From new pay to the new, new pay?

Trevor, Jonathan (2013) From new pay to the new, new pay? WorldatWork Journal, 22 (1). pp. 19-28.

Abstract

Alignment is a central concept within the established logic of strategic HR management. Human resource management (HRM) systems and processes create value by closely aligning valuable human capital to the strategic direction of the firm. The outcome is a workforce that is both capable and motivated to execute the strategy of the organization, in whatever form that may take. Pay is central to establishing and maintaining alignment between what matters to employees and what matters to their employer. The emphasis traditionally has been to attempt to limit the risk of potential conflict over pay. More recently the focus has shifted to view pay as a strategic lever by which management can generate enhanced employee commitment, loyalty, motivation and positive behaviors for superior firm performance. This article discusses how contemporary pay systems often fail in this role due to unavoidable barriers to their effective design and implementation. Research by the author indicates that attempts to use pay strategically produce unintended consequences, many of which result in unnecessary conflict. The consequence is most obviously to limit employee engagement, motivation and commitment. But worse yet, enhanced conflict reduces the likelihood of employee discretionary contribution and produces instead negative and damaging behaviors. Difficult to get right and easy to get wrong, this article argues that it is time for a new, New Pay. It concludes by proposing that pay should be managed as a risk with a clear focus on protecting value, while enabling effective leadership as the best means of securing employee alignment.

Item Type: Article
Keywords: compensation
Date Deposited: 18 Feb 2016 12:05
Last Modified: 18 Feb 2016 12:05
Funders: n/a
URI: http://eureka.sbs.ox.ac.uk/id/eprint/5902

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