Under which three conditions are individual incentive plans most appropriate?

What will be an ideal response?

Answer: Individual incentive pay plans are most appropriate under three conditions.

First, employees' performance can be measured objectively.

Second, individual incentive plans are appropriate when employees have sufficient control over work outcomes. Factors such as frequent equipment breakdowns and delays in receipt of raw materials limit employees' ability to control their performance levels. Employees are not likely to be diligent when they encounter interference: Chances are good that employees who previously experienced interference will expect to encounter interference in the future. Employees' resistance threatens profits because companies will find it difficult to motivate people to work hard when problem factors are not present.

Third, individual incentive plans are appropriate when they do not create a level of unhealthy competition among workers that ultimately leads to poor quality. For example, a company may create unhealthy competition when it limits the number of incentive awards to only 10 percent of the employees who have demonstrated the highest levels of performance. If the company judges performance according to volume, then employees may sacrifice quality as they compete against each other to outmatch quantity. In addition, under an incentive plan that rewards quantity of output, those employees who meet or exceed the highest standard established by their employer may be subject to intimidation by workers whose work falls below the standard. Unions may use these intimidation tactics to prevent plan standards from being raised.