The sad history of pay for performance 

Read the Case Study entitled “The sad history of pay for performance” and then answer the question at the end of the case.

Please be sure to back up your answer to the case with facts from the textbook (Chapter 11-  Towards International and Transnational Management)

International Variation in preferred corporate culture. One serious mistake is to assume that the culture preferred in the domestic HQ of an international company will work throughout the work and that HR can globalize its various tools without serious problems.

As it was mentioned on Chapter 11 (National Cultures and Corporate Cultures pg. 195) national cultures vary substantially on their relative preferences for the four cultures (Family, Incubator, Guided Missile, Eiffel Tower)

Read the case “The sad history of pay for performance” is a single concept than in many cases can bring disastrous consequences and contra productive effects.

The Sad history of pay for performance

Pay for performance is one of these incentive systems that “should” work because it seems so logical and fair, but in practice runs foul of corporate culture. So let’s consider the circumstances in which it succeeds and the many in which it fails.

It is, of course, an Eiffel Tower concept (Chapter 11) Top management is assumed to know how difficult jobs are and therefore how much the successful completion of each task is worth and what reward the employee deserves. Where the job-holder excels, top management even assumes that this excellence will take predictable and measurable forms, increasing in quantities achieved without the quality of the tasks being changed. One consequence of this is that you cannot change a production system to which rewards have been attached without also changing the reward system, which typically lead to strong resistance to change from employees and the need to recalculate pay-for-performance tariffs every time technologies change.

Pay for performance undermines the order and predictability of Eiffel Tower cultures. It does this by withholding a portion of the employee’s pay until after the task has been performed. If the task is held to be unsatisfactory, pay for that period will be less. There is a strong shift of power towards those judging performance and away from those actually performing.

Pay for performance runs into immediate difficulties in any Family culture where motivations and rewards are intrinsic, not extrinsic. You are not paid to be a good parent; you are not rewarded as an individual for what your family group has nurtured in you. Children given monetary incentives for fastening their seat belts is automobiles stopped doing so when the incentives stopped. From a family point of view their lives are precious in themselves and incentives trivialized this. What should a nurse get for holding the hand of a dying teenage joyrider whose auto has crashed and the breaking the news to his parents? Should she get $50, or a T-shirt with a heart  on it? Are not many jobs their own reward? Are we all just waiting staff wanting tips?

Pay for performance fails utterly in an Incubator culture. Indeed, it is anti-creative in its influence. When certain tasks are incentivized research shows that employees choose the easiest and avoid the more difficult ones. It is the hard jobs that most need innovation. If and when innovation does occur, it may not be rewarded. It may even be punished, because top management does not know what value to attribute to a task completed in a creative manner. In any case the deep significance of creativity is often insulted by the pin-money used to reward it. What if the innovation is worth millions and you pay $100? The innovator is likely to feel more aggrieved than if paid nothing.

Finally, the Guided Missile culture quarrels with pay for performance because you have singled out the individual and ignored the team. Why should not those who give help to other be rewarded? Why not give money to whole teams? Indeed, if the group becomes jealous of the high performing individual they will drag that person down to their level. Retail clerks who “sell too much” will have their receipt books stolen by co-workers or be otherwise punished. What is the point of making leaders out of high performers who are disliked by their peers because they received money that others helped them earn?

This capsule case is summarized from Alfie Kohn’s book, Published by Rewards.

(Source: Managing People Across Cultures by Fons Trompenaars and Charles Hampden-Turner)

Questions: A tool, often believed to be neutral, like pay for performance, will prove disastrous in certain cultures yet the need to locate and develop talent remains desperately urgent …

  • 1) How could you, as an International Manager working with a team of employees from different parts of the world evaluate your employees’ performance without causing anxiety, misinterpretation and frustration among them?

Again, be sure to back up your answer to the case with facts from the textbook (please use APA format). Your case report should have a minimum of 500 words. Submit your case report as Word document.


Grading Rubric

Your assignment will be graded according to the grading rubric.

Case Assignment

 Grading Rubric

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Thoroughly answered the question


References to course material


Spelling/Grammar at the college level and reference to text or other material


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