Unformatted text preview: ty are powerful incentives to high achievement and should generally go to those who do the best work. However, to ensure employee productivity, companies must also reward tenured employees with cost ofliving raises—though not with job security. On the one hand, rewarding average job performance with large pay increases or promises of job security is a waste of resources—for two reasons. First, complacent employees will see no reason to become more productive. Secondly, those normally inclined to high achievement may decide the effort isn’t worthwhile when mediocre efforts are amply compensated. Companies should, therefore, adjust their pay schedules so that the largest salaries go to the most productive employees. On the other hand, employees who perform their jobs satisfactorily should be given regular, though small, servicebased pay increases—also for two reasons. First, the cost of living is steadily rising, so on the principle of fair compensation alone, it is unjust to conde...
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This note was uploaded on 05/05/2009 for the course ECAS asdfasdf taught by Professor Asdfaf during the Spring '09 term at Academy of Art University.
- Spring '09