Alternative Reward Strategies and Employee Reactions

Abstract

Strategic compensation theory argues that rewards should be used to encourage employee activities that support organizational goals, but reward strategies often have confounding effects on employee attitudes and behaviors. Five reward strategies that might be followed—Individual Output, Group Output, Human Capital, Position and Market—were identified, and 154 employees from 10 companies were asked to indicate which were followed in their organizations. When reward strategies were compared with employee attitudes, some striking differences in responses between blue-collar and white-collar workers were revealed. The article concludes that compensation programs need to take into account alternative employee reactions among different classes of employees.