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Rothschild Gourmet Foods is a small, privately owned company based in the American Midwest.
It manufactures gourmet food products such as jams, olive oil and sauces, and has been in operation for 13 years. As a result of a company-wide change initiative,
Rothschild managed to boost sales, slash controllable costs, increase product quality, and raise employees’ performance-appraisal ratings. How did they do it? The company changed the ingredients in its total rewards system (Heneman,
DeSimone, Dooley & Jones, 2002).
In addition to offering flexible work schedules and other nonmonetary rewards, Rothschild skillfully implemented an organization-wide incentive plan based on corporate performance. Rothschild isn’t the only company that has discovered firsthand the power of a well-designed and well-executed rewards program.
Indeed, as far back as 1996, an article in USA Today (Neuborne,
1996) proclaimed a revolution in the rewards that organizations were offering employees. Instead of awarding employees pay increases and other incentives simply for seniority, the so-called “New Pay” linked rewards to achievement of the organization’s strategic objectives.
HR professionals and other managers began experimenting with innovative types of rewards in the workplace, including skillbased pay and goal sharing. And they discovered that the right total rewards system—a blend of monetary and nonmonetary rewards offered to employees—can generate valuable business results.
These results range from enhanced individual and organizational performance to improved job satisfaction, employee loyalty, and workforce morale.
Since the publication of the USA
Today article, organizations of all stripes have continued exploring innovative reward plans—particularly with an eye toward aligning workers’ interests with company goals. Today, this revolution manifests itself in two ways. First, organizations have moved beyond merely experimenting with new reward programs and have begun actually using them (Lawler, Mohrman,
& Benson, 2001). Second, these plans have shown increasing variety.
For example, reward systems now routinely contain both monetary and nonmonetary components—some of which (such as recognition) seldom saw use even as recently as a few years ago.
As interest in and use of total rewards systems has intensified, researchers have stepped up their examination of the ways in which