Restructuring Compensation Strategy Paper Example

Paper Type:  Essay
Pages:  6
Wordcount:  1617 Words
Date:  2022-10-03


Organizations face many challenges while managing the human resource, to better improve the performance, there is a need to understand the various aspects that affect the human resource and craft ways through which it emerging issues can be handled. Issues such as motivation, meeting worker's needs, compensation and stress management play a big role in turning the organizational human resource around. Throughout the essay, a discussion will be made on how to restructure the compensation strategy and suggest ways that can be followed to better the organization.

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Intrinsic Motivators

Intrinsic motivators are the behaviors that are driven by internal rewards. The motivation to take part in a behavior arises from within the individual since its satisfying to an individual. As per Cerasoli, Nicklin, & Ford, (2014), intrinsic motivators are different from extrinsic motivators which are done to avoid punishment. The desire to engage in behaviors arises from within. The rewards for intrinsic motivators include the creation of positive emotions within the individual (Cerasoli et al., 2014). For instance, there are activities that create a positive feeling like volunteering activities. A sense of progress is created when you see that something new is learned or a result is accomplished.

Factors That Increase Intrinsic Motivation

Challenges; people are much motivated when they pursue goals that have meaning even though the goal may not be certain. When a task is challenging, workers may have elevated self-esteem when they accomplish it. With feedback, their motivation to take up challenging task is increased (Gerakos, Ittner, & Moers, 2017).

Curiosity, personal motivation is raised when something at the place of work grabs the attention of a worker, for instance, a new way of solving issues in an organization may be created, but it fails to get the approval of the management (Cerasoli et al., 2014). When there is proof that the new way of solving problems can be helpful, a person may be motivated to work more. Moreover, the desire to have control over the environment motivates people to invent more.

As per Cerasoli et al., (2014), the need for cooperation and internal completion makes people motivated in their work, there is a desire to gain recognition through helping others or even compare results with those of others. The need to cooperate and improve the work environment is a motivator especially when it's a private organization (Llopis & Foss, 2016). Workers are also motivated by the need to gain recognition, as others get recognized; workers will also be internally motivated to perform better to gain similar recognition (Gerakos et al., 2017)

To help raise the level of intrinsic motivation, it is essential to have well-defined goals, a system of measurable progress towards the goal. Increased status after attaining the goal and rewards for achieving the goal (Gerakos et al., 2017).

Motivational Theories

Maslow hierarch of needs, Herzberg's Two-Factor Theory and McGregor's X and Y Theories will be discussed in this section.

Maslow's Hierarchy of Needs

The Maslow hierarch of needs is based on the need that people have to increase what they need to achieve in life (Kuranchie & Tawiah, 2016). Their needs are prioritized based on their importance, in the workplace; the task that brings them reasonable satisfaction are also prioritized and given more attention. Motivation at the place of work will rely on the physical, biological and the social needs that workers have at the place of work. Maslow created the five-stage theory that places needs according to the priority given.

In their work, Kuranchie & Tawiah, (2016) state that psychological needs revolve around the basics such as food, shelter, and clothes, with a place of work that can meet these, it means that productivity at the place of work may be higher. Safety and security needs play a huge role in employee motivation. The third tier comprises of social needs, they include association with others, when the organization can meet the needs, and it means there is a likely hood of improved productivity. Esteem which falls in the fourth tier ensures that the fifth stage of self-actualization is attained (Kuranchie & Tawiah, 2016).

Herzberg's Two-Factor Theory

As per Herzberg, there are two sides of the organization, factors that improve performance and those that reduce workers performance (Kuranchie & Tawiah, 2016). Factors improving performance are an achievement, job recognition, nature of the job, the level of responsibility and the conditions at work. On the other hand, institutional politics, supervision, pay, and the relation at the place of work reduce satisfaction. The theory recommends that the factors enhancing performance be perfected while those that affect performance are reduced.

McGregor's X and Y Theories

Theory X and Y theories categorize employees; theory X assumptions are that workers have to be threatened since they inherently dislike work. Workers have to be controlled, directed or even threatened. On the other hand, theory Y assumes that workers can reason, make decisions and have objectives to be achieved. The desire to commit to work depends on rewards got and the task assigned. The organization may opt to use one of the theories to motivate employees (Kuranchie & Tawiah, 2016).

Employee Compensation Theories

Compensation is the remuneration given to the workers for the work they do; employees are entitled to both financial and non-financial benefits for what they contribute to the organization (Ismail et al., 2015). Common theories include reinforcement and expectancy theory, equity theory and agency theory.

Reinforcement and expectancy theory works on the assumption that behavior that brings in rewards will be repeated. Workers will undertake activities when they are sure of rewards. The agency theory works on the assumption that workers will try to get the highest possible pay while the employer tries to bring it to the lowest, in this case, the salary will be reached through agreement. The organization may settle on pay based on outcome or employee behavior.

Equity theory works on the assumption that there is uniformity in the pay structure and the employee remunerations. When there is a feeling of being underpaid, workers tend to reduce their level of productivity. Equity can be categorized into internal equity, external equity, and individual equity. Internal equity is used as a metric by the workers to ensure that the pay received matches with that of workers in the same category. External equity measures the pay within the company and what is received by workers outside the organization. The organization should ensure that the pay matches the industrial average. Individual equity tells whether the pay received matches personal experience level. Workers may feel that they are underpaid based on what they contribute to an organization.

Stress Management

Stress is ever-present at the place of work, however, when the level of stress escalates beyond a given point; it becomes dangerous for the organization (Ismail, Mubarack & Azhar, 2015). Stress management enables the organization to work better; this is through increased motivation. The chances of workplace conflict are also reduced therefore making everyone lives easier and fun. Moreover, better stress management help to improve productivity in stressful situations.

To better manage stress in an organization, there should be mental, and first aid programs for managers to enable everyone in the organization have an understanding of health issues. Ismail et al., (2015) state that when workers are aware of healthy and unhealthy stress levels, the issues will easily be managed. The organization can also enhance a culture of communication; when workers are aware of mental health issues and how they affect them, the issue will easily be dealt with from within. Organizations should also increase the level of flexibility at the place of work (Ismail et al., 2015). This means that there should be programs such as compressed work weeks and work well being. Therefore, workers can easily talk about stressing issues at the place of work. When workers are learning to appreciate the stress that comes with work, the level of productivity is likely to be higher (Quick et al., 2013)

Clear communication policies mean that stressful situations will not easily arise, actions such as calling and emailing the employees after work should be minimized. Calls should only be done in emergencies (Ismail et al., 2015). On the management part, it is essential to review on how to lead and manage the team, ensure that the organization avoids tight deadlines, have a positive way of correcting mistakes and assign a task to people based on their capabilities. The management can be one of the stressors at the place of work.


There are various factors within an organization that affect its performance, one of them is employees and how they are motivated to handle work. Intrinsic motivators are essential in an organization to help ensure that workers have a positive attitude towards work. Motivational theories ensure that the organization picks up a theory to use as a strategy to enhance performance. On the other hand, better compensation ensures that employees will have a positive attitude towards work with a reduced level of stress.


Cerasoli, C. P., Nicklin, J. M., & Ford, M. T. (2014). Intrinsic motivation and extrinsic incentives jointly predict performance: A 40-year meta-analysis - psychological bulletin, 140(4), 980.

Gerakos, J. J., Ittner, C. D., & Moers, F. (2017). Compensation Objectives and business unit pay strategy. Journal of Management Accounting Research, 30(2), 105-130.

Ismail, M. B. M., Mubarack, K. M., & Azhar, A. G. M. (2015). The relationship between employee aspects and employee performance.

Kuranchie-Mensah, E. B., & Amponsah-Tawiah, K. (2016). Employee motivation and work performance: A comparative study of mining companies in Ghana. Journal of Industrial Engineering and Management, 9(2), 255-309.

Llopis, O., & Foss, N. J. (2016). Understanding the climate-knowledge sharing relation: The moderating roles of intrinsic motivation and job autonomy. European Management Journal, 34(2), 135-144.

Quick, J. C., Wright, T. A., Adkins, J. A., Nelson, D. L., & Quick, J. D. (2013). Preventive stress management in organizations. American Psychological Association.

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