Lecture 7: Total Rewards

Question 1

OVERVIEW OF TOTAL REWARDS

Answer 1

Total rewards consist of compensation (pay and benefits) as well as **relational & experiential rewards. **

PAY:
* Base pay
* Merit/Cost of Living
* Short-term incentives
* Long-term incentives

BENEFITS:
* Retirement
* Insurance
* Paid Time Off
* Perquisites
* Workplace Flexibility

RELATIONAL & EXPERIENTIAL REWARDS
* Culture
* Mission & Purpose
* Advancement
* Recognition
* Status
* Security
* Quality of Life

Its like a total rewards continuum ranging from cash to experience.

the average cost of american labor per hour worked is $41.04

Question 2

THEORIES UNDERLYING TOTAL REWARDS

Answer 2

Equity theory: seeking fairness in distrubution of rewards (employees compare their compensation and benefits to those of their colleagues. If they perceive an imbalance, it may lead to feelings of inequity, affecting motivation and job satisfaction.)

Expectancy theory: employees will be motivated to work hard and achieve goals if they believe that their efforts will result in a valuable reward, such as a bonus or promotion.

Operant conditioning (reinforcement):
Total rewards can be seen as positive reinforcement. When employees receive desirable rewards (e.g., bonuses, recognition), it reinforces their positive work behaviors.

goal setting theory: Total rewards can align with goal setting by linking compensation and benefits to achieving specific, measurable objectives. Employees are motivated to work towards these goals to earn rewards.

self determination theory: Total rewards programs that provide employees with a sense of autonomy, opportunities for skill development, and positive social interactions can enhance motivation and job satisfaction.

agency theory: aligning the interests of employees with those of the organization (shareholders) through well-designed compensation structures can help mitigate agency problems.

Question 3

WorldatWork Framework

Answer 3

TBD TBH LOLLL

Question 4

5 OBJECTIVES OF TOTAL REWARDS

Answer 4

1. align individuals with organizational goals
2. to motivate and reward performance
3. to attract talent
4. to retain the best employees
5. to reinforce or modify organizational culture

Question 5

Objectives of total rewards: **1. align individuals with organizational

examples of misalignment

Answer 5

EXAMPLES OF MISALIGNMENT (KERR, 1975):
this is basically the idea of rewarding something, while hoping that the outcome of this reward will be something, that is irrelevant/opposing to what the reward was awared for.

for instance rewarding for individual performance, while the organization is trying to build a collaborative and teamwork environment.

similarly if an organization rewards for short-term sales & earnings, while hoping for long term growth and profit.

Kerr, 1975

Question 6

DECISIONS ABOUT TOTAL REWARDS SYSTEMS:

Answer 6

there are many decisions to be made about the degree of dispersion (disparity across levels, departments, individuals within departments and levels etc.)

Measurement on when to give (tenure, skills, outcomes etc.)

basis for allocating rewards (individual, group, enterprise)

whether incentive pay should be used or pay at risk

how much emphasis needs to be placed on pay?

whats included in the total rewards package (compensation, benefits. promotion, ownership etc.)

Question 7

decisions in total rewards: dispersion

DISPERSION:
Currently, what is the average wage
disparity between CEOs and the typical
worker in top US companies?
A. 25:1
B. 135:1
C. 344:1
D. 577:1

Answer 7

C. 344:1

Question 8

DISPERSION CONT.

DISPERSION

Answer 8

Blackstone (1068:1)

Google (808:1)

Southwest Airlines (64:1)

Question 9

Decisions in total rewards

PAY-FOR-PERFORMANCE: INDIVIDUAL PLANS

Answer 9

1. Piece work/Piece rate: employee receives a set payment for each unit produced
2. Merit Bonus/Spot Bonus: employee receives one time cash award for past performance
3. Merit Pay: Employee receives increase to base pay for past performance

Question 10

Decisions in total rewards: pay for performance

PAY FOR PERFORMANCE: GROUP PLANS

Answer 10

1. Team incentive/Bonus plan: team members receive one time cash award based on team achieving certain goals
2. Gainsharing: employees receive one time cash award based on increases in productive and effectiveness of unit (eg., plant)

Question 11

decision-making in total rewards: pay for performance

PAY FOR PERFORMANCE: ENTERPRISE PLANS

Answer 11

1. Profit sharing: employees receive one time cash award based on firm profits
2. Stock options/Grants: employees receive one time option to buy or grant of company stock. Often vests over time
3. ESOPs (employee stock ownership plans): employees receive company stock in a retirement account. limits on diversification and penalities for early withdrawals.

Question 12

WHAT ARE THE 4 CATEGORIES OF BENEFITS

Answer 12

1. Legally required:
   * Social Security
   * Workers’ Compensation
   * Unemployment Insurance
2. medical and other insurance:
   * Medical Insurance, Dental, and Vision
   * Whole Life and Term Insurance
   * Short- and Long-Term Disability
3. Miscellaneous benefits:
   * Paid Time Off
   * Allowances
   * Dependent Care
   * Tuition Reimbursement
   * Student Loan Repayment
4. retirement and savings plans:
   * Defined Benefit Plans
   * Defined Contribution Plans
   * Flexible and Health Savings Plans

infosys, reebox, facebook

Question 13

re review the kerr readinng because i am lost by what is relevant???