Chapter 26
Motivation
Definition of Motivation
Definition
Motivation – The reason an individual does something.
Motivation is a continuous inner process which stimulates, sustains and regulates behaviour towards a specific goal or end.
It includes the hopes, wishes, desires, fears, or intentions which activate and drive people.
Motivation is the will, urge, drive or compulsion to do something to achieve goals.
Example
Effects of High Motivation at Work
Motivated employees:
Improve customer satisfaction, where customers come into contact with employees (for example, in shops and customer care centres).
High individual motivation is essential to the efficient functioning of the organisation and high-performing teams.
Limitations on Motivation at Work
The motivation of employees may be more crucial for some employers than others.
Many employees have interests outside work that may be as – if not more -important to them.
In some jobs, much of the work is highly automated or may be very repetitive. Motivation may have little effect on productivity or the quality of work.
Although the outcome of motivation (productivity, quality, etc.) may be measurable, motivation itself is challenging to measure.
The connection between greater motivation and better work performance may take time to prove.
Maslow’s Hierarchy of Needs
Abraham Maslow suggested that individuals at work are motivated by a hierarchy of needs.
He argued that individuals have needs that start with the most basic at the bottom and can work up to higher-order needs.
In the following pyramid, levels 1, 2 and 3 can be described as Secondary needs and levels 4 and 5 as Primary needs.
Needs
Description
Self-fulfilment
The need to achieve something that the individual considers worthwhile in itself.
Having achieved something, the need for self-fulfilment may be sustained by wanting to achieve more.
This explains why some individuals are always hungry for more success. (Maslow termed self-fulfilment needs as self-actualisation needs.)
Leaving a legacy
Recognised by peers in the hall of fame.
Work has become ubiquitous (everywhere, used and known by everyone)
Actions are inherently rewarding.
Esteem
Also called ego needs.
It includes the need to be appreciated and esteemed by others and feel important.
Promotion to a better job with more pay.
Power over decisions
Recognition of status by peers and subordinates.
Social
The need for social interactions with other people.
Individuals generally need to be part of a group at work, with friends and colleagues.
This may involve being able to talk about things outside work as well as about work.
Participation and interaction in desired social groups.
Social standing.
Safety/security
Needs to feel safe or secure.
Job security,
Pension at retirement age.
Physiological
Physiological needs are basic needs for food, clothing, a place to live and all the other essentials for life. A job and a wage or salary can meet these needs.
Basic wages
Activity 1
Determine which need the statement satisfies.
Statement
Need
A pay increase for exceptional performance
Having friends at work
Safe working conditions, free from physical danger
Having a challenging job that demands innovation and creativity
Fair treatment at work
Applying Maslow’s Hierarchy of Needs
Maslow argued that individuals must satisfy their lower-level needs before higher level needs.
For example, they need to satisfy physiological needs before their security needs; they will only have self-fulfilment needs if their esteem needs have already been met, and so on.
Maslow’s theory has some possible applications for management. His theory of a hierarchy of needs can be applied to how people behave and are motivated at work.
Limitations of Maslow’s Hierarchy of Needs
Individuals may experience needs in a different sequence than the one in Maslow’s hierarchy. For example, some individuals may want their esteem needs to be met in preference to their social needs.
Some individuals may have needs at different levels in the hierarchy satisfied simultaneously.
Maslow’s theory does not define self-fulfilment clearly, so it cannot explain the link between self-fulfilment and better work performance.
Maslow’s hierarchy of needs may apply more closely to culture and society in the USA but not so much to cultures in other countries.
Maslow’s theory is a content theory – it explains what motivation consists of but does not explain the strength of motivation or how it affects individuals. Some would argue that this is a weakness.
Herzberg’s Two-Factor Theory of Motivation
Frederick Herzberg proposed a content theory of motivation called the two-factor theory.
This theory seeks to explain what motivation consists of and its causes.
Herzberg’s theory focuses on satisfaction, which can be defined as how happy an individual is with their job. Therefore, a dissatisfied employee is unhappy with their situation at work.
Herzberg suggests that there are two groups or sets of factors that determine the satisfaction or dissatisfaction of individuals at work:
Hygiene factors
Factors that, if absent, will cause dissatisfaction among employees at work unless they are dealt with satisfactorily by management.
Employees who are dissatisfied see their work situation in a negative light.
Hygiene factors are ‘extrinsic’ to the job itself, meaning they have nothing to do with the content of the job itself.
Examples
A suitable level of supervision
Satisfactory company policies
Good relationship with the boss
Satisfactory working conditions
Good relationship with work colleagues
Job security
Satisfactory amount of pay.
Individuals cannot be motivated in their work if they are dissatisfied. Hygiene factors must be present before individuals can be motivated, but they do not motivate.
Motivating factors
Factors that, if present, will cause employee satisfaction in their work.
Satisfaction is personal: it comes from an individual enjoying their work and wanting to do it well.
Motivating factors will motivate employees to perform better. They are ‘intrinsic’ factors, which means that they are factors that arise from work itself.
Achieving something
Recognition
Meaningful and exciting work (satisfaction in the work itself)
Responsibility
Advancement, promotion.
The concepts of satisfaction and motivation are closely linked.
Implications of Herzberg’s Two-Factor Theory
Consider how the two-factor theory might influence the work of management in an organisation.
Just because an employee is not satisfied at work does not mean they are dissatisfied. Equally, just because an employee is not dissatisfied at work does not mean they are satisfied.
Management should try to provide conditions at work (hygiene factors) that employees find acceptable.
This will prevent dissatisfaction – but it will not create satisfaction. However, employees will not be interested in motivating factors if hygiene factors are absent from the work situation.
Management should provide motivating factors such as recognition and promotion for outstanding performance to motivate employees and improve performance.
Job Design
Herzberg argued that management could create motivation in individuals through their job (job design) to offer opportunities for responsibility, recognition and advancement.
There are three ways of providing variety to employees through the jobs they are given: job rotation, job enlargement and job enrichment.
Of these, only job enrichment can be a motivator.
Job design aspect
Job rotation
Moving employees regularly from one job to another provides them with variety and change.
For example, accountants in the accounts office may be rotated regularly between different bookkeeping tasks.
Moving employees between jobs that offer no challenge will not provide motivation.
Job enlargement
Adding extra duties and tasks to a job so that the job holder has more – and different – things to do.
Adding new routine tasks to a job that offers no challenge will not provide motivation.
Job enrichment
Making a job more challenging and interesting – for example, by giving it more responsibility or requiring the holder to show initiative or be innovative.
Herzberg argued that job enrichment could motivate employees and improve their performance.
Activity 2
Determine if the feature of work is a hygiene or motivating factor.
Work feature
Hygiene or motivating
Equal opportunities policy in the company
Break room where employees can take a break and have a drink of tea or coffee
Offering the prospect of promotion for good performance
A bonus pay scheme for employees who meet budget targets
Working in an office with colleagues and not alone in a separate room
A pension scheme for employees provided by the employer
Putting an individual in charge of a project team to develop a new product
McGregor’s Theory X and Theory Y
Douglas McGregor suggested that the attitude of employees towards their work is affected by their manager’s style.
To motivate employees effectively, managers should adopt a particular style that employees expect. McGregor identified two styles or approaches to management:
Theory X
The view is that employees dislike working and responsibility.
They will avoid both if they can. To prevent this, a manager has to supervise employees closely and force them into doing their work, with a threat of punishment if they do not do what is required of them.
A manager holding this view will act in an authoritarian way, emphasising supervision, control and discipline.
Theory Y
The view is that individuals will naturally put effort into their work and do not inherently dislike work: work can be a source of either satisfaction or dissatisfaction.
Jobs rarely challenge individuals to show their full potential, but individuals can be motivated to accept and seek challenge and responsibility.
A manager who believes in Theory Y will provide employees with more challenge and responsibility in their work and encourage them to develop their potential and improve their performance.
McGregor argued that if employees are treated by their manager as if Theory X is true, they will act in a way that supports this view.
If employees are treated by their manager as if Theory Y is true, they will also act in a way that supports the view – they will take on more responsibility.
Application of McGregor’s Theory X and Theory Y
The extent of the applying Theory X or Theory Y approaches to the workplace depends on the situation:
There are some situations where a Theory X approach may be more suitable, such as in a factory environment or a workplace where strict compliance with standard procedures is essential.
Theory Y managers are democratic in their approach and will consult with their subordinates and encourage participation in decision-making.
McGregor suggested that in most circumstances, Theory Y is the better approach to management because it will motivate employees and help them to improve their performance – to the benefit of the organisation and its objectives.
Theory X and Theory Y: two extreme views
Theory X and Theory Y are extreme views, and individual managers are likely to have opinions somewhere between these two extremes.
The practical value of McGregor’s ideas is that they encourage managers to think about how they manage their subordinates and the possible implications of their management style.
It also encourages them to think more about the potential benefits of giving more responsibility to subordinates and improving their motivation and performance.
Intrinsic and Extrinsic Rewards
Rewards at work can be categorised into two types:
Extrinsic rewards
Rewards depend on the decision of another person.
They come from outside the job.
Basic pay: wage or salary
Overtime payments
Cash bonus
Sales commission
Company pension
Medical insurance paid for by the employer
Rewards in the form of share options or grants of company shares
A company car
Attractive working conditions
Promotion: this is decided by someone else, so it is an extrinsic reward, although promotion may lead to intrinsic rewards.
Intrinsic rewards
Rewards that come from within the job or from how well the individual is satisfied on the job.
They are psychological in nature.
A sense of achievement in doing the work
Recognition from others, esteem, status
Pride in doing the work
Personal satisfaction in doing the work
A sense of challenge.
Activity 3
Classify the reward as intrinsic or extrinsic.
Reward
Intrinsic or extrinsic
Being given positive feedback for good work
Receiving entitlement to extra annual holiday
Being given a new task outside of regular job duties
Being entitled to maternity leave
Receiving extra allowances for sick pay
Working on an interesting activity
Managers can influence the motivation of individuals in two ways:
Managers can allow individuals to enjoy intrinsic rewards – for example, using leadership style or job enlargement.
Management can also provide extrinsic rewards. Remuneration schemes (pay schemes) are a common method of providing an extrinsic reward scheme.
Managers need to understand what rewards will effectively motivate people so they can create the required motivation.
Reward Systems and Motivation
Most reward systems in business provide extrinsic rewards.
A reward scheme encourages employees to perform better in their work or to achieve and exceed planning targets.
Many reward schemes provide cash payments to employees for the achievement of a target level of performance. These schemes are called performance-related pay schemes or PRP schemes.
Reward Scheme Components
Component
Basic pay
Every employee receives basic pay.
This may be a fixed annual salary, payable in monthly instalments, or a weekly wage based on hours worked.
Basic pay is not a motivator because it is a fixed amount. Individuals cannot be sure of getting an increase in basic pay if they work harder.
Herzberg suggested that basic pay is a hygiene factor: individuals are dissatisfied if they think it is insufficient.
The most common type of pay incentive scheme is a cash bonus arrangement.
Individuals receive a cash payment on top of their basic pay if they achieve or exceed a certain level of performance in their work.
For managers, cash bonuses are usually paid annually. For other employees, such as sales representatives, bonuses may be paid more frequently, every month or every quarter.
Cash bonuses can incentivise employees to work harder because the bonus depends on achieving a certain level or standard of performance.
Subjective and objective cash bonuses
The payment of a cash bonus, and the size of the bonus, could be a subjective decision by an individual’s boss.
The individual receives a bonus if the boss thinks they have performed well.
However, subjective bonuses are uncertain and depend on the relationship between the manager and the subordinate.
A better cash bonus system is one in which bonuses are decided by objective measurement: the individual receives a bonus if a measurable performance standard is achieved.
Profit- or measure-related pay
Individuals should be given a bonus for performance that they have influenced and that their efforts at work have affected.
For sales representatives, a cash bonus should be related to the value of sales they have won for the organisation.
For senior managers, cash bonuses are often linked to the size of the company’s profit for the year, assuming managers’ efforts have affected the profit.
Longer-term incentives
Cash bonuses are usually linked to short-term performance covering a period of up to one year.
Some companies, especially those whose shares are traded on a stock exchange, may also offer long-term incentives to senior executives.
These are intended to incentivise managers to improve company performance over the longer term.
Long-term incentives usually take the form of either share grants (after a period of three years and dependent on the company’s performance at that time) or share options.
Share options
Share options are a type of long-term incentive.
They are awarded to managers and give their holders the right to buy new shares in the company at a fixed price after a specified number of years (typically three years).
The individual is rewarded if the market price of the shares is higher than the fixed purchase price for the share options when the options can be exercised.
So the option holder is rewarded by an increase in the market value of the company’s shares over three years or so.
Issues Implementing Individual Reward Schemes
Link of Effort to Reward
A reward scheme can only be effective in providing an incentive or motivation to employees if they can see a positive link between the effort they put into their work and the reward they get.
If there is no apparent link between their effort and the measurement used to determine their reward, they will see no point in making an effort.
Link of Reward to Company Success
Managers may receive a cash bonus based on the size of their company’s profits.
But if their work does not directly impact profit, the bonus scheme is unlikely to provide a compelling incentive.
Challenges of Implementing Reward Schemes
If a different performance measure is used for each manager in the company, the scheme may become too complex and time-consuming to administer.
There is also the problem of deciding who should be included within the incentive scheme and who should be excluded.
The existence of a reward scheme may be a disincentive to employees who are not included in it.
Group Incentive Schemes
Incentive schemes can reward individuals or groups of employees.
An incentive scheme based on individual performance may have the negative effect of creating competition between colleagues and so discouraging collaborative working.
Instead of having an incentive scheme based on rewards for individuals, a scheme may offer rewards to groups of employees based on group performance. The thinking behind this is that individual efforts are less important than collective efforts for achieving the organisation’s objectives.
In this scheme, rewards should be given to groups of workers, such as work teams or all the employees in a particular work section or department.
Types of Group Incentive Schemes
Scheme
Team bonus (team PRP scheme)
A cash bonus is offered to all team members for the successful completion of an objective, providing an incentive to all team members to work together to achieve the goal.
Workgroup bonus (group PRP scheme)
A bonus may be available to a workgroup, such as everyone in a department, for achieving a performance standard or target.
A workgroup bonus may be introduced because it is too difficult to calculate how much bonus each individual in the group deserves for the work they have done.
Sharing the bonus
A problem with a team or workgroup bonus is deciding how to share it between the members of the team or group in a way that will avoid causing dissatisfaction about lack of fairness.
The arrangement may be to pay the same bonus to each team member or group or to pay each member the same percentage of their basic salary.
Company-wide bonus scheme
A company may pay a bonus to every employee if its profits exceed a target level.
The bonus will likely be a percentage of each employee’s salary or wages.
However, unless the company has only a small number of employees, it isn’t easy to link individual performance to its profit.
Individuals need to see a clear connection between extra effort and obtaining rewards in an incentive scheme to motivate them successfully.
