Role Of Pay As A Motivator Commerce Essay

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In relation of keeping up the motivation levels of the employees there can be named two types of rewards - intrinsic and extrinsic. As claim Armstrong and Murlis (1998) "Intrinsic motivation is self-generated in that people seek the type of work that satisfies them". Pay goes down under the extrinsic rewards and is not the most important motivator. To this group can also be added rewards such as promotion, bigger office, recognition in front of the other colleagues. However, all these are managed by someone else and usually it takes time to be executed.

On the other hand, the intrinsic rewards are the ones that can be felt by the individual immediately. Most likely these are feelings of gratitude, satisfaction and success, which for some people are enough, for others - not appreciated at all (Huczynski and Buchanan 2007:258). Moreover, because of the immediate effect of the intrinsic rewards most of the employers are counting on them to be the sole motivation drive for their employees. In contrast to that some are completely pushing them back and believe that in the current material and competitive world, the extrinsic rewards are the only option.

Moreover, there are different types of people either looking to get ahead with their career or just staying on their old experience and skills just waiting for time to pass ahead not even being merely interested by pay. This is the reason why managers and HR departments must examine their employees and decide what kind of job roles should be attributed to every person and who is likely to gain a promotion.

On the other hand, there are the people ready to do voluntary work not being driven by pay nor financial benefits but purely by their desire to get experience and more knowledge and skills. As it can be seen by Working Abroad organization in their website: "It enables people to learn new skills and languages, to develop and gain practical experience in the field in, sometimes demanding conditions, and to develop leadership and teamwork skills(REF!!!)." From here we can easily say that voluntary work is regarded upon from employers as a big advantage in people's CV.

Alternatively, we can speak about direct motivation "Direct motivation only takes place if the rewards are worthwhile" (Armstrong and Murlis 1998) as being there in everybody's mind and driven them to do their goals and tasks throughout determination, self-confidence and belief .

Transparency and Equality

Transparency in how people are paid can have both positive and negative impact on employees, their motivation and commitment.

If an organization is applying a performance reward pay, the transparency can lead to employees feeling valued and appreciated for their hard work. It can also be used as practical inspirational method. Basically, if you work hard, you are being paid more. That kind of openness can lead to improvement in the performance levels and more willingness for hard work, extra training and development of the employees.

John Stacey Adams has developed a theory which was named as "Adams Equity Theory" in 1963. This theory is based on the "input" and "outputs" of the employees to the firm. As we can see from the figure below, the theory says that the inputs of the employee such as working time, effort, skills, abilities, etc. must be in balance to the outputs of the employer such as financial rewards, recognition, reputation, etc.

In accordance with Adams' Equity Theory, an organization must manage to keep a fair equality of the inputs and outputs so that is possible to manage their goals and maximize their profits. ( )

So, an employer that is intending to use this particular type of reward pay must be consistent in the increase of the pay packages. It also needs to set up firm rules and to outline the requirements, and the levels of improvement that an employee has to reach to receive higher pay package. Of course there is a reward for the employer as well. It is based on the higher performance of the motivated employees, leading to more profitable business and bigger satisfaction, which may lead to bigger investments in the business.

However, many executives still receive huge amounts of pay even when their company is losing money and profits are decreasing. An example of this is the bonuses that some bankers receive on top of their pay. Total bonuses are currently estimated to be around £7bn and this at a time of heavy recession.

In a case like this it asks the question, do the bankers deserve the pay and bonuses that they get. Maybe their past performance over 3 or 4 year should be looked at and pay should be based around that, as the majority of the population are constantly seeing their wages being cut and having to make savings when and where they can.

Bolchover, a management writer talks about the "talent myth". This is an idea that a small amount of employees are paid high amounts of remuneration because they are harder to replace. An example of this is Wayne Rooney of Manchester United becoming the highest paid football player earning £250,000 per week with a 5 year contract. This came as a reaction by the club after Wayne Rooney said that he was going to quit the club. This links to the "talent myth" that Bolchover talks about as Manchester United see Wayne Rooney as a hard person to find a replacement for.

This type of executive pay structure can have an effect on the other employees within an organisation. And if are timed with high level of redundancies or relocations in the minor levels of staff it can lead to absenteeism, lower morale, commitment and appreciation (Price 2007:479). For instance, employees of the bank who have maybe sold lots of mortgages to customers in a year may feel that they are just as worthy of the bonuses as what a banker in the same organisation is worth. This may make them want to leave their jobs within the organisation and to seek employment elsewhere.

When looking at transparency, executive pay packages are presented in a more negative aspect. From one point of view, it is hard to justify such high executive pay from the position of an employee. So when it comes to transparency in the top hierarchy pay packages, it looks neither earned, nor deserved. In this case, the big publicity can be neglected if possible.

As we can see in the Money Watch programme 'Earning It' the people are telling why they deserve their salary and the experts having the amount of £330,000 tried to reward them equal. As a result 'low earners have more and high earners have had pay cut.' The experts decided to reward some people more than their current salary and some others less. Some of the people who rewarded less were disappointed, but the experts thought that they rewarded them equal. People who work in countries which are worst than other counties are paid less. A reason for an unequal pay is the recession because they are paid less than they deserve. The families cannot handle their finances as they are paid less during the recession and they are trying to change their lives in order to overcome it (BBC 2, n.d)

Equality Act 2010

The Equality Act is a modern, up date legislation and came into force in October, 2010 in order to tackling any disadvantages and discrimination in the workplace. The Equality Act 2010 simplifies the legislation of discrimination, provides benefits for business, government agencies and individuals. The equality Act's provisions, take place in different periods in order to helps the people and the organizations to prepare for these. (Equality and Human Rights Commission (n.d))

Moreover, there are nine major legislative acts that have been merged. The Equal Pay Act in 1970, the Sex Discrimination Act in 1975, the Race Relations Act in 1976, the Disability Discrimination Act in 1995, the Religion Regulations in 2003, the Sexual Orientation Regulations in 2003, the Age Regulations in 2006, the second part of the Equality Act in 2006, and the Sexual Orientation Regulations in 2007. (Equality and Human Rights Commission (n.d))

The changed parts of the Equality Act 2010 are the enhancing protection of persons with disabilities from discrimination, the definition of disability included the individuals who have had a disability, the 'normal daily activities' criteria are removed, the protection of individuals against discrimination by the association and the perception, the definition of gender reassignment extended to individuals who have suggested, started or finalize the process of gender reassignment, who are not under medical supervision and the 'Single Public Sector Equality Duty' includes the following characteristics that are protected; the Age, the Disability, the Gender reassignment, the Pregnancy and maternity, the Race, the Sexual orientation, the marriage and civil partnership and the Religion and belief. (Equality and Human Rights Commission (n.d), Government Equalities Office (n.d))

In addition, the law improved the protection for pregnant and nursing mothers and time off for childbirth, prohibiting the discrimination in private members' clubs, enhancing the employment courts' powers, it has a positive view in hiring and promoting that provides biggest margins to tackle the shortfalls in the labor force and it has new restrictions on the use of health related questions during the recruitment and selection exercises before being offered the job. Also, there are some other parts of the Act that are not changed yet but will change in the future. (Equality and Human Rights Commission (n.d), Government Equalities Office (n.d))

"The glass ceiling"

One of the aims of the Equality Act 2010 and the legislation before this was to remove the so called glass ceiling so everyone has the right to career progression and so that women and other minorities have the same life chances as everyone else to progress up the career ladder.

Historically men have been paid more for doing the same job role as a women, and it used to be viewed by employers that men did a better job than women and were worthy of more pay. This discrimination and inequality has lead to industrial action by women and the creation of the legislation.

One of the key examples of industrial action was in 1968 at Ford in Dagenham when 850 female sewing machinists went on strike for 3 weeks bringing Fords production to a standstill. This was because they had been placed as unskilled workers earning 87% of their male counterpart's wage, who had been placed on a semi -skilled grade of pay, for doing the same job role. From this the women won the right to 92% of the mens' pay and then 16 years later they were judged to be allowed equal pay.( Socialist Worker (2008) Ford machinists' strike, 1968: an inspiring demand for women's rights [online] available from <> [4 January 2011])

The definition "The Glass Ceiling" refers to an invisible barrier that limits the level to which a woman or another member of a demographic minority can advance within the hierarchy in an organization. The glass ceiling still exists today to a certain extent. However a study carried out by the Office for national statistics found that there was no pay gap between males and females between the ages of 22 and 29, but it was found out that single women got paid more over their lifetimes than single men did. However for all other age groups it was found that there was still a pay gap between men and women ranging from 3% to 20%.A spokesman from the study said that "'One of the major causes of the pay gap, beyond the concern about women and men who are paid different rates for the same job, is the fact that they choose low-skill, part-time jobs after they have children( Doughty, S. (2009) How to be paid more than men: Stay single [online] available from <> [4 January 2011])."

This suggests that it is not just about men and women being paid differently for the same job, but it is also about the types of jobs that women do after they have had children. However there are many reasons why women do not choose to get back on to the career path, for instance, the cost of childcare may not seem worthwhile working for, their husbands or partners may work full time and they choose to look after the children rather than the father looking after them.

A solution to this can be the flexible working pattern. It is a way of arranging the working time, working location and the pattern of working for the employees and employers best interest.( )

The weighing scale of some people can be improved by taking the chance to apply a pattern of flexible working. Doing that may help them arrange their life with a better balance and furthermore save a lot of money from the organization that they are working for. What is more, there are many different pattern of flexible working. It gives the chance to an employee to choose the beginning and the end time of his/her working day and also decide what break times should they have considering that they will work at standard core times.

Home working, is the opportunity, if the work is computer based, to work at home and only be present in the office for meetings or training times.

Term-time working, offers to work on school term timing model and during holidays you do not have to be at work but you are still employed.

Structured time off, is the option to increase your working hours during high peak phases which gives you the ability to use these extra hours for more time off work during the quiet periods ( ).

As per the Money Watch program, at the case of John Alexander who works as an advertiser, he did not have enough time to plan his life the way he wanted to so he has decided to use flexible working and to become a part time worker. In addition, Honda, the big car manufacturer, had to force a shut down so they decided to pay the staff 85% of their normal wages but to stay at home. Dean Simes, a quality control of Honda, stated that as the factory reopened, the workers are not getting extra money for the overtime and they work extra hours to reduce the number of hours that they own to the company (REF Money Watch Pr).

At the time of recession, all companies will be trying to minimize any extra cost that they have. Thus, if a worker suggests that the company can still have the benefits of his/her abilities, with less hours and lower payroll it may be a winning point for both. ( )


Executive pay as a reward can be justified. However, if big bonuses are being awarded right after one of the worst recession, there should be a proportion of extra money dedicated for the budgets of the lower levels of employees and their departments. This money can be used either for team bonding or for new office equipment and appliances which will ease their job.

Very good example of such rewards and constant motivation boost can be seen in Google headquarter. Their employees can enjoy a variety of relaxation activities, such as foosball, pool tables, pianos, ping pong tables, and gyms that offer yoga and dance classes, to enjoy on their own or with other colleagues. As well as break rooms with free snacks and nice meals for lunch (The Google Culture 2011). Not every company can afford to treat their employees in this way but it is widely known that when an organization invests in its people the performance rates are higher.

Furthermore, anytime that an executive is receiving a pay rise based on certain results of the company the employees should have a partial increase in their pay packages as well. That way all the staff members will be rewarded for the hard work and the efforts. They will be acknowledged as a part of the whole chain that reached the target. There is no need for big increase. Even a small one, but assigned according to the responsibilities and the individual commitment will do the work.

Critical Evaluation


In conclusion, we can draw up a solution being that people are motivated by pay as much as they are not motivated by pay. Their intrinsic motivation depends on various factors being boosted by the extrinsic motivation offered by their company. Yes everybody would appreciate pay rise but not everybody desires it consciously. Money matters as a financial way of expressing gratitude for service or work done, but in any case could it be regarded as the sole motivator for employees to go to work and stay there 8 hours a day 6 days a week.