CONSEQUENCES OF PAY DISSATISFACTION
Talks on job satisfaction, loyalty, organisation before self, altruism, and the like. May be allright for boardroom discussions, and for delivering lectures in classrooms. The talk. may also be relevant in a country like Japan, where people are inspired by a fanatical devotion to work. But in our country, an average worker cares only for money. Such being the reality, remuneration must fulfill the expectations and aspirations of employees and exploit their energies for the benefit of organizations.
Attractive remuneration enables an organisation to attract, retain and motivate competent people. Fresh MBAs and brilliant engineers flock around Hindustan Lever, Citibank, Motorola, ANZ Grindlays and Reliance because of their attractive remuneration packages retaining competent individuals for long is more difficult than attracting fresh ones. An employee's longevity of service in a particular organisation depends more on non-financial benefits, but the role of financial benefits cannot be ruled out, particularly at the lower levels of hierarchy.
Loyalty towards an organisation also depends on his or her perceptions about remuneration. It is common knowledge that an employee feels satisfied or dissatisfied with his or her remuneration—not so much by the total amount he or she receives, but by comparing his or her benefits with those enjoyed by others. Comparison provides a feeling of equity or inequity. There is a sense of equity when the employee's remuneration is equal or more than the remuneration received by others in the same category of jobs. If the remuneration is lower, the employee feels he or she is inequitably treated.
An employee sticks to an organisation when he or she is paid equitably. The organization’s pay structure must, therefore, be equitable and consistent. Employees get motivated to perform better when their past performance is rewarded adequately. Employees set expectations about rewards and compensation to he received, if certain levels of performance are achieved. These expectations determine goals or levels of performance for the future. Employees achieving the desired level of performance expect a certain level of compensation. At some point, the management evaluates and rewards the employee's performance. Examples of such rewards include merit-pay increases, promotions, and non-financial rewards such as recognition and increased status.
Employees consider the relationship between their performance and rewards related to that performance, and then the fairness of the relationship. The final step in the process will have the employee selling new goals and expectations, based on past experiences within the organisation. If employees see that handwork and superior performance are recognized and rewarded by the organisation, they will expect such relationships to continue in the future, Therefore, they will set higher levels of performance for themselves, expecting higher levels of rewards. Of course, if employees see little relationship between performance and rewards, then they may set minimum goals in order to retain their jobs, but will not see the need to excel in their positions.
Remuneration is the only HR activity which has its impact on all other functions regarding personnel. Take job evaluation, for example. It is job evaluation which establishes satisfactory wage and salary differentials. As was staled above, competent people are attracted towards an organisation if its remuneration is attractive. Recruitment and selection are dependent upon wages and salaries offered to prospective employees. There is a close relationship between performance appraisal and remuneration.
This is particularly true in cases where 'payment by results' schemes exist. Incentive payments depend on the employee performance which needs to be carefully assessed. It needs no particular emphasis that union-management relations largely depend upon employee remuneration. Industrial conflicts between employees and Employers Lake place on remuneration-related issues. There are other benefits of an effective remuneration system. Such a system, for example, helps the organisation obtain and retain employees at a reasonable cost. In the absence of a rational payment system, employees are likely to he overpaid or underpaid. There are a number of labor acts which need to be complied with by an organisation. Non-compliance of any provision makes the organisation
guilty and punishable. A properly designed wage and salary system helps the company avoid such possibilities.