to be more costly and may cloud the connection between performance and pay. Incentives are a critical tool for encouraging behavior — but for them to work, they have to be seen as both equitable and attainable. Workers want to know the link between their work and what they receive. This is illustrated by the Equity Theory that brings up motivation based on perceptions of fairness. Appropriately measured and integrated with organizational strategy, incentive programs can not only retain top talent but also increase engagement and at the same time lead to sustainable performance.
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Week 8 lectures