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Custom Is Incentive Pay Good Essay

Every employer has his own view on the way the employees should or should not be encouraged. The opinion of Patrick L. Lancaster, the owner of the firm with 22 year history will be used to show the specific example of implication of the bonuses within a Lantech company. In his article “Incentive Pay Isn’t Good for Your Company” Lancaster fully describes all the possible pros and cons of using incentives for the blue-collars and white-collars.

Lancaster states he does not see any benefits from incentive pay for the work of his company and any company in general. He provides two conclusions he made regarding the bonus awarding system. First is that such incentives do not work for the long term goals of the company, as they allow the employees who get them concentrate solely on completing certain tasks, leading to the overall worsening of the situation. Secondly, the only field of business where the bonuses are considered incentive is sales. The rest of the employees do not take the incentive as something special. The ideas above come from the real life experience of the author, not from the scholarly sources. A good example of incentive system failure is described, when Lancaster worked as a salesman for another company, and in order to get the bonus he only concentrated on the goals, that would allow him to do so, ignoring the customer’s needs, and thus failing the company.

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Taking Lantech as an example, Lancaster proves incentives can be motivating while the company needs to do a big leap and advance to the higher success in order to keep the market share and increase it. Lancaster describes a plan when the employees were the ones to choose their own manager, who received a share of the bonuses and made a decision about sharing the general bonus from the company among the other employees. Employees also had a right to evaluate each other and rank the best and the worst. As this plan came into action, most employees found themselves rather separated from each other. Another try to make the employees work better was done by stimulating managers with bonuses for the work they were supposed to do. As it turned out, managers got so much used to it that reconsidered their job duties such way as they were supposed to get some benefits from any actions they made. Besides, managers got involved in fighting over the bonuses, not striving for the better performance.  In order to improve the company performance, the objective criteria were established, but using them led to so many controversies most employees turned into cynics.

As the number of employees, benefitting from the bonuses, was around 10% of all the workers in the company, they were the only ones, resentful against the change of the new management plan, introducing a new system of bonuses. As for the rest of the employees, they were grateful for dropping the old plan, but later opposed to the new one, as it brought some new challenges to face.

Lancaster proved a good point about the incentive payments: they can become a part of the company strategy, but only as a short-term supplement to the main structure of it. As it is shown in the article, employees change their preferences from reaching the company goals and objectives in the full scale to concentrating solely on the tasks that would award them with bonuses once completed.

Using Lantech as an example, we see that the company would not benefit from the incentive pay for its employees, as they will provide the short-term effect only, changing the priorities of the personnel towards earning a bonus instead of following company objectives.

Custom Is Incentive Pay Good Essay

Code: Sample20

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