Organizational Context: Reward Systems Chapter 4

“If you must have motivation, think of your paycheck on Friday.”If you must have motivation, think of your paycheck on Friday.

Learning Objectives Discuss the theoretical background on money as a reward. Present the latest research on the effectiveness of pay. Describe some of the traditional methods of administering pay. Relate some of the latest forms of “new” pay and their value in helping attract and retain talented employees. Explain how recognition is used as an organizational reward. Discuss the role of benefits as organizational rewards.

The Theory Behind Pay for Performance Behavioral Modification Behavior is a function it’s consequence Reinforcing desired behaviors Extinguishing undesired behaviors Taxi drivers vs. Boeing Machinists

Pay: The Dominant Organizational Reward The Theoretical Background on Money as a Reward Physical Psychological Research on the Effectiveness of Pay World Series Budgets

Pay: The Dominant Organizational Reward The Theoretical Background on Money as a Reward Money is rarely #1 Money vs. Morale

Pay: The Dominant Organizational Reward Pay for Performance Base Hourly, weekly, monthly or annual basis Labor Market Driven (Continued)

Pay: The Dominant Organizational Reward Pay for Performance Merit Pre-determined Criteria Percentage or Sum Challenges Quantifiable and Understandable Criteria Salary “catch up” (Continued)

Pay: The Dominant Organizational Reward Pay for Performance The Use of Bonuses The Use of Stock Options ESOP (Continued)

Pay: The Dominant Organizational Reward Pay for Performance (continued) Potential Limitations Group Incentive Pay Plans Potential Limitations New Pay Techniques (Continued)

Recognition as an Organizational Reward Recognition versus Money Examples of Effective Formal Recognition Systems Bottom Line Evidence Treat like Merit Pay

Recognition as an Organizational Reward Recognition versus Money Recognition rewards can take many forms and are often controllable by the manager. Unlike many financial forms of reward, there is no limit to the number of people who can receive this type of reward of how often it is given. Research indicates that managers often underestimate how useful recognition can be in motivating employees to achieve goals. 5 Love Languages- Book

Recognition fully communicate new recognition procedures/programs to all in the organization; educate and encourage managers to use recognition as part of the overall compensation package; integrate recognition into the overall performance management process; hold and promote site-specific recognition ceremonies; publicize best practices; continually review and revise the recognition process to ensure maximum effectiveness; and solicit recognition ideas from employees and managers.

Benefits as Organizational Rewards Traditionally Offered Benefits (40%-45% of Salary) Federal Government-Mandated Benefits Social Security Workers Comp ERISA

Benefits as Organizational Rewards Traditionally Offered Benefits (30%-35% of Salary) Life, Disability, and Health Insurance Pension Benefits 401k IRA Roth IRA Time-Off Benefit Efficiency Wage Theory Save by paying more?

Benefits as Organizational Rewards Newer Types of Benefits Wellness Programs EAPs Life Cycle Benefits Other Benefits Flexible, Cafeteria-Style Benefits Education? (Continued)

Questions