Judy asks:
> I'm curious as to the effect that "not enough compensation" has on the
>employee.
First, like you, Judy, I agree that money is not a very effective
motivator in most circumstances. But the situation you mention has some
special characteristics.
If employees don't have "enough compensation" -- and it reaches the point
where employees feel they are being treated unfairly, then money becomes a
demotivator or, worse, a big distracter. I refer to this case as an
"equity/fairness" issue. In my experience, and I think there may even be
some research to back this up, until compensation reaches the point of
being an equity/fairness issue, it has little effect on performance
[except in those rare situations, such as sales commissions, where it
actually is contingent upon good performance.] But if people begin to
think that others performing the same or similar functions, or
contributing less than they do to the success of the organization (or
competitor organizations) are paid significantly more -- then performance
will suffer.
I don't think the causal factors of this performance decline are obscure.
For one thing, employees in such situations will spend (waste) time
discussing the unfairness of their pay during working hours; for another,
the feeling of being abused begins to reduce the willingness of people to
"go the extra mile" or even to care about the quality of their work.
Note, by the way, that it does not matter (as far as performance effects)
whether people are actually being unfairly compensated -- it only matters
that they believe themselves to be. Thus the solution to such a problem
must include a component of "perception changing" if it is to be
successful.
John W. Gunkler
jgunkler@sprintmail.com
--"John Gunkler" <jgunkler@sprintmail.com>
Learning-org -- Hosted by Rick Karash <rkarash@karash.com> Public Dialog on Learning Organizations -- <http://www.learning-org.com>