Organizational Reward Systems and Motivation

In the late 1800s, Sears & Roebuck started setting aside shares of stock for their employees’ pension plans. This enabled employees to share in company profits. This reflects a rewards system that includes:

 

Lump-sum bonuses

Gainsharing

Pay for knowledge

Employee stock options

Organizations may offer executives rewards that include high salaries, memberships in private clubs, and access to recreational facilities. Some CEOs earn millions more per year than other employees at the same company. Which statement best explains why executive compensation is so different than that of other employees?

 

Executives have more education than other employees.

Employee satisfaction tends to be highest a companies in which the top executives earn the most.

Executives are ultimately responsible for the organization’s success and therefore should be entitled to rewards.

Executive turnover is lowest at companies with high levels of executive compensation.

Managers at Lincoln Electric set annual performance goals for each employee. At the end of the year, managers determine pay increases based on each employee’s achievement of those goals. This is an example of:

 

Merit pay

Pay for knowledge

Gainsharing

Employee stock options

At ACME Fireworks, all of the employees in the company get a raise when company profits are 10% higher than the profits from the preceding year. This type of reward system is known as:

 

Lump-sum bonuses

Employee stock options

Pay for knowledge

Gainsharing