Final answer:
Denise needs to carefully design a pay-for-performance plan to align employee rewards with beneficial behaviors for the company's short and long-term success. Such plans can drive productivity and quality but must be monitored to avoid encouraging potentially harmful short-term focused actions.
Step-by-step explanation:
If Denise institutes a pay-for-performance plan, she needs to be careful that her employees are rewarded only for behaviors that actually help the company in both the short term and the long term. A pay-for-performance plan typically involves offering financial incentives based on how well employees perform their jobs. These incentives could be linked to various metrics like sales, productivity, or quality. It is critical to design these systems to reward actions that align with the company's strategy and goals. Otherwise, employees might focus solely on the short-term gains to meet targets and receive their bonuses, potentially at the expense of the company's long-term health. An effective pay-for-performance system should therefore ensure that the desired performance aligns with the company's overall success, encouraging behaviors that contribute to both immediate results and sustainable growth.
For example, piece-rate systems, where employees are paid a set rate for each unit produced or action completed, are a typical form of pay-for-performance. A study of loan officer effectiveness under a piece-rate system would analyze how individual incentives can drive productivity and the quality of loan processing. Nevertheless, attention must be given to how these systems could also drive behaviors that may not be in the best interest of the organization, such as cutting corners to meet quotas.
It's crucial to critically consider and address potential drawbacks. Incentive systems can sometimes create independent employees who steer actions toward their own preferences, which may not always align with the elected leaders or company's vision. It is a delicate balance to reward effort and skill without compromising the organization's integrity and strategic direction.