There from past studies is that pay indeed

There are many ways to motivate employees to perform highly. Amongst the common approaches used to motivate employees perform well is financial incentive. It is the common belief of employers that high salaries and commissions motivate employees to perform highly.

This theory has worked in some cases since pay increases have generated desirable outcomes such as high performance, low turnover rates and high demand in the labor market. When employees perceive that they will be well remunerated for performing in a certain manner, they strive to achieve the targets set by their employers.

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The theory that ‘pay generates motivation in employees’ originated from the belief that workers go to work so as to earn money. This means that the primary drive for laborers is money since that is the reason why they go to work. What has been established so far from past studies is that pay indeed motivates employees to perform highly (Cameron, 2006).

Pay does not however guarantee that there will be high performance from all employees since people react differently to stimuli. Whereas some respond favourably to pay packages, others want job security, recognition or improved working conditions. Pay therefore without a doubt motivates employees to perform highly but it does not work a hundred percent on all workers. It cannot be used as the only motivational factor that is applied so as to bring about high performance in the workplace.

Pay does not successfully bring about desired outcomes because it shifts focus from the job to money. If employers make it a rule that high performance is rewarded with increased pay, employees perceive that the only reason why they work hard is to receive high income.

Hence those employees who are contented with their pay get no reason to put in additional effort in their jobs. Pay as opposed to other sources of motivation is money centered and not job centered. Even though pay increases performance in the short term, it cannot be relied upon for long term sustenance of performance.

Eisenberger, Rhoades and Cameron (1999) brought out that if performance reward expectancy is to be relied upon, there must also be high levels of job satisfaction amongst employees. If employees do not show interest in their day to day routines, then only those who desire to remain controlled will respond to pay incentives. This is not desirable for companies that try to instigate employees to practice self leadership.

The motivating effects of the organization’s compensation programs can be measured through a three stage action plan that includes: setting standards, measuring employee performance and giving feedback (Neely, 2001). Measuring the effect of a motivational program starts with the setting of objectives and standards against which performance can be compared. Comparing performance vis-a-vis standards should be done regularly and accurately so that the results can be reliable when used for rewarding employees.

Giving of feedback is also particularly important during appraisals. Regular feedback ought to be given to employees so that they can be aware of their progress or weaknesses throughout their performance record. When measuring the motivating effects of the organization’s compensation programs, it is important to set challenging standards which are realistic, achievable and related to the company vision.

In summary, the role of compensation plans in the motivation of employees is dependent on the nature of job, employees and effectiveness of their implementation. Pay motivates employees if it is used strategically to boost performance related employee appraisals. The motivating effects of the organization’s compensation programs can be measured through setting standards, measuring employee performance and giving regular feedback.


Cameron, J. (2006). Rewards and intrinsic motivation: resolving the controversy. Charlotte: Information Age Pub Inc

Eisenberger, R., Rhoades, L. & Cameron, J. (1999). Does pay for performance increase or decrease perceived self-determination and intrinsic motivation? Journal of Personality and Social Psychology, 77(5): 1026-1040

Neely, A. (2001). Business performance measurement: theory and practice. Cambridge: Cambridge University Press