-- managing the performance of individuals - Case Study Example

This model presumes that human behavior is rational, therefore driven by the best information available at the time and designed to maximize individual interest’ (Pheffer 1998). Expected financial return motivates people to accept jobs and exert the level of effort that they are willing to spend on those jobs. If they know an incentive is waiting after a job well done, then they’ll be more encouraged to work. The act of giving inspires people to do more than expected of them. Transaction-cost theory identifies transactions organized by markets and hierarchies.

It contains the notion that people not only seek self-interest but do the job with ‘opportunism’ (Meschandreas 1997). If they know that they are monitored by their superiors, then they exert more effort in doing so because recognition or even a possible promotion or other advantageous opportunities are in the offing after a commendable performance. Good examples are what happened in companies such as IT Lab Ltd., Peppermint PR, Metaswitch, Bravissimo and Madgex. Simple tokens or little gifts like ‘chocolates, cups of tea, bottles of wine, vouchers for meal out, manicures at posh beauty salons, jars of sweets or even a simple thank you note’ (employeebenefits 2010) await an employee who had exerted an extra effort in doing a difficult project.

These simple little gifts excite the employees because of the rationale behind it. Receiving these small tokens mean recognition and appreciation for a job well done. 2. The article has only a limited number of criticisms on the trivial (gift) token as a reward strategy. With reference to theories of reward strategies expand the discussion of potential problems with this form of reward. Justify your answer with examples from the case study. Though it appears to some companies that giving small token of appreciation to employees is effective because it keeps the employees’ morale high through recognition and reward, still, it is not applicable to all companies at all times.

In fact, it has a downside. As Pheffer puts it in her “Six dangerous myths about pay”, this practice has been shown to undermine teamwork, encourage employees focus on the short term and lead people to link compensation to political skills and ingratiating personalities rather than to performance’ (Pheffer 1998). Consulting firm, William M. Mercer says ‘most performance-based pay plans absorb large amounts of management time and resources and they make everyone unhappy’. If the employees are motivated of the small tokens then the motivation was influenced by extrinsic factor.

‘Extrinsic factor (rewards) has an immediate and powerful effect but won’t necessarily last long (Armstrong 2009 ). Saying thank you and giving small tokens are good motivational practices but the employers should exercise extra caution in doing so because other employees who do not receive a gift may feel left-out or feel there’s an ongoing inequity and favouritism. Also, it is wise for the company to be specific in giving presents to avoid tax issues and hurting the budget. They should also remember that rewards should be given infrequently and on schedule to perk the excitement of the employees.

There’s also a possibility that the employer overlook someone’s hard work and commitment to the company. If this happens, the little incentive will do more harm than good because it might create grudges between employees. Like