29.06.09
Employees may be discouraged from putting in maximum effort at work if they are on performance-related contracts, it has been reported.
While many firms, such as those dealing in outbound sales, have long attempted to motivate their workforce by offering financial incentives for high success rates, the London School of Economics (LSE) and Political Science suggests this approach may be based upon false logic.
It claims that commission and performance-related pay often do not encourage people to work harder and can even have the opposite effect, by reducing employees' natural inclination to complete tasks and derive pleasure from doing so.
Dr Bernd Irlenbusch, from the LSE's Department of Management, said financial incentives may reduce intrinsic motivation and diminish ethical or other reasons for complying with workplace social norms.
He added: "As a consequence, the provision of incentives can result in a negative impact on overall performance."
Tom Hadley, director of external relations at the Recruitment and Employment Confederation, recently claimed that many firms are looking to offer employees enhanced professional development opportunities to compensate for a current inability to offer pay rises.
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