Posted by In order to avoid conflicts due to differences in wages, companies establish criteria for rewarding employees and use different forms of calculating salaries. Is it true, then, that the higher the salary, the greater the employee’s commitment to the tasks at hand was supposed to be?
It used to be believed that one of the most important reasons for a person to start a career is money. Initial studies on labor productivity treated wages as a simple relationship – the higher the wage, the greater the employee’s commitment to the tasks at hand was supposed to be. Over time, however, the trend started back in the 19th century by Frederick Taylor of treating humans as homo economicus has lost its relevance. Today, companies use a variety of wage incentive systems depending on the characteristics of the tasks assigned to the employee and his duties.
In order to avoid conflicts due to differences in wages, companies establish criteria for rewarding employees. In practice, the most common is the formation of wages based on the effort put into the task, the results achieved in a given period of time, the experience and knowledge of the employee, and the desired staffing needs at the time to promote the development of the company.
Determining wages based on the employee’s effort in performing the task is used in the creation of an unchangeable salary base. This is the case for most secretarial, administrative, financial and accounting employees. Their work is not directly related to the company’s income. When using this criterion, the International Labor Organization in recommends that employers also take into account mental and physical effort, the degree of concentration of attention, the length of time and working conditions, and responsibility for performance.
The criterion of performance at a given time is used by companies whose profits are strongly related to the direct involvement of employees in the affairs of the company. Examples include construction companies, retailers and even foreign language schools, where the amount of wages strongly depends on customer demand for the employer’s services or products. Management specialists warn, however, that both too strong a link between employees’ wages and their performance on the job and the lack of such links have a demotivating effect. A way to bind an employee to a company is to break down compensation into a minimum fixed salary set by one other criterion, such as knowledge and experience, and a portion that depends on measurable performance on the job.
Until recently, a frequently used criterion in the design of a compensation system was the employee’s level of education. Today, of greater importance to employers is the experience gained and length of service. Theoretical knowledge acquired during studies is receding into the background. Competency-based remuneration can be based on general criteria, that is, applicable to many positions, as well as specific ones that apply to a particular position in the company. A description of the requirements for an employee should be drawn up along with the establishment of the company’s personnel strategy. Dependence of the level of remuneration in the company on the competence of employees takes place wherever specialized and comprehensive knowledge of a particular subject is required. Examples include research institutes, new technology companies or universities.
The staffing needs of the company and the situation on the labor market strongly determine the level of wages in many Polish companies. High unemployment makes this criterion for determining a company’s pay policy widely used, and the amount of monthly salaries often becomes a secondary motivational stimulus. Just being employed is often supposed to be a sufficient motivator for an employee to work. However, this is a negative motivation and does not promote the integration of the company’s team. Using the criterion of the labor market situation, the company reduces costs in the short term. However, it is difficult to stabilize the staff – employees on the day of signing the employment contract often start looking for a new employer.