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Advantages
- generally perceived as being fair to all
- motivates workers to perform as well as they can + so increases output
- encourages workers to be as skilled as possible so they can earn more - workforce improved
- in situation where demand falls total wage bill will also fall
- competitive working environment can develop - employees compete against each other ∴ benefiting output + performance of business as a whole
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Disadvantages
- workers may not be able to achieve targets through no fault of their own e.g assembly line fails
- may be changes in external environment - employee has no control over achievement of targets
- quality can suffer - take shortcuts + cut corners
- unhealthy staff relationships if employees become jealous of others
- can be common source of trade union + labour disputes
- very strict quality control systems must be in place
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