Inconsistent incentives refer to rewards or recognition that are applied unevenly or unfairly across employees or business partners. These inconsistencies can result in negative perceptions, including favoritism and mistrust, which can erode morale, collaboration, and loyalty.
Key Impacts of Inconsistent Incentives:
Perceptions of Favoritism:
Employees or business partners may feel that others are unfairly rewarded or treated preferentially, leading to resentment.
Example: Only rewarding a select few employees for group efforts without clear criteria.
Erosion of Trust:
Inconsistent application of incentives can undermine trust in management or leadership.
Example: Changing bonus criteria without transparency may cause employees to doubt the fairness of the system.
Decreased Morale and Engagement:
Employees or partners may become disengaged if they perceive unfairness, leading to reduced collaboration and performance.
Why Option B is Correct:
Inconsistent incentives create perceptions of favoritism and mistrust, harming relationships and organizational culture.
Why the Other Options Are Incorrect:
A. Reduce the risk of legal disputes: Inconsistent incentives are more likely to increase, not reduce, the risk of legal or contractual disputes.
C. Increase employee motivation and productivity: Perceived unfairness typically reduces, rather than increases, motivation and productivity.
D. Improve the company’s public image: Negative perceptions due to inconsistent incentives can damage, not enhance, a company’s reputation.
References and Resources:
ISO 37001:2016 – Highlights the risks of inconsistent incentive systems in anti-bribery management.
COSO ERM Framework – Discusses the importance of fair and transparent incentives in achieving organizational objectives.
Harvard Business Review – Research on the effects of fairness and consistency in incentive programs.
