Organizational Reward systems

Since positive consequences (rewards and reinforces) are so important to employee behavior, reward systems become critical to employee performance and organizational success.
The organization may have the latest technology, well-thought-out strategic plans, detailed job descriptions and comprehensive training programs, but unless the people are rewarded for their performance-related behaviors, these tools will have little impact.

Thus, organizational reward systems become the key factor bringing about improved performance.

Monetary Rewards

Despite the tendency in recent years to downgrade the importance of money as an organizational rewards (& due to popularity of Maslow’s hierarchy of needs), there is evidence that money can be positively reinforcing for most people. There are also studies indicating that a salary increase, no matter how large, merely intensifies the belief that they deserve more.

In terms of Maslow’s hierarchy of needs, money is often equated only with the most basic requirements of employees. It is viewed in the material sense of buying food, clothing & shelter. Yet, money has a symbolic as well as economic meaning. It can provide power & status and can be a means to measure achievement.

Compensation techniques

The standard base-pay technique provides for minimum compensation for a particular job and is a type of continuous reinforcement schedule. Pay by the hour for workers and the base salary for managers are examples. The technique does not reward aboveaverage performance or penalize belowaverage performance, and it is administered on a continuous basis controlled largely by the job rather than by the person performing the job.

Non-financial rewards

Social rewards – recognition, attention, praise

Feedback as a reward – objective feedback has a positive effective. If feedback is Positive, Immediate, Graphic & Specific (PIGS), it is more effective.


Behavioral Management

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Behavioral Management applies the principles of behaviorist learning theory, especially operant conditioning & reinforcement. The term Organizational behavior modification or O.B.Mod. represent a behavioral approach to the management of human resources for performance improvement. The steps in applying O.B.Mod. are – Identification of Performance behaviors Measurement of the behavior Functional analysis of the behavior Development of an intervention strategy Evaluation to ensure performance improvement

Application of behavioral management

Employee productivity  Safety & accident prevention  Sales performance  Absenteeism & tardiness


Organizational Reward Systems

Main objectives of reward programs
Getting qualified people to join the organization  Keeping employees coming to work  Motivating employees to achieve high levels of performance


Lawler’s Conclusions

Reward satisfaction is influenced by…
How much is received and how much the person feels should be received  Comparisons with others

People differ in the…
Rewards they desire  The importance they place on them

Some rewards are satisfying because they lead to other rewards

Reward Packages

Any reward package should be…
Sufficient to satisfy basic needs  Considered equitable  Individually oriented


Extrinsic and Intrinsic Rewards

Extrinsic (external)Rewards
Salary, wages, fringe benefits  Interpersonal rewards  Recognition and promotions

Intrinsic(internal) Rewards
Completion  Achievement  Personal growth  Autonomy


Rewards, Turnover, Absenteeism

Managers can…  Influence employee attendance behavior  Punish, establish bonuses, and allow employee participation in developing plans Absenteeism reduction is determined by…  The perceived value of the rewards  The amount of the rewards  Whether employees see a relationship between attendance and rewards

Rewards and Job Performance

Key points
Each person has different needs and perceptions, so outcomes have different values  Managers must consider individual differences when choosing rewards  Valued rewards can result in the exertion of effort and high levels of performance


Organizational Commitment

Use intrinsic rewards to develop organizational commitment
Provide achievement opportunities  Recognize achievement when it occurs  Develop intrinsic reward systems that focus on personal importance or selfesteem


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