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Chapter 10 Chapter 10 - Reward Systems and Legal Issues Learning Objectives 10.1 Distinguish between traditional and contingent pay plans and how each of these reward systems relates to the performance management system. 10.2 Understand the reasons for the popularity of contingent pay plans. 10.3 Describe how contingent pay plans can help improve employee motivation and performance. 10.4 Be aware of reasons contingent pay plans can fail. 10.5 Design a contingent pay plan taking into account key variables such as the organizations culture and strategic business objectives. 10.6 Understand that pay is only one of many tools that can be used to motivate employees. 10.7 Use rewards effectively so that they produce the effects intended. 10.8 Know the principles of how to design an organizations pay structure, including how to conduct a job evaluation. 10.9 Understand the advantages of the broad-banding approach to designing a pay structure. 10.10 Understand the role played by six legal principles in the implementation of performance management systems: employment at will, negligence, defamation, misrepresentation, adverse impact, and illegal discrimination. 10.11 Identify the point at which a performance management system allows illegal discrimination. 10.12 Know what type of evidence employees need so that they can to prove illegal discrimination and what type of evidence employers need for them to prove lack of illegal discrimination. 10.13 Know the impact of the key laws that prohibit discrimination based on race, sex, religion, age, disability status, and sexual orientation on the design and implementation of performance management systems. 10.14 Design a performance management system that is legally sound. 161 Part IV: Reward Systems, Legal Issues, and Team Performance Management ___________________________________________________________________ Chapter Outline Performance Management: Reward Systems and Legal Issues Overview 1. Reward Systems 2. Legal Issues 1. Reward Systems: Overview Traditional and Contingent Pay (CP) Plans o Reasons for Introducing CP Plans o Possible Problems Associated with CP o Selecting a CP Plan Putting Pay in Context Pay Structures Traditional and Contingent Pay (CP) Plans Traditional Pay o Salary and salary increases are based on Position Seniority Contingent Pay o Salary and salary increases are based on job performance o Also called: Pay for Performance o If not added to base pay, called variable pay Reasons for Introducing CP Plans Performance management is more effective when rewards are tied to results CP Plans force organizations to: Clearly define effective performance Determine what factors are necessary Supervisor and employees are better able to understand what really matters CP plans help to recruit and retain top performers CP plans project good corporate image Why does Avon use CP plans?... View Full Document

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