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 been working for the company for a different length of years.
Devin has been working in the company for 5 years. Erin has been working in the company for 2 years. Alice has been working in the company for 4 years. Carrie has been working in the company for a year and Bruce has been working in the company for 3 years. With those numbers given, I have added them all and came up with 15 years. Now, just divide the $4,000 by 15 and we get the amount in dollars per year. Here’s the math: $4,000 / 15 months = $266. 6666666666667 Or rounded off to the nearest hundredth thousandth becomes $266. 666
Devin: 5 years: 5 x $266. 666 = $1,333. 33 Erin: 2 years: 2 x $266. 666 = $533. 332 Alice: 4 years: 4 x $266. 666 = $1,066. 664 Carrie: 1 year: 1 x $266. 666 = $266. 666 Bruce: 3 years: 3 x $266. 666 = $799. 998 Total: 15 years: 15 x $266. 666 = $3,999. 99 or $4,000 (rounded off to the nearest whole number) Allocation of rewards based on each employee’s performance To help me distribute the money among the employees according to their performance, I have made a ranking rate from 3 to 1; 3 being the best, 2 being the good and 1 being okay.
I have made my performance ranking on each employee based on what they contributed to the success of the project. I gave Devin and Carrie a ranking of 3. Devin was the project manager and I would say that his job was very important, because he was influential in securing the client, coordinating everyone’s effort on the project, and managing relationships with the client. Think about it, if he didn’t do well on his job, the client wouldn’t stay with them on the project; he was the one who had the most interaction with the client.
Alongside, he put in a lot of extra hours for this project and worked from the very start of the project. To add to that, even though he has the highest salary and seems to have no problems on money, he still did what’s right. He could have had the choice to slack and depend on the rest of the team for the success of the project because he makes a lot of money, but no; he did what he needed to do and even gave a little more than a 100% of his time. As for Carrie, she is also the best in my ranking because she was in charge of the web development and was primarily responsible for meeting the project deadline.
If she didn’t make sure that the team met the project deadline, the client would probably be disappointed and possibly pull out of the project. Carrie did work for the project for only 6 months; nevertheless, she put in a lot of extra work hours for the project. Alice, the technical lead who oversaw the technical aspects of the project, received a ranking of 2 or good. I gave her a 2 for her performance because even though she resolved many important technical issues, she couldn’t stay at the office outside regular hours like her co-workers did.
I understand that she is a single mother and I would certainly give her a ranking of 3, if she didn’t have personal lives be an issue on her ability to do more for the project. Yes, she was productive during regular work hours, but that’s what every employee should be doing in the first place. Erin also received a 2for her performance. She was the graphic designer. She was in charge of the creative aspects of the project. She did her job and worked for the project from the beginning; but when she experimented with many looks, it slowed down the entire team.
It was good that the client liked the look and the feel of the project which resulted in repeat business, but I believe that slowing down the entire team could’ve ended the other way; it could’ve been bad, leading to a failure of meeting the deadline. Bruce received a 1 for his performance. Bruce is the tester; he was in charge of finding the bugs in the project and ensuring that it worked. He did find a lot of bugs, but those bugs were not really bugs, but his misuse of the system. Moreover, he misunderstood many things and was not very aggressive in his testing.
What makes it even worse was that he was very pessimistic on the likelihood of the success of the project and had a complete negative attitude towards the whole project. That kind of negativity doesn’t help on making the project a success. Now here’s the math for the distribution of the bonus based on performance. $4,000 / 11 = $363. 6363636363636 Or rounded off to the nearest hundredth thousandth becomes $363. 636 Devin: rank of 3: 3 x $363. 636 = $1,090. 908 Carrie: rank of 3: 3 x $363. 636 = $1,090. 908 Alice: rank of 2: 2 x $363. 636 = $727. 272 Erin: rank of 2: 2 x $363. 636 = $727. 272 Bruce: rank of 1: 1 x $363. 36 = $363. 636 Total of all ranks: 11 x $363. 636 = $3,999. 996 or $4,000 (rounded off to the nearest whole number) I got 11 from adding all ranking of each employee. So 3 + 3 + 2 + 2 + 1 = 11 I did this because this way, I could give a value in dollars per rank. Then multiply that value in dollars to the rank that each employee received. Finally, we need to know how much employee will receive from the $12,000 bonus. Devin: $1,090. 908 – months worked on project $1,333. 33 – years in the company + $1,090. 908 – performance $3,515. 146 Carrie: $545. 454 – months worked on project $266. 666 – years in the company $1,090. 908 – performance $1,903. 028 Alice: $727. 272 – months worked on project $1,066. 664 – years in the company + $727. 272 – performance $2,521. 208 Erin: $1,090. 908 – months worked on project $533. 332 – years in the company + $727. 272 – performance $2,351. 512 Bruce: $545. 454 – months worked on project $799. 998 – years in the company + $363. 636 – performance $1,709. 088 Total of $11,999. 99 Not exactly $12,000, but one cent doesn’t hurt. In conclusion, I truly believe that my process of allocating the bonus within the employees makes an ethical sense and the five employees will have no reason to complain.
I strongly believe this because if I were in their position, I would absolutely understand why the bonus was distributed this way and why I received the amount of money that I have received. First of all, the reward allocation was not based solely on performance or that the reward was allocated equally among the employees. If it was based solely on performance, I think that the ones who did great will want more of the share and the ones who didn’t do great will still want more of the share that they didn’t get.
Furthermore, if the reward was allocated equally among the employees, those who did a great job will react and ask why everyone else got the equal amount of bonus when not all of them did a great job for the project. This is how I would exactly feel if this ever happened to me. So, I have trust on my reward allocation decisions; that these decisions won’t hurt my employee’s working attitudes and motivation to work hard on accomplishing future goals and projects.
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