Bauer, Human Resource Management
SAGE Publishing, 2020
Instructor’s Manual
Chapter 12: Rewarding Performance
Chapter Summary
– Pay represents a type of formal reward system.
Chapter Learning Objectives:
After completing this chapter, students should be able to:
LO 12.1: Describe the motivating potential of pay and other rewards.
– Traditional pay programs
– Pay-for-performance programs
– Defining motivation
Bauer, Human Resource Management
SAGE Publishing, 2020
LO 12.2: Identify the prevailing theories of motivation and goal setting.
– Reinforcement theory
– Expectancy theory
LO 12.3: Explain how pay can be used strategically to motivate desired behavior.
– Compensation strategies need to be communicated to the organization.
– Strategic decisions of what behaviors are to be rewarded.
LO 12.4: Describe common individual and group pay-for-performance programs.
– Individual pay-for-performance programs
Merit pay
Bauer, Human Resource Management
SAGE Publishing, 2020
Differential piecework
Standard-hour plans
Sales commissions
– Group Pay-for-Performance Programs
LO 12.5: Assess common challenges and opportunities of pay-for-performance programs.
– Performance measurement
– Incentive effects
Bauer, Human Resource Management
SAGE Publishing, 2020
Suggested Exercises or Projects
Exercise 12.1 Exhibiting the effects and linkages in expectancy theory. Hold out a $1 bill. Tell
the class that any student who wants it can simply come and get it. It is likely there will be a
general hesitancy until someone decides to come up and get the $1 bill. Ask the students why
they were not motivated to come and get the $1 bill. Did they think the effort they would put
forth was not worth the valence of the outcome (a free $1) or perhaps they did not think they
Discussion Questions:
1. Organizations do not operate in a vacuum. They are susceptible to the many internal and
external environmental influences in industry today. What are some of the important external
factors that organizations need to consider when developing a strategic compensation plan?