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Motivation: Reward system and the role of compensation

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IBS-Plekha ovHuma Resource Ma ageme Mo iva io : Reward sys em a d he role of compe sa io HUMA RESOURCE MA AGEME “Mo iva io : Reward sys em a d he role of compe sa io ” S ude : A o Skobelev, IBS-855 eacher: Kar ashova L. he desig a d ma ageme of reward sys ems prese he ge eral ma ager wi h o e of he mos difficul HRM asks. his HRM policy area co ai s he grea es co radic io s be wee he promise of heory a d he reali y of impleme a io . Co seque ly, orga iza io s some imes go hrough cycles of i ova io a d hope as reward sys ems are developed, followed by disillusio me as hese reward sys ems fail o deliver.Rewards a d employee sa isfac io Gai i g a employee’s sa isfac io wi h he rewards give is o a simple ma er. Ra her, i is a fu c io of several fac ors ha orga iza io s mus lear o ma age: 1. he i dividual’s sa isfac io wi h rewards is, i par , rela ed o wha is expec ed a d how much is received. Feeli gs of sa isfac io or dissa isfac io arise whe i dividuals compare heir i pu - job skills, educa io , effor , a d performa ce - o ou pu - he mix of ex ri sic a d i ri sic rewards hey receive. 2. Employee sa isfac io is also affec ed by compariso s wi h o her people i similar jobs a d orga iza io s. I effec , employees compare heir ow i pu /ou pu ra io wi h ha of o hers. People vary co siderably i how hey weigh various i pu s i ha compariso . hey e d o weigh heir s ro g poi s more heavily, such as cer ai skills or a rece i cide of effec ive performa ce. I dividuals also e d o overra e heir ow performa ce compared wi h he ra i g hey receive from heir supervisors. he problem of u realis ic self-ra i g exis s par ly because supervisors i mos orga iza io s do o commu ica e a ca did evalua io of heir subordi a es’ performa ce o hem. Such ca did commu ica io o subordi a es, u less do e skillfully, seriously risks damagi g heir self-es eem. he bigger dilemma, however, is ha failure by ma agers o commu ica e a ca did appraisal of performa ce makes i difficul for employees o develop a realis ic view of heir ow performa ce, hus i creasi g he possibili y of dissa isfac io wi h he pay hey are receivi g. 3. Employees of e misperceive he rewards of o hers; heir mispercep io ca cause he employees o become dissa isfied. Evide ce shows ha i dividuals e d o overes ima e he pay of fellow workers doi g similar jobs a d o u deres ima e heir performa ce (a defe se of self-es eem-buildi g mecha ism). Mispercep io s of he performa ce a d rewards of o hers also occur because orga iza io s do o ge erally make available accura e i forma io abou he salary or performa ce of o hers. 4. Fi ally, overall sa isfac io resul s from a mix of rewards ra her ha from a y si gle reward. he evide ce sugges s ha i ri sic rewards a d ex ri sic rewards are bo h impor a a d ha hey ca o be direc ly subs i u ed for each o her. Employees who are paid well for repe i ious, bori g work will be dissa isfied wi h he lack of i ri sic rewards, jus as employees paid poorly for i eres i g, challe gi g work may be dissa isfied wi h ex ri sic rewards.Rewards a d mo iva io From he orga iza io ’s poi of view, rewards are i e ded o mo iva e cer ai behaviors.

Bu u der wha co di io s will rewards ac ually mo iva e employees? o be useful, rewards mus be see as imely a d ied o effec ive performa ce. O e heory sugges s ha he followi g co di io s are ecessary for employee mo iva io . 1. Employees mus believe effec ive performa ce (or cer ai specified behavior) will lead o cer ai rewards. For example, a ai i g cer ai resul s will lead o a bo us or approval from o hers. 2. Employees mus feel ha he rewards offered are a rac ive. Some employees may desire promo io s because hey seek power, bu o hers may wa a fri ge be efi , such as a pe sio , because hey are older a d wa re ireme securi y. 3. Employees mus believe a cer ai level of i dividual effor will lead o achievi g he corpora io ’s s a dards of performa ce. As i dica ed, mo iva io o exer effor is riggered by he prospec of desired rewards: mo ey, recog i io , promo io , a d so for h. If effor leads o performa ce a d performa ce leads o desired rewards, he employee is sa isfied a d mo iva ed o perform agai . As me io ed above, rewards fall i o wo ca egories: ex ri sic a d i ri sic. Ex ri sic rewards come from he orga iza io as mo ey, perquisi es, or promo io s or from supervisors a d coworkers as recog i io . I ri sic rewards accrue from performi g he ask i self, a d may i clude he sa isfac io of accomplishme or a se se of i flue ce. he process of work a d he i dividual’s respo se o i provide he i ri sic rewards. Bu he orga iza io seeki g o i crease i ri sic rewards mus provide a work e viro me ha allows hese sa isfac io s o occur; herefore, more orga iza io s are redesig i g work a d delega i g respo sibili y o e ha ce employee i volveme . Equi y a d par icipa io he abili y of a reward sys em bo h o mo iva e a d o sa isfy depe ds o who i flue ces a d/or co rols he sys em’s desig a d impleme a io . Eve hough co siderable evide ce sugges s ha par icipa io i decisio maki g ca lead o grea er accep a ce of decisio s, par icipa io i he desig a d admi is ra io of reward sys ems is rare. Such par icipa io is ime-co sumi g. Perhaps, a grea er roadblock is ha pay has bee of he las s ro gholds of ma agerial preroga ives. Co cer ed abou employee self-i eres a d compe sa io cos s, corpora io s do o ypically allow employees o par icipa e i pay-sys em desig or decisio s. hus, i is o possible o es horoughly he effec s of widespread par icipa io o accep a ce of a d rus i reward sys em. Compe sa io sys ems: he dilemmas of prac ice A body of experie ce, research a d heory has bee developed abou how mo ey sa isfies a d mo iva es employees. Vir ually every s udy o he impor a ce of pay compared wi h o her po e ial rewards has show ha pay is impor a . I co sis e ly ra ks amo g he op five rewards. he impor a ce of pay a d o her rewards, however, is affec ed by ma y fac ors. Mo ey, for example, is likely o be viewed differe ly a various poi s i o e’s career, because he eed for mo ey versus o her rewards (s a us, grow h, securi y, a d so for h) cha ges a each s age. a io al cul ure is a o her impor a fac or. America ma agers a d employees appare ly emphasize pay for i dividual performa ce more ha do heir Europea or Japa ese cou erpar s.

Europea a d Japa ese compa ies, however, rely more o slow promo io s a d se iori y as well as some degree of employme securi y. Eve wi hi a si gle cul ure, shif i g a io al forces may al er people’s eeds for mo ey versus o her rewards. Compa ies have developed various compe sa io sys ems a d prac ices o achieve pay sa isfac io a d mo iva io . I ma ufac uri g firms, payroll cos s ca ru as high as 40% of sales reve ues, whereas i service orga iza io s payroll cos s ca op 70%. Ge eral ma agers, herefore, ake a u ders a dable i eres i payroll cos s a d how his mo ey is spe . he radi io al view of ma agers a d compe sa io specialis s is ha if he righ sys em ca be developed, i will solve mos problems. his is o a plausible assump io , because, here is o o e righ a swer or objec ive solu io o wha or how someo e should be paid. Wha people will accep , be mo iva ed by, or perceive as fair is highly subjec ive. Pay is a ma er of percep io s a d values ha of e ge era e co flic .Ma ageme ’s i flue ce o a i udes oward mo ey Ma y orga iza io s are caugh up i a vicious cycle ha hey par ly crea e. Firms of e emphasize compe sa io levels a d a belief i i dividual pay for performa ce i heir recrui me a d i er al commu ica io s. his is likely o a rac people wi h high eeds for mo ey as well as o heigh e ha eed i hose already employed. hus, he mea i g employees a ach o mo ey is par ly shaped by ma ageme ’s views. If meri i creases, bo uses, s ock op io s, a d perquisi es are held ou as valued symbols of recog i io a d success, employees will come o see hem i his ligh eve more ha hey migh have perceived hem a firs . Havi g heigh e ed mo ey’s impor a ce as a reward, ma ageme mus he respo d o employees who may dema d more mo ey or be er pay-for-performa ce sys ems. Firms mus es ablish a philosophy abou rewards a d he role of pay i he mix of rewards. Wi hou such a philosophy, he compe sa io prac ices ha happe o be i place, for he reaso s already s a ed, will co i ue o shape employees’ sa isfac io s, a d hose expec a io s will sus ai he exis i g prac ices. If mo ey has bee emphasized as a impor a symbol of success, ha emphasis will co i ue eve hough a compe sa io sys em wi h a sligh ly differe emphasis migh have equal mo iva io al value wi h fewer admi is ra ive problems a d perhaps eve lower cos . Mo ey is impor a , bu i s degree of impor a ce is i flue ced by he ype of compe sa io sys em a d philosophy ha ma ageme adop s. Pay for performa ce Some reaso s why orga iza io s pay heir employees for performa ce are as follows: u der he righ co di io s, a pay-for-performa ce sys em ca mo iva e desired behavior. a pay-for-performa ce sys em ca help a rac a d keep achieveme -orie ed i dividuals. a pay-for-performa ce sys em ca help o re ai good performers while discouragi g he poor performers. I he US, a leas , ma y employees, bo h ma agers a d workers, prefer a pay-for-performa ce sys em, al hough whi e-collar workers are sig ifica ly more suppor ive of he o io ha blue-collar workers. Bu here is a gap, a d he evide ce i dica es a wide gap, be wee he desire o devise a pay-for-performa ce sys em a d he abili y o make such a sys em work.

New developments in early language acquisition. Basic handbook of child psychiatry. Vol. 5,ed. J. D. Noshpitzetal. New York: Basic Books, pp. 51-61. Lewin, B. D. (1933). The body as phallus. Psychoanal. Q., 2:24-47. Lewis, M., and Brooks-Gunn, J. (1979). Social cognihon and the acquisition of self. New York: Plenum. Lewis, M., and Rosenblum, L. A., eds. (1974). The effect of the infant on his caregiver. New York: Wiley. Lichtenberg, J. D. (1975). The development of the sense of self. J. Amer. Psychoanal. Assn., 23:453-451. Lichtenberg, J. D. (1981). Implications for psychoanalytic theory of research on the neonate. Int. Rev. Psychoanal., 8:35-52. Lichtenberg, J. D. (1987). Infant studies and clinical work with adults. Psychoanal. Inq., 7:311-330. Lichtenberg, J. D. (1988); A theory of motivational functional systems as psychic structures. Amer. Psychoanal. Assn., 36 (Suppi.): 57-72. Lichtenberg, J. D. (1989). Psychoanalysis and motivation. Hills-dale, N.J.: Analytic Press. Loewald, H. W. (1951). Ego and reality

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