The fallacy of trying to tie compensation to effort

All business leaders are constantly on the lookout for ways to increase employee production. For generations, it was thought there was a direct correlation between wages and employee output, meaning if you pay people more, they will work harder. While this position has some merit, especially for those individuals driven by a need to compete and win, it does not hold true for the majority of the working population of North America. To validate this position, let’s take a look at the science behind the facts by exploring two well known motivational theories; Herzberg’s Motivation-Hygiene Theory and Vroom’s Expectancy Theory.

Victor Vroom first proposed his Expectancy Theory while at the Yale School of Management in 1964. He said that “a person will decide to behave or act in a certain way because they are motivated to select a specific behavior over other behaviors due to what they expect the result of that selected behavior will be”. The simplified version of his theory is that people behave in a certain manner based on their perception of what they expect to happen because of their behavior. If a person doesn’t see a personal win for whatever action they are engaging in, there is no motivation for them to keep doing it.

There are two main applications for this theory in the workplace. First, employers must relate rewards directly to performance. Second, employers need to ensure those rewards are wanted or desired by the recipient. Just throwing money at employees in terms of reward and compensation is a waste of resources if the employee is not seeking extra income. What if the employee is seeking a different shift, a different work environment, a more challenging role, greater responsibility, or broader job responsibilities? The employee probably won’t turn the money down, but the cash will do nothing to drive the employee’s performance forward. On the flipside, merely promoting someone into a position of higher responsibility without providing any financial incentive will do little to demonstrate this promotion is a reward. This situation can lead employees to feel taken advantage of or disrespected by the employer.

Frederick Herzberg conducted his own research on what motivates employees and drives performance. He based his theory on Maslow’s Hierarchy of Needs. His position is that “individuals are not content with the satisfaction of lower-order needs at work, for example, those associated with minimum salary levels or safe and pleasant working conditions. Rather, individuals look for the gratification of higher-level psychological needs having to do with achievement, recognition, responsibility, advancement, and the nature of the work itself”.

Herzberg’s Motivation-Hygiene Theory was developed from data collected from interviews with a large number of engineers and accountants in the Pittsburgh area. From analyzing these interviews, he found that job characteristics related to what an individual does (the nature of the work performed) apparently has the capacity to gratify such needs as achievement, competency, status, personal worth, and self-realization, thus making him or her happy and satisfied. However, the absence of such gratifying job characteristics does not appear to lead to unhappiness and dissatisfaction. Instead, dissatisfaction results from unfavorable assessments of such job-related factors as company policies, supervision, technical problems, salary, interpersonal relations on the job, and working conditions. Thus, if managers wish to increase satisfaction on the job, they should be concerned with the nature of the work itself, the opportunities it presents for gaining status, assuming responsibility, and for achieving self-realization. If, on the other hand, management wishes to reduce dissatisfaction, then it must focus on the job environment; policies, procedures, supervision, and working conditions. He found that those factors which led to job satisfaction (achievement, interest in the work, responsibility and advancement) had little to do with job dissatisfaction. He found that those factors which led to job dissatisfaction (company policy, practice, supervision, compensation) did very little to contribute to job satisfaction.

Herzberg found that Motivators such as challenging work, recognition, and responsibility, give an individual positive satisfaction based on the intrinsic conditions of the job itself. He also found that Hygiene factors such as job security, salary, wages and benefits did not give positive job satisfaction. What he found that was that if these factors were considered to be missing or inappropriate, dissatisfaction in the job resulted from their absence.

So what does Herzberg’s Theory mean to an employer? First, it means that you won’t motivate people by money alone. Employers need to provide workers with basic conditions such as appropriate wages and benefits, provide them with policies and procedures aimed to help them do their jobs effectively and provide them with a safe work environment. Without these basic conditions, no employee will ever be satisfied with his or her position. To really motivate employees, employers need to focus on the intrinsic components of the job itself while ensuring the employees’ basic needs are met.

The Gallup Organization released a survey in 2011 which showed that 71% of workers are now either disengaged or actively disengaged at work. In comparison to last year’s result of 46% of workers being either disengaged or actively disengaged, this shows a dramatic increase in the amount of individuals who are simply marking time at work. Do you want to make sure you don’t have a workplace which mirrors this survey’s result? Then instead of just throwing money at the problem, follow these seven suggestions:

1. Make sure your compensation system is aligned with the jobs and responsibilities associated with the job at hand.
2. Satisfy employees’ basic needs of being able to afford to live on the money they make, the job provides an environment that allows the employees to do their best work.
3. Supervisors are skilled in leadership skills, not just management skills.
4. People are put in positions which allow them to do more of what they do best every day.
5. The rewards for a job well done are aligned with the desires and motivations of the individual.
6. Employees have access to additional means of adding value to their contributions such as additional training or exposure in the organization.
7. Recognize employees for a job well done in a manner appropriate to the accomplishment and the individual.

Don't believe unsubstantiated theories or opinons. Look to proven scientific research for real solutions of how to fully engage your people then adjust your organizational culture to incorporate proven solutions.