A Reward Allocation Decision

Only available on StudyMode
  • Download(s) : 27
  • Published : May 5, 2013
Open Document
Text Preview
A Reward Allocation Decision
Reward allocation is a significant organizational issue, as it affects the working attitudes of the employees as well as the efficiency of the organization. Many people would say that the reward allocation must be equal for each employee, giving each of them equal amount of reward; some people would say equity should be used, basing it on performance and the competency of each individual; and other people would say that it should be given based on the needs of each employee without regard to individual performances. There are a number of ways to allocate rewards to employees. As for me, I would allocate the rewards this way: according to the length of months that each employee worked for the project, the length of years each employee has been in the company and through their individual performance. Being granted to allocate rewards is a very complicated job because it takes more than just decisions to make, but also the heart to understand what each employees would feel when decisions are made. In my opinion, if bonuses weren’t a part of the reward, just having to go out of my way to recognize each employee for their share in the success of the team and praising them would definitely be great. On the other hand, giving extrinsic rewards is one way to motivate the employees. As stated from Chapter 5: Theories of Motivation from the Organizational Behavior book, “Motivation is defined as the desire to achieve a goal or a certain performance level, leading to goal-directed behavior.” So, if an employee is given an extrinsic motivator such as money, they are more likely to be motivated to accomplish goals or do a better job. But then of course, the employee must see the reward as a motivator for it to be effective. Chapter 5: Theories of Motivation, under Process-based Theories, also said that “When distributing rewards, make sure you pay attention to different contribution levels of employees. Treating everyone equally could be unfair if they participated and contributed at different levels.” Like what I mentioned earlier, I am focusing on the contribution levels of each employee given the length of months they worked on the project, their performance, and the length of years they’ve been in the company. To start off, I have divided the $12,000 bonus into three categories: total months worked of all five employees on the project, the employee’s performance, and total years each employee has been working in the company. That would give us $4,000 each category. Allocation of rewards based on total months worked on the project Each employee worked a different length of months. Devin and Erin both worked on the project starting from the beginning which means they have worked on the project for the year or 12 months each. Alice worked on the project for 8 months. Carrie and Bruce both worked on the project for 6 months each. With those numbers given, I have added them all and came up with 44 months. It is understandable that the project was only for a year or 12 months to be exact, so why 44 months? Here’s why: If I were to divide the $4,000 by 12, each month will be about $333.333. If I multiply that by the months worked by each employee, the numbers won’t make sense and it will all add up exceeding the $4,000. In simplest form, I am dividing the $4,000 by the total number of months worked on project by all five employees. Here’s the math:

$4,000 / 44 months = $90.90909090909091
Or rounded off to the nearest thousandth becomes $90.909

Devin: 12 months: 12 x $90.909 = $1,090.908
Erin: 12 months: 12 x $90.909 = $1,090.908
Alice: 8 months: 8 x $90.909 = $727.272
Carrie: 6 months: 6 x $90.909 = $545.454
Bruce: 6 months: 6 x $90.909 = $545.454
Total: 44 months: 44 x $90.909 = $3,999.996 or $4,000 (rounded off to the nearest whole number)

Allocation of rewards based on total years each employee has been working in the company Each employee has...
tracking img