One of the biggest problems that organisations have is
finding the right people to do the job. With so many applicants claiming that
they have the skills and experience necessary to successfully undertake a given
role, how does the organisation know who is telling the truth?
One method that is used, besides the rigorous application
processes and assessments now in place, is that of payment based incentives,
quite common in the financial sector. Such payment structures tend to link
salaries to performance. The theory behind this states that a person is only
likely to take on risk to the level at which they perceive it will pay off.
That is to say, if you are confident in your abilities, you will have less
aversion to taking a salary that is heavily dependent on your performance. By
opting for such a salary structure, organisations get information about the
candidate and their ability, i.e. that they are more or less likely to achieve
results.
In recent times, this approach has met with quite strong
opposition because it is believed to be one of the main causes of the financial
crisis. Nevertheless, maybe if we showed a bit more confidence in our abilities
and are willing to take on non-conventional salaries, we may have a better
chance of getting a job.
In a podcast by Professor Ian Ayres,
he refers to Zappos.com where the CEO offers recent recruits $2,000 if they
want to leave the organisation.
For further information read The Armchair Economics,Landsburg.
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