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Managers should proceed with caution when administering incentive plans, aligning them carefully with strategic objectives to ensure effectiveness. Understanding the advantages and drawbacks of incentive systems is crucial for optimizing employee performance and motivation.
The cardinal rule when administering incentive plans is for managers to combine thorough planning with a 'proceed with caution' approach. Incentive plans should be designed carefully and aligned with strategic objectives to ensure effectiveness.
Various types of incentives such as efficiency wages, commissions, bonuses, stock options, and more are used to align employee incentives with company goals. However, caution is necessary as incentives can lead to unintended consequences like risk-averse behavior and neglect of other performance aspects.
It is important for companies to understand the advantages and drawbacks of incentive systems and utilize them properly to drive performance and motivate employees towards achieving company-wide objectives.
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