Strategic human resource research paper
QUINCY1010
Lecture6Worksystemsandrewards.ppt- Work Systems and Rewards
How has work evolved?
From Taylor to Toyota
The “flexible firm”
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Objectives of reward systems
Rewards and performance
Equitable rewards
- Historical Evolution of Work Systems
industrial betterment (industrial revolution to early 20th century = coercive control + individual work ethic)
scientific management (by WWI = technical control + workers’ self-interest)*
welfare capitalism/human relations (Great Depression = normative control/“hearts and minds”)
systems rationalism (post-WWII = Taylorism with computers)
organizational culture/quality/HPWS (1980s to date = normative control + employee commitment/loyalty)*
Source: Barley and Kunda (1992) Administrative Science Quarterly.
- Typology of Control and Commitment: from Alienated to Ascendant?
Source: Peter Wickens (HR Manager Nissan, Sunderland UK)
| CONTROL OF THE PROCESS | |||
| Low | High | ||
| COMMITMENT OF EMPLOYEES | High | Anarchic | Ascendant |
| Low | Apathetic | Alienated |
- Types of Work Tasks and Trends in Work Transformation
*
- Paradigms of Work Organisation
Source: Noon & Blyton (2013)
*
- “Modern Times”
Fordism and “scientific management” …
separation of conception and execution
repetitive/deskilled operations
close supervision
https://www.youtube.com/watch?v=DfGs2Y5WJ14
- Performance of Car Assembly Plants
Source: Womack et al (1990) The Machine that Changed the World, p.92.
| Japanese in Japan | Japanese in N. America | American in N. America | All Europe | |
| Productivity (hours/vehicle) | 16.8 | 21.2 | 25.1 | 36.2 |
| Quality (assembly defects per 100 vehicles | 60.0 | 65.0 | 82.3 | 97.0 |
| Space (sq.dt/vehicle/year) | 5.7 | 9.1 | 7.8 | 7.8 |
| Size of repair area (as % of assembly space) | 4.1 | 4.9 | 12.9 | 14.4 |
| Inventories (days 8 sample parts) | 0.2 | 1.6 | 2.9 | 2.0 |
- Toyota’s Production System
Just-in-time (not “just-in-case”)
Total quality management (“right first time”)
Continuous improvement (kaizen)
- Batch/Lot Production
- Just-in-Time Production
- Total Quality Management
- Continuous Improvement: Kaizen
Source: Monden (1994) Toyota Production System
- The “Flexible Firm”
Forms of Flexibility
- Functional
- Numerical
- Temporal
- Financial
Source: Atkinson (1984) Personnel Management, August
Source: Office for National Statistics
- From Direct Employment to “Bogus Self-Employment”
- Rigidity and Flexibility in the Internal and External Labour Market
Source: adapted from Streeck (1988: 417-18)
| EXTERNAL LABOUR MARKET | |||
| Flexibility | Rigidity | ||
| INTERNAL LABOUR MARKET | Flexibility | Anomic Conflict (e.g. increasing number of UK and US firms) | Diversified Quality Production (e.g. Germany and Japan) |
| Rigidity | Standardised Production (e.g. UK and US firms prior to 1980s) | Uncompetitive Firms (e.g. some UK firms in the 1970s) |
- Organisations of the Future?
Source: Osterman et al (2002)
| Contrasting Assumptions in 20th and 21st Century Organisations | ||
| Assumptions about: | 20th Century Organisation | 21st Century Organisation |
| People | Theory X: people are a cost that must be monitored and controlled | Theory Y: people are an asset that should be valued and developed |
| Technology | Design technology to control work and minimise human error | Integrate technology with social systems to enable knowledge-based work |
| Work | Segmented, industrially-based and individual tasks | Collaborative, knowledge-based projects |
- Reward Systems
Objective objectives
Employer and employee objectives
Behaviour and compensation
Theories of remuneration – expectancy and equity
- Objectives of Payment Systems
Recruitment
Retention
Motivation
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Equity
Fairness
- Employer Objectives for the Contract of Payment
Competitive (attract labour)
Cost effective (MRPL=MRCL)
Control, motivation and performance
Change management
Prestige
*
- Employee Objectives for the Contract of Payment
Purchasing power (“a living wage”)
Fairness (“fair day’s pay for fair day’s work”, “a slice of the pie”)
Relativities (“close comparisons”)
Recognition (“a job well done”)
Composition (predictable and personal)
Rights (e.g. equality, voice/bargaining)
- Rewarding Performance
Selection
Performance
Rewards
Appraisal
Development
*
- Expectancy Theory
Employees feel they have been set achievable targets (employees believe it is possible to perform at the expected level)
Employees can see a clear link between pay and the attainment of these objectives (payment is forthcoming when targets are achieved)
Employees value the rewards (pay) on offer
Source: Vroom (1964)
*
- Performance-Related Pay
| Proposed Benefits | Practical Problems |
| Improves commitment and capability | Translation of expectations |
| Better two-way communications | Divisive |
| Enhance line management | Supervisor commitment/capability |
| Complements other HR policies | Trade union opposition |
| Improves business awareness | Financial constraints |
- Employees in Receipt of PBR (%)
Source: WERS2011
Payments-by-results (PBR) includes any method of payment determined by objective criteria – the amount done or its value – rather than just the number of hours worked. It includes commission and bonuses that are determined by individual, workplace or organisation productivity or performance. It does not include profit-related pay schemes.
*
- Workplaces Using Incentive Schemes (%)
Merit Pay – pay related to a subjective assessment of individual performance by a superior or manager
Profit-Related Pay (PRP) – payments or bonuses related to profit levels of all or part of the organisation
Share Schemes – any Share Incentive Plan (SIP); Save As You Earn (SAYE or Sharesave); Enterprise Management Incentives (EMI); Company Share Option Plan (CSOP); or other employee share scheme
Source: WERS2011
- Paying for Quality and Team-working
| Quality | Team-working | |
| Reward level | Pay above market median to attract more highly qualified staff/or non-financial rewards (e.g. job security) | Sufficient to retain staff and depress turnover (local salary survey to ensure pay above the market median) |
| Reward systems | (1) Time-based (remove link between output/payment) (2) Bonuses tied to customer satisfaction (3) Input-pay (e.g. acquisition of skills) | (1) Merit or competency-based (inc. rating for team contribution) (2) Team bonuses (3) Skill-based pay (encourage functional flexibility within teams) |
| Reward structure | Flat(ter) organisational structure and therefore flat(ter) grade structure, scope for progression, single status benefits | Relatively flat grading structure to encourage flexible deployment, ‘pay range’ to reward skill acquisition, single status benefits |
| Reward form | Non-traditional (e.g. prizes, recognition, award ceremonies), profit sharing/share ownership, security benefits (e.g. pension) | Non-traditional (e.g. prizes), ‘collective benefits’ (e.g. nights out, gifts) and recognition (e.g. certificates, awards) |
- How do Incentives Work?
The Auto-glass Study
Background: merger of two auto-glass fitting companies, dominant company operated PBR, staff on day-rate gradually switched to PBR, company systematically recorded performance
Impacts:
peer pressure
heterogeneity of effort choice
sorting
Source: Ed Lazear (2000)
- Rewards and (De)Motivation
Pay and other rewards deserve more attention as a potential source of demotivation (i.e. if the company “gets it wrong”)
Employee involvement is typically a precondition for a successful rewards strategy
- Equity Theory
Procedural justice (i.e. how the pay system operates)
Interactional justice (i.e. how employees are dealt with in any interaction with managers responsible for administering pay)
Distributional justice (i.e. pay outcomes, both internal and external)
*
- Establishing Job Worth
Relative Worth
Internal Equity tension External Equity
Job Evaluation Labour Market Rate
and Relativity
Non-analytical Analytical
*
- References
Atkinson, J. (1984) Personnel Management, August, pp.28-31.
Barley, S.R. and Kunda, G. (1992) ‘Design and Devotion: Surges of Rational and Normative Ideologies of Control in Managerial Discourse’, Administrative Science Quarterly, 37(3): 363-99.
Lazear, E.P. (2000) ‘Performance pay and productivity’, American Economic Review, 90(5): 1346-61.
Monden, Y. (1994) Toyota Production System: An Integrated Approach To Just-In-Time, Springer.
Noon, M., Blyton, P. and Morrell, K. (2013) The Realities of Work: Experiencing Work and Employment in Contemporary Society, Macmillan Education.
Osterman, P., Kochan, T.A., Locke, R.M. and Piore, M.J. (2002) Working in America: A Blueprint fro the New Labor Market, Cambridge, MA: MIT Press.
Streeck, W. (1998) ‘The internationalization of industrial relations in Europe: prospects and problems’, Politics & Society, 26(4): 429-59.
Workplace Employment Relations Study (WERS) 2011 – available at:
Vroom, V.H. (1964) Work and Motivation, San Francisco, CA: Jossey-Bass.
Womack, J.P. Jones, D.T. and Roos, D. (1990) The Machine that Changed the World, Free Press.
