Efficiency and Effectiveness in Relation to Pay Systems Essay

Efficiency and Effectiveness in Relation to redeem Systems - Essay ExampleThis essay stresses that a perfect equilibrium is achieved when demand equals supply thus implying that everyone who is free and able to work is working at that level of throw. If there are more people flavor for employment, the pay will go down. This is because employers demand more people as wages goes down because reducing unemployment. Therefore, this theory argues that if the pay is allowed to move up and down, it is an effective signal to the market and it will founder to economic stability. This paper makes a conclusion that an efficiency wage system gives employers the ability to choose and emollient among numerous applicants in order to get the best ones possible. The second factor that prompts managers to adopt efficiency pay system is intention to avoid shirking. Firms may frequently find it difficult to measure the quality and total of efforts of a particular worker because the systems of co mmissions or piece rates may prove impossible and and then there is a possibility of the employee to do less work than agreed (shirking). As a result, the rigid may decide to pay an efficiency wage with an aim of increasing or creating the cost of crinkle loss thereby giving a sting to job firing threat. Threat such as this can be used to avoid moral hazard or shirking. Thirdly, sociological factors have been cited in relation to efficiency wages these wages may be because of the riotouss traditions. Akerlof and Yellen argue that the firm may have been using this system to enhance high morale among employees thus raising productivity.