The Goal of a Performance Pay System Is to Get

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The Answer is Actual employee effort may be impossible to measure due to asymmetric information.However,it is important for the management to try to measure,as much as possible,True effort,as long as it is not too costly to devise such measurements.One method that can be used is relative performance evaluation.The employee's performance is measured relative to peers' performance.This method is more likely to be useful if all peers in the comparison group are subject to the same random elements.Another method that can be used is peer evaluation or 360-degree evaluation.This method seeks to gather as much information as possible from others about the employee's True effort,and often uses subjective rating scales.Again,the cost of implementation should be taken into account.

The Goal of a Performance Pay System Is to Get

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