Work motivation ‘Money may not be able to buy happiness, but you can make a substantial down payment on it’ Marx

Remember Herzberg’s motivation and hygiene factors. Motivators Achievement Recognition Work itself Responsibility Advancement Hygiene factors Company policy and administration Supervision SALARY Interpersonal relations Working conditions

The pay dichotomy Maximise the utilisation of pay Maximise pay Employee seeks to Company seeks to Maximise the utilisation of pay Team development Maximise flexiblility Pay for performance Ensure managerial control Maximise pay Self gain Role definition Steady or guaranteed pay increases Maximise autonomy Competing Often Incompatible Aims

Pay objectives (Torrington and Hall) Employee objectives Purchasing power ‘Felt fair’ Rights (To share in company’s profit) Relatives Recognition Composition Employer objectives Prestige Competition Control Motivation and productivity Cost

Principles of pay policy To attract sufficient and suitable candidates To retain employees who are satisfactory To reward employees for effort, loyalty, experience and achievement Influencing factors to note Stay within agreed budget State of the labour market Nature of employees relations

Consider Legal obligations………The ‘minimum’ reason Get sufficient share of relevant labour market…………... The ‘competitive’ reason Fair reward for those performing specified roles……………… The ‘equitable’ reason Provide an incentive for employees …………………….. The ‘motivational’ reason Keep pace with inflation………….. The ‘cost of living’ reason

Key components: pay for the man pay for time spent pay for the job pay for the man pay for time spent pay related to output contribution

Pay for the job: its physical difficulty the nature of the physical surroundings its intellectual difficulty, and thus the qualifications it demands (this is not the same as the qualifications the man doing the job happens to possess. Paying more for a job because it needs a graduate is pay-fot-the-job. Paying a man more because he has a degree is pay-for-the-man.) the value of the job to the firm

Pay for the man: his age his experience his needs (number and kind of dependants, for instance) his qualiications (not those necessarily demanded by the job, but any others he may have) his rank (this is rare in Western industry, but it is central to military payment systems, and is a fairly important factor in Japan, though rank in Japan is fairly closely correlated with age and experience).

Potential impact of pay components ECONOMIC OBJECTIVES PAY COMPONENT HUMAN OBJECTIVES Flexibility Self correction Stability Performance Security Group identification Individual influence (short-term) develop- ment (long- term) FIXED Pay for the job man VARIABLE Pay for time spent working Pay for contribution to output Pay for company performance group Ind.

Performance through its direct action to stimulate workers’ efforts. Flexibility through the ease with which it allows people’s jobs to be changed. Self-correction through the way in which it stimulates (or fails to stimulate) workers and, indirectly, supervisors to take corrective action themselves. Stability through the way in which it increases or decreases tensions that may lead to disruption. Performance through its direct action to stimulate workers’ efforts.

Types of pay Pay related to hours, not to effort Pay proportional to output / effort Bonus paid to all employees on whole business productivity. To Improve conditions Change relationships Encourage responsibility Give pride of work Gain co-operation Therefore Increased efficiency Time rate system High day rate Measured day work Payment by results Direct incentive Combined time rate and piece work Company-wide incentive schemes Scanlon plan Rucker plan Single status schemes

Benefits Security Work Status Pension Life assurance Benefits in kind (taxable) Fringe benefits Perks Security Work Status Pension Life assurance Private health care Bridging loans Low cost mortgage Creche facilities Profit sharing Share options Pre-retirement counselling Redundancy counselling Subsidised meals Cars Car loans and allowances Car mileage Sabbaticals prizes Prestige cars Enhanced pension and life assurance Entertainments allowance Paid telephone School fees Credit cards Long and short term Day to day operational requirements More as rewards

Effects of changing pay systems B Average productivity increase 10/15% Premiums Placework Average prod. Increase 30/40% Average prod. Drop 10/20% Fixed wages C A Productive efficiency Down Up Over 30% 20/30 10/20 0/ 10 20/ 30 Over 30% 2 7 15 6 5 Quality worse same better 1 30 5 18 3 14 Absenteeism W S B 2 33 1 20 16 Personnel turnover W S B 2 32 19 15 1 A B C

Factors to consider in devising a new payment system/scheme Management objectives Problems in the existing scheme Types of employee /size of unit Possible future change (need for flexibility) History Lupton and Gowler - Technology - Labour market - Disputes and disputes procedures - Structural dimensions

Union pressure/preferred methods Legislative constraints Curnow - Internal consistency - External competitiveness - Flexibility - Easy to understand/administer - Continual updating

The facts of life