GMAT : Analysis of An Issue

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An Issue

72. Companies should not try to improve employees' performance by giving incentives - for example, awards or gifts. These incentives encourage negative kinds of behaviour instead of encouraging a genuine interest in doing the work well.


Discuss the extent to which you agree or disagree with the opinion stated above. Support your point of view with reasons and / or examples from your own experience, observations or reading.


Providing employee incentives can be a double-edged sword. On the one hand, the promise of bonuses or gifts can spur workers to higher achievement. On the other hand, incentives can create resentment and internal competitiveness that are damaging to morale and to the organization. Even so, I think a carefully designed incentive program can operate to the net benefit a company.

Incentive programs are counterproductive when the distribution of rewards appears to be personally biased when the program recognizes just one kind among many important jobs in the organization or when there are too few rewards available. For example, if a manager regularly rewards an employee who is perceived to be a favorite, co-workers will be resentful. Or if the company decides to recognize high sales while ignoring an especially precise cost-assessment from the accounting department, the accountants may feel their work is not valued. Finally, if rewards are too few, some employees will become overly competitive, while others may simply stop trying.

However, incentive programs can be designed to avoid such pitfalls. First, the company must determine that it can provide sufficient rewards to motivate all employees. Then it must set and follow, clear and non-arbitrary guidelines for achievement. Finally, management should provide appropriate incentives throughout the organization, thereby sending the message that all work is valued. Admittedly, even a thoughtfully designed incentive program cannot entirely prevent back-stabbing and unfair competitive tactics. But watchful management can quell much of this behaviour and the perpetrators usually show their true colours in time.

In sum, I think that the productivity inspired by thoughtful incentive programs will very likely outweigh any negative consequences. In the final analysis, then, I disagree with the speaker's recommendation against their use.

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