How does allowing employees to participate in pay-related decisions affect the incentive process?

Employee participation in pay-related decisions can be part of a general move toward employee empowerment. If employees are involved in decisions about incentive pay plans and employees' eligibility for incentives, the process of creating and administering these plans can be more complex. There is also a risk that employees will make decisions that are in their interests at the expense of the organization's interests. However, employees have hands-on knowledge about the kinds of behavior that can help the organization perform well, and they can see whether individuals are displaying that behavior. Therefore, in spite of the potential risks, employee participation can contribute to the success of an incentive plan. This is especially True when monetary incentives encourage the monitoring of performance and when the organization fosters a spirit of trust and cooperation.