Critical Thinking

  1. Does money motivate employees? Why or why not?

Money motivates employees. Money is the foundation of different lifestyles that different individuals exhibit. Employees can use the money to buy things that can satisfy their desires and needs. Employees base the value of services that they offer an organization to the money that they earn. The symbolic value of money enables employees to feel more appreciated and recognized. Symbolically, money serves as a measure of the input that employees bring into an organization. Additionally, money serves as a direct reward for performance. Employees can only perceive their performance as significance based on the marginal amount of money they are offered. With money as a reward, employees are motivated to work better as this guarantees them job satisfaction.

  1. Why should compensation systems be equitable? How can an organization design an equitable compensation system?

Organizational success highly depends on the kind of compensation system in place. Any employee would want fair treatment from the employer. Compensation equity becomes an essential tool for achieving organizational success. Paying employees fairly motivates them to focus more on achieving organizational goals. A sense of inequity in the workplace demoralizes employees because they feel unrecognized. Compensation equity increases productivity and morale. It also prevents losing employees from an organization. Designing an equitable compensation system depends on the nature of the external market data and various internal factors. Conducting a market analysis helps to determine payment gaps that exist in an organization. These gaps include areas where the organization is underpaying, overpaying, or is not competitive. Consequently, the data will be be used to address salary ranges based on payment differences. The organization must ensure that the salary ranges are flexible to counter internal equity issues. The market data will help the organization to set a competitive rate for their workers. It will assist the company in making payment decisions to attract in-demand talent and satisfy workers.

  1. Compare and contrast the four job evaluation methods. Give an example of an organization in which each of the four methods might provide an optimal strategic fit.

Job ranking and job grading are traditional, non-quantitative methods of job evaluation. Job ranking is suitable for small organizations because it is easy and inexpensive. This method best works in restaurants because of the small number of employees. Job grading is also easy to understand. It is suitable for medium businesses such as those in the telemarketing organization because it lacks flexibility.  On the other hand, factor comparison and point methods of job evaluation are quantitative in nature. Employees can easily understand factor comparison because it does not involve many details. It is the most suitable fast-food businesses and security firms. The point method allows employees to move from one scale to another. It is also flexible and easy to use. This type of evaluation best work in banks.

  1. Discuss the pros and cons of employee pay being fixed versus variable and dependent on performance. How might such decisions impact recruiting, motivation, and retention?

Each method of compensation has both pros and cons, depending on the type and size of the organization. Performance-based compensation encourages productivity in an organization. Such a system rewards well-performing employees because such is the core purpose of performance-based compensation. Performance-based compensation motivates workers increasing sales and profitability. In a fixed payment system, top performers may end up being under-compensated while poor performers are overcompensated because employees are not encouraged to work hard. However, unhealthy competition among workers may result in a variable payment system. Such an atmosphere discourages collaboration hence low productivity. Payment based on performance creates pressure on customers because the employees must push them to buy to earn commissions. This does not happen in a fixed payment system because payment is not based on performance. Recruiting employees will be difficult during lean times. Moreover, a variable payment system may not retain workers when businesses are bad because they mostly perform poorly. Employers will look for other business opportunities in lean times. However, employees will still be comfortable in a fixed payment system because their wages will not depend on the sales they make.

  1. Analyze your current job responsibilities. Determine whether the method by which you are compensated is appropriate.

I have worked as a project manager for the last two years. This position made me responsible for the management of various projects while I led a cross-functional team. I travel a lot, and I do everything from organizing meetings and designing project implementation plans. I prepare meeting reports, charts, and materials as per the type of project. Leading the project team is among my favorite tasks. While at the office, I handle various tasks and situations involving administrative and clerical functions. I am compensated through the fixed-payment method. I find this method appropriate because sometimes I do not work at all, like when there are no projects, yet I receive my payment. When I receive payment in such a manner, I feel motivated to work effectively in the next project.

  1. Is performance-based pay effective? Why or why not? How can performance-based pay systems be better designed to ensure optimal results?

Performance-based pay is not effective. In a performance-based pay system, workers feel as generalized, and those who work hard may not be fairly compensated. Every work will be compensated equally because of a performance-based system rewards as a group. Employees will decrease their job satisfaction because they feel pressurized to work too hard. This will cause them stress and as such, lowering their productivity to a greater extent. To ensure optimal results, employers should reward the workers as individuals. Individual payments based on performance motivate each work as this quickly strikes a balance between those who worked and those who did not. It is essential to ensure that workers are individually appreciated for their efforts.

Reading 11.1

  1. What are the advantages and disadvantages of organizational policies that mandate pay secrecy? Consider this question from the perspective of managers, employees, and owners. Is pay secrecy a good practice?

Organizational policies that mandate pay secrecy enjoy enhanced control of the organization. The organization can easily be able to sort good workers from bad ones. Employee turnover is greatly reduced since information about salary differences is withheld. Additionally, pay secrecy reduces conflicts among workers and management. On the other hand, pay secrecy leads to a limited sense of external and internal secrecy. The management does not have direct control over employee motivation because of a lack of trust and loyalty. Pay secrecy reduces the motivation of workers hence reduced productivity. Overall, pay secrecy is not a good practice. It decreases employees’ job satisfaction and motivation. In such a system, there is an inequitable compensation distribution that gives rise to feelings of uncertainty and unappreciation to the workers.

Reading 11.2

  1. What obstacles exist to developing pay-for-performance plans in the public sector? How can these obstacles best be overcome? Do public sector pay-for-performance plans differ from those found in the private sector?

Pay for performance is difficult to measure in the public sector. It is challenging to establish cost control in the public sector. These obstacles mainly arise from the fact that public services cannot be easily quantified. Performance pay involves costs that are realized during the identification of performance measures. It is more complicated to identify these measures because the criteria are often subjective. These obstacles can be overcome by reviewing human resources policies that bring about imbalances in the payment system. There needs to be sufficient planning and maximum patience since higher productivity and increased efficiency takes time to be realized. There must be an understanding that employees work differently, and as such, they should be paid based on the tasks that they handle. There should be accountability in the organization as this helps to increase trust between managers and employees. Private sector pay-for-performance plans may differ from those found in the public sector. The private sector is mostly concerned about merit while the public sector is concerned with performance. There are often conflicts in the public sector between the rater and those being evaluated regarding the most appropriate amount of compensation. The private sector does not have such bureaucracy timing of award payments is based on merit.

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