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Other Financial Management Techniques
Finance & Accounting
Pages 6 (1506 words)
Other Financial Management Techniques Effects of wrong performance measures tied to compensation The effects in the case of wrong performance measures being tied to compensation in the organization have been explained as follows. The level of compensation offered to the employees should take into account the performance in not only one particular area of service especially in case of manufacturing units…
The implementation of wrong performance measures would mean that the management has not allocated balanced weight-ages to all these four areas of organizational goals in order to link it to the compensation structure of the employees. The tying of wrong performance measures to the compensation of the employees would mean that it has the likelihood of giving rise to unethical behaviour among the workers and the employees in the manufacturing plants (Tonchia and Quagini, 2010). The examples of wrong performance being tied to compensation include the aspects in which the performance of the employees is linked only with the volume of output with ignorance in the quality of the finished products being produced by the companies. The management often pays more attention to the volume of output and overlooks the quality of the product being offered in the market. Thus linking the compensation structure with such performance measure could lead the employees to adopt short-cut procedures in the process of manufacturing. ...
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