Pay for Performance vs Equitable Pay

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The Impact of Payment Strategies on Employee Performance

The issue of cash and the way the employers pay their employees is a touchy aspect, and it directly reflects on the level of performance that the organization will experience. The effects of the payment strategy that the management deploys while rewarding the workforce either gives the necessary motivation to the employees or demoralizes others. In essence, the approach of paying and rewarding the employees is a primary factor when it comes to the morale of the employees to work harder or get demoralized. Consequently, the production in any business or organization varies in accordance to the motivation that the employees have while doing their work, which is the relative image of how satisfied the employees become with the payment system that the management has put in place. In that case, equitable pay and pay for performance schemes are some of the most common payment approaches that the contemporary business organizations use. Some business managers tend to believe that Providing equitable pay and meaningful work is a more effective way to motivate employees than pay for performance schemes. However, this statement is wrong, and the fee for performance schemes work had better in the contemporary business organization than the equitable pay approach. That is mainly because, employees that work under the pay for performance system work harder to achieve specific goals and win some rewards, it also retains the best and focused employees and they get motivated that they are all treated equally while the equitable pay approach would leave some of the employees feeling demoralized.

Motivating Employees to Achieve Performance Goals

To begin with, the approach of pay for performance motivates the employees to attain both personal and company goals. That is to say, employees have unique goals that they work to earn. Paying them equally may divert their minds to side sources of income that may help them achieve what they want, thus, losing the focus at the work area and diminish the performance (Shields, Brown & Kaine et al. 2015). In any case, they have the prior assumption that they will receive a constant value for their salary no matter the level of dedication they invest in the organization. Paying for the performance that they generate gives them the push to work better and get the amount they desire. It draws all their attention and leads them to focus on how to increase their bonuses and rewards for bigger sums. Considering that the scheme rewards the employees as much as they earn for the company, the employees may have the motivation to work smarter and attain the specific achievements that will lead to specific rewards to help them get the amount of cash that they require (Olafsen, Halvary, & Forest et al. 2015). It is even better than those who cannot cope up with the competition may quite. As many people seek to retain their jobs, even the less committed to work harder and secure their places. It works double to maintain the only the best-motivated employees (Gieter & Hofmans, 2015).

Equal Treatment and Employee Motivation

Moreover, the pay for performance system employees gets motivated that they get equal treatment relative to the work that they undertake at the organization while the equitable pay approach would leave some of the employees feeling demoralized for getting equal pay for the different amount of work (O'Reilly, Smith & Deakin et al. 2015). In paying all the employees equally, those that would take an extra mile to market the company products feel ignored or unrecognized because the management does not appreciate their work. In the end, they would end at neglecting the extra effort that they invested so that they may also get the pay that is relative to the reward that all the order employees get for the same amount of work like the rest. That would be a different case if the management recognized and appreciated the extra effort that they put into practice and rewarded them relative to their performance (Carpenter & Gong, 2016). It would give permission to proceed to do even more with the assurance that they will get the reward at the end of it all.

Exceptions to Pay for Performance

Nonetheless, in the cases of equal payment, some employees may feel that they have better skills in accordance with their certifications in that area or more significant levels of experience than other new employees in that sector (Samnani & Singh, 2014). That would leave them with the notion that they deserve better share than the rest, which may prove complicated. In the pay for the performance approach, such employees would have the challenge to work and demonstrate the genuineness of the extra payment that they receive, thus motivating them and improving the performance (Hameed, Zubair & Ramzan, 2014).

The Importance of Maximizing Returns

However, the even-handed approach of management payment is not a completely unreliable approach in motivating the employees of the organization. The fact that advantages in the pay for performance outweighs its benefits does not render it useless in the motivation attempt to workers. There exists few instances in which equal pay would work better to motivate the employees than the pay for performance approach (Gerhart & Fang, 2014). For example, taking the case of different qualifications for various employees, the low profile employees who happen to work with more certified and experienced employees may feel motivated to get the similar salaries like those of the people who would otherwise deserve greater ranks in the job. To the newly employed workers, this is a sign of equity in the organization, and it proves no discrimination concerning the ability, performance or qualification that the employees have (Nyberg, Pieper & Trevor, 2015). The approach is vital in motivating the weaker among the group and bringing them to the same or relatively equal potential as those who can do well in the organization. However, the disadvantage of this may outweigh the difficulties that it brings along with it. Although the junior employees will get motivated; those with the potential to propel the flags of the organization to higher levels may remain unmotivated and fail to put all their potential into full use (Jacobsen & Andersen, 2015). The benefits that the organization would earn from the hard work of the majors would be higher than the time that it will spend in motivating the minors to get them to some level (Belle, 2015). In any case, the main aim of any company with a good vision is to attain the maximum with the least available resources (Gupta & Shaw, 2014).


Conclusively, the statement "Providing equitable pay and meaningful work is a more effective way to motivate employees than pay for performance schemes" is wrong as the advantages associated with the pay-for-performance method are more significant than the equitable compensation. The benefits of the former outweigh the disadvantages a big deal, a case that is almost the contrary with the latter. It is evident that the approach of pay for performance motivates the employees to attain both personal and company goals for them to earn the much wealth that they may desire for self-sustenance (Aguenza & Som, 2015). In addition, the pay for performance system employees get motivated that they get equal treatment relative to the work that they undertake at the organization while the equitable pay approach would leave some of the employees feeling demoralized for getting equal pay for a different amount of work. Although, there are few cases in which the similar pay approach works to motivate the workers better than the payment for performance method, the disadvantages in such scenarios still have devastating adverse effects. The number of employees that are driven is still minimal, and the sacrificial cost that an organization bears for preferring this approach is excellent. The organization would instead motivate those who bring more income than build the weak in the team. Therefore, it would be correct to state that pays for performance schemes are a more effective way to motivate employees than fair pay.


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October 24, 2023

Business Economics

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