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Employees with high perceived self determination often display self-confidence and self-importance. Subjectively, they know they are competent even though objectively they might not be. On the other hand, employees with low perceived determination often seek for recognition and approval. Subjectively, they are often uncertain of their competence even though objectively they are very competent. Thus, there is variation in subjective perceived competence between these two groups of employees. When these two groups of employees receive pay for performance, they would respond to it differently. As for the first group of employees, pay for performance might be something they feel they deserve it and hence might not increase perceived self-determination or their intrinsic motivation. However, for the second group of employees, pay for performance would likely be cherished for every single bit of it which would increase their intrinsic motivation as well as perceived self-determination. In other words, “variations in perceived competence positively influenced intrinsic motivation only under conditions of low self-determination” (David Markland, 2010).

1)      Does pay motivate employees? Why or why not?

Yes, pay motivates almost every employee. There are “studies show that almost everyone is motivated by money to some degree, many to a moderate degree, and most to a great degree when compensation is properly designed” (Mae Lon Ding, n.d.). People work for employers because they give their time and energy in exchange for salary that is then used to purchase food and other necessities to replenish their depleted energy. There are relatively very few people in a profit-driven organization who are not motivated by pay but seek for praise and recognition; but these are the exceptions. There are, however, rare breed of humankind where people are working for an ideal such as sacrificing their time, youth, energy, and entire life in serving the handicap and the sick. For the second group of people, pay does not motivate them. They are motivated by spiritual wealth.

2)      How could you measure the motivating effects of your organization's compensation programs?

There are two effects of motivation brought about by organization’s compensation programs that can be measured. One is the tangible performance of employees, such as percentage of sales of company’s products by sales people and the production output by people in the manufacturing area before and after the implementation of company’s compensation programs. And the other is the intangible effects such as how empolyees’ moral are affected with the compensation programs; are they are feeling and behavoring better than before, like coming earlier to work and going back later?

A company must motivate her employees wisely and “it is a shame for an employer to ignore the motivational effect that can be achieved with payroll dollars since it is such a large expense item for most businesses” (Mae Lon Ding, n.d.).

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