There have been a lot of
criticisms from different quarters against incentive/performance related pay
system. The occupational psychologists question the ability of performance
related pay (PRP) to motivate positively; leading in this line of argument is
Kohn (1993) who argued that “incentives can only succeed in securing temporary
compliance”. Stating that their use cannot change underlaying attitudes, while
the attempt to do so ultimately damagesthe long term health of the
organization by undermining relationships, and encouraging employees to focus
on short-term aims.
According to Hendry et:al; 2000:
Sociologist saw it as a means of reinforcing management control at the expense
of workers autonomy; while management thinker such as W. Edward Deming in his view says that: incentive pay or
performance related pay substitutes leadership for ‘supervision’ removing
organizational hierarchies and managing people with as little direction and
control as possible.
The major criticisms of
performance related pay (PRP) are summarized by Gemoz-Meja and Balkin (1992,
Cannell and Wood (1992), Pfeffer (1998) and Purcell (2000) as follows:
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Employee performance related pay (PRP),
especially where the incentive is substantial; tends to develop a narrow focus
to their work. They concentrate on those aspects they believe will initiate
payment, neglecting the other part of the job.
§
PRP because of its individual nature, tends to
undermine team-working. People focus on their own objectives at the expense of
cooperation with colleagues.
§
PRP tends to discourage creative thinking, the
challenging of established ways of doing things and a questioning attitude
among employees.
§
Budgetary constraints often lead managers to reduce
ratings, creating a situation in which excellent individual performance is not
properly rewarded
§
When the results of performance appraisal
meetings have an impact on pay levels, employees tend to down play their
weakness. As a result development needs are not discussed or addressed etc.