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Reward Systems and Legal Issues - Coggle Diagram
Reward Systems and Legal Issues
TRADITIONAL AND CONTINGENT PAY PLANS
Traditional Pay
Salary and salary increases are based on Position & Seniority
CONTINGENT PAY
If not added to base pay, called: Variable pay
Salary and salary increases are based on Job performance
REASONS FOR INTRODUCING CONTINGENT PAY PLANS
Supervisors and employees are better able to understand what really matters
CP plans enhance employee motivation to accomplish goals that match organizational needs
CP Plans force organizations to Clearly define effective performance & Determine what factors are necessary
CP plans help to recruit and retain top performers
Performance management is more effective when rewards are tied to results
CP plans project good corporate image
POSSIBLE PROBLEMS ASSOCIATED
WITH CONTINGENT PAY PLANS
Rewards are not significant.
Managers are not accountable.
There is the folly of rewarding A while hoping for B.
There exists an extrinsic motivation at the expense of intrinsic motivation
A poor performance management system is in place.
Rewards for executives are disproportionately large compared to rewards for everyone else
SELECTING A CONTINGENT PAY PLAN
Productivity: Individual
Piece rate
Sales commissions
Customer service
Gain sharing
Competency-based pay
Productivity: Group
Group incentives
Gain sharing
Teamwork
Team sales commissions
Gain sharing
Competency-based pay
Employee development
Skill-based pay
Overall profit
Profit or stock sharing
Executive pay
PUTTING PAY IN CONTEXT
Define and measure performance first, and then allocate rewards.
Use only rewards that are available.
Make sure all employees are eligible.
Make rewards visible.
Make rewards contingent.
Make rewards timely.
Make rewards reversible.
Use nonfinancial rewards.
PAY STRUCTURES
Job Evaluation
Consideration of KSAs required for each job
Value of job for organization
Create a paystructure
How muchother organizations pay
Method of data collection; Determine theworth of various jobs
Broad Banding
Most commonly used pay structure
Pay structure collapses job classes intofewer (≤ 5) categories
SOME LEGAL PRINCIPLES AFFECTING
PERFORMANCE MANAGEMENT
Misrepresentation
Negligence
Adverse impact
Defamation
Illegal discrimination
Employment at will
LAWS AFFECTING PERFORMANCE MANAGEMENT
Performance dimensions and standards are clearly defined and explained to the employee, are job related, and are within the control of the employee.
The system includes a formal appeals process.
Employees are given a voice in the review process and are treated with courtesy and civility throughout the process.
Performance information is gathered from multiple, diverse, and unbiased raters.
Employees are given timely information on performance deficiencies and opportunities to correct them.
Supervisors are provided with formal training and information on how to manage the performance of their employees
The system is formally explained and communicated to all employees.
The system includes thorough and consistent documentation, including specific examples of performance based on firsthand knowledge
Procedures are standardized and uniform for all employees within a job group.
The system includes procedures to detect potentially discriminatory effects or biases and abuses in the system.