Pay and motivation

1. Mohan Madgulkar-Compensation Management/2006
Pay and motivation
• Maslow
• Herzberg
• Mclelland
• Adams
• Vroom
• Pay is a flexible reward which can satisfy a number of needs
• Primarily a hygiene factor
• For high achieving individuals pay a form of feedback; for high
affiliation, group targets can motivate; high power, pay confirms
status
• Pay is one of the most important ‘yardsticks’; based on individual
assessment, work effort may be altered accordingly
• If individual believes that improved performance will lead to
more pay, higher levels of motivation will result; if extra effort
required to attract more pay (expectancy) individual can make a
decision whether or not to work harder.

2. Mohan Madgulkar-Compensation Management/2006
• Pay has a strong impact on the employees’ standard
of living, it is a status symbol and important in
comparisons to others
• Employer:
– Critical in attaining strategic goals
• Impact on employee attitudes and behaviours
• Significant organisational cost
• Areas of compensation decisions
– Pay Structure
– Pay Level
– Job Structure
– Pay policies

3. Mohan Madgulkar-Compensation Management/2006
Compensation Challenges
Compensation
Challenges
Prevailing
wage rates
Union
power
Productivity
Government
constraints
Wage & salary
policies

4. Mohan Madgulkar-Compensation Management/2006
Changing Compensation Systems
Traditional Modern
Entitlement-base
increases
Performance-driven
gains
Pay = 100% base
salary
Variable component
added
Few incentive/bonus
plans, restricted to
executives
Many kinds of plans,
extended throughout
the organization

5. Mohan Madgulkar-Compensation Management/2006
Compensation Management
Phase I
Job Analysis Identify and study jobs
• Position descriptions
• Job descriptions
• Job standards

6. Mohan Madgulkar-Compensation Management/2006
Compensation Management
• Determine relative worth or
value of jobs
• Provides for internal equity
• Job evaluation methods:
• Job ranking
• Job grading
• Point system
Phase I
Job Analysis
Phase II
Job Evaluation

7. Mohan Madgulkar-Compensation Management/2006
Compensation Management
• Discover what other
employers are paying for
specific key jobs
• Provides for external
equity
• Sources of data:
HRDC
• Consultants
• Canada HR Centres
• Associations
• Self-conducted surveys
Phase I
Job Analysis
Phase II
Job Evaluation
Phase III
Salary Surveys

8. Mohan Madgulkar-Compensation Management/2006
Compensation Management
• Establishing the pay level
for each job
• Combines job evaluation
ranking, survey wage rates,
and other considerations e.g.
organization’s pay policy
• Wage-trend line developed
• Grouping the different pay
levels into a structure that
can be managed
• Job classes and rate ranges
Phase I
Job Analysis
Phase II
Job Evaluation
Phase III
Salary Surveys
Phase IV
Pricing Jobs
Match

9. Mohan Madgulkar-Compensation Management/2006
Tax considerations
• A tax efficient remuneration package can benefit both
employers and employees. From the employees perspective it
can enhance the benefits of working for that employer, from
the employers point of view, it can mean reduced costs.
• In the past , tax efficiency was one of the main reasons for the
proliferation of benefits, but it has become progressively less
important as governments have tightened up the fiscal rules
relating to employee benefits.
• Because fiscal regulations are constantly changing, it is
essential to update the information related to tax law for
salaried persons.