Chapter 10 Reward systems and legal issues

Job evaluation: understanding the value of each job

job evaluation: -not an employee evaluation -determining the worth of various jobs -creating a pay structure consideration of -ksaos required for each job -value of job for organization -how much other organizations pay

Legal: negligence

if organization documents describe a system and it is not implemented as described employee can challenge evaluation, charging negligence because policies are effectively part of the legal contract.

difference between legal and illegal discrimination

legal discrimination discriminates consistently among employees based on their level of performance based on a BFOR what appears to be legal discrimination can still be considered illegal if it results in systemic discrimination of a protected class.

Reward systems

salary and salary increases are (should be) based on: -performance -market worth depending on skill set --what are similar jobs being paid? -position (i.e., degree of authority & responsibility -seniority traditional: salary increases based on position and seniority contingent: salary increases are based on job performance unfortunately salary increases based on market worth are often only realized after getting a different job

CP systems for different organizational cultures

traditional organizations -piece rate -sales commissions -group incentives involvement organizations -profit sharing -skill-based pay

How to make rewards work

-make expectations clear -define specific behaviours and outcomes that will be rewarded -help employees achieve -all employees should be eligible for some kind of reward reward both individual and group performance -occasionally, reward at random -define and measure performance first and then allocate rewards -only promise rewards that are actually available -don't give raises that are so small they are meaningless -account for customer service and ethical issues Rewards should be: financial non financial visible contingent timely reversable (consider variable pay, not just pay increases)

Adverse impact/unintentional discrimination

Organization must demonstrate: -a specific KSAO is a business requirement for the job -all affected employees are evaluated in the same way organization should review ongoing performance score data by protected class to identify problems.

Pay structure: job evaluation

Ranking: create and compare job descriptions, then rank order their value. Advantages: little time and effort Disadvantages: -criteria for ranking may not be clear -distances between each rank may not be equal -least objective and fair classification: creating a series of job classes or grades advantages: -jobs can be quickly slotted into structure -high face validity and employee acceptance. disadvantages: -requires extensive time and effort for administration -differences between classification levels may not be equal. point method: -identify compensable factors (e.g., skills, experience, responsibility, working conditions) -scale factors based on skill/responsibility level required in the job -assign a weight based on relative importance of each factor so the sum of the weights for all factors = 100 percent advantages: -establishes worth of each job relative to all other jobs in the organization -comprehensive -easy to rank jobs when total points are known -most objective and fair Disadvantages: -requires extensive time and effort broad banding: pay structure collapses job classes into a small number of categories having larger overall pay variance. -provides flexibility in rewarding people -reflects changes in organization structure -provides better base for rewarding growth in competence. -gives more responsibility for pay decisions to manager -provides better basis for rewarding career progression, especially in flat organizations.

Illegal discrimination or disparate treatment

When evaluation is based on factors that are not related to performance, and employees receive different treatment: -protected groups can easily claim they were intentionally and illegally treated differently

Rewards can include

extrinsic: pay recognition -public -private status time sabbaticals respect instrinsic: challenge responsibility power freedom interesting feeling like you are contributing to something important

CP plans to enhance strategic directions

employee development -skill-based pay customer service -competency-based pay organizational improvement -gainsharing (get a percentage of the money you save the organization) Overall profit -executive pay -profit or stock sharing --bad if the company's stock price isn't going up

CP plans help improve individual motivation when:

employees see clear link between their efforts and resulting performance (expectancy) Employees see clear link between their performance level and rewards received (instrumentality) employees value the rewards available (valence) motivation=expectancy x instrumentality x valence

characteristics of legally sound PM systems

explained and communicated to all employees includes an appeal process procedures are standardized for all employees within a job group includes procedures to detect discriminatory effects or biases and abuses in the system. supervisors are trained on how to manage employee performance performance data is gathered from multiple, diverse, and unbiased raters to the extent possible documentation based on specific examples and first-hand knowledge. performance dimensions and standards are: -clearly defined and explained -job related -within the control of the employee employees are given -timely information on performance deficiencies -opportunities to correct deficiencies employees are given voice in the review process and treated with courtesy

Reasons for introducing contingent pay

performance improves when rewards are tied to results: -helps define performance and contributing factors (i.e., a form of goal setting). -clarifies strategic priorities -helps recruit and retain top employees -projects good corporate image -improves individual motivation

possible problems associated with CP

poor performance management system: -inappropriate measures -poorly managed reviews -lack of ongoing coaching rewarding counterproductive behaviour (rewarding A while hoping for B) by unintentionally: -discouraging cooperation -rewarding behaviour that actually harms performance -too much focus on outcomes and not enough on behaviours -ethics - when cost/benefits/competition are high, people become sneaky rewards are not considered significant overly large rewards for executives (i.e., looting the company). managers are not accountable for following proper performance management procedures extrinsic vs. intrinsic motivation: when you start paying people for almost everything, they expect to be paid for everything. intrinsic motivation will go away if your performance management system extrinsically motivates every little thing.