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Rewarding Teamwork

Rewarding Teamwork. Chapter 3. Variable (Incentive) Pay. ---Based on performance Advantages & disadvantages General Rule: Variable pay should not be > 15-20% of total compensation for individuals @ lowest level of organization. Why?

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Rewarding Teamwork

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  1. Rewarding Teamwork Chapter 3

  2. Variable (Incentive) Pay ---Based on performance • Advantages & disadvantages • General Rule: • Variable pay should not be > 15-20% of total compensation for individuals @ lowest level of organization. Why? • Proportion of variable pay can increase as employees move up organizational chart.

  3. Bonus Pool • How do you split it up? • What are you rewarding? • Behavior or results? • Individual effort or teamwork? • Consequences?

  4. Guidelines for Variable Team-Based Pay • Tie rewards to performance Make sure employee has control • Balance team & individual pay What %? • Make sure team compensation system compatible with rest of organization • How to divide it up? What are you promoting- cooperation or competition? • Decide on compensation criteria: bottom line results, contribution,behavior, attitude?What %?

  5. Guidelines for Variable Team-Based Pay • Decide on measurement periods & timing of payout • Shorter periods & faster payout motivate more but also increase administrative costs! • Share co. financial information with members.

  6. Recognition General Rules: • Not everyone should get it • Give in timely manner • Publicize it • Tie it to team performance • Personalize awards • Nomination should be simple • Recognize performance linked to org goals • To rewardefforts give noncash rewards • To rewardresults give cash rewards • Use tiers or levels to recognize different accomplishments or levels of contribution (let the team decide) Advantages & disadvantages?

  7. Profit sharing Corporate profits are distributed to employees Advantages? Disadvantages? Gainsharing A percentage of the value of increased productivity is given to employees(prearranged formula) Advantages? Disadvantages? Other Team-Based Pay

  8. Team Performance Appraisal • Purpose • Source of feedback • Personal development • Determination of pay • What is measured? • Job-based pay • Skill-based pay • Competency-based pay *Best for teams • Who measures it? • 360-Degree Feedback Advantages?

  9. Implementing 360-Degree FeedbackWhat do we need to think about? • Make it anonymous • Consider outside consultant for confidentiality • Determine which evaluation criteria to use • Decide who sees results • Initially only employee • Ensure action taken on feedback received • Initially do not tie it to compensation- use for learning & development • Decide who raters will be & who chooses raters • What is the ideal # of raters? • Consider training on “constructive feedback”.

  10. Rater Biases • Inflation bias • When do we do this? • Extrinsic incentives bias • What is the problem with this?? • Homogeneity bias • Halo bias • Fundamental attribution bias • Communication medium bias

  11. Reciprocity bias • Bandwagon bias • Recency bias • Conflict of interest End Results Meaningless evaluations Conflict Reduced learning Recommendations Training on biases Use objective measures of performance.

  12. Ratee Biases • Ratees don’t always interpret feedback as intended Egocentric bias: ratees tend to give themselves more credit than others & feel underappreciated Intrinsic interest bias: ratees become less enthusiastic about work when offered only extrinsic rewards Social comparison bias: ratees compare feedback with peers when interpreting evaluations Fairness bias: ratees more likely to accept poor outcome if procedure fair. How can we (as raters of performance) overcome them?

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