Employee Engagement: The Impact Of Wages On Employee Performance

Factors promoting employee engagement

Question:

Write an essay on “Employee engagement (wages and employee performance)”. 

Employees form a primary component of an organization. Enterprises rely most on the expertise of the employees to provide quality goods and services to the consumers. The performance of an employee depends on many factors ranging from the working conditions to compensation packages. It is important for an organization to motivate its workers to keep them focused on achieving the primary objectives. Employee engagement involves the provision of conditions that stimulate all members of an organization to work towards the realization of the primary goals and objectives (Camarinha-Matos &Afsarmanesh, 2006). It is a technique of influencing employees to go an extra mile to achieve success. The factors promoting employee engagement include integrity, trust, commitment, and communication between the workers and the employer (Anitha, 2014). Employee engagement is a technique that increases the chances of success in an enterprise (Kraus,Harms & Schwarz, 2006). Moreover, employee engagement plays a crucial role in improving individual worker’s performance (Tims, 2013; Truss et al., 2013). The method utilizes the skills of the employees to promote organizational success. An employee has to understand their role at the place of work to avoid misplacement of ideas and resources. The worker should participate in organizational activities as a team player.

Employees are important members of an organization. However, several organizations suffer for failing to involve their employees in organizational programs. For instance, the channels of communication utilized by organizations do not reach out to all the workers. The technological advancements present communication platforms such as the e-mail (Luxton et al. 2011). The conveyance of information through such platforms does not reach out to all the workers in the organization. In addition, there is a low level of interaction among the workers at the workplace. Employers promote the top-down communication at the place of work (Tolbize 2008). Such tendencies discourage innovation because employees cannot share ideas with their colleagues.

The paper seeks to demonstrate the impact of wages on employee engagement. The study concentrates on discussing wages as a factor that influences the activity of workers at the place of work. Moreover, the research discusses the sustainability of the approach for the employer over the course of employment of an individual.

Incidentally, it is useful to conduct studies on employee engagement to determine the desire for organizations to invest in the workers (Rich, Lepine & Crawford 2010). The study identifies the primary drivers of employee engagement in an organization. Moreover, the insights from the study are relevant for organizations to appreciate the need for assessing employee engagement.   

The study intends to influence companies to increase employee engagement. The information gathered from the study should enable organizations to identify opportunities for improving employee engagement in an enterprise. In addition, organizations should use the information gathered in the study to facilitate organizational growth. 

The development of the paper involved a series of studying several kinds of literature to determine the relationship between wages and employee engagement. The studied literature is credible because they are peer reviewed and belong to reputable authors. It was important to compare several pieces of information on the topic to determine the similarity and difference between the studies. The variety in the gathered knowledge demonstrated the importance of wages on employee engagement. The study includes three primary sections with subsections.

Importance of wages and employee engagement

The features determining performance pay in organizations depend on the observed and unobserved characteristics of employee performance (Lemieux, MacLeod & Parent, 2007). The authors indicated that employers in the United States pay their workers using bonuses and commissions. The researchers attributed the growing disparities in male wages over time to performance pay. However, firms find it difficult to determine the wages that are equivalent to the contribution of an employee to the success of a firm (Kahn & Lange, 2014). A company requires a system that determines the pay of workers according to their productivity. Managers and employers need to compensate the effort of an employee.

Accordingly, Boxall and Macky (2009) compared the perceptions of employees in High-Performance Work Systems (HPWS) and those in the low or medium investment in HPWS. The researchers determined that those workers in the High-Performance Work Systems had several features at the place of work. Such characteristics included lower job satisfaction, higher awareness of job pressure, and sentimental commitment. The HPWS benefits both the employer and the employee. An employee gets committed to their duties fully because the organization demonstrates their value through high compensation (Boxall &Macky, 2009). On the other hand, the employer gains from the increased productivity because of employee’s commitment (Dixit & Bhati, 2012).

According to Osterman (2006), the process of determining wages is an important aspect of managing an organization. The researcher acknowledged that previously, scholars ignored the necessity of determining wages within the firm. They placed much emphasis on the market conditions to determine wages. The determination of wages within the firm is an important aspect of doing business. Currently, the focus on the firm has gained momentum unlike before when much emphasis went to the market-wide contemplations. Therefore, an organization should focus on the internal systems to determine the wage of its workers.

Conversely, the ever-changing market dynamics call for flexibility in the systems of an organization and the skills of the employees (Patel, Messersmith & Lepak, 2013). It is important for organizations to keep investing in training workers to cope with the emerging market conditions (Dearden, Reed & Van Reenen, 2006). Training improves the dynamism of a worker thus enabling the organization to cope with the unpredictable market trends (Aguinis & Kraiger, 2009). Training of the employees is crucial especially in companies seeking specific skills of an employee. General training of workers equips them with skills that fit in systems of other companies within the industry (Harcourt & Wood, 2007; Aguinis & Kraiger, 2009). Therefore, a firm risks training an employee for the competitor. On the other hand, firm-specific training equips the worker with skills that are only applicable to the operations in the current firm.

Correspondingly, the wage bracket is among the factors that contribute to the motivation of an employee. Employees are likely to get discouraged in the event of realizing a co-worker with similar responsibilities earns a higher wage (Englmaier, Strasser& Winter 2014; Munnell, 2007). In an organization, the wage structure should be comprehensive enough to cover the different levels of hierarchy. According to Gächter and Thöni (2010), a reduction in the wage of a worker results in reduced productivity. However, such a reduction involving one employee in the firm does not affect the entire workforce.

Studies on employee engagement

Incidentally, money is functions as an agent of motivation. The motivation of an employee occurs through different processes including monetary value (Kuvaas, 2006). The workers derive happiness from the salaries they earn. An increase in salaries registers a positive impact on the productivity of an organization. An employee is likely to keep working harder in a position that attracts a higher salary. The increase in wages promotes encourages commitment among workers because they want to retain the trust of the employer and positions of operation (Kalleberg, 2009). High wages are likely to encourage a worker to devote more time for the activities of the organization (Kuvaas, 2006). There is a tendency of people associating higher salaries to job security. Highly paid workers have a feeling of job security and decide to settle in the organization thus promoting productivity.

Parenthetically, an organization consists of the living and non-living components. The living part of an organization ensures the utilization of the non-living elements. Human capital is a living component in the life of a business (Sule et al., 2015). Employees formulate policies and implement them according to the specifications of the organization. The operative works to achieve the objectives set by the employer. The commitment of a staff member deserves recognition because they contribute towards the profit margins (Kalleberg, 2009). Compensation of the members of staff is an obligation of the employer. The production of goods and services depends on the availability of qualified personnel. Therefore, there is no production of goods and services in the absence of human capital. 

Incidentally, the efforts of rewarding performance through wages should be flexible depending on the market situation. The employer should appreciate the complexity of the process of measuring and rewarding employees (Lemieux et al., 2007). There exist different rating systems between the performance pay jobs and other jobs in the United States of America. The tendency started in the 1970s and has continued until today where there are inequalities between wages of performance pay jobs and other forms of employment. The increase in performance pay jobs is the primary factor causing wage inequality in the US (Lemieux, 2008). The scholars insisted that the workers who receive payment for the effort towards success in an organization rarely belong to a workers union.

Conversely, employers should utilize different methods in determining the value of an employee and reimbursing fully. Firstly, the employer should consider evaluating the needs of a job during the determination of wages. Evaluation of the needs of a job allows the management to identify the wage that is compatible with the job value(Lemieux et al., 2007). Such a system involves fixing compensation before recruiting an employee. The organization has an existing payment system according to the importance of the role. Since the compensation is directly proportional to the features of the job, the human resource department sources for the most qualified person to take up a role. It is important to find an employee whose qualifications and expertise fit into the job requirements.

Determining performance pay in organizations

Similarly, employers can opt for another system of compensation where the reward depends on the productivity of a worker (Lemieux et al., 2007). In this case, the employer compensates the employee’s contribution to high productivity rather than the requirements of the job. Therefore, an employee has a basic pay that reflects the value of the job and additional compensation taking care of the achievement. Such a compensation system motivates employees to work extra hard to realize the targets at their roles. The system has the potential of affecting the worker’s contribution to an organization positively.

Conversely, Boxall and Macky(2009) insisted that an organization can only improve productivity if its workers demonstrate greater effort and behavioral attributes to assist the company succeeds. Employees’ commitment to the process of working to realize the objectives of an organization is a crucial component of success. The employer benefits when the worker if committed fully to their roles and responsibilities. The employees feel the impact of the HPWS directly in an organization. However, research has not taken an interest in determining the effects of the HPWS on an employee in a firm.

Accordingly, HPWS includes a series of techniques utilized be an organization to realize high performance (Messersmith et al., 2011). Employers use different innovative measures to improve the productivity of the workers to retain a competitive advantage over their competitors. The relevant Human Resource policies that promote the HPWS include conditional pay systems, employee involvement initiatives, and job security (Boxall &Macky, 2009). However, the scholars criticized the approach of the previous research on the importance of the HPWS. The scholars claimed that the studies considered employees as objects in the systems that conform to the conditions of the workplace. According to Boxall and Macky(2009), the people at the place of work have the ability to change the conditions of the workplace. Employees are active components of an organization who are likely to instigate organizational changes. Moreover, the scholars pointed out that there is a possibility that improvements in an organization’s performance result from the intensification of work. Boxall and Macky(2009) acknowledged the role of higher job satisfaction in the success of an organization.

Incidentally, the indicators of the contribution of the HPWS in an organization include improved quality of work, increased pay, and constructive psychological inferences (Boxall &Macky, 2009). Such contributions have the potential of elevating the general performance of an enterprise. Evidently, HPWS can result in high productivity if they are integrated into the management system carefully. The employee is the source of energy in facilitating productivity. Therefore, investment in the worker indicates the desire to increase production in an organization.

In his study, Osterman (2006) demonstrated the effects of wages in the manufacturing industry. The study indicated that Higher Performance Work Organizations (HPWO) translated into high wages in the blue collar jobs. The situation was different in employment opportunities requiring high skilled labor force. For instance, the computer-based technologies had higher wages due to the gains in productivity and the value of skill and technology. The skills for the white collar jobs are rated highly and the employees in those areas of employment receive higher wages compared to employees in the blue collar industry. Moreover, the HPWO systems played a significant role in increasing the wages of top organizational leadership. It is important to indicate that the researcher did not link the HPWO-related wages to the higher wage inequality among the employees.

Impact of High-Performance Work Systems on employee engagement

Incidentally, an employee loses the skills acquired through firm-specific training when they leave the organization (Dearden, Reed & Van Reenen 2006). Training of the employees in firm-specific skills is a method of reducing employee turnover. The tendency of training employees indicates the firm’s commitment to the developing the careers of its employees (Gong 2009). It is an indicator that the organization values an individual as part of their team. Companies have the tendency of taking care of the cost of preparation in the general training category. On the other hand, a firm pays part of the training cost when the teaching is specific to the enterprise. The factor that promotes the ability of a firm to pay for the general training is the slow steady increase in wages during the training. Therefore, the company has enough resources to direct towards the training exercise. In such a case, the training contributes to the productivity of employees more than the wages thus availing resources to the company to invest in training.

Accordingly, training plays a significant role in determining the wage structure of an organization. Training improves the skills of an employee thus translating into higher productivity. The productivity of the employee has a positive impact on the profit margin and determines the wage structure of a company. Therefore, training is a primary component of both wage determination and employee engagement. Since training has the potential of reducing employee turnover, the organization benefits more in the long-term. Evidently, the study indicated that training translates into increased performance. In this case, training is a crucial component in ensuring employee engagement.

Conversely, harmonization of wages within an enterprise is crucial to success (Millán et al., 2013). It is necessary for a company to determine the compensation package of the employees without biases. The involvement of an employee in the activities of an organization depends on their happiness. The tendency of unjust payment of wages in an organization contributes to the reduction in morale, high employee turnover, absenteeism, and low productivity. Therefore, the wage structure should not demonstrate biases towards its employees. The employee is an important stakeholder in an organization. Absenteeism, for example, affects the flow of activities because the supervisor has to allocate the roles of the absent employee to other workers in the organization. The present employees perform extra responsibilities, which might result in low productivity.

Correspondingly, wages are crucial in determining the happiness of an employee. The level of commitment depends on the state of mind of an employee. There is a tendency of employees committing their services to employers who pay the desired wages. It is important for an organization to improve the compensation packages periodically. Workers normally seek the intervention of trade unions to facilitate their fight for better salaries and improved working conditions. In many cases, strikes and demonstrations seek to have the employer paying a higher salary. Trade unions negotiate with employers on the behalf of their employees for attractive wages. Such actions demonstrate that money is an aspect that determines the happiness of an employee.

The role of wages in managing an organization

Accordingly, well-paid employees recognize their value for an organization (Brickson & Akinlade, 2015). Such a feeling motivates the employee to perform to their full potential because the firm compensates their services fully. On the other hand, those workers earning minimum wages get discouraged at continuing in their roles in a company. Workers desire the employer to compensate their services. Once the employer fails to provide the desired payments, some workers seek greener pastures elsewhere. Well-paid workers remain to perform their duties according to the expectations of the firm (Hong et al., 2012). Such employees are unlikely to seek similar job opportunities.

Subsequently, the employer should pay wages and salaries to compensate the services of its human capital (Sule et al. 2015). The employer gains profits from the efforts of the workforces and is obligated to satisfy the financial need of the workers through payment of salaries and wages. Moreover, motivation affects the extent of an organization achieving its objectives. Highly motivated employees take put much effort in realizing the objectives of a company (Hong et al., 2012). The scenario created by motivation challenges employers to maintain the traditions of rewarding good performers. Motivation influences performance thus a firm must find methods of sustaining it to retain higher achievers. 

Conclusion

Many factors affect the productivity of an employee in an organization. An employee seeks to work in a firm that values their skills and compensate fully. Organizations all over the globe employ different systems to influence the performance of employees. The call for higher wages occurs because money affects the happiness of a member of staff. Well-compensated workers are happy and remain committed to their duties. Organizations that pay attractive wages experience less employee turnover thus retain their competitive advantage. Low wages discourage the employee from utilizing their full potential while in service. Also, it instigates the intention of an employee to leave the organization. Different factors determine the salary and wages of a member of staff; however, a firm has an obligation to pay a value that is equivalent to the services of the employee. Employees are a primary element in a company because they facilitate the production of quality goods and services. The level of employee engagement determines the extent of success in a company. 

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