How are people
compensated?
11 questions

#1
Are you intrinsically
or extrinsically
motivated?

Source: Osterloh, Margrit & Frey, Bruno S.: ”Succesful Management by Motivation”, p. 9.

Source
BMW-Personalvorstand: ”Unsere Leute brauchen keine Karotte.”
http://www.faz.net/s/RubD16E1F55D21144C4AE3F9DDF52B6E1D9/Doc~ECFAF9EAF3BD645FFA
043C3C4C9E14AB5~ATpl~Ecommon~Scontent.html

#2
Openness about
wages – or not?

Source: http://www.youtube.com/watch?v=gJkOPxJCN1w

#3
Standard pay rates
or not?

Culture A Culture B
No use of standard pay rates Use of standard pay rates,
for example based on
length of education.
pay statistics.

#4
Variable or fixed
salaries?

#5
How is
the bonus system
designed?

Culture A Culture B
Higher bonus Higher bonus
the more ideas you deliver the higher you are up in
on open innovation portals. the hierarchy.
the more comments you the more years you have
write on blogs. worked for the company.
Consequence of ”B”

Compensation
Example of ”victims”:
Young, hard working
assistants
Performance

Source: http://www.ted.com/talks/dan_pink_on_motivation.html

#6
Who decides
who is paid
how much?

„Meine Verantwortung ist es nicht, wie viel ich verdiene.
Meine Verantwortung ist es, wie ich es einsetze. Und
diese Verantwortung muss ich tragen.“
Mr. Daniel Vasella
Source: http://www.nzz.ch/hintergrund/standpunkte/sendungen_1.2166738.html?video=1.3533070

A possibility is to let each person in a group
assign a percentage of the total compensation
budget to all the others.
The average of these numbers then determines
each person’s actual compensation.
Source: Malone, Thomas W.: The Future of Work, p. 67.

The energy company AES has tested a somewhat
similar system that sets salaries through peer review.
In the experiment, each person sent a proposed
salary for himself or herself to everyone else in
the group.
Source: Malone, Thomas W.: The Future of Work, p. 67.

#7
Who evaluates
whom?

Culture A Culture B
Everybody evaluates Manager evaluates
everybody employees
Example
People rate each other using a
rating scale of 1 – 100 points:
Employees rate
each other.
Employees rate
the manager.
The manager rates
employees.

#8
What is the
compensation system
designed to maximize:
Cooperation or individualism?

Cooperation Individualism
Culture A Culture B
Reward people for career Reward people for career
moves across functions moves up the hierarchy

Cooperation Individualism
Culture A Culture B
Low wage gap between High wage gap between
highest and lowest income. highest and lowest income.

Spannweite Lohn
Source
http://www.bilanz.ch/media/download/BIL_0309_024_finanzbranche.pdf

Spannweite Lohn
Source
http://www.bilanz.ch/media/download/BIL_0309_024_wirtschaft.pdf

How large should the maximum difference
in income be between people working for
the same company?
Factor 1:___

#9
How are people
evaluated?

Culture A Culture B
Quantitative and objective Qualitative and subjective
evaluation evaluation
Example Example
Pay based on number of ideas Pay based on outcome of
communicated on open conversation between
innovation portals. manager and employee.

# 10
Pay to do
1 job or more jobs?

Generalization Spezialization
Culture A Culture B
Pay to do 2 or more jobs Pay to do 1 job

# 11
Is a working relationship
interest based
or contractual based?

Culture A Culture B
Interest based relationship Contractual relationship
In today’s world, people help
each other on different topics
of interest using, for example,
various Web 2.0 tools such as
Twitter, Facebook, blogs,
Skype, and open innovation
portals.

Source: http://www.danpink.com/archives/2009/09/i-e-graphics-prose