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On Pay, Incentives and Contributions Published: Sunday, February 11, 2001 By: Dr. Manuel Angel Morales

An interesting human resources management question is how much compensation, incentives, recognition, prestige or privilege does any particular group of executives want within an institutional setting. The answer on conventional terms, could vary from none to all. But let me share with you some solid and empirical grounds with respect to this delicate organizational issue. The proposition is the following: Professionals, executives and other occupational groups want all the pay, incentives, recognition, prestige and privileges that is proportional to their formal education, experience, skills, and the complexity of their tasks and responsibilities. This proposition hold true while working with groups, teams and individuals.

There are always the power hungry among us, but the organizational and management crucial issue is how much resources and discretion over strategic decisions the professionals want. Unskilled workers will want very little, while highly skilled workers will want a lot.

Highly educated teams and groups compare themselves with other teams and groups. These comparisons are made within and among particular institutional sectors. For example, professors at the University of California compare themselves with professors at the University of Stanford, and seldom with managers at any other corporation. These comparisons are made within the contexts of similar organizational settings. It is here that the rankings of terms of education, experience, scope of work and skills are specially important for shopping expectations relative to pay and fringe benefits. Various levels of education and skills imply relative to groups who have comparable levels of incentives and compensation packages.

The most critical dimension in economic organizations is material benefits. In the areas of education, science, health and welfare, privilege and flexibility may be a very important dimensions, balancing the pay factor. The relative importance of each dimension such as autonomy, developed professional relationships, just means that certain trade-offs are allowed.

Thus, professionals are given considerable flexibility in terms of their own capacity to organize and perform their work, but much less pay than one would expect on the basis of their education. Those executives, managers or professionals who must work long hours on a regular basis are given much more pay than one would expect given their formal educational level.

Finally, the incentives/contributions theory asserts that the individual`s decision to participate in an organization and the organization`s decision to include him rest on a psychological contract sometimes expressed in great detail, sometimes largely implied or tacitly understood, about what each of the parties will contribute and receive. This contract, explicity or implicity, provides limits on the organization in terms of what can be requested from individuals. However, there remains a "zone of indifference" or a "zone of acceptance", which indicates that within the confiner of the contract, the organization can specify several sets of behaviors and the individual is indifferent to such requirements.

There is a quid pro quo dimension to the incentive/contribution contract, for it defines what is expected of individuals in terms of jobs needing to be done, and it defines incentives which the organization promises for the appropriate performance of such tasks.

In post-modern societies the content of the incentives/contributions arrangement is determined through a kind of institutional political process…


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