June 06, 2009

Human Resource Management Lesson 3 Exercise

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?

Thinking about my experience in several international companies and the knowledge in a familiar little company, there are several factors that have influence in the motivation of employees. Depending of the social-economical situation, the age and family situation, there are other factors different to the pay that can change along the time depending of the change of these situations. Following the Pyramid of needs (Maslow, 1943), to satisfy each stage more incentives that the money are necessary.


Figure.1. Maslow's Hierarchy of Needs

The first years in work life, when one is young, single and without family the money factor is not the main. The teamwork, improve the knowledge and good environment in the work are aspect important to satisfy needs, obviously always that the physiological needs are covered.

The things change when increase the familiar and job responsibilities because is need to satisfy several factors as are the familiar needs, in this case the increase of money help to satisfy the basic needs and for several years is motivating, but after if there aren’t another factors, the activity can fall into the monotony and pay is not enough to motivate.

Other way to explain the factors that can motivate to someone is through a Process Theory that define the motivation as a rational cognitive process occurring within the individual, and one of those theories is the Vroom's Expectancy Theory based three aspect like are the expectancy to get very good awards if you work harder; the valence is the importance for each one to have expectancy and this aspect is personal, social and cultural, because there are some social factors that force to increase the importance of to have expectations; the last aspect of the theory is the instrumentality is the belief that if you work to generate some output, part of this output has something for you, and in this sense could be exist the satisfaction to create something and the possibility to receive awards for it.

In my opinion the remuneration is not demotivating, but in several situations of the working life is not enough. There are a lot of systems to motivate and some examples are to take education (i.e. MBA) or to establish a career plan with stages of certification.

2.- Thinking about pay systems that you have experienced, which have been the most effective? Why?

My first job in the family company was a ‘manual’ job where the pay system was hourly rate. But in the rest of my jobs, after finish my university studies, I started to have a ‘non-manual’ job with performance-related pay (PRP) system. In the different jobs with PRP system that I have got the appraisal systems have been different even in the same company but in different periods of time the appraisal systems have been different.

The common factor in all the appraisal systems is that in all of them the percentage of pay related to the own work is low and the rest of the percentages depending the result of the company, division and the own group. I think that the period in which one I have got more motivation was when the degree of personal percentage was higher and when the goals were clearly defined. I think that the best method is when everybody knows the rules of game and the goals are complicated but reachable. I can say this because in some of my jobs the agreement was made directly with my manager and the conditions of it were very fuzzy and nobody else was participant in the agreement. Now in IBM, the situation is different because the conditions of the agreement and the string of approvals are right, but in this case the failure is in the mechanisms to get the measures of evaluation the conditions of the agreement.


Marchington, M. and Wilkinson, A. (2008), 'Human Resource Management at Work' (4th edn), London: CIPD.

Helen Newell (2009), Human Resources Management Study Notes, Warwick Business School.

Corbett, M. (2007) Organisational Behaviour Lessons Notes, Warwick Business School. 2007

Vroom, V.H., and P. Yetton (1973) Leadership and Decision Making, University of Pittsburgh Press, Pittsburgh.

Abraham Maslow Web Site:


- 2 comments by 2 or more people Not publicly viewable

  1. Kim White

    Hi Luis,

    You have made some sound points here. However, I think you could have anchored this much more to the material that you covered in Organisational Behaviour. Many students overlook that link, which is a missed opportunity, as it is very relevant in this particular instance. You have used a Content Theory (Maslow) but could also have used Process Theories (Vroom) as there is a difference between the intent (the content theory assumptions of PRP as designed), on the one hand, and the execution (the process theory application of the actual leader behaviours) on the other. In other words, its effectiveness can be constrained by a lack of true will and commitment by the manager. I think you could bring that out a much more.

    However, what can be done about it? How can a company, which in reality means more senior managers, ensure that their managerial subordinates are not just paying lip service? PRP procedures must be rigorously applied, but how do you do it?

    Also, if you rework this for your final submission, don’t forget your references.



    01 Jun 2009, 20:56

  2. Thank you for you comments, I am going to treat your sugestions and add the references in this lesson and the rest of them

    01 Jun 2009, 21:55

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