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The way of motivation the employees by means of incentives differs according to the company, the sector in which it is operating and the implemented compensation schemes. It is a common practice for the companies nowadays to use various techniques to motivate their agents, which are represented by a blend of intrinsic and extrinsic motivational factors usually called the incentive scheme. The share of each one of them within that scheme depends on numerous aspects but it usually starts with the companyÂ´s available financial resources. According to Applebaum & Kamal (2000) the large corporations using their sumptuous budgets have developed the elaborate financial compensation schemes in which they attempt to incite their employees to exert effort in order to achieve the marked goals and targets (extrinsic motivational factors). The firms with considerably lower resources at their disposal are unable to offer the same level of financial compensation. In order to attract and retain their employees their management must resort to alternative, non-monetary (intrinsic) factors. The most common examples of them are: job enrichment, job satisfaction, recognition, responsibility, achievement and advancement.
Is it then possible for a company to successfully motivate their personnel with only one set of factors? HerzbergÂ´s theory seems to be denying it as it states that human beings are driven by both, hygiene (extrinsic) and motivator (intrinsic) factors. However, the Self-Determination Theory (Gagne & Deci 2005) implicates that the concurrent application of both factors is not advisable as they are not additive and in consequence may lead to diminishing the motivation of employee. The key question appears to be: How does the company link those techniques with the realisation of its predefined goals. This paper attempts to present the practical application of this idea on the example of one Austrian transport company.
This totally independent, private and family owned Austrian company since its grounding in 1924 evolved from a small family business to the large and international transport organisation of roughly 1250 employees and one of the leaders in European full truck load sector. Despite its rapid growth over the last 50 years, the founder of enterprise always wanted to keep the familiar atmosphere intact, as he strongly regarded it as a key to long-term success of the company:
'As the employer, my contribution towards the sustainable economic success is to attract the best talents... We started as a small, family-run company - today we are a large family, whose task is to achieve a sustainable and long-lasting contribution to economic well-being and social cohesion... .'
As freight forwarder that operates between clients and hauliers and ensures for the proper communication between all parties involved, it relies in large part on its human resources and people an integral part of every communicational context. The pivotal role of human factor is deeply rooted in the companyÂ´s policy, which in general rests on 7 pillars and 4 of them refer directly to its employees:
Cooperative style of leadership with the greatest possible autonomy for its employees
Encouragement of positive team spirit within the organisation
Satisfied employees are the prime company target
Despite its large size the company philosophy assumes decentralisation as essential in keeping its familiar spirit. It was achieved by splitting the organisational structure into numerous divisions, so called profit-centres. These are teams of 4-8 people operating independently, with their own budgets, goals and market-related specifics. Although being a part of a large organisation, the employees have the feeling of working in a very small company and can develop a more personal approach to their tasks.
Cooperative style of leadership with the greatest possible autonomy for employees.
The company philosophy assumes that individuals search for a sense of purpose in terms of their economic dealings, searching for a task which will allow them to develop their personalities. This shows that company is interested in recruiting intrinsically motivated candidates as only they would be able to exert optimal effort in this type of culture. This in a way indicates that the organisation will primarily be focused on intangible non-monetary incentives.
The advocated cooperative management style implies granting employees, division members, maximum scope for development and the highest level of personal responsibility. The intrinsically motivated working environment is created by entrusting them with tasks that require a lot of different skills such as languages, professional knowledge, negotiations, communication with clients and providers. Furthermore, the employees are given the possibility of making decisions about their job, obviously according to the level of their experience and competence, including the decisions about the performance- or profit-related factors, e.g. such as price, without a too close supervision, which to some extent makes them act as if they were entrepreneurs themselves. All the same the employees are given the ownership over their task and they are held accountable for the outcomes of their actions. This implies that they will perform more effectively as in the situation where they would be excluded from the responsibility.
Encouragement of positive team spirit within the organisation
Once given the individual the recognition for their efforts, the company does advocate the team culture. The performance is measured not by the output of individual but by results of the teamÂ´s (division) work. This gives also all team members a feeling of equality in sharing the efforts, success and failure and encourages them to interact in order to constantly perform better. This also convinces all team members that group work has the leverage on individual work and generates much more profit. To boost the team building and to strengthen the relationships between those members a series of integration events is organised within each department every year, such as common dinners or sport events.
Satisfied employees are the prime company target
It is a common truth that only the satisfied employees are motivated to perform. The company thus tries to create the optimal ambience to promote social and cultural activities in order to maintain social contacts. In addition, the company provides the necessary tangible non-monetary factors such as tea and coffee facilities, newspapers, etc. The management advocates a healthy lifestyle and gives its full support to employees who undertake sporting and fitness activities by arranging various facilities such as gyms, courts etc. The high competence of the employees is achieved by the exposing them to intensive internal and external training on various job related issues. This also enhances their feeling of being appreciated by the company.
In the conditions of advanced decentralisation the assumptions of companyÂ´s social responsibility and employeesÂ´ commitment to them may be difficult to execute and control. This role is ascribed to the division managers who apart from the responsibility for the performance of profit-centre are also to ensure that level of motivation is equally distributed on all division employees. They act as the `motivation barometers` that monitor the level of staffÂ´s engagement.
The three main components of employeesÂ´ commitment (Dal Forno, Merlone 2010) are:
acceptance of organisational goals
willingness to work hard for the organisation
the desire to stay with the organisation
By comparing the efforts exerted by all members of team, the leaders can at a glance evaluate how much the given employee is engaged in the actions of the department and how far it identifies himself with the organisation. It is also vital for agent to have a goal orientation, which means that he sees sense in actions he is undertaking (Lee 2010)
Finally, the incentive system is completed by extrinsic factors. The financial compensations come on top of all non-monetary incentives, but are still deeply rooted in the social responsibility. The monetary compensation is not perceived as the direct motivational factor but more as a reward of personnel`s commitment. The direct reward system relies in large part on collective bargaining agreement and is supplemented by bonuses in case of meeting performance goals of the given profit-centre. This suggests that performance is not measured individually but collectively, which motivates all team members to maximize its profits. Additionally, various indirect compensations are offered to employees, as for example founding a nursery school with extended opening hours for working parents with children in pre-school age.
The importance of employee motivation in the long-term strategy of human resources management is not to be underestimated. What seems to ultimately determine of it is respective success or failure are the management skills. It can come to flourish only when management can correctly apply it to company reality, which means that managers should be aware of which employees are likely to submit to which motivational factors and company culture. The managers who lack in experience and know how, often contribute to the failure of non-financial techniques. Applebaum and Kamal (2000) stated that as well as beneficial, the non-monetary techniques can `backfire if improperly implemented by an unskilled supervisor or manager`. If however correctly implemented and skilfully communicated to employees, by means of including it into companyÂ´s philosophy and statement, as the previously described example of transport company it could be an excellent boost for meeting or even overachieving enterprises long-term goals.
It is difficult to state whether this intrinsically centred strategy would have been implemented also successfully in the other organisation with differently orientated goals. Probably not, but this does not mean this company would not be able to elaborate it own incentive scheme which would work evenly well. The next paper will try to prove that extrinsically orientated scheme proves also to be successful once the businessÂ´ specific goals have been clearly defined.
J.Q. Lee et al.; The relationship between future goals and achievement goal orientations:
An intrinsic-extrinsic motivation perspective; Contemporary Educational Psychology 35 (2010) 264-279
M. Gagne, E.L. Leci; Self-determination theory and work motivation; Journal of Organizational Behavior 26(2005) 331-362
A. Dal Forno, U. Merlone; Incentives and individual motivation in supervised work groups; European Journal of Operational Research 207 (2010) 878-885
S.H. Appelbaum, R. Kammal; An analysis of the utilization and effectiveness of non-financial incentives in small businesses; Journal of Management Development Vol. 19 No. 9 2000, 733-763