Compensation and Benefits Are One

Compensation and benefits are one of the factors that motivate employees to excel in their work however, it is unknown just how great of a motivator these two factors are to employees.

The objective of the research proposed herein is to examine the importance of compensation and benefits in the motivation of employees and to determine the extent to which these factors actually motivate employees to perform while on-the-job.

The work of Nohria, Groysberg and Lee (2008) entitled: "Employee Motivation: A Powerful New Model" published in the Harvard Business Review states that getting the best work out of people "…is one of managers' most enduring and slippery challenges." (p. 78) the determination of what motivates people as individuals is a question that is centuries old and in fact "some of history's most influential thinkers about human behavior -- among them Aristotle, Adam Smith, Sigmund Freud, and Abraham Maslow -- have struggled to understand its nuances and have taught us a tremendous amount about why people do the things they do." (Nohria, Groysberg and Lee, 2008) p.78

Nohria, Groysberg and Lee report having completed two major studies stated to be focused on answering the question of "what actions, precisely, can managers take to satisfy the four dives and thereby increase their employees' overall motivation?" (2008) p.78 Nohria, Groysberg and Lee report having conducted two major studies and that in one study they surveyed 385 employees of two global businesses -- a financial services giant and a leading it services firm." (2008) p. 78 the other study involved a survey of 300 employees from Fortune 500 companies." (Nohria, Groysberg and Lee, 2008, p.78)

In order to define overall motivation focused on were four "commonly measured workplace indicators:

(1) engagement;

(2) satisfaction;

(3) commitment; and (4) intention to quit. (Nohria, Groysberg and Lee, 2008) p.79

Nohria, Groysberg and Lee state that engagement is representative of the energy, effort, and initiative employees bring to their jobs…" and satisfaction is stated to be reflective of "the extent to which they feel that the company meets their expectations at work and satisfies its implicit and explicit contracts with them." (Nohria, Groysberg and Lee, 2008) p. 79

According to Nohria, Groysberg and Lee, satisfaction is reflective of the extent to which employees "feel that the company meets their expectations at work and satisfies its implicit and explicit contracts with them." (2008) p.79 Finally, it is stated by Nohria, Groysberg and Lee that commitment "captures the extent to which employees engage in corporate citizenship" and intention to quit 'is the best proxy for employee turnover." (2008) p.79

Each of these studies reported in the work of Nohria, Groysberg and Lee demonstrate that "an organization's ability to meet the four fundamental drives explains, on average, about 60% of employees' variance on motivational indicators…" whereas previous models have explained approximately thirty percent. Stated in the findings of Nohria, Groysberg and Lee were that "certain drives influence some motivational indicators more than others . Fulfilling the drive to bond has the greatest effect on employee commitment…" however it is stated that a company can best improve overall motivational scores by satisfying all four drives" simultaneously. In other words, "the whole is more than the sum of its parts; a poor showing on one drive substantially diminishes the impact of high scores on the other three." (Nohria, Groysberg and Lee, 2008) p.80

Nohria, Groysberg and Lee state that the four drives that underlie motivation include those as follows:

(1) the drive to acquire;

(2) the drive to bond;

(3) the drive to comprehend; and (4) the drive to defend. (Nohria, Groysberg and Lee, 2008) p.81

The organizational levers of motivation include those as follows:

(1) the reward system;

(2) the drive to defend;

(3) culture; and (4) job design. (Nohria, Groysberg and Lee, 2008) p. 82

Stated as the manner in which each of the drives of employees can be fulfilled are the following matches of drives, primary lever and actions as stated in the work of Nohria, Groysberg and Lee (2008) p.82.

Figure 1

Manner in which each of the Four Drives of Employees can be Fulfilled

Drive

Primary Level

Actions

Acquire

Reward System

Sharply differentiate good performers from average and poor performance

Tie rewards clearly to performance

Pay as well as your competitors

Bond

Culture

Foster mutual reliance and friendship among coworkers.

Value collaboration and teamwork.

Encourage sharing of best practices.

Comprehend

Job Design

Design jobs that have distinct and important roles in the organization.

Design jobs that are meaningful and foster a sense of contribution to the organization.

Defend

Performance-Management

Increase the transparency of all processes and Resource-Allocation

Processes

Emphasize their fairness;

Build trust by being just and transparent in granting rewards, assignments and other forms of recognition.

Source: Nohria, Groysberg and Lee ( )

The work entitled: "Best Practices for Compensation: 3 Key Steps to Building a Pay-for-Performance Culture" states that successful companies are "increasingly…tying compensation directly to employee performance to drive incredible business results. Originally believed only for sales professionals, pay-for-performance is proving to be effective at all levels and in all functions of an organization." (Workforce Management, 2009) p.3 Stated to be key business benefits of pay-for-performance are the following:

(1) Increased motivation;

(2) Improved retention; and (3) Cost savings. (Workforce Management, 2009) p.3

Stated as three steps that are 'key' in building a successful pay-for-performance culture are the following:

(1) Compensation planning is stated to be the first step in the implementation of the pay-for-performance system and it is stated that the majority of successful companies base this system on "a structured incentive scenario." (Workforce Management, 2009) p.4 it is reported that a survey conducted among companies and across industries revealed that there are two approaches that are most common; (a) annual bonuses and merit increases; and (b) goal-drive incentive plans. (Workforce Management, 2009) p.4

(2) Goal alignment is the second step and involves the establishment of the goals of the organization and through the means of a "clear mission." (Workforce Management, 2009) p.3

(3) Performance Management is the third stated step and involves the establishment of a system that manages and measures employee performance in an ongoing and quantifiable manner. A company's failure to take this last step in the process is stated to result in an "arbitrary or subjective review process." (Workforce Management, 2009) p. 4

The work of Matthew Rice, Director of Product Marketing for Taleo Corporation entitled: "Differentiated Compensation Programs -- a Business Imperative" relates the statement of Josh Bersin of Bersin and Associates that relates that compensation is representation of approximately sixty to seventy percent of all organizational expenses." (Rice, 2009) p.3 Rice states that effective compensation management is "difficult to execute even at a basic level because of the two distinct domains it encompasses." (Rice, 2003) p. 5

The work of Kreisman (2002) entitled: "Insights Into Employee Motivation, Commitment and Retention" states "Employee commitment, productivity and retention issues are emerging as the most critical workforce management challenges of the immediate future, driven by employee loyalty concerns, corporate restructuring efforts and tight competition for key talent. For many firms, "surprise" employee departures can have a significant effect on the execution of business plans and may eventually cause a parallel decline in productivity. This phenomenon is especially true in light of current economic uncertainty and following corporate downsizings when the impact of losing critical employees increases exponentially." (p.3) Kreisman (2002) additionally states that productivity and retention rates have been shown to fall when employees "become distracted, confused and preoccupied with potential outcomes immediately following an organizational transition such as a major restructuring, corporate downsizing, merger, acquisition, or even rapid growth spurt " (p. 3) the work of Dibble (1999) lists what pay really means to employees and states the following factors as critically related to the employee-perception of pay:

(1) Value -- perceived worth to an organization;

(2) Equity -- perceived worth compared to other individuals;

(3) Finances -- ability to maintain certain standard of living;

(4) Jealousy -- difficulties that arise if someone is not recognized according to perceived worth;

(5) Favoritism -- perception that one person may be singled out to receive more/less;

(6) Anomaly -- pay for reliability (attendance);

(7) Precedent -- recognition of similar actions in the future

(8) Appropriateness -- entitled to more than salary (bonus, profit sharing) for extra effort. (cited in Kreisman, 2002)

Kreisman (2002) states that major studies have demonstrated that the following reasons are the top reasons why employees leave their employer:

(1) Employee/manager relationship;

(2) Inability to use core skills;

(3) Not able to impact the organization's goals, mission;

(4) Frequent reorganizations; lack of control over career;

(5) Inability to "grow and develop";

(6) Employee/organization values misalignment;

(7) Lack of resources to do the job;

(8) Unclear expectations;

(9) Lack of flexibility; no 'whole life balance'; and (10) Salary/benefits. (Kreisman, 2002) p. 6

Kreisman (2002) states that while management theory and practice has traditionally and historically considered 'extrinsic' or external motivators including pay, benefits, status bonuses, pension plans, expense accounts, and so forth, all of which are "powerful motivators, by themselves they are no longer enough" and this is stated to be because rewards that are intrinsic in nature are "essential to employees in today's environment." (2002) p.7

Methodology

The methodology proposed in this study is one of a qualitative nature and is to be conducted through an extensive review of literature in this area of study combined with a survey of employees in a yet unchosen organization which will quiz the employees concerning the factors of primary importance in retention and satisfaction of employees by the organization.

Population and Sample

The population and sample in this study is as of yet, undetermined and will be decided at a later date.

Research Design

The research design in this study is as stated previously of a qualitative nature and of the nature that will ensue with an extensive review of the literature in this area of knowledge in order to ascertain the primary findings in previous research in this area of study. Secondly, the research proposed in this study is for a survey of employees of an organization for the purpose of determining the importance of employee compensation and benefits in maintaining satisfaction among employees and for the purpose of employee retention.

Instrumentation and Data Collection

The data in the research proposed herein will be collected through distributing surveys among employees in an organization that will participate in this study. The survey will have 25 questions and respondents will be asked to respond by stating a number between 1 and 5 with one representing 'strongly agree' and 5 represent 'strongly disagree' in a Likert-type survey.

Data Analysis

Analysis of the data in this study will involve the scoring of employee responses to the 25 questions in this study that is proposed for research.

Time Schedule

The proposed time schedule for this study is a period of six weeks which will be utilized for the purpose of reviewing the literature in this area of study and for the purpose of organizing, developing, preparing, distributing, administering, and scoring the employee surveys as stated in this proposal for research.

Resources Needed

Resources required for the conduction of this survey include paper and printing supplies as well as travel expenses to and from the organizational job site.

Personnel

Personnel required for the conduction of the research as stated herein will be the researcher and one assistant.