Behavioural Influence of Executive Pay Plan Essay

Behavioural Influence of Executive Pay Plan - Essay Example While economists tend to place importance on money as a strong motivator, behavioural scientists tend to consider it weak. Pendleton, A. notes in his book: "achieving change in employee attitudes and behaviour has often been an important objective of those introducing employee share ownership schemes. It is thought that share-owning employees will feel greater commitment to the firm and a greater sense of identity with its aims"(154). The idea of inculcating a higher sense of ownership among employees to enhance overall company performance seems to be the underlying reason for this new plan. Whether there is a direct relationship between share ownership and greater employee motivation and commitment is debatable. It is however likely that ownership which encompasses employee participation can make the employees react in a positive manner. "Consistent with incentive theory, the evidence also shows that firms and workplaces with shared compensation practices have a higher incidence of shared decision-making/information sharing practices" (Conyan and Freeman 1). From the employee perspective, making employees stakeholders, can induce a higher sense of responsibility among them and give them a sense of greater role in decision-making. However if this expectation is not met, it could then lead to a sense of frustration and discontentment. The other reason for employee discontent could be related to share value. If it falls for reasons that employees perceive as beyond their control it could work as a demotivator and impact employee morale. Aptly pointed out by Cooper and Rousseau: As the destiny of employees becomes more tightly integrated through ownership via financial participation, issues of work/life separation (shared futures with the fortunes of the organization) and the very meaning of work will be raised. What will be the consequence for employees in terms of role confusion, wellbeing and stress levels, work values, commitment, cooperative versus competitive behaviours The confusion in identities also comes hand-in-hand with an increasing diversity of psychological contracts at work-or certainly the attitudinal stances within these contracts towards HRM policies aimed at a performance culture, and shared risk policies and practices (Sparrow 2000a). Not all employees seek increased financial participation or involvement in their organization. The assumptions of generic improvements in motivation, commitment, and engagement with the commercial process that seem to underlie much of the popular discussion of employee ownership are by no means proven. Inde ed, there are more grounds to expect wide individual differences in the in the attractiveness of such a concept, and the relevant outcomes noted above ( 52). The new reward system is bound to influence employee perceptions and impact behavioural factors which will influence motivation, performance and morale. This is discussed below. Commitment and Recognition versus Individual Goals Mitchie, Oughton and Bennion note that "the positive effect that involvement and participation policies have on motivation and commitment may be enhanced and made more effective and