Chapter 11 Rewarding Performance Copyright 2012 Pearson Education

Chapter 11 Rewarding Performance Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 11 -1

Pay-for-performance § Pay-for-Performance (P-f-P) § § § Incentive System Rewards individuals and groups based on their contributions Challenges § “Do only what you get paid for” syndrome § Unethical behavior—pressure to produce § Can foster competition, not cooperation Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 11 -2

Pay-for-Performance: Challenges § § Factors beyond employee control Difficulties in measuring performance Credibility gap Potential reduction of intrinsic drives Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 11 -3

Meeting the Challenges § § § Link pay and performance Use pay-for-performance as part of broader HRM system Promote the belief that performance makes a difference Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 11 -4

Meeting the Challenges § Use multiple layers of rewards § § Different types of pay incentives Increase employee involvement § Participate in pay plan design Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 11 -5

Types of Pay-for-Performance Plans Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 11 -6

Individual Plans § Individual-based plans § § Merit pay, bonuses, and awards Advantages: § Performance rewarded likely to be repeated § Incentives can help shape person’s goals [use with goal-setting interventions] § Rewarding individual performance is equitable § Fit with individualistic culture in the U. S. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 11 -7

Individual Plans § Disadvantages: § Can promote single-mindedness § Many do not see link between pay and performance [or perhaps not there ] § Quality goals may not be given priority Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 11 -8

Individual Plans § Most likely to succeed when: § Individual contributions can be isolated § The job demands autonomy § Cooperation is less critical to successful performance § Competition is to be encouraged Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 11 -9

Team-based Plans § § Cash/noncash Given to all equally? Team may decide how to distribute the award Case 11. 2—Lakeside Util. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 11 -10

Team-Based Plans § Advantages: § § § Foster group cohesiveness Easier to assess team performance Disadvantages: § § § Possible lack of fit with individual culture Free-riders Social pressures to limit performance Difficulties identifying meaningful groups Intergroup competition Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 11 -11

Team-Based Plans § Most likely to succeed when: § Work intertwined, hard to identify individual contributions § Organization’s structure facilitates groups and teams [e. g. , HPWSs] § Case 11. 2 redux Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 11 -12