Compensation and Reward Programs it

¶ … Compensation and Reward Programs It is reasonable to suggest that most people get up and go to work every day out of a combination of a desire to make a contribution as well as a need for compensation and rewards. For some people, pay and benefits may be less important than other rewards they achieve through working, but for others, compensation and rewards are what motivates them to superior performance levels.

In this regard, Sulkin (1999) emphasizes that, "Compensation and reward programs provide greater motivation for employees to increase personal and organizational productivity" (p. 10). One approach that has been shown to be generally effective in motivating employees and in improving productivity is through a sharing-the-wealth program.

Providing employees with the opportunity to earn bonuses for superior performance is known by different terms, but O'Bannon and Pearce (1999) report that when bonuses are used as team- or group-based incentives, they are termed "gainsharing." According to O'Bannon and Pearce, "In its simplest form, gainsharing is a team or group incentive system which provides employee bonuses based on performance improvements" (p. 363). This approach is also congruent with the vast body of evidence that clearly emphasizes that pay remains among the top components of an effective compensation and reward program.

For example, Chonko and Roberts (1996) note that, "Of all the many properties that characterize work in formal organizations, pay is one of the most important. Pay has been found to influence significant organizational behavior variables, including turnover" (p. 154). By using team-based incentives, companies can help channel individual efforts into achieving organizational goals while improving employee morale in the process, an outcome that must be viewed as a "win-win" by any measure.

In this regard, O'Bannon and Pearce (1999) add that, "Team-based incentives have the advantage of focusing independent-minded employee efforts on a common goal. Company benefits from gainsharing include stronger employee focus on cost reduction, quality improvement, employee involvement, improved labor relations, and more responsive managers" (p. 363). Besides money, other key components of a compensation and rewards program include an entire constellation of perquisites and benefits such as healthcare and dental insurance, or work modification techniques such as telecommuting and flextime.

Some of these key components, such as work modification techniques like telecommuting, are highly cost effective and companies may be able to implement these components more readily than they will be able to provide more expensive components such as healthcare coverage. Moreover, work modification programs may be able to justify higher levels of pay and benefits for participating employees as a result of increased productivity. For instance, Raines and Leathers (2001) note that, "Telecommuting may alter the wage bargain as workers increase their productivity by working at home.

Productivity has increased 30% in some telecommuting industries" (p. 307). It should be pointed out, though, that the costs associated with funding and administering an effective compensation and reward program can be prohibitively expensive unless management keeps a close eye on the cumulative effects of these programs. In this regard, Hayes (2006) emphasizes that, "Employers must calculate and pay salaries, schedule and track tax and benefits payments, meet a host of workplace regulations and keep accurate records about every detail" (p. 49).

Therefore, although there is no "one-size-fits-all" approach available, effective compensation and reward programs will tailor their offerings to those.