Essentials of Organizational Behavior, 14/e

Using Extrinsic Rewards to Motivate Employees

As we saw in Chapter 3, pay is not the only factor driving job satisfaction. However, it does motivate people, and companies often underestimate its importance. One study found that while 45 percent of employers thought pay was a key factor in losing top talent, 71 percent of top performers called it a foremost reason.49

Given that pay is so important, will the organization lead, match, or lag the market in pay? How will individual contributions be recognized? In this section, we consider (1) what to pay employees (decided by establishing a pay structure), and (2) how to pay individual employees (decided through variable-pay plans).

What to Pay: Establishing a Pay Structure

There are many ways to ...