There are significant changes and much more competitive challenges in todays business environment because of globalization, fast changing economics and technological advances. Each organization tries to use their strategies to improve their productivity, which is one of the most important factor affecting the overall performance of any organization, to response with increasing of global competition, delivery of products and services and to compete with others (Holbeche, 2009). Motivation and rewards are one of the methods that are about getting and persuading people to work to the maximum of their ability especially in a poor working environment industry and organizations which have various problems within organizations because of poor management, adaptation towards globalization, low productivity and performance of employees. (Häsänen, 2010).
In organization or industry, worker has been rewarded in many forms such as basic salary, bonus and holidays for their fine performance, which benefit to organizations. Most of the time that people conclude that money and motivation are nearly synonymous. One approach to management that has been recognized as the importance of tying rewards to performance is scientific management, which was developed by Frederick Winslow Taylor (1911 cited in Deci, 1973). He used motivators such as wage incentives, and sale commissions to study about effect of motivators. Each unit of output that was produced within manufacturing industry has been paid, depended on how effective it was.
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Taylor set the assumption that a worker will perform effectively to the extent that his rewards are made contingent upon effective performance, which should be measurable. The reward in this situation is money that is extrinsically mediated. In theory, it should be effective but because of some limitation that is money is not only reward that can make workers, who work within organizations, more productive or more effective. So it depends, paying money does not necessarily motivate them and money is not the only reward which workers seek to achieve (Deci, 1973).
The goals for everyone are different since people are not the same, some seek for higher position to be recognized in society so being promoted will be counted as their influencing motivator, some seek good working condition. Under environment that is not suitable to work, work becomes boring and unfulfilling, with workers doing a narrowly defined job, and working as machine minders. The workers does not fully put their effort into their work and use their knowledge and skills. In this case, obviously money is not an effective motivator; they seek a better working environment. In addition, people also need intrinsic rewards, that are internal rewards, which the person derives from doing what he likes or meeting challenges or goals (Kitchin, 2010).
This essay will focus on an argument that money is not the only thing that can make workers more effective. It really depends on each situation including people's needs and motivators vary from one person to another. There is various motivation theories that will be use to support this argument as well as developing the understanding of motivation. Note that, effectiveness varies from industry to industry, for example, more effective for manufacturing industry means higher productivity of production but for business, it means more sales being generated.
Motivation is the act or process of providing something that causes a person to take some action that results in some type of reward. The purpose of motivation is to convince potential employees of entering into the company, to increase the performance of current employees to be more effective and to avoid the leaving of current employees by developing a system of incentives (Shanks, 2007). For many years, conventional wisdom held that employees worked primarily for money so most of them tried to ask for the offer to be a financial reward as their only performance incentive (Banks, 1997). There are many motivation theories that attempt to enhance understanding of motivation, benefit to managers and influence many people to use or adapt theories of human motivation as part of their life such as Maslow's theory, Aldefer's ERG theory, and Herzberg's theory (cited in Shanks, 2007).
Abraham Maslow was psychologist who developed a theory of human motivation to help him understand the needs of his patients (cited in Boddy and Paton, 2011). Needs are physiological as well as psychological that affect a person's survival as well as sense of well-being (cited in Latham and Ernst, 2006).
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Maslow (1943 cited in Shanks, 2007) purposed that all people had needs that could be arranged in a hierarchy of needs that progresses from the lowest, subsistence-level needs to the highest level of self-awareness and actualization. The concept of the Hierarchy of needs is that the most basic need had to be met before the next higher need was of any concern and could act as an incentive. The five levels in Maslow's hierarchy are Physiological needs, Safety needs, Belonging needs, Esteem needs, and Self-actualisation.
Physiological needs, Maslow defined those needs as the most basic needs that include element needs for physical survival such as food, basic salary, water, and comfortable workspaces with clean air. Safety needs include safe work, well-designed facilities, job security, shelter, and freedom from violence. Belonging needs, which would follow satisfaction of safety needs, those needs deal with love, relationship and social concern such as relations with fellow workers, relations with customers and social groups. When physiological needs, safety needs, and belonging needs were met, people will seek for recognition, respect of others that are Esteem needs. The lack of recognition from their direct supervisor is one of the main reasons that forces employees leave their jobs. Receiving recognition and praise seem to be fundamental motivators for employees who work for a long time and seek for esteem needs instead of lower-level needs. Some employees like to feel that their work contributes to establishing a good reputation for them and find opportunity to advance with less money concern. The last level in Maslow's hierarchy is self-actualisation needs, which were fulfilled last and least often, referred to the desire for self-fulfilment and for realising potential; they seek for personal relevance in their work. (Boddy and Paton, 2011).
The most obvious and mostly use as motivational item is money or monetary compensation, which includes wages and salaries, bonuses and retirement plans. As mentioned, most of the people list salary as one of the most important factors when considering a job. Money acts as vital parts of employee's reward package and help fulfilling the bulk for their physiological needs (SADRI and BOWEN, 2011). However, according to Maslow's theory, people can be motivated at work to make them work more effective by giving them the opportunity to meet their needs through incentives, and money is just one of the physiological need. For example, if people do not have their basic physiological needs met then they are highly motivated to work in order to enable them to meet those basic physiological needs. The money paid for the work will enable them to purchase and satisfy their physiological needs. Many company provide free food for their employee so workers was motivated by food instead of the money to satisfied their physiological needs but after workers have eaten enough then food will not motivate the workers or no longer acts as a incentive. When move to another level of needs, the next incentive will be used (Kitchin, 2010). When, employees who significantly have satisfied the four lower needs now are looking to better themselves, those around them and the world as a whole. Some people find a great opportunity to get out of the office and partner with co-workers to do charity work, they want to contribute themselves to the society which also helps meet employee needs for love and belonging as well as satisfy self-actualization needs at the same time (SADRI and BOWEN, 2011).
The ERG theory is an extension of Maslow's hierarchy of needs. Aldefer (Kitchin, 2010) suggested that people are motivated by the opportunity to fulfil their needs at work. His theory difference from Maslow in the sense that he believed that people could regress back to previously fulfilled needs if their efforts to meet higher level needs were frustrated, or lower-level needs do not have to completely satisfied before upper-level needs become motivational.
Aldefer classified needs into three categories rather than five. The three types of needs are existence, relatedness and growth. Existence needs are related to Maslow's physiological and safety needs, he combine those needs into one level. Relatedness needs involve interpersonal relationships and are comparable to Maslow's belonging needs. Growth needs are in essence of Maslow's esteem and self-actualization needs. ERG theory's implications for managers are similar to hierarchy of needs; managers should focus on meeting employee's existence, relatedness and growth needs, though without necessarily applying the condition that job-safety concerns necessarily take precedence over challenging and fulfilling job requirements.
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In general, people work or motivated to fill a variety of needs, both material and psychological. Many workers prefer money rather than other incentive because money can certainly help worker to meet a number of those needs such as place to stay, buy something to eat, and buy insurance but money cannot buy everything, obviously, money cannot buy happiness and time. Thus, in some situation, it is not all about money that can make worker more effective. Frederick Herzberg (1966 cited in (Kitchin, 2010, Banks, 1997) developed the motivator-hygiene theory which related motivation to the nature of a person's work. Herzberg argued that meeting the lower-level needs of individuals would not motivate them to exert effort but would only prevent them from being dissatisfied. Only if higher-level needs were met would make individuals be motivated. Herzberg named higher-level needs as motivator factors and lower-level needs as hygiene factors or maintenance factor.
Hygiene factors are those aspects surrounding the task which can prevent disconnect and dissatisfaction but will not in themselves contribute to psychological growth and hence motivation. Motivator factors are aspects of the work itself that Herzberg found influenced people to superior performance and effort (Boddy and Paton, 2011).
From the motivator-hygiene theory, manager meets employees lower-level needs by improving pay, benefits, safety, and other job-contextual factors will prevent employees from becoming actively dissatisfied but will not motivate them to exert additional effort toward better performance or more effective. More factors are needed. Herzberg supports that increased money did not necessarily lead to increased worker motivation. Some employees may place a high value on money; many others do not for a variety of reasons. It depends on different factors in different situation so they are more incentive apart from money that can make worker more effective as supported by Maslow's hierarchy of needs and ERG theory as well.
For example, A single worker whose home is paid off and who makes a car last 120,000 miles will have far lower living expenses than someone with two new cars, a mortgage and children in day care. An employee without pressing financial needs might value time off or public recognition as their incentive rather than money. Another example is a senior staff that worked with bad general manager who always complaint everyone no matter it was right or wrong and never take responsibility in everything decided to leave. However, the company did not want him to leave and decided to give much more money to persuade him to stay with the company but in this situation with money as a motivator, it could not keep this man because he does not want money, he want to work with someone else. Or a vegetarian wouldn't work in a meat-processing plant, no matter what the salary is because money is not the incentive that this vegetarian wants (Banks, 1997).
In conclusion, money can help workers meet many of their needs as well as being motivated to work more effective, but money alone does not always encourage increased worker motivation. Many workers may not need much money or they have enough money to satisfy their level of needs or may value other things more since there are many more motivators apart from money. Motivators can be everything that can satisfy needs that are important to them at that point in their life, and offered a description of those needs. According to Maslow's theory, people would seek to satisfy needs that they want, some seek for safety, and some may seek for wellbeing so the motivators for each person will be different. Thus, only money cannot make a worker more effective, it requires other motivators as well.