What impact does an individual-based pay structure have on employee motivation according to Fresh Munchables' compensation team?

An individual-based pay structure often emphasizes personal performance and achievements, which can lead to variations in how employees perceive their compensation relative to their contributions. While such a structure is designed to reward high performers, it can inadvertently create feelings of inequality among employees, particularly if the criteria for performance and pay differ greatly among peers.

When some employees consistently receive higher pay due to their individual contributions, others may perceive this as unfair, especially if they feel their efforts are not recognized in the same way. This perception can lead to dissatisfaction and demotivation among those who believe they are performing at a similar level but receiving lower pay. Therefore, the potential for internal equity issues arises, where disparities in compensation can disrupt team cohesion and overall morale.

In contrast, options that suggest increased motivation or decreased motivation for high performers do not capture the nuanced dynamics of internal equity that can arise from an individual-based pay structure. Encouraging unequal pay among employees is a consequence of such systems, but the primary concern for internal equity resonates more deeply with the motivation levels it can affect. Thus, the correct choice reflects the complexities and potential pitfalls of implementing individual-based pay systems within an organization.