The relationship between the implementation of the reward system and the effectiveness of performance evaluation is very important for all performance management links.It is obvious that combining the results of performance evaluation with monetary rewards can make the performance evaluation system more effective. Some studies have found that when rewards are combined with evaluation results, the effectiveness becomes very high, which contradicts the view often mentioned in the past that evaluation is very effective when evaluation is not combined with monetary rewards.[1]
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There may be many different types of rewards provided or received by the company. These rewards can be basically classified into two categories: internal rewards and external rewards.
The intrinsic reward is related to the work pleasure that individuals feel.Examples include being able to participate in decision making, obtaining more interesting job assignments, having opportunities for personal growth, and obtaining more responsibilities.External rewards involve the surrounding environment surrounding the work itself.The most obvious external reward is remuneration or salary.External rewards can be further divided into direct rewards and indirect rewards.Examples of direct compensation include dividends, profit distributions, and overtime pay.Examples of indirect compensation include paid holidays, tuition subsidies, and health insurance.
Rewards can be distributed from three aspects: individuals, groups, and the overall organization.There are considerable differences among these three levels, but the general perception is that if rewards are to be directly related to performance, they should be distributed at the individual level.
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General MotorsAnd the United Auto Workers Association, agreed to provide GM with a unique incentive system for auto workers at ThorStar Auto Factory in Tennessee.This system is mainly based on the acceptable risk level and low basic salary for employees.When this factory was opened in 1992, the basic salary accepted by workers of Thorium Star Automobile Factory with the same skills and work nature was only 95% of the basic salary of workers of other General Motors factories.The remaining 5% is determined by sales volume and profit.In 1992, each worker received about US $1800, which was also determined by the profit of the factory in that year.By 1997, this incentive system had become more risky: the basic salary accepted by workers in ThorStar Automotive Factory was only 88% of the basic salary of workers in other General Motors factories, and the remaining 12% depended on the situation.The wages of the workers in that year were about US $2100.In 1995 and 1996, the workers of Tennessee ThorStar Automobile Factory were very happy about their annual salary increase of about 10000 dollars, which was the result of this risky reward system.
