(Solution) 5HR03 Question 4. AC 2.2: Explain how the current contingent rewards could affect individual team and organisational performance
Solution
Impact on individual performance
Mercy Frontier currently offer a very base contingent rewards: a salary bonus and holiday bonus that are only based on service completed. They can foster retention as they understand that retention will equate to a predictable gain; however, they don’t draw the line between quality and low quality contribution. So evidence indicates that performance-based pay works best if employees have the opportunity to affect the measured performance (Nyberg et al., 2016) and tenure progression alone is unlikely to generate extra individual efforts following the expectation.
Impact on team performance
Service linked progression can help teamwork if team members aren’t competing for a small bonus. This fits humanitarian work as teams in the field and programme, treasury and fundraising depend on each other. But, if more is being demanded of some employees than of others, it might leave them feeling that they are being treated unfairly, and consequently, reluctant to offer assistance. Transparency, participation and fairness determine the influence of performance pay on motivation (Wenzel et al., 2019) and, for that reason, reliable team processes are crucial.
Impact on organisational performance
A predictable progression would allow Mercy Frontier to retain organisational knowledge through predictable forecasts, but overinvests costs due to automatic increases even if there is an absence of funding or outcomes. This can reduce funding available to a donation-based charity to use for emergency operations. The hidden motivational and management costs is also documented in the public sector literature for situations where pay-for-measured performance is very closely linked (Weibel et al., 2010), particularly in cases involving Quality, Dignity and Safeguarding which is not quantifiable.
Should performance incentive be implemented?
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