The Importance Of Motivation Business Essay
Disclaimer: This essay has been submitted by a student. This is not an example of the work written by our professional essay writers. You can view samples of our professional work here.
Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UK Essays.
Motivation has so many definitions, and it has been discussed, assimilated and referred to in many aspects, as people have come to understand the importance of Motivation, Motivation refers to in one instance "the reasons underlying behaviour" (Guay et al., 2010, p. 712). This is a major phrase as it refers to a simple but major fact. That behaviour is promoted and supported by motivation. This means that what we do and how we do it is based on motivation. In the same context Gredler, Broussard and Garrison (2004) broadly define motivation as "the attribute that moves us to do or not to do something" (p. 106) This means in the right hands and in the right management motivation can ensure that people behave and act the way factors dictate them to behave. A powerful tool that is worth all the man hours spent in researching this element.
In the past few decades Human motivation has become a complex and well-studied field with reason. Motivation has broad roots in a diverse collection of academic disciplines that has come to play a big part in today's culture some of which is psychology, sociology, education, political science, and economics. In simplified terms, motivation can be defined as, "what causes people to behave as they do" (Denhardt et al., 2008, p. 146). The part motivation plays in all these fields has come to be so immense that everyone today respects and tries to understand the depth of motivation.
The general consensus as to the definition of motivation which reflects that: (1) motivation is goal directed (Lawler, 1994), (2) motivation outlines the achievement and pursuit of goals (Denhardt et al., 2008) and (3) motivation is environmentally dependent (Pettinger, 1996). Campbell and Pritchard (1976) define motivation as being the set of psychological processes that cause the initiation, direction, intensity, and persistence of behavior. All these factors have a direct impact on productivity and the positive human influence in the environment.
Motivation has been identified as "not something that people do to others. Motivation occurs within people's minds and hearts. Managers can influence the motivational process, but they cannot control it" (Denhardt et al., 2008, p. 147).Which makes it harder to wield, however if management can make the conditions such it can promote motivation. Its has become important to know and understand as much as possible when it comes to motivation so that management can do everything that is possible to make the environment a "motivation zone"
Also Young (2000, p1) in his studies makes a valued and simple statement, what motivation is depends on who you ask he states. He further states suggests that motivation can be defined in a variety of ways, depending on who you ask .Ask someone on the street, you may get a response like "its what drives us" or "its what make us do the things we do." Therefore motivation is the force within an individual that account for the level, direction, and persistence of effort expended at work." Again before management decisions that may or may not involve cost is taken it is important that an assessment on which relevant motivators for the relevant situation is assessed and assimilated prior.
Again a statement and study that will help managers get the best out of the people states that according to Antomioni (1999, p29), "the amount of effort people are willing to put in their work depends on the degree to which they feel their motivational needs will be satisfied. On the other hand, individuals become de-motivated if they feel something in the organisation prevents them from attaining good outcomes.
Bartol and Martin (1998) describe motivation as a power that strengthens behaviour again stating the fact that motivation drives behaviour, as such drives performance or in most instances the lack of it.
Also it is said that motivation is a progression of moving and supporting goal-directed behavior (Chowdhury.M.S, 2007). It is an internal strength that drives individuals to pull off personal and organizational goals (Reena et al, 2009).
Motivation is such a factor that exerts a driving force on our actions and work. According to Baron (1983, p. 123),
The main Motivational theories can be divided to two content theories, centred around the assumption that all individuals share a similar set of human needs and that we are all motivated to satisfy those need (Maslow, 1946; McGregor, 1957; Herzberg, 1968; Alderfer, 1969; McClelland, 1988) however process theories explained that while most people might have the same needs but the importance and the placement of those needs are different to each other and motivation needs to be adjust accordingly ( Skinner, 1935; Festinger, 1957; Adams, 1963; Vroom, 1967; Porter & Lawler, 1968; Kahler, 1975; Locke et al., 1990)things study will look in to most motivation theories that are applicable in this context and review them accordingly.
Motivation and Employees go hand in hand in today's context. And there are theories born every day on motivation, how to motivate etcâ€¦.Most theories are centred around the assumption that individuals all share a similar set of human needs and that we are all motivated to satisfy those needs as per the fundamental motivational guru's (e.g., Maslow, 1946; McGregor, 1957; Herzberg, 1968; Alderfer, 1969; McClelland, 1988) Which has started an immediate creation of new theories both proving and disproving these fundamentals. Process theories are centred around the rational reasoning process and say that while most people may have similar needs, the importance and placement of those needs is different for everyone which is a very common sense way of reasoning; that it is something highly subjective (e.g., Skinner, 1935; Festinger, 1957; Adams, 1963; Vroom, 1967; Porter & Lawler, 1968; Kahler, 1975; Locke et al., 1990).
In a early study in this regards Bassett-Jones &Lloyd (2005, p931) presents that two views of human nature underlay early research into employee motivation. The first view focuses on Taylorism, which viewed people as basically lazy and work -shy", which has been disproved in the later years from motivators and hygiene factors. And thus held that these set of employees can only be motivated by external stimulation. The second view was based on Hawthorn findings, which held the view that employees are motivated to work well for "its own sake" as well as for the social and monetary benefits this type of motivation according to this school was internally motivated.
It has been said that financial, economic and human resources, the latest are more essential and have the capability to endow a company with competitive edge as compared to others (Rizwan et al, 2010). As the human capital is gaining its repute as the most important factor an organisation has in its position, all these studies become paramount in today's context.
Employee motivation has become a main item in the "to do list" for most managers to increase effectual job management amongst employees in organizations (Shadare et al, 2009). It is said that a motivated employee is responsive of the definite goals and objectives that he or she must achieve, therefore he or she directs its efforts in that direction. Rutherford (1990) reported that motivation formulates an organization more successful because provoked employees are constantly looking for improved practices to do a work, so it is essential for organizations to persuade motivation of their employees (Kalimullah et al, 2010).
As motivation and job satisfaction go hand in hand it has been said that, Job satisfaction is directly associated with internal work motivation of employees that enhances as the satisfaction of employees increases (Salman et al, 2010)
Motivation and performance
Motivation and Performance has been linked together for a long time, and manager's everywhere are now digging deeper to understand the roots of these theories. As motivation is considered an internal drive, it is important that managers understand what moves their staff to perform. In Beyond the Fringe, Simms discusses how various organizations utilize tailored versions of "non-cash rewards" as employee incentives. In today's research it has now been determined that cash is but a quick fix solution to a problem. Simms suggests that Herzberg's view of salary as not being a motivator holds. Motivation leads to greater employee satisfaction and performance (Simms, 2007).All the more reason why managers should focus on this element in a human resource point of view.
When looking at real life examples we consider the study by Whiteling who looks at the cases of Reuters and supermarket giant Salisbury's to show how important it is to create a culture where employees become directly involved in suggestions for change. Motivation since it goes hand in hand with empowerment this study becomes a important one. By creating a culture where employee input is valued and utilized, the changes faced by the organization are better understood and receive the support of the employees. This also has the side effect of creating employee motivation to support and accomplish the organizations goals and change efforts (Whiteling, 2007). Today managers have understood that the silo system of yesterday that had managers in one segment and employees in another made the working environment a de motivated one.
A good communication chain and even the grape wine has provided the employee to discuss problems etc, if this fails and communication is halted de-motivation has a way of creeping in. A common thread of communication between employers and employees emerges as a requirement for employee motivation (Simms, 2007; Jakobson, 2007; Whiteling, 2007; Silverman, 2006; & Sharbrough, 2006). And studies have shown that motivated staff are more energised and more geared to perform. Many of these case studies link high employee motivation with increased employee performance (Simms, 2007; Jakobson, 2007; Whiteling, 2007; Silverman, 2006; & Sharbrough, 2006).
Robbins and Coulter (2005, 392.) suggests that motivation refers to "the processes that account for an individual's willingness to exert high levels of effort to reach organizational goals, conditioned by the effort's ability to satisfy some individual need." If managers today are to assume responsibility to lead employees toward attaining organizational goals, it is then crucial for them to comprehend the psychological process of motivation.
Research has suggested that reward now cause satisfaction of the employee which directly influences performance of the employee (Kalimullah et al, 2010).
All businesses use pay, promotion, bonuses or other types of rewards to motivate and encourage high level performances of employees (Reena et al, 2009). So the age old debate of what motivates employees is being studied and researched to identify what motivates employees.
"Leadership is about getting things done the right way, to do that you need people to follow you, you need to have them trust you. If you want them to trust you and do things for you and the organization, they need to be motivated (Baldoni.J, 2005). Theories imply that leader and followers raise one another to higher levels of morality and motivation (Rukhmani.K, 2010).Motivation is purely and simply a leadership behaviour. It stems from wanting to do what is right for people as well as for the organization. Leadership and motivation are active processes (Baldoni.J, 2005)."
Research has suggested that reward now cause satisfaction of the employee which directly influences performance of the employee (Kalimullah et al, 2010).
As per La Motta (1995) that performance at job is the result of ability and motivation.
The above theories all point at the direction that motivation and performance shares strong links, and that if management can identify what motivates their employees, performance can be enhanced, and through which the all-important bottom line can be enriched.
Theories of Motivation
Motivation due to its importance had spawned many theories and those theories can be broadly categorized as Content theories and Process theories.
Observing the Content theories they attempt to explain what drives individuals to act in a certain manner based on a universal understanding that all human beings have needs to satisfy, these are the most renowned and spoken of theories in motivation. However, there are several limitations these approaches can contribute in practice due to the complexity of human nature. As such, it is important for organizational managers to know what employees need and also their needs will evolve over time while bearing in mind that needs differ considerably among employees. Subsequently design a flexible reward system (McShane, Von Glinow 2000, 74.) to adapt to various needs of the employees. In this case, the needs of employees will determine the effectiveness of incentives used to motivate them.
The most notable and widely spoken theories of motivation is easily comprehensible motivational was propounded by American psychologist Maslow, who conceptualized the infamous five stages of needs that influence human motivation as illustrated below:
FIGURE1: Maslow Hierarchy of Needs (Griffin2008,438.)
The most basic needs are named as Physiological needs such as food, air, water and shelter outline the basis for motivation and are necessary to ensure the continuation of human life. The secondary needs are named as Safety needs are required by individuals to feel protected from emotional and physical jeopardy. Organizations can satisfy these needs by providing safe working environment, job security and retirement benefit package. The third layer is Belongingness needs refer to the need for affiliation and group identification individuals obtain from family members, friends, colleagues etc. This includes, but not limited to friendship, social interaction, belongingness, or acceptance by others. The fourth is the Esteem needs can be simply described as feeling good about oneself. Self- esteem and personal accomplishment through challenging assignments are part of internal esteem needs while nice job titles, recognition, rewards and reputation are external esteem needs. And lastly Maslow speaks of the highest level of the evolution of needs which are Self-actualization is the pinnacle level of attainment in the need hierarchy. It implies that the full potential of an individual has been realized. This need, however, is hard for a manager to address as it is completely up to the employee's desire to achieve. Griffin (2008, 439.) suggests that managers can help foster an environment where attaining self-actualization is possible for instance empower employees to make decisions about work and providing opportunities for self-development. As observed by Maslow,
Maslow concluded that individuals are primarily motivated by unsatisfied needs in an ascending scale. This concept is termed 'satisfaction-progression process' or pre potency whereby individuals will proceed to fulfil a next higher level need only after a lower level need of the hierarchy is fully satisfied. In other words, an individual whose physiological needs are unmet will not escalate to fulfil the next layer i.e. safety needs; instead will motivate oneself to persevere until the currently recognized need is satisfied. (McShane et al. 2000, 67.) What is important when looking at Maslow's theory is to note that Maslow informs that you have to satisfy a step by step needs hierarchy. However many state this is not the case.
Taking the needs theory into consideration "Alderfer revised Maslow's theory of hierarchical needs by reclassifying the five-level pyramid into three broader categories of human needs:
Existence needs combines Maslow's physiological and safety needs. It simply refers to essential needs for survival such as food, shelter, and safe working environment.
Relatedness needs is similar to social needs of Maslow's theory; a need for individuals to sustain interpersonal relationships and to feel connected to others. Extrinsic motivation also falls within this category.
Growth needs encompasses esteem needs and self-actualization of Maslow's theory. This is a need consisting of self-improvement; develop intrinsic motivation for task through accomplishments; complete meaningful task and be creative.
Almost disproving Maslow, Alderfer contends an individual may be motivated by two or three need category at the same time where one need appears more dominant than the other. This is known as the 'frustration-regression process' whereby if an individual who is unable to satisfy the growth need will regress to relatedness need which continues to be a strong motivator. (McShane et al. 2000, 68.)"
Contrary to theorists who believe that individuals have identical innate needs, David McClelland (1988) argues that certain needs differ from individual to individual and that they are often learned needs; with some people having higher levels of one need than others. McClelland proposes that individuals are motivated based on three needs: achievement, power, and affiliation. Each person has a certain level of each need and in combination they describe what types of motivation influences would suite them best.
Two factor theory
Another important theory that will assist this study greatly is "Herzberg's motivation-hygiene approach, a theory closely connected to the corporate world, was derived from an empirical experiment conducted on employees to determine job satisfaction.
Herzberg noted that determinants entailing satisfaction are labelled as motivators, whereas hygiene factors tend to lead to dissatisfaction. He stated that Individuals will strive to satisfy hygiene needs so as to reduce dissatisfaction but do not necessarily persuade long-term satisfaction but inadequate or the absence of good hygiene factors will cause dissatisfaction. However, dissatisfaction will not result from unsatisfied intrinsic needs nor reduce dissatisfaction when these needs are met. (Herzberg, Mausner, Snyderman 1959, 113-114.) Motivation factors are related to work content while hygiene factors are related to work environment (Griffin 2008, 440.) as summarized below:
Company policies and administration
According to Herzberg et al. (1959, 131-132.), managers should avoid placing strong emphasis on fulfilling hygiene needs as this will result in employees relying too heavily on extrinsic rewards and may pose impediments to the long term success of the organization. Instead, managers should focus on designing more intrinsically challenging task, provide recognition and empowering employees when certain level of ability is demonstrated, which are the true motivators, when fulfilled, contribute to long-term positive effect on employees' job performance.
Process theories provide the explanation on how individuals are motivated. In this theory the 'need' accounts for one component of the process through which individuals decide how to behave. Another component could possibly be for rewards. For instance, an employee perceives a reward (e.g. gift certificate) will be given for exhibiting certain behaviour (e.g. working diligently), so this reward turns into a motive for that behaviour. So the employee focus turns towards the reward which is a hygiene motivator.
Vroom's expectancy theory suggests that motivation levels of employees depend on three guiding principles:
(i) Expectancy (E-P) is the probability that exerting effort will lead to high levels of performance. For E-P to be positive, the employee must possess the appropriate skills, education, experience and necessary training to perform.
(ii) Instrumentality (P-O) refers to the employee's perception that performance will lead to the desired outcome. The P-O expectancy will be positive if the employee believes good performance will result in a promotion or pay rise.
(iii) Valence refers to how the employee perceives the attractiveness of the reward. The attractiveness of each reward differs between employees. For valence expectancy to be positive, organizational managers need to determine the kinds of available rewards the employee values the most. The reward may be monetary or non-monetary.
According to Vroom, motivation level can be computed using the following formula:
Motivation = Expectancy X Instrumentality X Valence
The theory advocates that motivation is present only when employees perceive a positive correlation that effort leads to job performance and job performance leads to rewards. (Griffin 2008, 444.) To put in simply, if the strength of either expectancy or instrumentality or valence is zero or insignificant, there will be no motivation. If an employee who has the ability to perform well does not expect a reward or does not find the reward attractive, then he/she will not be so motivated to do the job. For motivation levels to be high, all three factors must be high too. It is clear, from the expectancy theory, that incentives play a crucial role in motivating employees.
"In 1968, Edwin Lock proposed that the mere setting of goals can serve as a form of motivation (Wofford et al., 1992) and tested Atkinson's (1958) notion that performance and task difficulty were related in a curvilinear, inverse function (Locke & Latham, 2002). Lock's idea, a seemingly natural outgrowth of Aristotle's telos (Barker, 1958), have been supported in a number of studies (Latham &Baldes, 1975; Rothkopf&Billington, 1979; Locke et al., 1990).
Lock's core principle in his goal-setting theory states that by setting moderately difficult, self-assigned, and specific goals, individuals are challenged to increase performance towards those goals. Setting goals also allows workers to judge their own performance against that needed to reach the goal. Goal setting is also an important attribute for teams. Specific and measurable performance goals in teams can solidify cohesion, increase performance, and reaffirm purpose (Katzenbach& Smith, 2003).
"Social equity theory was introduced by John S. Adams (1963) and is an extension of Festinger's cognitive dissonance theory and also appears to rely on the concept of the looking-glass self (Cooley, 1983). Equity theory is based on the notion that people are most satisfied in relationships, both personal and professional (Mowday, 1991), when the "give and take" are equal. In terms of work, this can mean that a person judges equity by measuring their input to outcome ratio against that of other workers. Adams suggested that we gain our sense of equity through the process of socialization.
Thus under equity theory, perceived inequity creates tension which is proportionate to the inequity, and this tension is what serves to motivate individuals to change.
Adams outlines six methods to reduce the tension of inequity: (1) altering effort, (2) altering outcomes, (3) changing how people think about effort or outcomes, (4) "leave the field" (p. 428), (5) try to change the outcomes for others, and (6) change the comparison standards. However, Adams cautions that, "Not all means of reducing inequities that have been listed will be equally satisfactory, and the adoption of some may result in very unsteady states" (p. 429).
Intrinsic and extrinsic motivation
What motivates people, Money or something else, this question has been asked by many for the better part of this century. It was identified that there are two types of motivation, intrinsic and extrinsic. "By looking deeper into the multiple theories of motivation, one will find that there are two basic types of motivation: intrinsic and extrinsic motivation. Intrinsically motivated behaviors are seen when there is no other apparent reward except the activity itself (Deci, 1975). Malone and Lepper (1987) have defined it as "what people will do without external inducement." Examples of intrinsic motivation are hunger, a sense of duty, altruism, and a desire to feel appreciated. Extrinsically motivated behaviours are those where the controlling mechanism is easily seen (Deci, 1975). Examples of extrinsic motivation are money, rules and laws, and the physical environment.
Deci and Ryan (1985) state that intrinsically motivated behaviours are innate and can result in creativity, flexibility, and spontaneity while extrinsically motivated behaviours are generally done as a consequence of pressure and result in low self-esteem and anxiety. However, even the mere identification of intrinsic/extrinsic behaviours has been a topic of debate (Scott, 1975; Guzzo, 1979). Despite this, the distinction between intrinsic and extrinsic motivation is an important one given their impact upon each other.
There has been much research into the effects that intrinsic and extrinsic motivation have upon each other, especially in the field of education. It has been found that many students do not find studying to be intrinsically rewarding (Csikszentmihalyi & Larson, 1984) and that extrinsic motivation has the exact opposite effect on student achievement than is desired (Lepper & Hodell, 1989). In fact, Cameron and Pierce (1994) have shown that when individuals are asked to complete a task, mere verbal praise after successfully completing the task increases intrinsic motivation. Contrary to popular belief, the use of expected extrinsic rewards for completing the task actually produces a negative motivational effect for future task completion once the reward is removed. However, Cameron and Pierce also found that reinforcement, unlike reward, does not harm intrinsic motivation (Cameron & Pierce, 1994).
Factors of motivation
There are many factors that motivate individuals, and as the study shows there is no one rule of thumb to motivate someone but a well observed and specific process that is motivation.
When looking at research on motivator we see the results from a representative sample of the labour force in seven different countries by Harpaz (1991 p.75) showed that the two most dominant work goals were "interesting work" and Good wages"; He further concluded that these two factors were consistent across different organisational levels, between genders and age groups.
Quinn (1997) also cited in Harpaz (1991 p.311) concluded, "When the ratings of twenty three job related factors (including the need factors) were carried out, the conclusion reached was that no single factor was pre-eminently important". He further pointed out that, "The most aspect of the worker job was that of sufficient resources to perform a task.
No matter how automated an organization may be, high productivity depends on the level of motivation and the effectiveness of the workforce so staff training is an indispensible strategy for motivating workers. One way managers can instigate motivation is to give appropriate information on the sentences of their actions on others (Adeyinka et al, 2007).
Money is the fundamental inducement; no other incentive or motivational technique comes even close to it with respect to its influential value (Sara et al, 2004).
Empowerment is and has become as strong a buzz word as motivation. This tool is a carefully planned and processed one that promotes motivation to great lengths. Employees execute their finest novelties and thoughts with the sense of belonging, enthusiasm, and delight, in empowered organizations. Adding up, they work with a sense of responsibility and prefer benefits of the organization to theirs (Yazdani,B.O. et al, 2011)
If an organization wants to improve and be successful, trust plays a significant role so it should always be preserved to ensure an organizations existence and to enhance employees' motivation (Annamalai.T, 2010).
It can make intrapersonal and interpersonal effects and influence on the relations inside and out the organization (Hassan et al, 2010).
Empowerment will always be a defining factor in the process to motivation.
Empowering makes employees feel that they are appreciated and for making it possible continuous and positive feedback on their performance is essential (Smith, B, 1997)
Empowerment results in motivating employees that leads to constant expansion and organizational growth (Smith, B, 1997).
Empowerment directs faster decision of customer troubles for the reason that employees did not dissipate time referring customer objections to managers. Increased autonomy enhances work productivity, amplifies employees' wisdom of self-efficacy and their motivation to get upon and complete certain tasks (Mani, V, 2010)
Bhatti and Qureshi (2007) propose that employee participation in organization measures develop motivation and job-satisfaction level (Reena et al, 2009).
Sanderson (2003) believed that empowerment creates motivation and energy in workforce to do their work efficiently and effectively (Amin. et al, 2010).
"Employee participation and empowerment not only direct to efficiency, effectiveness and innovation but they also boost employee gratification, work motivation and trust in the organization (Constant.D, 2001)."
Kuo et al. (2010) recommended that together the job characteristics of career revamp and employee empowerment are imperative characteristics in giving greater employee dedication and trustworthiness toward the organization and increased level of motivation (Reena et al, 2009).
Another way of motivating individuals that has an age old history is recognising people for their achievements no matter how big or small they are. According to Maurer (2001) rewards and recognition are essential factors in enhancing employee job satisfaction and work motivation which is directly associated to organizational achievement (Jun et al., 2006). In Kalimullah Khan's study, where he has examined the relationship between rewards and employee motivation in commercial banks of Pakistan, this study focused on four types of rewards of which one was recognition which he tested through Pearson correlation. The results showed that recognition correlates significantly (0.65) with employee work motivation (Kalimullah et al, 2010).
Stajkovic and Luthans's (2003) meta-analysis of 72 field studies shows that an organizational behavior modification intervention using monetary incentives improved task performance by 23 percent, whereas an intervention with social recognition did so by only 17 percent and feedback by only 10 percent. Furthermore, by combining all three types of motivational reinforces, performance improved by 45 percent. This is a stronger effect on performance than when each approach was applied separately. Feedback combined with money and social recognition produced the strongest effect on performance.
Management and administration of organizations and institutions should build up the arrangement for giving that rewards and recognition to enhance employee job satisfaction and motivational level (Reena et al, 2009).
Deeprose (1994) argued that the motivation of employees and their productivity can be enhanced through providing them effective recognition which ultimately results in improved performance of organizations.
Freedman (1978) is of the view that when effective rewards and recognition are implemented within an organization, favourable working environment is produced which motivates employees to excel in their performance. Employees take recognition as their feelings of value and appreciation and as a result it boosts up morale of employee which ultimately increases productivity of organizations.
Flynn (1998) argued that rewards and recognition programs keep high spirits among employees, boosts up their morale and create a linkage between performance and motivation of the employees.
Baron (1983) argued that when we recognize and acknowledge the employees in terms of their identification, their working capacity and performance is very high.
Employees are motivated fully when their needs are met. The level of motivation of employees increases when employees get an unexpected increase in recognition, praise and pay (La Motta, 1995).
Lawler (2003) argued that there are two factors which determine how much a reward is attractive, first is the amount of reward which is given and the second is the weightage an individual gives to a certain reward.
Bull (2005) posits a view that when employees experience success in mentally challenging occupations which allows them to exercise their skills and abilities, they experience greater levels of job satisfaction. Incentives, rewards and recognition are the key parameters of today's motivation programs according to most of the organizations as these bind the success factor with the employees' performance
"Ali and Ahmed (2009) confirmed that there is a statistically significant relationship between reward and recognition respectively, also motivation and satisfaction. The study revealed that if rewards or recognition offered to employees were to be altered, then there would be a corresponding change in work motivation and satisfaction."
Incentives have been in the use from the beginning of twentieth century. This is the era of rising scientific management where manufacturing process were looked in to with the mind of optimizing efficiency. By work specialisation and introducing pay-for-performance approach workers were encouraged to perform (Taylor, 1964 ).
McGregor (1960) came up with Theory X and Theory Y representing two different type of people X being the workers who lazy, need of being controlled and does not prefer to take responsibilities known as Classic view . And Y workers represent the new view the opposite of X workers. Generally Y was the more common of the two companies would benefit more from them and so incentive systems should be aimed at them (McGregor, 1960).
Meyer (1975) shows that a majority of workers at organizations with cash-bonus incentive systems were unhappy with the money they received as well as being unhappy with the systems themselves.
Team incentive is criticised by lot of employees since it can be unfair and tent to create free-riders. However when it's organized correctly, group incentive systems could produce the same results as individual incentive systems (London & Oldham, 1977).
Rewards should based on goal-setting and the achievements of those goals. That way, people could work towards a long term goal without too much influence from factors out of their control (Sarin& Winkler, 1980). However Healy (1984) found out managers that are rewarded based on profit are more likely to change accounting procedures in order to maximize profit displayed. Also rewards based on short term measures cause a drop in executive spending (Larcker, 1987).
In the beginning of nineteen eighties we could see that the not only for workers incentives are given for managers as well. In Kim (1990) has found that organizations that use long term incentives for their managers show an increase in earnings-per-share and market return beyond their competitors.
In late nineties when companies became more globalized implementing incentive across borders and cultures received some attention. Gomez-Mejia and Welbourne, using Hofstede's different measurements of culture implemented a incentive system, the low scoring countries, incentives should refrain from rewarding behaviour linked to either of the genders, focusing instead on gender-neutral behaviour (Gomez-Mejia &Welbourne, 1991).
Nelson (1995) points out those non-monetary rewards make economic sense and if used properly they can have the same influence as monetary-rewards. He also claims that with salaries becoming more and more fixed, organizations need to come up with other ways than money to reward their employees (Nelson, 1995). Adding to this economic view Frey (1997) claims that since people use more than money to value their existence they are motivated by more than just money.
If an incentive system encourages behaviour that goes against employees' values then either they will revolt against the system or the system will turn out to be very expensive. However, if an incentive system encourages behaviour that does not go against employee values then it can be highly successful (Bento & White, 1998).
Cite This Essay
To export a reference to this article please select a referencing stye below: