When organization performance declines
A)a virtuous circle may be created.
B)performance-based pay plans do not pay off.
C)managers must avoid changing the pay practices.
D)employee attrition rate declines considerably.

Question

Quizplus · Accepted Answer

Performance-based pay plans may not pay off when organization performance declines because the employees may not be able to achieve their targets due to various reasons such as lack of resources, unfavorable market conditions, or internal issues. In such cases, performance-based pay plans can create demotivation and dissatisfaction among employees, further impacting organizational performance. It is essential for managers to reassess and modify pay practices to improve motivation and engagement levels among employees during a performance decline. Option A is incorrect because a virtuous circle is a positive outcome where improved performance leads to more significant motivation and better results. Option C is incorrect because managers should re-evaluate pay practices as a part of their strategy to enhance performance. Option D is unrelated to the issue of organizational performance decline.

When Organization Performance Declines