There are lots of criticisms by
experts against incentive payment. Some of these criticisms are:
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In the case of skill based pay system: They require a considerable investment
in skill analysis, training and testing, and in most cases the individual employees
will not be using all the skills at the same time, inevitably, payroll cost
will rise (Armstrong,2006)
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Incentive pay undermine intrinsic motivation:
Winkle (2001) asserts that contingent financial reward (incentives) may
actually undermine the intrinsic motivation that often results in optimal
performance.
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Rewards can have unintended consequences: One
experts says: “Tell people that their income will depend on their productivity
or performance rating and they will
focus on the number. Sometimes they will manipulate the schedule for completing
tasks or even engage in patently unethical and illegal
behaviour” (Letterman, 2001).
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You get what you paid for: An incentive plan
that rewards a group or individuals based on how many piece they produce may
lead to rushed production and lower quality. A plant wide incentive for
reducing accidents may simply reduce the number of reported accident.
§
Incentives may rupture relationships: An incentive pay plan has the potential for
encouraging individuals (Individual group) to pursue financial reward for
themselves.
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Pay is not a motivator: Herzberg says employers
should provide adequate financial rewards, and then build other effective
motivators such as, opportunities for achievement and psychological success
into the jobs. More challenging jobs and employee regulations often makes more
sense than do financial incentive plans.
However, the failure of
individual incentive to achieve the desired goal(s) led to the introduction of
group incentive.