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. MotivatorsAchievementRecognition Work itself ResponsibilityAdvancement Hygiene factors Company policy and administration SupervisionSALARY Interpersonal relations Working conditions

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

Pay objectives (Torrington and Hall) Employee objectives Purchasing power ‘Felt fair’ Rights (To share in company’s profit) RelativesRecognitionComposition Employer objectives PrestigeCompetitionControl Motivation and productivity Cost

Principles of pay policy 1.To attract sufficient and suitable candidates 2.To retain employees who are satisfactory 3.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 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).

ECONOMIC OBJECTIVES PAYCOMPONENT HUMAN OBJECTIVES FlexibilitySelfcorrectionStability Performan ce SecurityGroup identifi cation Individual influence (short- term) Selfdevelop-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. Potential impact of pay components

 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 Time rate system High day rateHigh day rate Measured day workMeasured day work Payment by results Direct incentiveDirect incentive Combined time rate and piece workCombined time rate and piece work Company-wide incentive schemes Scanlon planScanlon plan Rucker planRucker plan Single status schemes 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 Change relationships Encourage responsibility Encourage responsibility Give pride of work Give pride of work Gain co-operation Gain co-operation Therefore Increased efficiency

BenefitsSecurityWorkStatus 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 Sabbaticalsprizes 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 Benefits in kind (taxable)Fringe benefitsPerks

Effects of changing pay systems Productive efficiency DownUp Over30% 20 / /2 0 0/100/10 20 / 30 Ove r 30% Qualityworsesamebetter AbsenteeismWSB Personnel turnover WSB ABCABC Placework Premiums Fixed wages Average productivity increase 10/15% Average prod. Drop 10/20% Average prod. Increase 30/40% A B C

Factors to consider in devising a new payment system/scheme 1.Management objectives 2.Problems in the existing scheme 3.Types of employee /size of unit 4.Possible future change (need for flexibility) 5.History 6.Lupton and Gowler - Technology - Labour market - Labour market - Disputes and disputes procedures - Disputes and disputes procedures - Structural dimensions - Structural dimensions

7.Union pressure/preferred methods 8.Legislative constraints 9.Curnow - Internal consistency - External competitiveness - External competitiveness - Flexibility - Flexibility - Easy to understand/administer - Easy to understand/administer - Continual updating - Continual updating

The facts of life Pay rates and salary levels Organisation’s ability to pay Comparable rates, levels elsewhere Labour market conditions Government action (incomes policy, taxation) Organisational or technological change Existing differentials custom and practice European Community Productivity Cost of living (inflation) Bargaining strength of TUS