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Reward Systems and Legal Issues - Coggle Diagram
Reward Systems and Legal Issues
PERFORMANCE MANAGEMENT AND THE LAW
a fair system is the application of standardized procedures to all employees
when the rules and procedures are known by everyone, and they are applied in the same way to everyone, the system is likely to be regarded as a fair one
SOME LEGAL PRINCIPLES AFFECTING
PERFORMANCE MANAGEMENT
Misrepresentation
Adverse impact
Defamation
Negligence
Employment at will
Illegal discrimination
LAWS
AFFECTING PERFORMANCE
MANAGEMENT
Race Relations Act of 1976
Sex Discrimination Act of 1975
Equal Pay Act of 1970
Disability Discrimination Act of 1995.
Employment Equality (Sexual Orientation) Regulations 2003
Employment Equality (Religion or Belief) Regulations 2003
Selecting a Contingent Pay Plan
Strategic direction of organization
Overall Profit
Executive pay
Profit or stock sharing
Customer service
Competency based pay
Gainsharing
Employee development - Skill based pay
Productivity
Individual
Group
Teamwork
Team sales commissions
Gainsharing
Competency based
Culture of Organization
Traditional organizations
Piece rate
Sales commissions
Group incentives
Involvement organizations
Profit sharing
Skill-based pay
Involvement
Shared decision making
Lateral communications
Loosely defined roles
Traditional
Top-down decision making
Vertical communication
Jobs that are clearly defined
Pay Structures
Job Evaluation
process of data collection through which an organization can understand the worth of various jobs
ranking method
criteria for ranking may not be understood clearly
the various positions in terms of relative worth to the organization
classification method
classes or job families are created
each individual job is placed within a job class
point method
compensable factors
Broad Banding
a band
one band may include the two instructor positions
a second band may include the three professor jobs
An organization's pay structure
Classifies jobs
Into categories
Based on their relative worth
Is Designed by job evaluation methods
Putting Pay in Context
A reward increases the chance that Specific behaviors and results will be repeated, or Employee will engage in new behavior and produce better results
How to make Rewards work
Only use rewards that are available
Make sure all employees are eligible
Define and measure performance first and then allocate rewards
Rewards should be both Financial or Non financial
Reward should be Visible, Contingent, Timely, Reversible
Traditional and contigent pay plans
to reward employees for the positions they fill by job description + not by how they do their work
are rewarded for filling a specific
slot in the organizational hierarchy
one’s job directly determines pay and indirectly determines benefits and incentives received
a pay range that determines minimum, midpoint, and maximum rates for each job
Contingent pay (pay for performance)
individuals are rewarded based on how well they perform on the job
employees receive increases in pay based wholly or partly on job performance
CP plans were used only for top management
the use of CP plans extended to sales jobs
Reasons why CP plans may not be succeed
managers may not be accountable for the system and implement it ineffectively
the focus may be only on extrinsic rewards
rewards for executives are disproportionately large compared to the rewards for everyone else
employees may not view the rewards as valuable
the system may be rewarding behaviors and results that are counter to the needs of the organization
they may be tied to a poor performance management system in which the performance dimensions measured are not relevant to organizational success
Reasons for introducing contingent pay plans
enhance employee motivation to accomplish goals that match organizational needs
affect motivation positively
needs to be a clear link between employee effort and employee performance (expectancy) and between employee performance and the rewards received (instrumentality), and employees need to value the rewards available (valence)