COMMERCE 2BC3 Chapter Notes - Chapter 9: Trait Theory, Balanced Scorecard, Profit Sharing
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Pay for performance theories: expectancy theory, reinforcement theory, basic behavior modification theory, agency theory, about having managers and employees act like owners when the owners are not around to keep track of what they are doing. Immediate and every time: delayed and random. Agency theory: owners are principles, pri(cid:374)(cid:272)ipals (cid:894)seek to dire(cid:272)t a(cid:374)other"s (cid:271)eha(cid:448)ior(cid:895, agents is expected to act on behalf of principal, can align through use of pay contracts. Interests of principals and agents not always aligned. Principal- agent contracts: behavior-based e. g. merit pay, (cid:862)do this, get this(cid:863, simple positive reinforcement contract. Total compensation mix: proportion of pay to benefits. Pay mix: proportion of fixed pay to variable pay. Pay for performance (p4p(cid:895) (cid:862)varia(cid:271)le for(cid:373)s of pay desig(cid:374)ed to re(cid:272)og(cid:374)ize a(cid:374)d re(cid:449)ard e(cid:373)ployees" perfor(cid:373)a(cid:374)(cid:272)e that are (cid:271)ased o(cid:374) (cid:373)easure of i(cid:374)di(cid:448)idual or group (cid:272)o(cid:374)tri(cid:271)utio(cid:374) to the orga(cid:374)izatio(cid:374)"s success: (noe et al. , 2012) Types (see table 9. 1, p. 354: merit pay. Incentive pay: profit sharing, owership, gain sharing, skill-based.