Question: “The one best way to increase work motivation for an organization is through employee reward schemes”. Discuss.
Since the set-up of organizations in our society, the aim of employees has always been driven towards achieving the set goals. The key role of building an employee’s interest and commitment to the job itself is motivation. (Pinder, 1998) said that work motivation is defined as a set of energetic forces that originally comes from both within as well as beyond an individual’s being, to initiate work-related behaviour and to determine its form, direction, intensity and duration. Research evidences has linked motivation to job performance and organizational commitment. (Colquitt, 2011). Employees are motivated for several reasons as they want to pursuit their goals and ambitions towards getting richer, more status and more power. Work motivation comprises 3 elements such as direction, the path along which employees engage their effort; intensity, amount of effort allocated to goals and finally persistence, continuous effort for a certain time. The purpose of studying work motivation was to investigate how employees tend to be more committed to work under certain kind of rewards.
Rewards and Motivation
Motivation has a strong positive effect on job performance. Employees with higher levels of motivation tend to have higher level of task performance. There are a lot of studies that support relationships between different motivating forces and task performance. (Colquitt, 2011).
The strongest motivating force is self-efficacy. According to (Bandura, 1997), self-efficacy refers to the belief that a person is able to organize and accomplish courses of action that are required to produce given attainments. Self-efficacy is also associated with task effort, task choice, and persistence in task achievement. (Gist & Mitchell, 1992).
The 2nd most powerful motivating force is difficult goals. Advocates of goal-setting theory argue that for employees to meet goals successfully, they should be directed in specific and challenging goals. According to Locke and Latham (2002, 2006), these challenging and specific goals motivate performance far better than ‘doing your best’. For instance, Robert Ruffolo, the new chief of research and development at Wyeth, Inc., has given his team of scientists to work on a specific goal of 12 new drugs compounds every year and would be rewarded if they achieve them. Consequently, the set target was achieved every year since and the Wyeth’s scientists have stepped up the goal to the creation of 15 new compounds per year. (Colquitt, 2011). This demonstrates that employees who receive such defined goals tend to do better than those with no specific goals.
The 3rd motivational force is high level of valence, instrumentality and expectancy developed by Vroom (1964). This shows that highly motivated employees believe that effort and outcome will result in successful performance and desired outcomes. However, (Porter, 1968; Lawler, 1973) developed Vroom’s expectancy theory which identifies factors contributing to job performance. Performance may suffer if an employee is asked to do a task where he is not consistent with.
Finally, employees who feel a sense of equity in the job will engage in citizenship behaviour which aids the organization.
So we can assume that what motivate employees are basically rewards. Take for example the company ‘Enterprise Rent-A-Car’. It hires about 7000 fresh graduates to work in the company.
High motivation, enthusiasm, positivism and energy are the basic profile requirements for the job. However, the majority of recruits left the company but for those who stayed, they are obviously motivated by great promotion prospects and panoply of incentives. (Colquitt, 2011). This example demonstrates that extrinsic and intrinsic work motivation complements each other. The students are extrinsically motivated because of the promotion and are also intrinsically motivated due to the interest and challenge the job pertains to.
There are two types of rewards namely the intrinsic and extrinsic rewards that we will look at in the next paragraphs.
Intrinsic rewards are the benefits or valued outcomes which come from the individual itself. (Buchanan, 2010). Employees are motivated on the basis of what they personally gain when executing a task. It can be self- satisfaction, interest, knowledge gain, skill development, personal expression or simply happiness procured by doing that particular work. For example, when artists finish their paintings that took months, self accomplishment is the intrinsic reward when they contemplate the beauty of their work well executed. Intrinsic rewards in management can be categorized as job characteristics model, job enrichment and job empowerment.
3.1. Job characteristics model
The job characteristics model is the basis of the job enrichment strategy of the expectancy theorists Richard Hackman and Greg Oldham (Hackman, 1974; Purdy, 1975). It features the jobs, individual’s experience and outcomes in terms of motivation, satisfaction and performance.
This model proposes that job can be analyzed in terms of ‘five core dimensions’ as follows.
a).Skill variety refers to the use of different skills and abilities to do a variety of job activities.
For example, a flight attendant that announces and demonstrates safety and emergency procedures as well as distributing food and beverages to passengers.
b).Task identity refers to the extent where a job requires completion of a whole piece of work.
For example, the assembling of an entire computer model.
c).Task significance refers to which a job affect the whole of an organization.
For example, a hospital.
d).Autonomy refers to the level of independence and freedom to do tasks that a job provides.
For example, Best Buy brought up the concept ROWE (Result Only Work Environment) where they believe that if they let their employees do their own work management, they would be more productive. So far, this idea resulted positively by increased productivity and commitment among the Best Buy employees.
e).Feedback refers to the degree where employees are told how well they are doing based on previous performance. For instance, getting either a positive or negative response from the lecturer after delivering the presentation.
3.2. Job enrichment
Frederick Herzberg was the first to develop the concept of job enrichment to discover what factors influenced job satisfaction and dissatisfaction. (Buchanan, 2010). Job enrichment is defined as a job design practice whereby employees are given multi-responsibility such as scheduling, coordinating and planning their work. Herzberg came up with the ‘two factor theory of motivation’ namely the motivator and hygiene factors. To increase motivation and performance, we should focus on the motivator factors. Herzberg (1968) argued that improving hygiene factors will only remove dissatisfaction but will not increase motivation. To achieve job enrichment, he advocated the application of vertical loading factors which consists of improving motivation by removing controls, increasing accountability, providing direct feedback, introducing new tasks and special assignments and finally granting additional authority.
3.3. Job empowerment
(Ford, 1969) have complained that they have lost their employees that are still with them. AT&T employees expected interestingness and valued work but due to lack of job empowerment, their performance has consequently suffered. Empowerment gives employees more autonomy, direction and decision-making responsibility. According to Wall and Wood (2002), empowerment is not considered as motivating but rather as an effective management tool. It has more significant impact on performance than new technology by encouraging new ideas and effective work.
Extrinsic rewards are the valuable benefits provided by others which comprise salary increases, promotion, bonuses, job security, praise, recognition, fringe benefits, dividends and company cars. Research suggests the power of the motivator pay is underestimated by employees. When employees rank the importance of extrinsic and intrinsic rewards, they usually put money at the fifth place. However, other research studies show that salary has a greater impact on motivation than any other forms of rewards. This is so because money helps to satisfy the existence needs and also contributes to a sense of esteem that makes employees feel well-regarded and competent. (Colquitt, 2011).
4.1. Rewarding employee equitably
Adam’s equity theory (1965) is based on perceptions of fair and unfair treatments. Employees are motivated to act when unfair treatments avail. The more intense the perceived inequity, the stronger we are motivation to act. From a management perspective, perceived equity seems to lead to greater job satisfaction and organizational commitment. (Sweeney et al., 1990). However, if for example, the inputs and outcomes of employee X are lower compared to those of employee Y, there is under-rewarded inequity. Employees tend to either demand a raise in salary or simply shrink the inputs. Therefore to avoid counterproductive behaviour among employees, the probable solution would be pay secrecy.
4.2. Employee Benefits, pensions and allowances
There are other types of extrinsic rewards such as job status, membership seniority, improved performance appraisal and non-financial rewards. Employees that have met the goals set by the organizations are sometimes rewarded with company cars, private healthcare, paid holidays or salary pension schemes. However, the benefits and attractiveness of rewards vary among cultures. For instance, good performance in an American-based company may earn you a trip to Las Vegas but the ‘alcohol-and-gambling’ rewards may not be equally viewed in the Middle East or in some parts of Asia. A more appropriate reward for employees in India would be free entrance tickets to the new film in cinemas. (Colquitt, 2011).
According to (Stajkovic & Luthans, 1997), self-efficacy has been shown to be positively and strongly related to job performance. Gist and Mitchell (1992) noted that self-efficacy involves a comprehensive judgment on an employee’s capability to perform a specific task. They also point out that self-efficacy is a dynamic construct that is altered over time and in response to new information and experiences. Self-efficacy is also comparable to self-confidence. The more a person believes he/she has the ability, the more motivated he/she will be to complete a task successfully.
The main positive aspect of goal-setting is that it helps employees to boost their performance and has been set forward as a powerful motivational tool. However, it contains certain limitations. For example, in 1960, the Ford Motor Company has been challenged to produce a cheap and light car in minimum time. To be able to meet the goal on time, they overlooked unperformed safety. This resulted in their challenges deadline being achieved but to the detriment of safety ethical behaviour and the company’s reputation. Secondly, goal setting can degrade employee performance by not taking into consideration certain features that are still important. Moreover, risk-taking behaviour may be severely lowered due to excessive focus on goals. (Ordonez et al., 2009) stressed on the fact that goal setting motivates unethical behaviour. Finally, goals can promote competitiveness among employees rather than cooperation. (Mitchell & Silver, 1990).
The main advantages of this theory are: It is credible and right because of evidence support from research and simply because it has intuitive appeal. The theory has also its drawbacks as it is complex and covers a range of interrelated factors. Secondly, the impact of job insecurity on performance and change is overlooked. Moreover, the use of instruments and statistical methods to test the theory may have doubtful validity. The practical managerial consequences of this theory are that the link between performance and rewards must be clear if rewards are to have wanted motivational effect. (Buchanan, 2010).
Edward Lawler (1973) argued that intrinsic rewards influence us more on our motivation to work.
The five core dimensions stimulate three psychological states critical to high work motivation, job satisfaction and performance. These are experienced meaningfulness, where employees consider that work has value, meaning and that it is worthwhile. Secondly, the experienced responsibility, where the employee feels empowered about the work input and finally, the knowledge of results, where employees get the feedback of how well they are performing. Tim Claydon and Mike Doyle (1996) argue that empowerment is not reality-based as managers in organizations are reluctant to abdicate power of dictating tasks to other ordinary employees.
Extrinsic rewards helps to kick-start employees to work even better and achieve higher motivation. But on a critical basis, Kohn (1993) claims that incentive schemes risk to fail because even though money may help us meet our needs, research have demonstrated that many employees do not value money first. Rivalry and negative influence among employees may be triggered because of competition for rewards. Incentive schemes discourage risk taking and creative exploration. The more we experience control, the more we will tend to lose interest in our job. Extrinsic rewards buy adherence of employees concerning working guidelines and do not encourage long-term devotion to the organization. It is not to be taken for granted that when paying employees more, they would perform better. In fact, sometimes they may actually perform worse. Employees that feel frustrated about others getting rewards can demonstrate counterproductive behaviour where he/she will engage into property deviance, sabotage, theft or waste resources of the organization.
Taking into consideration all the facts, reward schemes are effectively the best way to increase work motivation between employees. If every morning, employees wake up and go to work without getting anything in return whether it may be intrinsic or extrinsic rewards, they won’t feel motivated at all because, we, human beings have been brought up to give and receive and we all have the common nature of successfully achieving our goals in life. It is certainly through rewards schemes that we will grow and advance in life.
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