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Management and Organizational Studies
Management and Organizational Studies 3342A/B
Linda Eligh

Chapter 10Pay for performance Performance Appraisal and Plan Design Pay for performance plana pay plan that links individual pay to some measure of performance on the jobHR practices such as designing a performance appraisal that employees find acceptable goes a long way toward increasing trust in top management What behaviours do employees care about Linking organization strategy to compensation and performance management oEmployers want employees to perform in ways that lead to better org performance oEmployee performancefSKM whereSSkill and ability to perform taskKknowledge of facts rules proceduresMmotivation to perform oThe way that compensation systems are designed is intimately linked to the stability of performance measuresoPerformance measurement related to compensationVariabilityease of Variability in Organization performancemeasurement in individual performanceLow variabilityfew High variabilityswings in overall regular and large corp performanceswings in overall corp performanceUnstable unclear and CELL Aprovide wide CELL Bprovide wide changing objectivesrange of rewards range of rewards beyond beyond just money just money Emphasize Include significant base pay with low incentive component incentive portionStable and easily CELL Cemphasize CELL Demphasize measuresmonetary rewards with monetary rewards Large large incentive base pay with low componentincentive portion What might cause wide swings in org performance Something usually in the external environment that is beyond the employees controlnot fair to employees that their pay should sufferperceived as unfair treatment oCELLS B and Dlow incentive component is appropriate with highly variable annual performance oCELLS A and Clarger incentive components are appropriate in companies with stable annual performance Some employees have jobs that are fairly stable with consistent expectation while other deal with a lot of fluctuations in things expected from thembroader range of rewards available for employees with unstable demands and large incentive component for employees with stable demands Answers questions about how good employees can JOIN the company how they can be RETAINED how they can DEVELOP SKILLS and how can they PERFORM well on the joball compensation decisionsWhat does it take to get these behaviours What theory and research sayoMotivationa process involving the determination of what is important to a person and offering it in exchange for desired behaviour Research that employees prefer pay systems that recognize individual performance cost of living seniority and the market rateAlso prefer flexible total compensationidea that only the individual would know which package of rewards best suit hisher personal needs Motivation theoriesoSome theories in the table focus on contentwhat is important to them like Maslow and Herzberg oExpectancy equity and agency theory focus less on need states and more on the nature of the exchange and how it affects motivation Expectancy theorypeople cognitively evaluate potential behaviours in relation to rewards offered in exchange
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