The Agent Theory That Individual Performance Evaluation Determined Compensation

1466 Words Aug 27th, 2015 null Page
Performance-related pay has adopted in business for a long time, which means wages paid-related how well employee did. This strategy was on the basis of the Principe-agent theory that individual performance evaluation determined compensation. Pay for performance has worked in a specific period that people need money to satisfy rudimentary demand for daily life. With the economic developing, money is not only standard for work any more. Employees need multiple motivated methods of improving working interests and the factors of motivation become flexible. This essay is argued that wage is not only way to motivate employees.

According to Bulletined, “workplace motivators include both monetary and non-monetary incentives” (Bulletined 2002). Actually, everyone has different objectivity in life and then they will have diverse attitude to their work. Research by American association for Retired the person figured that incentives about money have various effects on people which classified by aging and personality.

Frey has distinguished two basic types of employees, which are extrinsically motivated and intrinsically motivated. As for extrinsically, this kind of people are having desire to earn more money or want to get more respected than other (Frey 2002). In this case, pay for performance could play an important role in motivation. The higher wages they received, the more effective work rate they will do. Unfortunately, this method only could be used in a simple…

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