Pay for Performance

When the United States economy was rising fast and it seemed as if everyone was making money, some were making more than others. Mainly on Wall Street, it was the stock-brokers who were making a lot of money. The pay of a stock broker is not represented in base salary but on a pay per performance base. The average stock broker lives for that large, end of the year, bonus check. The bonus is based on how well you did in the stock market over the calendar year.

What is it about motives that drive people to work hard and to perform at the best of their ability? There are three motivators that are generally listed that provide that drive that one has to have in order to perform their job, some listed are: pay-for-performance, recognition and rewards, and job design. All of these motivators are just a few of the many options that are done in order to drive a person.

However, pay for performance and big year bonuses do have its disadvantages. During the good economic years of the recent housing boom, many people on Wall Street bought and sold credit default swaps. They truly believed that lending money to people who had no business obtaining a $750,000 mortgage on $40,000 per year income would last. However, the bottom fell out of the market and many lost jobs and homes. Extremely large, end-of-year, bonuses have become a detriment to many business. Many employees have a mindset that they are only there for a short period of time and therefore are not concerned with long term consequences, which was the mindset of why someone might want to work in the financial sector, that mindset of "make a lot of money quickly and get out". However, the thought of offering large, year-end bonuses is one way that some companies attract and/or keep talent. One way to initiate large bonuses is to put clauses in contracts that state that an employee is to make all decisions for the betterment of the firm for the long term.