Bài giảng Human Resource Management - Chapter 12 Recognizing Employee Contributions with Pay

Introduction Organizations have discretion in deciding how to pay. Each employee’s pay is based upon individual performance, profits, seniority, or other factors. Regardless of cost differences, different pay programs can have different consequences for productivity and return on investment. Pay plans used to energize, direct, or control employee behavior. Three theories that help to explain compensation’s effects are the reinforcement theory, expectancy theory and the agency theory; behavior–reward contingencies shape behaviors.

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Chapter 12Recognizing Employee Contributions with PayCopyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.IntroductionOrganizations have discretion in deciding how to pay. Each employee’s pay is based upon individual performance, profits, seniority, or other factors.Regardless of cost differences, different pay programs can have different consequences for productivity and return on investment.Pay plans used to energize, direct, or control employee behavior.Three theories that help to explain compensation’s effects are the reinforcement theory, expectancy theory and the agency theory; behavior–reward contingencies shape behaviors. 12-*Programs Recognizing ContributionsPrograms differ by payment method, payout frequency and ways of measuring performance.Potential consequences include employees’ performance motivation and attraction, culture and costs. Management style and type of work influence whether a pay program fits the situation.GainSharing12-*Merit PayMerit pay programs link performance-appraisal ratings to annual pay increases.A merit increase grid combines an employee’s performance rating with employee’s position in a pay range to determine size and frequency of his or her pay increases.Merit Bonus - Merit pay paid in the form of a bonus, instead of a salary increase.Some organizations provide guidelines regarding percentage of employees who should fall into each performance category.12-*Profit SharingUnder profit sharing, payments are based on a measure of organization performance (profits), and payments do not become a part of base pay.Advantages-profit sharing may encourage employees to think more like owners. labor costs are automatically reduced during difficult economic times, and wealth is shared during good times.Disadvantage-workers may perceive their performance has less to do with profit than top management decisions over which they have little control. 12-*OwnershipOwnership encourages employees to focus on organization’s success, but may be less motivational the larger the organization.Stock options - plan that give employees the opportunity to buy company stock at a previously fixed price. Employee stock ownership plans (ESOPs) give employers certain tax and financial advantages when stock is granted to employees.ESOPs can carry significant risk for employees. 12-*GainsharingGainsharing – form of compensation based on group or plant performance rather than organizationwide profits that does not become part of the employee’s base salary.offers a means of sharing productivity gains with employees.Improves performance12-*Group Incentives and Team AwardsGroup incentives measure performace in physical output.Team award plans may use a broader range of performance measures.Individual competition may be replaced by competition between groups or teams.Individual incentives reward individual performance but payments are not rolled into base pay. Performance is measured as physical output rather than by subjective ratings.12-*Managerial and Executive PayTop managers and executives are a strategically important group whose compensation warrants special attention. Some companies' rewards for executives are high regardless of profitability or stock market performance.Executive pay can be linked to organizational performance (agency theory). Increased pressure from regulators and shareholders to better link pay and performance.Securities and Exchange Commission (SEC) 12-*Process and Context Issues 3 issues represent areas of company discretion and pose opportunities to compete effectively:Employee Participationin Decision MakingCommunicationPay & Process:Intertwined Effects 12-* SummaryPrograms vary as to whether they link pay to individual, group, or organization performance. Often, it is a choice between different combinations of programs that seek to balance individual, group, and organization objectives.Wages, bonuses, and other types of pay influence an employee’s standard of living. Pay can be a powerful motivator. An effective pay strategy promotes an organization’s success; conversely, a poorly conceived pay strategy can have detrimental effects.4 categories of a balanced scorecard include financial, customer internal and learning and growth.12-*