REWARD AND PUNISHMENT

By Fariz Alfan A.P

Prentice Hall 2006

7-1

Reward

Reward is concerned with the formulation and implementation

of strategies and policies that aim to reward people fairly,
equitably and consistently in accordance with their value to the
organization

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Objectives of Reward

Support the organisations strategy

Motivate employees

Strengthen psychological contract

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Basic Types of Reward

Extrinsic rewards

satisfy basic needs: survival, security

Pay, conditions, treatment

Intrinsic rewards
satisfy higher needs: esteem, development, etc

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Rewards Used by Organizations

MATERIAL REWARDS
Pay
Pay raises
Stock options
Profit sharing
Deferred compensation
Bonuses/bonus plans
Incentive plans
Expense accounts

STATUS SYMBOLS
Corner offices
Offices with windows
Carpeting
Drapes
Paintings
Watches
Rings
Private restrooms

SUPPLEMENTAL BENEFITS
Company automobiles
Health insurance plans
Pension contributions
Vacation and sick leave
Recreation facilities
Child care support
Club privileges
Parental leave

SOCIAL/INTERPERSONAL REWARDS
Praise
Developmental feedback
Smiles, pats on the back, and
other nonverbal signals
Requests for suggestions
Invitations to coffee or lunch
Wall plaques

REWARDS FROM
THE TASK
Sense of achievement
Jobs with more responsibility
Job autonomy/self-direction
Performing important tasks

SELF-ADMINISTERED
REWARDS
Self-congratulation
Self-recognition
Self-praise
Self-development through
expanded knowledge/skills
Greater sense of self-worth
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Advantages of Fair Compensation

System
1. Encourage the normal worker to perform better and achieve
the standards fixed.
2. System would be well defined and uniform. It will be apply
to all the levels of the organization as a general system.
3. System would be easy to implement, so that it would not
penalize the workers for the reasons beyond their control and
would not result in exploitation of workers.
4. System would also bring about amicable settlement of
disputes between the workmen union and management.

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Punishment
The purpose of punishment is to encourage and enforce
"proper" behavior as defined by a group, an organization, or
society through the use of negative consequences.

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Kinds of Punishment
Punishment is meant to be so disagreeable that it prevents or stops
certain behaviors. It comes in two forms: positive and negative.
Positive punishment involves actually doing something unpleasant
to the employee. Verbal reprimands and written warnings are
examples of this kind of punishment. Negative punishment takes
or withholds something valuable from the employee, including
promotions or the job itself.

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The Process of Social

Exchange

The use of rewards and punishments by a leader

has been described as a process of social
exchange between the leader and followers.

The leader wants certain behavior from a follower,

such as attendance, a clean work area,
responsiveness, or good performance. The leader
also controls certain items that followers either
want (rewards) or would like to avoid (punishment).

As long as both perceive the contract as fair and the

benefits to each party outweigh their costs, they
will tend to have a mutually satisfying and
productive relationship.

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7-7

Contingent Rewards
and Punishments

Rewards and punishments must be contingent

on the followers behavior.

Making the follower aware of this contingency allows

the follower to focus efforts on repeating the
behavior or performance to obtain the reward again.

When the leader expresses dissatisfaction with a

followers poor attendance and states that repeated
poor attendance will result in the followers dismissal,
the follower now has the knowledge needed to avoid
further punishment.

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7-8

Major Effects of Rewards and

Punishments
Follower Benefits

improved performance
compliance with requests
satisfaction with supervision
commitment to organization
role clarity

Group or Organizational Benefits

improved productivity
increased enthusiasm
cohesiveness
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7-11

Thanks for your attention!!

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