Human Resource Management, 3rd Edition

Chapter 11

Motivating Employees Through Compensation

A MANAGER'S PERSPECTIVE

LYNETTE LOOKS OVER THE NUMBERS ONE LAST TIME TO MAKE SURE THAT HER CALCULATIONS ARE CORRECT. TOMORROW SHE WILL MEET WITH A HUMAN RESOURCE SPECIALIST TO TALK ABOUT HER COMPENSATION RECOMMENDATIONS. MAKING DECISIONS ABOUT PAY IS ONE OF THE THINGS SHE HAS FOUND MOST DIFFICULT SINCE BECOMING A PARTNER IN THE CONSULTING FIRM. THIS YEAR LYNETTE IS PLANNING TO RECOMMEND THAT HIGH PERFORMERS GET A MUCH LARGER RAISE THAN LOW PERFORMERS. SHE HOPES THIS WILL HELP MOTIVATE ALL EMPLOYEES TO STRETCH AND IMPROVE THEIR PERFORMANCE. YET, SHE ALSO KNOWS THAT HER FIRM HAS FALLEN SOMEWHAT BEHIND COMPETITORS WHEN IT COMES TO COMPENSATION. WILL GIVING HIGHER RAISES TO TOP PERFORMERS MEAN THAT AVERAGE PERFORMERS WILL BE MORE LIKELY TO QUIT AND MOVE TO ANOTHER FIRM? DOES IT REALLY MATTER AS LONG AS THE TOP PERFORMERS STAY? WILL BIGGER DIFFERENCES IN PAY DECREASE COOPERATION AMONG EMPLOYEES?

As she contemplates these questions, Lynette begins to think about her own pay. Since making partner she knows that her compensation is higher than most employees of the firm. However, she feels some frustration knowing that there are other partners who work fewer hours but will make three times more than she will this year. Lynette wonders if it is fair that pay is based largely on number of years with the firm rather than current productivity. ...