{"id":940,"date":"2019-08-21T19:23:56","date_gmt":"2019-08-21T19:23:56","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/wm-humanresourcesmgmt\/?post_type=chapter&#038;p=940"},"modified":"2024-04-25T01:32:00","modified_gmt":"2024-04-25T01:32:00","slug":"compensation-and-motivation","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/wm-humanresourcesmgmt\/chapter\/compensation-and-motivation\/","title":{"raw":"Compensation and Motivation","rendered":"Compensation and Motivation"},"content":{"raw":"<div class=\"textbox learning-objectives\">\r\n<h3>Learning Outcomes<\/h3>\r\n<ul>\r\n \t<li>Discuss the connection between compensation and motivation<\/li>\r\n<\/ul>\r\n<\/div>\r\nAlthough some dispute the link between compensation and motivation, it repeatedly shows up in surveys as one of the primary determinants of human behavior.\r\n\r\nBefore we take a look at the current research on the topic, answer the following question.\r\n<div class=\"textbox tryit\">\r\n<h3>Practice Question<\/h3>\r\nhttps:\/\/assess.lumenlearning.com\/practice\/8b2faf34-d320-494b-8920-bb724580cdfb\r\n\r\n<\/div>\r\n<img class=\"alignright wp-image-1038\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/4056\/2019\/08\/23180353\/career-3386334_960_720-300x196.jpg\" alt=\"A man in a suit carrying a briefcase walks up a flight of stairs.\" width=\"350\" height=\"229\" \/>\r\n\r\nIn their 2019 Compensation Best Practices Report, PayScale notes that \u201csome survey results show that money is the biggest motivator driving employees to seek other jobs, while others show career growth to be the primary incentive. Secondary reasons overall include issues related to benefits, fit with the organization or the job, and relationship problems with direct supervisor or managers.\u201d[footnote]\"<a href=\"https:\/\/www.payscale.com\/content\/report\/2019-Compensation-Best-Practices-Report.pdf\" target=\"_blank\" rel=\"noopener\">Will They Stay or Will They Go?: Employee Retention in an Uncertain Economy.<\/a>\" PayScale. 2019. Accessed August 22, 2019.[\/footnote]\r\n\r\nGallup found that when employees are evaluating opportunities outside their current organization, they consider the following five factors most important:[footnote]Mann, Annamarie and Amy Adkins. \"<a href=\"https:\/\/news.gallup.com\/businessjournal\/204533\/dream-job.aspx\" target=\"_blank\" rel=\"noopener\">The Dream Job<\/a>.\" Gallup. March 1, 2017. Accessed August 22, 2019.[\/footnote]\r\n<ol>\r\n \t<li style=\"font-weight: 400;\">the ability to do what they do best<\/li>\r\n \t<li style=\"font-weight: 400;\">greater work-life balance and better personal well-being<\/li>\r\n \t<li style=\"font-weight: 400;\">greater stability and job security<\/li>\r\n \t<li style=\"font-weight: 400;\">a significant increase in income<\/li>\r\n \t<li style=\"font-weight: 400;\">the opportunity to work for a company with a great brand or reputation<\/li>\r\n<\/ol>\r\nIn a national survey, 54% of employees rated direct financial compensation as \"very important\" or \"extremely important\" to motivation. When stratified by age group there was statistically insignificant difference between Baby Boomer, Gen X and Gen Y on this point.[footnote]\"<a href=\"http:\/\/www.whatishumanresource.com\/compensation-and-employee-motivation\" target=\"_blank\" rel=\"noopener\">Compensation and Employee Motivation<\/a>.\" whatishumanresource.com. Accessed August 22, 2019.[\/footnote]\r\n\r\nIn an article titled \u201cCompensation Doesn\u2019t Drive Motivation,\u201d author Kevin Howell titles one of the sections \u201cCompensation Isn\u2019t Enough.\u201d[footnote]Howell, Kevin. \"<a href=\"https:\/\/www.reflektive.com\/blog\/compensation-motivation\/\" target=\"_blank\" rel=\"noopener\">Why Compensation Doesn't Drive Motivation<\/a>.\" Reflektive. Accessed August 22, 2019.[\/footnote] And that\u2019s a key point. Equitable compensation isn\u2019t enough to drive high levels of motivation, it\u2019s a minimum expectation. Forbes writer Ken Sundheim puts the compensation question in perspective, noting that research has shown that for employees to be motivated, basic minimums need to be met, including pay, working conditions and job security. Sundheim notes that \u201clow compensation can not only hinder motivation and performance, but can actually create vengeful employees. When human beings feel they are being inadequately paid, they will tend to shift the majority of their focus on the unfairness of the situation.\u201d[footnote]Sundheim, Ken. \"<a href=\"https:\/\/www.forbes.com\/sites\/kensundheim\/2013\/11\/26\/what-really-motivates-employees\/\" target=\"_blank\" rel=\"noopener\">What Really Motivates Employees?<\/a>\" Forbes. November 26, 2013. Accessed August 22, 2019.[\/footnote]\r\n\r\n<img class=\"alignright wp-image-1041\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/4056\/2019\/08\/23182915\/cowomen-7Zy2KV76Mts-unsplash-300x200.jpg\" alt=\"Three women sitting at a table together working on laptops.\" width=\"350\" height=\"233\" \/>The reality is that our desire to reduce complex questions to simple answers\u2014for example, to identify the one factor or most important determinant of behavior\u2014belies the complexity of human experience. For example, Maslow\u2019s Hierarchy of Needs illustrates that we are motivated by different things at different stages of our development. Given that there are five generations in the workforce, it\u2019s likely that employees will be at different levels of development. Economic and health factors can also determine where a person is in their development and what they value and therefore what motivates them. Finally, changes in the employee-employer relationship and the nature of work may affect employee expectations and what significance the work has to an employee. For example, if a business is engaging in transactional relationships with its alternate workforce, it is likely to find those relationships (motivation) is driven more by compensation than other factors. Finally, generational changes in attitudes toward work may also impact what one wants from an employer. For some, \u201cwork\u201d is not their life\u2019s work, but a side hustle, so non-financial rewards may have less value. Finally, a reductionist view fails to account for income inequality. There are many people who don\u2019t need to work. Someone like Alphabet CEO Larry Page, who was paid a dollar in 2018 (but is worth over 54 billion)\u2014and, indeed, many Google employees\u2014are not going to be motivated by compensation. However, the common refrain that compensation doesn\u2019t drive motivation is simply not consistent with the financial realities of many Americans. In a specialized economy where we must purchase rather than provide for our own basic needs, we are all motivated by money to meet those basic needs.\r\n\r\nA more accurate answer is that what motivates a person depends on their specific situation. As is true of benefits, understanding a compensation requires what drives human motivation requires an understanding of where each person is in terms of their financial well-being and professional career development. Just as employees expect a personalized approach to benefits, employers who recognize that employees have different preferences for different types of rewards\u2014from cash to recognition to autonomy\u2014will have a better chance of not only getting an employee\u2019s initial commitment but keeping that person onboard and motivated. Keeping employees \u201cHungry\u201d should refer to a person\u2019s drive for achievement, curiosity, not a physical state of need. If Employers want to tap higher-level capabilities, they should ensure that employees aren\u2019t distracted by lower-level needs. Pay is an important general motivator, but it is not the end of the story.","rendered":"<div class=\"textbox learning-objectives\">\n<h3>Learning Outcomes<\/h3>\n<ul>\n<li>Discuss the connection between compensation and motivation<\/li>\n<\/ul>\n<\/div>\n<p>Although some dispute the link between compensation and motivation, it repeatedly shows up in surveys as one of the primary determinants of human behavior.<\/p>\n<p>Before we take a look at the current research on the topic, answer the following question.<\/p>\n<div class=\"textbox tryit\">\n<h3>Practice Question<\/h3>\n<p>\t<iframe id=\"assessment_practice_8b2faf34-d320-494b-8920-bb724580cdfb\" class=\"resizable\" src=\"https:\/\/assess.lumenlearning.com\/practice\/8b2faf34-d320-494b-8920-bb724580cdfb?iframe_resize_id=assessment_practice_id_8b2faf34-d320-494b-8920-bb724580cdfb\" frameborder=\"0\" style=\"border:none;width:100%;height:100%;min-height:300px;\"><br \/>\n\t<\/iframe><\/p>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignright wp-image-1038\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/4056\/2019\/08\/23180353\/career-3386334_960_720-300x196.jpg\" alt=\"A man in a suit carrying a briefcase walks up a flight of stairs.\" width=\"350\" height=\"229\" \/><\/p>\n<p>In their 2019 Compensation Best Practices Report, PayScale notes that \u201csome survey results show that money is the biggest motivator driving employees to seek other jobs, while others show career growth to be the primary incentive. Secondary reasons overall include issues related to benefits, fit with the organization or the job, and relationship problems with direct supervisor or managers.\u201d<a class=\"footnote\" title=\"&quot;Will They Stay or Will They Go?: Employee Retention in an Uncertain Economy.&quot; PayScale. 2019. Accessed August 22, 2019.\" id=\"return-footnote-940-1\" href=\"#footnote-940-1\" aria-label=\"Footnote 1\"><sup class=\"footnote\">[1]<\/sup><\/a><\/p>\n<p>Gallup found that when employees are evaluating opportunities outside their current organization, they consider the following five factors most important:<a class=\"footnote\" title=\"Mann, Annamarie and Amy Adkins. &quot;The Dream Job.&quot; Gallup. March 1, 2017. Accessed August 22, 2019.\" id=\"return-footnote-940-2\" href=\"#footnote-940-2\" aria-label=\"Footnote 2\"><sup class=\"footnote\">[2]<\/sup><\/a><\/p>\n<ol>\n<li style=\"font-weight: 400;\">the ability to do what they do best<\/li>\n<li style=\"font-weight: 400;\">greater work-life balance and better personal well-being<\/li>\n<li style=\"font-weight: 400;\">greater stability and job security<\/li>\n<li style=\"font-weight: 400;\">a significant increase in income<\/li>\n<li style=\"font-weight: 400;\">the opportunity to work for a company with a great brand or reputation<\/li>\n<\/ol>\n<p>In a national survey, 54% of employees rated direct financial compensation as &#8220;very important&#8221; or &#8220;extremely important&#8221; to motivation. When stratified by age group there was statistically insignificant difference between Baby Boomer, Gen X and Gen Y on this point.<a class=\"footnote\" title=\"&quot;Compensation and Employee Motivation.&quot; whatishumanresource.com. Accessed August 22, 2019.\" id=\"return-footnote-940-3\" href=\"#footnote-940-3\" aria-label=\"Footnote 3\"><sup class=\"footnote\">[3]<\/sup><\/a><\/p>\n<p>In an article titled \u201cCompensation Doesn\u2019t Drive Motivation,\u201d author Kevin Howell titles one of the sections \u201cCompensation Isn\u2019t Enough.\u201d<a class=\"footnote\" title=\"Howell, Kevin. &quot;Why Compensation Doesn't Drive Motivation.&quot; Reflektive. Accessed August 22, 2019.\" id=\"return-footnote-940-4\" href=\"#footnote-940-4\" aria-label=\"Footnote 4\"><sup class=\"footnote\">[4]<\/sup><\/a> And that\u2019s a key point. Equitable compensation isn\u2019t enough to drive high levels of motivation, it\u2019s a minimum expectation. Forbes writer Ken Sundheim puts the compensation question in perspective, noting that research has shown that for employees to be motivated, basic minimums need to be met, including pay, working conditions and job security. Sundheim notes that \u201clow compensation can not only hinder motivation and performance, but can actually create vengeful employees. When human beings feel they are being inadequately paid, they will tend to shift the majority of their focus on the unfairness of the situation.\u201d<a class=\"footnote\" title=\"Sundheim, Ken. &quot;What Really Motivates Employees?&quot; Forbes. November 26, 2013. Accessed August 22, 2019.\" id=\"return-footnote-940-5\" href=\"#footnote-940-5\" aria-label=\"Footnote 5\"><sup class=\"footnote\">[5]<\/sup><\/a><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignright wp-image-1041\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/4056\/2019\/08\/23182915\/cowomen-7Zy2KV76Mts-unsplash-300x200.jpg\" alt=\"Three women sitting at a table together working on laptops.\" width=\"350\" height=\"233\" \/>The reality is that our desire to reduce complex questions to simple answers\u2014for example, to identify the one factor or most important determinant of behavior\u2014belies the complexity of human experience. For example, Maslow\u2019s Hierarchy of Needs illustrates that we are motivated by different things at different stages of our development. Given that there are five generations in the workforce, it\u2019s likely that employees will be at different levels of development. Economic and health factors can also determine where a person is in their development and what they value and therefore what motivates them. Finally, changes in the employee-employer relationship and the nature of work may affect employee expectations and what significance the work has to an employee. For example, if a business is engaging in transactional relationships with its alternate workforce, it is likely to find those relationships (motivation) is driven more by compensation than other factors. Finally, generational changes in attitudes toward work may also impact what one wants from an employer. For some, \u201cwork\u201d is not their life\u2019s work, but a side hustle, so non-financial rewards may have less value. Finally, a reductionist view fails to account for income inequality. There are many people who don\u2019t need to work. Someone like Alphabet CEO Larry Page, who was paid a dollar in 2018 (but is worth over 54 billion)\u2014and, indeed, many Google employees\u2014are not going to be motivated by compensation. However, the common refrain that compensation doesn\u2019t drive motivation is simply not consistent with the financial realities of many Americans. In a specialized economy where we must purchase rather than provide for our own basic needs, we are all motivated by money to meet those basic needs.<\/p>\n<p>A more accurate answer is that what motivates a person depends on their specific situation. As is true of benefits, understanding a compensation requires what drives human motivation requires an understanding of where each person is in terms of their financial well-being and professional career development. Just as employees expect a personalized approach to benefits, employers who recognize that employees have different preferences for different types of rewards\u2014from cash to recognition to autonomy\u2014will have a better chance of not only getting an employee\u2019s initial commitment but keeping that person onboard and motivated. Keeping employees \u201cHungry\u201d should refer to a person\u2019s drive for achievement, curiosity, not a physical state of need. If Employers want to tap higher-level capabilities, they should ensure that employees aren\u2019t distracted by lower-level needs. Pay is an important general motivator, but it is not the end of the story.<\/p>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-940\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Compensation and Motivation. <strong>Authored by<\/strong>: Nina Burokas. <strong>Provided by<\/strong>: Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Shared previously<\/div><ul class=\"citation-list\"><li><strong>Authored by<\/strong>: mohamed_hassan. <strong>Provided by<\/strong>: Pixabay. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/pixabay.com\/illustrations\/career-success-path-stair-3386334\/\">https:\/\/pixabay.com\/illustrations\/career-success-path-stair-3386334\/<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/about\/cc0\">CC0: No Rights Reserved<\/a><\/em>. <strong>License Terms<\/strong>: Pixabay License<\/li><li><strong>Authored by<\/strong>: Cowomen. <strong>Provided by<\/strong>: Unsplash. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/unsplash.com\/photos\/7Zy2KV76Mts\">https:\/\/unsplash.com\/photos\/7Zy2KV76Mts<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/about\/cc0\">CC0: No Rights Reserved<\/a><\/em>. <strong>License Terms<\/strong>: Unsplash License<\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section><hr class=\"before-footnotes clear\" \/><div class=\"footnotes\"><ol><li id=\"footnote-940-1\">\"<a href=\"https:\/\/www.payscale.com\/content\/report\/2019-Compensation-Best-Practices-Report.pdf\" target=\"_blank\" rel=\"noopener\">Will They Stay or Will They Go?: Employee Retention in an Uncertain Economy.<\/a>\" PayScale. 2019. Accessed August 22, 2019. <a href=\"#return-footnote-940-1\" class=\"return-footnote\" aria-label=\"Return to footnote 1\">&crarr;<\/a><\/li><li id=\"footnote-940-2\">Mann, Annamarie and Amy Adkins. \"<a href=\"https:\/\/news.gallup.com\/businessjournal\/204533\/dream-job.aspx\" target=\"_blank\" rel=\"noopener\">The Dream Job<\/a>.\" Gallup. March 1, 2017. Accessed August 22, 2019. <a href=\"#return-footnote-940-2\" class=\"return-footnote\" aria-label=\"Return to footnote 2\">&crarr;<\/a><\/li><li id=\"footnote-940-3\">\"<a href=\"http:\/\/www.whatishumanresource.com\/compensation-and-employee-motivation\" target=\"_blank\" rel=\"noopener\">Compensation and Employee Motivation<\/a>.\" whatishumanresource.com. Accessed August 22, 2019. <a href=\"#return-footnote-940-3\" class=\"return-footnote\" aria-label=\"Return to footnote 3\">&crarr;<\/a><\/li><li id=\"footnote-940-4\">Howell, Kevin. \"<a href=\"https:\/\/www.reflektive.com\/blog\/compensation-motivation\/\" target=\"_blank\" rel=\"noopener\">Why Compensation Doesn't Drive Motivation<\/a>.\" Reflektive. Accessed August 22, 2019. <a href=\"#return-footnote-940-4\" class=\"return-footnote\" aria-label=\"Return to footnote 4\">&crarr;<\/a><\/li><li id=\"footnote-940-5\">Sundheim, Ken. \"<a href=\"https:\/\/www.forbes.com\/sites\/kensundheim\/2013\/11\/26\/what-really-motivates-employees\/\" target=\"_blank\" rel=\"noopener\">What Really Motivates Employees?<\/a>\" Forbes. November 26, 2013. Accessed August 22, 2019. <a href=\"#return-footnote-940-5\" class=\"return-footnote\" aria-label=\"Return to footnote 5\">&crarr;<\/a><\/li><\/ol><\/div>","protected":false},"author":17,"menu_order":7,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Compensation and Motivation\",\"author\":\"Nina Burokas\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"},{\"type\":\"cc\",\"description\":\"\",\"author\":\"mohamed_hassan\",\"organization\":\"Pixabay\",\"url\":\"https:\/\/pixabay.com\/illustrations\/career-success-path-stair-3386334\/\",\"project\":\"\",\"license\":\"cc0\",\"license_terms\":\"Pixabay License\"},{\"type\":\"cc\",\"description\":\"\",\"author\":\"Cowomen\",\"organization\":\"Unsplash\",\"url\":\"https:\/\/unsplash.com\/photos\/7Zy2KV76Mts\",\"project\":\"\",\"license\":\"cc0\",\"license_terms\":\"Unsplash License\"}]","CANDELA_OUTCOMES_GUID":"af397113-5a28-40a1-af10-4d26ef3ac6bf, 8c6112eb-f762-47fb-84ce-0a3b5d692ed3","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-940","chapter","type-chapter","status-publish","hentry"],"part":926,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/wm-humanresourcesmgmt\/wp-json\/pressbooks\/v2\/chapters\/940","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/wm-humanresourcesmgmt\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/wm-humanresourcesmgmt\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-humanresourcesmgmt\/wp-json\/wp\/v2\/users\/17"}],"version-history":[{"count":11,"href":"https:\/\/courses.lumenlearning.com\/wm-humanresourcesmgmt\/wp-json\/pressbooks\/v2\/chapters\/940\/revisions"}],"predecessor-version":[{"id":3364,"href":"https:\/\/courses.lumenlearning.com\/wm-humanresourcesmgmt\/wp-json\/pressbooks\/v2\/chapters\/940\/revisions\/3364"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/wm-humanresourcesmgmt\/wp-json\/pressbooks\/v2\/parts\/926"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/wm-humanresourcesmgmt\/wp-json\/pressbooks\/v2\/chapters\/940\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/wm-humanresourcesmgmt\/wp-json\/wp\/v2\/media?parent=940"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-humanresourcesmgmt\/wp-json\/pressbooks\/v2\/chapter-type?post=940"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-humanresourcesmgmt\/wp-json\/wp\/v2\/contributor?post=940"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-humanresourcesmgmt\/wp-json\/wp\/v2\/license?post=940"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}