Human Resources Management: Lesson 3 – Exercise
Question 1: Reflecting on your own experience as an employee and as a manager, to what extent do you think pay motivates or demotivates employees? Why?
Several considerations (personal and “perceived” in the team I am/was working with) may be taken about this topic.
Up to decades ago payment (in goods first, in money then) was the only reason to work, to perform any activities.
Nowadays (and in my personal experience) this is not true any more.
Several jobs (especially in this flexible market) that give you the same payment (or even more) may be performed but there’re OTHER reasons that persuade you to invest time & forces in one particular “project”.
My personal working experience started quite early, with several very short term contracts that gave me low pay and no “security” nor career evolution opportunities.
In that period pay was a need (to pay my university) and really it was my only motivator.
In my next working experiences (especially after the degree), in the choice among different opportunities, I started to consider other targets/elements like the possibility of
abroad work experiences,
changing position in few years,
growing in the same sector,
having training sessions…
All above obviously taking in account “relativities” and “differentials”.
Applying Herzberg’s (1996) two-factor theory to 2 of my personal experiences:
- in administration sector: medium “hygiene” + low “motivational” factors à employees were not motivated and did many complaints.
- in operations sector: medium “hygiene” + high “motivational” factors à employees were motivated but did many complaints; it was exciting and competitive working contest but pay and conditions should be improved if company wants to retain highest skills.
Around 10 years working experience make me feel that:
- I completely agree that a pay above the market average (or a salary increase) is a “motivator” ONLY at the beginning,
- I’ve also experienced (and seen around me) that underpayment feelings lead to a complete lack of motivation ONLY if no hope of career / growing opportunities (both in salary and position) are given,
- A great motivator is often the direct award on salary of one employee’s work.
Obviously all the above is based on my personal experience, the working contest I’ve been living in, my desire for professional growth, market conditions and so on.
Those are (some of the) factors that influence the pay view, changing one (or some) of the above may radically change these conclusions.
Question 2: Thinking about different pay systems that you have experienced, which have been the most effective? Why?
I think there’s no most effective pay system.
My answer will be “it depends” and it will be based on my wishes and on my personal experience.
Nowadays what I feel (obviously?) is that the worst is a COMPLETE FIX PAY system. In this contest there’s no motivation at all and employees tend to work as less as they can. By the way when this contest is imposed (for instance in public sector) other “motivators” (like job rotation, job enlargement, working conditions improvement...) may be applied by management
I think that “individual performance-related pay” works effectively.
It’s accused of being too dependent on the judgement of managers but I’ve personally experienced an improvement in its application through the involvement of a 360° employees review. This kind of evaluation revealed itself helpful also in organization where team working is widespread and where a single employee may be simultaneously part of more then one team.
We’ve also to remember the important “message” a company that adopt a PRP method gives to stakeholders.
Several appraisal systems may be used to calculate the PRP.
For sure the “comparison with objectives” is the most objective one but it’s not always applicable. In my opinion when “Narrative report” or “Critical incidents” are used they’ve to be fully supported and motivated. The next employee’s managers understand, only in this way, all the previous evaluations given.
I strongly believe in the “Potential review” especially for employees that shows a desire for professional growth.
In conclusion I believe there’s no perfect system; we’ve to remember that pay is only ONE among performance managing elements.
It has to be flexible and adaptable to changing circumstances.
1) The Warwick MBA for IBM – Human Resource Management (IB811Z)
2) Mick Marchington and Adrian Wilkinson, Human Resources Management at Work. People Management and Development, Third Edition, CIPD, 2007
 The Warwick MBA for IBM – Human Resource Management (IB811Z) Lesson 3
 Mick Marchington and Adrian Wilkinson, Human Resources Management at Work. People Management and Development, Third Edition, CIPD, 2007