Case study: Individualized Rewards

Organizations have historically assumed that “one size fits all” when it comes to
allocating rewards. Managers typically assumed that everyone wants more money
and more vacation time. But as organizations become less bureaucratic and more
capable of differentiating rewards, managers will be encouraged to differentiate
rewards among employees as well as for individual employees over time.

Organizations control a vast number of potential rewards that employees might

find appealing. A partial list would include increased base pay, bonuses, shortened
workweeks, extended vacations, paid sabbaticals, flexible work hours, part-time
employment, guaranteed job security, increased pension contributions, college tuition
reimbursement, personal days off, help in purchasing a home, recognition awards,
paid club memberships, and work-from-home options. In the future, most
organizations will structure individual reward packages in ways that will maximize
employee motivation.

QUESTION:

1. What are the positive aspects of having individualized rewards? (Think in terms of
employees and managers.)

2. What are the negative aspects of having individualized rewards? (Again, think in
terms of employees and managers.)

Answer
1. Positive aspects of having individualized reward:
- Employees will feel that their efforts are recognized. They input are energized, directed and
sustained. Relying on Equity theory, we know that employees may perceive unequal if their
input-outcome is not “unmatched”. It will cause many “problems” behind, they may be
dissatisfied and if the worst situation, they quit their job. Therefore, invidualizing reward may
prevent that case by giving them a proper reward, which suits their needs. Moreover, in the
expectancy theory perspective, employees tend to act in certain ways based on the expectation
that action will bring a appropriate outcome. Similarly, by providing individualized rewards,
company give their expectation that if they do their job well, they will receive rewards
identically. Consequence, it maintains employee’s job satisfaction and feel comfortable, and
well-treated at the workplace.
- In term of managers, In fact, the relationship between employees and managers plays an
important roles of the organization. Individualized rewards helps managers increase his or her
employee’s loyalty, productivity. Based on acceptance theory of authority, it is believed that
the authority of managers comes from the willingness of the employees. By individualized
rewards give managers more “trust”, respect from employees. Therefore, they become more
“authorizing”, more power and can direct their employees appropriately. Eventually,
monitoring means “exploiting” employees’s capabilities well. As a result, making more profit for
organizations
2. negative aspects of having individualized rewards
- Employees:
+ lack of teamwork: by providing that kind of reward, employees may concentrate
solely on their own performance. It may leads the workplace more stressful and hard
for employees to coordinate with each other.
+ mental problem and high turnover rate: for those people who can not “achieve”
individualized rewards equal or higher than their colleagues may feel stress and
experience a “gloomy” job every single day. In the worst case, they may come down
with some metal health problems and quit their job.
- Managers:
+ spend more time and money: Employees needs are not explicit easily. To “capture”
that, managers must take time and even other resource (human,...) to investigate
individual needs.
+ less focus on “present”: due to paying attention on how to motivate employees, how
to give them appropriate rewards,…Managers may not have enough time to deal with
other organization problems. It may lead the organization performance is declined.
+ more problems: it become “more matter” if the employees needs is higher than their
performance. For example, an employees want a higher bonus although he/she
performs poorly. In that case, individualized rewards may satisfy employees but
“hurt” the company resources.

Case study: Pfizer

Admit it. Sometimes the projects you’re working on (school, work, or both) can get
pretty boring and monotonous. Wouldn’t it be great to have a magic but- ton you
could push to get someone else to do that boring, time- consuming stuff? At Pfizer,
that “magic button” is a reality for a large number of employees.

As a global pharmaceutical company, Pfizer is continually looking for ways to help

employees be more efficient and effective. The company’s senior director of
organizational effectiveness found that the “Harvard MBA staff we hired to develop
strategies and innovate were instead Googling and making PowerPoints.” Indeed,
internal studies conducted to find out just how much time its valuable talent was
spending on menial tasks was startling. The average Pfizer employee was spending 20
percent to 40 percent of his or her time on support work (creating documents, typing
notes, do- ing research, manipulating data, scheduling meetings) and only 60 percent
to 80 percent on knowledge work (strategy, innovation, networking, collaborating,
critical thinking). And the problem wasn’t just at lower levels. Even the highest-level
employees were affected. Take, for instance, David Cain, an executive director for
global engineering. He enjoys his job—assessing environmental real estate risks,
managing fa- cilities, and controlling a multimillion-dollar budget. But he didn’t so
much enjoy having to go through spreadsheets and put together PowerPoints. Now,
however, with Pfizer’s “magic button,” those tasks are passed off to individuals
outside the organization.

Just what is this “magic button”? Originally called the Office of the Future (OOF), the
renamed PfizerWorks allows employees to shift tedious and time-consuming tasks
with the click of a single button on their computer desktop. They describe what they
need on an online form, which is then sent to one of two Indian service-outsourcing
firms. When a request is received, a team member in India calls the Pfizer employee
to clarify what’s needed and by when. The team member then e-mails back a cost
specification for the requested work. If the Pfizer employee decides to proceed, the
costs involved are charged to the employee’s department. About this unique
arrangement, Cain said that he relishes working with what he prefers to call his
“personal consulting organization.”

The number 66,500 illustrates just how beneficial PfizerWorks has been for the
company. That’s the number of work hours estimated to have been saved by
employees who’ve used PfizerWorks. What about Joe Cain’s experiences? When he
gave the Indian team a complex project researching strategic actions that worked
when consolidating company facilities, the team put the report together in a month,
something that would have taken him six months to do alone. He says, “Pfizer pays
me not to work tactically, but to work strategically.”

Discussion Questions

Question 1: Describe and evaluate what Pfizer is doing with its PfizerWorks.

Question 2: What structural implications—good and bad—does this approach have?

(Think in terms of the six organizational design elements.)

Question 3: Do you think this arrangement would work for other types of
organizations? Why or why not? What types of organizations might it also work for?

Question 4: What role do you think organizational structure plays in an organization’s

efficiency and effectiveness? Explain.