An incentive changes behaviour, but not always the behaviour the business wants. A reward for output suits tasks where output is easy to count and check, and can harm tasks where quality, judgement or teamwork matters. This is a common application point in motivation at work.
How do you check whether an incentive fits a task?
Ask four questions about the task.
- Can output be counted? Pages printed or loaves baked can be counted. Customer trust cannot.
- Can quality be checked quickly? If poor work only shows later, rushing goes unseen.
- Does one person control the result? If the result depends on a team, an individual reward may create conflict.
- Is the work repeated or creative? Repeated tasks react to speed rewards. Creative tasks need time to think.
Where the answers are yes, pay per unit can work. Where they are no, another reward may suit better, such as recognition, a team bonus or more control over the work.
Worked example
Cetak Pantas is a print shop in Shah Alam with machine operators and designers. The owner plans to pay RM15 for every design a designer submits, on top of salary, and RM0.02 per page above 3,000 pages a day for machine operators.
Step 1, the operators. An operator who prints 4,000 pages in a day earns (4,000 − 3,000) × RM0.02 = 1,000 × RM0.02 = RM20 extra. Pages are easy to count and a spoiled page is easy to see. The incentive fits.
Step 2, the designers. Suppose designers now submit 20 designs a week, and 2 need redoing, which is 10%. So 18 are right first time.
Step 3, predict the reaction. Paid per design submitted, designers rush. Suppose they submit 30 designs a week and 30% need redoing. That is 9 redone and 21 right first time.
Step 4, cost it. The bonus bill is 30 × RM15 = RM450. The cost per right-first-time design is RM450 ÷ 21 = RM21.43. At the old pace of 20 submitted, the bill would be RM300 for 18 right designs, which is RM16.67 each.
Step 5, judge. The scheme pays more for each good design while clients receive more disappointing work. A reward linked to client approval or to fewer redone jobs fits the designers better.
The mistake to watch for
A common slip is to apply one scheme to everyone.
Mistaken answer: “Paying per item will motivate all the staff because they will all work faster and the business will earn more.”
This treats a designer’s work like a machine’s output and ignores quality.
The correction is to name the task difference: operators produce countable, repeated output, while designers produce varied work where quality decides the value.
Check yourself
1. A baker earns RM0.30 for every loaf above 200 a day. She bakes 260. What is her extra pay?
Show answer
Loaves above 200 = 260 − 200 = 60. Extra pay = 60 × RM0.30 = RM18.
2. Which job suits pay per unit better: packing parcels at a warehouse, or advising clients on a long-term plan? Give a reason.
Show answer
Packing parcels. Output is easy to count and check. Advice depends on judgement and client trust, so counting the number of clients could push staff to hurry.
3. A call-centre team handles each customer problem together. The owner wants to pay each person for the number of calls they close. Give one risk.
Show answer
Staff may avoid helping colleagues or pick easy calls to close their own number, so the team’s overall service falls. A team-based reward fits shared work better.
Where this leads next
Follow the effect through to output in tracing motivation through productivity, where uncertainty becomes the main point. The ratios tool helps with cost per unit.
If you tend to recommend one answer for every role in a case, our teachers can work through that habit in online one-to-one Business tuition.