Linking reward schemes to performance measures
Benefits of effective scheme Potential problems
Incentive to achieve a good performance •
level.
Motivate employees/managers to act in the •
long-term interests of the organisation.
Attracts and keeps valuable employees.•
Makes it clear that performance creates •
organisational success.
Organisation focused on continuous •
improvement.
Employees may be motivated more by •
intrinsic factors (e.g. job satisfaction,
challenge).
Employees may become demotivated if they •
feel that circumstances are outside their
control.
Raised stress if a significant proportion of •
their income is performance related.
Incentive towards dysfunctional behaviour.•
Deciding on individual, team, division or •
group performance?
Management styles
Three distinct styles of performance appraisal which will have implications for system design.
These styles were described in chapter 1.
Budget-constrained.•
Profit-conscious.•
Non-accounting.•