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Chapter 5 - Motivation in Action.docx

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University of British Columbia
COMM 292

Chp 5 Motivation in ActionCreating Effective Reward SystemsFour major strategic rewards decisions 1What to pay employeesestablishing a pay structure Balancing internal equity and external equityo Internal EquityThe worth of the job to the organization established through technical process called job evaluation o External EquityThe external competitiveness of an organizations pay relative to pay elsewhere in its industry established through pay surveys 2 How to pay individual employeesvariablepay plans and skillbased payplans VariablePay ProgramA reward program in which a portion of an employees pay is based on some individual andor organizational measure of performance o Allows companies to fluctuate pay quicker in response to the economy changing fixed labour costs to more variable costs IndividualBased IncentivesPieceRate Pay PlanAn individualbased incentive plan in which employees are paid a fixed sum for each unit of production completed o Often modified where employees earn a base hourly wage plus a piecerate differentialMeritBased Pay PlanAn individualbased incentive plan based on performance appraisal ratings o Effective because individuals perceive strong relationship between performance and rewards o Based on performance appraisals can make it valid or invalid o Sometimes pay raise pool fluctuates based on economic conditions not performance o Unions typically resist meritbased pay plansBonusAn individualbased incentive plan that rewards employees for recent performance rather than historical performance o Incentive effects higher because it rewards recent performanceSkillBased PayAn individualbased incentive plan that sets pay levels on the basis of how many skills employees have or how many jobs they can do o Increase flexibility in workforce employee skills are interchangeable o Employees get frustrated when they learn all the skills
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