Types of Team Pay Incentive pay Recognition Profit sharing Gainsharing CHAPTER 3 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall3-1

Purpose/objective Eligibility Program award levels Benefit implications Funding Types of awards Nomination procedures Timing Award presentation Program evaluation CHAPTER 3 Exhibit 3-5. Implementing Recognition Awards: A Guide Source: Adapted from Gross, S. E. (1995). Compensation for teams: How to design and implement team-based reward programs. New York: AMACOM. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall3-2

Exhibit 3-7. Pay Strategies for Four Types of Teams Source: Adapted from Lawler, E. E. (2000). Rewarding excellence: Pay strategies for the new economy (p. 217). San Francisco, CA: Jossey-Bass. CHAPTER 3 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall3-3

Team Performance Appraisal What is measured? Job-based pay Skill-based pay Competency-based pay Who does the measuring? Single-source evaluations Multi-source evaluations CHAPTER 3 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall3-4

Exhibit Degree or Multi-Rater Feedback CHAPTER 3 Superiors’ Ratings Employee Customers’ Ratings Subordinates’ Ratings Suppliers’ Ratings Other Team Members’ Ratings Source: Novak, C. J. (1997, April). Proceed with caution when paying teams. HR Magazine, 42(4), 73–78. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall3-5

Rater Bias Inflation bias Extrinsic incentives bias Homogeneity bias Halo bias Fundamental attribution error Communication medium Experience effect Reciprocity bias Bandwagon bias Primacy and recency bias Conflict of interest bias CHAPTER 3 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall3-6

Ratee Bias Egocentric bias Intrinsic interest Social comparison Fairness Listening to advice CHAPTER 3 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall3-7

Guiding Principles, Part I Goals should cover areas that team members can directly affect Balance the mix of individual and team-based pay Consult with team members who will be affected Avoid organizational myopia Determine eligibility (who qualifies for the plan) Determine equity method CHAPTER 3 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall3-8

Guiding Principles, Part II Quantify criteria used to determine payout Determine how target levels of performance are established and updated Develop a budget for the plan Determine timing of measurements and payments Communicate with those involved Plan for the future CHAPTER 3 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall3-9

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 3-10