Reward systems

1. Expectancy theory: Motivation is a multiplicative function of
1. Expectancy (that effort will lead to performance), times:
   
2. Expectancy (that performance will be rewarded), times:
   
3. Valence (Different outcomes will be noticed and rewarded)
2. Equity theory:
1. People evaluate and compare the ratio of what they contribute to a situation (input) and an outcome (output) with a ratio for a comparative referent. If the ratio equal than equity exists. If the ratios are unequal than people have a tendency to adjust the ratios.
2. Five possible action levels:
1. Change actual outcomes (e.g. ask for raise, stealing office supplies, etc.)
   
2. Change actual inputs (working less hard, longer breaks, less team player, etc.)
   
3. Change other's outcomes
   
4. Affect other's inputs (distracting them from work, taking credit for her contributions, etc.)
   
5. Leave the situation
   

Also consider the reward mix (fixed, variable, benefits) and reward process. New reward innovations include:

1. Cafeteria-style benefits
2. Broad banding (increase pay steps with job title)
3. Team reward (align own and team goals)
4. Profit sharing
5. ESOP/ Stock options