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Organizations today recognize the need to keep their employees motivated to retain the businesses competitive advantage in the industry through high performance. (Edward Lawyer, 2008)
The aim of this essay is to critically analyze the case study "Joy of giving" by giving insight into various theories of motivation, their implications and relevance in practical world. Furthermore, it will discuss the positive outcomes of motivation attained by designing and implementing various reward systems and finally potential drawbacks of token rewards will be considered such as feeling of entitlement to rewards and resentment in the absence of the same.
Motivation is essentially the desire to achieve a particular goal. In organizational setting, it is the drive which pushes employees to perform well and to go the extra mile when needed because of their loyalty to the organization. This motivation can be achieved through appropriate reward strategies which first identify each employee's needs and inclinations such as Internal Locus of Control and External Locus of Control and accordingly offer rewards that appeal to the individual's intrinsic and extrinsic motivations. (Lefcourt, 1982)
Self Determination theory is the understanding of evolved innate psychological tendencies of individuals towards shaping of personality and behavior regulation. (Ryan, Kuhl and Deci, 1997). This theory recognizes three needs as key ingredients of motivation. These are competence (Harter, 1978; White, 1963), relatedness (Baumeister & Leary 1995; Reis 1994) and autonomy (deCharms, 1968; Deci, 1975). These are critical elements of self esteem and components for growth in a social setting. The role of management is to design ways to foster these three traits amongst the workforce to enable organization to survive in the fiercely competitive world through maximum productivity and loyalty.
Companies now employ a mix of rewards in line with needs and process theories of motivation. This is especially necessary as factors that motivate employees constantly change with time. According to Peppermint PR's managing director, the company does not follow a stringent plan to give out gifts but every time he feels that a colleague has gone out of the way to handle the work responsibility of another employee with a no- problem attitude, he rewards them. Carolyn Axtell, senior lecturer at Sheffield University thinks individual recognition has the highest impact when an individual is singled out and praised.
According to Maslow's hierarchy, basic pay, assurance of security and health insurance cater to lower end needs of employees such as Physiological and Safety while equitable distribution of rewards among employees fulfills the principle of Equity theory. (Gunkel, 2006)
Intrinsic and extrinsic factors arousing interest in individuals to stay committed to their jobs and stay fixated at goal achievement arise out of perceived strength of need, reward value of goal and the individual's expectations of himself in the situation (Ross, 2009). Those with high extrinsic motivation require rewards such as promotions and bonuses which provide positive enforcements and reinforcements at completion of tasks. Intrinsic motivation such as high interest in organization tasks and satisfaction from high performance can be intertwined with extrinsic rewards. For example, a salesperson is motivated to greet staff courteously, record transactions honestly and be responsible for customer satisfaction because at the end of the day she earns favorable comments from loyal customers, bonus for increasing customer retention and gets punished if she fails to record items purchased accurately. While all these are extrinsic motivators, chances of promotions, happy customer following eventually creates intrinsic motivation to do well irrespective of external rewards.
Different types of needs and process theories of motivation are as following. The four most famous needs theories are Maslow's hierarchy of needs, Alderfer's ERG theory, McClellands theory of acquired needs for achievement, power and affiliation and Hertzberg's two factor theory separating hygiene factors from the motivators. Hertzberg's two factor theory is widely practiced in organizations where it is recognized that basic pay, safe working conditions and health and pension plans serve as hygiene factors which means they create dissatisfaction if absent but do not motivate employees hence other factors need to be employed to bring about intrinsic motivation. IT Lab Limited, realizes that while large company benefits often go unnoticed, small gifts of appreciation and rewards on an ongoing basis prove to be a lot more powerful in showing an employee that he is cared for and hence provide intrinsic motivation.
Types of process theories are Expectancy theory and Equity theory. Expectancy theory also known as Valence- Instrumentality- Expectancy Theory suggests that effort directed is associated with desire for an outcome and perceived probability of success. Equity theory is one's desire of outcomes (rewards) to be in line with the amount of effort directed towards achieving the goal (Green, 1992)
Abraham Maslow suggests human needs move up the hierarchy which requires the lower needs to be fulfilled before one climbs onto the higher ones. It starts from physiological needs, moving onto safety needs then love and belonging, self esteem and finally self actualization. The bottom four need levels known as deficiency needs have to be satisfied before employees start their conquest of self-actualization and work selflessly therefore managers in organizations must work at fulfilling those needs among employees by providing them with adequate pay, job security, health insurance and opportunity to work in teams to nurture interpersonal relationships among colleagues with a given set of norms to regulate members behaviors (McDavid and Harari, 1968)
Similarly, Alderfer adapts his theory from Maslow's by compressing his five levels of hierarchy into three levels of human needs- existence, related and growth needs. Essentially existence is a combination of physiological and safety needs. Related needs include acceptance by others, self esteem and interpersonal relationships while growth needs are the intrinsic component of esteem needed for one's self development and growth (Alderfer, 1972).
Analysts are increasingly paying attention to Process theories of motivation to establish a just reward system which provides the impetus to employees to work wholeheartedly. A system which identifies the value that individuals place on their inputs rewards them accordingly with recognition, financial and non financial benefits. At Metaswitch, rewards are designed such that they spread to a large number of employees instead of expensive rewards for a few. Mc Lennan says managers should be given clear guidance on reward distribution so it is applied equitably following sound judgment.
The case study has relevant examples from organizations that ensure elements of Expectancy theory of motivation are present. At Madgex, thank you emails are sent to deserving staff members with the copy of email sent to the entire organization. This public recognition increases sense of accomplishment. Small gifts with a pension plan, bonuses at the end of a successful financial year and childcare vouchers are distributed based on intensity of effort being recognized.
According to Maneaud of Bravissimo, the organization thinks long and hard about the gifts before spending money on them placing special emphasis on the types of gifts being offered and obtains suggestions from employees on what they want. She also feels that acquiring staff feedback on work conditions and work-life balance provides motivation as employees feel they have a say and authority in organization functions.
A reward strategy permits remuneration to employees for their work performed in line with company objectives and culture elements. It is considered essential in maintaining competitive advantage, increasing employee productivity and retaining workforce (Phillips & Connel, 2003). Latham and Locke's goal theory states that an employee's performance and motivation are higher if challenging goals are agreed upon mutually and timely feedback is given on their achievements. While salary and bonuses are given out at regular intervals, other awards should also be given with an element of surprise, awarded for behavior which is out of the ordinary. (Robbins, 2009)
"An expected gift at a specified date becomes just another dry financial contract" says Glaskie from Pepppermint PR. Gaksie also adds that gifts should be presented with genuine and warm praise such as 'thank you' and 'well done'.
While traditional reward strategies such as Fredrick Taylor's scientific techniques of rewarding piece by piece and bonuses granted on addition output, providing employees with company stock option and phantom stock options and profit sharing in case of team performance, are still in vogue and widely practiced, nontraditional reward systems are also gaining importance. These are flex-time, flex place, cafeteria system of rewards which allow workers working fewer days but longer hours, telecommuting from their homes and choosing their own reward basket based on their personal interests in cafeteria system (Giesecke & Mc1eil (2010). If teams have been assigned to perform a task, then individuals should be rewarded on team performance. However the problem of equity theory may arise here..If free riders receive as much compensation as the hard workers then a sense of inequality will prevail leading to dissatisfaction. World at work (2007).
Other potential limitations of reward tokens are as following. Rewards lead to a feeling of discrimination and resentment among employees if process employed is not transparent and since a judgment element always exists in the administration of these rewards, it could be more subjective than objective Walker and Smith (2002).
Feelings of entitlement arise among employees and dissatisfaction in the absence of these rewards. Masters and Rimm (1987)
The rewards may at times be considered insignificant and fail to create a sense of pride among employees when given out too frequently.
If rewards are too focused on individual efforts and there is a pool of individuals competing for a particular reward, excessive competition can take ugly shape.(Alvey, 2003)
As mentioned by Johnny Glifford in the case, if token rewards are not followed by employer's respect for employees then they lose most of their value and further widen the gulf between employers and employees suggesting a non caring management attitude.
Finally, reward token can have tax implications for the company if they exceed nominal budget.
HSE is an independent supervisory body in Britain that looks out for working conditions, safety and health issues in the workplace. ACAC is a pubic body of the government of UK operating to improve practices involved in industrial relations (Lewis and Thornbory, 2020)
As stress has been recognized as a major source of illness among workers leading to absenteeism, sickness, anxiety and depression, HSE suggests managers to look after the well being of the staff, identify potentially risky situations and determine ways to avoid and transfer risk of accidents. By taking steps to improve individual staff productivity, reduce potential risk of conflict among team members, training staff for problem- solving leads to a well equipped workforce to cope with pressures, reduced staff turnover and less stress related implications Cooper (1999).
ACAS encourages flexible working keeping in mind changing demand landscape by customers who require goods and services as and when needed. Also employees constant strive for a work-life balance has led to identification of flexible work patterns that makes optimum use of labor and resources. When employees are allowed to choose from options such as part-time working, working from home and job sharing, they are better able to manage work alongside family responsibilities and are more productive and loyal to the organization Avery and Zabel (2001)
Summary and Conclusion
While the case study discussed importance of small gifts in the reward strategy of the organization at unpredictable intervals to keep employees motivated through positive reinforcement via examples from various organisations, it did not discuss how to identify different motivational needs of different employees and allocation of rewards accordingly. Employee feedback alone is not sufficient to decide whether rewards had the desired impact or not. Needs and Process theories of motivation were discussed to figure out the extrinsic and intrinsic motivators and to design rewards accordingly. Green (1992)
Herzberg's two factor theory along with Equity and Expectancy theory are most widely practiced as organizations realize that pay, bonuses and pension plans are not sufficient to motivate employees especially at the higher levels. Equity and Expectancy theory play a vital role in efforts directed towards performance as perception of rewards value and individual ability to achieve it determine efforts towards goal achievement. Moorhead and Griffin (2008)
Consequently, rewards are incumbent to achieve motivation. Contemporary rewards such as cafeteria style, flex hours, flex place and job sharing enhance employee creativity and productivity as more than one job can be managed at the same time. Giesecke & Mc1eil (2010)
Overall, stress in the organization can be reduced through risk identification and training workers on how to counter it Cooper (1999). Flexible working conditions as suggested by ACAS allow individuals to manage a better work-life balance by working from home, part time and overtime as per need