Chapter 10
Reward Systems and Legal Issues
10.1 TRADITIONAL AND CONTINGENT PAY PLANS
to reward employees for the positions they fill as indicated by their job descriptions and not necessarily by how they do their work.
CP - pay for performance, means that individuals are rewarded based on how well they perform on the job.
When a CP plan is implemented, pay raises are determined in part or wholly based on performance
10.2 REASONS FOR INTRODUCING CONTINGENT PAY PLANS
CP plans force organizations to define effective performance clearly and to determine what factors are likely to lead to effective performance
CP plans enhance employee motivation to accomplish goals that match organizational needs. More specifically, CP plans have the potential to help people change behavior and improve performance
CP plans
Employees see a clear link between their efforts and the resulting performance (expectancy).
Employees see a clear link between their performance level and the rewards received (instrumentality)
Employees value the rewards available (valence).
10.3 POSSIBLE PROBLEMS ASSOCIATED
WITH CONTINGENT PAY PLANS
A poor performance management system is in place
There is the folly of rewarding a while hoping for B
Rewards are not considered significant
Managers are not accountable
There exists extrinsic motivation at the expense of intrinsic motivation
Rewards for executives are disproportionately large compared to rewards for everyone else.
10.4 SELECTING A CONTINGENT PAY PLAN
Piece rate
Sales commissions
Group incentives
10.5 PUTTING PAY IN CONTEXT
Define and measure performance first, then allocate rewards
Use only rewards that are available
Make sure that all employees are eligible
Make rewards timely
Make rewards reversible
Use nonfinancial rewards
10.6 PAY STRUCTURES
10.6 PAY STRUCTURES
Job evaluation is a process of data collection through which an organization can understand the worth of various jobs and, as a result, create a pay structure.
a job description is created for each job
job descriptions are compared to each other in terms of how valuable each job is for the
organization
a series of classes or job
families are created.
each individual job is placed
within a job class. The end result is a set of classes, each including several jobs.
10.6.2 Broad Banding
10.7 PERFORMANCE MANAGEMENT AND THE LAW
The application of standardized procedures to all employees
10.8 SOME LEGAL PRINCIPLES AFFECT
PERFORMANCE MANAGEMENT
Employment at will
Negligence
Defamation
Miscrepresentation
Adverse impact
Illegal discrimination
10.9 LAWS AFFECTING PERFORMANCE MANAGEMENT
Several countries have passed laws prohibiting discrimination based on race, ethnicity, national origin, sex, religion, age, disability status and sexual orientation