2 Agenda Purpose and types of rewards Effectiveness Case study
3 Purpose Thank employees for a job well done Motivate certain kinds of behaviors – Continued good performance – Increased performance – Change in how effort is allocated Need to consider motivation theories when determining appropriate rewards – Equity – Expectancy – Need based theories
4 Pay Increases Raise – permanent increase Bonus – one time payment – Spot bonuses are less formal bonus programs – Many companies still using signing bonuses Increases must be large enough to be meaningful Thinking about raises vs. bonuses – What are the cost implications of each? – What are the motivational implications of each?
6 Non-monetary rewards Includes recognition and opportunities – Employee of the month – Lunch with the boss – Bigger office – Attending a conference or seminar Not technically part of the overall compensation package, but an important motivational tool
7 Effectiveness Aligned with corporate goals, strategy Contingent on performance Valued by the employees Allocation process is perceived as fair
8 Rewards Case Study Read the “ Howe 2 Ski ” case study – Will be distributed in class In small groups, answer the questions Whole class discussion
9 An Ongoing Debate: Do Monetary Rewards Motivate or De-Motivate? Motivate: Economic incentives improve quantity and do not reduce quality (Gupta & Mitra). De-Motivate: Economic incentives reduce the satisfaction of doing enjoyable tasks (Deci).
10 For next class Topic: Pay secrecy Read HBR case “ When Salaries Aren ’ t Secret ” – What are the key issues for the organization? For the employees? – How would you recommend the organization deal with this problem?