Human resources within an organisation may represent the most of import resource of the organisation. As such it seems that the ways employees are motivated and rewarded for their work could be an of import factor act uponing the organisation ‘s success. Research has brought about a figure of wages system theories which focus on employee motive for the intent of organisational success.
Based on several theoreticians, Maslow, Herzberg, Edwin Locke, among others, this paper will research the type of wages systems used in an organisation and measure the benefit of these for the concern. It argues that organisational success depends upon the equal use of both, extrinsic and intrinsic wages systems. Touching upon the different theories it will associate these to both, organisational civilization and organisational aims. Besides discussed will be the extent to which different wages systems may take to employee attitudes of individuality and the function it could play in group behaviour. The paper will reason that a combination of intrinsic and extrinsic wages systems is of importance.
As Armstrong ( 1996, p.4 ) points out, “ a wages system consists of fiscal wagess ( fixed and variable wage ) and employee benefits, which together comprise entire wage. The system besides incorporates non-financial wagess ( acknowledgment, congratulations, accomplishment, duty and personal growing ) ” . From this it can be seen that a wages system is based on presenting employees on their attempts within the concern in signifier of pecuniary or non-monetary benefits, pecuniary benefits being salary and rewards, and non-monetary benefits being for case acknowledgment and perchance flexible working hours. Therefore the wages system acts as a motive scheme, forcing employees to execute efficaciously with a wages end in head. Alternatively it can be seen as a mental or behavioural scheme, as the wagess and their benefits would be chosen to direct employees towards accomplishing the professional aims. The following are the different wages systems an organisation can take from.
Intrinsic Wagess are separately based wagess acted upon a end of self-development of accomplishments, cognition every bit good as experience. Leting employees to research their possible further to accomplish self-actualization without outlook of good wagess but merely because they wish to and bask making it. It could be said to be a spontaneous award as Ryan and Deci ( 2000 ) as cited in Wlodkowski ( 2011 ) . “ Intrinsic motive is entailed whenever people behave for the satisfaction inherent in the behaviour itself ” . Intrinsic wages falls on a figure of motivational theoreticians based theories.
For case, Douglas McGregor is responsible for the theory X and theory Y. While Theory X states that workers do non like work, for Theory Y he states that, “ the higher-level demands of regard and self-actualization are go oning demands in that they are ne’er wholly satisfied. As such, it is these higher-level demands through which employees can best be motivated ” ( Douglas McGregor, 1960 ) . Therefore it appears that the organisational wages system should be built in a manner that allows the satisfaction of higher degree demands: it should further intrinsic motive.
David McClelland, responsible for the McClelland theory, states that employees are self-motivated based on self-growth desires and accomplishments. Accoring to McClelland ‘s theory of demands, there is three demands focal point, viz. : accomplishment, power, and association ( Robbins, 2009 ) . This could intend giving employees undertakings that empower and challenge them to better and one time they feel more involved it might actuate them to make better. Example techniques are occupation enrichment and occupation rotary motion.
Abraham Maslow, popular for the Maslow ‘s hierarchy on demands theory, saying worlds are motivated by self-internal demands other than pecuniary wagess, “ He believed that people are inherently good, are free to move, and possess limitless potency for acquisition, growing and development ” , ( Seel, 2011, pg.1472 ) . Therefore, extrinsic wagess entirely would non be sufficient for organisational success.
It appears that non all employees are driven by pecuniary wagess but instead by the desire to larn, the want to transcend their possible, to better themselves, and to be empowered by the duties and responsibilities bestowed upon them. An illustration for this would be people who volunteer in non-profitable organisations in order to derive the on the job experience, to develop and to add to the accomplishments they already have.
Extrinsic Wagess are good wagess that can be displayed for work good done and therefore act as incentives. They prove employees are more efficient when there is a compensation for their work, these involve pay, publicities handiness, acknowledgment, “ extrinsic motive, which means being moved to make something because of some specific honoring result ” , ( Bramer, 2007, p.131 ) . This wages theory can be based on a figure of bookmans, but most notably on Vroom ( 1964 ) and his Expectancy Theory which argues that “ motive depends on person ‘s outlooks about their ability to execute undertakings and receive wagess ” ( Mukherjee, 2005, p.120 ) . Thus the theory is extrinsic oriented, for employees are motivated by results and wagess other than self-driven desires.
Therefore there is a direct nexus between wages system and employee public presentation, which organisational success to a big extend depends upon. Organizational success may be defined as the success of the concern, connoting any set end an organisation sets out to accomplish. These ends can be internal and external or fiscal and non-financial ends, dependant on the set aim. With the concern universe invariably altering, organisations are forced to accommodate, which leads to alterations of the set ends as good. These alterations and versions an organisation needs to undergo require flexibleness in employee public presentation, i.e. working excess hours in periods of high demand, which is to be facilitated through an efficient wages strategy. In this manner, while organisational success is linked to the organisational aims, its mission and its civilization, these are shaped and determined by a wages system that drives employee public presentation.
For case, the organisational aims give employees every bit good as employers lucidity on the organisation ‘s ends or at least their outlooks. To accomplish this, organisations are meant to be willing to put on the resources, which in this instance are the employees, to accomplish set end. “ Human resource direction is peculiarly concerned with all the activities that contribute to successfully pulling, developing, motivation, and keeping a high acting work force that consequences in organisational success. “ , ( Sim, 2002, pp.2-3 ) .
A wages system that drives employee public presentation has an consequence on organisational civilization, which in bend is of import, as “ a positive civilization can work for an organisation by making an environment conducive to public presentation betterment and the direction of alteration ” ( Armstrong, 2000, p.33 ) .
Dependant on these factors, organisations could be able to choose appropriate wages systems to actuate employees to drive the organisation to success. Yet different concern organisations are involved in different concern Fieldss, which mean that non all reward systems can use to all concern organisations. Dependent on the nature of the concern whether a service based sector concern or a production based concern, organisations are to be strategic on the honoring system they put in topographic point, through strategic options that can assist the organisation accomplish its ends within its competitory environment, ( Daft, 2009 ) . The wages system should actuate employees, from which in return, employees will demo trueness and committedness to the organisation and taking the organisation to success by making its set ends. The usage of intrinsic wagess, by enriching and lending to the employee ‘s professional growing in signifier of feedback on their public presentation, can take to organisational success, as “ employees who feel they are recognized for first-class public presentation outperform companies whose employees do non ” , ( Deeprose, 2007, p. 5 ) . Such wagess can be good adapted by organisations with McGregor ‘s theory Y mentality directors. With these wagess being linked to occupation enrichment and occupation rotary motion, this will sharpen the employee ‘s accomplishments and add new 1s to the 1s the employee already has. This could assist to insulate the organisation from accomplishment deficits and avoid surplus costs such as enlisting and preparation. Thus, an intrinsic wages strategy may let the organisation to be successful in holding skilled human capital, cut down organisational cost and maintain quality in their production.
Extrinsic wagess on the other manus, “ doled out by supervisors to guarantee that work is done decently and that the regulations are followed, include things like wages, fillips, committees, fringe benefits, benefits, and hard currency awards ” ( Thomas, 2002, p. 6 ) . The usage of these wagess is more in sync with organisations accommodating McGregor ‘s theory X, stating employees are self-motivated. With such wagess in topographic point, employees are to be every bit productive as expected since they are clear on the accomplishments of their attempts. Yet with extrinsic wagess the “ organisation has big grade of control over the nature and pecuniary cost of the wagess with which it intends to counterbalance the attempts of its employees and can therefore pull strings the usage of these external wagess to impact employee behaviour ” ( Erasmus, 2008, p.476 ) . Thus it may be necessary for organisational success to accommodate and take the wages system to run into employment worlds and demands. The acceptance of systematic wages systems has led to most organisations to go more individualistic in their wagess, as “ typical wages and acknowledgment systems favor single and functional work ” ( Earley and Gibson, 2002, p.161 ) . And what these techniques similarities are that wagess are based on workers standing out as single winners over their colleagues ( Cox, 1994 ) , where those who are able to run into the needed criterions are able to be rewarded and those who can non are non. Such ‘individualism ‘ might hold a dividing consequence within the organisational clime and civilization.
With intrinsic wagess, where the whole centralisation of awards is spontaneous, these wagess are self-explanatory as to how they are individualistic, employees seek to better themselves for themselves, “ These people frequently put their ain success through competition over the good of the group, and they tend to measure determinations in footings of how those determinations affect them as persons ” ( Shong, 2004, p.72 ) .
Equally much as this has led to positive growing of employees ‘ accomplishments and productiveness, it has besides had its drawback, as the usage of both wagess in an individualistic mode has led to differences among employees, “ an individualistic system values star performing artists and has an imbalanced wage profile ” ( Keidel, 1995, p.78 ) . Thus an individualistic attack to the wages system may take to resentment, particularly when employees attend to the same undertaking but are been rewarded otherwise. Honoring of single accomplishment breed a civilization of competition and struggle ( Axelrod and Johnson, 2005 ) . This could take to some employees, mean performing artists, being laid off since their attempts are clouded by the high acting employees. For the “ individualistic system a few “ heavy batters ” are important, while virtually everyone else, particularly those whose public presentation is mean or below norm is expandible ” ( Keidel, 1995, p.79 ) . However, when “ reward systems are designed in such a manner that subsidiaries could gain more than superior this would non be tolerated ” ( Brewster and Harris, 2004, p.123 ) . Therefore when lower degree employees are being paid more than the higher up it could turn out fazing for those employees with more experience and more making. This could impede the success for organisations.
The use of the wages system within organisational scheme could convey a corporate dimension to a apparently individualistic system. “ Directors ought to make what they can to make an organisational civilization that is supportive of collectivized and squad based values ” ( Earley and Gibson, 2002, p.161 ) . Extrinsic wagess ( payment by consequences and piecework strategies ) can be attributed to group work force public presentation. By utilizing “ group inducement strategies which tend to work on the same rule as single strategies, either through measuring of physical end product or through extra payments for clip saved on undertakings ” ( White and Druker, 2000, p.111 ) , organisations are able to non merely actuate one employee to be productive for the organisation ‘s success but groups of employees. Further, intrinsic wagess such as acknowledgment, congratulations and positive feedback, other than being done separately, can be done jointly. “ The intrinsic incentives can work every bit good in squads that feel they are carry throughing something worthwhile and have a proper grade of liberty to pull off their ain personal businesss and to do operational determinations ” ( Armstrong, 2000, p.27 ) . By acknowledging groups ‘ inputs, attempts and consequences, and giving feedback for farther betterments the group will experience as portion of the organisation and strive to accomplish other than experiencing as merely portion of the work infinite.
Despite the organisational and employee benefits from squad based reward systems, the utility of group wages systems might necessitate to be regarded critically, as “ the best beginning of security for persons is their market value and they will therefore prefer public presentation related wagess ” ( Brewster and Harris, 2004, p.125 ) . Therefore individualistic employees will experience the demand to stand out to demo their worth, taking to a group instability, because they might “ experience strongly that their wage should be related to their ain attempts instead than being dependent on the public presentation of other people ” ( Armstrong, 2002, p.25 ) .
Equally much as employees might be efficient and successful as a group, there will be no cognition of their betterment separately, “ inequality dimension believe people vary in their ability and accomplishment ” ( Brewster and Harris, 2004, p.123 ) . With this in head, most employees could be acquiring more work done than others and at the terminal of the twenty-four hours be rewarded the same.
Reward systems are indispensable to the organisational success, no adult male or adult female would accept her attempts non to be rewarded. “ Few psychologists would dispute with the impression that people act in the way of their ain perceived self-interest, hence organisational wages systems ” ( Keidel, 1995, p.58 ) . For organisations to be successful, both, extrinsic and intrinsic wages systems should be put into drama. Much as employees would be motivated by being recognized and praised for their work while breaking themselves in their public presentation, other wagess are indispensable to maintain their liquors up and set them in a good off place to go on being productive without concern. Theorists like Herzberg and Maslow support this fact with their two factor and hierarchy of demands theory.