The new base salary refers to the initial amount paid to the employee, excluding any allowances. A new base salary positively impacts the employees’ job satisfaction in a company by attracting top talents, increasing motivation, and boosting loyalty (Purwanto, 2020). Employees in a company always put themselves in that state of mind of becoming financially stable. This is worth the new base salary, where the employees will understand their value by seeking positions worth paying. In this case, the employees’ research what other companies compensate their employees. This will attract the top talents when new base salaries are more in one workplace than the other. From the case study, different packages are offered to the employees, hence the lack of talent attraction. Therefore, a new base salary is important to the employees’ job satisfaction since the best candidates for a company are attracted.
The second reason for having a new base salary is its ability to increase employee motivation. In order to improve job satisfaction in a workplace, a proper compensation of the employees should be conducted. This indicates that the organization treat their employees as human beings by valuing them as workers. The need on new base salary increases the overall morale of employees, while motivating them to going to work early and performing extremely perfect. In addition, when employees know that there is a new base salary, they will be increasingly motivated to deliver good job results. In most cases, the new base salary of a company is the determining factor of success among the employees.
Moreover, the new base salary positively impacts the employees’ job satisfaction by boosting their loyalty of the employees. When employees are well paid in a company or workplace, they are likely to stay longer in a company. In addition, proper compensation of the employees through the new base salary is the reason behind their retention in a company. Therefore, the human resource management of a company like Gravity Payments should invest in recruiting more staff but demonstrating loyalty to the existing employees. New base salary results in retaining employees who experience low turnover rates, hence getting motivated.
Theories to Explain the Positive Impact of New Base Salary on Employees
According to Maslow’s hierarchy of needs, a new base salary is a deficiency need, serving as a security measure, and people will never get motivated until they acquire it. This suggests that the new base salary will have a positive impact on the motivation of employees (ÄŚabrilo, 2019). As a result, when employees’ lowest needs are unmet, they will decide based on the new base salary concerns. Therefore, Gravity Payments’ human resource manager must consider fulfilling the new base salary needs for employee motivation.
Alderfer’s ERG Theory argues that individuals are simultaneously motivated by multiple levels of needs, while the most important level changes with time. The theory asserts that existence, relatedness, and growth are the basic things that employees should fulfill (Foktas & JuceviÄŤienÄ—, 2021). Therefore, a workplace should recognize employees’ multiple and simultaneous needs. Gravity Payments should focus on the new base salary among other employee needs to avoid frustration and enhance motivation.
In expectancy theory, the motivation of employees depends on the likelihood of effort leading to the expected performance, and they believe that the performance will result in a reward. The employees must believe that the new base salary is achievable to improve their performance and motivation (Foktas & JuceviÄŤienÄ—, 2021). This theory agrees that the new base salary positively impacts employee motivation and brings achievable confidence. When the employees of Gravity Payments value the new base salary, they believe their compensation will be effective, leading to their motivation.
Equity theory proposes that the motivation of employees in a workplace depends vastly on the sense of fairness. In Gravity Payments, employees are set to create a mental ledger to compare the ratio of job input and outputs. Since Gravity Payments employees are paid differently, the equity theory is not left behind to support that motivation is impacted positively by the new base salary. In this case, Gravity Payments should pay her employees the same, especially if they are equal-value jobs, to raise motivation in the company.
In terms of goal-setting theory, there is a need for Gravity Payments to increase the incentives for the employees to attain fast and quick production. Goal-setting theory is result-oriented and focuses on motivating employees. Through this theory, the positive impact of employees’ motivation is realized by the new base salary that should be availed to the employees by the managers of Gravity Payments company.
Whether Other Companies Should Pay Their Employees’ Base Salary, Pros, and Cons of the Revolutionary Approach
The CEO of Gravity Payments, Dan Price, performed a great deed by declining to take the $1 million bonus he was due based on the company’s 2014 earnings. He hopes his decision to increase starting salaries for all workers to $70,000 will inspire them to work hard. Dan Price has high ambitions for the future of his organization. Therefore, he desires content and inspired workers. The company and its workers will reap multiple benefits from this move. Increased staff productivity, employee retention, and quality contributions from each employee are just some of the long-term benefits the firm can expect from this deployment. Considering these inspiring arguments, I think it is time for other companies to explore increasing their starting pay to $70,000 a year. All the advantages described above will accrue to them. Staff output rises, absenteeism drops, and turnover is kept to a minimum.
The benefits of this groundbreaking strategy lie in its ability to match the requirements of its employees, thereby increasing their motivation and morale. Second, it fosters a high-performance culture while raising output. Taking this tack is usually beneficial to a business since it demystifies the goal-setting procedure and strengthens the link between workers and management. An innovative strategy helps develop core corporate principles and foster a positive, performance-based culture (ÄŚabrilo, 2019). The groundbreaking method also gives workers more say over their productivity. Ultimately, this method helps businesses succeed by luring and keeping the best workers at a price that leaves room for profit.
Conversely, if workers view one another as competitors, the revolutionary approach could hinder teamwork. Second, it can be challenging to modify an existing performance-based compensation plan. It may be challenging to stop the program if it is not producing the desired effects. If workers are not paid the new base salary promised, they may leave the company. Finally, there is always the chance of putting too much weight on hard, measurable skills. An individual’s performance can be improved by creating challenging goals for themselves (Cabrilo, 2019). As a result, soft skills like communication and creativity may get less attention.
References
Čabrilo, S. (2019). Importance of employee’s motivation for business success–Example of Beiersdorf. FINIZ 2019-Digitization and Smart Financial Reporting, 85-90. Web.
Foktas, P., & JuceviÄŤienÄ—, P. (2021). Which motivational theories are suitable to motivate employees belonging to generation Y?. In Bilgin, M.H., Danis, H., Demir, E. (Eds), Eurasian business and economics perspectives (pp. 249-264). Springer, Cham. Web.
Purwanto, A. (2020). Effect of compensation and organization commitment on turnover intention with work satisfaction as intervening variable in Indonesian industries. Systematic Reviews in Pharmacy, 11(9), 287-298.