‘Greed Is Good’ – Remuneration, Motivation And Organization
The 1980s saw a significant emphasis on personal reward in the business world, both domestically and abroad, on the theory that highly motivated people could revolutionize both organizations and societies. Gordon Gekko's assertion that greed was good in the movie Wall Street serves as an extreme example. However, the inappropriate use of compensation as a motivator has resulted in companies being traumatized and bankrupt in the 1990s. On reward-based compensation systems, however, have been built significant corporate successes. An earlier example is Allied Dunbar, which recently entered the financial services market, and Phones4U
Individual traders at the infamous Barings Bank received bonuses totaling millions of dollars, but over time, these driven people fell short of the organization's goals. Additionally, even when a person's reward system is based on a manager performing admirably and meeting all performance metrics, leading to the success of the organization and receiving compensation, there may be issues due to the significant pay gap between senior and middle management. It may not be best for the organization to have a payment system that depresses or demotivates 10 people for everyone that it motivates
Since employees must act enthusiastically to advance the company's interests both now and in the future, wise organizations work to motivate and reward all of their employees while also making them feel treated fairly. The relationship between the things for which they are being rewarded and the actions they can take to influence the desired outcome, however, must be properly established
a sensible organization that
The individual manager's decision to act in his or her own best interests is reasonable
Managers want to achieve and will be drawn to those tasks at which they know they can succeed, typically favoring the short term over the long term. Managers work for people, not organizations, and want to please the superiors closest to them, or failing that, their peer group
The obvious conclusion is that before relying on a compensation structure to alter performance and behavior, an organization should lay some foundational work. In other words, the organization and management systems must be in harmony with the pay structure
An effective reward structure must be installed under five conditions
There are many different measurement systems, with the Balanced Scorecard being one of the most well-known. It has multiple objectives and is used by Tesco
Monitoring: If performance measures are not properly monitored or are only monitored during a review at the end of the year, the manager may get the impression that they are unimportant or, worse yet, that failure is acceptable as long as all the managers fail concurrently
Control of the tools necessary for the job: The organization must make sure the person is not overly dependent on variables beyond his control to achieve the performance measures outlined (this is the 'how' part of the equation)
Consistency: Making sure that short-term organizational factors don't overly affect or motivate managers to their true goals. The organization must also make sure that its structure, regardless of how loose or bureaucratic, is appropriate for the demands placed on managers
Reward and strategy aligned: Achieving a clear strategy for an organization is a journey rather than a one-time event. An organization can implement a compensation system even if its strategy is somewhat muddled if organizational and management conflicts are settled using the "balanced scorecard" and the strategy. Only then will the organization be under pressure to improve its strategy, structure, and compensation plans
There is a checklist of 10 factors that the efficient remuneration and reward structure should take into account based on these five prerequisites. must succeed
Back up the business plan
Support the behavior you want to see.
Honor pertinent performance
Be substantial, fair, and tax-efficient.
Be on time (the reward must occur soon after the accomplishment).
Include non-cash incentives (recognition can be just as valuable as money).
Be firm (a salary increase should only be postponed until the target is reached; a bonus lost due to missing the target should not be recoverable).
Be eminently clear
