M6D1: How Should We Get Paid?

Incentive systems develop and are embedded in the structure of an organization. The design of incentive systems needs to account for the ethical dimension. When incentive systems do not consider the ethical dimensions, they can act like a trap. Employees earn additional pay through an incentive that is often tied to specific criteria associated with financial performance. When employees pursue the incentives, they can find themselves trapped in an unethical dilemma. Issues often arise when the incentive system creates a conflict of interest for the employee or manager.

Incentive system design is completely under the control of the organization. There is a need for companies to reconcile the need for organizations to maximize business profits through motivating employees with the need for ethical behavior (Hollis & Yakhou, 2008) through a focus on long-term objectives versus short-term profits.

For your discussion:

• Use the EC Library to locate an article that addresses the ethical issues associated with performance-based incentive systems. This article can be a peer reviewed research-based journal article or a magazine/newspaper story.
• Analyze the issue and devise an adaptation of the incentive system discussed in the article to increase ethical behavior.
  • This might mean that you offer an alternative to a strictly sales-based incentive system.
  • Consider the three major approaches (utilitarian, rights and duties, and fairness and justice) when discussing your alternative.
• Describe how organizations can design systems that support ethical behavior, while also providing incentives for high levels of performance.