Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Rewarding Performance 11-1 Chapter 11

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Pay-for-performance  Pay-for-Performance (P-f-P)  Incentive System  Rewards individuals and groups based on their contributions 11-2  Challenges  “Do only what you get paid for” syndrome —  Unethical behavior—pressure to produce  Can foster competition, not cooperation

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Pay-for-Performance: Challenges  Factors beyond employee control 11-3  Difficulties in measuring performance  Credibility gap  Potential reduction of intrinsic drives

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Meeting the Challenges  Link pay and performance 11-4  Use pay-for-performance as part of broader HRM system  Promote the belief that performance makes a difference

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Meeting the Challenges  Use multiple layers of rewards  Different types of pay incentives 11-5  Increase employee involvement  Participate in pay plan design

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Types of Pay-for-Performance Plans 11-6

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Individual Plans   Individual-based plans  Merit pay, bonuses, and awards 11-7  Advantages:  Performance rewarded likely to be repeated  Incentives can help shape person’s goals [use with goal-setting interventions]  Rewarding individual performance is equitable  Fit with individualistic culture in the U.S.

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Individual Plans   Disadvantages: 11-8  Can promote single-mindedness  Many do not see link between pay and performance [or perhaps not there ]  Quality goals may not be given priority

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Individual Plans  Most likely to succeed when: 11-9  Individual contributions can be isolated  The job demands autonomy  Cooperation is less critical to successful performance  Competition is to be encouraged

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Team-based Plans  Cash/noncash  Given to all equally?  Team may decide how to distribute the award  Case 11.2—Lakeside Util

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Team-Based Plans   Advantages:  Foster group cohesiveness  Easier to assess team performance  Disadvantages:  Possible lack of fit with individual culture  Free-riders  Social pressures to limit performance  Difficulties identifying meaningful groups  Intergroup competition

Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall Team-Based Plans  Most likely to succeed when:  Work intertwined, hard to identify individual contributions  Organization’s structure facilitates groups and teams [e.g., HPWSs]  Case 11.2 redux