Question

Discuss the pros and cons of issuing bonuses to employees based on meeting production goals.

Answer 1

Pros and Cons of Issuing Bonuses to employees based on meeting production goals.

Pros:

1) Motivates the Employees: Giving the bonuses to the employees is a motivation to them to do their work more qualitativelya and effectively. Issuing bonuses attracts the employees to use their talent and earn more bonuses.

2) Increases Productivity: If the employee is get motivated they will tend to increase their productivity ti increase their earnings. This tells the employees that their work will be rewarded which increases the productivity.

3) Encourages Retention: Good Bonuses increases the job satisfaction of the employee and will be loyal to the organisation. Employees look for new employment if their work is not recognised and rewarded. So, bonuses discourage them looking for new opportunities.

4) Strengthens Succession: In order to be rewarded and get th ebonuses, the employees will strive to improve their skills through learning new skills from the training programs which enables them to do their job effectively and put themselves in a better position. This strengthens the high potential employees.

5) To control Employees: If the employees are given the opportunity to earn more, they will achieve more through their hardwork increasing the produtivity. This keeps the employees in control .

6) Equitable Distribution of Compensation: Issuing Bonuses will provide an equitable distribution of compensation. Higher incoem for those whose production is higher than those whose production is low.

Cons:

1) Time Consuming: It is time consuming activity to set all the standards for the performance incentives such as bonuses.

2) Encourage Deception: When the employees are unable to meet their standards and their performance is low it discourages them and may look for the better opportunities.

3) Improper Pre-determined Production Goals: The predetermined Production goals are to be set properly with the long term mission of the compamny. If the goals set were not aligned properly may encourage the risky practices of teh employees.

4) Other Effects: Some Employees who wants to earn more money may increase their productivoty to reach the predetermined production goals by ignoring the quality which is the most important factor for a company to succeed

5) Built in lImitation: It is easy to give bonuses to the employees who are in production department based on their productivity but it is not possible for those who work on other areas.

6) May lead to Conflict: The goals set for the employees to get the bonuses are to be properly defined and make the employees understandable, otherwise it may lead to conflicts.