Stated simply, Herzberg postulated that two groups of factors, “Motivators” and “Hygiene” factors, governed employee behaviour within organisations. Motivators (achievement, recognition, responsibility, promotion and career growth, and the intrinsic content of work) had a major impact on employee behaviour. The other group – the hygiene factors – had impact only insofar as, if they were not satisfied, this resulted in demotivation. But, this apart, they had little, or limited real motivational impact. Under this heading Herzberg included company policies and administration, work team relationships, supervision received and, interestingly, pay and benefits.
We have since moved on. Today, the
rewards received by employees are seen as exerting strong and even profound influence on employee behaviour and consequently on employee contributions’ to organisation performance. While a pay strike by guards at Dachau may have been unthinkable, Zwelinzima Vavi’s COSATU membership have very different views.
Perhaps the tipping point in understanding
the role of rewards in influencing employee behaviour emerged from the publication of agency theories in the 80’s. Such theories include the notion that the contribution that an employee makes, or is prepared to make to an organisation exists in a dynamic balance or inter-relationship with the inducements provided to him or her, to do so. (The contribution – inducement balance).
Consider, for example, the following
introductory extract from the 1989 article “Agency Theory : An Assessment and Review” by Kathleen Eisenhardt of Stanford University.
One day Deng Xiaoping decided to take his grandson to visit Mao. “Call me Grand Uncle”, Mao offered warmly. “Oh, I certainly couldn’t do that Chairman Mao”, the awestruck child
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replied. “Why don’t you give him an apple”, suggested Deng. No sooner had Mao done so than the boy chirped, “Oh thank you, Grand Uncle”. “You see”, said Deng, “what incentives can achieve”.
To suggest that remuneration theory and practice has increased greatly in complexity over the past decade or two, is to state the obvious. Contemporary management theory and practice requires boards and managers to apply their minds to an array of reward- related issues which received scant attention as recently as 25 years ago. They include, for example:
• designing pay scales which are perceived as internally equitable and yet still provide sufficient fixed pay inducement to attract scarce and mission-critical skills; • balancing rewards for skill and competence with those for superior performance; • achieving alignment at executive level between pay package composition (make-up) and the organisation’s mission, strategy and culture, and shareholder interests; • developing sufficiently robust pay policies to deal with the executive mobility (expatriate placements and secondments) required in multi-national organisations; • designing versatile pay structures which, for example, allow for dual career path requirements for executive management and top level professional staff; • complying with the governance and disclosure requirements expected of all major employers in today’s economy; • ensuring that while high pay and wealth
differentials are a reality in South Africa today, equity plans are in place to prevent excessive escalation in this trend.
The extent and severity of some of these issues is illustrated graphically in the inserts.
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March 2012 | Management Today 11
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