To an employee of a non-volunteer organization the most obvious personal incentive that the organization offers is a salary or wage. It is a peculiar and important characteristic of his relation with the organization that, in return for this inducement, he offers the organization not a specific service but his undifferentiated time and effort. He places this time and effort at the disposal of those directing the organization, to be used as they see fit. Thus, both the customer relation (in the commercial organization) and the employee relation originate in contract, but in contracts of very different sorts. The employment contract results in the creation of a continuing authority relation between the organization and the employee.
organization, nothing would be gained by offering an inducement to the employee unless the latter’s behavior could be brought into the system of organization behavior through his acceptance of its authority. Second, from the viewpoint of the employee, the precise activities with which his time of employment is occupied may, within certain limits, be a matter of relative indifference to him. If the orders transmitted to him by the organization remain within these limits of acceptance, he will permit his behavior to be guided by them.
What determines the breadth of the area of acceptance within which the employee will accept the authority of the organization? It certainly depends on the nature and magnitude of the incentives the organization offers. In addition to the salary he receives, he may value the status and prestige that his position in the organization gives him, and he may value his relations with the working group of which he is part. In setting his task, the organization must take into consideration the effect that its orders may have upon the employee’s realization of these values. If the employee values white-collar status, for example, he may be completely unwilling to accept assignments that deprive him of that status even when the work he is asked to perform is not inherently unpleasant or difficult.
There is great variation among individuals in the extent to which opportunities for promotion act as incentives for participation. Promotion is, of course, both an economic and a prestige incentive. Burleigh Gardner has pointed out the importance for administrative theory of the presence in organizations of certain highly “mobile” individuals, i.e. individuals who have a strong desire for advancement. It would be a mistake (which Gardner carefully avoids) to assume that these desires provide a strong incentive in all individuals.4
We find, then, that those participants in organization who are called its employees are offered a variety of material and nonmaterial incentives, generally not directly related to the attainment of the organization objective nor to the size and growth of the organization, in return for their willingness to accept organization decisions as the basis for their behavior during the time of their employment. The area within which organization authority will be accepted is not unlimited, and the boundaries will depend on the incentives that the organization is able to provide. In so far as these incentives are not directly dependent upon the organization objective, modification of that objective will not affect the willingness of employees to participate, and hence the latter group will exert little influence in the determination of the objectives.
Source: Simon Herbert A. (1997), Administrative Behavior, Free Press; Subsequent edition.