In recent years, a number of newer types of benefits have emerged and are gaining in pop-ularity. One example of these is wellness programs, and another, mentioned earlier in this section, is assistance with family-related responsibilities. These, in addition to others, are emerging as an important part of today’s organizational reward system.
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Wellness Programs
Wellness programs, which will also be discussed in Chapter 9 on coping with stress, are a spe-cial type of benefit program that focuses on keeping employees from becoming physically and/or mentally ill. There is considerable evidence that employees who exercise regularly and maintain or lose excess weight are less likely to take sick days and thus reduce health insur-ance premiums and lost productive time. As a result, more and more firms are now encour-aging their people to work out regularly by installing a gymnasium or workout center on the premises or offering to finance at least part of the cost of joining a local health club. Another wellness practice is to encourage employees to exercise by giving them a financial payment such as $1 for every mile they jog during the year. So a person who jogs three miles a day at the company gym will earn $15 a week. As indicated earlier in the chapter, some also encour-age their people to keep their weight under control, and individuals who are too heavy are
OB in Action: You Can’t Make More Time
Randy Pausch’s Heartfelt Views on Using Time to the Fullest
Randy Pausch was truly passionate about the benefits of time management. He was asked to write this not long before his death on July 25, 2008 at age 47, and he was excited to have the opportunity. In fact, it led to one of the last e-mails I got from him, which was full of excla-mation points and closed with the word “AWESOME!”
In the end, he didn’t have the energy to finish it. Thus, his friends have put the following together using the phrases he used many times.
So you’ve decided to take the time to read this arti-cle. Every moment of our lives requires this kind of deci-sion, which is the fundamental time-management question: Should I do X, or should I do Y?
All his life, Randy Pausch knew time was a gift. He was always logical about time, sometimes to the point of exasperating his friends with comments about the size of their in-boxes. But his reverence for hours, minutes—
even seconds—served him well.
He would stand before a room full of students and tell them time was their most precious commodity. They all knew they had finite money, but they lived as if they had infinite time. “You can always make more money later,”
Randy would say. “But you can’t make more time.” Time, like money, he explained, must be explicitly managed.
He had all sorts of practical advice for work. Stand while on the phone. (You’ll be more eager to finish up.) Avoid copying five people on an e-mail when you want something done. (Each will assume that one of the other four is going to step up to the plate.) Minimize interrup-tions. (Turn off the “new e-mail” pop-up alert or shut down e-mail during your good working hours.)
Other tips were reminders of the big picture. Do the
“ugliest” thing first—everything else will come more easily after that. Make time for the important things, not just for critical things; it is all too easy to spend
time fighting fires rather than doing the necessary deep thinking. And recognize that the best reason to save time in your work is to increase time with your family.
SO LITTLE OF IT LEFT
Toward the end of his life, Randy became something of a poster boy for the limits of time. Last September he gave a “last lecture” at Carnegie Mellon. He talked about the joys of life and how much he appreciated it, even with so little of his own left. It was a talk for his stu-dents and colleagues, but because it was recorded, he hoped it could be a message to his three kids, too.
Footage of the talk unexpectedly spread online, and he heard from thousands of people. (As a result, another lecture of his, on time management, was widely watched online, too.) Many wanted to know if his views on time changed as he got closer to the end of his life.
But there were no great epiphanies. “Everything now is more so,” he told people.
He lived longer than doctors predicted, and he mapped out that “extra” time with fervor. He went on a few romantic trips with his wife, Jai. He made a point of doing memorable activities with his children, such as swimming with dolphins and visiting Disney World. He was trying to give his kids—ages 2, 3, and 6—vivid mem-ories of their time together.
Even before the last stages of his illness, people asked him how to best prioritize their time. His answer was simple: “If I don’t do X, will it matter? And if I have to pick either X or Y, which one is more important? At the end of my life, which of these things will I be glad I did?”
Time is all we have. And, like Randy, we may find one day we have less than we think.
Note: Randy Pausch’s time-management lecture is viewable at www.thelastlecture.com.
110 Part One Environmental and Organizational Context
paid to lose the extra weight. For example, a firm may pay $10 for every pound an employee loses. Of course, once the individual has reached the weight recommended by the doctor, this weight must stay off. If the person gains it back, the individual may have to pay the firm $10 for every pound above the doctor’s recommended limit. Many firms find that these are small sums to pay when contrasted with the cost of having someone, for example, out of work six days a year due to poor health. In fact, in order to encourage everyone to stay healthy, some organizations pay people for unused sick days. So those who are in good health have an incen-tive to maintain this status. Finally, a growing number of large firms have on-site health care services that primarily focus on prevention rather than treatment.94
Life Cycle Benefits
Another popular group of new benefits comes under the heading of what collectively are being called “life cycle” benefits. These are based on a person’s stage of life and include such things as child care and elder care.
Child care benefits are extremely popular and many of the “best places to work” such as the software development firm SAS have on-site day care. Employees can drop off their child at the day care center, come by and have lunch with the child, and then pick up the youngster after work and drive home together. In a few instances, firms have even installed TV cameras so employees can view and keep track of their child throughout the day in the center. One of the primary benefits of this program is the elimination of day care costs, which can run well over $100 a week, as well as spending quality time with the child before, during, and after work, or, in the case of the TV-monitored systems, during the workday.
Elder care takes a number of different forms. One of the most common is referral ser-vices, which can be used by an employee who has a disabled parent or one who needs con-stant care. Another form is long-term health care insurance, which provides for nursing homes or at-home care.
Another popular benefit is employee assistance programs (EAPs for short), which were originally designed to assist employees who had problems with alcohol. In recent times, EAPs deal with drug abuse and now have generally expanded into marital problems and financial planning. The purpose of these programs is to provide help to employees in deal-ing with personal problems that can negatively impact their lives and their job performance.
The use of EAPs should be kept confidential so that employees are not hesitant to use the services for fear of career repercussions.
Other Benefits
In recent years a number of other benefits have begun to appear, many of them offered by especially innovative companies. One is concierge services that help employees choose gifts for presents, get tickets to concerts, schedule home or auto repairs, and so forth.
Another is the use of tuition assistance to help employees obtain a college education or advanced degree. A third is the use of noninsured benefit programs that help low-wage and part-time workers purchase medicines and medical assistance at a discount. Still another example is prepaid legal plans that offer a variety of services such as legal advice, wills and estate planning, and investment counseling. Finally, some firms just come up with rela-tively small, but still effective benefits for their employees. For example, at the accounting firm KPMG, employees received a hot summer surprise: six pints of gourmet ice cream, toppings, and a scooper; the L.A. law firm DLA Piper recently whisked 400 employees and their families off to Disneyland for the day; in Dallas the PR firm Weber Shandwick encourages employees to use their expense account to pay for cab rides after drinking alco-hol; and Safeco, Microsoft, and IBM offer employees work-from-home opportunities and subsidies for alternative transportation.95
Chapter 4 Organizational Context: Reward Systems 111
Flexible, Cafeteria-Style Benefits
Every organization has its own way of providing/administering the benefit package, but in recent years a growing number have begun offering flexible, cafeteria-style benefit plans.
Just like most firms today96offer their employees flexible times for arriving and departing work (see Chapter 2), they also offer plans that allow employees self-control and choice over the benefits received. Employees are allowed to put together their own package by choosing those benefits that best meet their personal needs. Under this arrangement, the organization will establish a budgeted amount that it is willing to spend per employee, and the individual is then allowed to decide how to spend this money. For example, some employees may want more life insurance because they have a young family, whereas others may prefer to spend more on health insurance coverage because they have a spouse with a debilitating illness.
There is evidence that these cafeteria-style programs can lead to increased satisfaction and reduced turnover.97However, organizations have also found that these plans can be somewhat expensive to administer because there are many different types of benefit pack-ages, and someone has to keep track of what each person has chosen. Additionally, employ-ees are usually allowed to make changes in their package on an annual basis, further complicating the problem of administering the benefits and the accompanying tax implica-tions.98Finally, even though employees seem to like cafeteria-style benefit plans, there is no assurance that they always make rational decisions.99For example, young employees with families may opt to deal only with more immediate concerns such as better hospital coverage for their spouse and children and completely ignore the benefits of contributing to a retirement program for their future.
In summary, benefits are clearly an important component of the organizational reward system. Unfortunately, because they are so common and everyone gets them, their value as a reward often goes unnoticed. Benefits are too often taken for granted and are considered to be an entitlement and thus become a hollow reward for employee performance and retention.
Summary
This chapter examines reward systems as an important part of the organizational context for organizational behavior. For most organizations, pay dominates the organizational reward system. There is considerable evidence that pay is vital not only for hiring and retaining talented employees, but also if properly administered for its positive impact on desirable outcomes such as productivity, quality, and customer service. In particular, pay provides employees with the opportunity to meet both lower-level maintenance and upper-level growth and achievement needs. The challenge for managers is to administer rewards properly. In particular, this means setting up pay systems that allow employees to know the outcomes that are to be rewarded, that measure these outcomes as fairly and objectively as possible, and that tie monetary incentives directly to the results.Pay administration takes several forms. Traditional methods include base salary and merit pay. Both of these, however, are often insufficient for retaining talented people.
Organizations have to offer incentives for desirable outcomes. As a result, pay-for-performance systems are in place in many firms. These include both individual and group incentive plans. Common examples of individual incentives include commissions based directly on sales or work output, bonuses, and stock options. Group incentives include gain sharing, profit sharing, and employee stock ownership plans.
In recent years many organizations have realized that they must develop new pay approaches. One example is the use of commissions that go beyond sales to outcomes such as customer service. Others include skill pay that is based on employees’ demonstrating completion of training and competency in particular job-related skills, competency pay that
112 Part One Environmental and Organizational Context
is based on rewarding people for abstract knowledge or competencies related to things such as technology or leadership, and broadbanding in which salary levels are collapsed into a small number of salary grades with broad pay ranges.
Another important but often overlooked component of organizational reward systems is recognition. In contrast to money, recognition is easier to control for an individual supervi-sor or manager and can be easily altered to meet the individual employee needs. Social recognition is provided by managers/supervisors contingent on performing desirable behaviors and is given more detailed attention in Chapter 12 on behavioral performance management. As part of the organizational reward system discussed in this chapter, formal recognition systems can innovatively provide awards for desirable outcomes, and many actual examples are provided.
Benefits are the third major component of organizational reward systems. Some of these benefits are mandated by the federal government (e.g., Social Security and workers’ com-pensation). However, numerous other benefits are received by today’s permanent employ-ees (not by temps, and this is a major problem for them). Examples include paid vacations, days off for religious holidays, personal leave, life and health insurance, and pensions. In addition there are benefits that have emerged in recent years that are proving quite popular.
Examples include wellness programs, child care benefits, employee assistance programs (EAPs), tuition assistance, prepaid legal expenses, and a host of other perks. In recent years the value of benefits as part of the reward system has increased, but so has the cost. The challenge for today’s management is to make sure there is a favorable cost-benefit ratio and go beyond what is required by law to contribute to desired outcomes such as retention and performance.