Payment Systems and the Influence of Motivation

Pay, effort, performance and rewards are core issues in the employer-employee relationship. The first reference to measure work dates back to the printing trade during the fourteen-century. From the employees’ perspective, policies regarding wages, salaries and other earnings have a major impact on their standard of living. Pay is often considered as a sign of status and success and, consequently, employees attach great importance to pay decisions when they evaluate their relationship with the organization. As a result, pay decisions are carefully structured and managed in any organization.

From the employer’s point of view, pay is a powerful tool for furthering the organization’s strategic goals. Pay and work measurements are elements of control and motivation for people at work. According to Armstrong ; Murlis (1994), the definition of Reward Management is the process of developing and implementing strategies, policies and systems which lead to organisational objectives by obtaining, keeping and increasing the motivation and commitment of employees. Reward is one method that companies use to communicate with employees about their value and contribution to the organisation.

Effective reward management results in the optimisation of staff costs, while individual and organisational performance can be improved. The process involves recognising that employees are motivated by a variety of factors, including, pay, benefits, personal and professional development and the work environment. Appropriate integration of these elements to satisfy both employer and employee is a complex task requiring specialist expertise. In a Human Resource Management context, reward management cannot be reduced to simple rewards and incentives, such as, salaries, bonuses and commissions.

It is also concerned with intangible benefits including the ability to satisfy the employees’ psychological needs. It is illustrated later that this has a direct bearing upon worker motivation. Critical analysis of each of these systems was undertaken in order to evaluate the appropriateness of each payment system within the modern business environment. A step-by-step analysis of each system was completed, with relevant case studies and personal experience placed within the text acting as further examples of the advantages and disadvantages of the various payment schemes.

The latter portion of the portfolio contains an appraisal of a number of Theoretical models relating to human motivation, and specifically worker motivation. These are cited to add a further dimension to the analysis and to clarify various issues that were identified during the earlier stages of the portfolio. From this critique, the case studies and the step-by-step analysis of each system, conclusions are drawn that illustrate an understanding of the various payment systems under examination. When a reward system is based according to the number of hours worked it is referred to as a payment system based on time rates.

This system rewards experience rather than performance. Therefore, the employees will receive an incremental award normally on an annual basis assessed on time served in the job. This leads to the emphasis being placed on the value task (the work system process) and not on the value of skills and abilities the employee brings to the job, or in the quality or quantity of their performance (McKenna, E. and Beech, N. 2002). Time-rates payment system is used when employees are paid for the amount of time they spend at work.

This is the most common method of payment in the UK. Under the time-rates payment system the employer controls work pace and performance by direct supervisory control or on the condition their employees complete the task on the basis of “responsible autonomy” (Friedman, 1977 cited White 2000, p 110). These facts lead to the reason TRP is suitable for the type of job where pace of work is not the key to optimal performance, or where the output is controlled by machine/process rather than by operator/human (Fernie and Metcalf, 1998: 34 cited White 2000, p 110).

The usual form of time rate is the weekly wage or monthly salary. Usually the time rate is fixed in relation to a standard working week, for example, 35 hours per week. The employment contract for a time-rate employee will also stipulate the amount of paid leave that the employee can take each year. Time worked over this standard is known as overtime. Overtime is generally paid at a higher rate than the standard time-rates pay although many employees who are paid a monthly salary do not get paid overtime.

This is usually the case for managerial positions where it is generally accepted that the hours worked need to be sufficient to fulfil the role required. It could be argued that the TRP system has provided the baseline while other dimensions of wage system are developed, for example PBR is related back to TRP, where it is calculated on the basis of time saved in doing a particular job. Extending working time provides a mechanism for increasing output and enhances earning through overtime-pay (White, G. and Druker, J. 2000).