Applied Performance Practices Study Guide

APPLIED PERFORMANCE PRACTICES * FINANCIAL REWARD PRACTICES >Financial Rewards- the most fundamental applied performance practice in organizational settings. >Pay has multiple meanings * Symbol of success * Reinforcer and motivator * Reflection of performance * Can reduce anxiety >Meaning of money varies * Higher value to men than women * Cultural values influence the meaning and value of money TYPES OF REWARDS IN THE WORKPLACE * Membership and Seniority * Job Status * Competencies * Performance 1. Membership- and Seniority- Based Rewards * Fixed wages, seniority increases. * (Sometimes called â€Å"pay for pulse†) represent the largest part of most paychecks. Sample Rewards: * Fixed pay * Most employee benefits * Paid time off Advantages: * May attract applicants * Minimizes stress of insecurity * Reduces turnover Disadvantages: * Doesn’t directly motivate performance * May discourages poor performers from leaving * Golden handcuffs may undermine performance 2. ) Job St atus-Based Rewards * Includes job evaluation and status perks. Job evaluation –systematically evaluating the worth of jobs within an organization by measuring their required skill, effort, responsibility, and working conditions. * Maintain feelings of equity (people in higher-valued jobs should get higher pay) and motivate employees to compete for promotion. Sample rewards: * Promotion-based pay increase * Status-based benefits Advantages: * Tries to maintain pay equity * Minimizes pay discrimination * Motivates employees to compete for promotion Disadvantages: Encourages hierarchy which may increase costs and reduce responsiveness * Reinforces status differences * Motivates job competition and exaggerated job worth. 3. ) Competencies-Based Rewards * Pay increases with competencies acquired and demonstrated * Employees now receive pay increases within each pay band partly based on how well they have acquired new knowledge and skills. * Skill-based pay-is a variation of compet ency-based rewards in which employees are rewarded for the number of skill modules mastered and consequently the number of jobs they can perform.Sample Rewards: * Pay income based on competency * Skill-based pay Advantages: * Improve workforce flexibility * Tends to improve quality * Consistent with employability Disadvantages: * Subjective measurement of competency * Skill-based pay plans are expensive 4. ) Performance-Based Rewards Here are some of the most popular individual, team and organizational performance-based rewards: * Individual Rewards * Bonuses- many employees receive individual bonuses for accomplishing a specific task or exceeding annual performance goals. Commissions- real estate agents and other salespeople typically earn commissions in which their pay increases with sales volume. * Piece rate systems reward employees based on the number of units produced. * Team Rewards * Bonuses- employees earn a bonus based on how well their store meets or exceeds specific fina ncial goals. * Gainsharing Plans- a reward system in which team members earn bonuses for reducing costs and increasing labor efficiency in their work process. * Organizational Rewards Employee Stock Ownership Plans (ESOPs) – a reward system that encourages employees to buy stock in the company. * Stock Options- a reward system that gives employees the right to purchase company stock at a future date at a predetermined price. * Profit-sharing Plans- a reward system that pays bonuses to employees based on the previous year’s level of corporate profits. * Balanced Scorecard (BSC) – a reward system that pays bonuses for improved results on a composite of financial, customer, internal process and employee factors.