Question

Provide positive feedback:

Powerful incentives can cause undesired behaviors. Suggest ways to solve this problem, using something you know a great deal about – academic performance. With incentives come the challenges of ethical, moral, and legal behavior having a diminished impact on the choices one makes to achieve the incentive. This effect was shown with outstanding in the banking sector during the 2008 economic meltdown. The large incentives offered to the people working in the financial sector drove large groups to conduct unethical and what became illegal operations that led to the collapse of the US housing market and had ripple effects throughout the world’s economies. In the scholastic arena, having training to educate students on what unethical and illegal behavior is a first step. Then by giving students the tools needed to verify that their work is not breaching these two things before turning their work in. And finally, by giving instructors and institutions the tools to check and verify a student’s work ins their own. This system works by e3ducating then having checks and balances in place to verify. How would you design a pay-performance system that uses powerful incentives to motivate behavior, yet keep the behavior from veering into the unethical? (Hint: You want to keep the powerful incentive effect of pay. So, don’t recommend eliminating incentive pay or reducing the size of the incentive component.) What’s left? The first step is offering an equal ability to all employees to obtain the incentive. This will involve training, mentoring, and the opportunity to have access to the incentives. Next the incentives must be set in a way that ensures the methods of reaching the incentives encourages employees to behave in a manner that is congruent to the company’s mission and culture. Lastly the methods employees use to reach the incentives must be able to be verified with a checks and balances by someone that the incentives will not effect. How do you ensure ethical behavior? This starts with the company and its core mission statement, then this has to be followed up with training on the standards, laws and expectations. Lastly the company must use checks and balances to verify the methods being used are following the ethical standards put in place. These checks must be conducted by someone who is not going to benefit from the manipulation of ethical judgment.

Answer 1

A positive incentive system, if designed well, can have a remarkable impact on organizational performance. It can align individual behaviour and efforts in such a manner which is constructive for the overall organization and eliminate inter-functional frictions which are mostly prevalent in any organization to get a superior output.

For a incentive system though to have a positive impact, it should be fair in its spirit and also the manner in which it is implemented. It should provide equal opportunity to everyone in the organization to attain it and if there are any disparity on the skill level is present, then the organization should work hard to eliminate them and ensure equal access of opportunity to get the incentive. The incentive system should also pass the legal and ethical test, wherein employees should be motivated to work in a just and ethical manner to achieve the incentive through hard work and quality output rather than bending rules or regulations. If this is not the case, then the whole purpose of having an incentive system would get jeopardized. Lastly, but not the least the evaluation of the employee's performance and deciding on their qualification to receive the incentive should be done impartially and without any ambiguity to make sure that the justness of the entire process is reinforced and employees are truly motivated to put in extra to achieve the incentive.