MG630 - Organizational Behavior: Pay Raise Case Study Analysis

This case study analyzes the impact of different pay raise strategies on employee motivation, drawing from the principles of organizational behavior. The student explores the effectiveness of frequent small raises versus annual larger raises, arguing that the former is more motivating due to the nature of extrinsic motivation and the opportunity for continuous performance evaluation and career growth. The analysis also considers the student's personal preferences, favoring frequent raises for better financial planning and sustained motivation. Finally, the case study examines the motivating potential of a 3% annual pay raise in the United States, concluding that it may only partially affect employees, as factors beyond monetary gain, such as recognition and skill development, play a crucial role, especially in developed countries. The student references relevant research to support their arguments.

Running head: PAY RAISE CASE STUDY
Pay Raise Case Study
Name of the Student:
Name of the University:
Author Note:

1PAY RAISE CASE STUDY
1. Do you think frequent small raises versus annual larger raises are more motivating?
Why or why not?
Frequent small raises are much more motivating than annual larger pays as money is
an extrinsic motivator and these kinds of motivation lasts for a shorter period of time. It has
been seen through research that pay raise motivates the employees but it lasts lesser than a
month (Langton, Robbins and Judge 2016). So, when annual raise is received, the novelty
goes away after a month or two and the organization needs to devise new techniques to
motivate the employees throughout the year. There are only a few handful of companies that
give frequent raises such as Solstice Mobiles and Shutterfly Inc. Employees are likely to be
motivated by frequent raises also because it gives them better opportunity to understand the
growth and career progress that they have and the company is also able to find employees
that can perform in an high performance environment. They can replace employees who are
not showing continuous growth and the employees are also able to see proof of how they
improve (Mohrman and Lawler 2017).
2. Do you think you would personally be more motivated by more frequent raises or by
performance bonuses if the annual amounts were the same?
I believe that I personally would be more motivated by frequent raises rather than
yearly raise. The reason behind this are several. Frequent raise would require regular
performance review and goal setting, which would ensure that I perform well throughout the
year (Black et al. 2019). Moreover, because of the gradual increase I will be able to plan my
life better and make investments with due consideration. Moreover, it would also motivate
me to work as my lifestyle will improve gradually. With yearly raise, I might become
demotivated after a few months as I become accustomed with the raised salary. I will have to
wait a whole year to get the benefits of my effort and it is likely that I will not get the same

2PAY RAISE CASE STUDY
benefits as frequent raises, as the drop in performance after a few months will surely affect
my appraisal. Moreover, yearly appraisals will make it difficult for me plan the year ahead
and improve with speed. Organizations are becoming high perforce with time (Mohrman and
Lawler 2017). Employees are expected to perform consistently and efficiently. The
organizations want continuous growth which can only be facilitated by frequent raises, which
is indicative of the growth map of the employees and the company.
3. Annual pay raises in the United States are expected to be around 3 percent in the next
few years. Do you think this percentage is motivating to employees? Why or why not?
In United States, the projected pay raise will only affect the workforces partially.
Workforce in USA is not wholly motivated by monetary gain. People work for recognition
and skill development. Though payment matters and raise determines the extrinsic value of
employee satisfaction, it is likely to affect less if the intrinsic motivation s are high and the
organizations are providing the employees with proper benefits and incentives (Kuvaas et al.,
2017). Maslow’s need hierarchy defines this behavior and as US is a developed country, their
self-fulfillment is much more important that their need fulfilment. Developed countries have
more facilities and services from the government that reduces their daily needs and thus,
recognition, attribution and better opportunity attracts and motivates people to work (Kuvaas
et al., 2016).

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References
Black, S., Gardner, D.G., Pierce, J.L. and Steers, R., 2019. Process Theories of
Motivation. Organizational Behavior.
Kuvaas, B., Buch, R., Gagne, M., Dysvik, A. and Forest, J., 2016. Do you get what you pay
for? Sales incentives and implications for motivation and changes in turnover intention and
work effort. Motivation and Emotion, 40(5), pp.667-680.
Kuvaas, B., Buch, R., Weibel, A., Dysvik, A. and Nerstad, C.G., 2017. Do intrinsic and
extrinsic motivation relate differently to employee outcomes?. Journal of Economic
Psychology, 61, pp.244-258.
Langton, N., Robbins, S.P. and Judge, T.A., 2016. Organizational Behaviour:
Concept. Controversies, Applications.
Mohrman, A.M. and Lawler, E.E., 2017. Motivation and performance-appraisal behavior.
In Performance measurement and theory (pp. 173-194). Routledge.