November 01, 2008

Human Resource Management Lesson 3 Exercise

QUESTION 1

My work experience is mainly limited to IBM although before starting at IBM I worked short periods of time as a trainee in Solvay (chemical company) and Caja Cantabria (building society). I joined IBM 9 years ago and I have just been moved to a middle management position.

I think the pay in general is not a motivation factor but it can be easily a source of disincentive, so I tend to agree with Herzberg’s theory (1966). Pay could mean so many different things to each individual, the same level of money can provide security for one individual and not for other . Reviewing my personal experience is that when I had been working for IBM about 5 years the salary was an element of demotivation for me, I had much more responsibilities than some of my peers and my salary was rather lower, later my salary was increased and I stop thinking so much about my pay and others aspects became much relevant for me such as the career path and the degree of self-accomplishment. This is quite close to the hierarchy of needs in Maslow’s theory, the salary is no a motivational factor anymore when it is satisfied. However I have to say that the level of safety of the pay is a variable that I personally feel that change with the time and the personal circumstances.

QUESTION 2

I have just experienced one pay system that is the one that IBM applies for support functions (in my case finance). The pay system is based on an annual salary paid in monthly basis plus on-top bonus paid yearly; both are dependant on the employee yearly evaluation by the first line manager that is called PBC (Personal Business Commitments ), the evaluation rates:

Rating

Definition

Description

PBC 1

Among the top contributors

this year

Achieves exceptional results; as a 1 performer clearly stands out from the rest; is a role model for the IBM Values.

PBC 2+

Above average contributor

Goes above and beyond job responsibilities;

outperforms most peers; finds ways to grow scope and impact.

PBC 2

Solid contributor

Consistently meets job responsibilities; is reliable in doing job; demonstrates appropriate level of knowledge, skill, effectiveness and initiative.

PBC 3

Among the lowest contributors this year, needs to improve

When compared to others:

•         Does not fully execute all job responsibilities, OR executes responsibilities, but with lower degree of results; and /or

•         Does not demonstrate as high a level of knowledge, skill, effectiveness, or initiative

PBC 4

Unsatisfactory

•         Does not demonstrate or utilize knowledge and skill required;

•         Does not execute against job responsibilities; and/or

•         Shows no improvement after consecutive PBC 3 ratings

The pay system differentiates top performers and low ones, the amount of GDP is related to the evaluation but the amount is not very significant so I would say that employees are much more interested in the percentage of salary increase for the following year that is impacted somehow by the evaluation , however there is not a direct and quantified relation between PBC and salary increase , so for instance one person with PBC 2+ can have a salary increase of 5% and another one can have 0%, in my opinion this lack of clarity does not contribute in a positive way to employee performance.

Sales force have a different pay system, the base salary is lower than the one that have the non-sales employees and a percentage of variable pay is much higher, it is directly related to sales they achieved in comparison with the objectives that are set twice per year (called quota, including both revenue and profit objectives), I think this is a suitable scheme when the goal is to maximize the turnover and the profit.

REFERENCES

  • Study notes. Warwick University. Human Resource Management. 
  • Maslow A, (1987), Motivation and Personality (3rd edition) New York: Harper and Row
  • Herzberg F (1966) Work and the Nature of Man Cleveland: World Publishing Company 

  • Marchington, M. and Wilkinson, A. (2005) Human Resource Management at Work (3rd edn). London: CIPD  


- 2 comments by 1 or more people Not publicly viewable

  1. Hi

    Again a rather brief review of the questions, but the main points are introduced. If you think about it pay is such a complex ‘thing’ becuase it measn so many different things to each individual – the same level of money can provide security for one individual and the opportunity to self-actualise for another. Also as you describe above it sends out powerful signals inside the company about the perceived value of the individual and their status etc. So it is very difficult for any organisation to get all the elements of its pay system in line with each individuals ‘needs’ – also remember that these change over time as well.

    You could perhaps have used some of the ideas from the lesson and associated reading more obviously in this blog.

    regards

    John

    03 Nov 2008, 20:20

  2. Thanks! I have update a little question 1

    09 Nov 2008, 19:00


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