Sample Essay

Performance related pay is beneficial in circumstances where the organization is experiencing a change. PRP can also help to develop an entrepreneurial culture within the organization (Noe, Hollenback, & Gerhart, 2008). Similarly, the best part of PRP (Performance Related Pay) is simple and concise that is employees that work hard gets more rewards and equality prevails in the organization. PRP is used more in the public sector people like teachers, bankers; nurses etc are getting benefit out of it. However, an element of ‘gaming’ arises in the PRP system where employees can manipulate their behaviors and doesn’t increase productivity in response to schemes.

The effectiveness of performance related pay can’t be judged appropriately and studies found that a large number of schemes are less efficient than expected. This might happen because in the public sector extrinsic rewards are usually low and that’s why employees are not motivated that much. Similarly, favoritism and biasness may occur in this process because evaluation of employees are often done by their lines managers and a person who is equally good can’t get the reward because of the prejudicial behavior of his/her manager(Decanzo & Robbins, 2006).  Gender biasness and discrimination can also result in incorrect evaluation and might disappoint employees.

Relationships between employee with the employer and the relationship of organization with other stake holders are quite valued in every organization. The shareholders can ask the management about undue expenses and hefty salaries of employees. Although that’s rare but the management of any organization is answerable to the shareholders as they have invested in their company.

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