2.4 Motivation
Learning Goal
I can understand what motivation is and analyze intrinsic needs and extrinsic needs.
Introduction
Many studies have been undertaken to try to explain what motivates workers. There seems to be some agreement that pay and benefits are important in encouraging staff to work well, but these are not necessarily the most important factors.
Intrinsic motivation comes from the satisfaction that one gets from working on and completing a task. Extrinsic motivation comes from the external rewards associated with working on a task like pay and benefits.
Well-motivated workers help an organization achieve its objectives as cost effectively as possible. Motivated workers will also attempt to reach their own personal goals. Employers can provide motivation to workers through addressing both the extrinsic and intrinsic motivation of their workers.
Motivation levels have a direct impact on productivity levels and the competitiveness of the business– highly motivated workers have high productivity and this reduces unit costs, whereas unmotivated or demotivated staff will not perform effectively, doing only the minimum of what is expected.
2.4 KEY TERMS
motivation
intrinsic motivation
extrinsic motivation
self-actualization
job enrichment
hygiene factors
motivating factors
hourly wage
piece rate
salary
commission
performance-related pay
profit-related pay
job enlargement
team working
job redesign
CAN YOU...
Identify two examples of extrinsic motivation? Intrinsic motivation?
Learning Goal
I can discuss the motivational theories of Taylor, Maslow, McGregor and Herzberg and their relevance to businesses today.
Motivation Theories
Motivational content theories are based on the assumption that individuals are motivated by the desire to fulfil their inner needs. They focus on the human needs that energize and direct behavior and how managers can create conditions that allow workers to satisfy those needs.
F.W. Taylor
Taylor made the first serious attempt to analyze worker motivation. He aimed to advise management on the best ways to increase worker performance and productivity.
Taylor’s main aim was to reduce the level of inefficiency that existed in the US manufacturing industry. Any productivity gains could thenbe shared between business owners and workers.
Taylor identified seven steps to improving worker productivity:
1. Select workers to perform a task.
2. Observe them performing the task and note the key elements of it.
3. Record the time taken to do each part of the task.
4. Identify the quickest method recorded.
5. Train workers in the quickest method and do not allow them to make any changes to it.
6. Supervise workers to ensure that this ‘best way’ is being carried out and time them to check that the set time is not being exceeded.
7. Pay workers on the basis of results – based on the theory of ‘economic man
The theory of ‘economic man’ stated that man was driven or motivated by money alone and the only factor that could stimulate further effort was the chance of earning extra money. This formed the basis of Taylor’s main motivational suggestion – wage levels based on output.
Taylor believed workers should be paid a ‘fair day’s pay for a fair day’s work’ and that the amount should be directly linked to output through a system known as ‘piece rate’. This means paying workers a certain amount for each unit produced. To encourage high output a low rate per unit can be set for the first units produced and then higher rates become payable if output targets are exceeded.
CAN YOU...
Explain how F.W. Taylor's work influences the way businesses operate today?
"Our needs determine our actions – we will always try to satisfy them and we will be motivated to do so."
Maslow's Hierarchy
Abraham Maslow’s research identifying and classifying the main needs that humans have had a major influence on business. If work can be organized so that we can satisfy some or all of our needs at work, then we will become more productive and satisfied.
Maslow's Interpretation
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Individuals’ needs start on the lowest level.
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Once one level of need has been satisfied, humans will strive to achieve the next level.
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Self-actualization is not reached by many people, but everyone is capable of reaching their potential.
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Once a need has been satisfied, it will no longer motivate individuals to action – thus, when material needs have been satisfied, the offer of more money will not increase productivity.
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Reversion is possible – it is possible for satisfaction at one level to be withdrawn, e.g. a loss of job security, and for individuals to move down a level.
Limitations of Maslow's Work
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Not everyone has the same needs as are assumed by the hierarchy.
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In practice it can be very difficult to identify the degree to which each need has been met and which level a worker is ‘on’.
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Money is necessary to satisfy physical needs, yet it might also play a role in satisfying the other levels of needs, such as status and esteem.
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Self-actualization is never permanently achieved – as some observers of the hierarchy have suggested. Jobs must continually offer challenges and opportunities for fulfillment, otherwise regression will occur.
McGregor Theory X and Theory Y
Douglas McGregor identified two distinct management views of workers and how they are motivated. He called these Theory X and Theory Y. Theory X managers view their workers as lazy, disliking work and unprepared to accept responsibility, needing to be controlled and made to work. Clearly, managers who held Theory Y views believed that workers did enjoy work and that they found it as natural as rest or play. They would be prepared to accept responsibility, were creative and they would take an active part in contributing ideas and solutions to work-related problems – meeting their intrinsic needs in the process.
Theory X managers believe that workers
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dislike work
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will avoid responsibility
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are not creative
Theory Y managers believe that workers
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can derive as much enjoyment from work as from rest and play
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will accept responsibility
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are creative
Significance of McGregor's Work
Workers' behavior is a result of the attitudes management have of them. For instance, if a manager believes that all workers behave in a Theory X way, there will be control, close supervision and no delegation of authority. The staff, as a result of this approach, will almost certainly not enjoy their work and may indeed try to avoid it and fail to contribute in any meaningful way. Therefore, they will become like Theory X because of the way they are treated. The exact reverse could be the case for workers treated in a more democratic style, based on the Theory Y view.
CAN YOU...
Explain how Maslow's work relates to McGregor's Theory X and Y?
Herzberg's Two Factor Theory
Herzberg used worker questionnaires to discover:
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those factors that led to them having very good feelings about their jobs
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those factors that led to them having very negative feelings about their jobs.
Herzberg’s conclusions included:
Job satisfaction resulted from five main factors: achievement, recognition for achievement, the work itself, responsibility and advancement. He called these factors the ‘motivators’. He considered the last three to be the most significant.
Job dissatisfaction also resulted from five main factors: company policy and administration, supervision, salary, relationships with others and working conditions. He termed these ‘hygiene factors’. These were the factors that surround the job itself (extrinsic factors) rather than the work itself (intrinsic factors). Herzberg considered that the hygiene factors had to be addressed by management to prevent dissatisfaction, but even if they were in place, they would not, by themselves, create a well-motivated workforce.
Consequences of Two-Factor Theory
Pay and working conditions can be improved and these will help to remove dissatisfaction about work; but they will not, on their own, provide conditions for motivation to exist.
The motivators need to be in place for workers to be 2 prepared to work willingly and to always give of their best. Herzberg suggested that motivators could be provided by adopting the principles of ‘job enrichment’.
A business could offer higher pay, improved working conditions and less heavy-handed supervision of work. These would all help to remove dissatisfaction, but they would all be quickly taken for granted. If work is not interesting, rewarding or challenging, then workers will not be satisfied or will not be motivated to offer their full potential whatever the pay level offered to them.
'Job Enrichment'
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Assign workers complete units of work – typical mass-production methods leave workers to assemble one small part of the finished product. This is not rewarding, can be boring and repetitive and prevents the worker from appreciating the importance of what they are doing as part of the overall production system. Herzberg argued that complete and identifiable units of work should be assigned to workers, and that this might involve teams of workers rather than individuals on their own.
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Provide feedback on performance – this type of communication could give recognition for work well done and could provide incentives to achieve even more.
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Give workers a range of tasks – to challenge and stretch the individual, a range of tasks should be given, some of which may be, at least initially, beyond the workers’ current experience. This, in quite a large measure, ties in with the ‘self-actualization’ level in Maslow’s hierarchy.
Evaluation of Herzberg's Work
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Team working is now much more widespread as a consequences of his findings, with whole units of work being delegated to these groups.
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Workers tend to be made much more responsible for the quality of their own work rather than being closely supervised by a quality-controlling inspectorate.
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Most firms are continually looking for ways to improve effective communication, and group meetings allowing two-way communication are often favoured.
CAN YOU...
Explain the correlation between job satisfaction and job dissatisfaction?
Learning Goal
I can apply the content theories of Mayo and McClelland and the process theories of Vroom and Adams.
Mayo and The 'Hawthorne Effect'
Elton Mayo, best known for his ‘Hawthorne effect’ conclusions based on a series of experiments he conducted at the Hawthorne factory of Western Electric Co. in Chicago. Mayo’s experiments were initially based on the assumption that working conditions – lighting, heating, rest periods and so on – had a significant effect on workers’ productivity.
Experiments were undertaken to establish the optimum working conditions and the output of a control group was also recorded – this group experienced no changes in working conditions at all. The results surprised the observers – as lighting and other conditions were changed, both improved and worsened, so productivity rose in all groups including the control group. This forced Mayo to accept that:
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working conditions in themselves were not that important in determining productivity levels
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other motivational factors needed to be investigated further before conclusions could be drawn.
Subsequent experiments were carried out with a group of assembly-line workers. Changes to rest periods, payment systems, assembly-bench layout and canteen food were made at 12-week intervals. Crucially, before every major change, the researchers discussed the new changes with the work group. At the end of the experiments, the working conditions and hours of work were returned to how they had been before the start of the trial. Output rose far above the original level. Clearly, other motivational factors were operating to increase productivity completely separate from the conditions of work.
The Hawthorne effect – Mayo’s conclusions
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Changes in working conditions and financial rewards have little or no effect on productivity.
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When management consult with workers and take an interest in their work, then motivation is improved.
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Working in teams and developing a team spirit can improve productivity.
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When some control over their own working lives is given to workers, such as deciding when to take breaks, there is a positive motivational effect
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Groups can establish their own targets or norms and these can be greatly influenced by the informal leaders of the group.
Evaluation of Mayo’s research for today’s businesses
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Since Mayo’s research there has been a trend towards giving workers more of a role in business decision-making – this is called participation.
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Personnel departments, which hardly existed in the early years of the twentieth century, were established to try to put the Hawthorne effect into practice.
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Team working and group working can be applied in many types of modern business organizations and these offer the greatest opportunities for workers and firms to benefit from the Hawthorne effect.
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The idea of involving workers, taking an interest in their welfare and finding out their individual goals has opened up new fields of research for industrial psychologists and this area of study is now regarded as an important component of university business courses.
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This development of the ‘people’ side of business has taken industry away from the engineer-focused and purely money-motivated views of Taylor.
McClelland and Motivational Needs Theory
A doctor of psychology, David McClelland, pioneered workplace motivational thinking, developed achievement-based motivational theory and promoted improvements in employee assessment methods. He is best known for describing three types of motivational need, which he identified in his book, The Achieving Society (1961).
Achievement motivation (n-ach)
A person with a strong motivational need for achievement will seek to reach realistic and challenging goals and job advancement. There is a constant need for feedback regarding progress and achievement and a need for a sense of accomplishment. Research has suggested that this result-driven attitude is almost always a common characteristic of successful business people and entrepreneurs.
Authority/power motivation (n-pow)
A person with this dominant need is ‘authority motivated’. The desire to control others is a powerful motivating force – the need to be influential, effective and to make an impact. There is a strong leadership instinct and when authority is gained over others, it brings personal status and prestige.
Affiliation motivation (n-affi l)
The person with a need for affiliation as the strongest driver or motivator has a need for friendly relationships and is motivated towards interaction with other people. These people tend to be good team members – there is a need to be liked and popular and to be held in high regard.
McClelland stated that these three needs are found to varying degrees in all workers and managers. The mix of motivational needs characterizes a person’s or manager’s behaviour, both in terms of what motivates them and how they believe other people should be motivated. McClelland firmly believed that ‘achievement motivated’ people are generally the ones who make things happen and get results. However, they can demand too much of their staff in the achievement of targets and prioritise this above the many and varied needs of their workers.
Process Theories
Process theories emphasize how and why people choose certain behaviors in order to meet their personal goals and the thought processes that influence behavior. Process theories study what people are thinking about when they decide whether or not to put effort into a particular activity. One of the best-known process theorists is Victor Vroom.
Vroom and Expectancy Theory
Vroom suggested that individuals chose to behave in ways that they believe will lead to outcomes they value. His expectancy theory states that individuals have different sets of goals and can be motivated if they believe that:
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there is a positive link between effort and performance
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favourable performance will result in a desirable reward
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the reward will satisfy an important need
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the desire to satisfy the need is strong enough to make the work effort worthwhile.
His expectancy theory is based on the following three beliefs:
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‘valence’ – the depth of the want of an employee for an extrinsic reward, such as money, or an intrinsic reward such as satisfaction
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‘expectancy’ – the degree to which people believe that putting effort into work will lead to a given level of performance
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‘instrumentality’ – the confidence of employees that they will actually get what they desire regardless of what has been promised by the manager.
Even if just one of these conditions or beliefs is missing then, Vroom argued, workers will not have the motivation to do the job well. Therefore, according to Vroom, managers should try to ensure that employees believe that increased work effort will improve performance and that this performance will lead to valued rewards.
Adams and Equity Theory
A simple theory of workplace motivation was developed by John Stacey Adams, a workplace and behavioral psychologist, in 1963. Equity theory is based on the premise that employees will put forth a particular level of effort that they feel compares to the reward potential. The basic idea is: inputs must equal outputs.
When a balance is achieved between inputs and outputs, it is believed that employees will be more satisfied and willing to work toward higher levels of productivity. Many would argue that fairness is something that we should expect out of our employers. When it comes to fairness, employees rely heavily on perception; namely, what do they perceive to be fair and equal? When a reward is perceived as equitable to the level of effort that they must exert, positive outcomes and high levels of motivation should be the expected result.
The Perception of Inequality
According to equity theory, employees expect to be adequately rewarded for their efforts. They also expect to be rewarded in the same way that other employees are. Inequalities in rewards can lead to lower levels of job satisfaction, deviant workplace behavior and low employee morale and can cause performance problems that negatively impact the entire organization.
When the perception is that one employee is being treated unequally when compared to another worker, the following employee behaviors are common:
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asking for more equitable treatment
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looking for ways to make their efforts look greater by comparison
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putting in a lower level of effort
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looking for a new position within the company or even quit entirely to seek out employment at a more
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acting unethically in order to restore perceived balance (steal from work, use company resources for personal gain, etc.)
CAN YOU...
Apply the content theories of Mayo and McClelland and the process theories of Vroom and Adams.
Motivation in Practice
Learning Goal
I can evaluate different forms of financial motivation and their impact on motivation.
Payment or Financial Reward Systems
The most common payment systems are:
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hourly or time wage rate
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piece rate
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salary
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commission
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performance-related pay and bonuses
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profit-related pay
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employee share-ownership schemes
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fringe benefits.
Hourly wage rate
An hourly wage rate or ‘time rate’ is set for the job – perhaps by comparing with other firms or similar jobs. The wage level is determined by multiplying this by the number of hours worked and is usually paid weekly. Although there is more income security than with piece rate, speed of work is not rewarded with this payment system – indeed, the opportunity to earn overtime might encourage workers to stretch work out unproductively.
Piece rate
A rate is fixed for the production of each unit, and the workers’ wages therefore depend on the quantity of output produced. The piece rate can be adjusted to reflect the difficulty of the job and the ‘standard’ time needed to complete it. The level of the rate can be very important. If set too low, it could demotivate the workers, but, if too high, it could reduce the incentives – because workers will be able to meet their target wage level by producing relatively few units
Salary
A salary is the most common form of payment for professional, supervisory and management staff. The salary level is fixed each year and it is not dependent on the number of hours worked or the number of units produced. The fixing of the salary level for each job is a very important process because it helps to determine the status of that post in the whole organization. Job evaluation techniques may be used to assist in deciding the salary bands and the differences between them. In most organizations, all jobs will be put into one of a number of salary bands and the precise income earned within each band will depend upon experience and progress. It is always possible to gain promotion to another job in a higher salary band. Firms that are interested in creating a ‘single status’ within their organization are now increasingly putting all staff – manual and managerial – on to annual salaries to give the benefits of security and status to all employees
Commission
Commission can make up 100% of the total income of direct sales staff – it reduces security as there is no ‘basic’ or flat-rate payment if nothing is sold during a particular period – or it can be paid in addition to a basic salary. It has the same advantages and disadvantages as the piece rate used in production industries, except that the potential drawback of low quality of production may be replaced by the risk of high-pressure selling, where sales staff try so hard to convince a customer to buy a product or service that they simply create a bad impression of the company. Commission-based pay also does not encourage team work – each individual salesperson will be keen to hold on to each new customer for themselves to earn more commission!
Performance-Related Pay (PRP)
Performance-related pay is usually in the form of a bonus payable in addition to the basic salary. It is widely used for those workers whose ‘output’ is not measurable in quantitative terms, such as management, supervisory and clerical posts. It requires the following procedure:
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regular target setting, establishing specific objectives for the individual
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annual appraisals of the worker’s performance against the pre-set targets
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paying each worker a bonus according to the degree to which the targets have been exceeded.
The main aim is to provide further financial incentives and to encourage staff to meet agreed targets. Bonuses are usually paid on an individual basis, but they can also be calculated and awarded on the basis of teams or even whole departments.
Problems with PRP
There are problems with PRP schemes. The main issue is one that Herzberg would recognize – does the chance of additional pay ‘motivate’ or just temporarily ‘move’ a worker to perform better? As there is no change in the nature of the work being undertaken most of the ‘motivators’ recognized by Herzberg would not be satisfied by PRP. In addition, the concentration on individual performance can create divisions within teams and groups, and this can work against the findings of the Hawthorne effect. There is also a widely held view that PRP bonuses are often inadequate, even to achieve short-term productivity gains or improvements in effort. The last problem concerns the style of management that PRP can lead to. By giving senior managers the power to decide which subordinates have achieved performances above target, it can lead to claims of favoritism and the ability to control staff by means of the ‘carrot’ of extra rewards.
Profit-related Pay
The essential idea behind profit-sharing arrangements is that staff will feel more committed to the success of the business and will strive to achieve higher perform-ances and cost savings (see Table 14.9). Some shareholder groups, however, claim that profits should be the return to the owners of the business and are a reward to them for taking risks with their own capital.
Employee share-ownership schemes
Some profit-sharing schemes do not offer cash but shares in the business to each worker when the firm declares a profit. This is designed to establish the workers as part owners of the business and reduce the conflict that might exist between ‘them’ (the owners and managers) and ‘us’ (the workers). In practice, many of the shares in such schemes are quickly sold by the workers, thus reducing the hoped-for long-term impact on motivation (see Table 14.9).
Fringe benefits
These are non-cash forms of reward – and there are many alternatives that can be used. They include company cars, free insurance and pension schemes, private health insur-ance, discounts on company products and low interest rate loans. They are used by businesses in addition to normal payment systems in order to give status to higher-level employees and to recruit and retain the best staff. Some of these fringe benefits are taxed, but others are not and that gives the employees an added benefit, because to purchase these ‘perks’ from after-tax income would be very expen-sive. It is very difficult to assess the impact of these benefits on productivity.
CAN YOU...
Explain how each of the financial motivators work.
Learning Goal
I can assess the role of non financial methods of motivation and evaluate their impact.
Non-Financial Methods of Motivation
It is now widely recognized that businesses cannot use money alone to create the necessary motivation for employees to complete jobs efficiently. Non-financial motivators include:
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job enlargement
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job enrichment
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team working
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empowerment
Job enlargement
This can include both job rotation and job enrichment, but it also refers to increasing the ‘loading’ of tasks on existing workers, perhaps as a result of shortage of staff or redundancies. It is unlikely to lead to long-term job satisfaction, unless the principles of job enrichment are adopted.
Job enrichment
This involves the principle of organizing work so that employees are encouraged and allowed to use their full abilities – not just physical effort. The process often involves a slackening of direct supervision as workers take more responsibility for their own work and are allowed some degree of decision-making authority. Herzberg’s findings formed the basis of the job enrichment principle. The three key features of it are not always easy to apply in practice, but employers are increasingly recognising the benefits to be gained by attempting to implement them:
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complete units of work so that the contribution of the worker can be identified and more challenging work offered, e.g. cell production
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direct feedback on performance to allow each worker to have an awareness of their own progress, e.g. two-way communication
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challenging tasks offered as part of a range of activities, some of which are beyond the worker’s recent experience − these tasks will require training and the learning of new skills. Gaining further skills and qualifications is a form of gaining status and recognition – see Maslow’s hierarchy of human needs
To introduce job enrichment into many traditional businesses, a process known as job redesign is often necessary. Job redesign involves the restructuring of a job – usually with employees’ involvement and agreement – to make work more interesting, satisfying and challenging.
Team working
This approach to work places each member of staff into a small team of employees. Some traditionalists argue that moving away from ‘pure division of labour’, where one worker performs just one simple task all of the time, will result in lower productivity and time-wasting ‘team’ meetings. Supporters of job enrichment would respond by claiming that more challenging and interesting work, as allowed by team working or ‘cell’ production, will lead to:
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lower labour turnover
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more and better ideas from the workforce on improving
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the product and the manufacturing process, consistently higher quality, especially when total quality management (TQM) is incorporated.
There are a number of benefits to the organization from team working:
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Team spirit should improve the motivation of staff.
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Teams are more flexible than hierarchical systems.
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New teams can be formed and redundant teams disbanded as the needs of the organization change.
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Management costs may be reduced as fewer middle managers and supervisory staff are required.
Delegation and empowerment
Delegation involves the passing down of authority to perform tasks to workers. Empowerment goes further, allowing workers some degree of control over how the task should be undertaken and the resources needed to complete it
Evaluation of Financial and Non-Financial Motivational Methods
If it is accepted that pay is not the only motivating factor for people to work effectively and to be satisfied in their jobs, then managers need to take a critical look at all of the payment and non-financial methods of motivating staff.
What works for some groups of workers will not be effective with others. Managers need to be flexible and adapt the methods and approaches that are available to motivate staff to the particular circumstances of their business and their workforce.
The main factors that influence the different degrees of emphasis on pay and non-pay factors include the leadership style of management and the culture of the organization. If managers have the attitude that workers are naturally lazy and cannot be trusted, then a ‘payment by results’ system with close supervision will be adopted. If the culture views workers as partners or associates in the business, then production will be organized to give workers a chance to accept responsibility and to participate. A monthly salary payment system is likely under these circumstances. As with so many important decisions made within a business, so much depends on the attitudes and beliefs of senior managers – and the business culture they adopt.