The Importance of Pay in Employee Motivation: Discrepancies Between What People Say and What They Do

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Reflection on THE IMPORTANCE OF PAY IN EMPLOYEE MOTIVATION: DISCREPANCIES BETWEEN WHAT PEOPLE SAY AND WHAT THEY DO Introduction
Leadership is "organizing a group of people to achieve a common goal." The leader may or may not have any formal authority. Students of leadership have produced theories involving traits, situational interaction, function, behavior, power, vision and values, charisma, and intelligence among others. Discussion and Analysis

The use of monetary or other financial incentives in the classic “work performance paradigm” is based primarily on reinforcement theory. Reinforcement theory focuses on the relationship between a target behavior (e.g., work performance) and its consequences Money and employee motivation. (e.g., pay), and it is premised on the principles and techniques of organizational behavior modification. Organizational behavior modification is a framework within which employee behaviors are identified, measured and analyzed in terms of their functional consequences (i.e., existing reinforcements) and where an intervention is developed using principles of reinforcement rewarding performance improves many human resource objectives for the firm. We have seen this several times in earlier chapters. For example, deferred pay based on performance can improve self-selection in recruiting. Similarly, performance pay may increase the return on investments in human capital, motivating greater investments in skills. Better incentives can improve decision-making, encouraging employees to use their knowledge in the firm’s interests. Most human resource policies involve some form of incentive scheme (though many are subtle). More broadly, incentives are what drive modern economies. Understanding basic incentive theory provides you with intuition that is useful in many business contexts. Employee engagement can be critically important to competitiveness in the contemporary business environment. The Gallop Organization, which studied employee...
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