Managers Should Reward Productive Employees Without Creating Class System In Work Force

November 20, 2001

Harrisburg, Pa. -- Managers should reward high performance employees with higher pay but without creating or reinforcing a visible class system of favored employees, a Penn State expert says.

While no one in industry argues against rewarding merit, allocating special privileges to upper echelon employees, even if well deserved, means establishing a company culture that is fundamentally undemocratic and injurious to morale, says Dr. David A. Morand, associate professor of management at Penn State Harrisburg.

"In recent decades, companies have seen the nature of labor become much more interdependent and expertise largely decentralized," he notes. "The top-down, hierarchical style of management has been replaced by a flatter, more egalitarian arrangement that works against class or status differences, and blurs the distinction between supervisor and employee. If anything, this trend will continue."

The Penn State researcher presented his findings in the paper, "The Processes and Effects of Programs of Status-Leveling in Organizations," at a recent Academy of Management annual meeting in Washington, D.C.

"A potential conflict exists between the obvious need to reward certain employees through a meritocratic system, versus the need for all employees to feel that at some fundamental level they are not being treated like 'second-class' citizens, that they are all equally valued members of the organization," Morand says.

One solution, while not perfect, is for companies to recognize excellence with bigger paychecks, while at the same time emphasizing an egalitarian culture through removal of the class-based symbols that traditionally served to demarcate "workers" from "managers." Such removal or blurring of class-based symbols might entail practices such as elimination of reserved parking spaces, elimination of segregated executive dining and bathroom facilities, or elimination of separate building entrances for different classes of personnel, the researcher notes.

Also helpful would be a reasonable degree of equality in the placement, size and decor of offices, as well as style of dress in the workplace. Equalization of these types of symbolic rewards across all workers is important in that it prevents class or status differences from becoming an institutionalized part of the company culture.

Even in the area of salaries, Morand says, companies can continue to differentially reward employees based upon standards of merit, while at the same fostering a greater sense of egalitarianism through devices such as profit sharing and ESOP'S, or through capping the ratio between CEO compensation versus that of the company's lowest paid workers.

"The origins of organizational class systems are rooted in 19th century class schisms within American society," Morand notes. "In that era, we easily accepted that in society at large there existed distinct upper and lower class strata, each having its own station in life with accompanying symbols. Earlier in the 20th century, business organizations tended to adopt this class-based schema, thus building into their very culture and structure the stereotyped distinction between `blue' versus `white' collar workers, between `working' people who primarily engaged in manual labor, versus managers who possessed greater intellectual capital (education and expertise) and who were thus presumed to comprise the brains of the organizations -- its `ruling class.' "

Nevertheless, according to the researcher, while contemporary organizations increasingly expect all levels of workers to be capable of demonstrating independent initiative and of effectively participating in work-related decisions, symbolic markers of class distinctions continue to exist in many companies.

"Perquisites such as executive washrooms and reserved parking spaces serve little purpose, other than making some members feel disempowered and second-rate," Morand says. "Any device which symbolically elevates one group of employees at the same time has the effect of diminishing or devaluating the remaining groups of employees."

**pab**

Contacts:

Paul Blaum (814) 865-9481 pab15@psu.edu

Vicki Fong (814) 865-9481 vfong@psu.edu

EDITORS: Dr. Morand can be contacted at (717) 948-6158 or at dam9@psu.edu by email.