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REWARD SYSTEMS AND LEGAL ISSUES - Coggle Diagram
REWARD SYSTEMS AND LEGAL ISSUES
TRADITIONAL AND CONTINGENT PAY PLANS
Traditional pay plans do not have a link with the performance management system
Contingent pay plans called pay for performance plans, allocate rewards wholly or partly based on job performance
REASONS FOR INTRODUCING CONTINGENT PAY PLANS
Contingent pay plans enhance employee motivation to accomplish goals that match organizational needs
there 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)
POSSIBLE PROBLEMS ASSOCIATED WITH CONTINGENT PAY PLANS
First, they may be tied to a poor performance management system.
Second, the system may be rewarding behaviors and results that are counter to the needs of the organization.
Third, employees may not view the rewards as valuable.
Fourth, managers may not be accountable for the system and implement it ineffectively.
Fifth, the focus may be only on extrinsic rewards.
Finally, rewards for executives are disproportionately large compared to the rewards for every- one else
SELECTING A CONTINGENT PAY PLAN
CP systems
Piece rate
Sales commissions.
Group incentives
Systems that work well in organizations with involvement cultures
Profit sharing.
Skill-based pay
PAY STRUCTURES
Job Evaluation
The classification method
The point method
Broad Banding
Broad banding is a type of pay struc- ture that collapses all job classes into a few categories, usually about five
PUTTING PAY IN CONTEXT
Define and measure performance first, then allocate rewards.
Make sure that all employees are eligible.
Use only rewards that are available.
Make rewards visible
Make rewards contingent
Use nonfinancial rewards
Make rewards reversible.
Make rewards timely.
PERFORMANCE MANAGEMENT AND THE LAW
A basic principle that guides the design of a fair system is the application of standardized procedures to all employees.
SOME LEGAL PRINCIPLES AFFECTING PERFORMANCE MANAGEMENT
Negligence
Defamation
Employment at will
Misrepresentation
Adverse impact
Illegal discrimination
LAWS AFFECTING PERFORMANCE MANAGEMENT
Race
Ethnicity
National origin
Sex
Religion
Age
Disability status
Sexual orientation