Compensation in Cuba: Employee Engagement and Motivation through a Socialist Lens

Introduction

Fidel Castro’s rise to power in 1959 changed the course of Cuba’s relatively short-lived independence, moving the nation from the corrupt dictatorship of Fulgencio Batista to a Marxist-  Leninist-inspired regime (Britannica). Although faulted by many Western critics for the brutality of their efforts to realize their ideas concerning economic equality and redistribution of wealth, Fidel Castro and his brother, Raul, helped Cuba achieve an overall steady rate of economic growth in the decades following Fidel Castro’s ascension to power. This occurred despite periods of famine and the loss of a major ally and provider of economic support, the Union of Soviet Socialist Republics in 1991. Economic growth once again accelerated when the island nation began to develop its tourism sector in 1994, culminating with former U.S. President Barack Obama’s decision to ease restrictions on American travel to Cuba in 2014. Indeed, Cuba enjoyed 4.4% Gross Domestic Product growth in 2015. Nevertheless, the recent political turmoil and travel policy changes in the United States as well as a decline in Venezuela’s commerce with Cuba, one of the island’s primary trading partners, contributed to a decrease in the country’s GDP in 2016 (CIA World Fact Book, 2017).

These economic and political shifts are important to Cuba’s workers who, as members of a socialist economy, earn amounts determined and allotted by the state. Individuals with little education and few skills, and those collecting unemployment earn about $20 per month, whereas more educated workers may earn up to $70 per month. For example, physicians in Cuba now earn an average of $67 per month. Musicians are the highest paid individuals in the nation, as their talent and skills make them valuable abroad and thus more likely to emigrate than members of other occupation groups. Relatively meager salaries, whether for musicians, doctors or others, are supplemented by government-funded education, healthcare, housing and food. In short, the government provides Cubans the necessary basics, so that they may use their earnings to purchase goods and services of their choice.  Approximately 10% of the island’s citizens are employed in the nation’s private sector. A large share of such businesses focus on tourism and pay heavy income taxes and fees to the government (Rizzi, 2017).

This political, social and economic structure has implications for the management of public institutions as it ultimately renders useless performance-based compensation, often regarded as a key managerial tool to engage and motivate employees. Berman et al., for example, have argued that earnings are a concrete measure of employee value, purchasing power, social prestige and perhaps even self-worth (2016, p. 242). These analysts have also contended that employees who believe they are receiving a fair return for their efforts stay in their jobs longer (2016, p. 225). How then do Cuban managers maintain employee engagement and motivation, without being able to quantify the individual-organization relationship by varying salaries for individual performance (Berman et al., 2016, p. 241)?

The Cuban Experience and Employee Motivation/Management Strategies

The “needs perspective” of motivation may provide at least a partial answer to this puzzle. This view asserts that an employee’s innate desire to satisfy his or her hierarchy of needs will provide them with motivation to work. The referenced needs are those that Maslow argued are required for human survival and include safety, belonging, self-esteem and self-actualization (Berman et.al, 2016, p. 218). As noted above, the Cuban government routinely provides the island’s population with its basic shelter, health care and nutrition needs free of charge through publicly funded food, housing and healthcare programs. The government also works assiduously to foster a collective sense of Cuban identity through propaganda and free, state-controlled education. These factors, along with the island’s culture of strong family structures and a “work to live” mindset, suggest that it may not be necessary for public program managers to have recourse to compensation as a central motivation tool for the employees they oversee.

In contrast to the needs perspective, Vroom’s expectancy theory of motivation posits that individuals make conscious choices to take actions that result in the greatest pleasure while incurring the least pain (Seongsin, 2007, p. 789). Proponents of this view contend that this principle produces a self-reinforcing chain of behaviors and choices: the more value a worker puts on an outcome, the harder they will work to achieve it; the more confidence they have in their ability to complete the task well, the more effort they will exert; and the more confidence they have that they will be rewarded for their effort, the more they are likely to employ their energies and capabilities to attain an objective  (Berman et al., 2016, p. 218). At first glance, this perspective on motivation does not appear to accord with Cuban employment practice. Indeed, it appears useless to seek to quantify how motivated Cubans feel to complete a task since there is little possibility that their decision to value work will result in significant raises or bonuses. Put differently, a view of work motivation that seeks to incentivize employee behaviors by promising monetary rewards cannot work in Cuba with its strict government pay banding based on profession.

However, non-monetary rewards and work-related benefits could be used to motivate Cuban employees under a model informed by Vroom’s theory. Cuban culture and interpersonal relationships thrive on open communication and generous friendships (Government of Canada, 2017). These widely accepted values provide a mechanism by which employees could be motivated outside of financial compensation alone. These might include, for example, managerial kudos for working to ensure “friendly and cooperative workplace relations,” “reducing negative supervisory relationships” or “selecting the right people for a job.” In theory, it would be straightforward to create such nonpecuniary “meaningful rewards and recognitions” that are fairly distributed, and that could be accorded by means of  an informal thank you or via more formal types of appreciation. That is, “feedback that provides recognition” could be implemented in a socialist system that does not otherwise provide budgetary or ethical leeway for monetary bonuses (Berman et al., p. 225-7). In any case, it is worth recalling that the rewards for doing a job well do not have to be monetary. Flexible work schedules, increased opportunities for education and training, shortened work weeks or even the prestige of receiving or attaining an honor or a supervisory position, are all rewards that could be employed within a socialist political system. When we adjust the way we measure valence, a system defined by Vroom’s expectancy theory could be designed in a fashion that could be used in Cuba.

The key to implementing a motivation system that relies more heavily or even completely on non-monetary rewards lies in shifting an employee’s motivation from extrinsic to intrinsic.  McGregor developed Theory X and Theory Y to explain what drives people to complete their work (Berman et al., p. 197). Theory X strongly emphasized that managers employ extrinsic motivations, such as money, rewards or even threats, as necessary, to get a job done. McGregor argued, meanwhile, that Theory Y  managers routinely emphasized the intrinsic drivers behind achievement, helping their employees recognize their roles in the work to increase performance and creativity in their organizations (Berman et al., p. 219). In Cuba, where citizens are acculturated from a young age to feel loyalty and devotion to the state, fleshing out such intrinsic values and developing systems of employment related motivation around them could increase managers’ ability to incentivize effectiveness and productivity without additional expenditures.

Exploring Cuban workplace motivation provides a lens into a key argument concerning the often posited superiority of capitalism¾that socialist and communist economies are unable to maintain motivation for growth without adopting a capitalist model of ever-increasing and ultimately unsustainable, wages. Examining Cuba’s socialist employment experience suggests that in the long run, the role of the manager shifts from triggering motivation through external rewards to fleshing out intrinsic engagement with soft skills, such as communication and relationship building. While certainly not perfect, the Cuban economy and employment sector offers a different, but useful, perspective on employee engagement and motivation.

References

Berman, et al. (2016). Human Resource Management in Public Service. Los Angeles: Sage Publications, Inc.

“Cuba” (2017). CIA World Fact Book. Accessed: 15 October 2017. https://www.cia.gov/library/publications/the-world-factbook/geos/cu.html

“Cuban Revolution” (N.D.). Encyclopedia Britannica. Accessed: 15 October 2017. https://www.britannica.com/topic/Cuban-Revolution

“Cultural Information– Cuba” (6 June 2017). Government of Canada Centre for Intercultural Learning. Accessed: 15 October 2017. https://www.international.gc.ca/cil-cai/country_insights-apercus_pays/ci-ic_cu.aspx?lang=eng

Rizzi, Mario (24 January 2017). “Poverty in Cuba,” Full Compass Guides. Accessed: 15 October 2017. http://bestcubaguide.com/much-money-cubans-make/

Seongsin, Lee (2007) “Vroom’s expectancy theory and the public library customer motivation model,” Library Review, 56(9), pp.788-796, https://doi.org/10.1108/00242530710831239

Morgan Dean is a first year graduate student at Virginia Tech, studying for a Master’s in Public Administration and Policy. She completed her undergraduate degree (BA) in International Studies at Hollins University in Roanoke, Virginia in 2013. Currently working at Meadowview Community Center in Pulaski, Virginia, Morgan is interested in community and economic re-development in Appalachia, and plans to build a career in this field. Her interest in socio-economics and politics is largely thanks to her undergraduate advisor at Hollins, Dr. Jeanette Barbieri. In her free time, Morgan likes to be outside with her dog, Merle Dean.