motivation in practice - introduction to financial incentives
Although some theorists like Herzberg believe that money is not a positive motivator (although lack of it can de-motivate), pay systems are designed to motivate employees.
The scientific / Theory X approach, in particular, argues that workers respond to financial rewards.
Getting employee pay right (often referred to as the “remuneration package”) is a crucial task for a business.
Why is pay important?
• It is an important cost for a business (in some “labour-intensive” businesses, payroll costs are over 50% of total costs)
• People feel strongly about it. Pay helps to satisfy many needs (e.g. security, esteem needs, resources to pursue self-actualisation)
• Pay is the subject of much important business legislation (e.g. national minimum wage; equal opportunities legislation)
• It helps attract reliable employees with the skills the business needs for success
• Pay also helps retain employees – rather than them leave and perhaps join a competitor
• For most employees, the remuneration package is the most important part of a job – and certainly the most visible part of any job offer.
There are many methods of financial reward (these are covered in separate revision notes)
•
Time-rate pay
•
Piece-rate pay
•
Commission
•
Performance-related pay
•
Bonuses
•
Shares and options
•
Benefits in kind (“fringe benefits”)
•
Pensions
Because pay is a complex issue, there are several ways in which businesses determine how much to pay, and which methods to use:
• Job evaluation / content; this is usually the most important factor. What is involved in the job being paid? How does it compare with similar jobs?
• Fairness – pay needs to be perceived and be seen to match the level of work
• Negotiated pay rates – the rate of pay may have been determined elsewhere and the business needs to ensure that it complies with these rates.
• Market rates – another important influence – particularly where there is a standard pattern of supply and demand in the relevant labour market. If a business tries to pay below the “market rate” then it will probably have difficulty in recruiting and retaining suitable staff
• Individual performance – increasingly, businesses include an element of “performance-related” reward in their pay structures.
However, it is important to remember that pay is only one element of motivation and will work best where management also give attention to:
•
Developing good management and supervision;
•
Designing jobs and organising work groups to make them as satisfying as possible;
•
Providing feedback to staff about their performance and training and development;
•
Making effective arrangements for communications and consultation.
tutor2u is the leading global publisher of e-learning resources for Economics, Business, Politics, Enterprise, Law, Sociology, Religious Studies and related subjects. Our materials are used by over 3,500 schools and colleges in the UK and in educational institutions in over 85 other countries. tutor2u offers a range of free and subscription-based materials - designed to support teachers and inspire students. The business also runs a popular series of student revision workshops and teacher conferences. tutor2u was named Online Learning Resource of the Year at the prestigious BETT Show - the World's leading educational show.
|
Privacy & terms of Use |
Contact us |
Teacher Newsletters & Subject Blogs |
