Performance-Based versus Membership-Based Rewards
Organizations allocate rewards based on either performance or membership criteria. HR representatives in many organizations will vigorously argue that their system rewards performance, but you should recognize that this isn’t always the case. Few organizations actually reward employees based on performance—a point we will discuss later in this chapter. Without question, the dominant basis for reward allocations in organizations is membership.
Performance-based rewards use commissions, piecework pay plans, incentive systems, group bonuses, merit pay, or other forms of pay for performance. Membership-based rewards, on the other hand, include cost-of-living increases, benefits, and salary increases attributable to labor—market conditions, seniority or time in rank, credentials (such as a college degree or a graduate diploma), a specialized skill, or future potential (for example, the recent MBA graduate from a prestigious university). The key point here is that membership-based rewards are generally extended regardless of an individual’s, groups, or organizations performance. In any case, performance may be only a minor determinant of rewards, despite academic theories holding that high motivation depends on performance-based rewards.
Performance-Based versus Membership-Based Rewards Organizations allocate rewards based on either performance or membership criteria. HR representatives in many organizations will vigorously argue that their system rewards performance, but you should recognize that this isn’t always the case. Few organizations actually reward employees based on performance—a point we will discuss later in this chapter. Without question, the dominant basis for reward allocations in organizations is membership. Performance-based rewards use commissions, piecework pay plans, incentive systems, group bonuses, merit pay, or other forms of pay for performance. Membership-based rewards, on the other hand, include cost-of-living increases, benefits, and salary increases attributable to labor—market conditions, seniority or time in rank, credentials (such as a college degree or a graduate diploma), a specialized skill, or future potential (for example, the recent MBA graduate from a prestigious university). The key point here is that membership-based rewards are generally extended regardless of an individual’s, groups, or organizations performance. In any case, performance may be only a minor determinant of rewards, despite academic theories holding that high motivation depends on performance-based rewards.
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