One advantage of membership and seniority is that the employees are guaranteed of promotions and benefits, that is, they are sure to advance in their careers as long as they stay in the company (Hamel, 2013). Some companies and labor unions can also protect the senior employees from layoffs; thereby providing them with job security. On the other hand, a disadvantage is that performance is not rewarded and career growth is slow, which can discourage employees from improving their performance and will also prevent the company from attracting the most motivated and talented workers.
With regards to job status-based rewards, one advantage is that pay equity is maintained by the conduct of job evaluations (McShane & Von Glinow, 2012). Another advantage is that the employees are motivated to compete for promotions. In contrast, one disadvantage is that it makes employees hoard resources and exaggerate their duties. It also enforces hierarchy and status and makes the workplace inflexible.
With regards to competency-based rewards, their advantage is that they lead to the development of a more flexible workforce that is able to produce a better quality of work. However, on the down side, the evaluation of employee competencies can be subjective and the development of these competencies through training can be quite costly.
Finally, an advantage of performance-based rewards is that they encourage employees to work harder and better, which leads to employee retention (Wooton, 2011). The best employees stay because their efforts are rewarded. However, a disadvantage is that it might reduce employee morale as some companies use performance-based rewards to encourage the best employees and to eliminate the weakest ones. They can also damage creativity, teamwork, and self-esteem.
In the company I worked for, another type of rewards that made the employees stay were the comprehensive set of benefits. The company kept upgrading the benefits, which were equal for all (for the most part), making the employees stay. There were also office parties, office massages, and financial seminars that were available to the employees for free. These rewards were not based on individual performance but were made available to the employees to reflect the company’s good performance as a whole.
In my opinion, these rewards improve behavior and performance to some extent. As discussed earlier, they all have their advantages and disadvantages, and I think that a balance can be achieved by implementing more than one type of rewards. For example, performance-based rewards can be implemented together with company-wide rewards, such as parties and perks that are available for all. This way, all of the employees can enjoy the rewards even when they are not able to reach the level of performance that the others are able to achieve. They will still be encouraged to improve their performance, though – in order to obtain the performance-based rewards – but failing to do so will not make them feel demoralized as there are still other benefits and perks that they can enjoy. In addition, this will reduce competition among the employees as they know that they are, more or less, equally rewarded on the basis of the company’s performance but that they can get more if they improve their individual performance. Moreover, I think that these rewards can become more effective if the company’s management team is able to implement them in an objective manner and if they can make the employees understand the mechanics and the purpose behind these rewards very well, along with how they support the company’s strategic objectives.
Hamel, G. (2013). Advantages & disadvantages of seniority. Retrieved from
McShane, S. & Von Glinow, M. (2012). Organizational behavior (6th ed.). McGraw-
Wooton, P. (2011, December 3). Benefits and drawbacks of performance-based compensation.
Retrieved from http://www.shiftiq.com/articles/benefits-of-performance-based-