Why is the performance related pay not suitable for every company?

Even where empirical research has identified the benefits of performance related pay, it is clear that reward schemes are not suitable for every type of company and performance related pay cannot, on its own, bring about change within the company. However, it can encourage employees to focus on quantity rather than quality and focus narrowly on a task.  For example, Pfeffer (1998) states that performance-related pay focuses on individual contribution whereas the task may require a team effort and for employees to work together. Furthermore, it can lead to short-termism, meaning that employees are exclusively focused on receiving bonus pay-outs, whereas a longer-term view might be needed or it may encourage conformity between workers when you need to challenge them. McHenry similarly argues that softer management approaches can have a greater effect on effort and performance than the carrot and stick methods such as performance-related pay, as suggested by McGregor.

In 1992, Beck introduced his concept of society that developed through historical changes based on factors such as the economy, reigning political systems and technological advancement. Beck proposes the idea of three different forms of societies: the traditional society, which describes the era before industrialisation, following this is first modernity which is characterised by the emergence of the industrialisation process. Lastly, the second modernity, or risk society, developed through a negative impact of the first modernity. Risk society’s main distinction to its former forms is its production of risks. These manufactured risks are undesirable outcomes in the process of producing social goods. According to Beck, this risk production is primarily rooted in mass production and consumption. Prior models of societies were more concerned with hazards, which are unavoidable catastrophes caused by nature such as earthquakes, tsunamis, or others.