The Erg Theory Of Motivation Business Essay


Human Resource Management (HRM) means managing people effectively in order to achieve the goals and objectives of any organizations, small or big. More sophistically, HRM involves all management decisions and practices that directly affect or influence the people, or human resources, who work for the organization. Corporations today have increased their attention towards managing human capital effectively. The reason behind this notion is that employees enable an organization to achieve its goals and that managing human capital is critical to an organization's success.

According to David A. Decenzo and S.P Robbins "Human resources management is a process consisting of the acquisition, development, motivation and maintenance of human resource".

According to Barry Cushway "Human resources management can be defined as a range of strategies. Processes and activities designed to support corporate objectives by integrating the need of the organization and the individual that comprise it".

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The goal of human resource management is to help an organization to meet strategic goals by attracting, and maintaining employees and also to manage them effectively. I.e. a HRM approach seeks to ensure a fit between the management of an organization's employees, and the overall strategic direction of the company (Miller, 1989).

HRM activities

The Human Resources Management (HRM) function includes a variety of activities, and key among them is deciding how to motivate your staff, ensuring they are high performers, dealing with performance issues, and ensuring your personnel and management practices conform to various regulations. Activities also include managing your approach to employee benefits and compensation, employee records and personnel policies.

Motivation views

Motivation is the acceptance to work hard in order to achieve organisational goal. This is internal state of mind which moves a worker to set himself up for the target.

Motivation is a chain of process which helps an individual to identify his intensity, set towards the right direction and make efforts to get his goal.

ERG Theory of Motivation

Maslow's needs theory is very famous but Clayton Alderfer redefined this theory to make it more applicable. This rework is called ERG Theory Of Motivation.

Alderfer reshaped Marslow's hierarchy of needs into three different and broader sections of need.

ERG Theory




Existence Needs

This information includes the basic necessities. Every human has some material needs. Like physical and psychological demands. These needs are attached with every individual since he is born and leaves him when he is dead.

In HR these needs play a vital role in a worker's life. These needs urge him to get motivated and strive to get success.

Relatedness Needs

Man is a social animal. He likes to be praised. Ideals are made to follow their footsteps.

At work, supervisors and managers became role models. Their subordinate works hard for fame and recognition. It is also very common in co-workers.

Growth Needs

Like physical growth, everyone wishes to get advanced in his corporate life. In this category, a worker realises his potential and develop his skills and eventually develop himself.

Implication of ERG theory

Managers must realise that every worker has his own individuality. He has his own personal needs. So at the same time, worker's different needs must be satisfied to get him motivated.

Introduction of IKEA

I choose IKEA Company for investigate and examine HR activities. As it is Scandinavian style. Most of the furniture is from Ikea flat pack Ikea consumers ready to be assembled, internationally known as the home installation approved retailers. This cost of the packaging can be reduced. IKEA has a range of 9,500 products, including furniture and accessories.

Performance management

IKEA evaluates its employee performance through the human resource system and one of the subsystems. In the appraisal system, customer services and sale people are evaluated in target achievement. The bonus is paid if they achieved agreed target for the job. IKEA set the performance appraisal standards are based on their strategic goals and job analysis & job descriptions. Their immediate managers follow up the targets which subordinates have achieved. Based on the target achieved managers measure and indicate the performance compared with the standards and performance of other subordinates. If the target is achieved or exceed relevant person get bonus.

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Other employees are evaluated by work performance in their job types and contribution towards the department. IKEA's employees are aware about their job objectives and targets. Performance of them is measured by the line mangers and report during the year. End of the year company has performance review. The evaluation is made on a point scale. The results are reflected in remuneration. Superior discusses the evaluation result individually with each employee in order to seek high level of understanding.

Motivational problems in IKEA

It is believed that human resources function play vital role not only development but also in development and connection of all employees in the organization. The human resources function of IKEA, it is expected, enables it's to develop and deliver services that target their most important assets that are the people. It is however noted that human resources makes sure that services respond to what matters most to the employee.

In IKEA, the sale of Stockport branch (Cheshire) is currently suffering from fewer sales for last six months. The sales team has hired new staff but still there is no big change in sales. The staffs are not achieving their targets so this branch is suffering not from external but internal issues of staff.

The main issues, which are observed in this branch, are following:


The old staffs were not as trained as the new is. Consequently the experienced people are de motivated as they think that fresh breed is generating more profit. Ultimately they stopped working hard.


There was no further career development in this branch. Mostly workers relied what they have achieved and were satisfied at their current positions. Therefore there wasn't any progress in job positions and bonuses.


On the above account, Human resource performance is regularly and meticulously monitored by the organization on yearly basis through employee appraisal. This is useful in that it helps to improve employee's job performance by identify strength and weakness and determine how their strength can be put in to best use and how their weaknesses can be overcome. It is also acknowledge that staff appraisal also helps to find out problem. Which may be restricting employee progress and causing inefficient work practice?

It is further explained that appraisal provides information for human resources planning to assist success planning and to ensure the suitability of employee or provision for particular types of employment and training. However, contrasting to the number of times staff appraisal is conducted by this organization i.e. once a year, it is suggested that employee appraisal should be a continuous process and that should not be confined to a formal review once a year as it and is done in this organization.

It is that employee appraisal as part of human resources monitoring system can help workers get in to a mind-set of both introspective constructive criticism and self-recognition, and that it makes them more willing to receive feedback from appraisal. The following are some point of the good thing advantages about employee appraisal as conducted in IKEA.

It provided the chance to reflect on human resources performance during period under review and when applicable point out any contribution the staff has made that the manager may not remember.

It also gave the worker and the management a good starting point to objectively discuss their, performance and makes it's easier for them to portray development area.

Its presented an opportunity for management to help the employee see where they are not begins objectives and help them build the ability to appraisal other as well

Motivation strategies and its impact

The following are some of the motivation strategies applied by IKEA Company.

Recruiting and Selection

Employees are important to the success of the company. Therefore the importance of recruitment and selection process is essential for IKEA in order to ensure that employees are appropriately chosen. IKEA promotes equals fair and legal choosing the suitable applicants irrespective of gender, race, colour, nationality and ethnic origin. And follow to equal opportunity rules to all staff.

IKEA uses on online application form. They use value-based questionnaire to decide applicant's suitability. This helps to show which person is best suit. After initial screening, applicants are invited to an interview and assessment centre for the final selection processes.

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Applications which send direct to the company will have a review on them and verify the suitability comparing the essential company required. Recruitment team have an initial phone interview with applicants those who fit to the position, ensure applicants skills. Who are successful in the interview are invited to the next stage of interview and direct to the assessment centres.

Assessment centres are most effective ways to find out if the person is good fit for the role. This gives the chance for the company to see behaviour of the applicant in realistic work base situation. IKEA's assessment centre consist number of exercises designed to access full range of skills and personal attributes required for the job.

Exercises may include:


Group discussions


Role plays

Business case studies

Written exercises

Psychological test

Training and development

According to Gray and Smeitzer (1989), when a worker joins an organization, it would be useful to train and develop the person in order to maximize his/her human resource potential. They note that due to the ever increasing competition among present day organization, companies need to have more sophisticate employees. IKEA trust providing training to supply the skills, knowledge and disposition required by individuals or groups to do their work more effectively and efficient. In this, organization, training for an employee is continuous throughout his/her working life with the organization. In fact training is used to provide new comers with skills or to raise their existing skills to necessary levels.

Career development

This is another method of motivation and development put in place by IKEA. The organization aims, among other things, to create work environment where employees can work effectively and efficient, to make the IKEA fit for their purpose. And to do it needs to have not only the right amount of committed workers but also those with the right kind of knowledge and skills. On that account the organization gives opportunities for career development to each staff. IKEA provides such types of service and training to their which make develop their career in that area which they are interest.


For IKEA retained trained and high skilled staff is more cost effective than recruiting new staff. Thus IKEA is planning HR policies to offer a mix of financial and non-financial benefits to retain people. Rewards are the value for employees get return for work have done and gives them a job satisfaction and good working environment. IKEA offer rewards for employees to feel the true value at work.

Up to 10% bonus paid for work above what is expected in employee's day-to-day role.

21 days holiday

Choice of company pension scheme.

Increase salary of staff every year by performance.

Critical evaluation of their effectiveness to meet organizational objectives

To begin with the organization recognized that there will be times when an employee's fails to do his or her duties for one or two reasons. Therefore the management put in place a policy called individual performance improvement and capacity policy. This procedure explains the way to be followed for performance management in situation that have something to do with capacity.

Motivational performance is indicated by the sufficiency and the capability of staffs. The sufficiency of the working staff is about getting right number of staff for certain task. Capability deals with staffs having the ability, skills and knowledge to carry out the work that is required. Another factor that would help indicate human resource performance is the customer satisfaction. In Storey's opinion (1987), there are major differences in HR business strategy. He discussed these as 'hard' and `soft' versions of HRM. Of the 'hard' version of the concept, and therefore workers problems in focus, and the effects of HRM (Human Resource Management), the business judgment based on performance criteria. However, the 'soft' HRM (human resource management) is also a major concern of business performance with parallel interest in the results of the employees on the other side to defend, is probably

(Storey cited in Guest, D. 1999).

Beside the above, there are other factors which are used to indicate HR performance in IKEA. Among these are the following, cost containment, organization, effectiveness, social responsibility and integrity.

Meanwhile, stone R(2005) describe cost containment as focusing on cost reduction through reduce unnecessary expenses, improve productivity, reduce absenteeism, and how labour turnover from own organization. He maintains that organizational effectiveness can be realized by focusing on organizational structure, job design, employee innovation, acceptable to change, employee motivation, and flexible reward system and employee relation. On social responsibility ,he notes that by focusing on legal compliance and improvement in area such healthy and safety in working place, equal opportunities, provide accurate information about product and minority opportunities and development, an organization can live up to their expectation. He further argues that organizations would protect their integrity by focusing on the enhancement of organization's reputation for ethical issues, fair treatment of employee, honesty in communication and honouring of agreements.

On their part, Scullion and Linehem (2005) content that an organization HR performance would be indicated not only be putting in place a well formulated corporate strategy geared toward creating and sustaining competition advantage but also making sure that employees possess the potential, capability and motivation to implement organizational strategies efficiently and effectively.


The success of the operation of the any organization depends upon its effective human resource management. In this assignment, the author is able to investigate the contribution of human resource management to achieve the organizational goals. Human Resource planning and development methods in the organization has been examined and finally the ways of performance of organization Human management has been analysed in order to achieve the organization's goal and objective in given time frame.