Question

When we look at designing compensation programs, we need to remember that we are trying to motivate the employee to do the things that we need them to do, consistently, over a period of time. Probably the most significant theories that help you to understand compensation planning and employee motivation are expectancy theory and equity theory. Which theory is more in line with your own philosophy on employee motivation?

Answer 1

Compensation and benefits is the monetary and non-monetary benefits provided to the employees by the firm. It is a crucial part of Human Resource Management (HRM) which keeps the employees motivated. Companies which have a robust compensation and benefits policy are able to attract a better talent pool. Compensation involves monetary incentives such as salary, bonus, etc. Benefits are non-monetary incentives such as health insurance, medical facilities, etc.

There are various motivational theories such as Herzberg’s two factor theory, Maslow’s hierarchy of needs and ERG (Existence, Relatedness, Growth) theory on team motivation. The motivational theories can be both need-based as well as process-oriented. In my opinion, Douglas McGregor’s X and Y theory is in line with my philosophy on employee motivation.

According to Douglas McGregor’s theory X, employees do not intrinsically like to work and hence close supervision and tight control is required from their managers. According to Douglas McGregor’s theory Y, managers should try to create a work environment that is participative and provides opportunities to employees to practice self-control and self-direction.