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Salary motivation theory
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A person-focused pay program rewards employees through compensation for acquiring and implementing job related competencies, knowledge and skills and not for exhibiting and displaying successful job performance (Martocchio, 2013). Pay-for-knowledge compensation plans base employee’s pay on the number of jobs in the organization they can do rather than on the specific jobs they may be doing at a particular time. Typically, when hiring new employees, they start off at a base rate, and as they learn different jobs and skills in the company, their pay rates go up correspondingly. Thus, each additional skill that employees learn, pay raises are attached, encouraging them to become multi skilled (Curington, Gupta, & Jenkins, 1986).
Essentially, when the worker switches
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Likewise, this type of system takes into consideration the knowledge, skills, and abilities the employee possess upon hiring and learns in the course of the assessment period. In this manner, employees are fairly compensated for what they bring to the organization and is not given pay increases based on general duties. Once an individual employee masters a skill, then it becomes pivotal to to focus on the development of other areas in relation to how they benefit the company.
On the other hand, job-based performance programs are simpler to administer. Once the plan is in place for the job, and as long as the duties do not change, you can use it for all current and future employees who fill that position. Because you will be using the plan on many occasions, it becomes less complicated for you to complete. Person-focused pay programs, however, are specific to each employee. Although, employees who fill the same position will possess similar knowledge, skills and abilities, you will have to review and revise the plan with each new hire, and you will need to study it carefully prior to administering the formal appraisal (Deeb,
Money is a necessity in everyday life within the modern world and there are different ways to define money due to a variety of perceptions and views held by a wide range of people. However it is widely accepted that money is defined as a tool that serves as a medium of exchange, a unit of account which means that it is an agreed measure for recording the prices of goods and services, and a store of value. It also has to be firstly acceptable as a medium of exchange, durable, convenient for usage and finally divisible. There are different types of money which are Commodity Money, Convertible Paper Money, Fiat Money which isn’t convertible, Private Debt Money which are deposits and Composite Currencies such as the Euro.
Philip H. Knight knows people respond to incentives, principle 4 of economics. So he established loan programs, continuing education for employees and increased wages. These incentives are good for a company to give their employees. If the employees continue with their education’s and still decide to work for the company, the company has made a good investment with an employee who already has a familiar background with them already. The employee benefits also because they furthered their knowledge and wages with the company.
If the economy would be helped by putting money in the pockets of the people who spend it, nothing would benefit the economy more than a raise in the minimum wage. (Our Opinions)
Performance related pay is a financial reward given to employees whose work is considered to have reached a required standard or is above average. “PRP criteria can relate to the individual employee, to work groups or to the organization as a whole” (Armstrong, 2002). It is fair to provide people with financial rewards as a means of paying them according to their contribution (Armstrong 1993:86). The primary purpose of performance related pay in any organization is to recruit, retain and motivate the workforce. It also helps in focusing employees’ minds on particular goals (Protsik, 1966); communicate to employees an organization’s core values, and change the culture of that organization (Kessler and Purcell, 1991).
Creating a more frequent opportunity for advancement creates a more frequent compliance towards obtaining the goal. Increases that are more frequent, yet smaller than a larger annual amount, provide more opportunities for the employee to feel a sense of value to the company. The more valuable the employee feels they have increases their motivation and productivity. In the long run, smaller increases in pay increase the overall productivity of the company. A sensible company should realize that the increased productivity it enjoys are due, in large part, from the increased perceived value that the employee feels that they contribute to the
Most will agree that knowledge is the ‘key’ resource in this post-industrial economy. The challenge for many companies is developing an organization that creates and cultivates knowledge and learning. Pay plays a significant role in shaping workplace behavior. Most of the traditional pay systems reward the job the individual performs rather than the skills he/she brings to the job. The system is not being able to reward the things the company needs and this presents a barrier. The trend has moved away from pay for the value of the job, service and seniority. It is being replaced with paying for skills, knowledge, competency, performance and productivity, all which can be delivered through different invitations, from changes to base pay to introducing gainsharing.
Pay for performance structure is critical to business overall performance. It is one of the effective ways that a firm can motivate its employees to improve their effort and remain loyal to the firm. As noted earlier, the pay for performance influences the labor supply and demand curve to create a competitive labor market. Two exemplary companies in Singapore that have managed to attract employees and retain high performance are SAP and ChapmanCG. The SAP, an IT and software firm, for instance, implements the SAP Success Factor compensation, a program meant to align compensation with the firm’s goals in order to retail qualified and talented employees (SAP 2016). This compensations program
Employee compensation and reward systems have undergone a couple of paradigm shifts since inception. Reward systems were traditionally compensation based and focused on the individual or the position (Beam 1995). After a recession in the early 1980's, employers turned to performance based models in an attempt to save money while still rewarding top performers (Applebaum & Shapiro, 1992). Today, the most successful organizations are using a total reward model, a hybrid of the performance based model combined with strategic human resource management planning to create reward systems that both benefit the employee and help organizations realize their operational goals (Chen & Hsieh, 2006).
Lazear, E.P. (2000). The Future of Personnel Economics, The Economic Journal, No. 110, 467, pp. 611-639.
In large organisation, competition is not only in the market for goods and services but also for the quality of employees. As such, a large organization can only become attractive to the most skilled and high quality workers if it has an effective compensation and benefit plan. The key purpose of an effective compensation and benefit system is to provide employees with the right rewards for their work and right behavior in the workplace. Typically, organizational success is determined by the quality of employees an organization has. In turn, the organization can only attract such quality workers and maintain them through effective compensation and benefit
Job satisfaction includes challenging work, interesting job assignments, equitable rewards, competent supervision, and rewarding careers. The quality of work life and psychological rewards from employment are very important. It is doubtful, however, whether many of us would continue working were it not for the money we earn. This paper establishes the definition of compensation, overview of compensation philosophy, critical components of a compensation strategy, and an example of an effective compensation practice. (www.indiana.edu/~busx420/Book.../chap09.doc)
Every job should be a learning experience, in that, employees should be able to learn new duties if capable and get feedback. Employees should also be accountable for his/her work. Accountability means you’ll be concerned about the work and motivated to act. All of the aforementioned systems provided that but still offered no proof that one was better than the other. Unfortunately, none of them can do that because each will always lack something.
In any organization, sometimes, monetary schemes doesnot get people involve to pursue work in a certain way, rather it demoralize and threatens the self-esteem of employees. According to Meyer (1975), “the basis for most of the problems with merit pay plans is that most people think their own performance is above average”. The amount may ...
Performance management is used for the basis of promotion, reduction in force purposes (talent management), gives transparency of what an organization is looking for, merit increases, and lastly it provides protection against lawsuits for unlawful termination by keeping written documentation. Performance evaluations are advantageous to both the organization and the employee. A leading advantage of performance evaluations is it gives the employee an opportunity to create and achieve smart goals. Although performance evaluations primary function is to measure whether an employee is a good fit or a bad fit for the organization, its function is so much a broader. Performance management is tool purposely used to motivate employees to examine themselves and determine if they have selected the profession that is best for them; consequently the feedback an employee receives from their superior supports them with increase their knowledge and
This makes all employees across all divisions equal when it comes to performance and development planning. Also, by implementing categories for each employee, supervisors can use the scoring system to see exactly where gaps and weaknesses are in the team. Once gaps and weaknesses are identified, performance and development planning can be constructed accordingly. Basically the new performance management system allows supervisors of the organization to identify, address, and resolve any sort of employee performance issues or concerns. This can lead to higher buy-in of the organization, and an increase in overall