What form of pay-for-performance might work (or does work) and why.Explain

Answer only one of the following questions (your choice). Useful information for answering any of these questions will be found in class notes, the textbook, or online. Each of these sources will require some searching.

For each question, state whether:

  1. a) It would be desirable to use some form of pay for performance or not.
  2. b) What form of pay-for-performance might work (or does work) and why.
  3. c) Whether this is a case in which the firm should not use pay-for-performance, and if so, what alternative reward might be used to motivate job performance.

In all cases, assume that some appropriate combination of valid selection, and/or training, has been done. Another way of stating this, is to assume that knowledge skill and abilities to perform the job are sufficiently high. Therefore your answer does not need to discuss how high knowledge skill and ability was obtained, or how to remedy problems with low knowledge skills and abilities.


  1. Many jobs (perhaps 30% in the US economy) fit the characteristics of our model of individual simple job design. Lincoln Electric is a (World Class) company that manufacturers welding machines and welding supplies. While there are some high skill jobs at Lincoln electric, many of their jobs fit the model of individual simple job design. Lincoln electric is famous for its effective use of pay-for-performance. Briefly describe Lincoln electric’s piece rate and bonus pay-for-performance systems. What are some of the key reasons why Lincoln’s compensation system is so effective at motivating high levels of job performance? (You will easily find information on Lincoln electric and their compensation system online using Google.)
  2. Many managerial and professional jobs (for example engineer, computer programmer, nurse) may be characterized as individual complex, but do not have countable products or parts analogous to those in Lincoln electric’s manufacturing operations. Is it appropriate to use some form of pay-for-performance in these jobs? What kind of pay for performance plan might work well? What other things in the human resource system would be necessary to have effective paper for performance in these jobs?
  3. Some jobs in both manufacturing and service industries use teams that have the characteristics of group complex job design. (Recall the three defining characteristics of group complex jobs: Management holds team responsible for results & team holds individuals responsible for their performance; Teams are permanent; Team roles provide management within teams, and between teams). Would it be desirable to use some form of pay for performance in these jobs? What form of pay-for-performance might work? What are the advantages and especially disadvantages of this approach? If pay-for-performance is not used, then what alternatives might be available?

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