COMMERCE 2BC3 Chapter Notes - Chapter 9: Performance Appraisal, Agency Cost, Fixed Cost

• School: McMaster University
• Department: Commerce
• Course: COMMERCE 2BC3
• Professor: Dr Schat

Document Summary

Pay for performance: varia(cid:271)le for(cid:373)s of pa(cid:455) desig(cid:374)ed to re(cid:272)og(cid:374)ize a(cid:374)d re(cid:449)ard e(cid:373)plo(cid:455)ees" perfor(cid:373)a(cid:374)(cid:272)e that are (cid:271)ased o(cid:374) (cid:373)easures of i(cid:374)di(cid:448)idual or group (cid:272)o(cid:374)tri(cid:271)utio(cid:374)s to the orga(cid:374)izatio(cid:374)"s su(cid:272)(cid:272)ess; so(cid:373)eti(cid:373)es (cid:272)alled incentive pay, variable pay, or performance-based pay. O e(cid:373)plo(cid:455)ees" pa(cid:455) does (cid:374)ot depe(cid:374)d solel(cid:455) o(cid:374) the jo(cid:271)s the(cid:455) hold i(cid:374)stead, differe(cid:374)(cid:272)es i(cid:374) perfor(cid:373)a(cid:374)(cid:272)e (cid:894)i(cid:374)di(cid:448)idual, group or firm), seniority, skills etc. are used as a basis for differentiating pay among employees. Response followed by a reward is more likely to recur in the future. High performance followed by a monetary reward will make future high performance more likely. Expectancy theory: the theory suggests motivation is function of valence, instrumentality, and expectancy. Motivation based on beliefs employees hold that rewards will be received form firms in return for behaviors requested. Implies that linking an increased amount of awards to performance will increase motivation and performance.