Types of Reward Problems
Failure to Produce Desired Behaviour
When a reward system has no impact on behaviour.
Production of Desired Behaviour and Undesirable Consequences
When the reward system does indeed generate the desired behaviour, but there are
also unanticipated negative consequences.
Sears service technicians did generate increased sales, but cheated customers.
When a reward system generates the rewarded behaviours, with no obvious
negative consequences, but also serves to suppress other desirable behaviours that
are not measured or rewarded.
Auto retailer – sales staff paid only on the basis of individual sales. Didn’t want to
train new staff - competition
Production of Reward Dissatisfaction
When employees believe that the rewards they receive are not consistent with the
contributions they are making to the organization, or when they believe that the
reward system is unfair.
Can result in a variety of negative consequences
o Poor work performance
o High turnover
o Poor customer service
o Employee dishonesty
Three Key Employee Behaviours
An effective reward system should promote desired behaviour.
Occurs when employees decide to join and remain with a firm.
Occurs when employees perform the tasks that have been assigned to them.
Organizational citizenship behaviour
Occurs when employees voluntarily undertake special behaviours beneficial to the
organization that goes beyond simple membership and task behaviour.
o Extra effort
o High cooperation with others
o High initiative
o High innovativeness
o Extra customer service
o General willingness to make sacrifices for the good of the organization Three Key Employee Attitudes
The attitude one holds towards one’s job and workplace, either positive or negative
Leads to membership behaviour
o Reduces stress
The attitude one holds toward good job performance
The strength of employee’s desire to perform his or her duties well.
Leads to task behaviour
A sense of shared goals, belongingness and desire to remain a member of the
organization (organizational commitment).
Can have a positive effect on job satisfaction and work motivation
Leads to citizenship behaviour and contributes to membership and task behaviour
o Positive group norms
o Cooperative behaviour
o Innovative behaviour
o Increased job effort
Each of these attitudes can lead to behaviour which is beneficial to the
organization in different ways.
Need only provide sufficient rewards to create some degree of membership
Human Relations Organizations
Rely on job satisfaction and positive work norms.
Must ensure they have equitable reward systems that generate job satisfaction and a
substantial degree of commitment
Depend on high membership behaviour and adequate task behaviour.
High Involvement Organizations
Need to generate all three job attitudes and behaviours. Key attitude is organizational identification which generates organizational citizenship
Causes and Consequences of Reward Dissatisfaction
There are four main causes of reward dissatisfaction:
Violation of Psychological Contract
When people decide whether to join a firm, they do so based on their expectations
about the rewards they will receive and the contributions they will have to make –
Problems with the psychological contract can occur for two main reasons:
1. There has not been accurate communication about the nature of the
rewards provided and/or contributions required. These turn out to be
different from the employee’s expectations
2. The employer unilaterally changes the “contract” in a way that the
employee perceives as unfavourable
Causes distrust, decreased job satisfaction, reduced citizenship behaviour and
decreased work performance.
Can lead to increased turnover, theft or sabotage
Employees make comparisons between the ratio of contributions they make to the
firm and the rewards they receive, and the ratios of relevant others, mostly
Employees experience dissatisfaction with pay when:
Lack of Organizational Justice
Distributive justice is the perception that overall reward outcomes are fair – equity
theory. Has a stronger effect (dissatisfaction)
Procedural justice is the perception that the process through which rewards are
determined is fair.
Procedural justice is achieved if the pay system is:
o Free of bias
Unless employees believe that both of these are fair, they will not feel that the
reward system is fair.
Consequences of Reward Dissatisfaction Attempt to Increase Rewards
Quit organization and take a more rewarding job
Demand higher extrinsic rewards, individually (asking for a raise) or collectively
through a union
If no union exists, employees must attempt to form one
Some employees may resort to illicit means – stealing the firm’s property or
Increase work performance, if they are quite certain it will lead to significantly
increased rewards – promotions
Increasing intrinsic rewards – doing something they enjoy
Attempt to Reduce Contributions
Formally request their job duties be reduced – unpaid overtime
Reduced effort or longer breaks
Reducing quality of customer service
Why do People Work?
If they have unsatisfied needs
If employment is seen as the best vehicle to satisfy those needs
If they are able and willing to do the things that the employment requires
What factors determine whether an employee stays with the employer long term?
Satisfaction with pay
Satisfaction with promotion
Satisfaction with supervisors
Satisfaction with co-workers
Satisfaction with job itself
Satisfaction with job security
o Employees stay with the organization based on positive feelings toward