It is a well established fact that human wants and desires are asymmetric in nature.
One may say that they are dying of thirst; they could drink a whole well. But, when you put a bucket of water in front of them, only a glass is suffice to quench them. So, after the first glass, the remaining glasses of water do not have that high a value; rather the value depreciates with more quantity. It is also called the law of diminishing marginal utility.
The same principle operates when we pay the salary to our employees. Handing over a chunk of the monthly pay packet to the employees, albeit hefty, becomes an entitlement over a period of time. It can even seem insignificant at times to the employee. The staff member may be inclined to think that his/her organisation does not pay him/her enough. Thoughts about seeking employment elsewhere may begin to take shape within the staff member. There then emerges the grave danger of dissatisfaction from work for the organisation; this is extremely contagious in many situations.
However, all this can be easily avoided rather the motivation of employees can easily be enhanced through a simple change in disbursement of their salaries.
The principle of diminishing marginal utility can be employed to break up the salary of the employees into various parts and these parts can be paid at different times of the month.
For example, an employee’s salary may consist of fixed components such as the monthly allowance, and variable components such as travel allowance, commission on sales, reward or gifts for special occasions. These components should have a different time within a fixed monthly schedule, of being transferred to the employees.
Such a practice ensures that each time the employee receives some due, his/her excitement and satisfaction from the receipt of the sum, however big or small, remain high. It keeps the staff members motivated to turn up to the office and look forward to receiving the money. This tactic is especially helpful in getting the sales team working in the field, to report regularly to the office. Furthermore, when an employee receives his/her due that is connected to his/her performance, such as the commission on a sales, he/she is able to analyse and compare his/her performance vis-à-vis the others and also his/her own performance in different months. This is an effective stimulant for self-improvement and better performance. The only drawback this practice has is that it can increase the workload of the accounts department. However, through formulating and establishing a structure of procedure, all this can be easily overcome. The extra work will become routine task within a couple of months.
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