Implementation Tip from Dixon, Hayes, & Stack's Changing Conceptions of Employee Compensation

The effects of contingent reinforcement on a variety of work behaviors have been well known in the organizational behavior management (OBM) literature for some time (e.g., Hopkins, 1987; Mawhinney, 1975). While most applications of monetary incentive-based programs have focused on the individual, this trend is gradually expanding to include group-based pay for performance programs as promising results of this type of system are reported (Honeywell-Johnson & Dickinson, 1999; Kovac, 1986). By using group-based contingencies, individual employees often become more aware of how their own performance affects the group and organization collectively. As a result, individuals are better able to determine the impact of their performance on an organizations ’ financial status. A concurrent awareness among individual employees and their performance, as well as the organization’s success has not always been accomplished with individual employee-based compensation systems. Open Book Management Defined Although many organizations are realizing the added benefits of contingent reinforcement and group-based compensation programs, compensation alone is not enough. Simple bonus compensation can not ensure the success of the organization or that worker performance has a direct relationship to net profits. Therefore, a growing number of organizations are implementing a hybrid form of group-based compensation, entitled “open-book management ” (Stack, 1992). The open book management system consists of four basic principles:! Sharing financial and operational information with all employees! Creating business literacy in all employees! Creating accountability for financial and operational outcomes with each employee! Giving employees a stake in the success of the organizatio