Work motivation
‘Money may not be able to buy
happiness, but you can make a
substantial down payment on it’ Marx
Remember Herzberg’s motivation and
hygiene factors.
Motivators
Achievement
Recognition
Work itself
Responsibility
Advancement
Hygiene factors
Company policy and
administration
Supervision
SALARY
Interpersonal
relations
Working conditions
The pay dichotomy
Employee seeks to
Company seeks to
Maximise pay
Competing
Maximise the
utilisation of pay
Self gain
Often
Team development
Role
definition
Steady or
guaranteed
pay increases
Maximise
autonomy
Maximise flexiblility
Incompatible
Aims
Pay for
performance
Ensure managerial
control
Pay objectives
(Torrington and Hall)
Employee objectives
Purchasing power
‘Felt fair’
Rights (To share in
company’s profit)
Relatives
Recognition
Composition
Employer objectives
Prestige
Competition
Control
Motivation and
productivity
Cost
Principles of pay policy
1. To attract sufficient and suitable candidates
2. To retain employees who are satisfactory
3. To reward employees for effort, loyalty, experience
and achievement
Influencing factors to note



Stay within agreed budget
State of the labour market
Nature of employees relations
Consider
 Legal obligations………The ‘minimum’ reason
 Get sufficient share of relevant labour
market…………... The ‘competitive’ reason
 Fair reward for those performing specified
roles……………… The ‘equitable’ reason
 Provide an incentive for employees
…………………….. The ‘motivational’ reason
 Keep pace with inflation………….. The ‘cost of
living’ reason
Key components:
 pay for the job
 pay for the man
 pay for time spent
 pay related to
output contribution
Pay for the job:
 its physical difficulty
 the nature of the physical surroundings
 its intellectual difficulty, and thus the qualifications
it demands (this is not the same as the
qualifications the man doing the job happens to
possess. Paying more for a job because it needs a
graduate is pay-fot-the-job. Paying a man more
because he has a degree is pay-for-the-man.)
 the value of the job to the firm
Pay for the man:
 his age
 his experience
 his needs (number and kind of dependants, for
instance)
 his qualiications (not those necessarily demanded
by the job, but any others he may have)
 his rank (this is rare in Western industry, but it is
central to military payment systems, and is a fairly
important factor in Japan, though rank in Japan is
fairly closely correlated with age and experience).
Potential impact of pay components
ECONOMIC OBJECTIVES
Flexibility
Self
correction
Stability
PAY
COMPONENT
Performan
ce
HUMAN OBJECTIVES
Security
FIXED
Pay for the
job
Pay for the
man
VARIABLE
Pay for time
spent working
group
Pay for
contribution to
output Ind.
Pay for
company
Group
identifi
cation
Individual
influence
(shortterm)
Self
development
(longterm)
 Flexibility through the ease with which it
allows people’s jobs to be changed.
 Self-correction through the way in which it
stimulates (or fails to stimulate) workers and,
indirectly, supervisors to take corrective action
themselves.
 Stability through the way in which it increases
or decreases tensions that may lead to disruption.
 Performance through its direct action to
stimulate workers’ efforts.
Types of pay
Time rate system
Pay related to hours, not to effort
• High day rate
• Measured day work
Payment by results
• Direct incentive
• Combined time rate and piece
work
Pay proportional to output / effort
Bonus paid to all employees on
whole business productivity.
Company-wide incentive schemes
• Scanlon plan
• Rucker plan
Single status schemes
To Improve conditions
Change relationships
Encourage responsibility
Give pride of work
Gain co-operation
Therefore Increased efficiency
Benefits
Benefits in kind (taxable)
Fringe benefits
Perks
Security
Work
Status
Pension
Life assurance
Private health care
Bridging loans
Low cost mortgage
Creche facilities
Profit sharing
Share options
Pre-retirement
counselling
Redundancy
counselling
Subsidised meals
Cars
Car loans and
allowances
Car mileage
Sabbaticals
prizes
Prestige cars
Enhanced pension and
life assurance
Entertainments
allowance
Paid telephone
School fees
Credit cards
Long and short term
Day to day operational
requirements
More as rewards
Effects of changing pay systems
B
Average productivity
increase 10/15%
Premiums
Placework
Average prod.
Drop 10/20%
Average
prod.
Increase
30/40%
Fixed
wages
C
A
Productive efficiency
Down
Over
30%
A 2
Quality
Absenteeism
Personnel
turnover
Up
20
/3
0
10
/2
0
0/
10
7
15 1
0
0/
10
10
/2
0
20
/
30
Ove
r
30%
2
B
1
0
6
5
C
2
2
5
7
worse
same
better
W
S
B
W
S
B
1
30
5
2
33 1
2
32
2
18
3
20 1
19
2
14
1
16
15
1
1
Factors to consider in devising a
new payment system/scheme
1. Management objectives
2. Problems in the existing scheme
3. Types of employee /size of unit
4. Possible future change (need for flexibility)
5. History
6. Lupton and Gowler - Technology
- Labour market
- Disputes and disputes procedures
- Structural dimensions
7. Union pressure/preferred methods
8. Legislative constraints
9. Curnow
- Internal consistency
- External competitiveness
- Flexibility
- Easy to understand/administer
- Continual updating
The facts of life
Organisation’s
ability
Comparable rates,
Bargaining strength
to pay
levels
of TUS
elsewhere
Cost of living
(inflation)
Productivity
European
Community
Pay rates
and
salary levels
Labour
market
conditions
Government
action
(incomes policy,
taxation)
Organisational or
Existing
technological
differentials
change
-custom and
practice