Managing People, 2nd Edition

8   Pay is never neutral

Pay and leisure

In Chapter 3, we briefly touched on the debate over whether pay or job satisfaction motivates people; now it is time to look at pay on its own. It is interesting how easy it is for a legitimate opinion to overlook the obvious. The advocates of pay as the prime motivator are, of course, right and wrong. Pay does motivate in lots of ways, but will people go on increasing this effort endlessly as more and more increments of pay are added?

Common sense tells us that there must be a physical limit, but does it stop before that? Yes, it does. There must come a point when you want to spend your earnings. In other words, at some stage, effort and leisure begin to compete. That is why the labour supply curve eventually ...