MAPA5385 Assignment 6

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Tarleton State University *

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5385

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Business

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Feb 20, 2024

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Assignment #6: Performance Management, Leadership, Rewards, & The Law Assigned: Saturday, November 19 Due: Friday, November 25 (23:59) Student Name Submission Date November 25, 2022 According to Aguinis (2022), over the past two decades, an increasing number of organizations (including public organizations) have opted to adopt contingent pay plans. (A) What is “contingent pay” (1 to 3 sentences)? (B) Why are contingent pay plans implemented (3 or 4 benefits)? (C) Name and briefly describe the 6 reasons that contingent pay plans sometimes fail to work as intended. Where quoting the textbook directly is necessary or unavoidable, use quotation marks and indicate from what page the quote is from. It is okay if your answer flows over to a new page. Numbered, lettered, or bulleted responses are allowed. However, remember that writing quality matters. Avoid incomplete thoughts, sentence fragments, misspellings, etc. 12-point Times New Roman Font | 300 to 500 (max) words Aguinis (2022), defines contingent pay as a pay for performance method of pay in which an individual is rewarded based on their job performance. The individual would get increases in pay based on how well they perform on the job. In some instances, these increases are added to the individual’s base salary, or it can be given as a once time bonus. In the past two decades, contingent pay plans have grown in use and are implemented due to the effective results shown in many Fortune 500 companies. Aguinis (2022) states that performance measurement and performance improvement are taken more seriously when the performance measurement system is tied to a reward system. Organizations that reward high-level performance typically attract high-achieving performers and retain them with contingent pay plans. Aguinis (2022) also states that the implementation of CP plans leads to enhanced employee motivation and has the potential to help people change behavior and improve performance. Aguinis (2022) notes that productivity can increase an average of 30% in organizations that implement a CP plan. While CP plans can improve employee motivation, it is necessary for the following conditions to be present. First, employees must be able to see a clear link in their efforts and the resulting performance. Second, employees must be able to see a clear link between their performance and the rewards to be received. Lastly, employees must value to the rewards available. While contingent pay plans can be successful, there are also six reasons that they fail to work as intended. Aguinis (2022) lists these reasons as follows: CP plans fail when a poor performance management system is is place. CP plans fail when employees get rewarded in an unexpected way while having a clear expectation of something else. CP plans fail when rewards are not considered significant. CP plans fail when managers are not accountable when handling performance and performance evaluations. CP plans fail when extrinsic motivation exists at the expense of intrinsic motivation. CP plans fail when rewards for executives are disproportionate to those of all other employees in the organization. Contingent pay plans have become increasingly popular and for good reason. They prove to be powerful tools in creating a solid foundation of culture for an organization. However, they must be implemented correctly and with an effective performance management system.
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