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Rewarding Performance

Rewarding Performance. Chapter 11. Pay-for-performance. Pay-for-Performance (P-f-P) Incentive System Rewards individuals and groups based on their contributions. Challenges “Do only what you get paid for” syndrome Unethical behavior — pressure to produce

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Rewarding Performance

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  1. Rewarding Performance Chapter 11

  2. Pay-for-performance • Pay-for-Performance (P-f-P) • Incentive System • Rewards individuals and groups based on their contributions • Challenges • “Do only what you get paid for” syndrome • Unethical behavior—pressure to produce • Can foster competition, not cooperation

  3. Pay-for-Performance: Challenges • Difficulties in measuring performance • Credibility gap • Potential reduction of intrinsic drives • Factors beyond employee control

  4. Meeting the Challenges • Use pay-for-performance as part of broader HRM system • Promote the belief that performance makes a difference • Link pay and performance

  5. Meeting the Challenges • Increase employee involvement • Participate in pay plan design • Use multiple layers of rewards • Different types of pay incentives

  6. Types of Pay-for-Performance Plans

  7. Individual Plans • Individual-based plans • Merit pay, bonuses, and awards • Advantages: • Performance rewarded likely to be repeated • Incentives can help shape person’s goals [use with goal-setting interventions] • Rewarding individual performance is equitable • Fit with individualistic culture in the U.S.

  8. Individual Plans • Disadvantages: • Can promote single-mindedness • Many do not see link between pay and performance [or perhaps not there ] • Quality goals may not be given priority

  9. Individual Plans • Individual contributions can be isolated • The job demands autonomy • Cooperation is less critical to successful performance • Competition is to be encouraged • Most likely to succeed when:

  10. Team-based Plans • Cash/noncash • Given to all equally? • Team may decide how to distribute the award • Case 11.2—Lakeside Util.

  11. Team-Based Plans • Advantages: • Foster group cohesiveness • Easier to assess team performance • Disadvantages: • Possible lack of fit with individual culture • Free-riders • Social pressures to limit performance • Difficulties identifying meaningful groups • Intergroup competition

  12. Team-Based Plans • Work intertwined, hard to identify individual contributions • Organization’s structure facilitates groups and teams [e.g., HPWSs] • Case 11.2 redux • Most likely to succeed when:

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