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Rewards, Pay Practices

Rewards can be classified into intrinsic and extrinsic rewards.

Ø Associated with job itself.

Ø Works with high intrinsic values include judges, doctors.

Ø More important in influencing motivation and performance.

Ø Can undermine extrinsic

Not connected with job content but are given to employees by supervisors, peers, and organizations such as trade unions.

Associated with short cycle time jobs and limited to behaviour specific to the job.

$ Salary

$ Bonuses

K Loans

K Company car

K Health Insurance

C Large offices

C Assign parking

C Insignia and titles

Ø Important to separate the two so that one cannot contaminate the other when causes of dissatisfaction are being investigated.

Ø Motivational value in building as many rewards as possible into the job itself

Ø Organizations have much more control over extrinsic rewards.

Ø How rewards are distributed can be communicated in policy statements.

Ø Reinforce company culture and define the relationship between performance and rewards.

Performance

Effort

Seniority

Equality

Power and Influence

Cafeteria-Style Fringe Benefits

Lump-Sum Pay System

Skill Based Compensation

Accumulating Time Off

All Salaried Team

Open Salary Information

Pay Practice	Employee Advantage	Organisational problem	Design Issue
Cafeteria-Style Fringe Benefits	Increased satisfaction with pay and benefits	Cost of administration	Educated work force that is very diverse.
Lump-sum pay	Increased satisfaction with pay, greater visibility and status of raises	Cost of administration and cash flow effects	Turnover rate, fair rates
Skill-based compensation	More flexible and skilled work force, increased satisfaction	Pressure to pay all employees the same, complaints about raises	Open climate, fair pay rate, portion of pay based on performance.
Accumulating time off	Improved satisfaction, linked to performance appraisal system	Must have a good performance appraisal system in place	Open climate, need for improved quality
The all-salaried team	Improved job and pay satisfaction, recognition improved	Some employees prefer hourly wage, blurs link between performance and reward	Open climate, emphasis on teamwork, limited use of piece-work pay systems
Open-salary information	Increased job satisfaction, greater trust and motivation, better salary	Time- consuming	Open climate, dependable pay brackets, pay based on performance.