For a company to successfully run, company should come up with creative ideas and high efficiency of the work, and to do that, a firm should be able to motivate each worker of the firm to elicit each of their discretionary effort. It is because, it directly links with the total wage spending of the company which should be linked to outcome and cost of monitoring effort and considering all of those making employees willing to work will result in greater efficiency of the company.
Employees are the core or the main body of all the production of product and service. So how can a company which does not even satisfy their own workers will possibly satisfy the customers with high quality product and service?()
Therefore, there is an idea weighing on the management style of 'of the workers, by the workers, for the workers'().
Following to above management style, manager of big companies are developing or considering variety motivating techniques and motivation theories. So firms not only needs deal fast with each of their own fast-changing environment but also concentrate to create best working condition for the workers to maximize motivation.
Like firms mentioned above with motivation, they are nimble to listen to the claims of the employees. They apply techniques like project team-work, performance-linked pay and incentives to reach perfect inner-service to the workers.
So, like above, there is gaining importance of giving motivation to workers. In this essay, I will search and study theories of motivation and look in to detail of successful firm 'Nokia' and analyze this firm by doing it so, I would like to find out the meaning of motivation and how well those managers of Nokia have elicited 'discretionary effort' from workers for the company.
Maslow's Hierarchy of Needs theory
Most famous is Abraham Maslow's hierarchy of needs theory. He believed that there is 5 level of hierarchy of needs exist within human nature. (A.H. Maslow, A Theory of Human Motivation, Psychological Review 50(4) (1943):370-96)
It is simply most basic needs for human to survive. Things like needs of oxygen for breathe, fulfillment of hunger, thirst, sex and sleep. They are the biological needs which are most essential, it comes front of all the desires that human would want.
When physiological needs are fulfilled, the needs of security are followed.
Human should fill sense of safety of their own health, employment, property and resources. Those factors make them feeling safe.
Needs of Love/Belonging
Human is social animal, when the front two needs are filled, third need can become dominant. Human nature always seeks for the sense of belonging and love/friendship. Maslow describes "people seek to overcome feelings of loneliness and alienation" (Maslow, Abraham (1954). Motivation and Personality. New York: Harper).
Needs for Esteem
When the first three needs reach to satisfactory level, the needs for esteem can become next. It is like self-esteem and respect from others. When these self-esteem and respect is gratified, the person feels confident and valuable as a part of person in a society. Deficiency of those needs would make a person feels weak, inferior and nothing.
Needs for Self-Actualization
When each level of foregoing needs is fully satisfied, then the last level of needs "self-actualization" is activated. According to Maslow, self-actualization is what a person's need to be what they are "born to do." There is a famous quote by Maslow, Abraham H. "A musician must make music, an artist must paint, a poet must write, if they are to be ultimately at peace with themselves". These needs make people to feel progressing, reach-potential and self-fulfillment. (Psychology - The Search for Understanding
by Janet A. Simons, Donald B. Irwin and Beverly A. Drinnien
West Publishing Company, New York, 1987)
By observing hierarchy of needs, each level tends to be satisfied to progress on next level of hierarchy. However, from the point of 'giving motivation' view, none of those desires or needs could not been perfectly satisfied. Maslow theory describes that somehow-satisfied need could not stimulate the people any longer.
>> How hierarchy of needs Theory could be used in management
According to Maslow, if someone wants to motivate somebody, there is a need of understanding what that specific person wants and find out where his or her need is located in hierarchy of needs and provide the upper level of hierarchy.
Adams's Equity Theory
Adams, J.S. 1965. Inequity in social exchange. Adv. Exp. Soc. Psychol.
An individual always do compare himself to others. Let's say, an individual got offer of 2500 pound per month and he thinks it is very good deal and took the job, he will do his job with passion and he will be satisfied with his work. However, if someone else or his acquaintance gets the same job with 3000 pounds with same as his ability/work time/contribution, probably he will not be happy about his earning and job. Even if he was satisfied with his earnings in the beginning, as soon as he feels that it's not fair or equal treatment, the matter that he gets good paid it will not consider him much, but rather obsessed with other's payment.
The problem is that individual starts to think comparatively and starts to believe it is not fair. An individual always compare within his mind and think about the effort he put in and the reward. By doing so, if an individual thinks that he is not fairly treated, the input effort will be directly affected (demotivated).
Above example's idea is called 'Equity Theory' and it was developed by Stacey Adams in 1965.
It is simply, an individual comparing his input-reward and other's input-reward proportion.
For an employee to compare himself in equity theory, the referent is important variable. There are three types of referent 'system', 'self' and 'other'.
For system, the referent is the system of individual's belonged organization. Individual will take wage structures, wage policy and decision-making process into the consideration. Also, organization will need to make important decision with organization's system to an individual as a comparison to others.
Putting 'self' as a comparison referent, result ration of input will be referenced to individual.
This is reflected by one's experience or standard wage or family maintenance-need allowance.
Equity theory is not only interested in absolute reward, it also has interest in other's reward. An individual do compare other's input-reward, founding on effort, experience, education, and ability over their wage level, promotion and recognition. If an individual feels unfair and inequitable over reward ration of input, this feeling will make him/her to experience 'tension'. This tension will continually provide motivation until he/she is treated in equity to him.
>> How Equity Theory could be used in management
Monthly paid employees will enhance quality and quantity to feel the fairness with 'tension' and increase input factor for fair wage proportion.
When compensation is made with Production quantity, over-rewarded worker will have lower quality but higher quantity just to increase their income. However, an individual who receive payment founding on price ratio will increase in effort to accomplish fairness and this will lead to increase in quantity and quality. But, this might result in excess payment and unfairness. Therefore, managers should direct employees to enhancing in quality rather than quantity.
Also motivation is influenced by not only absolute reward but also relative reward. Each time when employee feels that s/he is unfairly treated, it will follow an action to fix about that inequity, like improved or diminished productivity or quality, absence and turnover. Therefore, it is most important factor to make employees to feel in equity in equity theory.
>> Vroom's expectancy theory
Most comprehensive explanation about motivation is performed within Victer Vroom's Expectancy Theory.
Expectancy theory is well described by Montana (Montana Patrick J; Charnov, Bruce H, Management - 4th edition; (2008) - Barron's Educational Series, Inc.), "This theory emphasizes the needs for organizations to relate rewards directly to performance and to ensure that the rewards provided are those rewards deserved and wanted by the recipients."
The expectancy theory suggest that action is followed the expectation from the result and the amount of effort is decided by how attractive the result is to an individual himself. Below, there are three linkages with this theory.
Effort-performance linkage: Possibility of reward expected by putting certain amount of effort.
Performance-reward linkage: Beliefs which expect right reward will be given by doing certain level of performance.
Attractiveness: a person's target and desire of potential result or reward which could be obtained by doing his job successfully.
All explanations seem similar, but simply there are three points.
First, how much an individual should work for certain level of outcome and whether that outcome is possibly achieved.
Second, what will be the reward for doing such work?
Third, how attractive the reward is from the effort of doing such work and how does this job help with goal achievement?
â‰« Applying Expectancy Theory
How 'Expectancy Theory' could be applied? For to link with motivation, I will example myself and try to find out how this theory used.
Most of students have preference on professors or lecturer expecting for something that they would like to learn from the course unit. They would like to know when the exam will be, what kind of assignment they need to do and how much percentage will be taken to get maximum grade or how much amount of time will going to be needed, and think logically about whether this course is linked with what they need.
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Let's say that I feel in the way above. I liked this course unit and worked really hard to get good mark on this essay. I have prepared for long time for this and believed that this will be helpful when I graduate and get good job or get into master course. Then, result came out, my average score of all the course units were 72 percent, however, this specific course was 41 percent. And I got angry and frustrated. Like other assignments, I prepared exact amount of time and put effort, but how could only this specific unit gets such a low score?
From here there will be some interesting facts will be coming out. Suddenly, he (I, from other's perspective from now on) will be constantly missing this unit course lecture and do not revise.
Even if he attends the lecture concentration for this course is hugely dropped.
So, we could say that his motivation is lacking with the related subject. Why did he change? To explain this using motivation theory term;
At the beginning, the merit of good grade (Effort-performance linkage) was high. However, the result was not good (Performance-reward linkage). In other words, if the assignment was fairly graded based on what he did and got good score, the Performance-reward linkage is satisfied and it would have motivated him more. However, if he is demotivated, it is from his belief that his knowledge was not incongruous with fair grading system.
>> How 'Expectancy Theory' could be used in management
First, Expectancy Theory emphasizes on pay and reward. As a result, organization should believe that employees also want the same reward and compensate. This kind of perspective is from egoism that an employee pursuit expected-satisfaction to be maximized. So that manager needs to try to fulfill that expected-satisfaction wisely.
Second, theory points up understanding of attractiveness by the workers. Employees will want to be treated reasonably with positive result/target/outcome they expected. Therefore, the firm should try to satisfy employees' attractiveness.
Third, theory highlights on expected performance. Does an individual understands what is expected on s/he and how could it be compensated. If workers do not grasp the point of this relation, the ultimate goal of organization will be never met. So, this is essential to make both manager and workers to understand clear of performance-reward relation.
Last, theory relates with perception. No matter what actually happens, a person's perception decides level of effort according from not objective result but from performance, reward and goal achievement. Therefore, there is a need for continuous feedback to match the reality and perception of workers.
¿ What is Nokia?
Nokia is a Finnish multinational network corporation is headquartered in Keilaniemi, Espoo ("Nokia in brief (2007)" (PDF). Nokia Corporation. March 2008.)
Nokia's main industry is in the manufacturing of mobile devices and in converging Internet and communications industries, with 128,445 employees in 120 countries, sales in more than 150 countries and global annual revenue of EUR 50.7 billion and operating profit of 5.0 billion in 2008. It is the world's largest manufacturer of mobile phones: its global device market share is approximately 38% in 2009, ("Q3 2009: Quarterly and annual information". Nokia Corporation. 2009-10-15)
The Nokia brand, valued at $34.9 billion, is listed as the fifth most valuable global brand in the BusinessWeek, Best Global Brands list of 2009 (first in non-US Company). It is the number one brand in Asia (as of 2007) and Europe. Also Nokia is the 42nd most admirable company worldwide in Fortune's World's Most Admired Companies list of 2009, and the world's 85th largest company as measured by revenue in Fortune Global 500 list of 2009. ("Fortune Global 500 2009". Fortune. 2009-07-14.)
- Nokia's Case study for motivation
¿ Monetary Incentives: work performance wage structure, Global bonus plan (when profit exceeded 20%, 5% cash payback), production and researchers' incentives.
¿ Non-monetary performance bonus system and Complete and Fair Assessment
Nokia motivates employees by providing rewards according to their performance. However, it's hard to see that they only motivated people with monetary returns, Non-monetary performance bonus system also help to motivate workers. Things like promotions and possibility to self-development will help and also a clear and fair system for this is needed.
Nokia is not in seniority system, there was a case 34 years old man became vice president by his ability. Nokia tried to achieve highest level of work satisfaction.
2. Empowerment organization
¿ Allowing autonomy, leads to motivation
Bureaucratic chain of command provides high efficiency, but this has disadvantage of blocking creative ideas coming up from bottom line of workers. And this is one of the factors blocking motivation. Exampling Nokia, they allow significant amount of autonomous decision to workers. This provides sense of belonging to a company and people feel that they are taking part for company's profit. This leads to motivation of workers due to Maslow's hierarchy of needs theory (sense of belonging).
Case: Nokia immediately supported 6,000,000 dollars for the marketing for Pacific-Asia market as they received idea of competition going harsh in China.
3. Project manager system
Technology, marketing, production and salesman unites as one team and work for 1-2 years for specific project and managers for the project are empowered like chairman in that specific project; this stimulates workers as it has venture business attributes. Nokia has number of small projects teams. Those groups decide everything like estimated budgets too. This gives power to agilely response to market changes.
4. Human resource development program
Providing self-developing opportunities to employees / Maximizing self-development and self-actualization at work
Human resource is crucial factor for economical production in industry f like Nokia with high knowledge and technology. Competitive power is human resources. Modern employees tend to think a company as not only place for earning-money but also as place for self-actualization. Therefore, a company with no self-development lacks power to attract more human resources (Attractiveness, Vroom's expectancy theory). So, firms should provide more opportunities and sense of duty of the company like Nokia's human resource development program.(In Nokia, they value employees through 180 inspections list, helps to find out each workers adaptation-skill and decision-making skills in five levels. By doing so, it tells what that employee needs in specific details and gives job according to it and provide staff training service) and they also provided for experience improvement program by going around world branches.
â€» Based on Nokia's motivation system, 19% of market share in mobile technology in 1999, increased up to 35% in 2001. Also, total sales were increased 48% leaving total profit 56% higher.
Matthew J. (1996), ã€ŒFuture management (ë¯¸ëž˜ê²½ì˜) 11ã€, Dae-kyung publishing company.
Nokia homepage http://www.nokia.com
ã€ŒAnalyzing Nokia's successã€ From www.hunet.co.kr
Managers tend to think that talented-employees turnover is cause by higher financial reward from other company. However, many of employees' turnover reasons are like vision-realization, challenging to new work, harmony of both life and work, higher opportunity of recognition and flexibility of culture and organization. These kinds of reasons suggest that motivation is not only from financial issues but also from Non-monetary issues like mentioned above. I believe what employees consider most is winning recognition from their bosses about work-performance. If this is not done, it's evitable to demotivate workers. In this contrast, Nokia has well understood workers, with fair assessment; they have suggested sense of duty to their workers for the company and made them feel as important part of Nokia. As conclusion Nokia got grater profit and it can be said that Nokia has successfully motivated their employees. Those kinds of techniques of motivation are all founded from the theories of Maslow, Adams and Vroom and Nokia successfully adopted in reality.
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