By Chantel Schirmer

When it comes to compensation money can speak volumes to employees. We know the weight of money is significant when an employee chooses to take a position or promotion. In fact, Dave Smith says it this way “It’s not just a number; it’s an emotional measure reflecting how valued an employee feels by their employer” (Smith, 2015).

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A few years ago I remembered hearing the employees share about the $500 incentive per pay period to the employee who got the most wine club sign-ups. The energy as you can imagine was electric. A “$500” bonus to a paycheck was significant. It didn’t take much to enforce the motivation of employees to reach out to customers to grow the “wine-club” sales. This Monetary incentive is an example of direct compensation and extrinsic rewards that ultimately motivated the increased performance of employees (Swift).

This experience showed the power of money and extrinsic rewards which not only motivated individuals but also drew in the team dynamics of the employees togetherness as well as increased customer service which increased sales and overall profits for the company. Additionally, the extrinsic reward also indirectly positively affected the intrinsic rewards through intangible efforts such as psychological where the compensation also met the needs of employees with family to further care for their well being and the boost of team dynamics which could be said to increase the social effects.

Part of the reason the employees’ behavior as well as mine, was able to be influenced to get more wine club sign-ups was that the internal equality of the jobs was considered to be attributed to distributive fairness. We all worked the same level of job, and same pay, so the compensation of input/output of the employee who got the most made sense. Ultimately in this case the perk of that $500 bonus was enough to keep the employees motivated to work hard, increase sales, while also knowing someone was getting a significant boost in their paycheck was a case of seeing the extrinsic rewards directly impact the individual employee, the entirety of team togetherness, and improve the company’s overall productivity. The increased motivation of behavior made the pay out for the employer worth it.

Photo by Alexander Mils on Unsplash

References:

Smith, D. (2015). Most people have no idea whether they’re paid fairly
Links to an external site.. Harvard Business Review, 93(12), 1-3 

Swift, M. (n.d.). W8 Lecture 1 – Introduction to Compensation. HRM. MGMT 453×400

Swift, M. (n.d.). W8 Lecture 2 – Pay Structures. HRM. MGMT 453×400

Swift, M. (n.d.). W8 Lecture 3 – Current Issues in Compensation. HRM. MGMT 453×400

Swift, M. (n.d.). W8 Lecture 4 – Overview of Incentives. HRM. MGMT 453×400

Swift, M. (n.d.). W8 Lecture 5 – Designing Incentive Programs. HRM. MGMT 453×400