Introduction

Human Resource Management

The most important "products" in today's economy are services provided by people; there
is, therefore, considerable interest in the field of human resources. Indeed, it has been
called the "last frontier" of management. By gaining an understanding of appropriate
principles and procedures, strategies can be developed to meet the human resource
management challenge presented by reinvention initiatives.
In this endeavor it is well to remember that managing human resources is both a science
and an art; there are accepted approaches to the subject, but no single right way. Those
looking for neat answers to complex questions are likely to be disappointed by any source
they consult.
This course will be an integrative learning experience by emphasizing two related goals:
First, scholastic goals which include the acquisition of a set of human resource concepts
and their application to contemporary issues; and
Second, personal career goals which encompass the development of the human resources
of this class as well as individual career plans.
This is an exciting and dynamic topic area that encompasses such issues as workforce
diversity, drug testing, video display terminals, secondary smoke, AIDS, lie detectors,
sexual harassment, total quality management, comparable worth, whistle blowing as well
as more traditional management concerns.
Subjects such as these will be briefly addressed in this course and examined in greater
detail in "Issues in Human Resource Management" next year.
Our objective will be to examine a framework for understanding the management of
human resources. The cognitive map which we will jointly pursue has several critical
areas:
(a) the managerial environment,
(b) the acquisition, allocation, development, and sanction of human resources, and
(c) change and the future.
Accordingly, we will initially address the professional, historical, and work context
within which human resources are managed. Next, in the single largest portion of the
class, personnel management will be explored as the performance of systemic functions
in organizations (acquisition, allocation, development, and sanction). Finally, change and
the future of human resource management in government will be probed.

Do we all need rewards and incentives to be motivated for work?

Ask teachers and parents what role rewards and incentives would play in the ideal
teaching situation and most of them would admit that ideally they wouldn't need them at
all: that their students would be so motivated to learn and so excited by the process that
rewards would be entirely beside the point.
The music itself would provide more than enough satisfaction. So most of us who use
rewards do so with a hint of reluctance, regret or guilt. We wish they weren't necessary.
And, in addition, some of us worry about the message we are sending with our rewards.
Are we reducing the enjoyment of the music and the learning process by distracting our
students with extrinsic rewards? Are the children going to become more interested in the
reward than the musical task undertaken to earn it? Are we turning everything, even the
wonderful gift of music-making, into a carefully measured economy where every effort
and accomplishment is purchased with a sticker?
There is good reason to be wary of the role rewards and incentives are used. Recently
good studies, articles and books have been published which call into question even our
most accepted uses of incentives. But by thoughtfully considering the way in which we
use rewards, we can avoid many of the most common pitfalls. First, we should think
about the why we are using our reward.
The most obvious, though arguably the most risky reason, is to provide a supplementary
motivating drive for a student to do a particular task. We could also use rewards to
express respect for the child and our appreciation of exceptionally good work. We might
use a reward to publicly recognize or draw attention to good work.
It might be that we wish to draw the student's own attention to the magnitude of what he
has accomplished, as though he has scaled a mountain and we are encouraging him to
enjoy the view. And we might use a reward system to make tangible, or objectify, the
process of learning.
These all seem like perfectly reasonable reasons to consider rewarding a student.
However, it is important to realize that the message we intend to send with our reward
and the message which is actually received by the student might be very different. For
instance, if we use a reward to supplement motivation, what we mean to say is "this task
is so important that I am giving you something special to ensure that you do it".
But it is very easy for the child to get the message that "this task is not worth doing on its
own merit; some bonus must be included to make it worthwhile". And similarly, if we
use a reward (say, a graduation award) to call public attention to an accomplishment,
what we want to say is "this student has accomplished something wonderful". But what
might be understood by the student and others is "students who have not completed this
repertoire are not doing anything worthy of recognition".

If we use a sticker-chart to quantify progress as a beginning student polishes up her first

"Twinkle Variation", we are hoping to show the student that although daily improvement
might be too slight to see, as the stickers add up real learning is taking place and longterm progress will result. Instead, the student may get the idea that the repetition and the
accumulation of rewards is the primary objective, rather than the learning that this is
symbolizing.
Probably the easiest way to avoid sending the wrong message is to be aware of the
possibility. We need to be receptive to the student's possible misinterpretation of our
goals in giving rewards. If we find ourselves bargaining with the student about the
reward, or if we find that interest is primarily in the reward rather than the process which
earns it, we need to change tactics quickly!
And it certainly wouldn't hurt to be quite open and up-front with students about why we
are using a reward. Even young students can benefit from the explanation that although
they will receive a Book 1 graduation ribbon at the recital, what you are most proud of is
not that they have finished Book 1, but that they struggled to overcome the difficulties
they were having with tone, worked very hard at this, and can now play with a beautiful
legato style.
Or it might very well help a seven-year-old to hear that a proper bow-hold is SO
important to you, and to his ultimate progress on the instrument, that you would be
willing to pay him for it for a couple of weeks.
This tells him why you are using the reward, prevents any misunderstandings, and
encourages him to stay focused on the skill in question, rather than the gimmick used to
achieve it.
In the remainder of this newsletter we will look at some of the controversies involved in
the use of rewards, the ways in which many of us are using rewards and incentives, and
examples and comments concerning individual experiences. Read on!

Do companies really motivate their employees in the real sense for

target achievements? If yes then how ?
Beware of the Employee of the Month Programs
Many Companies use employee-of-the-month awards. This award may include a
photograph of the honoree with an engraved nameplate in the lobby of the business,
perhaps a reserved parking place and/or a small cash bonus.
Variation on employee-of-the-month programs are almost endless. At Acapulco
Restaurants in Long Beach, CA, the honoree also gets a paid day off. At Gregson's
Foods, a retail grocery chain in Cadlsden, AL, the employee receives a silver name tag
inscribed with the title, month and year of the award to wear as long as he/she works for
the company.
As popular as these programs are, they may not be the best for motivating today's
employees.
What's Wrong with Them?
It's difficult to motivate employees through a "program". Programs are often too distant
and formal to get excited about. Motivation is very personal and stems primarily from the
interaction between an employee and his or her manager. What is motivating to an
individual also varies from person to person.
The best motivation comes from daily positive reinforcement by management of desired
performance with as many employees as possible - not something that occurs once a
month for a single employee.
When new, an Employee of the Month program can stimulate much excitement, hovever,
over time much of the thrill is often lost. Oftentimes the selection criteria for the program
aren't clear, and overheard are such things as "Let's give it to someone in Accountingthey never get it" or "Sally can't get it - she already received it earlier this year".
In other instances the program reaches a saturation point where so many employees have
received the award that it no longer seems special.
A program's reputation can also be tarnished. In one company I consulted with,
management was seeking to improve the employee-of-the-month award, which many felt
was ineffective. By talking with employees, I quickly learned that some employees who
received the award were not considered deserving by other employees, I also learned it
was a great administrative burden for managers to nominate someone for the program and a humiliating experience for both the manager and employee if "corporate"
subsequently rejected the application.
Getting More from a Program

If you have to have an employee-of-the-month program, there are some things that can
help it be more successful. They are as mentioned belowFirst, make sure other things are systematically being done to recognize employee
performance in the workplace on a daily basis.
Second, employee-of-the-month programs can be improved if nominations are open to
everyone, not just management. This keeps the program from being biased to favor
employees who have greater visibility with management.
Third, a program can be further improved if it's not limited to being given one a month so as to seem like a quota - whenever that happens.
Fourth, for best results, strive to keep the program fresh and flexible, and make changes
in the program as it begins to feel stale to targeted employees.
In summary, there are more effective ways to improve employee motivation, morale, and
initiative than are typically obtained from employee-of-the-month programs. But if used
in conjunction with other techniques - and with an awareness of the potential pitfalls employee-of-the-month programs still have a place in motivating today's employees.

LESSON 1
Role of Compensation and Rewards in the Organization
Learning Objective

Understand the meaning of Compensation and Rewards

Types of Compensation and Rewards

Basic purpose for establishment of a sound Compensation and Reward

administration

Importance and purpose of Compensation and Rewards

What is Compensation?
In a laymans language the word Compensation means something, such as money, given
or received as payment or reparation, as for a service or loss. On the other hand, the word
Reward means something given or received in recompense for worthy behavior or in
retribution for evil acts.
The word Compensation may be defined as money received in the performance of work,
plus the many kinds of benefits and services that organizations provide their employees.
On the other hand, the word Reward or Incentive means anything that attracts an
employees attention and stimulates him to work. An incentive scheme is a plan or a
programme to motivate individual or group performance.
An incentive programme is most frequently built on monetary rewards (incentive pay or
monetary bonus), but may also include a variety of non-monetary rewards or prizes.
Types of Compensation :
Compensation or rewards (incentives) can be classified into:
(1) direct compensation and
(2) indirect compensation.
Money is included under direct compensation (popularly known as basic salary or wage,
i.e. gross pay) where the individual is entitled to for his job, overtime-work and holiday
premium, bonuses based on performance, profit sharing and opportunities to purchase
stock options.

While benefits come under indirect compensation, and may consist of life, accident, and
health insurance, the employers contribution to retirement (pensions), pay for vacation
or illness, and employers required payments for employee welfare as social security.
While French says, the term Incentive system has a limited meaning that excludes
many kinds of inducements offered to people to perform work, or to work up to or
beyond acceptable standards. It does not include:
(1) Wage and salary payments and merit pay;
(2) Over-time payments, pay for holiday work or differential according to shift, i.e. all
payments which could be considered incentives to perform work at undesirable times;
and
(3) Premium pay for performing danger tasks.
It is related with wage payment plans which tie wages directly or indirectly to standards
of productivity or to the profitability of the organization or to both criteria. Compensation
represents by far the most important and contentious element in the employment
relationship, and is of equal interest to the employer, employee and government.
(1) To the employer because it represents a significant part of his costs, is increasingly
important to his employees performance and to competitiveness, and affects his ability
to recruit and retain a labor force of quality.
(2) To the employee because it is fundamental to his standard of living and is a measure
of the value of his services or performance.
(3) To the government because it affects aspects of macro-economic stability such as
employment, inflation, purchasing power and socio economic development in general.
While the basic wage or pay is the main component of compensation, fringe benefits and
cash and non-cash benefits influence the level of wages or pay because the employer is
concerned more about labor costs than wage rates per se. The tendency now is towards an
increasing mix of pay element of executive compensation has substantially increased in
recent years.
Basic purpose for establishment of a sound Compensation and Reward
administration
The basic purpose of establishment of a sound compensation and reward administration is
to establish and maintain an equitable compensation structure.
Its secondary objective is the establishment and maintenance of an equitable labor-cost
structure, an optimal balancing of conflicting personnel interests so that the satisfaction
of employees and employers is maximized and conflicts minimized.

A sound wage and salary administration tries to achieve these objectives:

(a) For employees:
Employees are paid according to requirements of their jobs, i.e., highly skilled jobs
are paid more compensation than low skilled jobs. This eliminates inequalities.
(2) The chances of favoritism (which creep in when wage rates are assigned) are
greatly minimized.
(3) Job sequences and lines of promotion are established wherever they are applicable.
(4) Employees' morale and motivation are increased because a wage
programme can be explained and is based upon facts.
(b) To employers:
(1) They can systematically plan for and control their labor costs.
(2) In dealing with a trade union, they can explain the basis of their
wage programme because it is based upon a systematic analysis of job
and wage facts.
(3) A wage and salary administration reduces the likelihood of friction
and grievances over wage inequities.
(4) It enhances an employee's morale and motivation because adequate and
fairly administered wages are basic to his wants and needs.
(5) It attracts qualified employees by ensuring and adequate payment for all
the jobs.
According to Beach, wage and salary programmes have four major purposes:
(1) To recruit persons for a firm;
(ii) To control payroll costs;
(iii) To satisfy people to reduce the incidence of quitting grievances, and
fractions over pay and
(iv) To motivate people to perform better.
Tutorial Activity 1.1
Discuss the role and importance of Compensation and Rewards.

Tutorial Activity 1.2

What is the basic purpose behind the establishment of a sound Compensation and
Reward administration system in the organizations?
Tutorial Activity 1.3
Knowledge of the importance of compensation management makes you in becoming a
hard core Human Resource manager. Throw light on the validity of this statement with
the help of a corporate example.
Tutorial Activity 1.4
Now let us study the role of the Supervisor in Compensation
Supervisors must be actively involved in discussing the institution's compensation
program with employees. The supervisors role in compensation encompasses the
following:
Ensure employees know their job title, salary range and responsibilities. Respond to
employee questions to clarify and resolve issues quickly and efficiently.
Conduct a formal performance review once a year. In addition, you should communicate
your expectations when employees are promoted or transferred into a new job.
Remain knowledgeable of your employees' salaries, skills and experience.
Ensure the job descriptions are current and accurate. Develop desk or departmental job
descriptions to more clearly define what is done in your particular area, unless the generic
job description is a very close match. The education and experience requirements of the
job description must match the generic job description.
Review your staffs salaries at least once every fiscal year in order to determine and make
salary changes. Use the Job Changes/Salary Actions and Merit Program guidelines for
assistance.
Familiarize yourself with non-base salary benefits such as paid leave, insurance,
retirement, recreational facilities, and flex schedules. Direct your questions to the
Benefits Department.
Reward employees with non-monetary rewards such as sincere praise, thanks for a job
well-done, and lunches, pizza parties, cakes, etc., for achieving milestones.

When a job changes significantly or you need to develop a new job, a compensation
analyst can assist you to determine if an existing job title/description is suitable.
Tutorial Activity 1.5
Let us understand from the case below the role of Compensation and Rewards
management with regard to HEALTH CARE PROVIDERS.
The National Environmental Education & Training Foundation's (NEETF) Health &
Environment Program provides environmental education and training for health
professionals to improve health care and public health, with a special emphasis on
protecting children and other populations disproportionately effected by environmental
pollutants. Given current trends in the American health care system, we believe it is also
critical to form partnerships with managed care organizations to incorporate
environmental measures into mainstream health care delivery systems. To further protect
children's health, in addition to working with health care providers, NEETF has initiated
a healthy schools program to reduce environmental pollutants in schools.
NEETF's Health & Environment Programs are designed to integrate environmental health
into health care provider education and practice settings (e.g. medical and nursing
schools, continuing education programs, private health care organizations) and improve
environmental health conditions in the United States, with an emphasis on children's
environment.
Health Care Providers: The Role of Compensation and Incentives, in Disease
Control Priorities in Developing Countries, second (DCP2)
Charles Hongoro and Charles Normand
Section 1.0: The Nature and Role of Health Care Providers in Disease Control
This section will focus on the following issues:
1.1
A brief description of health care providers and their role in health systems
Health care provider problems. These will be analysed at three levels:
(1) Individual health worker level---issues related to morale/motivation, productivity,
informal activities, internal capacity, remuneration, work environment, etc;
(2) Organisational level (including independent individual providers)issues related to
funding methods, level of autonomy, referral hierarchy (role), accountability structures,
etc; and
(3) Health system levelissues related to the level of decentralisation, funding
arrangements, regulations, system capacity, etc.

Health care systems response to health care provider problems--- health sector reforms?
Common solutions to disparate issues? Where are we getting it wrong?
Section 2: Health care provider incentives
What are Incentives?
This will address definitional issues based on a thorough review of literature. The focus
will be on developing a common view and understanding of the meaning of incentives at
both theoretical and operational levels.
Formal classification of incentives: to include health system, organisational and
individual incentives. The distinction between monetary and non-monetary incentives
will be made for each of these categories.
The links between types of incentives and disease control priorities will be explored
incentive and objective alignment. The need for aligning health system, organisational
and individual incentives, and the problems associated with doing so will be highlighted.
Contextual issues: The context is defined here from an individual and /or organisational
viewpoint. This will include issues on working culture, norms and regulations, health
systems organisation
Incentives in practice: This section will draw on empirical evidence of what matters to
health care providers in developing countries. The source of information will be
published and unpublished material, and a technical paper focusing on a country
(Bangladesh) or region. This will include a box highlighting a success story or failure in
using incentives.
Section 3: Health care provider compensations
The section will include a description of health care provider compensations in
developing countries focussing on individuals (public health workers), organisations
(public, NGOs, and private) and independent individuals (e.g. General Practitioners, and
traditional healers)
3.1 Current practices on health care provider compensations: types of payments for
individuals and organisations or independent private practitioners fee-for service,
capitation, case payments (e.g. DRGs, per diem, flat rate (bonus payment), salary, global
budget.
The interplay of mechanisms and incentives will be discussed. Problems associated with
each method will be highlighted for example paying for group effort (will draw on
concepts of co-operative behaviour, and the prisoners dilemma)

This section will highlight what seems to work and what does not ---and why using
specific examples from both developing and developed countries where appropriate. The
dimensions of analysis will include rationale, design, implementation, impact on
incentives (incentive alignment issues) and ultimately health care provider behaviour.
Two boxes highlighting a success story and a failure will be included in this section.
Vertical versus integrated programmes. The key question to be addressed here is how the
design of a diseases control programme influences health care provider incentives and
behaviour particularly looking at effects of compensation methods, management regimes,
work environment, accountability, input procurement (as a micro-system analysis of the
system), etc.
Examples of vertical and integrated programmes that introduced innovative
compensation and incentive structures will be used to demonstrate possible effects of
programme design and implementation on health care provider behaviour and draw
implications for disease control.
Performance related compensations: This section will be devoted to an analysis of health
care compensation methods based on some form of contractual arrangement. Theoretical
and practical arguments for and against use of such methods will be discussed.
Compensation methods and sustainability issues. A discussion of health systems
capacity to sustain different types of compensation methods--- funding arrangements,
relationship with other public sector workers, labor migration etc.
Formal classification (based on theory and evidence) provider compensations, predicted
and observed behaviour. Material from this section will draw from literature
Example:
Type of
compensation
E.g. bonus
payments

Rationale

Design

Incentives

Increase
productivity

Based on
quantitative
outputs

Increase
volume of
activity and not
quality

Empirical
evidence
E.g.
confirmatory
evidence but
risk of
opportunistic

4.0 Is there an optimal combination of health care provider compensation and incentives
for DCs? This section will focus on the following issues:
Cross cutting issues: linking compensation to performance, managerial autonomy over
health care providers, markets or hierarchies for what types of disease control activities,
National issues: diversity of perceptions of incentives coloured by contextual issues such
as norms, culture, customs, religion, regulations, politics and the economy.

The notion of different compensation and incentive packages for different contexts. Each
package should include the core elements (see cross-cutting issues) for promoting desired
performance behaviour.
5.0 What governments must do and not do:
To adapt and not to imitate:
To put health care provider compensation and incentives to the fore in designing disease
control strategies and programmes, emphasis on strengthening health system incentives
that promote appropriate health care provider behaviour.
The health system should on one hand be able to support the attainment of positive
outcomes of organisational and individual incentives, and on the other suppress negative
or unintended outcomes. For example, promoting dual practice as an incentive to public
health workers in a poorly monitored or regulated system might not help achieve public
health goals.
Implications of increased demand for health workers in the context of scaling up to
MDGs
Need for different approaches for different contexts, and the cost implications of
suggested solutions to current provider compensation and payment problems.
6.0 The R & D Agenda
Based on the literature review and analysis above, this section will devoted to
highlighting areas where information is absent or incomplete. The foregoing will form
the basis for suggesting a research agenda that will help further our understanding of the
role of health care provider compensation and incentives in disease control in developing
countries.
Questions:
(1) Discuss the case analysis with respect to compensation and Rewards management.