Economic Reward Models

Out of necessity, people work to make a living. Yet in strictly economic terms, the issue of payment is complicated. To begin with, someone’s overall satisfaction with his or her compensation depends not only on salary (gross income and take-home pay) but also on raises (upward changes in pay and how these changes are deter- mined), how income is distributed (the number of checks received or salary differences within the company), and what benefits an employer offers (stock options, tuition credits, on-site gym facilities, vacation time, sick leave, health insurance, pensions, and other services). Each of these factors constitutes part of a formula for satisfaction . In fact, many rewards are not monetary but symbolic—such as titles, office size, location, carpeting, furnishings, windows, and the ability to regulate access by others.

Perhaps the most basic theory of worker motivation is Victor Vroom’s (1964) expectancy theory. According to Vroom, people are rational decision makers who analyze the benefits and costs of the possible courses of action. Accordingly, he said, workers become motivated and exert effort when they believe that (1) their effort will result in an improved performance, (2) their performance will be recognized and rewarded, and (3) the monetary and symbolic rewards that are offered are valuable and desirable. Over the years, this theory has been used with some success to predict worker attendance, productivity, and other job-related behaviors.

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