Motivation Reward system and the role of compensation — страница 2

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level of individual effort will lead to achieving the corporation’s standards of performance. As indicated, motivation to exert effort is triggered by the prospect of desired rewards: money, recognition, promotion, and so forth. If effort leads to performance and performance leads to desired rewards, the employee is satisfied and motivated to perform again. As mentioned above, rewards fall into two categories: extrinsic and intrinsic. Extrinsic rewards come from the organization as money, perquisites, or promotions or from supervisors and coworkers as recognition. Intrinsic rewards accrue from performing the task itself, and may include the satisfaction of accomplishment or a sense of influence. The process of work and the individual’s response to it provide the intrinsic

rewards. But the organization seeking to increase intrinsic rewards must provide a work environment that allows these satisfactions to occur; therefore, more organizations are redesigning work and delegating responsibility to enhance employee involvement. Equity and participation The ability of a reward system both to motivate and to satisfy depends on who influences and/or controls the system’s design and implementation. Even though considerable evidence suggests that participation in decision making can lead to greater acceptance of decisions, participation in the design and administration of reward systems is rare. Such participation is time-consuming. Perhaps, a greater roadblock is that pay has been of the last strongholds of managerial prerogatives. Concerned about

employee self-interest and compensation costs, corporations do not typically allow employees to participate in pay-system design or decisions. Thus, it is not possible to test thoroughly the effects of widespread participation on acceptance of and trust in reward system. Compensation systems: the dilemmas of practice A body of experience, research and theory has been developed about how money satisfies and motivates employees. Virtually every study on the importance of pay compared with other potential rewards has shown that pay is important. It consistently ranks among the top five rewards. The importance of pay and other rewards, however, is affected by many factors. Money, for example, is likely to be viewed differently at various points in one’s career, because the need for

money versus other rewards (status, growth, security, and so forth) changes at each stage. National culture is another important factor. American managers and employees apparently emphasize pay for individual performance more than do their European or Japanese counterparts. European and Japanese companies, however, rely more on slow promotions and seniority as well as some degree of employment security. Even within a single culture, shifting national forces may alter people’s needs for money versus other rewards. Companies have developed various compensation systems and practices to achieve pay satisfaction and motivation. In manufacturing firms, payroll costs can run as high as 40% of sales revenues, whereas in service organizations payroll costs can top 70%. General managers,

therefore, take an understandable interest in payroll costs and how this money is spent. The traditional view of managers and compensation specialists is that if the right system can be developed, it will solve most problems. This is not a plausible assumption, because, there is no one right answer or objective solution to what or how someone should be paid. What people will accept, be motivated by, or perceive as fair is highly subjective. Pay is a matter of perceptions and values that often generate conflict. Management’s influence on attitudes toward money Many organizations are caught up in a vicious cycle that they partly create. Firms often emphasize compensation levels and a belief in individual pay for performance in their recruitment and internal communications. This

is likely to attract people with high needs for money as well as to heighten that need in those already employed. Thus, the meaning employees attach to money is partly shaped by management’s views. If merit increases, bonuses, stock options, and perquisites are held out as valued symbols of recognition and success, employees will come to see them in this light even more than they might have perceived them at first. Having heightened money’s importance as a reward, management must then respond to employees who may demand more money or better pay-for-performance systems. Firms must establish a philosophy about rewards and the role of pay in the mix of rewards. Without such a philosophy, the compensation practices that happen to be in place, for the reasons already stated, will