The Effectiveness of Monetary Incentives on Job Performance Essay Example
Introduction
Nowadays, business environments have become increasingly dynamic and competitive. Due to globalisation and technological change, many companies today are trying to identify innovative compensation strategies that are directly linked to improving organizational performance as well as to make the companies become more flexible and adaptive. According to Appelbaum and Mackenzie (1996), the fundamentals of incentive pay and how it associates with known organizational behaviour theories can be correlated with the achievement of company goals through the use of reward system.
Basically, employees work because of money and they desire to receive fair wages and salaries for their contributions. Whereas employers want their workers to feel that is what they are getting and at the same time wish to maximize firm value. Hence, it is rational that employees and employers perceive money as the basic incentive for satisfactory job performance.
Campling, Poole, Wiesner and Schermerhorn (2006) suggest that the use of monetary incentives in the classic ‘work performance paradigm’ is based mainly on the ‘Reinforcement Theory.’ Under this theory, managers must concentrate on the relationship between target behaviour (job performance) and its consequences (pay), as well as emphasized on the principles and techniques of organizational behaviour modification. Campling et al. (2006, p.398) define organizational behaviour modification as ‘the application of operant conditioning to influence human behaviour at work.’
According to Ballentine, McKenzie, Wysocki and Kepner (2003), monetary incentives include salary increases, profit sharing plans, stock options, warrants, individual and small-group rewards, merit pay, project bonuses, and additional paid vacation time. The purpose of such incentives is to reward employees for outstanding job performance through money.
However, the effectiveness of monetary incentives on job performance has
Nowadays, business environments have become increasingly dynamic and competitive. Due to globalisation and technological change, many companies today are trying to identify innovative compensation strategies that are directly linked to improving organizational performance as well as to make the companies become more flexible and adaptive. According to Appelbaum and Mackenzie (1996), the fundamentals of incentive pay and how it associates with known organizational behaviour theories can be correlated with the achievement of company goals through the use of reward system.
Basically, employees work because of money and they desire to receive fair wages and salaries for their contributions. Whereas employers want their workers to feel that is what they are getting and at the same time wish to maximize firm value. Hence, it is rational that employees and employers perceive money as the basic incentive for satisfactory job performance.
Campling, Poole, Wiesner and Schermerhorn (2006) suggest that the use of monetary incentives in the classic ‘work performance paradigm’ is based mainly on the ‘Reinforcement Theory.’ Under this theory, managers must concentrate on the relationship between target behaviour (job performance) and its consequences (pay), as well as emphasized on the principles and techniques of organizational behaviour modification. Campling et al. (2006, p.398) define organizational behaviour modification as ‘the application of operant conditioning to influence human behaviour at work.’
According to Ballentine, McKenzie, Wysocki and Kepner (2003), monetary incentives include salary increases, profit sharing plans, stock options, warrants, individual and small-group rewards, merit pay, project bonuses, and additional paid vacation time. The purpose of such incentives is to reward employees for outstanding job performance through money.
However, the effectiveness of monetary incentives on job performance has