Evaluate variable-pay programs in terms of their impact on motivation and productivity

What will be an ideal response?

Variable-pay programs increase motivation and productivity. Studies generally support the idea that organizations with profit-sharing plans have higher levels of profitability than those without them. Profit-sharing plans have also been linked to higher levels of employee affective commitment, especially in small organizations. Similarly, gainsharing has been found to improve productivity in a majority of cases and often has a positive impact on employee attitudes. Economist Ed Lazear seems generally right when he says, "Workers respond to prices just as economic theory predicts. Claims by sociologists and others that monetizing incentives may actually reduce output are unambiguously refuted by the data." But that doesn't mean everyone responds positively to variable pay plans. A study found that whereas piece-rate pay-for-performance plans stimulated higher levels of productivity, this positive affect was not observed for risk-averse employees.