Employee compensation and reward systems have undergone a couple of paradigm shifts since inception. Reward systems were traditionally compensation based and focused on the individual or the position (Beam 1995). After a recession in the early 1980's, employers turned to performance based models in an attempt to save money while still rewarding top performers (Applebaum & Shapiro, 1992). Today, the most successful organizations are using a total reward model, a hybrid of the performance based model combined with strategic human resource management planning to create reward systems that both benefit the employee and help organizations realize their operational goals (Chen & Hsieh, 2006). Traditional Reward Systems Beam (1995) defined traditional rewards systems as hierarchy-based, often tied to seniority or position rather than performance, where rewards were usually a product of promotion. Rewarding stability such as seniority or annual goals create organizations resistant to change (Lawler & Worley, 2006). According to research presented by Lawler and Worley (2006), Chen and Hsieh (2006) and Beam (1995), traditional reward systems are not effective at motivating employee performance or organizational excellence, and they often lead to complacent organizations not capable of the rapid change required to remain effective. As a result, traditional hierarchy-based systems have since been replaced with performance based models. Performance Based Reward Systems Following the recession in the early 1980's businesses turned toward performance based pay in an effort to increase profits and productivity (Appelbaum & Shapiro, 1992). A joint study conducted in the late 80's between the American Productivity Center and the American C... ... middle of paper ... ...aballero, Marjorie J.. (1988). Stepping Up Performance: Incentives In Sales Force Contest. Baylor Business Review, 6(3), 16. Retrieved from ABI/INFORM Complete. (Document ID: 192747). Chen, Hai-Ming, & Hsieh, Yi-Hua. (2006). Key Trends of the Total Reward System in the 21st Century. Compensation and Benefits Review, 38(6), 64-70,5. Retrieved from ABI/INFORM Complete. (Document ID: 1170167441). Lawler, Edward E., & Worley, Christopher G.. (2006). Winning support for organizational change: Designing employee reward systems that keep on working. Ivey Business Journal Online,1-5. Retrieved from ABI/INFORM Complete. (Document ID: 1041969981) Nacinovic, I., Galetic, L., & Cavlek, N.. (2010). Corporate Culture and Innovation: Implications for Reward Systems. International Journal of Social Sciences, 5(1), 32-37. Retrieved from Academic Search Complete database
Mujtaba, B. G., & Shuaib, S. (2010). An Equitable Total Rewards Approach to Pay for Performance Management. Journal of Management Policy and Practice vol. II (4), 111-121.
In a business or a workplace, it is essential for the organization, which consists of the employers, the managers, and their employees, to work towards reward programs within the human resources in order to create a healthy and cordial work environment and most importantly, to efficiently achieve business’ goals. In Carol Patton’s (2013) article, Rewarding Best Behaviors, she explains the importance of several companies that are beginning to recognize their employees, not just for the end-results, but for reflecting good behaviors towards the business’ values, such as demonstrating creativity on certain projects, problem solving towards certain issues, and also collaborating with fellow co-workers. Patton stresses that these reward programs could help suffice the overall being of a company as long as the rewarded behaviors correlate with the corporate strategy. Patton expresses that some things human resources must comprehend include “how its company creates success, what drives its business strategy and what behaviors are needed from employees to achieve that success” (Patton, 2013 para. 15). Moreover, the employee would be reflected as a role model for others and perhaps influence them to demonstrate comparable behaviors.
When employees were asked, what factors could be changed at USAA to help maintain employee motivation levels, a couple of them answered with, “higher wages” and “more money”. This response corroborates other studies regarding pay which state surveys will more likely under emphasize the importance of pay relative to other motivational factors. (Rynes, Gerhart & Minette, 2004). “Financial incentives had by far the largest effect on productivity of all interventions. For example, pay was four times more effective than interventions designed to make work more interesting.” (Rynes, 2004). One reason for this phenomenon is social desirable responding. It should be noted, that although pay may be under reported, the results indicate other factors are also important for employee
The company Steel Co, which has been established for around 30 years, has been in a steady decline during the current recession and although a Divisional Director has been employed by the owner the fortunes of the company have not improved. The staff is unhappy, unproductive and unimpressed by the Human Resource system that currently exists in the company. The pay structure that currently exists within the organisation has been much debated among employees who feel it is unsatisfactory. The Business Adviser will research Performance and Reward management tools in order to help the company develop a more suitable Performance and Reward system to use. A variety of sources will be used in order to evaluate the system and tools against other organisational frameworks. The pay structure within the company will also be looked at in order to identify any possible changes that could be made.
An incentive or reward system refers to a program designed by an organisation to reward high performance and motivate workers on an individual and group basis (Corby et al. 2009, p. 2). Rewards are useful to a company operating in a competitive market. Although used interchangeably, rewards and recognition where the former can be monetary or non-monetary but has a cost to the company, while the latter is meant to offer psychological reward, for instance, oral public recognition or end of the year award. While the company does not provide financial incentive, it provides non-financial in the form of cars for its Sales Division consultants. This improves the working condition of the employees, but it does not improve their financial stance. Wright (2004) notes that some employees are more concerned with status, for instance, an executive desk, attractive office or business card (p. 76). Such incentive make the jobs and company attractive.
The total rewards approach challenges the human resources (HR) professional to look at the entirety of the work experience, not just the traditional compensation and benefits packages, when developing strategies to recruit, retain, and motivate employees (Giancola, 2009; Pregnolato, Bussin, & Schlechter, 2017; Stoskopf, 2004). Total rewards approach has five components – base compensation, benefits, performance and recognition (Giancola, 2009; Gomez-Mejia, Balkin, & Cardy, 2016; Pregnolato, et al., 2017; Stoskopf, 2004), work-life balance, and development and career opportunities (Giancola, 2009; Pregnolato, et al., 2017; Stoskopf, 2004). These components, when integrated into a comprehensive total rewards
What does addiction and pair-bonding have in common with the dopamine reward system? Better yet, what is the DA reward system? The DA reward system is what keeps us evolving. It is what keeps all living animals evolving. It serves to motivate us to do basic survival skills like, eating, drinking and reproducing. Though it is used for other things as well (Katherine H. Taber, Deborah N. Black, Linda J. Porrino, Robin A. Hurley, 2012). Our reward system makes us crave water and after drinking water, give us a feeling of relief… the relief being the reward. So we have been conditioned to crave water and get rewarded after consuming it (Katherine H. taber et al. 2012). Without this basic trait, we would not be here.
Performance related pay is a financial reward given to employees whose work is considered to have reached a required standard or is above average. “PRP criteria can relate to the individual employee, to work groups or to the organization as a whole” (Armstrong, 2002). It is fair to provide people with financial rewards as a means of paying them according to their contribution (Armstrong 1993:86). The primary purpose of performance related pay in any organization is to recruit, retain and motivate the workforce. It also helps in focusing employees’ minds on particular goals (Protsik, 1966); communicate to employees an organization’s core values, and change the culture of that organization (Kessler and Purcell, 1991).
McMullen, Stark and Jenson find in their research by understanding the employee/ reward dynamic go hand in hand by developing rewarding programs that are in line with organization vison and employees attentiveness to contribute to the organization success. (McMullen, Stark and Jenson, 2007) Reward programs provide organization to creating a competitive an advantage but it is the employees that bring the full circle. Reward programs contribute to organization success but it does have it pros and cons. Many pros develop when using reward programs such as attracting top talent, motivating employees; strive for growth, development, and retaining good
Reward systems have been evolving and growing throughout the years, but there are many types that have always been there. Base pay is the most common, which is an employee’s base wages and salary that they are paid on hourly, weekly, monthly, or annually (Luthans, 2011, p.94). Merit based pay is another type of incentive, which rewards and motivates an individual to perform their jobs to the standards of their employers. According to the text Organizational Behaviors, by Fred Luthans, there are three other options for paying an employee for their performance: individual incentives pay plans, using of bonuses, and the use of stock options. Individual based pay plans are based on the employees output and/or quality. Some organizations use bonuses as incentives to their employees. These are offered sometimes as op...
In any organization, sometimes, monetary schemes doesnot get people involve to pursue work in a certain way, rather it demoralize and threatens the self-esteem of employees. According to Meyer (1975), “the basis for most of the problems with merit pay plans is that most people think their own performance is above average”. The amount may ...
2). Looking at performance-related pay in the framework of reinforcement theory believe this system of payment and compensation “suggest that pay can be used to create consequences for desired behaviors such as high performance that will in turn reinforce the behaviors” (p. 2).
There is considerable debate over merit pay and the effect it has on employees within an organization. Psychologists believe merit pay is related to the incentive theory of psychology; people respond to rewards and with the proper motivation, it increases performance (Cherry). Employers consider merit pay an effective tool and a form of competition strategy for motivating employees to achieve positive performance outcomes. Many employers ignore the fact that incentive plans may motivate some individuals while others have high work ethics and do not need motivation. The intent of this paper is to discuss merit pay used by companies, the motivational factors on employees to reach high achievement, and the challenges that employees face due
The foundation for effective job performance and compensation system can be traced to effective job analysis process. Fundamentally, a job analysis should consist of a thorough examination of the job 's duties and knowledge, skills, abilities, and qualities that are required in order to be successful in a specific position, upon which appropriate rewards or compensation can be determined. For many perspectives, jobs are usually made up of requirements and rewards, where rewards may be regarded as a major recruitment strategy for motivating potential employees in order to influence them to stay the organization for a longer period as well as enhance their performance. The most common or basic form of rewards which attracts employees is extrinsic
Organizations are working hard in today’s world of business, not only to remain competitive, but also to focus on stability and structure. Employees are the backbone of an organization. It is becoming more important to offer quality HRM programs to staff, in order to support the retention of trained and experienced staff. Employees have always been concerned with salary however, there is a new focus emerging that looks at compensation as a whole entity. Monetary wages are now just as important as other benefits such as paid time off, medical and dental offerings and retirement. This paper will discuss the importance of the total compensation program which includes many aspects, not just salary. Attention must be paid to equal pay, pay