Compensation, Motivation, Performance, and Equity: Report Analysis

This report analyzes two articles focusing on the impact of compensation on employee motivation and performance. The first article examines the compensation gap between expatriates and local employees, using equity and reflection theories to explain how unequal pay can reduce effort and discourage risk-taking. The second article discusses the importance of compensation research in the modern business world, highlighting the complexity of compensation policies and the differences in pay structures across various organizations. Both articles emphasize the significance of compensation in the business environment, with the second article supporting the first by describing different compensation plans. The report explores how compensation strategies affect employee behavior and creativity, particularly within multinational corporations, and the importance of understanding the relationship between pay, performance, and equity.

MOTIVATION, REWARDS AND
COMPENSATION
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 Article 1: Hon, A. H., & Lu, L. (2015). Are we paid to be creative? The
effect of compensation gap on creativity in an expatriate context. Journal
of World Business, 50(1), 159-167.
 Article 2: Gupta, N., & Shaw, J. D. (2014). Employee compensation: The
neglected area of HRM research. Human Resource Management
Review, 24(1), 1-4.
REFERENCES OF TWO ARTICLES

Objective:
 To identify the two tier compensation system involved in modern MNC’s
present and operating in the developing countries
 To track the reason on why creativity did not match with the compensation
gap in the Multi National Corporations
Method:
 Use of Equity theory and Reflection theory
 The use of the motivation effect has also been studied in this following
research
ARTICLE 1 (THE EFFECT OF
COMPENSETION GAP)

Argument:
 The compensation gap between the locals and the expatriates are huge.
 The existence of a two fold compensation structure.
 Payment or compensation depends on the outcome-input ratio.
Conclusion:
 Based on the equity theory and reflection theory, it can be proposed that
the relative lower pay of local employees as a result of the compensation
gap will lead to a much reduced effort and discouraged risk-taking by the
local employees
 This in turn will have a negative impact upon their behaviors
ARTICLE 1

Objective:
 Reason for the importance of Compensation research in the modern world
 Importance of Compensation in the business world
 Is pay based on organizational, group, or individual performance
Method:
 Verification of the compensation system of a number of different business
organizations
 The verification of the difference in the pay structures by means of a
critical analysis
ARTICLE 2 (EMPLOYEE COMPENSATION)

Argument:
 Complexity that exists in compensation research
 Global concerns in the compensation policies of different companies
 Different types of compensation policies
Conclusion:
 Performance based pay plans differ from other pay plans in a business
organization
 Pay criterion are specified to the employees well in advance
 Compensation perspectives are different in different regions of the world
ARTICLE 2

 Both the articles discuss the importance of compensation in the modern
business world
 The former article discuses that payment depends on employee
performance which is supported and shown in article 2 where the authors
describe that there are different compensation plans for the employees.
CONTRIBUTION OF ARTICLES TO THE TOPIC

 Hon, A. H., & Lu, L. (2015). Are we paid to be creative? The effect of
compensation gap on creativity in an expatriate context. Journal of World
Business, 50(1), 159-167.
 Gupta, N., & Shaw, J. D. (2014). Employee compensation: The neglected
area of HRM research. Human Resource Management Review, 24(1), 1-4.
REFERENCES