Remuneration: Lifting the curtain on HR’s dark art (part 4)

The four and final part of Sheshaya Surtani journey into remuneration.  More of Sheshaya’s writing can be found here.

If you’re just joining us, please take a look at parts one through three of this series

Remuneration (part 1)

Remuneration (part 2)

Remuneration (part 3)

Part 4: Conclusion: The bottom line about the compensation arena

Taking account of all the key issues discussed in the previous blog series part 1-3, let us now widen our perspective considering the bottom line about compensation:

  • The primary issue an organisation needs to consider in relation to thinking about compensation: how much it wants to rely on direct, short term economic incentives Vs. longer term economic rewards. I.e. should we promote, provide stock ownership or rely on non-monetary forms of motivation?
  • In many contexts, PFP is too narrow a concept. We need to think more broadly in terms of rewards for performance (considering the full portfolio of rewards that the organisation can provide to its employees). Moreover it is important to bear in mind the basic question: to what extent do you want employees focusing on pay as their main source of job motivation?
  • As an essential takeaway: managers must be urged not to lose sight of the powerful social and psychological forces that motivate people and influence their reactions to any reward system. This has led to strong emphasis on the process by which performance is evaluated and rewards are distributed in an organisation, which are likely to have a profound impact on the perception of organisational distributive and procedural justice. (C.f. Greenberg).
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