Performance related pay?
Todays class on Creating Business Excellence certainly resulted in a lively debate on performance related pay! This stemmed from a theory put forward by Deming, and stoutly defended by Paul Roberts, that performance related pay has a negative impact on an organisation. Whist initially, it appeared to many students that this may not be the case i, I would have to argue to the contrary and agree with Deming and Paul's views on this subject.
My argument will simply draw on something everyone can clearly see. In a football team, certain players are rewarded with "goal bonuses" in their contracts, earning thousands of pounds extra if they happen to score a goal for their side. Whilst at a a basic level, this may seem a smart idea by increasing that players motivation to score a goal, it can infact hamper a side. For example, if a side is losing or need to score a goal, a selfish player may try and score when not in the best position to get his goal bonus, rather than pass the ball to a better placed team mate who may be in a much better position to score. This could ultimately result in a goal not being scored, and the team subsequently losing the match that they must quite simply win.
I believe this theory can be applied in a business environment, where workers may become apprehensive about helping out fellow employees as it takes time away from them being able to earn extra money, or may prevent employees within different departments helping each other out, or offering solutions to problems as it would boost a different department's productivity. As Paul mentioned today, I feel offering bonuses on a pro rata basis across the entire business is more beneficial to being given bonuses based on your individual work. This is because it creates a better culture within the organisation, with all individuals being rewarded on a pro rata basis. I believe this would help improve the overall standard of work within an organisaton across all levels, rather than sales staff being self focussed on driving higher numbers, irrespective of whether manufacturing could meet higher sales for example.