Rewarding Performance

8 Key excerpts on "Rewarding Performance"

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  Talent Management

  • Sushmita Sen(Author)
  • 2019(Publication Date)
  • Society Publishing

    (Publisher)

  It is possibly the most critical contract term in each paid-work. Brown (2001) describes rewards as a strategy that combines compensation, employee benefits, work-life balance, personal recognition and career development in the benefits package. Thus, pointing out some positive association existing between rewards and business strategy. This is in agreement with the arguments of Rhoades et al. (2001) according to whom reward strategy play an important role in motivating employees to perform innovatively. Rewards do not just focus on financial compensation but can include the praises that employees acquire from their managers, the opportunity to take on important projects or tasks, and even leadership attention. Supervisor reward power is positively associated with employee task performance, productivity, satisfaction, and thus organizational turnover. According to Cox and Purcell (1995), and Nyandoro and Goremusandu, (2016), the actual advantages of a very much planned organizational reward strategy lies in its intricate linkages with the business strategy. Rewarding Management 135 Figure 6.1: The Michigan model highlighting the importance of rewarding the employees. Source: https://upload.wikimedia.org/wikipedia/commons/d/db/Michigan-model.gif Reward management is important for any business that has employees. It is a motivational practice which is concerned with the formulation and implementation of strategies and policies in order to reward people fairly, equitably and consistently in accordance with their value to the organization. It deals with everything from who will design the plan and what types of rewards it will include to how the plan will be funded and under what business conditions the plan is intended to operate. In other words, it comprises of designing, implementing and maintaining the reward systems (reward processes, practices and procedures) with the main objective of meeting the needs of both the organization and its stakeholders.

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  Human Resource Management

  • Michael L. Nieto(Author)
  • 2017(Publication Date)
  • Red Globe Press

    (Publisher)

  91 INTRODUCTION Performance and rewards can motivate and energize us to over-come obstacles, to preserve and achieve more than we expected. Understanding what motivates us and, just as importantly, other people is a key area of management. Rewards are a universal and international language. People around the world respond positively to a caring and supportive employment environment. The subject of rewards is particularly interesting to all of us. People like being rewarded. For example, a child smiles when they receive a gift. Our colleagues generally respond positively to encourage-ment. Yet we are all individuals, preferring and making different life choices. So while a young and ambitious City trader may respond to the opportunity to earn large bonuses, the voluntary worker’s efforts receive no pay, though they may find their work very rewarding. Therefore, the first step in evaluating rewards is to consider which rewards are appropriate to the situational context. In this chapter you will read about a variety of organizations drawn from consultancy and research work to illustrate different approaches to rewarding people. The rewards strategy, as with other HR policies, has to be an inte-grated part of the organization’s strategic plan (Nieto 2006; Bratton and Gold 2012). 5 Performance and Rewards Management UNDERSTANDING INTRINSIC AND EXTRINSIC MODELS OF REWARD There are examples of intrinsic and extrinsic rewards in every working environment. For example, in August 2012, the efforts and achievements of Olympic athletes were broadcast from London around the world. The efforts of athletes competing to achieve their dreams of Olympic success were evidence of individual and team commitments to achieve. For the athletes, the reward was to represent their country and for a few athletes, the glory of an Olympic medal. In each case, the athletes were motivated to give their best performance on the day.

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  Managing Employee Performance and Reward

  Systems, Practices and Prospects

  • John Shields, Jim Rooney, Michelle Brown, Sarah Kaine(Authors)
  • 2020(Publication Date)
  • Cambridge University Press

    (Publisher)

  At the same time, they should also reflect on the needs and expectations of employees (Soderquist, Papalexandris, Ioannou & Prastacos 2010) as well as other key stakeholders, such as shareholders in the case of corporations (Beer, Boselie & Brewster 2015) or citizens for public sector organisations (Lee & Wilkins 2011). Unfortunately, along with the many success stories, organisational life is also littered with instances of performance and reward systems that have gone horribly wrong. The consequences include demotivating good employees and causing them to leave, eroding workplace trust and morale, poisoning the relationship between employees and their supervisors, and damaging product and service-provision quality. Perhaps more so than other facets of human resource management, the management of employee performance and rewards is a strategic, attitudinal, emotional and behavioural minefield. Ill-chosen, badly designed or poorly implemented performance and reward management systems can communicate entirely the wrong messages as to what the organisation expects from its employees (Franco-Santos & Otley 2018). An ill-conceived reward system may not only fail to elicit desired behaviour, it may also encourage behaviour that Chapter 1 Performance and reward basics | 3 is dysfunctional, deceptive or even destructive; that is, it may give rise to endemic organisational misbehaviour (see Wright 2018 for a discussion of the ‘dark side’ of reward management). So performance and reward management is fraught with challenges for all concerned – employees, managers, clients/consumers and business owners. Consequently, the overarching proposition guiding this book is: managing employee performance and reward is very easy to do badly AND difficult – but also vital – to do well. Some argue that we should not bother at all, at least with the practices of earlier decades.

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  Performance Management

  Theory and Practice

  • Susan Hutchinson(Author)
  • 2013(Publication Date)
  • CIPD - Kogan Page

    (Publisher)

  This chapter explores the different forms of performance-related rewards and their advantages and disadvantages, and uses the terms ‘variable pay’, ‘contingent pay’ and ‘incentive pay’ to also cover the concept of performance-related reward. As an introduction, the chapter begins by exploring the main categories and types of performance-related reward, the key trends and some of the general reasons for adopting such schemes, as well as some general criticisms. The chapter then examines one of the most popular forms of performance-related reward – individual performance-related pay – and the evidence for and against utilising such schemes. The rest of the chapter considers other types of schemes and their consequences.

  WHAT IS PERFORMANCE-RELATED REWARD?

  The defining feature of this type of reward is that some or all of employee remuneration is dependent on some assessment of performance (Bryson et al, 2009), whether that be individual, team/group or organisational performance. When designing a performance-based reward scheme there are four key questions to consider (Shields, 2007; Perkins and White, 2011). These are:

  • What is being assessed?

  • Whose performance is being assessed?

  • Over what period of time is the performance being assessed?

  • What form does the contingent reward take?

  The first issue concerns the criteria for assessing performance: should it be based on behaviours or results, or on a combination of the two? Results-based approaches – such as piecework, commission, bonuses and stock options – are generally more straightforward to measure than behaviours, and are more appropriate where performance outcomes can be accurately specified, quantified and measured, such as in a sales environment. Behavioural measurements are more qualitative in nature and more likely to be found where outputs are less tangible, such as in the public sector and in research and development environments. Chapter 5 considered these alternative forms of measurement in more detail.

  As for whose performance is measured, it might be an individual, team, work group, workplace or organisation. Generally, research suggests that the closer the performance unit is to the employee, the more effective the outcome (Heywood and Jirjahn, 2006; Prendergast, 1999). An individual payment-by-results (PBR) scheme, involving a direct link between individual performance and pay, is likely to have the strongest incentive effects, whereas reward schemes linked to organisation-wide criteria tend to have the weakest incentive effects (Bryson et al, 2012). Systems linked to some form of collective performance are also vulnerable to ‘free-rider effects’ whereby less effective individuals take advantage of better-performing colleagues, or to ‘the Ringelmann effect’, named after Maximilien Ringelmann, who found that having group members work together on a task actually results in significantly less effort than when individual members work alone (Ringelmann, 1913). Group-wide schemes are also likely to have more ‘noise’ compared to individual-based schemes in that they will be more influenced by factors outside the control of the individual (Bryson et al

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  Designing Dynamic Organizations

  A Hands-on Guide for Leaders at All Levels

  • Jay Galbraith, Diane Downey, Amy Kates(Authors)
  • 2001(Publication Date)
  • AMACOM

    (Publisher)

  Organizations are relying more on team- and unit-based compensation than they have in the past. If your organization design assumes cooperation will be necessary because of the interdependence and complexity of the work, then the work should be motivated and rewarded through rewards that don't just focus on more than individual contributions. Team and unit incentives usually combine aspects of performance and skill-based pay.

  Performance Incentives. A performance goal is set for the team or business unit. It may be based on hard criteria, such as cost savings, output achieved, or deadlines met, or it may include some softer criteria, such as effective problem solving. When the goal is met, a bonus is given, either in the form of cash, stock, or noncash rewards. When it is linked to a gain-sharing or profit-sharing plan, the amount is tied to the overall financial performance of the unit.

  Skill-Based Pay. Teams can be rewarded for the collective skills they accumulate. The team is not rewarded until all team members reach a certain level, in order to encourage the more skilled employees to help others achieve competence. It is most commonly applied in team settings where the tasks of the team are specific and measurable and where there is a desire to make the team more flexible and autonomous by increasing the skills of all team members. As each team member learns and applies the skills that are needed by the team overall, that person's pay is increased. Team members cross-train in the work of others in order to lessen the impact of absenteeism on productivity. People are also rewarded for developing management skills. As these responsibilities are moved to the team, the organization can reduce the number of managers needed.

  Rewards based on collective effort and outcomes have some potential hazards.

  Distinguishing Which Organizational Level to Reward.

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  Performance Management For Dummies

  • Herman Aguinis(Author)
  • 2019(Publication Date)
  • For Dummies

    (Publisher)

  In this chapter, I cover the two main types of rewards: financial (also called “tangible”) and nonfinancial (also called “intangible”). These are the basic ingredients of a reward systems. Also, you learn about how to connect performance management to different types of rewards.

  Not All Rewards Are Created Equal

  Until a few years ago, the terms “compensation” and “compensation and benefits” were used commonly. But more recently, these labels have been replaced with “rewards” and “total rewards.” A reward system is the set of processes for distributing both financial and nonfinancial rewards as part of an employment relationship.

  Financial rewards

  An employee’s financial rewards include cash compensation (base pay, cost-of-living and merit pay, short-term incentives, and long-term incentives) and benefits (income protection, work–life focus, tuition reimbursement, and allowances).

  Nonfinancial rewards

  Employees also receive nonfinancial rewards, which include recognition and status, employment security, challenging work, learning opportunities, and work-life focus, among others.

  Not all types of rewards are directly related to performance management because not all types of rewards are allocated based on performance. For example, some allocations are based exclusively on seniority.

  Different Types of Financial Rewards

  There are six different types of financial rewards: base pay, cost-of-living adjustments and contingent pay, short-term incentives, long-term incentives, income protection, and allowances.

  Base pay

  The base pay,

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  Paying for Performance

  A Guide to Compensation Management

  • Peter T. Chingos(Author)
  • 2002(Publication Date)
  • Wiley

    (Publisher)

  The authors guide readers through this hospitality organization’s challenge — from problem to analysis to solution — and demonstrate how its new approach to rewards strategy can significantly add to the bottom line. 1.1 WHY IS REWARD STRATEGY IMPORTANT? Today’s competitive conditions make it more difficult for employers to acquire and retain experienced and productive talent. The growing awareness that finding, motivating, developing, and keeping employees is a key component of business success has raised expectations for human resource (HR) departments. Today, the HR function is being scrutinized more closely, with expectations that it will make a contribution to the business — just like finance, accounting, mar- keting, and sales. The reward programs that have been the traditional domain of HR (e.g., pay, benefits, training) represent a significant and growing investment for an organization. In general, these programs have been managed discretely rather than as part of an overall strategy. As leadership looks to HR to support the organization’s business objectives and enhance profitability, some tough questions need to be answered: • How can we attract and retain the right people? • How do we motivate and develop employees? • Do we know what skills, knowledge, experience, and behaviors we actually reward? • How do we pay for performance? • Are pay, benefits, and career investments aligned with each other — and with our business strategy? • How do we measure the return on our investment in people? A broader concept of rewards, and reward strategy, is needed to answer these questions effectively. 1.2 WHAT CONSTITUTES A REWARD STRATEGY? Surely, an individual’s evaluation of a job opportunity is based on more than just current pay. It also includes the benefits that a company might offer, as well as the opportunities for learning and advancement: the career.

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  Reengineering Performance Management Breakthroughs in Achieving Strategy Through People

  • Tracey Weiss, Franklin Hartle(Authors)
  • 2023(Publication Date)
  • CRC Press

    (Publisher)

  All of these stories represent radical departures from the status quo. All used a blend of “how” and “what” measures. All sought to reach below the tip of the iceberg and appeal to the qualities that make people want, and need, to excel. All were seeking to tap a source of energy they would need to drive their strategies—the engine in reengineering. In short, these leaders reasoned that they would have to create a high level of motivation if they were going to ask for new behaviors and raise the bar on performance. They all sought—and found—the last piece of the performance puzzle: a way to reward human performance that truly adds value to the organization.

  It’s safe to assume nobody will perform without some kind of reward, monetary or otherwise. The key is to harness this source of motivation and use it to pull the organization forward. A well-designed performance management plan that is aligned with rewards is an excellent tool for managing that balance between intrinsic and extrinsic rewards, which together are the source of motivation and the key answer to the “why” of performance. In fact, we’ve found that rewards work best when they function in sync with a performance management program that reaches the bottom of the iceberg. And pay is only part of the picture.

  In his book Human Motivation, David McClelland points out that money is misleadingly concrete as an incentive. He says psychologists use it in experiments—and, we might add, businesses use it in practice—because it is easier to manipulate than other incentives like personal development opportunity or recognition. In a sense, we have all been trained to value money as the symbol of success. But McClelland demonstrates that money always takes on the meaning of the particular motivational situation in which it is employed as an incentive.1 To illustrate, he describes an experiment where a professor offered students $2.50 if they could complete a project faster than average performers, who would receive half that amount. While the incentive did appear to make the students work harder, McClelland argues that the larger prize may have lent prestige to faster performance, thus raising the students’ desire to please the professor. From our business experience, we can add that a professor (manager) who commands no respect from his or her students (employees) might even be de-motivating students by insulting them with a trivial reward.

  McClelland shed light on the elusive relationship between pay and performance. Even substantial raises and bonuses for top performance may de-motivate in the long term, especially if they are not supported by a fair, well-reasoned, and widely understood system of performance management. Money alone is not sufficient to foster an ongoing, lasting productivity boost. Often, an employee’s primary desire is to feel part of the organization and to be recognized for the work he or she does. People are motivated to their core by a higher cause. In this sense, performance management can make the difference between pay being a motivator and its becoming a neutral or negative influence. Rewards work best as a strategic tool when they are tied to a well-designed performance management process that is, in turn, aligned with the organization’s culture. Pay is not a panacea. We need to look at it, as McClelland pointed out, in the context of the motivational situation in which it is employed.

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