HRM Final: Chapter 11

job evaluation

method of ranking jobs in relation to their worth to the organization and ensures internal equity -qualitative and quantitative -factor comparison system calculates the relative worth of jobs on a range of job-related factors

building blocks of reward mgmt process

Block 1: Base Pay Block 2: Performance pay Block 3: Employee Benefits Block 4: Non-financial reward

factors influencing pay strategy

Internal: 1. pay strategy: setting an organization's pay policy to lead, lag or match competitor's pay 2. worth of job: managers need to establish internal equity of pay within the organization 3. relative worth of employee: managers decide the degree employees should be rewarded for performance 4. ability to pay: consider current and future financial resources to pay employees External: 1. labor market conditions: affected by SES conditions, gov regulations, policies/practices, and unions 2. area market rate: influenced by pay for similar jobs in the marketplace; establishing external equity 3. cost of living: consider employees' financial conditions, such as local housing and inflation 4. social values: family and cultural values taken into consideration

process theories

Vroom's expectancy theory: employees should exert greater work effort if they have reason to expect that it will result in a reward that they value Adam's equity theory: individuals tend to compare their rewards with the performance/rewards ratio of relevant others Locke's goal setting theory: a specific, challenging goal or performance criterion tends to motivate employees to increase their performance Skinner's reinforcement theory: an organization's reward system should frequently reinforce desirable performance criteria; the more closely reward is tied to performance, the more powerful its motivational effect

team-based rewards

aims to reinforce behavior that reaps effective teamwork through group coordination

Block 3: Employee benefits

all financial rewards that are not paid directly in cash to the employee (pension, medical coverage, annual leave, etc) -services that are purchased by the employer for the employee's use total remuneration = block 1 + block 2 + block 3 -this equation is flexible and blocks can be strategically integrated into organization's core values and strategic plan

reward

an item (tangible or intangible) that is received in recognition for behavior or output -intrinsic or extrinsic

Block 1: Base Pay

cash amount guaranteed for coming to work (before rewards or benefits) -either a salary (set) or wage (hourly) -internal equity: when people feel that performance or job difference result in corresponding differences in pay rates -external equity: the levels of pay for similar jobs in the external labor market (market rates: what competitors are paying for jobs) -pay strategies: lead-lead (salary begins above market rate and continues to rise), lead-lag (beings above and falls below over time), lag-lead (begins below and goes above over time)

reward strategy

development, implementation, and use of reward systems that enable individuals to complete work tasks that are aligned with organizational goals, structures, and strategies -crucial for reinforcing and fostering the right performance

content theories

explain what rewards motivate people (intrinsic or extrinsic)

reward management

formulation and implementation of equitable rewards in a way that aligns with the strategic direction of the organization -helps attract, motivate, and retain employees

Block 4: Non-financial Reward

generally the most powerful performance motivators; positive relationship between individual autonomy, skill development, learning environment, and intrinsic motivation

person-based pay

paying individuals based on what their human capital is worth in the context of the labor market and inside the organization -usually based on personal attributes and knowledge, skill, and ability

market-determined pay

rewarding high-performing individuals at or above the market rate, while other colleagues are rewarded below the market rate

intrinsic rewards

rewards that are sourced from inside, or are internal to, the individual -generally intangible -ex: non-financial (recognition in newsletter or on plaque), first choice of holiday leave or shifts, receipt of valued things such as the best parking spot or office with a window

extrinsic rewards

rewards that are sourced outside, or are external to, the individual -generally tangible and financially related -ex: direct financial rewards may include performance pay or a bonus, indirect financial rewards may include free use of childcare or the company car

Block 2: Performance Pay

the pay individuals receive based on their individual, group, and/or organizational performance (contingency pay) -discretionary bonus: provided after the event, which makes no guarantee that future work and effort will reward similarly -incentive: establishing specific individual performance criteria or objectives and rewarding the achievement of these criteria; individual, group, and organization-wide incentives -know advantages and disadvantages (pg.298-299)