Money, Motivation and Employee Performance

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Table of Contents

Money, motivation and employee performance
How compensation ranges are determined by employers
What can organizations do to better control benefits costs?
How to measure effectiveness in matters of compensation and benefits
References

Money, motivation and employee performance

Money is categorized under financial benefits and rewards in performance management. Money has been used a major source of employee motivation in personnel management for a long time. This is still embraced in contemporary human resource management where the relevance of financial rewards and benefits in employee motivation is emphasized. Awarding employees with financial rewards is an important motivator to employees.

This can be argued from basis of the organizational behavior theories like the Maslows hierarchy of needs theory. According to the theory, basic needs are placed first in the hierarchy. Satisfying the needs of employees should be a priority. Financial benefits and rewards help employees meet most of their basic needs. A salary increment means that an employee can meet an extra basic need, thereby making the employee fairly comfortable to work (Caruth & Handlogten, 2001).

How compensation ranges are determined by employers

The contemporary human resource management practices are governed by laws and regulations. There is compensation in the present working environment, which calls for organizations to embrace rationality in the determination of salary range for their employees as part of the efforts to sustain employees. While each employer would like to have a given salary scale to reflect the control of costs and expenditure, external factors in the present managerial environment play a critical role in determining the salary range for employees.

Employers keep watching what the competitor organizations are paying their employees and use it to set the salary range for their employees. Employers compliance with the wage and labor laws only comes in as a secondary factor, and it is only embraced in determining the salary range for low-scale employees (Chingos, 2002).

What can organizations do to better control benefits costs?

The goal of each organization is to enhance performance outcome. One of the desirable modalities of enhancing the performance of an organization by reducing costs through balancing of costs and their benefits to the organization. There are different methods that are used to relate costs to benefits in organizations. Some accounting tools like cost accounting are deployed by organizational managers to determine the payoff of a number of costs that are incurred by the organization.

From the analyses, organizations try to eliminate functions that are deemed to have few benefits to the organization. However, it is critical to observe that most of the costs of organizations go into the maintenance of organizational workforce (Kinney & Raiborn, 2009). Therefore, most of the cost cutting measures that are implemented by organizations target the benefits of the employees.

How to measure effectiveness in matters of compensation and benefits

The effectiveness of the compensation and benefits system in an organization is often determined by the level of employee performance. The main reason for implementing the benefits and compensation system in an organization is to steer the employees so that they can increase their rate of productivity.

For each of the compensation or benefits package that is unleashed by an organization, there is a certain level of performance that is expected to be attained as a payoff by the employees to the organization. Compensation and benefits are meant to motivate the employees, thereby encouraging them to increase their level of input. The increase in work input is reflected in work output and profitability of the organization (Jackson, Schuler & Werner, 2011).

References

Caruth, D. L., & Handlogten, G. D. (2001). Managing compensation (and understanding it too): A handbook for the perplexed. Westport, CT: Quorum Books.

Chingos, P. T. (2002). Paying for performance: a guide to compensation management. New York, NY: John Wiley & Sons.

Jackson, S. E., Schuler, R. S., & Werner, S. (2011). Managing human resources. Mason, OH: South-Western.

Kinney, M. R., & Raiborn, C. A. (2009). Cost accounting: Foundations and evolutions. Mason, OH: Thomson/South-Western.

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Money, Motivation and Employee Performance

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