This document discusses compensation, merit pay, and motivation in organizations. It covers desired employee behaviors that organizations aim to encourage through rewards like pay, benefits, responsibility, and social affiliation. Theories of motivation like Vroom's Expectancy Theory are presented, which posit that employees will be more motivated to perform if they expect rewards for high performance. The document also discusses challenges with pay for performance systems, like issues with performance measurement, budget constraints reducing rewards, and the potential for systems to damage cooperation and self-esteem. Guidelines are provided for effective implementation of such systems, like gradual rollout and ensuring meaningful rewards.

1. Compensation, Merit Pay and Motivation Presented by: Ken Lee (Qian Li)

2. Organizations Motivate Join & Remain Perform assigned roles Act innovatively & spontaneously Types Of Behavior

3. Desired Behaviors & Rewards Desired Behaviors Organizations encourage Rewards Membership Reliable Role Innovative spontaneous activity Pay & Fringe Benefits Responsibility & Autonomy Social Affiliations Organization provide

4. Pay Membership Performance Cash Retirement plans life & health insurance indirect compensation Instrumental System Rewards Geared to Performance

6. Theory of Pay for Performance Sales in Private Sector PMRS Contingency Pay Schemes Salary Welfare Bonus

7. Design of Pay-for-performance Strategic Choices Structural Issues Process Issues

8. Structured Issues Structured Issues Measures of Performance Comprehensiveness of Criteria /Objectivity of Measures Salary vs Bonus Permanent Adjustment to Base Pay/One-time Bonus Level of Aggregation Individual/Program/Installation/Agency/Bureau Size of Payouts 3% is a good rule of thumb Administrative Convenience Frequency of Payout Hierarchy/ Subunits Number of Different Plans

15. Reasons for Continuing Experimentation Failures involve designs predicated almost exclusively on an individual level of aggregation. Notion of "each according to his or her efforts“ is ingrained in the American political culture. Failures were predictable because the structure or administration of the system violated one or more principles of system design.

17. Thank You! Presented by: Ken Lee (Qian Li)