Sunday, December 22, 2013

Performance Management: Rewarding (Individual & Group)

In the last byte, we looked at why rewarding employees is a critical organizational decision. In today's byte, we look at whether rewarding would be good if done at the individual level or a group level.

In an organization, invariable the completion of a task requires an employee to play 2 distinct roles:
  1. As an individual contributor towards the success of the assigned target
  2. As a group member working together towards accomplishing the target.
When the question of compensating the performance of the employee arises, different cultures look at it differently. While the American influence looks at a verily individualistic reward system, the Japanese and Chinese cultures have a group based reward system. The individual system in extreme cases could end up leading to dysfunctional behavior in an organization, while the group bases system could kill initiative and creativity of the individuals in the group if not properly planned and executed.

A good way out of this situation would be: At the individual level, a skill based and pay-for-knowledge system would be good; at the group level, gain-sharing plans emphasizing on reducing costs would be a good approach. However, it is important to note that a case by case approach towards implementation and some tailor made modifications are necessary.

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