Managers are like all other employees in the organization. Managers work, have their tasks and goals. They need motivation just like their subordinates. We can even say that the manager needs not only motivation but also precise incentives for development.
The incentive mechanism applied should be known in advance to the behaviors, and not in general terms, but the greatest detail concerning:
The exact parameters of the desired managerial behavior and those expected by the management, as an expression of the interests of the whole, work results, criteria for evaluating the behavior and its results, by which the preliminary incentives and sanctions will be driven, a combination of different types incentives and sanctions, as well as the conditions under which they are offered,
the time intervals after the completion of the behaviors and the receipt of results from them, as well as after their assessment by the relevant bodies, in which the management entities will collect the envisaged incentives or sanctions. Reference: “Fundamentals of management and classification of management functions”, https://www.libraryofmu.org/fundamentals-of-management/
Remuneration is an independent management activity, but in many organizations, it is joint with the activity “labor evaluation”. It is considered that this is right, because the principles of usefulness, quality, fairness in personnel management are respected.
In essence, the activity “remuneration” is an application of the strategy and policy of the organization in the field of human resources. Remuneration must be made following the value of the people, under the value they have for the organization. This value is measured by the contribution of people to achieving the goals of the organization.
The subject of this management activity focuses on:
Financial remuneration (monetary, monetary);
Non-financial remuneration (non-monetary, moral).
The reason for combining the financial and non-financial rewards of the people in the organization is that only under certain conditions the increase of the salary can stimulate the increase of the labor productivity and the efficiency of the organization. One of these conditions, for example, is that there is an attitude in people that there is a link between wages and productivity and that increasing productivity affects their wages. Many managers make mistakes here. Reference: “Different types of managers”, https://bvop.org/journal/types-of-managers/ (BVOP.org) They reward people’s efforts according to the length of service and working hours and take very little into account what results they achieve and whether they affect the goals of the organization. Reference: “Manager vs leader: similarities and differences”, https://pm.mba/posts/manager-vs-leader/
Remuneration management is mainly concerned with the design, implementation, and maintenance of payment systems that help to improve the quality of the organization. To do this, systems must ensure competitive and equivalent pay levels and structures, and that remuneration is directly linked to the contribution, quality, and potential.
Today, the emphasis is on performance pay to achieve productivity through people.
Everyone’s salary consists of three components. One part is paid for the performance of labor duties and all those who have the same obligations receive equal pay. The second part of the salary is determined by the length of service and some factors of life. Everyone receives this amount, but its amount is adjusted annually and automatically. The third part is different for each worker and is determined by his results in work. However, the bad worker understands that this part of his salary is quite minimal. A good worker understands that it is as big as the other two parts of the salary combined. It does not increase automatically, but depending on the degree of responsibility, etc. if the results of the worker’s work fall, it must be “cut” from its variable part. Thus, wages, the real part of them, is related to productivity, ie the results of work.
Productivity also leads to changes in wages.
Objectives of the management activity “remuneration”:
- Maintaining high motivation in professionally adapted people;
- Maintaining high performance;
- Productivity and efficiency in the organization;
Therefore, the remuneration objectives can be achieved if there is a link between this management activity and the other activities. Remuneration, for example, must be in line with labor design, human resource planning, labor analysis, labor evaluation. It can and should be used to maintain effective working and working relationships with staff. Reference: “Knowledge and skills of the manager”, https://projectmanagement.news.blog/2021/07/09/knowledge-and-skills-of-the-manager/
Remuneration or remuneration structures need to be created to attract, retain and motivate people who want to work in the business unit. To accomplish this, the payment system must be:
Externally competitive – market levels must be observed or otherwise it will not be possible to attract good quality staff. It will also be difficult for them to stay unless working for the company gives them other benefits that money cannot buy;
Internally equivalent – the payment system must feel fair. There is nothing more likely to motivate someone than the knowledge that other people get more for the same job or worse, to do less responsible work. If extra money is given as a bonus, care must be taken to ensure that it is well deserved;
Able to give a reward that is commensurate with performance – even if they are not the only one, money is the most effective motivator and their impact does not have to be long-lasting. Reference: “The profession of the manager: How to become one”, https://scrumtime.org/profession-of-the-manager/
To accomplish all this you need:
- Understand the factors that affect pay levels;
- To know how to obtain reliable information about market levels;
- To know how to evaluate the work to obtain an equivalent salary structure;
- Understand the different payroll systems that can be applied;
- To be able to build and maintain a pay structure;
- Introduce and manage an administrative payment system that achieves efficiency and economy in operations.
Remuneration procedures for managers
Remuneration procedures begin with the development of a strategy and policy for the remuneration of the people in the organization. The strategy and the policy of remuneration are an expression of the intentions of the organization to ensure job satisfaction, to motivate above all the competent people. The remuneration policy indicates specific ways of implementing the strategy. It is developed based on the factors that in a certain period cause good and high performance, motivation, satisfaction. In addition, the values and principles of corporate culture are taken into account in the development of the remuneration policy. One of the main things in the remuneration policy is to determine the structure of payments. Reference: “Motivating the behavior of the manager”, https://agileprojectmanagement.home.blog/2021/07/10/motivating-the-behavior-of-the-manager/
How they are stimulated, as well as the amount of remuneration that individuals receive in the various units of the organization are also a prerequisite for conflict. Very often people do not evaluate a situation objectively but consider only some alternatives that are favorable to satisfy their personal needs or the need of their group.
Most of them overestimate their importance and underestimate the importance and role of others. Another source of conflict is differences in values. Other reasons for conflicts are the differences in life experience and education between the representatives of the different divisions in the organization.
The motivational process is seen as part of human relationships and part of programs that provide opportunities to improve performance.