Alternative Strategies for an Improved Business Outcome (original) (raw)

Implementation Tip from Dixon, Hayes, & Stack's Changing Conceptions of Employee Compensation

The effects of contingent reinforcement on a variety of work behaviors have been well known in the organizational behavior management (OBM) literature for some time (e.g., Hopkins, 1987;. While most applications of monetary incentive-based programs have focused on the individual, this trend is gradually expanding to include group-based pay for performance programs as promising results of this type of system are reported . By using group-based contingencies, individual employees often become more aware of how their own performance affects the group and organization collectively. As a result, individuals are better able to determine the impact of their performance on an organizations' financial status. A concurrent awareness among individual employees and their performance, as well as the organization's success has not always been accomplished with individual employee-based compensation systems.

Strategic Management Journal STRATEGIC REWARD SYSTEMS: A CONTINGENCY MODEL OF PAY SYSTEM DESIGN

A limited number of studies have addressed the idea of 'strategic' reward systems-the matching of compensation systems to a firm's strategy. Prior research on this topic has been confined to U.S. firms, however, and a number of key questions remain unanswered. Using a sample of 917 employees from two large Swiss financial institutions, we found that pay systems are linked with divisional strategic orientation, but in a different form than prior studies. Additionally, we identify hierarchical position as an important variable in the tailoring of reward systems. Hierarchy has a significant main effect on pay plan design, and an interactive effect with strategic orientation.

Compensation: Theory Evidence and Strategic Implications

SOUTH ASIAN JOURNAL OF MANAGEMENT , 2008

The detailed analysis regarding the integration of economic, psychological and management perspectives offer rich insight in this area. The book is an invaluable tool for those trying to understand the complexities associated with compensation and how pay strategies influence the success of organizations. In sum, the authors Barry Gerhart and Sara Rynes do full justice to the questions they try to answer relating to pay level, pay structure and the pay delivery system. As the book presents a compendium of theory, current practices and research evidence, it lives up to the title of the book “Compensation: Theory, Evidence and Strategic Implications”. The book is a useful guide to not only student community but also compensation management consultants and organizational development specialists.

The Original Management Incentive Schemes

Journal of Economic Perspectives, 2005

During the 1990s, the structure of pay for top corporate executives shifted markedly as the use of stock options greatly expanded. By the early 2000s, as the dot-com boom ended and the Nasdaq stock index melted down, these modern executive incentive schemes were being sharply questioned on many grounds—for encouraging excessive risk-taking and a short-run orientation, for being an overly costly and inefficient method of providing incentives, and even for tempting managers of firms like Enron, WorldCom and Tyco to commit fraud in order to ensure a high stock price at the time of exercise. This article examines executive incentive schemes developed by Du Pont and General Motors in the 1920s —the original incentive schemes linking executive compensation to stock prices. The author argues that these plans were well-designed to pre-empt and address many of the criticisms of modern-day executive stock option plans.

Matching compensation and organizational strategies

Strategic Management Journal, 1990

This study examines the impact of organizational strategies (at both the corporate and business unit level) on pay strategies, and their interactive influence on the effectiveness of the compensation system. The empirical findings are based on the survey responses of 192 human resource management executives in business units of large manufacturing firms. Corporate strategy was a significant predictor of pay package design, pay level relative to the market, and pay administration policies. Business unit strategy was a significant predictor of pay package design and pay level relative to the market. The findings are supportive of congruency notions which suggest that the effectiveness of the compensation system is partly a function of the fit between pay strategies and organizational strategies.

REWARD AND COMPENSATION STRATEGY: ISSUES AND CHALLENGES

Management & Change, 2000

The procurement, development and retaining of employees have never been so important than today in most of the organizations worldwide. Companies are relentlessly searching for ways to retain their core employees. Understanding the interlinkages between peljormance management strategy, training and development strategy. compensation strategy. and deployment of employees has become very vital for attracting, motivating and retaining good employees. In this era of restructuring and downsizing, much needs to be done by the employers to motivate their employees. The companies who are restructuring themselves are finding it difficult to keep up the morale of their employees. In many cases. the huge incentive and performance related pay systems have failed, and the psychological contract between employees and employers is under the process of redefinition. To sustain the motivational level of employees. organizations must demonstrate to them a close link between performance and rewards. This is the rationale which is advocated for the Lise of merit pay. But in spite of its attractiveness. the PRP and ESOP sometimes bring about results precisely the opposite from the desired ones. The role of HR manager has to be a facilitator's one to encourage line managers in creating such an environment. The communication level between the different st'akeholders is also required to be high to dispel any misunderstanding and then a right kind of performance based work culture can be nurtured.