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

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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).

10. 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.

11. 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.

12. 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

13. 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

14. Effects of changing pay systemsB
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

15. 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

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

17. The facts of life