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In: Economics

Should employees receive pay increases for simply doing the job they are were hired to do...

Should employees receive pay increases for simply doing the job they are were hired to do or should they have to go above and beyond? Would your answer be different for bonuses? Provide an explanation for your response. Support your response with an APA cited reference(s).

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Expert Solution

If the employees are doing the job for which they were appointed, a pay increase will provide misguided incentives. A pay increase should be provided for consistently performing better than others, the same job. This pay increase is called merit pay increase and are normally provided for adjustment with inflation. In this sense, there is a new trend of providing efficiency wages where more than market going wage is provided to the workers by big companies in order to keep the workers motivated and loyal to the firm.

As far as bonuses are concerned, these are a part of reward system and they are mostly paid to the group or the team for excellent performance. Here bonuses are provided for the same job and sometimes to the employees that were a part of the team but had lower contribution. Because group performance becomes essential for the bonus, they are encouraged to participate and perform rather than free ride.  

Rahul Sunny answered 1 year ago
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