COMM 292: Chapter 5
What are the three major obstacles to ending these follies?
1. Individuals stuck in old patterns of reward and recognition (stick to rewarding things that can be easily measured). 2. Organizations don't look at the big picture (subunits compete with each other). 3. Management and shareholder focus on short-term results.
What are flexible benefits?
A benefits plan that allows each employee to put together a benefits package individually tailored to his needs and situation.
What is the employee stock ownership plan (ESOP)?
A company-established benefit plan in which employees acquire stock as part of their benefits.
What is gainsharing?
A group-based incentive plan in which improvements in group productivity determine the total amount of money to be shared.
What is the variable pay program?
A reward program in which a portion of an employee's pay is based on some individual and/or organizational measure of performance.
How can we create a motivating work environment?
Abolish incentive pay. Re-evluate evaluation. Create conditions for authentic motivation. Encourage collaboration. Enhance content. Provide choice.
Can we just eliminate rewards?
Alfie Kohn says that organizations should focus less on rewards and more on creating a motivating environment.
What is the main advantage of merit pay plans?
Allow employees to differentiate pay based on performance so that those people thought to be high performers are given bigger raises. Can be motivating.
What are flexible spending plans?
Allow employees to set aside up to the dollar amount offered in the plan to pay for particular services.
What are merit-based pay plans?
An individual-based incentive plan based on performance appraisal ratings.
What is the piece-rate pay plan?
An individual-based incentive plan in which employees are paid a fixed sum for each unit of production completed.
What are bonuses?
An individual-based incentive plan that rewards employees for recent performance rather than historical performance. One time reward for defined work rather than ongoing entitlement.
What is skill-based pay?
An individual-based incentive plan that sets pay levels on the basis of how many skills employees have or how many jobs they can do.
What is a profit-sharing plan?
An organization-wide incentive plan in which the employer shares profits with employees based on a predetermined formula.
Why are variable pay programs becoming so popular?
Automatically reduces expenses when performance declines. Employee's earnings recognize contribution rather than become a form of entitlement.
What is required to set up pay levels?
Balance between external and internal equity.
What are some limitations of merit pay plans?
Based on annual performance appraisal. Pay raise pool fluctuates based on economic conditions or other factors that have little to do with employee's performance. Unions resist merit-based pay plans.
What is skill-based pay also known as?
Competency-based pay. Knowledge-based pay.
What is job rotation also known as?
Crosstraining.
How does the plan distribute money?
Direct cash outlays or stock options.
What are the drawbacks of job enlargement?
Does little to add challenge or meaningfulness to a worker's activities.
What is a way to create an effective rewards system?
Employee recognition. It uses multiple sources to recognize both individual and group accomplishments.
What happens in economic downturns with the profit-sharing plan?
Employees will be less motivated because they know that the likelihood of receiving significant bonuses is low.
How to figure out what to pay?
Establish a pay structure.
What are flexible benefits consistent with?
Expectancy theory's thesis tha organizational rewards should be linked to each employee's personal goals.
What do Canadian and US firms rely on?
Extrinsic rewards more than firms in other countries.
What are some close competitors to money? Why?
Food and sex because they also have strong and drivers feelings, significance, and strivings.
What type of rewards can be used in the employee recognition programs?
From a thank you to high profile recognition.
How is gainsharing different from profit sharing?
Gainsharing focuses on productivity gain rather than profits so it rewards specific behaviours that are less influenced by external factors. Can receive incentive awards even when organization isn't profitable.
What is one major form of group-based pay program?
Gainsharing.
What are core plus plans?
Has a core of essential benefits and a menu like selection of benefit options from which employees can select and add to the core.
How do we know what benefits to offer?
Have flexible benefits (develop a benefits package).
What is job design?
How tasks are assigned to form a job.
What are some downfalls of the profit-sharing plan?
Ignore factors like customer service and employee development. Those who work in companies in cyclical industries will see inconsistent rewards.
What do Mexican employees prefer?
Immediate feedback on their work. Therefore, daily incentives work better.
How are pay for performance programs challenged by teamwork?
Incentive pay when awarded to individuals can have a negative effect on group cohesiveness and productivity. Should be focused on team-based pay, not individual in a team.
What are some advantages of skill-based pay plans?
Increase flexibility of the workforce (filling staff needs is easier when employee skills are interchangeable). Facilitates communication in the organization because people gain a better understanding of each others' jobs.
What do ESOPs have the potential to do?
Increase job satisfaction and work motivation.
What do Japanese and German firms rarely use?
Individual incentives.
What are the three types of variable pay programs?
Individual. Group. Organization.
How do we put in play employee recognition programs?
Intrinsic rewards.
What was developed to target the drawbacks of job enlargement?
Job enrichment.
How can we reshape jobs (job redesign) to make work more motivating?
Job rotation. Job enlargement. Job enrichment.
What types of organizations typically use merit pay plans?
Large organizations.
What do Chinese firms use?
Likely to give bonuses to everyone.
What are some examples of management reward follies?
Looking for teamwork and collaboration but rewarding the best individual team member. Looking for innovative thinking and risk taking but rewarding the proven methods and not making mistakes. Looking for development of people skills but rewarding technical achievements.
How do some companies try to encourage employees to adopt the perspective of top management?
Making them owners of the firm where they will likely think about the consequences of their behaviour if they own part of the company.
Why are managers reluctant to provide feedback?
Managers may be nervous pointing out weaknesses directly to employees. Employees get defensive. Employees have inflated assessment of their own performance.
What are the three most popular types of benefit plans?
Modular plans. Core plus plans. Flexible spending plans.
What is the most commonly used reward in organizations?
Money because it can help needs get met.
Why is this reward a problem?
Money is not the top priority for many employees as many emphasize relationships in the workplace.
Why do motivation theories not work equally throughout the world?
Motivation theories are culture-bound.
Why is developing a rewards program a complex process?
Must consider the value individuals place on specific rewards.
Why are recognition programs attractive?
Organizations are under cost pressures and recognizing an employee's superior performance can cost little to no money.
What is a problem with the rewards system?
Organizations engage in "the folly of rewarding A, while hoping for B."
What do profit-sharing plans focus on?
Past financial results. They do not focus employees on the future because managers are looking for way to cut costs today without considering longer term organizational needs.
What are some disadvantages of skill-based pay plans?
People can top out (run out of skills to learn which frustrates employees who have been challenged by learning and received pay raises). People acquire skills they don't need. Doesn't address level of performance. Rewards aren't always equitable.
What are the four main forms of individual-based variable-pay programs?
Piece-rate wages. Merit-based pay. Bonuses. Skill-based play.
What are modular plans?
Predesigned packages of benefits with each module put together to meet the needs of a specific group of employees.
What are the two major forms of organizational-based pay program?
Profit sharing. Stock options and Employee Stock Ownership Plans (ESOPs).
How are pay for performance programs challenged by public sector employees?
Public sector work is of a service nature so it is hard to measure productivity. It is difficult to make a link between rewards and productivity.
How can you reward employees with a strong need for social acceptance?
Publicly recognize accomplishments.
What are the strengths of job rotation?
Reduces boredom and increases motivation by diversifying the employee's activities.
How to figure out how to pay?
Reward individuals through variable pay programs.
How are employee recognition programs linked with the reinforcement theory?
Rewarding a behaviour with recognition immediately following that behaviour is likely to encourage its repetition.
What is one advantage that bonuses have over merit pay?
Rewards employees for recent performance instead of historical. Incentive effects of performance will be higher.
What are some examples of piece-rate pay plans?
Sales associates who are paid commission.
Who is most likely to be rewarded through profit-sharing plans?
Senior executives.
What is a key strategic decision in regards to setting pay?
Setting pay levels above, at, or below market rates will cause different trade-offs.
What are some keys to an effective feedback session?
Sincere managers. Constructive climate. Employee perception of fair treatment.
What are some challenges for the pay-for-performance programs?
Teamwork. Unions, Public sector employees. Ethical considerations.
What is external equity?
The competitiveness of an organization's pay relative to industry standards (pay surveys).
What is job enlargement?
The horizontal expansion of jobs. Increasing the number and variety of tasks performed.
How is the employee recognition program linked with the expectancy theory?
The key component of motivation is the link between performance and reward.
What does job enlargement target?
The lack of diversity in overspecialized jobs.
What do flexible benefits replace?
The one benefit plan fits all approach.
What is job rotation?
The periodic shifting of an employee from one task to another.
What do stock options allow employees to do?
The right to buy stocks in the company at a later date for a guaranteed price. Employees acquire stock as part of their benefit.
What has job design shown us?
The way the elements in a job are organized can increase or decrease effort.
What is internal equity?
The worth of the job to the organization (job evaluation).
What is the solution to the performance feedback problem?
Train managers to conduct constructive feedback sessions.
What are the drawbacks of job rotation?
Training costs increased. Productivity reduced. Causes disruptions when people have to adjust to the new employee.
How are pay for performance programs challenged by unions?
Unionized employees are typically paid on the basis of seniority and job categories with opportunity to receive performance based pay. Ability to hand out rewards may be limited because of the collective agreement.
What happens if employees suffer from overroutinization?
Use job rotation.
What is more effective for public sector employees?
Using the goal setting theory to improve performance instead of the pay for performance programs.
What are the four major strategic rewards decisions that need to be made?
What to pay? How to pay? What benefits to offer? How to construct employee recognition programs?
What is a pure piece-rate pay plan?
When an employee gets no base salary and is paid only for what he produces.