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The simplicity of the question is actually quite deceiving. Different professions call for different means to motivate and make employees productive, therefore it is impossible for one answer to fit all. It must also be noted that the definition of productivity can also be challenged. However, for the purpose of this paper, I would like to take the liberty of answering the question in a straightforward manner, looking at one profession. Therefore I would like to rephrase the question: what makes an analyst of an investment bank productive?
The HR department of investment banks recruit people with the right skills to fit the profile of an analyst, as well as the organisation. This involves determining the characteristics most important to performance, measuring the characteristics that determine performance, as well as evaluating applicants' motivation levels. Investment banks are bureaucratic organisations with ridged structures, lack of communication channels and power struggles exist which encourages stiff competition. According to Saigal (2009), a former analyst, during the interview process, interviewers look for candidates who are highly intelligent, aggressive and go-getters by nature, in order to fit the organisations nature. Oyer (2008) discusses two models describing the attributes of an investment banker. The first is that "Investment Bankers Are Born", while the second describes "The Making of an Investment Banker." Model 1 states that bankers (or analysts) "will be highly productive investment bankers because their skills match the production function well... (and that a)... correlation between starting in banking and working there (exists)... there is no causal effect of first job on subsequent jobs" (Oyer, 2008). The second model says that skills are acquired in school and therefore a person can learn to fit the profile of an analyst. Regardless of the model an individual falls under, as the application process involves application forms, reference checks, letters of recommendations, personality tests, drug tests, among many other checks, by the time a selection has been made, the successful candidate will feel an inert sense of achievement and therefore will have a boost even before he actually starts working. At this stage, it is the company's task to realise the potential of the newly hired employee, as well as to ensure that he has been socialised with the organisation successfully. This will generate motivation, satisfaction, morale and productivity amongst the freshly recruited analysts. The next stage is to send the analysts for intensive training, for a couple months, where they can learn required skills. Training sessions continue throughout the job cycle of an analyst, helping the employees to strengthen their skill-set, as well as gain a deeper appreciation of the firm's culture. This job enrichment, along with job rotation among different departments within the bank, will motivate the analysts.
Motivation is the driving force that energizes, directs, and sustains an individual's behaviour (Marvel et al, 2007). An employees' internal desire to perform the best possible job or to exert the maximum efforts to execute assigned tasks make him productive. Productivity, in turn, refers to the quality of output achieved. That is, how much an employee works and how efficient he is at with job. It is also important to note that the employee must have the ability, capability in order to be motivated and thus productive. For example, an analyst must have good command over research databases tools, the dedication to work long hours, etc. "Since motivation influences productivity, management needs to understand what motivates employees to reach peak performance" (Marvel et al, 2007)
Applying Ritchie and Martins (1999) theory, in the book Organizational Behaviour, an analyst would be classified as a high need individual, valuating achievement, recognition, power, money and tangible rewards. Money breeds greed and this motivates analysts more than anything. The main reason for being in this industry and working overtime is to earn more money. "... Monetary incentives can affect behaviour in diverse ways... these all stem from their influence on one of three factors... 'cognitive exertion', the incentive increases the amount of thought put into the task; 'motivational focus', the incentive changes the agent's goals; or 'emotional triggers', the incentive is a prerequisite for the agent to predict or emit their response. (Reed, 2005). Leading off from the base salary, the bonus is a major driver. At the end of every year, analysts are divided into quartiles according to their performance. Those in the bottom quartile either earn a low bonus or are fired. This encourages a Darwinist environment in the bank. Therefore in order to avoid this risk, analysts aim to be productive and successful. Pay for Performance systems are in place for analysts, where "... the quality of each employee's job performance should, according to merit principles, be recognised through the pay system" (Milkovich & Wigdor, 1991). Banks reward performance based on the amount the individual analyst and his work teams contribute to the bank and the quality of this work. An analyst typically earns $60,000 a year, with a bonus of up to 100% (Saigal, 2009) His accuracy, performance, productivity and attitude will garner him a higher bonus, as well as the overall performance of his team. Deal teams usually consist of three members; the analyst who does the ground work, the associate who checks the work of the analyst, and the VP who runs the transactions and reports to the director. Large investment banks have hundreds of these small teams and the analysts main goal is to perform well along with his team, as ultimately his team will support and fight for his larger bonus. Therefore high levels of group cohesion, coupled with high performance norms, will lead to high performance. Pay-Performance Plans for an analyst is individual, but largely influenced by the team. The advantages of individual-based plans are that performance that is rewarded is likely to be repeated, however it is important to note that once pay for-performance is implemented, the employer cannot take it away as the analyst will continue to expect it.
High salaries translate into a new expensive lifestyle. Expense accounts and other perks are also a reason to want to be in and stay in the industry. Analysts of big investment banks have access to chauffer driver cars to take them home after working late, gym membership, expense accounts to entertain clients, etc. This adds to the glamour associated with the profession and makes an employee extra productive. Being an analyst means that short term goals are engrained in the system. If one is successful, they can be promoted to an associated after three years. This visible goal makes is an incentive to do better. In addition, one wants to perform well in order to get a strong recommendation either for applying to business school or for another job. Large investment banks usually gain constant media attention. Knowing that you are an employee of such a bank generates loyalty and pride and this is also a driver to make employees more productive. The responsibility an employee feels towards his company motivates him. The industry is cut-throat, exciting and competitive. There are thousands of keen applicants looking to start a career as an analyst every year. There are also analysts looking to secure their jobs. The competition itself, and risky work environment, are often considered to be exciting amongst analysts and therefore motivate them.
There are numerous motivation theories which have been developed over the decades, all which seek to understand why employees are motivated, and therefore productive. Taking analysts into consideration, we will now investigate these theories.
Maslow's Need-Hierarchy Theory perhaps is the best fit for the profession of an analysts behaviour. The high salaries can take care of the physiological and security needs, the rich lifestyle can ensure social needs are met, as well as esteem needs. Analysts then need to realise their potential. The need to achieve these stages encourage productivity. The more an analyst earns, the better the lifestyle he can afford, the more confident he becomes, etc. It is interesting to note that this theory reveals that "... a satisfied need is not a motivator of behaviour" (Tripathi & Reddy, 2009:260). However "it is difficult to know about the needs and motives of an individual from the analysis of behaviour... behaviour is multi-motivated" and this makes the observation and study of motivation very complex" (Tripathi & Reddy, 2009:260).
The biggest motivator of Two-Factor Theory is internal job factor that leads to job satisfaction. "Hawthorne experiments have shown that the climate of an organisation also plays an important part in determining worker's motivation"(Tripathi & Reddy, 2009:257). People who chose a profession in the banking sector are usually very passionate about the work environment, the fast paced life, the large financial deals and the recognition associated with them, as well as the opportunities for advancement. If these motivators did not exist, the analysts would most likely be unsatisfied to perform and this would translate into low productivity. Investment banks usually provide their employees with plenty of Hygiene factors such as a fantastic salary, benefits and working conditions. These all ensure that the analysts are not dissatisfied with their jobs, however it should be noted that they will also not encourage motivation. To ensure that the analyst perform to their full potential, motivators must exist. "According to Herzberg, one important way to increase intrinsic job satisfaction is through job enrichment" (Tripathi & Reddy, 2009:262) and this, for analysts, is achieved through the numerous training sessions conducted by the banks. Enrichment leads to increased employee engagement and in turn, is a form on control used by the management. It should be noted that this "...theory suffers from the following weaknesses inherent in the critical incident methodology which was used by Herzberg" (Tripathi & Reddy, 2009:263). These include the fact that
"persons, when satisfied, attribute the causes of their feelings to themselves...(but blame dissatisfaction to external causes)... the categorisation of factors into motivators and hygienes requires... the interpretation of the rater which vitiates the results... (lastly) the methodology has the bias of being able to recall only the most recent job conditions and feelings" (Tripathi & Reddy, 2009:263). Lahiri and Srivastava, in their journal "Determinants of satisfaction in middle management personnel" partially support this theory. The believe that "...satisfied and dissatisfied feelings are unipolar but both intrinsic and extrinsic factors contribute to satisfied and dissatisfied feelings" (Tripathi & Reddy, 2009:268).
The Work Adjustment Theory suggests that employees' motivation levels and job satisfaction depend on the fit between their needs and abilities, as mentioned earlier, as well as the characteristics of the job and the organization. For analysts, these needs may be a promotion to associate, or a good recommendation for business school, whereas the characteristic of the job may be a job design which is challenging and competitive, which feeds the nature of a typical analyst.
Analysts generally associate with the need of affiliation and achievement in McClennand's Need for Achievement theory. The need to harness social relations help the chances of an analyst getting a good recommendation and referral by superiors, while the need for achievement motivates him to be productive and therefore likely to get a promotion to associate.
Job satisfaction is "is the extent that a person's job fulfils his dominant needs and is consistent with his expectations and values...." (Tripathi & Reddy, 2009:273). To explain this concept better, Herzberg's X Y theory may be applied, as well as the need-fulfilment theory and the social reference group theory. These theories explain that job satisfaction positively correlated to "the degree to which the various motivators or satisfiers are present... the degree to which one's personal needs are fulfilled in the job... the degree to which the characteristics of the job are met with the approval and the desires of the groups to which the... (analyst)... looks for guidance in... defining social reality" (Tripathi & Reddy, 2009:273). Tripathi & Reddy (2009) use Korman's correlations of job satisfaction, which include pay and promotional opportunities are directly related to job satisfaction, and are also relevant to analysts. It is important to note that according to Tripathi & Reddy (2009), as well as Vroom, little correlation exists between job satisfaction and productivity. It should also be noted that Vroom's theory faces a problem as it "attempts to predict the amount of effort... there is limited agreement about the meaning of effort" (Steers et al, 1996). Tripathi & Reddy (2009) state that the reason for low correlation is because job satisfaction is affected by the amount of rewards derived from a job, as well as his performance being affected by the basis for attainment of these rewards. Therefore, an emphasis should not be placed on maximising satisfaction, rather emphasis should be placed on enhancing the "relationship between performance and reward" (Tripathi & Reddy, 2009:276). An analyst will perform between with a higher salary and bonus.
Morale and productivity share a positive relationship. "Where the work involves the total man... low morale will lead to... decreased productivity" (Tripathi & Reddy, 2009:276). In order for an analyst to be recognised and rewarded, he must experience production-oriented morale, where "there is a complete identity between the individual and the organisation goals" leading to a satisfied analyst, as well as a happy boss. This may also be achieved thru job rotation, job training, retirement plans, etc. Morale studies in India, as described in by Tripathi & Reddy (2009) state thehigher the education, the lower an employee morale. Analysts are highly educated and academically bright, so this shows that many efforts must be made by the employees firm to motivate them and raise productivity.
It is important to recognise that theories and findings, though being applied to one profession, may differ amongst analysts in different countries. Most of the motivation theories were concluded by U.S. scholars and tend to "have two underlying assumptions that reflect Ameriacn values of free will and individualism" (Champoux, 2000:149).. "Many U.S. workers respond to self-actualisation (and Need for Achievement)...French and German workers have a strong need for security... belongingness and love needs are at the top in the Scandinavian countries" (Champoux, 2000:128). Evidence is strong that the need theories of motivation, as well as other related to job satisfaction and morale, "...are culture bound and do not apply universally" (Champoux, 2000:128). Understanding this fact also leads to ethical issues when multinationals attempt to motivate and raise productivity amonst their employees. The Utilitarian view is that "if peoples needs affect their motivation and job performance, then managing a multinational operation congruent with local people's needs could lead to high performance" (Champoux, 2000:129). As per the rights-based opinion, "people simply have the right of congruence with their needs in their work experience" (Champoux, 2000:129).
Frey and Osterloh (2002) believe that employees are either driven by extrinsic motivation, such as salaries, or intrinsic motivation, which include job satisfaction and relating to organisational values, and that both types of motivation are in conflict with another. Edward Lawler (1973), in the book Organizational Behaviour, argues that extrinsic rewards and performance are not as direct as intrinsic rewards and performance, as the latter is more immediate. After studying an analyst's motivation, I find that both types do exist harmoniously. In addition, I do believe that analysts should be inherently motivated and this will lead to satisfaction and high morale, which all translate into high productivity. One should also keep in mind that the work environment of the industry is intense and often breaks the employees' motivation, leading to stress and high rates of burnout. Therefore management must make a conscious effort towards understanding motivation and implementing measures to boost employee morale and job satisfaction, to gain from the benefits of productivity.