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Motivation: Reward system and the role of compensation
Психология

HUMAN RESOURCE MANAGEMENT

“Motivation: Reward system and the role of compensation”



Student: Anton Skobelev, IBS-855
Teacher: Kartashova L.
    The design and management of reward systems present the general manager
    with one of the most difficult HRM tasks. This HRM policy area contains
    the greatest contradictions between  the  promise  of  theory  and  the
    reality of implementation.  Consequently,  organizations  sometimes  go
    through cycles of innovation and hope as reward systems are  developed,
    followed by disillusionment as these reward systems fail to deliver.


Rewards and employee satisfaction

    Gaining an employee’s satisfaction with the  rewards  given  is  not  a
    simple matter. Rather,  it  is  a  function  of  several  factors  that
    organizations must learn to manage:

  1. The individual’s satisfaction with rewards is,  in  part,  related  to
    what is expected and how much is received. Feelings of satisfaction  or
    dissatisfaction arise  when  individuals  compare  their  input  -  job
    skills, education, effort, and performance - to output  -  the  mix  of
    extrinsic and intrinsic rewards they receive.

  2. Employee satisfaction is  also  affected  by  comparisons  with  other
    people in similar jobs and organizations. In effect, employees  compare
    their  own  input/output  ratio  with  that  of  others.  People   vary
    considerably in how they weigh various inputs in that comparison.  They
    tend to weigh their strong points more heavily, such as certain  skills
    or a recent incident of effective performance. Individuals also tend to
    overrate their own performance compared with the  rating  they  receive
    from their supervisors. The problem of unrealistic  self-rating  exists
    partly because supervisors in most organizations do not  communicate  a
    candid evaluation of their  subordinates’  performance  to  them.  Such
    candid communication to subordinates, unless done skillfully, seriously
    risks damaging their self-esteem. The bigger dilemma, however, is  that
    failure by managers to communicate a candid  appraisal  of  performance
    makes it difficult for employees to develop a realistic view  of  their
    own performance, thus increasing  the  possibility  of  dissatisfaction
    with the pay they are receiving.

  3. Employees often misperceive the rewards of others; their misperception
    can cause the employees to become  dissatisfied.  Evidence  shows  that
    individuals tend to  overestimate  the  pay  of  fellow  workers  doing
    similar jobs and to underestimate their performance (a defense of self-
    esteem-building  mechanism).  Misperceptions  of  the  performance  and
    rewards of others also occur because  organizations  do  not  generally
    make available accurate information about the salary or performance  of
    others.

  4. Finally, overall satisfaction results from a  mix  of  rewards  rather
    than from any single  reward.  The  evidence  suggests  that  intrinsic
    rewards and extrinsic rewards are both important and that  they  cannot
    be directly substituted for each other. Employees who are paid well for
    repetitious,  boring  work  will  be  dissatisfied  with  the  lack  of
    intrinsic rewards, just  as  employees  paid  poorly  for  interesting,
    challenging work may be dissatisfied with extrinsic rewards.


Rewards and motivation

    From the organization’s point of view, rewards are intended to motivate
    certain behaviors. But under  what  conditions  will  rewards  actually
    motivate employees? To be useful, rewards must be seen  as  timely  and
    tied to effective performance.

    One theory suggests that the following  conditions  are  necessary  for
    employee motivation.

  1. Employees must believe effective  performance  (or  certain  specified
    behavior) will lead to certain rewards. For example, attaining  certain
    results will lead to a bonus or approval from others.

  2. Employees must feel that the  rewards  offered  are  attractive.  Some
    employees may desire promotions because they seek power, but others may
    want a fringe benefit, such as a pension, because they  are  older  and
    want retirement security.

  3. Employees must believe a certain level of individual effort will  lead
    to achieving the corporation’s standards of performance.

    As indicated, motivation to exert effort is triggered by  the  prospect
    of desired rewards: money, recognition, promotion,  and  so  forth.  If
    effort leads to performance and performance leads to  desired  rewards,
    the employee is satisfied and motivated to perform again.
    As mentioned above, rewards fall into  two  categories:  extrinsic  and
    intrinsic. Extrinsic rewards  come  from  the  organization  as  money,
    perquisites,  or  promotions  or  from  supervisors  and  coworkers  as
    recognition. Intrinsic rewards accrue from performing the task  itself,
    and may include the  satisfaction  of  accomplishment  or  a  sense  of
    influence. The process of work and  the  individual’s  response  to  it
    provide the intrinsic rewards. But the organization seeking to increase
    intrinsic rewards must provide a work  environment  that  allows  these
    satisfactions to occur; therefore, more organizations  are  redesigning
    work and delegating responsibility to enhance employee involvement.

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