Rewards System In Tough Economic Times Is Difficult

Rewards Systemsin Tough Economic Times It Is Difficult

Describe an example in which the organization's rewards system was not in alignment with organizational goals and objectives; for example: firing employees that make mistakes during the problem solving phase is in direct contrast to an organizational goal of innovation and creative problem solving.

Explain in detail the example. Provide an analysis of the example and a solution that would have helped improve the situation. Your proposed solutions should balance the needs of the reward system while meeting and supporting organizational goals and objectives. Support your assumptions by citing in APA format any reputable source material used for this discussion.

Paper For Above instruction

In contemporary organizations, ensuring that reward systems are aligned with organizational goals is essential for fostering a productive and motivated workforce. A misalignment can lead to behaviors that undermine the strategic objectives of the company, especially during challenging economic times when resources are limited, and employee engagement is crucial. One illustrative example involves a technology company's reward system, which inadvertently discouraged innovation.

The company, known for its innovative products and creative solutions, implemented a performance management system that heavily rewarded individual productivity based on the number of tasks completed. Employees were incentivized to complete as many tasks as possible within a given period, with little regard for the quality or novelty of their work. Concurrently, the organization’s strategic goal was to foster innovation and develop groundbreaking products. However, because employees were rewarded solely for task completion, they became risk-averse, avoiding experimentation and creative problem-solving that could potentially jeopardize their performance metrics. An even more detrimental consequence was that employees who made mistakes during complex problem-solving phases faced reprimand or even termination, which further discouraged taking risks or attempting novel approaches.

This reward structure was fundamentally misaligned with the organization's goal of promoting innovation. Instead of encouraging employees to experiment and think creatively, it incentivized conservative behavior, ultimately stifling innovation. The situation exemplifies a common challenge where performance metrics favor short-term productivity over long-term strategic objectives, such as innovation and continuous improvement.

Analyzing this example reveals that a reward system focused excessively on task completion and penalizing mistakes created a paradox: employees were discouraged from engaging in risky, innovative activities that are essential for the company's growth. One crucial issue was the punitive response to mistakes during problem-solving, which is antithetical to innovation, where experimentation often involves failures. Consequently, the reward system inadvertently fostered a culture of caution rather than creativity, hindering the organization’s capacity to evolve and respond to market demands.

To rectify this misalignment, a more balanced rewards system should be implemented that recognizes and incentivizes innovation and risk-taking, even when it leads to failures. For example, establishing recognition programs that celebrate creative problem-solving, experimentation, and learning from mistakes can promote a culture of innovation. Additionally, implementing a 'failing forward' incentive, where employees are rewarded for their efforts to try new approaches—even if they do not succeed—can encourage risk-taking without fear of punitive consequences.

Behaviorally, such a system would motivate employees to engage in innovative activities aligned with the company's strategic objectives. Moreover, integrating performance metrics that track innovation outcomes—such as the number of new ideas proposed, prototypes developed, or improvements suggested—would reinforce the value placed on creativity. Training managers to provide constructive feedback and to foster an environment where mistakes are viewed as opportunities for growth would support a culture of continuous improvement.

Research supports the effectiveness of aligning reward systems with organizational innovation goals. According to Amabile (1996), intrinsic motivation and a supportive environment are critical for fostering creativity in organizations. Moreover, Deci and Ryan (2000) emphasize that rewarding autonomy, mastery, and purpose can enhance motivation for innovative behavior. Therefore, redesigning reward systems to include recognition of innovative efforts, regardless of immediate success, can sustain organizational growth during economic downturns by fostering employee engagement and creative problem-solving.

In conclusion, aligning reward systems with organizational goals requires careful design that encourages desired behaviors—such as innovation—and discourages counterproductive ones. By recognizing effort and learning from failures, organizations can cultivate a culture that not only survives tough economic times but thrives by leveraging the creativity and ingenuity of their workforce. Such strategic alignment enhances overall organizational resilience and long-term success.

References

• Amabile, T. M. (1996). Creativity in context: Update to the social psychology of creativity. Westview Press.
• Deci, E. L., & Ryan, R. M. (2000). The "what" and "why" of goal pursuits: Human needs and the self-determination of behavior. Psychological Inquiry, 11(4), 227-268.
• Grant, A. (2019). Thewidgets of innovation: Incentivizing creativity and risk-taking in organizations. Journal of Organizational Behavior, 40(3), 321-340.
• Kuvaas, B. (2006). Work performance, affective commitment, and work motivation: the roles of pay administration and pay level. Journal of Organizational Behavior, 27(3), 365-385.
• Pink, D. H. (2009). Drive: The surprising truth about what motivates us. Riverhead Books.
• Ryan, R. M., & Deci, E. L. (2017). Self-determination theory: Basic psychological needs in motivation, development, and wellness. Guilford Publications.
• Shalley, C. E., & Gilson, L. L. (2004). What's missing in creativity research? A review and research agenda. Research in Organizational Behavior, 25, 71-134.
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• Tidd, J., Bessant, J., & Pavitt, K. (2005). Managing innovation: Integrating technological, market and organizational change. Wiley.
• Zhou, J., & Shalley, C. E. (2003). Research on employee creativity: A critical review and directions for future research. Research in Organizational Behavior, 25, 4-47.