gomez_mhr05_im_11 - Chapter 11 Chapter 11 Rewarding...

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Chapter 11 Chapter 11 Rewarding Performance CHAPTER OVERVIEW (PPT 11.1- 11.3) This chapter focuses on the effective design and implementation of pay-for- performance systems. First, it addresses the major challenges and pitfalls facing managers in their attempts to link pay and performance. Second, the chapter offers a set of general recommendations to deal with pay-for- performance challenges. Third, it describes and analyzes specific types of pay-for-performance programs. Finally, it discusses unique pay-for-performance plans for executives and sales personnel. ANNOTATED OUTLINE I. Pay for Performance: The Challenges (PPT 11.4- 11.5) This section covers the attitudes that employees have about pay, the difficulties in measuring performance, the psychological contract, lack of flexibility, the importance of credibility, job satisfaction, stress, and the potential reduction of intrinsic drives. A. The "Do Only What You Get Paid For" Syndrome B. Negative Effects on the Spirit of Cooperation C. Lack of Control D. Difficulties in Measuring Performance E. Psychological Contracts F. The Credibility Gap G. Job Dissatisfaction and Stress H. Potential Reduction of Intrinsic Drives II. Meeting the Challenges of Pay-for-Performance Systems (PPT 11.6-11.7) 151
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Part Five Appropriately designed pay-for-performance systems offer managers an excellent opportunity to align employees' interests with the organization's. Pay-for-performance programs are not likely to achieve the desired results unless complementary HRM programs are implemented at the same time. A. Link Pay and Performance Appropriately B. Use Pay for Performance as Part of a Broader HRM System C. Build Employee Trust D. Promote the Belief that Performance Makes a Difference E. Use Multiple Layers of Rewards F. Increase Employee Involvement G. Use Motivation and Nonfinancial Incentives III. Types of Pay-for-Performance Plans (PPT 11.8- 11.16) Types of pay-for-performance plans vary in design. Some are designed to reward individuals, teams, business units, the entire organization, or any combination of these. A. Individual-Based Plans Individual-based plans are the most widely used pay-for- performance plans in industry. There are several plans that can be used: merit pay , bonus programs , and awards . Advantages of individual-based pay-for-performance plans include rewarded performance is likely to be repeated, financial incentives can shape an individual's goals, they help the firm achieve individual equity, and they fit in with an individualistic culture. Disadvantages include they may promote single-mindedness, employees do not believe pay and performance are linked, they may work against achieving quality goals, and they may promote inflexibility. Figure 11-2
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gomez_mhr05_im_11 - Chapter 11 Chapter 11 Rewarding...

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