Factors Determining Pay

Maslow mentioned in his theory, managers who are following this theory deflect their attentiveness to offering complementary pleasing relationships, more attractive work, and more opportunities for self-fulfilment.

On other hand, Herzberg in his theory suggests that there are two basic needs of individuals such as hygiene factors (environmental factors) and motivation factors. See (Appendix 3). Managers who following Herzberg theory, they reject money as a motivator and put attention on supplying more job enhancements.

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According to McGregor’s theory, managers’ may follow two different theories which is theory X and theory Y. Pursuant to theory X, the average employees dislikes work and will avoid it whether he/she know what to do or not, that is why employers suggest Theory Y which lead them to do excellent job and manager offer opportunities to do a job done. However, McClelland focused interest on providing employees the capability to persuade their needs for success, power, and relationship.

Companies use both positive amplification and negative amplification to motivate employees. Managers may use positive motivation techniques to persuade employees to create good quality job. Some managers may use negative motivates techniques to encourage employees and stop them from bad manners. However, companies reward their employees with both touchable products, as well as admire. Mangers may reward their employees by providing weekly or monthly bonus or free lunches, many managers reward their top employees by praising them.

For example: Tesco use two motivation theories – Maslow and Herzberg, see both hierarch in (Appendix 4). Tesco uses Maslow theory because it suggests the company if they achieve one level then it motivates them to achieve the next one. Also Tesco aims to motivate its staff both by paying interest to hygiene factors and by enabling satisfiers. For example, Tesco motivates its staff by good communication, by giving responsibility and involving employees in decision making. Tesco allow the staffs to be part of the talks on pay rises. This shows credit of the work that staff do and rewards them.

In Tesco they rewards staff for their works because it keep motivates them at work and will carry on applying different motivation theories at work. Sum reward use by Tesco in a way of getting employees to welcome the complete value of their benefits package. Tesco also follow pension system and this will usually include pension assistance that the employer creates on the employee’s behalf and being process in payroll department. They also reward employees by giving them extra benefits such as car insurance and private medical insurance, by special offers and discounts. See Tesco’s reward system in (Appendix 5).

Job evaluation is really an extensive process and it must have to follow some in a systematic approach. At the start of this process management must make clear to its employee the reason of this program and importance of it. After that a group has been fixed where all the knowledgeable HR specialists and employees are included. On the next step organisation choose the job from the every department that they are going to evaluate. Then the selected job investigates by the committee in detail. Next, the committee chooses a method for the job evaluation. There are two methods that have followed to evaluate a job and these are:

Analytical – points rating, factor comparison, proprietary brands; and

Non-analytical – job ranking, job classification, paired comparisons

The other factors determining pay:

The pay which is award to a work can be influence by various factors and that creates some difference between the roles and the organisations. Those factors are as follows:

Size of the organisation


Skills and experience

Industry sector

Profitability of the organisation

Employee performance

There are two types of rewards: Extrinsic rewards are tangible rewards that employee receives from their good performance, such as bonuses, salary raise, gifts, promotion, compensation and commissions. Intrinsic rewards are inclined to give personal satisfaction to an employee, such as information, feedback, recognition, trust and relationship.

Employee bonus systems are a positive strategy and can provide actual motivation. Moreover to monetary thoughts; bonus systems take into account factors such as attendance, customer service, quality, group and individual performance. Also bonuses increase employees’ motivation and output. It improves employees’ morale and gives them self-esteem. However, a carefully planned bonus scheme can improve retention which helps preserve the best employees

Salary raise is other types of reward system and it is one of the most significant motivators of the employee, also it is the key motivation behind an employee’s performance.

Promotion is one the most important types of reward system, where an organisation reward an employee by moving them from their position to higher position. Promotion improves employee morale and job satisfaction.

However, improved performance is an effectiveness of reward system, where it helps employee to do well performance because by doing this an employee can get extra reward forms the organisation. By the side of this reward employees also put their efforts, skills and knowledge which help them to learn something new.

However, reward system also boosts profit, where a company has good opportunity to make profit because employee works honestly and carefully. It also helps to bring positive psychological contract between employees and the organisation and creates a better working environment and helps organisation to keep gifted, potential employees with them.

There are some methods that use by Tesco to monitor their employees’ performance. Tesco use observation and feedback to monitor their employee performance. On this system Tesco hire someone for monitoring the performance of the employee and after providing feedback straightforward. By observing and providing feedback Tesco can give the accurate shape to the employee which is expected to them.

Tesco also use performance standards and it is one of the employee performance monitoring system where performance has been compared with the criterion and there employee need to accomplish this criterion. Under this system performance must have to be realistic, measurable and have expressed in terms of time, quality, cost, quantity, effect, or manner of performance.

Performance evaluation is another method that plan by Tesco to determine the actual job performance of an employee against chosen performance standards. In Tesco employees’ are interviewed to talk about their performance to identify strengths and weaknesses, and to create a plan about how weaknesses, can be improve and how strengths can be increase.

Tesco also uses a method known as “360-degree appraisal” (Business Case Studies, 2013). Where in this method all Tesco’s stakeholders evaluate an employee’s performance and give them feedback. For example, manager of one department get feedback from their manager, from the HR department and their team.


The conclusion of this report shows that employees’ motivation and reward are very important. There are many types of theories of motivation such as Maslow’s, Herzberg’s, McClelland’s and McGregor’s theories. Each theory has a slightly different view of a leader’s and employee’s motivation. Motivation is managers’ action to influence employee’s behaviour at work, so that perform as required in order to achieve organisational goals. Reward management can be view as a type of management practice where employees are rewarded for their performance. Rewards can be tangible and intangible benefits to employee as part of employment relationship. Employees see reward as a return in exchange of their performance being appreciated by employer.

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