Introduction
Resources delineate the accomplishment of any Organization;
Material, Machine, Money, Method and most prominently Manpower (Tauseef, 2012).
The Employees (Manpower) are the distinctive resource because all the other
resources are non-living, Employees make use of the other resources to produce
the output and achieve the organization’s goal. Therefore, Human Resource is
the greatest asset any organization can have and should be given the highest
priority. (Ojeleye and Okoro, 2016). Since the greatest asset is a living one,
in order to get the efficient and effective result from human resource
Motivation is necessary. (Zaman, 2011). Employer can set motivation by many
means, whereas Remuneration stand alone as a non-avoidable and fundamental
requirement for employees. All compensation designs incorporate impetus and
bonus plans keeping in mind the end goal to spur workers’ performance by
remunerating them. (Calvin, 2017).
Generally, Performance consider doing the work as well
as the result achieved, however in the management perspective Performance is
indeed often regarded as simply the outcomes achieved: a record of person’s
accomplishments. (Armstrong, M. 2010). A record of person’s accomplishments in
an organization may depend on many substances such as the employee’s needs (Figure
1.0: Maslow’s Hierarchy of needs), opportunity and motivation, ability to learn
and perform and environmental factors.
According to Maslow, you need to know where a person
is on the hierarchical pyramid in order to motivate
him/her. Then you need to focus on meeting that person’s needs at that level
(Robbins 2001).
Physiological
needs
This need at the bottom of the triangle and include
the lowest order need and most basic. This includes the need to satisfy the fundamental biological drives
such as food, air, water and shelter. According to Maslow, organizations must
provide employees with a salary that enable them to afford adequate living
conditions (Nyameh, J. 2013). The rationale here is that any hungry employee
will hardly be able to make much of any contribution to his organization.
Safety needs
This occupies the second level of needs. Safety needs
are activated after physiological needs are met. They refer to the need for a
secure working environment free from any threats or harms. The rationale is
that employees working in an environment free of harm do their jobs without
fear of harm. (Nyameh, J. 2013)
Social needs
This represents the third level of needs. They are
activated after safety needs are met. Social needs refer to the need to be
affiliated that is the needed to be loved and accepted by other people.(Martin,
D. & Joomis, K. 2007). To meet these needs organizations encourage
employees participation in social events such as picnics.
Esteem needs
This represents the fourth level of needs. It includes
the need for self-respect and approval of others. (Nyameh, J. 2013) Organizations
introduce awards banquets to recognize distinguished achievements.
Self-actualization
This occupies the last level at the top of the
triangle. This refers to the need to become all that one is capable of being to
develop ones fullest potential. (Nyameh, J. 2013) The rationale here holds to
the point that self-actualized employees represent valuable assets to the organization
human resource. (Martin, D. & Joomis, K. 2007)
However, each level of the Maslow’s hierarchy comes
with the different remuneration package as well; remuneration gets better as
the employee move high in the triangle. Therefore, ultimately, remuneration
highly proven as a fundamental motivation for any hierarchical employee.(Aldi
at el 2016).
2.0 Best influence
of remuneration:
Firstly, a good remuneration attract the best talent
to the organization. Recruiting high caliber employees is as top priority for
many businesses at the current world and a competitive salary offering is one
of the key factors potential employees will take into account. Best talents are
always prefer to sell their service at the higher rate knowing and recognizing
them as the best. Whatever the Organization is afford to hire them only can
have them working for their organization.
Figure 2.0 (Top best paying big companies, according
to employees) shows how the successful companies remain successful by using the
remuneration as a fundamental motivator. Even though this organizations are
well known brand amongst their industry, they do have a good remuneration to
keep attract the young best talents to the company.
Secondly, a good remuneration helps branding the
organization. In any country, people get to know the best-paid employer rather
very quickly than any other category of employer. For example, we all are aware
that the companies listed on figure 2.0 even though they are not from our
country. A strong employer brand ease many activities in the organization such
as attract applicants that are more qualified and improve the reputation.
Figure 2.1 (the world’s most valuable brands of 2018)
shows the value of the world’s best brands. When we compare the figure 2.0 with
2.1, we will agree that the world’s best brands do pay the world’s best salary.
More research may reveal the better connection between these two figures,
however it is appear that the remuneration of employees and the company
branding have direct relationship
Thirdly, once again a good remuneration motivates the
employees to do something extraordinary. As mentioned earlier in figure 2.0
(Top best paying big companies, according to employees) are the companies
nearly changing the world by innovation. People around the world are simply
following what these companies ask us to do. What Google does on google search,
Apple with iTunes and Facebook with connecting the world are few examples for
extraordinary work done by employees.
Finally, a good remuneration sustain the employee at
work. Heneman and Judge (2009) have described four types of employee turnover
under two categories. Voluntarily initiated by the employee and the
involuntarily initiated by the organization are the two types. Here voluntarily
initiated by employee is controlled by a good remuneration practice (Heneman
and Judge 2009). Opportunity cost to the
new job is current remuneration and if the current remuneration is better, no
one will buy into a new lower paid job.
Employees depend on their monthly income and their commitment also
depend on how much they earn, so it is practically very hard to downsize their
needs at any situation. Therefore, a good remuneration prevent employees to
other offers even though it is desirable.
Conclusion:
According to Aswathappa, K. (2007) an agency relationship
occurs whenever one party (the principal) hires another person (the agent) who
possesses specialized knowledge and skills. However, specialized knowledge and
skills come with higher cost due to the competition. Therefore, there is high
influence on employee’s performance by the employee’s remuneration.
Remuneration itself only does not influence the employee’s performance but
remuneration have considerable amount of influence than any other factors. (Aldi
at el 2016)
References:
Aldi,
C. Musa, H. and Hari, W. The effect of Remuneration on Motivation that
implicates employee’s Performance. Indonesian Journal of Business and
Entrepreneurship, 2(2).
Armstrong,M.
(2010) Armstrong’s essential Human Resource Management Practice: A guide to
people Management. 1st ed. London and Philadelphia, Kogan Page Limited.
Aswathappa,
K. (2007) Human Resource and Personnel Management (Texts and Cases).4th ed. New
Delhi, Tata- McGraw Hill.
Calvin,
O. Y. 2017. The Impact of Remuneration on Employees’ Performance. Arabian
Journal of Business and Management Review, 4(2), pp.34-43.
Forbes
(2018) The World's Most Valuable Brands [online]. Forbes. Available at: <https://www.forbes.com/powerful-brands/list/#tab:rank>.[Accessed
on 22nd April 2019].
Heneman,
H. G and Judge, T. A. (2009) Staffing
Organizations. 6th ed. McGraw Hill International Edition.
Julie
Bort and Zoë Bernard (2017) The 50 best-paying big companies, according to
employees. businessinsider[Online]. available at <https://www.businessinsider.com/comparably-50-best-paying-big-companies-salary-employees-2017-11.>. [Accessed on 28th April 2019].
Martin,
D. & Joomis, K. (2007) Building Teachers: A Constructivist Approach to
Introducing Education. 1st ed. Belmont, CA Wadsworth, Cangage Learning.
Nyameh
Jerome. 2013. Application of the Maslow’s hierarchy of need theory; impacts and
implications on organizational culture, human resource and employee’s
performance. International Journal of Business and Management Invention, 2(3),
pp.39-45.
Ojeleye,
Y.C and Okoro, C.I. (2016) Job stress and employees’ productivity in
telecommunication sector of Nigeria. International Journal of Multidisciplinary
Education and Research, 1(5), pp.5-10
Robbins,
S.P. (2001) Organizational Behavior. 9th ed. New York, Prentice-Hall, Inc.
Tauseef
Aized. (2012). Total Quality Management and Six Zigma. 1st ed. Croatia, InTech.
Zaman,
K. (2011) Relationship between Rewards and Employee Motivation in the Nonprofit
Organizations of Pakistan. Business Intelligence Journal, 4(1), pp.327-334.
As you said the motivation is the most important thing with relevant to employees's performance. According to Johnson (2011), Organizations need to understand employees' voices and understand needs, issues, and values. This is the most powerful driving force for employee performance. In support of Robinson et al. (2004) Identify key elements that contribute to feeling valued and involved including the ability to participate in decision-making and express ideas.
ReplyDeleteThis comment has been removed by a blog administrator.
DeleteYes Nadani, In general motivation act as a deciding factor of the performance of an employee. motivation as “the attribute that moves us to do or not to do something (Gredler, Broussard and Garrison 2004). Motivation involves a constellation of beliefs, perceptions, values, interests, and actions
Deletethat are all closely related. As a result, various approaches to motivation can focus on cognitive behaviors (such as monitoring and strategy use), non cognitive aspects (such as perceptions,beliefs, and attitudes), or both (Gottfried 1990). I have taken remuneration only as a motivation to analyse the performance.
ReplyDeleteFor an organization to achieve their objectives they must have in place a sufficient and efficient human resource team.This team which comprises the employees of an organization determines how well the organization performs.It is widely suggested in human resource circles that employee remuneration affects the performance of the employees and that of an organization as whole.
Thanks Diana for taking the same view as me. As I have mentioned in the blog "The Employees (Manpower) are the distinctive resource because all the other resources are non-living, Employees make use of the other resources to produce the output and achieve the organization’s goal. Therefore, Human Resource is the greatest asset any organization can have and should be given the highest priority. (Ojeleye and Okoro, 2016)". So the greatest asset should be treated well too in order to perform well.
DeleteIn addition to the content above, further effect of remuneration for employee performance and motivation can be discussed with following theories,
ReplyDeleteReinforcement theory states behaviors that result in receiving rewards are mostly repeated. Hence, the consequence of remuneration on high performance resulting in monetary rewards will ensure future performance (DeCremer et al, 2008). moreover, behaviors and attitudes of employees could be transformed if they receive rewards whereas exhibiting the anticipated behaviors or attitudes (Cropanzano et al, 2005).
Equity theory states that employees expect same rewards for same inputs (Wayne et al, 2002). The theory mainly focuses on the equity of remuneration in terms of employee pay structures (DeCremer et al, 2008). The inequity perceived by employees may effect in falling productivity, increased absenteeism and higher turnovers (Cropanzano et al, 2005).
As you said Reinforcement theory proposes that you can change someone's behaviour by using reinforcement,punishment, and extinction. Rewards are used to reinforce the behaviour you want and punishments are used to prevent the behaviour you do not want. Extinction is a means to stop someone from performing a learned behaviour. on the other hand negative punishment involves removing a pleasant stimulus other than the one maintaining the behavior in order to decrease the frequency of the behavior (M. Sundel & S. Sundel, 2005). Therefore it is acceptable to say this reinforcement theory makes sense to my essay.
DeleteAs you’ve mentioned a good remuneration attract the best talent to the organization. In order to attract the best people for the company, a firm should do more than simply analyze its organizational competencies and determine what types of talent are required. First, it is important that the company has an employee value proposition (EVP). An EVP summarizes what employees can expect to receive from the company in exchange for the work they perform. As such, an EVP is the set of benefits that characterize an employer. A good EVP enhances the company’s reputation as a good place to work, and thus drives talent attraction and retention. Second, an organization needs to identify which recruitment channels are most appropriate to attract the desired talent according to its cultural and organizational characteristics, and which selection practices are most likely to help the firm identify a good candidate for a given position. That is, the organization needs to identify the staffing processes that will help it achieve its talent goals(Hatum, 2010).
ReplyDeleteI totally agree on what you have mention in your comment, Employee Value Proposition (EVP), is the unique set of benefits which an employee receives in return for the skills, capabilities and experience they bring to a company. However, many industry analysts attribute the incessant attrition rate and poor performance of firms to lack of awareness of the application of motivational strategies. EVP has become very relevant, especially in the new millennium and have received overwhelming dominance from the developed countries and of late a focus on the transitional or emerging economies. However I have only taken remuneration as a motivational factor to elaborate its standalone pros and cons.
DeleteIn addition to Maicibi (2005) defined remuneration as pay or reward given to individuals for work done.He further identified the indicators of remuneration include: basic salary, wages, health schemes, pension schemes, transport allowances overtime allowances and responsibility
ReplyDeleteallowances. Remuneration can also be referred to as monetary or financial benefits in form of salaries, wages, bonuses, incentives, allowances and benefits that is accrued or given to an employee or group of employees by the employer (firm) as a result services rendered by the employee(s),commitment to the organization or reward for employment.
In addition to what u described above I would like to share some theoretical frame works which describes the Influence of Remuneration on Employee's Performance.
ReplyDelete1. Reinforcement and Expectancy Theory
Gerhart, Minkoff & Olsen (1995) reinforcement theory states that a response followed by a reward is more likely to recur in the future (Thorndike's Law of Effect). Aswathappa (2007) asserted that a behaviour which as a rewarding experience is likely to be repeated. The implication for remuneration is that high employee performance followed by monetary reward will make future employees performance more likely. Buchan et al (2000) suggest that behaviour can be modified if individuals receive the reward at the time they exhibit the desired behaviours. An important assumption in this theory is that rewards can become an acquired right if they are delivered on a regular basis.
2. Equity Theory
Buchan et al (2000) equity theory posits that because employees in organizations expect to be rewarded like other employees for similar levels of input, the distribution of rewards becomes important. It is the perceived equity of the effort-reward balance that is important in determining the employees’ level of motivation. Aswathappa (2007) the theory emphasises equity in pay structure of employees' remuneration. employees perception on how they are being treated by their firms is of prime importance to them. The dictum ''a fair day work for a fair pay'' denotes a sense of equity felt by employees. When employees perceive inequity it can result in lower productivity, high absenteeism or increase turnover.
3. Agency Theory
According to Buchan et al (2000) an agency relationship occurs whenever one party (the
principal) hires another person (the agent) who possesses specialized knowledge and skills. Agency theory focuses on the divergent interests and goals of the organization's stakeholders and the way that remuneration can be used to align these interests and goals. The remuneration payable to employees is the agency cost and that it is natural that employees expect high agency cost while the employer seek to minimize it. Thus, these theories posit that the remuneration in the form of wages or salaries can be agreed upon on the basis of the outcome or the behaviour of an employee (Aswathappa, 2007)
Thank you Tharindu for the additional readings, as I have mentioned earlier in my comment, my context for the blog is only covers the remuneration as a motivational factor and therefore this article only covers the pros and cons of the subject matter.
DeleteA logical result of the appraisal process is determining which employee most deserve rewards. Compensation entails pay and benefits. Allocating rewards is a complex and specialized activity. Rewards include both direct compensation (salary) and indirect compensation (benefits) that organizations offer to employees. The aim of compensation practices is to help organizations offer to employees. The aim of compensation practices is to help organizations establish and maintain a competent and loyal workforce at an affordable cost (Sims, 2002).
ReplyDeleteCompensation practices are also affected by legal requirements of equal pay for equal work, minimum wage, over time provisions and required benefits such as social security. In addition to the level of pay, a successful compensation system is based on fairness. Employees bring a variety of perspectives to bear in deciding whether they are satisfied with the compensation they receive, thus making management of compensation a particularly challenging human resource activity (Sims, 2002).
Here I would like to add a crucial principle throughout the remuneration system. That is the felt-fair principle which was introduced by Jaques in 1961. As Jaques said, the remuneration system should be matched with employee’s needs and responsibility as per their position of the Maslow’s hierarchy of needs. The important point here is, the reward/remuneration package should not less with respect to their associates (Armstrong, 2014).
ReplyDeleteWell noted point Maduka, I have also mention similar on the article as ''Generally, Performance consider doing the work as well as the result achieved, however in the management perspective Performance is indeed often regarded as simply the outcomes achieved: a record of person’s accomplishments. (Armstrong, M. 2010). A record of person’s accomplishments in an organization may depend on many substances such as the employee’s needs (Figure 1.0: Maslow’s Hierarchy of needs), opportunity and motivation, ability to learn and perform and environmental factors''.
DeleteBy changing managerial approach in order to motivation and motivating of human resource allows better performance of the organization (Kerestešová, 2012). As you mentioned, remuneration can successfully use as tool of motivation. However, to use remuneration as motivation tool it must be sufficiently diversified. It must be continuously updated and improved with new, attractive incentives or impulses, able to reflect better performance (Martina & Rudolf ,2013; Jedinak,2012).
ReplyDeleteHi Niroshan, According to Xanthopoulou et al, (2009 a) remuneration is a technique for promoting morale, increasing inspiration and encouraging team unity. Remuneration can drive workers to be more productive yet does not need to essentially be pay based . Calvin ( 2017) suggested that remuneration can likewise be an acknowledgement. However, monetary remuneration can be powerful in long haul inspiration and profitability, for example, an advancement (Calvin, 2017). Remuneration builds employees’ confidence provided the rewards are perceived as equitable. In other words, giving incremental rewards considering which employee is the most prolific, the second most valuable and so on (Baker et al, 2007).
ReplyDeleteHi Upul, After setting up a proper remuneration package for the employee, the company should look after on something that will sort all the ones you have listed it suppose.
DeletePerformance based high level remuneration is considered one of the important aspect and also a competitive advantage for a organization for attracting, motivating, and retaining skilled and high performing employees (Rynes, Gerhart and Minette, 2004). Though remuneration can motivate the employees, it is not the only motivator (Armstrong, 2005).
ReplyDeleteHerzberg’s two factor model theory explains the factors those can improve motivation are different from the factors that lead to demotivation. Doubts have been identified on the effectiveness of remuneration as a motivator by Herzberg. He further claimed that remuneration does not create sustainable satisfaction and motivation (Armstrong, 2005). Kohn (1993) also categorically argued financial incentives does not motivate employees.
Remuneration motivates employees because it is linked directly or indirectly with the satisfaction of many needs. If the remuneration is regular, it placates the basic need for survival and security and it can also satisfy the basic need of the employee for self-confidence. Moreover, higher remuneration set the employees in a grade apart from their colleagues and enabling them to buy you things others cannot afford (Armstrong, 2005).
Motivation is the encouragement to do something. There are short term motivators and there are long term motivators. There are also different levels and sides to motivation. money would be recognized within the safety category (Maslow's). When you have money you feel secure, because you have a resource you need to survive. According to Maslow once that need is fulfilled you move to the next level for motivation. Therefore in this article I have only cover the 1st and most motivator only and its usage.
DeleteAs you have mentioned , recruiting high caliber employees to the organization is a top priority but to retain them for long is the key to success for any business. For that, you need to have a proper strategy which is employee branding. An attractive remuneration is an essential part of employee branding along with evaluating, understanding and refining the existing employees.
ReplyDeleteAs per an article by Steve Harvey on 'The benefits of an employer branding strategy: How to become a talent magnet' there are few real world examples on companies which used this employee branding to their success. Namely they are Vodafone - through generating an employer value proposition (EVP) which is a two way communication, Unilever - with the help of the website 'glassdoor' and L'oReal - by 'Are you in' campaign.
-Randitha
Yes Randitha, Herzberg’s Motivation-Hygiene Theory would explain more about your comment. This theory focuses on the factors causing job satisfaction and the factors causing job dissatisfaction, and that they are different. Herzberg called the satisfiers motivators and dissatisfiers hygiene factors. Hygiene factors are in a sense maintenance factors that are necessary to avoid dissatisfaction but do not themselves provide satisfaction.(Harvard Business Review, 2003).
DeleteThe general meaning of remuneration is the basic salary or pay of an employee, but in the broader sense, remuneration comprises salary, fringe benefits, compensation, bonus, commissions, employee stock option, etc. (Guedri and Hollandts 2008). It is important for the corporate executives or managers to be aware of the economic and social background of employees to offer good remunerations as per their talent and skills and motivate them to work.
ReplyDeleteRemuneration or money is considered as a means of fulfilling the basic needs of man. This is due to the purchasing power of money offered to an individual as remuneration (Stajkovic and Luthans 2003). According to different motivation theories, such as Maslow’s Need Hierarchy, Two-factor theory by Herzberg’s, McGregor’s theory X and theory Y, etc. Money is one of the main sources to persuade the behaviour of an individual towards his organization and work productivity (Wheeler 2008).
completely agree on your comment Indeera and i have mention this as ''According to Aswathappa, K. (2007) an agency relationship occurs whenever one party (the principal) hires another person (the agent) who possesses specialized knowledge and skills. However, specialized knowledge and skills come with higher cost due to the competition. Therefore, there is high influence on employee’s performance by the employee’s remuneration. Remuneration itself only does not influence the employee’s performance but remuneration have considerable amount of influence than any other factors. (Aldi at el 2016)''.
DeleteRemuneration can encourage workers to do their work, that can automatically increase productivity (Xanthopoulou et al, 2009). Increase or change in Remuneration will increase long term productivity that is profit, that may be increased or will raise or make it faster in productivity (Calvin, 2017), also rewards can increase employees’ confident level in their work. In other words, based on their sincerity and talent in work employees can be encouraged by increment (Baker et al, 2007). Generally, if an employee gets an opportunity to show their ability to specific task easily than others can increase their mental ability, that's encourage their confident level towards work. Systematic plan for Compensation is hypotheses that any organization can make. (Christensen, 2011) Also fair Remuneration can encourage employees to bind with their organization, also encourage them to accept any agreement among workers also with business, the basic assumption is money can directly impact in work or productivity. Most of the superiors believe that satisfied Remuneration or salary can force out employees work, increase benefit and make them to finish their work quickly (Bauer et al, 2006) To force out work, to maintain or encourage talent of the employees proper or Systematic compensation method is the main key or impact in each association.(Coyle and Conway, 2004).
ReplyDeleteThanks Saravanakanth for the further and deep addition for my blog. as you can see your comment is an added argument for my heading and it further strengthen my argument. money performing a vital part in employee motivation and it will be a basic motivational factor for all. however i also agree on ''Remuneration itself only does not influence the employee’s performance but remuneration have considerable amount of influence than any other factors. (Aldi at el 2016)''.
DeleteAs cited in Calvin (2017), Hellriegel, Jackson and Slocum (1999) defined performance as the level of an individual's work achievement after having exerted effort. Job performance can be viewed as an activity in which an individual is able to accomplish the task assigned to him/her successfully, subject to the normal constraints of reasonable utilization of the available resources ( Dar et al. 2011). Further to this, Maicibi (2005) defines remuneration as pay or reward given to individuals for work done. Maicibi (2005) further identifies and claims the main indicators of remuneration as follows:
ReplyDelete1. Basic Salary
2. Wages
3. Health Schemes
4. Pension Schemes
5. Transport Allowances
6. Overtime Allowances
7. Responsibility Allowances (when applicable)