Rewards

OS352 HRM

Fisher

Nov. 9, 2004

2

Agenda

Pay grades Purpose and types of rewards Effectiveness Case study

3

Pay Grades

Used in federal government Job evaluation places jobs in a specific pay

grade Can have ranges (e.g., GS 11-13, depending

on education and experience) Also have pay differentials

4

How does all of this become a pay structure?

y = 10200x + 10600R2 = 0.8917

0

20000

40000

60000

80000

0 2 4 6

Grade

Sal

ary

Grade Salary

1 $22,000

2 $35,000

3 $36,000

4 $45,000

5 $68,000

Helps guide/place controls on managers – we know when an employee is paid appropriately

5

Purpose of rewards

Thank employees for a job well done Motivate certain kinds of behaviors

– Continued good performance– Increased performance– Change in how effort is allocated

Need to consider motivation theories when determining appropriate rewards

– Equity– Expectancy– Need based theories

6

Pay Increases

Raise – permanent increase Bonus – one time payment

– Spot bonuses are less formal bonus programs– Many companies still using signing bonuses

Increases must be large enough to be meaningful Thinking about raises vs. bonuses

– What are the cost implications of each?– What are the motivational implications of each?

7

Basis for rewards

Individual level rewards– Piecework– Merit pay– Sales commissions

Group/organizational level rewards– Gainsharing– Profit sharing– Stock ownership

8

Non-monetary rewards

Includes recognition and opportunities– Employee of the month– Lunch with the boss– Bigger office– Attending a conference or seminar

Not technically part of the overall compensation package, but an important motivational tool

9

Effectiveness

Aligned with corporate goals, strategy Contingent on performance Valued by the employees Allocation process is perceived as fair

10

Rewards Case Study

Read the “Howe 2 Ski” case study– Will be distributed in class

In small groups, answer the questions Whole class discussion

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An Ongoing Debate: Do Monetary Rewards Motivate or De-Motivate?

Motivate: Economic incentives improve quantity and do not reduce quality (Gupta & Mitra).

De-Motivate: Economic incentives reduce the satisfaction of doing enjoyable tasks (Deci).

12

For next class

Topic: Pay secrecy Read HBR case “When Salaries Aren’t

Secret”– What are the key issues for the organization?

For the employees?– How would you recommend the organization

deal with this problem? If you did not buy the case, it is available

in hard copy from the library