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- Incentives signal what is important, but the signal may be too blunt
- Incentives do motivate behavior, but sometimes it‘s the wrong behavior.
Conditions under which the right behavior is motivated:
- Task is easy to learn, little interdependence with others
- Task is easy to monitor for quality
- Employee’s goals are clear and one-dimensional
- Incentive systems do affect who joins the organization, but the results
can backfire
- The use of variable pay increases dispersion, which can damage
performance
A 2004 survey 0f 350 companies showed that 83 percent of
organizations believe their pay-for-performance programs are only
somewhat successful or not successful at accomplishing their goals