Organizational Context:

1
Chapter 4

• Organizational Context
• Reward Systems

2
Learning Objectives

• Discuss the theoretical background on money as a
  reward.
• Present the latest research on the effectiveness
  of pay.
• Describe some of the traditional methods of
  administering pay.
• Relate some of the latest forms of new pay and
  their value in helping attract and retain
  talented employees.
• Explain how recognition is used as an
  organizational reward.
• Discuss the role of benefits as organizational
  rewards.

3
The Theory Behind Pay for Performance

• Behavioral Modification
• Behavior is a function its consequence
• Reinforcing desired behaviors
• Extinguishing undesired behaviors

4
Taxi Drivers vs. Warehauser Plant Workers
5
Pay The DominantOrganizational Reward

• The Theoretical Background on Money as a Reward
• Physical
• Psychological
• Research on the Effectiveness of Pay
• World Series Budgets

6
Pay The DominantOrganizational Reward

• The Theoretical Background on Money as a Reward
• Money is rarely 1
• Money vs. Morale

7
Pay The DominantOrganizational Reward
(Continued)

• Base Pay
• Hourly, weekly, monthly or annual basis
• Labor Market Driven

8
Pay The DominantOrganizational Reward
(Continued)

• Pay for Performance
• Merit
• Pre-determined Criteria
• Percentage or Sum
• Challenges
• Quantifiable and Understandable Criteria
• Salary catch up

9
Pay The DominantOrganizational Reward
(Continued)

• Pay for Performance
• The Use of Bonuses
• The Use of Stock Options
• ESOP

10
Pay The DominantOrganizational Reward
(Continued)

• Pay for Performance (continued)
• Potential Limitations
• Group Incentive Pay Plans
• Potential Limitations
• New Pay Techniques

11
Recognition as anOrganizational Reward

• Recognition versus Money
• Examples of Effective Formal Recognition Systems
• Bottom Line Evidence
• Treat like Merit Pay

12
Recognition as anOrganizational Reward

• Recognition versus Money
• Recognition rewards can take many forms and are
  often controllable by the manager.
• Unlike many financial forms of reward, there is
  no limit to the number of people who can receive
  this type of reward of how often it is given.
• Research indicates that managers often
  underestimate how useful recognition can be in
  motivating employees to achieve goals.
• 5 Love Languages- Book

13
Recognition

• fully communicate new recognition
  procedures/programs to all in the organization
• educate and encourage managers to use recognition
  as part of the overall compensation package
• integrate recognition into the overall
  performance management process
• hold and promote site-specific recognition
  ceremonies
• publicize best practices
• continually review and revise the recognition
  process to ensure maximum effectiveness and
• solicit recognition ideas from employees and
  managers.

14
Benefits asOrganizational Rewards

• Traditionally Offered Benefits (40-45 of
  Salary)
• Federal Government-Mandated Benefits
• Social Security
• Workers Comp
• ERISA

15
Benefits asOrganizational Rewards

• Traditionally Offered Benefits (30-35 of
  Salary)
• Life, Disability, and Health Insurance
• Pension Benefits
• 401k
• IRA
• Roth IRA
• Time-Off Benefit
• Efficiency Wage Theory
• Save by paying more?
• Henry Ford and 5 a day

16
Benefits asOrganizational Rewards
(Continued)

• Newer Types of Benefits
• Wellness Programs
• EAPs
• Life Cycle Benefits
• Other Benefits
• Flexible, Cafeteria-Style Benefits
• Education?

17
Questions
?