te ETO ae ae RR ie rrraceorensb ca sce Oo ae fier Immediate feedback. MyManagementLab® CHALLENGES Aes this chapter you shoul be able to desl moe effec with the folowing 1 Grasp the major challengesin payforpertommance 4 Develop comp=tace in desigaing pay for systems. performance pias for executives and sees people 2. Develop competence in dealing with potential 5. Leam about haw to reward excellence in customer problems with pay for performance stan. sonic. 3 Have ‘amity with various types of pay 6 Become aware of special concerns with pay for forperionnance plans and thei edventages pesfomance programs in smal Ams, sadveniages. erty Tore Company bass is employes’ =. To remedy the stuaton, Century instuted anew pro- ‘ad ayes on how wel eles efor eich cedure a yest ago, Unde his new sister, superasors must cles athe pst 10 yee, these “mets” ae dstrbute employe perfomance atin 2s flame: encllent ‘oat 25 parent of base py About to yeas ago the flop TSH, very good net 20%), goed (net 2094), sti HR partment conducted an employes atc suey One ctr (next 389, marin oruncatstaccry Govest 10%) fis mestsing fins: ore than ay rales ate petoed to these 7 pee of nls ft tt py performance dasfictions, wth res and pvoence Were une enoljees at the fo reching a te repose, tp manegesasked ‘1Operent elie and those atthe te fs sti vie ‘bottom eceing nating, ay aes ee indeed sed on par Shot afte the gst was ‘omanc (as ited by oli oon auth pte tice dio ‘some othe unrated factors, Supis- ‘that something had gone wrong, ing te data shoved nat eneljes ‘A lage number of employees coulénotunderstane how arity ‘tr performance had “cropped compared to the previous year Bi ae that_faotim a big ole in wo recened Foren cones tat sipeorswce eqs pay nce, late empl: hauneed heh ee Seeceaiomanc ining: and ras sstenning tel te weoih ‘turn complained that aspen oy nisl esr gp aa nmeTesontetasofowforince Mepesind aos ond Meng aoe eee were right: Supewios rated more than 0 pecen oft workers a “ocelot” and tere was ery mine al mi he pecetage secynaidaleniggs Sno Pmationefee! Ele “Attempting to motivate employees with pay incentive er yT one (a real company given a fictitious ‘of pay incentives is increasing. In 1988, the numb performance (chiefly in the form of bonuses) to all salar 2014, experts estimated that close to 95 percent of L ound the world. A mor related pay increaThe “Do Only What You Get Paid For” helping them understand the evaluations for themselves :to qualit dan employee's control include ‘quality of the materials th For instance, many medical roup p their pay in the form of Medicine: Do The ing a great deal of contreduce employees’ intrinsic drives, or internally driven motivation. One expert argues that the more a firm stresses pay as an incentive for high performance, the less likely itis that employees will engage in activites that benefit the organization (such as overtime and extra-special service) unless they are promised an explicit reward.” Exhibit 11.1 illustrates how extrinsic motivation may crowd out intrinsic motivation when incentives are introduced, Meeting the Challenges of Pay-for-Perfarmance Systems Properly designed pay-for-performance systems present managers with an excellent opportunity toalign employees’ interests with those of the organization, The following recommendations can help to enhance the success of performance programs and avoid the pitfalls we just discussed Develop a Complementary Relationship Between Extrinsic and Intrinsic Rewards Recent psychological research suggest that hybrid intrinsic-entrinsie rewards may be effective motivators and that one type of reward may not necessarily compete with the other but rather they serve as complements to each other! For instance, “3M offers rewards that nourish both:1k Pay and Performance Appropriatel astances, managers can justif a or meas ditional piece-rateting Ethically ‘in place, en he organization is bet grams providing examples of “gray” or unethical behavio hen it i8 appropriate or inappropriate to Use Motivation Manage k, “Health1 paid vacation, 1 telev but tend to becredibility. In adi4c” Under the rightoe Worth It? Iger ($40.2 million), Direc ($15.4 million), and 37 disentang! wsinessWeek, consultant Larry contracts for t is imp(2010), Conpensetion a to simulate innovation i