Pay
When the class discussed compensation, I was glad to hear the conversation move toward the limits of performance pay. I think people over value the importance of money as a motivating factor toward employee productivity. If a person is given a raise of $1, from $10 to $11, will this person's productivity increase 10%? I find it hard to believe it would. If the person recently started slacking off 9.1% from a prior productivity level, a 10% increase is possible, since these two percentages cancel each other out and return the worker to normal productivity. Still, was the dollar raise necessary? Probably not. Instead, management probably slipped up. Good management can prevent work place dissatisfaction to some extent and can also increase productivity. Once management improved productivity, a wage increase may be justified as reinforcement for the employee, but it is likely that the raise would not have to be equivalent to the increase in productivity.
Comments
Posted by: Sean Detwiler
Posted on: November 10, 2006 05:45 PM
I definitely agree that wages are often over-valued from a manager’s perspective. There are many other factors that improve morale and productivity that must be addressed before a wage increase will have an effect. Personally, I think that the most important aspect of a job to an employee is the environment. In the HR simulation, our team increased wages significantly in the first quarter, only to realize that morale had decreased and grievances had increased. The only positive effect the wage increase had was a small decrease in turnover. After we allocated funds to a safety program, morale and productivity finally increased. I think that this evidence demonstrates that managers should carefully consider the situation before assuming that simply increasing wages will result in the desired increase in productivity.