Reward and Fairness Issues in Performance Related Pay

Employee motivation is, or at least must be, one of the key issues for directors, managers and personnel managers. The leader must be able to find the sensitive strings of his subordinates, which can be motivated by influencing them to achieve high performance. The correct use of motivation encourages staff to make more efficient use of their knowledge, skills, and talents. In today's turbulent, often chaotic environment, commercial success depends on the employee's talent and effort. Despite the many existing theories and practices, some of the motivation of leaders today remains a mystical term. This is partly due to the fact that people are motivated by different things and techniques.

Motivation is derived from an internal force that provides an individual the opportunity to achieve their needs or goals. People are motivated by a variety of things and often have different motivating factors. Employers should be mindful of individual motivating factors when attempting to motivate staff to increase performance. While some people may be motivated by money, many are motivated by things like: recognition, promotion, and increased responsibility. Once an employer has identified motivating factors they are able to analyze a variety of motivational theories to design and implement a program that will motivate employees to go above and beyond what is expected of them.

According to researcher Lindner (1998), motivated employees are needed in our rapidly changing workplaces to aid in the survival of organizations. Not only is it important to meet the needs of the consumer, it is equally important that to make sure that associates are taken care of and remain motivated. For this reason, Gibson, Ivancevich, Donnelly and Konopaske (2012) “states much of management’s time is spent addressing the motivation of their employees” (p. 125). According to the Encyclopedia of Small Business (2007), employee motivation is the level of energy, commitment, and creativity employees bring to their jobs; the inner force that drives individuals to accomplish personal and organizational goals (Lindner, 1988). Despite its obvious importance, employee motivation can be an elusive quest for managers due to the multiplicity of incentives that can influence employees to do their best work. The reality is that every employee has different ways to become motivated and the knowledge of how to motivate them is key to organizational success. It is imperative that employers get to know the personal needs and wants of their employees in order to establish tactics in which to motivate each of them. Once achieved, “managers are in a better position to encourage and reward employees to behave in effective ways” (Gibson et al, 2012, p.

Pay-for-performance plans are formal compensation systems that are directly related to organizational or individual performance. The United States Department of Labor defined pay-for-performance as a raise in pay based on a set of criteria put in place by employers, and notes that the Fair Labor Standards Act,

There are as many different methods of motivating employees today as there are companies operating in the global business environment. Still, some strategies are prevalent across all organizations striving to improve employee motivation. The best employee motivation efforts will focus on what the employees deem to be important. It may be that employees within the same department of the same organization will have different motivators. Many organizations today find that flexibility in job design and reward systems has resulted in employees ' increased longevity with the company, improved productivity, and better morale.

Good performance is rewarded through timely job promotions, special recognition and in some cases monetary rewards and incentives.

The success of any business depends on the productivity and satisfaction of its employees. Employees need to be motivated to work. Motivation can be defined as the inner force that drives individuals to accomplish personal and organizational goals. Motivation can be either intrinsic or extrinsic. For an individual to be motivated in a work situation there must be a need, which the individual would have to perceive a possibility of satisfying through some reward. Intrinsic motivation stems from motivations that are inherent and arise from performing the task of the job itself, which the individual gets a feeling of either positive or negative motivation as a result of

A successful motivational program recognizes these factors and combines awards, recognition, and peer pressure. To even further maximize full potential, managers should personalize these incentives based on the employee’s interests, hobbies, and recreational activities (Boe, 2011). This is consistent with the ERG theory developed by Clayton

O’Neil (1998) suggests six minimal criteria for the design of a performance based pay system. The first of these criteria is that the reward system should be self-funding, that is, the performance increases should as a minimum offset the cost of the rewards provided. The second criterion is that the distribution of the rewards must be consistent, fair and justifiable. In addition reward plans must be transparent and clearly communicated. The third criterion

that employees remain motivated if they are rewarded to achieve goals of a company. And when they are

Motivation in the workplace is one of the major concerns that managers face when trying to encourage their employees to work harder and do what is expected of them on a day-to-day basis. According to Organizational Behavior by John R. Schermerhorn, James G. Hunt and Richard N. Osborn the definition of motivation is "the individual forces that account for the direction, level, and persistence of a person's effort expended at work." They go on to say that "motivation is a key concern in firms across the globe." Through the years there have been several theories as to what motivates employees to do their best at work. In order to better understand these theories we will apply them to a fictitious organization that has the following

Pay for performance is to link employees’ salary or salary increase to his or her performance. It seems to be a reasonable or attractive idea but it often does not work well in organizations. Please use at least 4 motivation theories or models to explain why pay for performance may not work as expected—particularly in government and nonprofit organizations.

Industrial/Organizational (I/O) Psychology is devoted to the study of employee behavior in the workplace and understanding the issues facing organizations and employees in today’s complex and ever changing environment. Motivation refers to the set of forces that influence people to choose various behaviors among several alternatives available to them. An organization depends on the ability of management to provide a positive, fostering and motivating environment for its employees in order to increase profits, productivity and lower turnover rates of its employees. The purpose of this paper is to discuss and compare six academic journal articles and explore the behavior, job, and need based theories of motivation that can aid management in motivating and understanding their employees. Finding that delicate balance to can sometimes be elusive so effectively learning how to motivate by understanding, controlling and influencing factors to manipulate behavior and choices that are available to employees can produce the desired outcome.

An incentive pay program can reward employees who continue to produce superior work or encourage employees who already produce good work to best. Sometimes, use an incentive system when employees are lack of enthusiasm of getting down to work and improving things. If everyone in the same job classification gets the same pay, there is no real incentive to do an outstanding job (French, 1990). Various incentive plans used to motivate all employees such as production staff, sales staff, administrative staff and managerial and professional staff on an individual basis. To be improved employee work performance, the incentive pay programs need to be fairly matched with the employees’ expectation. Properly designed and maintained incentive pay program has the potential to increase employees’ productivity and work performance.

Being rewarded and recognised for their work or contribution is what keeps an employee motivated to work towards achieving the organisational as well as personal goals. When the employees is motivated by rewards, they will have job satisfaction consequently increasing the productivity of the organisation. It necessitates the need of managers to pay more attention in understanding their employees and come up with suitable types of reward systems for the organisation so that the employees are intrinsically and extrinsically motivated all the time. The hypotheses that I put forward here is to support this statement that effective reward management is critical to