COMMERCE 2BC3 Lecture Notes - Lecture 24: Equity Theory, Harvard Business Review, Motivation
9 Nov 2017
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Compensation costs are largest cost category in most firms. Varies by industry - highest in service organizations (e. g. , hospitals, colleges/universities) Total compensation = direct pay + indirect pau. Pay signals what is valued by an organization. Variation in pay due to individual performance, etc. Optimal compensation strategy is one that adds the most value to the firm. Two types of social comparisons - external and internal. Compare pay to those with similar job in other organizations. Any type of financial reward provided when certain specified performance results occur results occur. People will be more willing to do certain things if doing them results in (more) money. Get job, work harder, work more, do better, etc. Money is the crucial incentive no other incentive or motivational technique even comes close to money with its respect to its instrumental value (locke et al. , 1980) Called idea that people are primarily motivated by money a myth
