The Compensation Paradox

[QUESTION]: What positive and negative elements could you foresee in employee motivation if an employer’s pay structure only included a “menu of flexible benefits”, whereby you get to choose only a limited number among many?

[DELIVERABLE] As contextualized by our reading material, employee responsiveness could coalesce when administered clear, specific, and attainable goals. However, this occurrence only happens if — and only when — a workman is motivated to work.

A good employee does their work, and a great employee is one who does their work while motivated. This phenomenon relates to a principle of basic economics known as the invisible hand. Therein, the invisible hand serves as the impetus to work-related self-fulfillment. When people have jobs that provide security, above-market salary, excellent benefits, one can expect a general increase in motivation to attain organizational goals.

For managers to take full advantage of the symbolic value of pay, there must be a perception on the part of employees that their rewards are linked to their performance. Organizations must ensure that pay differences are based strictly on performance, and not on factors that do not relate to performance (such as gender, ethnicity, or other discriminatory factors).

However, even such egalitarian benefits could indeed deter employee motivation. Perhaps managers struggle to administrate goals and motivate employees when restrictions from physical communication are in place, i.e. the Covid-19 pandemic circumstances.­ Organizational success and employee retainment predicate the workman’s expectation to reward in relation to performance. Therein employees must realize a clear, direct link between their own job-related behaviors and the attainment of said rewards.

Failure to adequately compensate employees could lead to employee marginalization, which in effect deteriorates employee output. Moreover, inadequate compensation-plans tend to attract those who perform at suboptimal quality and standards. A business having such a workforce would serve as a deterrent to my being interested in their employment. I do not particularly appreciate working with those whose standards are below what the golden standard is within the industry.

On the other end, another issue may arise wherein an organization only compensates workers based on incentives. This may brood grounds where malfeasance becomes the norm, and compensations are namesake. The issue may arise in an organization where incentive-only plans lead organizational members to commit unscrupulous acts, such as fraudulent P&L submissions, puffery on sales calls, or omission of details from closed sales contracts.

Suppose I am offered a menu of flexible benefits, I would consider choosing an extended work schedule. I would choose this because I have many side projects that need 12–14 hours of attunement per diem. Then, perhaps, I too would be privy working for a company that offers telecommuting to work, rather than a physical presence.

Being a hard worker, I believe compensation should be meritocracy-based. And accordingly, I would seek new employment if the company’s benefits structure were not such. Nepotism, cronyism, and favoritism do not belong in the office.

Thanks — Adel Al-Aali

[QUESTION]: What positive and negative elements could you foresee in employee motivation if an employer’s pay structure only included a “menu of flexible benefits”, whereby you get to choose only a limited number among many? (Refer to Chapter 6’s “Types of Rewards” sections on differences in compensation packages and their consideration as a “benefit”, p. 234). What benefits would consider the most important for you and/or your family, if applicable? What types of deficiencies in total rewards would cause you to seek other employment?