Putting Economic Analysis to Work




 The aim of this paper is to investigate the impact of employee remuneration on organizational productivity. Remuneration (regrouped as ‘job satisfaction and motivation’) has been one of the challenges affecting both the employees and the job output despite the economic significance for both. In order to properly analyze the challenge and make a sound economic decision, it is necessary to apply all six steps of decision making to the stated problem.


Define the Problem:

 Remuneration through a broader context or a variety of ideas affects a person's experience of the situation and quality of the outcome (Perry, Mesch & Paarlberg, 2006). In real essence, it is memorized based on its linkage to other key elements such as the stress at work, the well-being, working conditions, homework interface and the control at work. An appropriate motivation is a subjective construct, which represents an emotional angle, which employees usually perceive as far as their job description is related (Samuleson & Marks, 2015).

 Researching and Identifying Objective

 From an economic perspective, both scholars of sociology and psychology directly distinguish the direct relation between job satisfaction and the work output. Information based on social processing hypothesis tends to clarify social influences and contextual cues and other objective determinants (Samuelson & Marks, 2015). The objective determinants interpret to the only option that work characteristics are prone to interpretation.

 Related findings outline that numerous approaches have described how employees have always strived to establish a positive context for their selfish interests in their various workstations. In this view, there is no any direct contextual link of work or external situations on job elements (Bernard, 2008). Nevertheless, motivational factors are triggered by behavioral traits that link in response to a given responsibility and hence impact the job output. The two main options here are for the management to either give in to motivate the employees or remain a ‘stubborn-he goat’ assuming all would be well.

 Comparing and Contrasting Each Alternative and Its Repercussions

 Take an example; the Google Company offers extrinsic benefits to its employees, and this has been evidenced by the brilliant performance of the company concerning economic progress (Stross, 2008). For instance, the employees are motivated through dental benefits, flex spending accounts, and free health services. Also, the employees are also reimbursed with up to $ 5000 to cater for their legal expenses (Stross, 2008). As always been a norm, the roads taken are always more important than the announced goals. After thorough research is conducted based on this model and all the alternatives brainstormed; the options for making the decision is availed through considering the economic perspective and constraints.

 Should the top management fail to satisfy and motivate employees, the job output would be considerably at risk but the company would be spending less on remuneration (William & Stehen, 2015). However, if a decision is reached at motivating the employees through creating conducive work environments and paying their allowances and overtime, the work morale of the employees would be boosted (Perry, Mesch & Paarlberg, 2006). Though the decision would be expensive for the organization, job output would be considerably improved and hence profits would increase. Therefore, in this case, the company must consider this option of satisfying and motivating the employees.

 Making a Decision or Choosing an Alternative

 An essential element that decision-making theorists neglect to expand on is on the manner, in which it is presented on the paper failing to acknowledge that it is a recursive and non-linear process (Perry, Mesch & Paarlberg, 2006). In this case, most decisions are made based on moving back and forth through identifying the criterion of choice and the presentation of any alternatives that might influence the procedure. In other words, the options chosen controls the standards established and alternatives considered.

 In relation to the motivation of employees, if the human resource manager decides to make a decision, the central question that would ring in his mind is; should the employees be motivated? Note that the decision here is ‘whether.’ The linear approach to this decision would be engaging other stakeholders on the possible cons and pros based on the practical significance of either of the decisions (Boundless, 2015; William & Stehen, 2015).

 After analyzing the potential importance of either of the choices above, the next part of the decision-making process would be moving to the process itself and identifying the criteria (profit maximization, good public relations, and increased job output) (William & Stehen, 2015). After this process, the next would be identifying the alternatives that are likely to influence the company positively (improving working environments, increasing the allowance of each employee, free medical covers or free laundries and dinner). The final approach would be evaluating each criterion and sticking to the best. The process would be as follows;

  • Decision whether

  • Select criteria

  • Identify alternatives

  • Match criteria for alternatives

  • Make choice

 Designing and Implementing an Action Plan

 The umbrella body that governs alludes to the fact that an actionable strategic planning revolves around proper planning and design. Before the implementation of such policies, a human resource manager in any organization must develop an efficient process and identify three relevant dates of the certain achievements (Boundless, 2015). Hiring alternative consultants can also be one of the strategic planning on considering motivating the employees. The following simple rules would help in creating a likelihood that the strategic plan would result in an actionable one rather than an entire document;

  • Involve the stakeholders of the company regarding the decision of motivating the employees.

  • The plan should be broken into various tasks, which includes goals and equality concerning economic perspectives.

  • Being realistic. It's essential for managers to think and reason ‘big', but it's also critical to outline what's realistic and can be achieved without straining the company.

 Now, once the plan is handy, it should be put into action. In this case, meeting with the staff and board members to review the plan and put forth their experience based on the proposals. Moreover, a survey on the teammates who came up with the planning, how the plan was successfully implemented and the nature of effectiveness must be identified (Boundless, 2015).

 Evaluating the Final Results

 The sole objective of an outcome evaluation is for decision makers to develop insights into the decision made. The lessons developed in this case results from the significance of the decision (Boundless, 2015). For instance, the benefits of motivating the employees by the managers regarding the economy can be felt through fundamental metrics of business such as lowered costs, production output and good public relations (William & Stehen, 2015). In this case, one can now consider whether the decision to award the employees a motivational package had dire consequences or not (Boundless, 2015).

 For instance, a decision on holding more training seminars for employees may have been purposed to make the employees more familiar with the advancing technology. However, if the performance regarding job output remained stagnant, then the decision would have been controversial. In this case, as long as the result of a decision is acknowledged, the outcome may imply the need to revise it and retry it in future (Boundless, 2015). The nature of biases experienced in the results of a decision may calm an honest assessment; whether on what went right or wrong for the managers based on the perspectives of the economy.

 Cost Benefit Analysis

 Cost-benefit analysis is a technique used in decision-making to compare the positive outcomes and negative outcomes of several decision alternatives. It can be used in HRM decision because it uses organizational resources such as money, time, and facilities. In this case, it can help to assess whether the increase in remuneration for employees will boost their level of motivation to improve their productivity (Boudreau, 1990). The value of additional output realized after remuneration increment should be more than the additional salaries, wages and benefits.

 For example, XYZ is a sportswear manufacturer and has 50 workers in its production facility. The average current output is 4,000 units per day, and every unit sells at $15. It plans to grow its revenue by increasing sales to 5,000 units per day. The production manager believes that the factory workers can increase their productivity if they are motivated by a pay rise. He has proposed that $80,000 be added to the monthly production budget to cater for salary increments, bonuses, and other benefits. He says that if the amount is available, the workers will hit the 5,000 units target without any changes in the machinery or equipment. The company has a margin of 25 percent. Below is a table showing a monthly cost benefits analysis for this alternative.

 The alternative shows that the company will benefit from the decision of increasing remuneration for production workers.

 The management is also considering another alternative where the factory workers will receive $4 for every additional unit of output produced above the current level. Thus, the company will incur $120,000 for the production of extra output. Below is a table showing how the alternative will perform.

 The company will have a negative output if it pursues this option. So, the first option is the best as it has a positive outcome of $32,500.

 Cost-benefits analysis is a useful tool for communicating the value of various decisions to others. It is consistent, systematic and accurate. It is a popular decision-making technique in finance, marketing, and operations, but it has not received much attention in HRM activities (Boudreau, 1990). The reason could be the fact that HRM programs have traditionally been presented majorly in qualitative terms making it difficult for the use of this technique. However, due to the scarcity of resources, businesses are forced to assign resources to organizational functions that can quantitatively assign numbers to their activities (Boudreau, 1990). Thus, the HRM cannot be allocated to resources if they do not provide quantitative values for all their financial requirements. It is important to note that cost-benefits analysis is not only about the dollar values but to enhance decisions and use of information effectively. It helps to evaluate the value of investing some resources in the improvement of the human resource. It also helps to choose between various options available for the human resource to maximize the return on investment. It can help to deal with uncertainty and avoid disruptions caused by failure to take risks in human resource programs (Boudreau, 1990). Finally, it provides a tool for assessing the level of knowledge that is available and whether it is sufficient to make a decision.


 Dartey (2010) has repeatedly lamented on the repercussions of job motivation and satisfaction to the employees in several ways. In his argument, the most widely used definitions describe it as a positive demonstrative state that is impacted from the appraisal of an individual's job experiences regarding the same (Dartey, 2010). Further analysis has explained it as how influential a person is with his or her duties in the working station. This does not depend on whether an employee is content with the job or not. Job satisfaction is assessed at the facet level, which does not depend on whether an individual is content with the job assigned, and at the global scale, which also does not depend on whether the employee is satisfied with the job contents.

 The most common facets include security, communication, supervision, appreciation, coworkers, personal growth and nature of work. The findings conclude and recommend the following factors be considered to enhance effective planning for job satisfaction and motivation;

  1. Recognition and reward

  2. Increasing and involving employee engagement

  3. Skill and potential development

  4. Measuring and evaluating job satisfaction