Pay for performance: the ethical implications

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This research describes an answer to the question: What is ethically problematic about pay for performance from a utilitarian, deontological, and virtue ethics point of view? The goal is to gain insight into the philosophical foundations on the basis of which it should or should not be judged whether the use of pay for performance structures is ethically objectionable. To answer this question I analyzed three types of sources: newspaper articles, policy documents and interviews. I first identified sensitizing concepts based on extensive literature review to understand pay for performance, utilitarian aspects of it, deontological aspects of it, and virtue ethics aspects of it. I then conducted a template analysis. From utilitarianism it must be argued that pay for performance structures are unethical, because inherently they do not lead to the highest level of utility, when this is not an integral part of the evaluation process. A deontologically ethical implementation of pay for performance structures requires an evaluation of compliance with the five general derived rules. The pay for performance structures as they occur in the present prevent an organizational structure from being virtuous because there is a discrepancy between the desired goals and the actual goals of an organization, it is no longer clear what role the employees and managers play to achieve those goals, and group dynamics become damaged and the structure is therefore no longer able to produce ethical consequences. This research showed that when an organization sets targets, or a government introduces concertized legislation these targets replace the moral compass of the acting person. This research gives insight in the excuses that individuals use to reduce cognitive dissonance.
Faculteit der Managementwetenschappen