Mgm 570 Employee Motivation and Compensation

Mgm 570 Employee Motivation and Compensation

Total Rewards System

Walter Clay

University of Phoenix

MGM 570 Employee Motivation and Compensation

Mr. Foy Wallace

13 November 2006

Introduction

Motivating the individuals that work for you is one of the most important functions that you will have as a manager. (People Skills, 2006) Simply stated getting employees to do the things they were hired to do is probably the biggest challenge a manager will face. You will always have individuals who will work their hardest for the rewards the company provides them. On the other end there are some employees that you can never keep happy not matter what rewards you give them. In this paper, I will discuss the concept of total rewards using the five elements total reward system. I will also discuss the impact of rewards systems on the organizational performance of companies in the Information Technology (IT) industry. Then I will look at the importance of direct financial rewards in comparison to other elements of the total rewards system for the IT industry. Lastly, I will look at the compensation and motivation practices, which are of particular importance in the IT industry.

Total Rewards Concept

The total rewards system concept is simply about the financial and non-financial benefits given to employees in trade for their services to the company. The employees will give the company their time, their abilities and efforts to support the company in return for the benefits the company provides. Total rewards involve the combination of five essential elements needed to motivate, attract and retain employees needed to accomplish the organizations goals. They are:

?• Employee Compensation

?• Employee Benefits

?• Employee Work-life Balance

?• Employee Performance and Recognition

?• Employee Development and Career Opportunities

Total rewards is the approach of using the five items to develop an employee benefit package designed to achieve optimal employee motivation. The key to the success of this is that the employee sees the financial and non- financial benefits as important. Another key to the total rewards system is that the company invests the time and effort to make sure that the system aligns with the company's strategy. "Some organizations won't do the hard work required to tailor total reward. Ultimately, it depends on the value the employer places on employees. (Future Strategy, 2006)

Compensation is the pay that companies provides to their employees for their services to the company. Benefits are the programs companies uses to in addition to monetary compensation they provide there employees. Most of them are developed to provide protection for the employee and his family. The work-life portion of the total rewards system is the ability of the company to develop and implement programs that allows an employee to be successful both at work and at home. Performance involves the positioning of the business, team and employee efforts meeting to achieve the company's goals. Recognition acknowledges the employee actions and performance provided to the company. Development is key employees performing better and leaders to advancing their company. Lastly, career opportunities are plans that allow employees to achieve their career goals. In the end the only thing that allows the total reward system to be effective for the employee is that the employee see the benefits of a company's total reward system as providing them with everything their family needs and career satisfaction.

Reward systems Impact on Organization Performance

McClelland's Theory of Needs defines the three major needs affecting the workplace and is currently the main model used in describing employee motivation. McClelland's theory states that individuals are motivated by the needs for achievement, the needs for power, and the needs for association. (Hudy, 1992)

The need for achievement relates to an individual's basic drive to "do something better or more efficiently than has been done before". Individuals with this need will try to find challenging situations and will constantly seek ways to improve. This is probably the most researched topic of McClelland's Theory. IT professionals are achievement motivated individuals and prefer a modest degree of risk since they perceive