Reason #4 - Pay is Important to Individuals

We are in the midst of a series that looks at the ten primary reasons for filling the space between the disciplines of Compensation and Organization Development for greater organizational effectiveness and employee empowerment.  The list of ten reasons comes from Dr. Ed Lawler's seminal work on the subject, Pay and Organization Development (Addison-Wesley, 1981).  We come to reason #4: Pay is Important to Individuals.

As most of us know, there continues to be much-heated debate as to whether pay really motivates people, or whether it is solely a demotivator if the compensation levels are off.  In the oft-quoted Daniel Pink's Drive, we are told that knowledge workers specifically are motivated by mastery, autonomy, and purpose.  While I am oversimplifying Dan's message, I think we are experiencing another both/and paradigm where people are motivated by intrinsic needs and extrinsic financial reward, whether manual labor workers or C-suite executives.  The extrinsic financial reward allows the individual to further meet certain intrinsic needs (e.g., one desires for their children to be safe and the bonus allows the family to buy a sturdy mini-van to protect them on the road).

"One of the keys to navigating this rocky terrain is in understanding HOW individuals place value on rewards...I see it as more of an explicit-implicit conversation as opposed to an extrinsic-intrinsic one."

One of the keys to navigating this rocky terrain is in understanding how individuals place value on rewards.  That value, unique to each individual, helps determine their level of motivation and thus effort expended.  This does not mean, however, that the number of rewards programs ends up equaling the number of employees.  It does mean that we must look beyond the explicit financial value of extrinsic rewards, and consider that the employee population has unspoken: a) expectations of what the outcome will be for their behavior, b) associated  attractiveness of the reward itself, and c) degrees to which they believe they will be successful in whatever it is being rewarded.  From this vantage point, I see it as more of an explicit/implicit conversation as opposed to an extrinsic/intrinsic one.

Case in point:  Rewind just a few weeks back to New Year's Eve  at 11:07 p.m.  I have just arrived back home from a trip to the veterinarian emergency room with my Pug, Oliver.  Not three hours prior I felt the sofa I was sitting on vibrate.  Subtle, yet enough to catch my attention.  Sam, Oliver's brother, was on my left and Oliver was on my right.  I put my hands on both of them, and sure enough Oliver's little body was shaking with every exhale.  This was out of character and pointed to something being off.  This was not Oliver's first trip to the E.R., and we have never walked out of there for less than US$500.  It was closer to US$2,000 for the time we found out he was fatally allergic to bees.

Cut to the chase: I love children, yet my husband and I don't have any of our own.  Sam & Oliver have become our surrogates. And, as parents would do for their sick children, we have done what was necessary to cure our dogs of - or at least mitigate symptoms of - their ongoing ailments.  As ironic as it seems given my background in Compensation, money has been less important to me than other more intrinsic factors.  I personally see money less as a signal of importance or self-worth and rather more as provision: provision for our choice of lifestyle, including very expensive healthcare for our dogs.  To that end, while I am not predominantly motivated by extrinsic financial rewards, compensation is still very important to me and I can articulate why.  I want to work hard and get paid fairly for the value I provide so that I can afford the things that are priorities in my life.

How is compensation explicitly important to you?

(p.s. For those of you who are wondering, Oliver will be okay.  His poor little back is just getting old with the rest of him.)