Is Pay Effective Organizational Reward ?


Pradip Kharade


Is pay effective organizational reward? Does fact CEO makes 20 times as much as the lowest paid members, have any effect on value pay as detriment of organizational performance?

Reward System

Organizations established reward systems to compensate their employees for good work done.

 Membership or Seniority-based reward  Job status based reward  Competency reward  Performance based reward

Types of Reward System

Pay for Performance

significant & multidimensional factor in job satisfaction. Employees prefer Flexible benefit plan which helps in both benefits satisfaction & over all job satisfaction.

Five Dimensions of Performance
    

Efficiency Effectiveness Economy Compliance Service Quality

Key Factors in Organizational Reward System
Reward Norms
•Profit & Equity •Equality •Need

Types of rewards
•Financial •Social •Psychic

Desired outcomes
•Motivate •Develop •Satisfy

Distribution criteria
•Results •Behavior

Money is instrumental in providing upper level need satisfaction. When pay serves for good performance, it acts as a symbolic cue for achievement. Pay for performance is something extra, beyond basic wages & salaries.

Effect on organizational performance
 

Large pay difference create feeling of injustice. If employee sense an inequity between pay ,they either leave the job or decrease their performance.

Three Golden Rules of Reward System
 

Reward good performance. Offer pay that is equitable with others within & outside the company. Offer pay in form in which raises are achievable & incentives are value pay.

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