Compensation

Motivationr`1

Many of you may remember that, during the 60's, money was not supposed to be a motivator. Both Abraham Maslow and following him, Frederick Herzberg, maintained that compensation did not motivate, but rather tended to dissatisfy.

They were correct, but one must take their definitions of salary and motivation in context. Without going into a long discussion, let's just say that base compensation does not motivate, but other forms of compensation such as profit sharing, bonuses, deferred compensation, and stock option plans can be a form of recognition, the second "best" motivator. (The best motivator is "the work itself.")

What is "motivation?" The root word is "move" which would mean that anyone who is moved to do something is motivated. Therefore, sitting on a tack, or at least the pain associated with it is a motivator. In psychology, at its most basic a motivator is that which impels or compels an individual to act toward meeting a need. On a physiological level, thirst, hunger, and sex are motivators or drives. They are basic needs which must be met.

Relating this to a corporate environment, it is not base compensation which drives the employee, but what that base compensation can satisfy in a higher level of needs. Money can't buy love (well, except for buying a kitten or puppy), but it can buy some security such as insurance benefits (a need level one step up from basic). After basic and security needs are met, compensation is not the motivator, but what compensation represents is.

One statement that must be made before continuing is...

Incentive Compensation

All incentive compensation programs require that there be established standards of performance. In some, while difficult, it is also necessary to establish a way to measure the productivity of individuals or groups (departments). But there can be no way of distributing incentive compensation without these two actions - unless one considers across-the-board bonuses as a form of...