1. When we discuss pay-for-performance, motivation is an essential topic to unde
ID: 349482 • Letter: 1
Question
1. When we discuss pay-for-performance, motivation is an essential topic to understand. Does money motivate, and what else besides money works as a motivator? Explain
2. What are some amounts that CEOs are making, and what is the most lucrative form? How does their pay correspond to the health of their companies? Explain
3, The paywatch site shoes how much a CEO makes compared to the average employee. In other countries, this ratio is much lower. Can we justify such high ratios for our CEOs? Explain
4. Too often, executives are focused on short term metrics, such as quarterly reports. So executives may get pay in the form of long-term incentives, often tied to share price in the future, to encourage longer term focus. Do executives do things that are good for the share price but ultimately unethical or just bad for the company? Give examples.
Explanation / Answer
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1. Money is one of the biggest motivator. What the company benefits out of employees work is money. So sharing profits by pay proportionate to work is a major motivator. However, Money as a motivator is effective when it is directly aligned to an individuals ideas, contribution and performance. If not coupled with other, non-monetary motivators, effects are short-lived. Moreover, if not provided to all the employees, monetary incentives may prove to be demotivating and counterproductive.
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