Incentive Pay

ACCOUNTING)STRATEGY)AND)CONTROL))

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ESSAY% 1:% Do% you% believe% that% incentive% pay% is% truly% effort:inducing;% that% is,% drive%

employees%to%perform%at%their%best?%Discuss%

%

In% recent% times,% companies% are% faced% with% a% lot% of% competition% and% they% need% to%

constantly%devise%strategies%to%tackle%this%competition.%They%are%continuously%looking%

for% ways% to% increase% the% performance% of% the% company% and% ways% to% keep% their%

workers% and% other% employees% motivated% so% that% they% deliver% their% best% in% such% a%

competitive% atmosphere.% Incentive% pay% is% one% such% strategy% used% by% companies% to%

perform% well.% Incentive% pay% is% pay% based% on% specific% performance% of% an% employee,%

which% may% take% the% form% of% gift% vouchers,% stock% option,% bonus,% profit% sharing,%

commission% etc.% It% is% generally% used% in% companies% where% the% performance% is%

measurable.%It%is%compensation%that%rewards%results%rather%than%time%spent%on%a%job.%

It%is%a%method%adopted%by%employers%to%motivate%employees%to%perform%better%and%

continue%delivering%good%results,%which%directly%leads%to%the%success%of%the%company.%

I%believe%that%structured%monetary%incentives%are%truly%effort%inducing.%

%

Incentive% pay% motivates% employees% and% maintains% high% work% performance.%%

Employees%find%it%hard%to%keep%themselves%motivated%at%work.%Implementing%a%good%

incentive% pay% program% helps% to% keep% the% employees% engaged% and% motivated% to% do%

well% by% rewarding% them% for% all% the% good% work% they% do.% For% instance,% in% the% Lincoln%

Electric% case% employees% were% paid% based% on% piecework.% This% would% induce% the%

employee% to% produce% as% many% pieces% as% possible% in% order% to% receive% a% high%

compensation.% The% effort% would% result% in% higher% productivity% for% the% firm% and%

thereby%higher%profits.%As%the%employees%would%get%a%part%of%the%bonus%they%would%...