Discussion #7

Discussion #7

W. Edwards Deming, often referred to as the leading quality guru in the United States, and psychologist Alfie Kohn support the idea that incentive pay is not a motivator for individuals to do a good job. Yet economists argue that incentive compensation does work and as economist George Baker notes in his 1993 article in the Harvard Business Review titled “Rethinking Rewards,” “The problem is not that incentives can’t work but that they work too well.” What does Baker mean? Discuss the importance of a well-developed compensation plan in attracting and retaining good employees and how to keep those plans from “working too well.”

Reference:

Brickley, J., Smith, C., & Zimmerman, J. (2016). Managerial economics and organizational

architecture (6th ed.). New York: McGraw Hill/Irwin.

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Discussion on Use of Incentives to Motivate Employees

            Despite Psychologist Alfie Kohn and W. Edward Deming claiming that incentive pay is not a motivator for employees, the strategy has proved to improve employees’ efficiency significantly. Economists are right in their view that incentive pay is an ideal strategy to motivate workers. The outlook is driven by the view that workers want to feel valued and appreciated by their employers. Thus, firms can show appreciation to their staff members by providing them with the wages and benefits they believe they deserve.

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