Does Putting a Price Tag on Employees Impact Their Performance? Let's Discuss!

Hi all,

Placing a monetary value on employees will affect their performance. Is this true? I request the group to share different views on this issue and discuss how employee performance can be increased.

Regards,
Sridhar
MBA
ICFAI Business School
Chennai

Hi Sridhar,

This is Hema, an HR consultant.

This is absolutely true. However, situations can be different:

1. Never have disparity in salary structure for the same qualification or position.
2. Never try to quantify monetary ceilings on performance.

Problems arise only in cases where a more knowledgeable and capable person happens to report to a less capable one. Once this is sorted out, money need not be the motivating factor.

We have a system of choosing the best-performing teams every month and publishing it in our journal, which has yielded better results than salary hikes. If a person is only looking for a salary hike as a result of their appraisal, then there may be something wrong with their motivational levels, and it should be addressed separately with them. It is better not to fix increment slabs based solely on performance.

Thanks,
Hema

Hi Sridhar,

Monetary alone is not the factor for ensuring high performance from employees..it can at times lead to uneasy questions if they come to know the others salaries( trust me grapevine tends to be very strong)..better performance is the prerogrative of the managers..as mentioned below..

Eight Things Managers Need to Do the First 90 Days on the Job

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Congratulations you have just been promoted to supervisor. Now what do you do? Whether this is your first supervisory position or even if you are a seasoned manager, you should proceed with your transition carefully. It begins with a plan and proceeds one step at a time. Here are a few ideas to consider:

Identify the informal leaders-Informal leaders will make you or break you. Informal leaders are those who are not in formal positions of power or authority, but have the ability to influence actions and attitudes over those in your organization. Keep in mind that during your transition, they have more power than you do. Sometimes the informal leader has the respect of others . . .or on the other hand they are major irritants. Nonetheless, try to make them your allies so they don't sabotage what you are trying to do. If you work in a unionized environment make sure you keep union officials informed and involved as much as possible.

Study past success-Discover what major accomplishments your group is proud of. A new leader will gain respect quicker when he or she recognizes and appreciates what the group has done in the past. By recognizing past accomplishments you will build a solid foundation for the future.

Delay making major decisions-Don't allow yourself to be pressured in making major changes or big decisions too soon. If possible, take a low-key approach until you are ready. Gather information, see how things are done and get to know your people first before making major changes. Once you start gaining "acceptance," and begin to understand why they do what they do, then they will be more supportive and willing to support your decisions and style of leadership.

Do one on one interviews-In every leadership position I held I invested time in interviewing everyone I could—a time consuming process that paid dividends. This allows you to establish yourself quickly, gain respect, build trust faster and learn important information. During the interviews ask these questions:

-What can I do to help you accomplish your job?

-What is keeping you from doing your best?

-What makes you feel appreciated?

-What did my predecessor do that we should continue?

-What did my predecessor do that we should stop?

-Are you considering leaving this job for another? Why?

-What do you see as my role in this organization?

-What direction do you think we should go?

Start solving problems-With information gained from the interviews begin making changes. Start with improving productivity related issues affecting your group. This will show them you are serious about improving their worklife further improving your reputation and credibility as a supervisor.

Conduct a meeting-Avoid having a meeting until you have something specific to say and enough background information to speak with authority. At the meeting highlight their past successes, some of the issues or problems affecting the group and what you plan on doing. Talk about some of the changes you are considering and why. Here are some other items to cover in this meeting:

Your background and experience

Just enough personal information to show you are human

Your expectations

Your pet peeves

Your leadership style

How they should approach you with problems

What to do with new ideas and suggestions

Set Goals-Now that you have established yourself as reputable and knowledgeable it is time to set goals for the future. There are many ways to set goals, but the main thing is don't do it in the dark. If you followed these steps goal setting will be a piece of cake. Involve your people as much as possible. Let them help you and your role as supervisor will be easier and more effective.

Cheerio

Rajat Joshi

Hi Hema,

"Never try to quantify monetary ceilings on performance." But the fact is that in many organizations, monetary slabs are purely driven by KRAs (key result areas) which in non-IT companies are just numbers. By sheer market and shareholder pressures, HR is also forced to toe the line of the organization being purely 'number-driven'. In such situations, what can HR do to infuse appreciation/monetary benefits for the quality of the job done along with, of course, quantity (the numbers)?

Hi,

That's true, and that is the reason why we are not able to extract the full performance from the employees. As you say, in many non-IT companies, the offer is based on what the candidate demands and not on the job specifications. It means if the candidate settles for a lower salary, that's it... Confusion starts when he enters the company and finds that persons of his caliber are drawing a better salary than his. The cases are many, and this is the reason why appraisals fail.

We need to eliminate parity in the salary structure and match it perfectly to the job descriptions across the organization. Once this is established, you can have more meaningful appraisals with impressive results.

Let me have your feedback.

Hi Hema,

It all depends on the type of industries. Yes, putting the employee's name on the journal or putting their name on the notice board will definitely boost the morale of the employees, but money is also one of the motivating factors. Few employees are motivated by achievement, recognition, the work itself, responsibility, advancement, and personal growth. Monetary and non-monetary incentives have to run parallel to each other.

Why do employees work? It's because of money. Every employee has a life to live and desires to be fulfilled on all fronts.

Incentives should include both recognition and monetary rewards. Employees' performance will improve if you have both. It also depends on the industries you are working in.

Not every employee is interested in monetary rewards because basic needs must be fulfilled.

Please read this article:

1990's adapted hierarchy of needs, including transcendence needs:

1. Biological and Physiological needs - air, food, drink, shelter, warmth, sex, sleep, etc.
2. Safety needs - protection from elements, security, order, law, limits, stability, etc.
3. Belongingness and Love needs - work group, family, affection, relationships, etc.
4. Esteem needs - self-esteem, achievement, mastery, independence, status, dominance, prestige, managerial responsibility, etc.
5. Cognitive needs - knowledge, meaning, etc.
6. Aesthetic needs - appreciation and search for beauty, balance, form, etc.
7. Self-Actualization needs - realizing personal potential, self-fulfillment, seeking personal growth and peak experiences.
8. Transcendence needs - helping others achieve self-actualization.

Please read this article for your information:

True motivators were found to be completely different factors: achievement, recognition, the work itself, responsibility, advancement, and personal growth.

People commonly argue that money is a primary motivator. It's not. Surveys repeatedly show that other factors motivate more.

For example: a survey by Development Dimensions International published in the UK Times newspaper in 2004 interviewed 1,000 staff from companies employing more than 500 workers and found many to be bored, lacking commitment, and looking for a new job. Pay actually came fifth in the reasons people gave for leaving their jobs. The main reasons were the lack of stimulating jobs and no opportunity for advancement - classic Herzberg motivators - 43% left for better promotion chances, 28% for more challenging work; 23% for a more exciting place to work; and 21% for more varied work.

Hi Hema,

It all depends on the type of industries. Yes, putting the employee's name on the journal or on the notice board will definitely boost the morale of the employees, but money is also one of the motivating factors. Few employees are motivated by achievement, recognition, the work itself, responsibility, advancement, and personal growth. Monetary and non-monetary incentives have to run parallel to each other.

Why do employees work? Because of money. Every employee has a life to live and desires to be fulfilled on all fronts.

Incentives should include both recognition and monetary rewards. Employees' performance will improve if you have both. It also depends on the industries in which you are working.

Not every employee is interested in monetary rewards because basic needs need to be fulfilled.

Please read this article:

1990's adapted hierarchy of needs including transcendence needs:

1. Biological and Physiological needs - air, food, drink, shelter, warmth, sex, sleep, etc.
2. Safety needs - protection from elements, security, order, law, limits, stability, etc.
3. Belongingness and Love needs - workgroup, family, affection, relationships, etc.
4. Esteem needs - self-esteem, achievement, mastery, independence, status, dominance, prestige, managerial responsibility, etc.
5. Cognitive needs - knowledge, meaning, etc.
6. Aesthetic needs - appreciation and search for beauty, balance, form, etc.
7. Self-Actualization needs - realizing personal potential, self-fulfillment, seeking personal growth and peak experiences.
8. Transcendence needs - helping others to achieve self-actualization

Please read this article for your information:

True motivators were found to be completely different factors: achievement, recognition, the work itself, responsibility, advancement, and personal growth.

People commonly argue that money is a primary motivator. It's not. Surveys repeatedly show that other factors motivate more.

For example: A survey by Development Dimensions International published in the UK Times newspaper in 2004 interviewed 1,000 staff from companies employing more than 500 workers and found many to be bored, lacking commitment, and looking for a new job. Pay actually came fifth in the reasons people gave for leaving their jobs. The main reasons were a lack of stimulating jobs and no opportunity for advancement - classic Herzberg motivators - 43% left for better promotion chances, 28% for more challenging work; 23% for a more exciting place to work; and 21% for more varied work.

Hope this will give you more input.

Thanks,

Shravan

Hi Sridhar,

It all depends on the type of industries. Few employees are motivated by achievement, recognition, the work itself, responsibility, advancement, and personal growth. Monetary and non-monetary incentives have to be parallel to each other.

Why do employees work? Because of money? Every employee has a life to live and desires to be fulfilled on all fronts.

Incentives should be both, like recognition and monetary rewards. Employees' performance will improve if you have both. It also depends on the industries you are working in.

Not every employee is interested in monetary rewards because basic needs need to be fulfilled.

Please read this article:

1990's adapted hierarchy of needs including transcendence needs:

1. Biological and Physiological needs - air, food, drink, shelter, warmth, sex, sleep, etc.

2. Safety needs - protection from elements, security, order, law, limits, stability, etc.

3. Belongingness and Love needs - work group, family, affection, relationships, etc.

4. Esteem needs - self-esteem, achievement, mastery, independence, status, dominance, prestige, managerial responsibility, etc.

5. Cognitive needs - knowledge, meaning, etc.

6. Aesthetic needs - appreciation and search for beauty, balance, form, etc.

7. Self-Actualization needs - realizing personal potential, self-fulfillment, seeking personal growth and peak experiences.

8. Transcendence needs - helping others to achieve self-actualization.

Please read this article for your information:

True motivators were found to be completely different factors: achievement, recognition, the work itself, responsibility, advancement, and personal growth.

People commonly argue that money is a primary motivator. It's not. Surveys repeatedly show that other factors motivate more.

For example: a survey by Development Dimensions International published in the UK Times newspaper in 2004 interviewed 1,000 staff from companies employing more than 500 workers and found many to be bored, lacking commitment, and looking for a new job. Pay actually came fifth in the reasons people gave for leaving their jobs. The main reasons were a lack of stimulating jobs and no opportunity for advancement - classic Herzberg motivators - 43% left for better promotion chances, 28% for more challenging work; 23% for a more exciting place to work; and 21% for more varied work.

Please read this basic theory:

Maslow's hierarchy of needs -

1. Biological and Physiological needs - air, food, drink, shelter, warmth, sex, sleep, etc.

2. Safety needs - protection from elements, security, order, law, limits, stability, etc.

3. Belongingness and Love needs - work group, family, affection, relationships, etc.

4. Esteem needs - self-esteem, achievement, mastery, independence, status, dominance, prestige, managerial responsibility, etc.

5. Self-Actualization needs - realizing personal potential, self-fulfillment, seeking personal growth and peak experiences.

Hope that this information will be useful to you.

Thank you,

Shravan

Hi Sonu,

You are absolutely right. Money is one of the motivators, and this cannot be the ultimate reward. The nature of the industry means a lot, and I was referring to the IT industry. Taking Indian factories into consideration, appraisal often translates to more money.

Your article is pretty good. Do keep in touch.

Thanks,
Hema

Hema is right on the dot. A better appraisal means more money for brick and mortar companies. The IT industry could be different.

I do agree that we need to look at the job descriptions and decide the salary structure. Right now, the desperateness with which recruitments happen in some of the non-IT engineering industries, invariably, it is the best "negotiator" who gets the best result irrespective of what the role specifications are or what the compensation level for similar roles in the organization.

Even in "multinationals" with local management, appraisal means more money. I have even listened to the "Head" saying - 'what is the point in giving a shield/non-cash award? Give them some cash and be done with it!'