A situation in which I engaged in a set of behaviors in which compensation played a major role occurred over the summer, when I was deciding between two job offers. The first job was with a company where I had interned the year prior. I really liked the people there, but my pay was lower than my friends’ in similar roles at other organizations. The second offer came from a rival firm, with a 20% pay boost and an enticing benefits package that led me to accept it. My thought process in the matter was based on equity theory, as explained in the lecture Outline- Compensation. This outline states, “employees make comparisons between themselves and their coworkers with regards to inputs and outputs … When ratio is unequal, attempts are made to restore balance” (Outline-Compensation). This relates to my situation: at the original company, the input was high because I worked on intense projects for many hours, but the output was low because I was paid below market value. To balance this situation, I switched companies to even things out.
Another way compensation affected me at this previous job was the lack of motivation. At the first company, I was underpaid, so I sometimes slacked off because I wanted more. This dip in effort is explained in Steven Kerr’s article “On a Folly of Rewarding A, While Hoping for a B”. Kerr highlights that when rewards don’t align with desired outcomes, people adapt rationally, so when I was getting underpaid, I acted accordingly by not working as hard. Overall, my switch to the rival company can be attributed to increased extrinsic and intrinsic rewards. The second organization provided extrinsic compensation through a pay bump and intrinsic reward through a feeling of motivation and pride in my job. Through these incentives, my motivation and behavior in switching companies are displayed.
Cieri, Mike. Outline- Compensation. Mgmt 553: Human Resources Management, Oregon State University. Canvas, Compensation.
Kerr, Steven. “On the Folly of Rewarding A, While Hoping for B.” The Academy of Management Executive, vol. 9, no. 1, Feb. 1995, pp. 7–14.
