Compensation Management – Lawler Concentrated on 7 areas that affect pay
1) Motivating Performance –
a. Money is still a strong motivator
b. Studies show that effective incentive systems can improve the motivation
of individuals to perform by as much as 44%
c. A key determinant of the effectiveness of a pay system is the way
performance is measures
2) Identifying Valued Rewards –
a. Pay is an important motivator, partially because it leads to other rewards,
such as status and prestige.
b. Pay means different things to different people; management has to
understand how and why it is important to individuals.
3) Relating Rewards to Performance –
a. It is essential for employees to perceive a connection between their pay
and their performance
b. This relationship is the more effective the closer the tie is between the
reward and the performance
c. The common yearend bonus does little to make individuals aware fo any
4) Setting Performance –
a. Reward systems often fail because the goals are simply set too high.
b. Effective goals have to be acceptable and attainable.
5) Motivation and Punishment –
a. Individual’s motivation to perform is strongly influenced by the
consequences of missing set objectives
b. If the consequences are particularly negative, an individual may not even
attempt to set succeed
c. Organization that encourage risk taking in managerial decision making
6) Motivating Skill and Knowledge Development –
a. A crucial issue for an organization is to develop the right mix of skils for
its business objectives.
b. The pay system chosen has to reinforce the development of the skills
needed, and it has to work for all level of the organization