Fair Payment System Essay Example | Topics and Well Written Essays - 1000 words

Fair Payment schema - Essay ExampleA rapidly growing body of literature and research indicates that flexibility and integrity have now come to occupy a vital place in remuneration schemes and the softness of strike a balance might results in breach of psychological contract. This flummoxs us to some germane(predicate) conceits in the discussion of fair pay system today. First we need to understand that when an employee starts working for an organization, it establishes a relationship between the employer and the employee. We call these exchange relationships since employee promises to offer something for the payment he hopes to receive. His services include loyalty, dedication, commitment and good performance. In return he hopes to be gainful in a way that would affect his talents and his input.One very heavy concept in this regard is that of equity theory that helps us to decide why we need flexibility and fairness while creating a remuneration strategy. Equity theory stud ies the psychological acknowledgment of world treated equally. This is a very relevant concept and one that is being utilize increasing in developing fair pay system. Equity theory states that employees must feel that they atomic number 18 being treated fairly when they comp be their pay with those of their counterparts at the same position. This is where inputs and rewards are closely studied. Employees would urgency to make sure that their input, if it is equal, must follow equal rewards. Adams (1965) explained that equity theory studies the ingrained mental impact that allows a soul to see how are efforts being rewarded and whether or not same efforts are being rewarded with similar returns. Equity theory further states that if people experience inequity, they will change their behavior in order to attain the feeling of equity or remove the tension that arises from the feeling of inequity. If they feel that their ratios are lower when compared to those of their colleagues i n the same position, they will start behaving in a negative fashion to bring their ratios at par with their efforts. Some will start coming late to work, or decrease their inputs or not meet deadlines etc. Psychological contract is another important concept which has been helpful in developing fair pay systems. Argyris (1960) who coined this term describes it as a set of practical and emotional expectations of benefits that employees and employers can pretty have of each other. Since that time, the term has been defined and redefined a number of times with Rousseaus definition becoming more or less influential An individuals belief regarding the terms and conditions of a reciprocal exchange agreement between the focal person and another party A psychological contract emerges when one party believes that a promise of rising returns has been made, a contribution has been given and thus, an obligation has been created to impart future benefits. (Rousseau 1989)Pay is generally the m ost important part of the contents of a psychological contract. In a UK study conducted by Herriot et al. (1996), it was found that employees utilize fairness and pay most frequently when work environment was discussed. It was the two things that topped the list of things that employees paid attention to when discussion of work environment came up. Pay for performance is the third most commonly discussed concept in development of fair pay system. Recent developments in the field of management and performance-based evaluation systems provide conclusive evidence of the fact that the understanding of