Reward Systems LRS 551

Compensation GoalsPay SatisfactionEquityJob EvaluationPay Motivation

Motivational Inducement Systems

Motivational Inducement Systems represent the environment in which the individual performs. They provide the situational context for predicting and understanding workplace motivation and resultant performance.

Motivational Inducement Systems represent the set of variables that the management of an organization can manipulate in an attempt to increase the motivation level or direction of its workforce.

There are four major inducement systems:Reward: Pay and promotion systemTask: The design of tasks and jobsManagerial: The style used by relevant leadersSocial: Workgroup dynamics and the culture of the workgroup and organization.

Inducement Systems: Motivation & Satisfaction

Satisfaction-An employee's attitudinal response to his or her organization. As an attitude, job satisfaction is summarized in evaluative component and comprised of cognitive, affective, behavioral components. As with all attitudes, the relationship between satisfaction and behavior, most specifically job performance and membership, is complex. Satisfaction is a function of the extent to which expectations are met resulting in positive feelings regarding aspects of the organization.

Motivation- The force that Energies, Directs and Sustains behavior. Motivation is a function of the interaction between the dispositional variables of individuals and their perceptions of the situations in which they perform.

Inducement System Satisfaction Motivation

RewardPay & Promotion

TaskJob Design

ManagerialLeadership StyleSocialCulture

Task variety and enjoyment. Absence of unpleasant activities

Equity, perceived fairness. and adequacy.

Satisfaction with leader; Affirmation of worth

Satisfaction with work group; Affirmation of worth

Perceived link between ERB and increased pay

Conditional positive task feedback

Conditional validating social feedback from leader

Conditional validating social feedback from Work group members

Inducement Systems & Motivational Sources

Motivational Inducement Systems

Sources of MotivationConditions for Motivation

Motivational Driver

Reward SystemPay & Promotion

Managerial SystemLeadership Style

Task SystemJob Design

Social SystemCulture

Intrinsic ProcessEnjoyment

Laisez-faire leadershipJob RotationSocial ActivitiesQuality of Work Life Programs

InstrumentalIncrease Pay and/or promotion is linked to high performance (ERB)

Increases in pay and promotion

Merit PayCommissionsIncentive PayGainsharingProfit SharingBonusesPromotion

Self Concept: ExternalIncreased status, recognition and external validation are associated with high performance (ERB)

Group acceptanceIndividual worthGroup StatusGroup Influence

Promotion RecognitionEmpowermentPositive Reinforcement

Job Enlargement Peer RecognitionCustomer RecognitionTeam Building

Self Concept: InternalSkills, abilities and values are validated through high

performance (ERB)

Achievement Validation of competencies

EmpowermentParticipation in problem solvingLinking skills to mission

Job EnrichmentKnowledge of Results

Goal IdentificationHigh performance (ERB) is essential in the accomplishment of important goals or benefits to others

Accomplishment

Vision creationGoal SettingEmpowerment in mission development

Alignment ActivitiesKnowledge of Results

Reward SystemsWhat are the goals of a compensation system?

Attract new qualified membersRetain high performing membersReinforce Adequate Role Behavior (ARB)Motivate Extra Role Behavior (ERB)

What are the dimensions of a compensation system?Pay Structure- The relative pay differential among various jobs within the organization and how this is determined.Pay Level- The relative amount of pay assigned to each job compared to the job marketPay Form- The makeup of the pay this individual receives. The relative amount of guaranteed vs. at risk pay. Basis for pay increases- How pay changes from year to year is an important aspect of a compensations system. The various bases for change are:

Seniority and longevity Cost of living Performance/merit Changes in job scope Increases in individual qualifications such as a new degree or certification. Changes in market for job and/or individual- A special form of this type of increase is to

match a competing job offer.

Pay Satisfaction

Pay Satisfaction

Fairness

Adequacy

Retention

Adequate RoleBehavior

Pay Equity

Self

ContributionsRewards

:Comparison

ContributionsRewards

H : L Underpaid InequityH H

L : H Overpaid InequityH H

H : H Overpaid InequityH L

L : H Overpaid InequityH L

H : L EquityH L

L : H EquityL H

H : L Underpaid InequityLH H

H : H Underpaid InequityLH H

Contributions

Job ContributionsResponsibilityEffort requiredSkills level requiredWorking Conditions

Personal ContributionsSeniorityEducationPrior Experience

Performance ContributionsQuality of workQuantity of workContribution to effectiveness and goal attainment

Comparisons

Job Equity- Individuals compare their pay to the pay of other individuals in the same position they hold within their organization. (Turret lathe operators at Electric Boat compare to other TLO’s at EB)

Company Equity- Individuals compare their pay to the pay of other individuals holding the different positions within their organization. (Nurses and R.I. Hospital compare to pharmacists at RIH).

Occupational (Market) Equity- Individuals compare their pay to the pay of other individuals holding the same position in other organizations. (Engineers at Raytheon compare to Engineers at NUWC)

Cohort Equity- Individuals compare their pay to the pay of others in similar cohort groups, generally age and education.

Self Equity- Individuals compare their pay to the pay they received at another point in time.

Responses to Inequity

Leaving the organization

Reduction in performance, generally extra role behavior

Attempting to increase one’s pay

Attempting to increase the performance of others- Generally through peer pressure

Rationalization- perceptually altering reward and/or contributions.

Job Evaluation - FESFACTOR 1: KNOWLEDGE REQUIRED BY THE JOB Factor 1 measures the nature and extent of information of facts which the workers must understand to do acceptable work

(e.g., steps, procedures, practices, rules, policies, theories, principles, and concepts) and the nature and extent of the skills needed to apply those knowledges . To be used as a basis for selecting a level under this factor, a knowledge must be required and applied

Level 1-1                   50 Points Knowledge of simple, routine, or repetitive tasks or operations which typically includes following step-by-step instructions

and requires little or no previous training or experience. ORSkill to operate simple equipment or equipment which operates repetitively, requiring little or no training or experience. OREquivalent knowledge and skill

Level 1-2                   200 PointsKnowledge of basic or commonly-used rules, procedures or operations which typically requires some previous training or

experience; ORBasic skill to operate equipment requiring some previous training or experience such as keyboard equipment; OREquivalent knowledge or skill.

use of specialized complicated techniques; OREquivalent knowledge and skill.

Level 1-6                     950 Points Knowledge of the principles, concepts, and methodology of a professional or administrative occupation as described in Level

1-5 which has been either: (a) supplemented by skill gained through job experience to permit independent performance or recurring assignments, or (b) supplemented by expanded professional or administrative knowledge gained through relevant graduate study or experience which has provided skill in carrying out assignments, operations, and procedures in the occupation which are significantly more difficult and complex than those covered by Level 1-5; OR

Practical knowledge of a wide range of technical methods, principles, and practices similar to a narrow area of a professional field, and skill in applying this knowledge to such assignment as the design and planning of difficult, but well precedented projects; OR

Equivalent knowledge and skill.

Level 1-7                     1250 Points Knowledge of a wide range of concepts, principles, and practices in a professional or administrative occupation, such as

would be gained through extended graduate study or experience, and skill in applying this knowledge to difficult and complex work assignments; OR

A comprehensive, intensive, practical knowledge of a technical field and skill in applying this knowledge to the development of a new methods, approaches, or procedures; OR

Equivalent knowledge and skill.

Level 1-9                    1850 Points Mastery of a professional field to generate and develop new hypotheses and theories; OREquivalent knowledge and skill.

Salary Structure

0 250 500 750 1000 1250 1500 1750 2000 2250$11,000

$12,000

$13,000

$14,000

$15,000

$16,000

$17,000

$18,000

$19,000

$20,000

$21,000

$22,000

Male

Linear (Male)

Female

Linear (Female)Grade 1

Grade 2

Grade 3

Grade 4

Grade 5

Grade 6

Grade 7

FES Points

Motivational Pay Systems

Merit PayBonusesCommissionsIncentive SystemsProfit SharingGainsharingSkill Pay