Michael David - Week 11 Assignment 01: Application Assignment

Review of journal article:

Managing Corporate Culture Through Reward Systems

In reading the article, I discovered a basic application of the reward systems that were learned in the class and that are in place today with organizations that have successfully implemented them. The article was written in 1987 at a time when few companies utilized reward systems aside from increased salaries and bonuses.

While reward systems were important to companies back then, they didn’t offer all the rewards offered today. The authors discovered two types of reward systems, hierarchy-based and performance-based systems (Kerr & Slocum, Jr., 1987). In hierarchy-based systems, employees have duties that are clearly defined by their superiors and have their performance assessed by the same. In the performance-bases system, management links the rewards to the employee’s performance in the organization. In 1987, Kerr and Slocum, Jr. discovered that rewards were financial and non-financial rewards were such things like status symbols. It was typical for rewards to be corner offices, first-class flights, golf club and executive club memberships.

Kerr and Slocum, Jr. categorized the bonding of individuals into two cultures: clan and market. The clan culture was unified individuals and their organizations by social aspects. Camaraderie, sense of belonging, pride, tradition and pressure from peers to conform are some of the ways the clan culture leads individuals to form bonds.  Market culture forms a contractual bond between individuals and organizations. Expectations and obligations are clearly defined ahead of time and everyone knows what to do to make it work. Commitments are short-term and rely on self-interest. There is little stress from peers to conform and little socialization. Consequently the reward systems are structured differently between the cultures they defined.

Clan culture rewards differ from market clan because of the different values involved. Rewards for clan can be status, organizational or team oriented. Market clan rewards will most likely be monetary or something geared toward the individual and not the team or organization as a whole.

By today’s standards, the reward system has changed since 1987 with some similarities remaining. The monetary rewards will always remain and be well accepted among the employees however, the non-monetary rewards have changed. Heymann and Barrerra (2010) did research to discover how companies engage their employees to boost moral, increase performance, reduce turnover and increase net profits. The found that money doesn’t always motivate. They studied companies in different countries and found that people want to be heard and they want to be involved. One example is the Great Little Box Company in Canada that reports company performance to the lower level employees. They tell the employees how their specific position affects the bottom line of the company’s profits. They then encourage employees to develop an open line of communication with upper management. This strategy, in addition to profit sharing and other financial incentives, has made the company extremely profitable and has created an employee culture that is very loyal with a low turnover. Knowing how their contributions affect the bottom line and the profit sharing opportunities they are entitled to, encourages them to work harder.

            Two other companies also enjoyed similar success as the Great Little Box Company. They are Isola, a roofing supply company in Norway and the Dancing Deer Baking Company in the United States. These two companies had limited financial capabilities to offer their employees so they restructured their organizations and opened the communication between management and employees. What they discovered was an increase in efficiency and profits when people worked closer together. In these cases, their reward was a better workplace.

            The contrast between the two different time frames was distinct. During the 80’s when the article was written, rewards were typical for that era. Pay and status mattered there was little mentioned about participation and open lines of communication. Corporate management would dictate the rules and the employees followed them if they wanted to reap the rewards. The organizational chart was high as opposed to flat and employees had to follow the chain of command. Today, organizations have learned to engage their employees and make them part of the team. They know they matter and their ideas contribute to the success of the organization as a whole, not just the individual or team.

Managing Corporate Culture Through Reward Systems can be found at:

http://search.proquest.com.libproxy.usc.edu/docview/210513921

Resources

Kerr, J., Slocum Jr, J., (1987). Managing Corporate Culture Through Reward Systems. Academy of Management Executive. 1 (2), pp.99-108

Heymann, J., Barrera, M. (2010) Engaging Employees in the Company's Profits and Their Own, Harvard Business School, pp. 1-28