Stimulative payroll system from the process theories of motivation point of view: A case study

Abstract

This case study analyzes the existing characteristics of the performance measurement system and incentive payment in an international manufacturing company in Serbia, from furniture industry. The main aim of the paper is to understand the cause-andeffect relationship that the performance-based payment system has on employees and the organization, that is, to assess the real motivational power of rewarding employees with financial incentives. The aim of the paper is to analyze the advantages and disadvantages of incentive pay systems from the point of view of process motivational theories that deal with the cause-and-effect relationship of motivation for work, performance and job satisfaction in people. A case study method was used. The existing practice was evaluated with a purpose-built instrument, based on assumptions derived from process theories of motivation. The results indicate that regardless of the high salaries of employees (up to 30% higher than other employee salaries in the market), there is still high employee turnover and absenteeism, reduced motivation, dissatisfaction and unethical behavior. The causes are inadequate and unrealistic goals, non-transparent performance measurement, frequent changes in teams, lack of work resources and technical training, as well as numerous operational problems in the company. After the identification and analysis of the current method of performance management, practical recommendations were given on how to overcome the observed shortcomings and increase the satisfaction and motivation of employees.

Keywords

• incentive pay
• performance management
• employee motivation
• goals
• process theories of motivation