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Learning Objectives

Learning Objectives. Discuss the theoretical background on money as a reward. Present the latest research on the effectiveness of pay. Describe some of the traditional methods of administering pay.

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Learning Objectives

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  1. Learning Objectives • Discuss the theoretical background on money as a reward. • Present the latest research on the effectiveness of pay. • Describe some of the traditional methods of administering pay. • Relate some of the latest forms of “new” pay and their value in helping attract and retain talented employees. • Explain how recognition is used as an organizational reward. • Discuss the role of benefits as organizational rewards.

  2. Introduction • Reward systems as a part of the organizational context. • Consequences and contingencies play an important role in organizational behavior. • Emphasize the emerging importance of human capital – to sustain and leverage it • Reward system is recognized as a vital dimension of the organizational environment.

  3. Pay: Dominant Organizational Reward • Rewards are provided with the objective: • Of motivation which affects performance • To encourage loyalty and retention • Theoretical background on money as a reward • Money can explain behavior • Achievement and recognition, status and respect • Agency theory • Aligning diverse interests and goals with rewards

  4. Pay: Dominant Organizational Reward Continued • Research on the effectiveness of pay – three considerations: • Outcomes that an organization seeks • Measurement of these results • Tie rewards to these outcomes • Traditional methods of administrating pay • Base pay approach: market conditions • Merit pay approach: predetermined criteria

  5. Pay: Dominant Organizational Reward Continued • Pay for performance • Individual incentive pay plans • Use of bonuses: upper-level managers • Use of stock options: senior-level managers • Potential limitations: excesses and ethical breakdowns, encourage narrow range of behavior, and may cause conflicts among individuals

  6. Pay: Dominant Organizational Reward Continued • Pay for performance • Group incentive pay plans • Gain sharing plan: net gain from productivity • Profit sharing: profit sharing pool distributed to employees • Employee stock ownership plan (ESOP) • Potential limitations: equal distribution among the group, late or regular payments

  7. Pay: Dominant Organizational Reward Continued • New pay techniques • Commissions beyond sales to customers • Rewarding leadership effectiveness • Rewarding new goals • Pay for knowledge workers in teams • Skill pay • Competency pay • Broadbanding

  8. Recognition as an Organizational Reward • Recognition versus money • Frequent nonfinancial rewards that have a big impact on employee productivity and quality service behaviors. • They can take many different forms, can be given in small or large amounts, and in many instances are controllable by the manager. • Recognizing creativity is becoming increasingly necessary for competitive advantage.

  9. Recognition as an Organizational Reward Continued • Steps needed to be set up to effectively manage a formal and informal recognition program: • Effective communication of the program and procedures • Appropriate education to the managers • Make recognition part of performance management process • Conduct recognition ceremonies, featured regularly • Publicize the best practices • Communicate steps involved in the program • Continuous review and changes for effectiveness • Solicit recognition ideas from both employees and managers

  10. Recognition as an Organizational Reward Continued • Examples of effective formal recognition systems. • Dierbergs Family Market: “extra step” program • Hotel Sofitel Minneapolis: “Sofitel Service Champions” • Fremont Hotel & Casino: “Personality with a Hustle”

  11. Benefits as Organizational Rewards • Traditionally offered benefits • Federal government-mandated benefits • Social security • Medicare benefits • Life, disability, and health insurance • Pension benefits • Private pension plan • Time-off benefit • Paid vacation, religious holiday, and sick leave

  12. Benefits as Organizational Rewards Continued • Newer types of benefits • Wellness programs • Coping with stress • Life cycle benefits • Child care and elder care benefits • Other benefits • Concierge services • Tuition assistance • Noninsured benefit programs • Flexible, cafeteria-style benefits • Employees put together their own package of benefits

  13. Questions ?

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