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    Pay-For-Performance: The Evidence: Mcgraw-Hill/Irwin

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    mnornajamudin
    Compensation_Milkovich

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    Pay-For-Performance: The Evidence: Mcgraw-Hill/Irwin

    Uploaded by

    mnornajamudin
    64 views29 pages
    Compensation_Milkovich

    Original Title

    111762_Chapter9

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    Compensation_Milkovich

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    64 views29 pages

    Pay-For-Performance: The Evidence: Mcgraw-Hill/Irwin

    Uploaded by

    mnornajamudin
    Compensation_Milkovich

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 29

    Chapter 9

    Pay-for-Performance:
    The
    Evidence
    McGraw-Hill/Irwin

    Copyright 2011 by the McGraw-Hill Companies, Inc. All rights reserved.

    Chapter Topics
    What Behaviors Do Employers Care
    About?
    What Does It Take to Get These
    Behaviors? What Theory and
    Practitioners Says
    Does Compensation Motivate
    Behavior?
    Designing a Pay-for-Performance Plan
    9-2

    What Behaviors Do Employers Care


    About?
    Employers want employees to perform
    in ways that lead to better
    organizational performance
    Organizational strategy is the guiding
    force that determines what kinds of
    employee behaviors are needed

    9-3

    Exhibit 9.1: The Cascading Link between


    Organization Strategy and Employee Behavior

    9-4

    Exhibit 9.2: The Big Picture, or


    Compensation Can't Do It Alone!

    9-5

    What Behaviors Do Employers Care


    About? (cont.)
    Behaviors that compensation needs to
    reinforce:
    Compensation should be sufficiently
    attractive to make recruiting and hiring
    good potential employees possible
    (attraction)
    Make sure the good employees stay with
    the company (retention)
    Build further knowledge and skills
    9-6

    What Behaviors Do Employers Care


    About? (cont.)
    Find ways to motivate employees to
    perform well on their jobsto take their
    knowledge and abilities and apply them
    in ways that contribute to organizational
    performance

    Performance must be accurately


    measured to tell if compensation
    efforts are working
    Performance management
    9-7

    Exhibit 9.3 Performance Measurement


    Relates to Compensation Strategy

    9-8

    What Motivates Employees?


    Motivation involves three elements:
    What is important to a person?
    Offering it in exchange for some
    Desired behavior

    9-9

    Exhibit 9.4: Motivation Theories

    9-10

    Exhibit 9.4: Motivation Theories

    9-11

    Exhibit 9.4: Motivation Theories


    (cont.)

    9-12

    Exhibit 9.4: Motivation Theories


    (cont.)

    9-13

    Exhibit 9.4: Motivation Theories


    (cont.)

    9-14

    Exhibit 9.4: Motivation Theories


    (cont.)

    9-15

    Exhibit 9.4: Motivation Theories


    (cont)

    9-16

    Exhibit 9.5: Components of a


    Total Reward System

    9-17

    Exhibit 9.6: Wage Components

    9-18

    Exhibit 9.6: Wage Components

    9-19

    Exhibit 9.6: Wage Components

    9-20

    Exhibit 9.6: Wage Components

    9-21

    Does Compensation Motivate


    Behavior?
    Key factors influencing a persons
    decision to join a firm
    Level of pay
    Pay system characteristics

    Job candidates look for organizations


    with reward systems that fit their
    personalities.
    Reward systems should be designed to
    attract people with desired
    Personalities and values
    9-22

    Do People Stay in a Firm (Or


    Leave) Because of Pay?
    Factors impacting turnover

    Pay based on individual performance


    Group incentive plans
    Level of employee satisfaction with pay
    Changing base pay

    9-23

    Do People Stay in a Firm (Or Leave)


    Because of Pay? (cont.)
    Other rewards that influence the
    decision to stay

    Work variety and challenge


    Development opportunity
    Social
    Status recognition
    Work importance
    Benefits

    9-24

    Do Employees More Readily Agree to


    Develop Job Skills Because of Pay?
    Skill-based pay is intended to pay
    employees for learning new skills
    Evidence indicates that pay for skill
    may not increase productivity, but it
    does focus people on believing in the
    importance of quality and in turning
    out significantly higher quality
    products

    9-25

    Do Employees Perform Better on


    Their Jobs Because of Pay?
    A well-designed plan linking pay to
    behaviors of employees generally
    results in better individual and
    organizational performance
    If the incentive depends on individual
    performance, applicants find the
    company more attractive

    9-26

    Do Employees Perform Better on


    Their Jobs Because of Pay? (cont.)
    Team-based incentives, in contrast,
    are less attractive
    One view suggests that linking pay to
    performance occurs through two
    mechanisms, an incentive effect and a
    sorting effect

    9-27

    Designing A Pay-For-Performance
    Plan
    Efficiency
    Strategy
    Structure
    Standards

    Objectives
    Measures
    Eligibility
    Funding

    9-28

    Designing A Pay-For-Performance
    Plan (cont.)
    Equity/Fairness
    Distributive justice
    Procedural justice
    Communications

    Compliance
    Comply with existing laws
    Enhance and maintain firms reputation

    9-29

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