Presented by:

Ahmad Zhafir+Nur Amirah+

Nurul Akmar+Nor Amalina+Muhammad Faiz
Behaviours that employer care
Theory and research say to get the behaviour
Compensation people say to get the behaviour
Total reward system
General comment of compensation motivate
behaviour
Specific comment of compensation motivate
behaviour
Designing a pay for performance plan
Employer want employees to perform in way
that lead to better organizational
performance.

Organizational strategy is the guiding force
that determines what kinds of employee
behaviours are needed

Employee performance= f(S,K,M)

Where
S = skill and ability to perform task
K = knowledge of fact, rules, principle
and procedure
M = Motivation to perform
Organization
strategy
Corporate
goal
Department
goals
Individual
goals
Employee task
behaviour
Behaviors that compensation needs to reinforce
sufficiently attractive to make recruiting and hiring good
potential employees possible (attraction)

Need to make sure the good employees stay with the
company (retention)

Need to find ways to motivate employees to perform well
on their jobsto take their knowledge and abilities and
apply them in ways that contribute to organizational
performance
Performance measurement
Performance management
How do we get good employment prospects
to join our company?
How do we retain these good employees once
they join?
How do we get employees to develop skills
for current and future jobs?
How do we get employees to perform well on
their current job?
3 elements of motivation:

What is important to a person?
Rewards in exchange of desired
behaviors
Desired behavior

Pay systems influenced by:
individual performance
changes in cost of living
seniority
market rate

e.g : Maslow's need heirarchy & Herzberg's two
factor theory

MASLOWS THEORY HERZBERGS THEORY
1. Meaning Based on concept of human
needs and their satisfaction
Based on the use of motivators
which include achievement,
recognition and opportunity for
growth.
2. Basis of
Theory
Hierarchy of human need Hygiene factors and motivating /
satisfiers factors
3. Nature of
Theory

Simple and descriptive

More prescriptive

4. Applicability
of Theory

Mostly applicable to poor and
developing countries where
money
Is still a big motivating
factor.
Applicability is narrow. It is
applicable to rich and developed
countries where money is less
important motivating factor.
5. Motivators Any need can act as
motivator
Hygiene factors (lower level needs)
do not act as motivators. Only the
higher order needs (achievement,
recognition, challenging work) act
as motivators
Not concentrate on needs, but rather focuses on outcomes
1. Expectancy: Effort Performance (EP)
2. Instrumentality: Performance Outcome (PO)
3. Valence - V(R)
The theory states that individuals have different sets of goals and
can be motivated if they believe that:
There is a positive correlation between efforts and performance.
Favorable performance will result in a desirable reward.
The reward will satisfy an important need.

Focus less on need but more on rewards in
exchange of desired behaviors

Employer identify important behavoirs &
outcome, pay specifically for achieving
desired levels

e.g : Expectancy theory, Equity theory and
agency theory


Emphasis of a large body of goal-setting
research

How we set goals can influence the performance
levels of employees

e.g : workers assiged "hard" goals do better than
workers told to "do your best"

Employees learned what behaviours were
important as part of the socialization process.
Compensation is designed to support the
risk-taking behavior.
Money is great equalizer but isnt everything.
Total reward system Compensation is one
of many rewards that influence employee
behavior.




1.COMPENSATION 2. BENEFIT
3. SOCIAL
INTERACTION
4. SECURITY
5. STATUS /
RECOGNITION
6. WORK VARIETY 7. WORKLOAD
8. WORK
IMPORTANCE
9. AUTHORITY \
CONTROL \
AUTONOMY
10.
ADVANCEMENT
11. FEEDBACK
12. WORK
CONDITIONs
13.
DEVELOPMENT
OPPORTUNITIES
COMPONENTS OF A TOTAL REWARDS
SYSTEM
WAGE
COMPONENTS
1. BASE PAY - Employees wage package.
2. ACROSS-THE-BOARD INCREASE - wages increase to all
employees regardless of performance.
3. COST-OF-LIVING INCREASE - Based on change in cost
of living.
4. MERIT PAY - Based on employees past performance.
5. LUMP-SUM BONUS - One-time bonus.
6. INDIVIDUAL INCENTIVE - Based on extra individual
production.
7. SUCCESS SHARING PLANNING - Focus only on group
performance -----------------CONSIST OF 2
TYPES Profit sharing & Gain sharing
8. RISK SHARINGS PLAN - Shares in the success &
Panalized during poor performance.
Join a firm
Stay or leave a firm
Develop job skills
Perform better
Level of pay
Pay system characteristic
Personalities
values
Development opportunity
Social
Work
Benefits
Pay based on individual
performance
Group incentive plans
Employee satisfaction
Pay system
Pay employees for learning new
skills
Skill-based increments
Pay for skill may not increase
productivity
Productivity/performance
increase
Incentive effect
Sorting effect
Efficiency
-strategy
-structure
-standard
Equity
Compliance
Employee performance depend on some
blend of skill, knowledge and motivation.
Absence any of the ingredient, performance
is likely to be sub optimal.
Reward must:
Help organization attract and retain employees
Make high performance and attractive option for
employees
Encourage employees to build new skill and
gradually foster commitment to organization