In that increasing the employees’ salary by 20% would

In a case study provided by NZIE, Dr. Lock, a
mechanical engineer who worked as the CEO and founder of a boatbuilding firm, noticed
a decline in employee productivity within their organization over a five-year
period. She reasoned that the decline was due to the employees’ need for more
money as she discovered that most of them had other jobs to compound their
income. This seem to explain why they were coming to work very tired and were
not achieving the expected results. She decided to increase their salaries
because she assumed that the low salary was the reason. 

After reading, studying and analysing
the case study provided by NZIE and according to the articles and journals that
came up with good researches it is very clear that the increase in salary in
Dr. Lock’s company did not have the desired effect because she did not take into
account many other important variables before making her decision, that is, she
believed that increasing the employees’ salary by 20% would solve all her
challenges  and thus increase
productivity, but she did not consider other factors mentioned in the
researches that have been used to answer the questions in this case study. Therefore,
some important points will be discussed below:

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Dr. Lock did not take into account the positive
effects that the environment in the workplace can have on productivity. Hence,
referring to that Leblebici (2012), states that one of the most relevant
factors for increasing and/or maintaining a good productivity is the
relationship among managers and employees and the team as a whole.


Dr. Lock also failed to take into account
aspects related to intrinsic motivation. In Reference to that, on the other
hand, Stringer, Didham, and Theivananthampillai (2011) argue that good
performance and productivity are more related to intrinsic motivation.
Likewise, these authors also claim that pay is very related to intrinsic motivation
as well. Furthermore, they affirm that pay fairness play an important role in
firms that use the pay-for-performance systems.


Possibly because she did not have much knowledge
about management since her training was in the engineering area, Dr Lock had
difficulty understanding and applying a more effective solution to prevent the
decline of productivity. According to Rynes, Gerhart, and Minette (2004), there
are some contradictions on what people say about pay and what people really
think of it. The same authors postulate that in most cases people do not feel
comfortable declaring their real thought on that subject, and yet Rynes at al.,
(2004), clarify that in the long run pay is not either the first nor the only
motivator for increasing productivity or job satisfaction, but it really has a
big impact on many employees performances as a motivator. Thus, it is evident
that pay is an important factor to be considered, but it is not the only one. Dr
Lock intuitively assumed that the problem was on the bottom line without doing
any further analysis, without consulting managers or other supervisors who
could help her to better understand the facts.