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CHAPTER 10:Reward Systems and Legal Issues - Coggle Diagram
CHAPTER 10:Reward Systems and Legal Issues
10.1 Traditional and Contingent Pay Plans
Traditional pay systems
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Contingent pay (pay for performance) means that individuals are rewarded based on how well they perform on the job
10.2 Reasons for Introducing Contingent Pay Plans
CP plans enhance employee motivation to accomplish goals that match organizational needs.
CP plans can help improve the motivation of employees when each of the following conditions is present:
Employees see a clear link between their performance level and the rewards received (instrumentality)
Employees value the rewards available (valence).
Employees see a clear link between their efforts and the resulting performance (expectancy).
The sorting effect: top performers are likely to be attracted to and remain within organizations that have implemented CP plans.
10.3 Possible Problems Associated with Contingent Pay Plans
Rewards are not considered significant
Managers are not accountable
There is the folly of rewarding A while hoping for B
There exists 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
10.4 Selecting a Contingent Pay Plan
Issues to Consider
_ Culture of organization
_ Strategic direction of organization
CP Systems for Different organization cultures
_ Traditional organizations
Piece rate
Sales commissions
Group incentives
_ Involvement organizations
Profit sharing
Sill-based pay
10.5 Putting Pay in Context
How to Make Reward Work:
_ Define and measure performance first and then allocate rewards.
_ Only use rewards that are available
_ Make sure all employees are eligible
_ Rewards should be both
Financial
Nonfinancial
_ Rewards should be:
Visible
Contingent
Timely
Reversible
10.6 Pay Structures
10.6.1 Job Evaluation
_ Methods of data collection
Determine the worth of various jobs
Create a pay structure
_ Consideration of
KSAs required for each job
Value of job for organization
How much other organizations pay
Ranking method:
Create job descriptions
Compare job descriptions
Rank job
Classification method:
A series of classes or grades are created.
Each job is placed within a job class
Point method:
Identify compensable factors
Scale factors
Assign a weight to each factor so the sum of the weights for all factors = 100%
An organization's pay structure
-> Classifies jobs
. -> Into Categories
.. -> Based on their relative worth
-> Is designed by job evaluation methods
10.6.2 Broad-Banding
Link Title
Most commonly used pay structure
Pay structure collapses job classes into fewer (less than five) categories
Advantages of Broad-Banding
Provides flexibility in rewarding people
Reflects changes in organization structure
Provides better base for rewarding growth in competence
Gives more responsibility for pay decisions to managers
Provides better basis for rewarding career progression
10.7 Performance Management and the Law
Performance management systems are usually legally sound if…
Procedures are standardized
Same procedures are used with all employees
10.8 Some Legal Principles Affecting Performance
Management
Defamation
Misrepresentation
Negligence
Adverse Impact
Employment-at-will
Illegal Discrimination
10.9 Laws Affecting Performance Management
During past few decades, several countries have passed laws prohibiting discrimination based on:
Race or Ethnicity
Sex
Religion
National Origin
Age
Disability status
Sexual orientation