5. POTENTIAL BENEFITS OF REWARD
SCHEMES
Management encourage employees
to achieve goals by having rewards
linked to their success of failure in
achieving desired levels of
performance.
6. Rewards and incentive shape the behavior
of employees –a well – designed scheme
will be consistent with the organizational
objectives.
A reward scheme provide an incentive to
achieve good performance.
Key incentive can be emphasized in the
reward scheme it is way of communication
the goals of the company to the employee.
7. An effective scheme will create an in which
all employees are focused on continuous
improvement.
Schemes that share ownership can
encourage behavior that in the longer term
increases the market value of the business.
8. SPECIFIC BEHAVIORAL PROBLEMS
In one of his articles for student accountant, the previous
examiner highlighted the following specific problems that
can occur with performance measurement schemes:
Tunnel vision:
under focus on performance measurers to the detriment of
other areas.
Sub- optimization:
under focus on some objectives resulting in other
objectives not being achieved.
9. Myopia:
Focusing on the short term resulting in the ignoring of the
long-term.
Measure fixation:
Behavior and activities in order to achieve specific
performance measures, that may not be effective.
Misrepresentation:
Using creative reporting to suggest that performance
measures have been achieved.
10. Gaming:
Deliberate distortion of the measure in order to achieve
some strategic advantage.
Ossification:
The unwillingness to change performance measure
scheme once it has been at set up.