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

HOBBY & ENERGY

WORK

 A motive is a reason for doing something.  Motivation is concerned with the factors that influence people’s behaviour  Direction – what?  Effort – how?  Persistence – how long?

 Intrinsic Rewards Status/ Growth / Responsibility  Extrinsic Rewards Non-financial (office, staff, title, etc.) Financial (direct and indirect compensation)

Motivators/ Satisfiers Achievement Recognition Work itself Responsibility Advancement Hygiene factors/ Dissatisfiers Company policy and administration Supervision SALARY Interpersonal relations Working conditions

„ The only way to do great work is to love what you do”

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

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

Maximize ability to attract and retain qualified employees Be within ability to pay Allow organization to remain competitive

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

 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

 Supply of Labor  Demand for Labor  Company Location  Economic State  Competition  Union Influence  Product/Service Demand

 Organization Size  Willingness to Pay  Ability to Pay  Tradition  Unionization  Job Itself  Employer Prestige  Work Force Character  Desired Employee Quality  Ratio of Labor Costs to Total Costs

Maximize ability to attract and retain qualified employees Be within ability to pay Allow organization to remain competitive

 pay for the job  pay for the man  pay for time spent  pay related to output contribution

 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

 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

 Individual  Group  Company-wide  Executive

Piecework Payment/ Payment by result: Pay proportional to output / effort Standard Hour/ Time rate system: Pay related to hours, not to effort Commissions Bonuses Skills-based Pay Non-financial Awards

Piece-rate Systems Standard Hour Plans Group Bonuses Profit Sharing

Gainsharing Scanlon plan: a gainsharing program in which employees share in pre-established cost savings, based upon employee effort) Rucker plan: a gainsharing program that returns cost savings to the employees, usually as a lump-sum bonus. It is a productivity measure, as opposed to profit-sharing which is a profitability measure. Stock Ownership Plans (ESOP)

Salaries Stock Options Long-term Incentive Plan Payouts Directors’ Fees Perks (membership, familiy, school etc.)

SecurityWorkStatus 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 Benefits in kindFringe benefitsPerks

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

What is the best practice?

 It is important to establish a strategic Reward Management System which clearly articulates the aims of the various reward elements, integrates them in a coherent way and tells employees what they can expect to receive and why.  The Reward strategy needs to be written, communicated and understood throughout the organization.  The strategic Reward Management System is a key element of:  HR Strategy  Business Strategy  Organization Culture

33 Reward System Financial Rewards/ Compensation Base Salary Pay Incentives Employee Benefits Non-financial Rewards Intrinsic Rewards – centers on the work itself Praise, recognition and other rewards given to the employee by peers or superiors.

WHY? Tool of standardization and control of benefits The amount and use of benefits are measurable Trace flexibly the different and changing needs of employees Fit to company's budget Cost-effective Attract and retain employees Best market practice Suit their current needs Simple, clear and justified Sense of control and involvement by having a choice Additional amount over their regular salaries For Employer For Employees

35 Tickets, Vouchers Internet Allowances Health Fund Pension Fund Frame amount

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  Disputes and disputes procedures  Structural dimensions

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

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