...Management Department Faculty Publications Management Department 1-1-2014 Pay-for-Performance’s Effect on Future Employee Performance: Integrating Psychological and Economic Principles Toward a Contingency Perspective Anthony J. Nyberg University of South Carolina, Anthony.Nyberg@moore.sc.edu Jenna R. Pieper University of Nebraska-Lincoln, jpieper@unl.edu Charlie O. Trevor University of Wisconsin-Madison, ctrevor@bus.wisc.edu Follow this and additional works at: http://digitalcommons.unl.edu/managementfacpub Nyberg, Anthony J.; Pieper, Jenna R.; and Trevor, Charlie O., "Pay-for-Performance’s Effect on Future Employee Performance: Integrating Psychological and Economic Principles Toward a Contingency Perspective" (2014). Management Department Faculty Publications. Paper 111. http://digitalcommons.unl.edu/managementfacpub/111 This Article is brought to you for free and open access by the Management Department at DigitalCommons@University of Nebraska - Lincoln. It has been accepted for inclusion in Management Department Faculty Publications by an authorized administrator of DigitalCommons@University of Nebraska - Lincoln. Published in Journal of Management 2014 ; doi: 10.1177/0149206313515520 Copyright © 2013 Anthony J. Nyberg, Jenna R. Pieper, and Charlie O. Trevor. Published by Sage Publications for Southern Management Association. Used by permission. digitalcommons.unl.edu Pay-for-Performance’s Effect on Future Employee Performance: Integrating Psychological...
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...Pay for Performance through Strategic Planning Introduction Because studies have shown time and again that pay represents one of the most important factors involved in retaining qualified employees, it is little wonder that there has been a great deal of attention focused on how best to compensate employees for their performance in recent years. Moreover, because employee performance and productivity is inextricably related to organizational profitability, these issues have assumed new relevance and importance in the current economic environment. There have been some mixed reviews concerning pay-for-performance approaches to enhancing employee performance, though, that suggest there is more involved than simply throwing money at top performers. Despite these constraints, many authorities suggest that pay-for-performance programs have a lot to offer organizations seeking to identify better ways to improve employee performance. In this regard, Miller, Hildreth and Rabin (2012) note that, “Individual incentives have a central role to play in the success of most conceptual schemes related to performance. Such plans, while very difficult, have large possibilities; seemingly insurmountable obstacles can be overcome if the emphasis moves to the employee's relative needs for power, affiliation, and achievement” (p. 230). These are tall orders for any human resource manager and an organization’s leadership, though, and the fact remains that measuring individual performance is a complicated...
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...Running head: ACTION INQUIRY RESEARCH PAPER- MERIT PAY Action Inquiry Research Paper- School Finance Jennifer Ponton Grand Canyon EDA 535 July 01, 2012 Action Inquiry Research Paper- School Finance Statement of the Problem This past spring thousands of teachers protested at the Louisiana State Capital to prevent Louisiana lawmakers from passing an educational reform bill proposed by Governor Bobby Jindall that would change the face of public education in Louisiana forever. Many superintendents and school personnel were relieved of their professional responsibilities on the days they protested hoping that they could sway the governor and the lawmakers from passing the bill. The bill was passed even without the support of many educational leaders and lawmakers in Louisiana. The laws passed by Louisiana lawmakers read like a conservative education reformer’s wish list. Teacher tenure in Louisiana after three years of employment was eliminated and replaced with teachers receiving a “highly effective rating for five out of six consecutive years of teaching. Back to back “ineffective rating will result in a teacher being fired. Seniority will no longer be a dominant factor in layoff decisions. In fact most decisions involving teacher employment and pay will now be the responsibility of both the principal and the superintendent of school. Before Governor Jindall’s reform plan it was the responsibility of the local school board. The reform proposed by the governor...
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...SCHOOL OF BUSINESS ADMINSITRATION BACHELOR OF BUSINESS ADMISNITRATION Semester: Fall 2015 – 2016 Course Title Performance & Compensation Course Code HURM402 TITLE OF Case Study APPRAISING PERFORMANCE AT PRECISION In submitting this work, I am confirming that it is all my own work, or the work of my group. I have correctly acknowledged the work of others by using references. Once my work is submitted to Turnitin, it becomes part of the database that subsequent works are checked against. Full Name of Student: Submission Date: Nov 27th, 2015 Assessment: CASE-2 Semester: Fall Academic Year: 2015 ------------------------------------------------- ------------------------------------------------- Date of Case-2 Handover Nov 20th, 2015 ------------------------------------------------- ------------------------------------------------- Time Period Start time: 02:00 PM End time: 03:00 PM ------------------------------------------------- ------------------------------------------------- Duration of Case-2 Handover 2 weeks (Due Date: 4th Dec, 2015) ------------------------------------------------- ------------------------------------------------- Number of Case-2 Handover Pages 7 pages (Including this cover sheet-1) ------------------------------------------------- Marking Scheme: Question | Score | Marks | CLO | Achieved | 1 | 7.5 | | 5 | □ Yes □ No | 2 | 7.5 |...
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...know merit pay involves giving employees a permanent pay raise based on past performance. Often the company’s performance appraisal system is used to determine performance levels and the employees are awarded a raise, such as a 2% increase in pay. I worked in a hospital and with nurses in an emergency room that got this exact raise. They had a cap that they could hit where they maxed out once they had been there for over 33 years they stopped getting the raise. The ever looming and potential problem with merit pay is that employees come to expect pay increases. This means it will be more so of an expectation and less so something earned. If you know something is coming either way, would you work harder for it? Not to sound lazy but time is valuable and why put in more time than everyone else for the same rewards? The only way to make merit pay more effective depends on making it truly dependent on performance and designing a relatively objective appraisal system. Without the appraisal system it is literally pointless. Ultimately, to be successful, the merit pay program must ensure that awards provided to the best performers will be substantially greater than increases awarded to average, or below-average performers. Merit pay when managed correctly provides a huge advantage for employers in my eyes. Merit pay helps an employer differentiate between performance of high and low performing employees and reward the performance of the higher performers. I believe that merit pay is worth...
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...Manufacturing Compensation Strategies Assessment Code: RWT1 Student Name: T Student ID: Date: Mentor Name: Table of Contents Executive Summary 3 Introduction 4 Research Findings 4 Merit Pay 5 Job Based Pay 6 Skill Based Pay 7 Recommendations 8 Conclusion 8 References 9 Executive Summary After examining several distinct compensation strategies utilized in the manufacturing industry, I have prepared this report to explore three specific plans; Merit Pay, Job Based Pay and Skill Based Pay. When considering a compensation plan, more than just pay should be included. No compensation strategy would be complete without including all forms of compensation from pay, health benefits, retirement savings options and time off. Merit Pay is increasingly becoming prominent in manufacturing. Employers that use Merit Pay bestow pay increases and incentives to employees based on individual performance. This maybe a good way to reward high performers and publicize those behaviors that the organization values. Job Based Pay is a structured pay system that compensates according to the position instead of the employee’s ability or adeptness to do the job. This job based strategy can reduce the likelihood of gender discrimination in pay. Also, it ensures that the employee is being paid a fair market value for the work they perform. Finally, Skill Based Pay focuses on the...
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...cover compensation systems, some advantages and disadvantages of compensation benefits, comparable worth, and some polices. The information will be used to further understand all topics discussed and addressed for management's purpose. KEYWORDS: Compensation systems, advantages and disadvantages of compensation systems, benefits, comparable worth, compensation policies INTRODUCTION This report is to review Compensation and all related information to better understand the advantages and disadvantages of different compensation systems. Compensation and or the benefits worker's get are a reflection of the organization's value of the worker’s worth, and to the position or the duties required to accomplish the job duties. Compensation could and should provide motivation for the worker or applicant to perform to the best of their abilities, not simply clock in and clock out. WHAT IS COMPENSATION The meaning of compensation is as followed, a fundamental component of employment and a critical issue for management and policies set in place. It traditionally refers to wages of employment, to include base pay or salary, bonus or incentives, benefits, and non-cash compensations. Organizations need to set and communicate clear principles by which workers are paid. In the least, they should ensure compensation policies adheres to employment standards and legislation. Some compensation elements governed by regulations are Minimum wage, holiday pay rates, overtime pay, payment...
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...Business Research Report Compensation Strategies Assessment Code: RWT1 Student Name: Jeannie Altmaier Student ID: 000284655 Date: 04/20/2014 Mentor Name: Kathy Huffman Contents Executive Summary 3 Introduction 4 Research Findings 5 Stock Options 5 Tuition Reimbursement 6 Merit Plans 7 Conclusion 8 References 10 Executive Summary In a business the main focus is become as successful as possible. In order to gain success and maintain the success a business must have a reliable and dependable staff. With this being said it is important to compensate employees to maintain and develop the best work performance possible. The success of the business is depended on the employees. Research has been done on three compensation strategies that benefit the employees and company, those three compensation strategies are implementing stock options, tuition reimbursement, and merit plans. Stock options benefits have been known as an attractive way to reward employee performance. It is important for the organization to claim the stock options to be capitalized on the balance sheet so shareholders can track EPS, which in return is beneficial to the organization as well. This compensation benefit has been around for decades and continued to grow until the increase in accounting rules in 2001. With more rules implemented it allows for the companies to maintain a fairness in the workplace. This option should be offered to all employees but is not...
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...Item 1 To: Mary Wallace-Vice President From: Wage & Salary Division Re: Request for pay increase/promotion Susan Anthony sounds like she would be a good candidate for promotion. However, while Mrs. Anthony has the time in grade to be promoted, we require some more paperwork showing that she is proficient in the areas you have stated. Once we have received this paperwork we will be more than happy to endorse her for this promotion (Nkomo, Fottler, & McAfee, 2011). Additional Action: Follow up with Mary Wallace to make sure that the proper paperwork is delivered in order to promote Mrs. Anthony to Senior Assistant. Item 2 To: Kelly Actor From: Wage & Salary Division Re: Request for pay increase Mrs. Actor, while we value the years of loyal service you have provided the Mack Organization, we are unable to match the salary increase that you are seeking. The only increase that the company could consider giving you is a cost of living increase. If you send us your reviews, showing that you have received high review scores, we could then consider giving you a 3-5% cost of living increase based on the performance review ratings. Also sending us a letter of endorsement from your supervisor would be helpful in getting you this cost of living increase as well. Once again your continuous loyalty to this company is greatly valued, and appreciated, and we hope that you will consider this counter offer as long as all the paperwork is filled and meets the standard (Nkomo et...
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...Business Research Report Compensation Systems Assessment Code: RWT1 Student Name: Diane Smith Student ID: 337372 Date: October 7, 2013 Mentor Name: Christina Wright Table of Contents Executive Summary 3 Introduction 4 Research Findings 5 Finding Number 1 5 Finding Number 2 6 Finding Number 3 7 Recommendations 8 Conclusion 9 References 10 Executive Summary Compensation represents monetary pay for performance. It is a very important component to our manufacturing company’s Human Resource system. Our 120 employees are the heart of our business. We depend on their knowledge to help our company reach its goals. Therefore, we researched a variety of compensation strategies, which you will read below, that have helped us develop a compensation system that will motivate, encourage, retain and reward employees. There is no perfect system. Not all systems fit all businesses. The idea that pay policies have strategic impact has become a major theme within the compensation literature since the mid-1980’s…analysis reveals that inferior organizational performance is associated with the lack of fit between pay policy and business strategy.” (Montemayor, 1996, p889). But through careful investigation we have found two systems we believe will work well in our company. Through our research, three compensation systems really stood out. We will discuss Merit Based Pay, Salary Plus Commission and end with Salary Plus Bonus. This report outlines our...
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...Compensation and Benefits Strategies Recommendations Elizabeth Copeland, Emily Krzyzaniak, Frederick McFarland, and Mary Thomas HRM/531 9/23/15 Maria Ziegler Compensation and Benefits Strategies Recommendations Landslide Limousines will be opening soon and they will be employing twenty-five people to keep the business in operation. The owner, Bradley Stonefield, wants to be comparable to the other limousine services around town so this must be considered when recommendations for compensation and benefits are made. Although the company is projected to see a 5% revenue growth over the first few years, they are estimating to have a net revenue of -$50,000 for the first year. The recommendations provided in this paper shall assist Landslide with securing their place in the transportation market in Austin, Texas. Market Research Evaluating companies in the relevant market will keep you competitive. We have researched 2 established car service companies in Austin, Texas operating with 25 employees or less. We started with a company you may be familiar with. Founded in 1989 by Tony Alyassin, Royal Carriages Limousine operates a substantial fleet of more than 25 vehicles (http://royalcarriages.com/). Employee are independent contractors with a compensation package of a flat wage rate and a corporate contribution to the National Taxi Drivers Association of Austin. The National Taxi Drivers Association is an organization that was founded in 2009 that focuses on taxi and limousine...
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...After accessing the advantages and disadvantages of using a Web-based compensation tool versus a client-server in my opinion I think the client –server is beneficial. “Thin-client technology was designed to make the Information Technology administrator’s job easier. With the arrival of thin clients, administrators no longer had to install a product update or a service release on a client desktop; they could use think technology to connect to a remote server and run all applications from a single point. But for a while, the technology had one major flaw: It required the installation of a software product on the desktop. Thin-client technology lets companies serve applications to graphical terminals in a manner similar to that used with legacy mainframe technology. Thin clients resemble today’s client/server systems but actually function as time-sharing clients on which applications are remotely displayed (Seltzer A. Mark, 2001). A client-server is beneficial because it can be controlled locally versus a web-based server has to be controlled through a provider. Web-based servers can only be accessed through internet based but a client-based server can be accessed by any local network. A client-based server is in full control whereas a web-based server is not in control of the software on hand. “Job evaluation creates an internal hierarchy of value. In the most common form of job evaluation, a set of factors is developed that reflects characteristics that add value to work in...
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...Institution: Performance pay also called merit pay can be defined as a system that remunerates its employees in relation to an assessment of individual performance and how well one works. Such systems basically are meant to align employees’ individual effort to the goals and objectives of the organization. Hence it is a reward to individual employees whose tasks have been considered to be above the set standards of an organization or above average. In cases and situations where the output produced or sales produced by an employee are hard or difficult to be empirically determined, performance pay is most applicable; for examples in the teaching profession. In cases of performance payment, individual performance is usually reviewed regularly through a process called performance appraisal. Performance appraisal helps in establishing and identifying if the set objectives and standards are in line with the performance results. Generally, performance pay is usually rewarded on basis of performance results rather than on the time worked, (Council, 2011). Performance pay for teachers has been quite a subject of contention in many places and especially in the USA. Performance pay is meant to compensate teachers based on a set of performance standard and does not consider a teacher’s level of education or the level of experience gained. Hence, the more outstanding results a teacher produces from the students, the more the teacher is to be paid. Merit pay does not necessarily come...
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...recognition programs Incentive payments for hourly employees may be determined by the number of units produced, by the achievement of specific performance goals, or by productivity improvements in the organization as a whole. In the majority of incentive plans, incentive payments serve to supplement the employee's basic wage. Piecework One of the oldest incentive plans is based on piecework. Under straight piecework, employees receive a certain rate for each unit produced. Their compensation is determined by the number of units they produce during a pay period. At Steelcase, an office furniture maker, employees can earn more than their base pay, often as much as 35 percent more, through piecework for each slab of metal they cut or chair they upholster. Under a differential piece rate, employees whose production exceeds the standard output receive a higher rate for all of their work than the rate paid to those who do not exceed the standard. Employers will include piecework in their compensation strategy for several reasons. The wage payment for each employee is simple to compute, and the plan permits an organization to predict its labor costs with considerable accuracy, since these costs are the same for each unit of output. The piecework system is more likely to succeed when units of output can be measured readily, when the quality of the product is less critical, when the job is fairly standardized, and when a constant flow of work can be maintained. Under the piecework...
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...Team F | FastCat | Compensation and Rewards | | Spring 2011 | Intro FastCat’s priority is to increase revenue and the new pay structure will accomplish that goal in the long run. The new, cost containment, policy rewards, among other things, behavior aligned with FastCat’s objectives. This in turn will increase revenue, innovation, and customer satisfaction. This new system will need to be assessed over time to make improvements. Choosing a multiple job structure with a person-based pay will allow FastCat to utilize a hybrid structure. We have decided to lead with pay in the more critical jobs and match with the remainder jobs which include low skill or are entry level positions. We have assessed present salaries, created a merit pay plan, and suggested a bonus structure and benefits package. Employee buy in is vital to this new structure and it is FastCat’s responsibility to keep the communication channels open. Strategy for Recognizing Performance Performance based pay plans are based on a number of dimensions. In light of the work done at FastCat, we have chosen criteria that allows for a better distribution of wages and implies sacrifice on everyone’s behalf. However, in the long run, most employees, and the organization will benefit from the new pay structure. Assess Present Salaries Changes for costs in the employee group did not directly translate for FastCat; there were several red and green circle employees. Benchmark jobs were able to alleviate...
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