The most straightforward example of when compensation influenced my behavior occurred when I was in the restaurant business. For months, I’d picked up extra shifts training new hires, filling in for busy stretches and staying late to make things run smoothly. I really liked my team, and I wanted the store to do well, so I was putting in a lot with no immediate benefit.
Then transfer a new employee came and told me he was getting paid more an hour than I was, but for no experience. I asked my manager why, and he told me that the higher rate was designed to attract “better applicants.” To hear that was to be made invisible. For the first time I knew my remuneration did not match what I was contributing.
This reaction directly ties to equity theory, which holds that people compare their inputs and outcomes to others. If they feel like they don’t get paid enough, motivation decreases (Smith, 2015). And that’s exactly what happened to me. I did come to work, but I stopped going the extra mile. I didn’t raise my hand for extra assignments or turn on the jets when something went awry. And I directed elsewhither the effort expended to make me feel that I was worth it.
This situation also relates to Kerr’s theory in “On the Folly of Rewarding a While Hoping for B.” My boss hoped I’d exceed expectations but instead rewarded new employees who were less competitive than those with experience (Kerr, 1975). The reward system fostered what the organization didn’t want. As Buckingham & Coffman assert in “Create Heroes,” recognition and a fair wage communicate value, and when employees fail to feel valued, they withhold effort.
In retrospect, the problem wasn’t just money it was the message that pay sent. Remuneration is about dignity, equity and gratitude Published: Compensation conveys a sense of respect. When pay is equal to performance, motivation of employees goes up. When it doesn’t, behavior shifts rapidly (Greenhouse & Strom, 2014).
Buckingham, M., & Coffman, C. (2016). First, Break All the Rules (Chapter 6: Create Heroes).
Kerr, S. (1975). On the folly of rewarding A, while hoping for B. Academy of Management Journal.
Smith, D. (2015). Most people have no idea whether they’re paid fairly. Harvard Business Review.
Greenhouse, S., & Strom, S. (2014). Paying employees to stay, not to go. The New York Times.
