Describe ethical problems associated with performance-based reward programs:
“Reward programs represent a powerful means for motivating high levels of individual and team performance.” (Hellreigel/Slocum, 2011)
First Ethical Issue:
Rewards become the prize and the tangible result of performing well in your job. Creating a reward based review may result in haves and have nots in the workplace, while you are rewarding success, there is little incentive for poor performers to do better. (The obvious incentive would be to perform better, but usually consistent poor performers have some obstacle to achievement.) “Rod Rodin, CEO of Marshall Industries, found that rewarding individual performance only created unhealthy competition among employees and destroyed morale.” (Hellreigel/Slocum, 2011)
Second Ethical Issue:
A second ethical issue is whether individuals should be rewarded if they are part of a team or should the entire team be rewarded. A lot of people don’t want to work with the guy who takes all the credit and gets all the rewards when part of a team.
Third Ethical Issue:
A reward such as a pay raise should be significant enough to reflect the contributions of the employee. A cost of living increase after a great review creates a negative reaction by the employee.
Fourth Ethical Issue:
Should a reward be a tangible item such as a car? Should it be intrinsic? Intrinsic rewards are built into the employment. When an individual is hired, there is a pre-set ladder of advancement based on achievements. This question addresses the ethics and values of a business. A promotion may be of greater value to the employee in the long run.
Fifth Ethical Issue:
When rewards are based on a skill level, the ethical dilemma is created when the employee reaches the limit of skills and can no longer be rewarded.
“Leaders need to link rewards to performance and set a measurement system in place that measures the behaviors that lead to effectiveness.” (Hellreigel/Slocum, 2011) Rewards should be relevant to the employee (usually cash) and have value (cash payout, raise or promotion).
Businesses must be responsible for unintended consequences of a reward. If a restaurant says all meals will be served within 10 minutes of seating, that does not mean the food will be well prepared or served well.
In the shrinking of the business world, ethical dilemmas are often presented when creating rewards across cultures. Many companies have gone international and need to consider cultural expectations.
In your experience, explain any abuses you have seen:
I have worked for a small company that handed out bonuses at the Christmas party. Unfortunately, not everyone got one, which made the whole event awkward.
I have also worked for a large state college that required transparency in financial reporting. The local newspaper would regularly list all employees of the school along with their salaries. In that case, the employees who made more got the bonuses while regular salary workers got a 1% raise, whether you showed up and did a good job or not. This was not a merit based reward system!