promoting employees without increasing pay
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PROMOTING EMPLOYEES WITHOUT INCREASING PAY
Ahmad U3072227Ario Ardianto Baroto U3088020Naina Dhingra U3080090Tsering Choden U3105935Ugyen Dorji U3103499
Presentation Outline Case introduction
Theories related to the case
Application of the theories to the case
Recommended solutions
Conclusion
Promoting without giving raises
• Promote from hourly job position to supervisory or management level
• Employment status, classification change and pay?
Reasons:• Boost morale and retain key employees • Cutting costs in difficult economic times
Problems:• Causing resentment and confusion• Morale problems and retention issues
Theories related to the casePromotion usually include pay increases
There is a strong support in the literature which indicates that promotions are positively correlated with wage increases (Gibbons & Waldman, 1999)
Distributive Justice theory claims, employees perceive that rewards are distributed in relation to contributions.
Theories related to the case Equity Theory: Employees evaluate and compare their inputs/outcomes ratio to others inside the same organisation or in another organisation to determine fairness.
• If employees perceive themselves as either undercompensated or overcompensated, this will create tension and will drive them to respond to this situation to reduce the tension and restore equity (Adams, 1963).
Application of the theoriesCompanies that promote employees without pay are
more likely to lose their top performers (76%).
Around 40% of HR senior executives recognize that salary and bonuses are the main reason employees leave their company (www.workplaceinfo.com.au, 2012).
Increased responsibilities are precious opportunity for employees to learn more, develop and grow.
Some managers respond well to the employees who are willing to take more responsibility for no extra pay and might be recorded as part of an individual’s career
path development.
Application of the theoriesSometimes some companies exploit those staffs
who agree to take on more work which might be more working hours or more responsibilities.
Consider distributive justice principle Rewards must be distributed related to contribution
Manage equity & fairness perceptionHigher responsibility should be fairly compensatedMay not always be monetary incentivesBe consistent, avoid discriminatory reasons
Recommended solutionsTransparency in terms of communication
Downfall in overall industry
Specific issues: losing a contract, unpaid bills
Recognize the value of employees
e.g : Revise mission statement to include all employees
Put a time frame on the freeze and
revisit the issue in the future
Recommended solutionsGood Values and strong Ethics of the company
Equal treatment, Top management concerned for employees and healthy working environment
Other form of benefits :
Increased vacation time
More flexible time schedule
Training for professional development
Working from home once a week
ConclusionOrganisations that are promoting their employees
without increasing pay are faced with potential problems, such as morale and retention issues.
Increased responsibilities are precious opportunity for employees to learn more, develop and grow, and might be considered in their career path development in the future.
Organisations must follow distributive justice principle, manage perception of equity and fairness, and recognize
the importance of participation and
communication.
ConclusionClear and transparent communication from management to
the employees is very essential in order to have positive
outcome. Informal meetings and involvement of influential
people from the employee group will be very helful.
Our recommendations :
Communicate clearly, put a time frame to reevaluate the
freeze,
recognize employees’ values, good values and strong
company ethics, and provide other forms of compensation for
the
promotion.
Discussion questionsWould you accept a promotion
without a pay increase? Why? What are the risks of promoting
employees without increasing their pay?
What can organisations do to overcome those risks?
Thank you for listenin
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