Importance of fair pay

Employee motivation is closely related to the types of rewards offered and their method of disbursement while debate exists over the motivational aspect of pay, there is little doubt that inadequate pay can have a very negative impact on an organisation. Pay dissatisfaction can influence employees’ feelings about their job in two ways:-

1. It can increase the desire for more money.
2. It can lower the attractiveness of a job.

An employee who desires more money is likely to engage in actions that can increase pay e.g. joining a union, looking for another job, going on a strike, looking for other ways of making money etc. When a job loses its attractiveness, the employee is more likely to be absent, leave the job or remain dissatisfied with the job.