MGHB02H3 Lecture Notes - Job Satisfaction, Employee Retention, Organizational Commitment
Document Summary
The prototype of all schemes to link pay to performance on production jobs is piece-rate. Piece-rate refers to a pay system in which individual workers are paid a certain sum of money for each unit of production they complete. Various schemes to link pay to performance on production jobs are called wage incentive plans. The introduction of wage incentives usually leads to substantial increases in productivity. One of the best examples of the successful use of a wage incentive plan is the lincoln electric company. Lowered quality: wage incentives can increase productivity at the expense of quality. Differential opportunity: a threat to the establishment of wage incentives exists when workers have differential opportunities to produce at a high level. Reduced cooperation: wage incentives that reward individual productivity might decrease cooperation among workers. Incompatible job design: the way jobs are designed can make it very difficult to implement wage incentives.
