Effect of Workers Compensation on Motivation

Effect of Workers Compensation on Motivation

Motivation can be defined as the set of factors that influence people to behave in a certain way (Nelson & Spitzer, 2003). Motivation is the key reason why most large organizations are able to survive in the complicated market (Frey &Osteroh, 2002). External and internal factors such as rewards and right working environment have been cited as core elements in propagating the values and objectives of an organization (Armstrong, 2008). As opposed to the traditional form of running the business which was controlled by the owner, the recent trading is regulated by set standards designed by the relevant governmental organizations (Nkomo et al., 2011). Setting the salaries and revenues to be paid is subject to the legislation of a particular country. According to Armstrong (2008), human capital is an essential asset for any institution with the intention of expanding its market coverage. Due to this fact, it is therefore paramount to have a well-guided knowledge of the roles of the employer and that of the employee.

Compensation measures total income received in a particular period (Brewster et al., 2008). For any country to estimate its capability to grow, it has to compile a list of earnings and non-salaried populace to help in future planning and budgeting (Frey & Osterloh, 2002). The concept of compensation is therefore integral in measuring the national income and product accounts. This translates to the evaluation of Gross Domestic Product, hence the statistical figures gives a clear indication of the economic performance (Bussin, 2011). The statistical data generated can indicate the people who are not employed and those employed. Workers compensation is given in form of cash or medical benefit to the employee, who suffer the injury or get ill while in the job. The claim is valid if only the primary cause of the problem was as a result of the employer (Armsrong, 2008). It is the responsibility of any business to pay the insurance fee, through deducting from the salaries of its workers (Jex& Britt, 2008). According to the set human resource policies, every organization is mandated to consider the safety of the employees before anything else. In determining the compensation case, no party holds the other responsible. An amicable solution is detailed in the policies, hence they are followed to the later (Armstrong, 2008).  After the determination of the course of action, the claimant is paid by the insurer, to retain the right image of the organization.

Failure to adhere to the worker’s compensation policies can have disturbing implications for the business. First, the perspective held by the employees is essential in their delivery. A survey conducted by Bussin (2011) indicated that many organizations could retain the highest rank in the market because of how they treat their employee. Some of them have favorable schemes, which assure the workers of their health and work-related injuries protection. They consolidate the trust hence improving the performance significantly.  Again, it is against the law to deny people the benefits of workers compensation (Bussin, 2011). This could result in losing both local and international market, should other stakeholders realize of non-compliance.

Impact of Workers Compensation on Employee Motivation

There are many factors that can trigger the potential of the employee to deliver fully at work such as pay rise, favorable working environment, and others. A study conducted by Armstrong (2008) indicated that workers compensation is a critical factor for any growth to be realized. There is a linear relationship between performance and motivation (Michael & Stan, 2002). Workers who are unhappy with their roles in the organization ends up making significant errors, which could cost the business heavily, far from what could have happened if the management made them happy. According to Bussin (2011), well-performing companies such as Netflix have invested in addressing the needs of its employees before anything else. They consider the fact that unsatisfied employee cannot deliver appropriately. The culture has won them accolade by securing the more significant market share in the economy (Nelson & Spitzer, 2003). Engaging the employees in every aspect of planning can clear the misunderstanding which arises during the time of compensation. Some of the critical drivers to facilitate motivation are; personal accomplishment at the place of work (Brewster et al., 2008). The management should be at the forefront in encouraging its workers, by showing them that they can achieve. To facilitate their performance, appropriate tools and equipment are required to accomplish the work. Furthermore, the employer is required to pay fairly for work done (Bussin, 2011). The most significant demotivator in the market is reduced pay, which makes the employees struggle to achieve the necessary needs (Frey & Osterloh, 2002). Bridging this gap is a certain channel for future growth since the people will work to reciprocate their happiness. In general, the medical and other cover gives the worker a platform to prove their skills without a sense of worry. Others like financial rewards regarding salary increments and other benefits influence the employee positively (Brewster et al., 2008).

Elements of Workers compensation

Although workers compensation could be different depending on the employee, place of work and the country, there are some elements which are common and cuts across all the areas (Nkono et al., 2011). The differences are not vast, but there are tailored to fit the state of operation.  According to Bussin (2011), human resource issues are designed based on international standards, which ensures a sense of equality in dealing with labor matters.  The following paragraphs discuss the significant elements.

Exclusive Remedy

Workers compensation is the exclusive remedy for the employees, and the family members in case of an injury, death or illness occur while at the place of work (Frey & Osterloh, 2002). The exclusive nature of compensation does not keep all cases out of the court since there are some issues which the two parties might fail to agree on (Armstrong, 2008). According to this element, it merely states that the employee is the only party who is recognized by the organization. The cost of damages caused should be catered for by the company, with the strict following of the set rules (Jex& Britt, 2008). In the case where the employer fails to consider the payments for the employee, labor court is involved to settle the dispute.

Workers Compensation Insurance

The states mandate all businesses and organizations to cover their workers through paying insurance premiums.  The regular premiums are deducted from the individual’s salary and advanced to the insurer, who later pays all the costs in case the peril covered against happens to the insured(Bussin,2011). The rate of payment is dependent on the nature of risk exposed to and also the position a person holds in the organization. Before inducting new employees in the organization, it is the requirement of the human resource manager to explain to them all policies concerning their insurance plan (Michael & Stan, 2002). Some businesses contract private companies to offer the services of medical cover, which is widely embraced by almost all institutions (Armstrong, 2008). However, some prefer the government scheme which is ideally cheap, hence saving some of the costs.

Workers Compensation Market

In an open market, insurers and the employers should be able to reach an agreement on the premiums to be charged (Michael & Stan, 2002). However, the case does not happen in determining the worker’s compensation, which is the most paramount point of consideration. In most cases, the compensation rates are fixed and not subject to negotiation (Nkono et al., 2011). The beneficiaries are compelled to accept what is provided since they have no other option (Bussin, 2011). Employers look for the insurer with additional benefits such as considering workers safety program to help them reduce the number of claims hence lower their cost.


Motivation is categorized into intrinsic and extrinsic, both of which plays a significant role in productivity. Scholars have identified that inherent motivation improves productivity more than extraneous, which is dependent on external factors such as the reward. However, the current employees are more focused on what the management can offer, trailing their internal passion for performing the work. From the previous paragraphs, it is clear that workers compensation is a crucial factor to whether the business will succeed or not. The culture of monetary reward has penetrated into the market, with employees requiring a particular form of appreciation to execute their work well. Any business that fails to recognize the effort of employees rarely survives in the market. Though compensation is reasonable to increase the productivity, building a culture of the personal drive would guarantee sustained success.