Note: Sample below may appear distorted but all corresponding word document files contain proper formattingExcerpt from Essay:
Ethics Human Resources, develop arguable proposition write essay. As, propose "Good Ethics Human Resources Management Enhances Employee Loyalty."
HRM incentives increase employee performance
The history of the labor force has been a rather tumultuous one, starting with the migration of the people from the villages to the towns, to become factory workers during the Industrial Revolution. Here, they were exploited and forced to work and live in unsafe and unsanitary conditions. They as such formed unions, but the initial demands were met with bloodshed. Gradually, the workers received the support and protection of the policy makers, and the modern day labor force is now sheltered by all legislations, common practices and ethical norms of organizational behavior.
Nevertheless, despite its evolution and better protection against abuses, the workforce of today is still faced with important challenges, one of the more notable of them being raised by the emergence of the economic crisis. This limits the employment opportunities, reduces employee morale due to instability and increases competition between the staff members.
The modern day employers then have an increased access to qualified and talented staff members, at costs lower than the ones they would face in times of economic prosperity. Still, to best capitalize on the skills and qualifications of their employees, the organizations should develop and implement incentives programs as these raise employee satisfaction, commitment and performance. While this argument is commonly accepted, there still are some opinions which state that incentives programs can also cause harm within the internal context of the firm. This project as such, seeks to approach both sides of this argument and come to a better informed conclusion.
2. In favor of HRM incentives
At a general level, the provision of incentives for the organizational staff members is associated with a series of benefits, some of the more common ones being revealed below:
The provision of incentives has a direct impact on the levels of employee on the job satisfaction related to both the level of compensation received, as well as the nature and opportunities presented by the environment in which they operate. At this level, it is observed that the incentives generate a positive effect on the attitudes of the employees.
Additionally, the positive attitudes and the incentives subsequently lead to behavioral reactions on the part of the employees, who come to increase their commitment to the firm, as well as their efforts to supporting the company to reach its overall objectives. In other words, incentives impact individual and organizational performances (Wright and Nishii, 2007).
The incentives provided by the firms help solidify internal teams and increase their overall performance levels. To attain these final scopes however, firms have to provide their employees with both internal environment incentives, as well as financial benefits. "Group-based incentive pay, on average, raises productivity, and the adoption of teams in addition to incentive pay leads to a further increase in productivity" (Boning, Ichniowski and Shaw, 2001).
The human resource incentives create competitive advantages within the industry (von Eckardstein and Konlechner, 2011). At this level, the explanation could be constituted by the fact that incentives have the ability to stimulate employee performances, and subsequently, organizational productivity and competitive position within the market place. Nevertheless, the incentives also create a desirable working environment, meaning as such that the firms become more appealing to prospective candidates, increasing the firm's access to talented staff members.
Aside from the more popular advantages of HRM incentives, there are also some less recognized aspects of providing incentives to the employees. One relevant example in this sense is represented by the provision of incentives to the executives within the firms. At this level, it is important for the incentives to be aligned at executive level, in order to engage and satisfy the executives; unless these incentives are adequately aligned, the executives would perform at lower levels of satisfaction.
In such a setting then, the satisfaction of the executives, through adequate incentives is directly linked to the overall performances of the firm. The executives have the ability to directly influence firm performance, and this influence is a positive one when the executives' motives are perfectly aligned with the overall scopes of the firm (Nwabueze, Scott, Horak, Mohammed and Chhotu, 2006). In other words, executive incentives stimulate performance and corporate vision.
Finally, a last stand to be presented in favor of incentives for the human resources is extracted from a 2006 study conducted by Yuan Li, Yongbin Zhao and Yi Liu on the link between incentives and technologic innovation and organizational performances. The results of their study suggest that there exists a direct relationship between immaterial incentives and technologic innovation. In other words, the authors found that when the organizations integrate their employees in training programs and provide other immaterial motivation, the technologic innovation in the respective institution increases.
Additionally, aside from the integration of immaterial incentives, the three researchers also found that it was essential to integrate more control processes and mechanisms in order to better stimulate technologic innovation. At the level of the material incentives, the authors found an indirect relationship between them and technologic innovation (Li, Zhao and Liu, 2006). Overall, the study adds new findings related to HRM incentives at the specific level of technologic innovation, yet its limitation is that it is conducted on the Chinese companies, and the ability to extrapolate the findings is still unsure.
3. Against HRM incentives
The general perception within the academic and practitioners' community is that the provision of incentives to the staff members subsequently leads to increased employee and organizational performance. Still, despite this general acceptation, there are some sources which come to argue the opposite. A first example in this sense is represented by the findings of Li, Zhao and Liu (2006), who conducted research on the Chinese organizations. While they found a positive and direct relationship between immaterial incentives and technologic innovation, the three researchers have found an indirect relationship between material incentives and technologic innovation. In other words, when the firms present their employees with salary increases, premiums, bonuses and other material incentives, this tends to materialize in lower levels of technologic innovation at the respective firms. What is also important to note at this stage is that technologic innovation is a faithful indicator of organizational performance. Extrapolating on the findings of Li, Zhao and Liu then, it could be stated that material incentives, while they are needed, they could fail to generate positive impacts on organizational performances.
Then, aside from the technologic dimension of the human resource incentives, de Kok, Uhlaner and Thurik (2006) find that the final nature of the impact of the incentives is linked to the size of the company. For instance, in the smaller size companies, the more likely to succeed incentives are the informal ones, which engage employees. Within the larger size institutions, the more successful incentives are the structured one. In such a setting then, while it cannot be argued that the incentives cause specific damage on the organizational performance, it can be concluded that it is necessary for the economic agents to provide those incentives that best apply to their specific features. In a different context, damages can be created.
To better understand the standpoint of de Kok, Uhlaner and Thurik, one could imagine the context of a large size entity, such a multinational corporation. In this setting, the incentives to be offered should be structured, transparent and based on specific grids and communicated expectations. Still, if the incentives are offered in an informal and unstructured manner, in the absence of a grid and a transparent approach, the motivation and performances of the employees could be negatively affected.
The issue of the negative aspects of incentive provision within the organizational setting is rather limitedly addressed and this is due to the commonly accepted perception that the incentives are able to generate positive impacts upon the employees, and subsequently, upon the firm. Still, it is also important to note that there are some authors which pin point to some specific shortages of the incentives programs. Their most relevant points as summarized below:
Unless adequately implemented, incentive systems within the firms can create inequality and among the staff members, leading as such to internal frustrations, tensions and negative impacts upon the working environment and even the company's productivity (Berger and Berger, 2008).
Intensive emphasis on employee compensation and motivation could distract the company from its core operations and could even materialize in a decreased emphasis on product quality, for instance. Such an outcome would decrease the overall quality of the company's offer and its competitive position within the market place.
Incentive pay systems for the employees generate additional complexity within the firm, due to the consumption of energy, time and financial resources. Additionally, incentive provision requires adequate evaluation, measurement and planning and these should be constantly provided by competent staffs (Randhawa, 2007).
An important aspect of incentives is the individual incentive plan, which rewards employees based on their individual performances. The scales and objectives set out…[continue]
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