Theory and Application of Motivation

From the Syllabus

(a) Factors that stimulate and influence (c) Implication of motivation
motivation: individual needs;
self-motivation; ability to make choices; theories to managers: getting
environmental opportunities. the best out of individuals;
appreciation of work and
(b) Theories of motivation:
(i) Content Theories – Maslow’s appropriate reward systems
Hierarchy of Needs; Herzberg’s Hygiene (financial and non-financial).
Theory; and,
(ii) Process Theory - Vroom’s Expectancy
Theory.
 WHAT IS
MOTIVATION?
 Motivation
• Motivation refers to the forces
either within or external to a
person that arouse enthusiasm and
persistence to pursue a certain
course of action (Daft, 2001)
• It is the responsibility of managers
to find the right combination of
motivational techniques and
rewards to satisfy employees’
needs and simultaneously
encourage great work performance
 Benefits of a Motivated Workforce
1. Improves productivity . 2. Retention of workers - low levels of
• Employee motivation affects staff turnover. This is very important
productivity, and part of a for businesses, as employees that stay
manager’s job is to channel in a business have experience and
motivation toward the keep recruitment costs low. Less
accomplishment of organizational training is also required.
goals. • According to the U.S. Department of
• Studies have found that high Labor, the cost of replacing an
employee motivation goes hand in employee can be 30% of that
hand with high organizational employee’s first-year earnings, so
performance and profits. it’s financially important to maintain
low employee turnover.
 Benefits of a Motivated Workforce
3. Improved relations between 4. Improved worker performance.
management and workers. • Motivated employees will
• This could mean that employees generally work harder, arrive on
are more likely accept changes time, and focus on their daily
without dispute, and will be less duties.
likely to take either legal or • Productivity levels could increase
industrial action against and the overall output of a
managers. business may be higher.
 Benefits of a Motivated Workforce
5. Improved quality and improved 6. Greater levels of creativity and
customer service. innovation
• Motivated employees are more • Motivated employees handle
likely to work to a higher standard uncertainty more easily, are better
and put more effort into creating problem-solvers and have higher
higher quality products. levels of innovation and creativity.
• Those in service industries are also • When an employee is motivated to
more likely to provide a higher level achieve a certain goal, they won’t
of customer service and be more let an obstacle stop them; instead,
enthusiastic about their role. they willingly think outside the box
to create a new solution.
WHAT MOTIVATES
YOU
AS A STUDENT?
 Intrinsic and Extrinsic Rewards at Google
Google, which is built on the philosophy of creating the “happiest,
most productive workplace in the world,” provides some of the most
amazing extrinsic rewards in corporate America—free breakfast,
lunch, and dinner; subsidized massages; free yoga and Pilates classes;
fitness centers; free snacks, beverages, and candy all day. The
headquarters includes play areas, cafes, coffee bars, and cozy
conversation areas, as well as conference rooms and offices, many
with desks that engineers were allowed to design for themselves.
Yet the strongest employee motivation seems to come from the
sense of community and support that these lavish perks create rather
than from the perks themselves. Google analyzes data on everything
to see how people are interacting because creativity requires
“serendipitous interaction”
 Motivation at Google?
https://www.youtube.com/watch?v=n_Cn8eFo7u8
 Factors that stimulate motivation
1. Individual needs
– Individuals have certain needs that create a desire to be fulfilled and
drive them to behave in a particular way to achieve those needs.
– For example a new high school graduate needs money to pay rent
and buy food, so he is motivated to find work that covers his
expenses.
– Content theories of motivation such as Maslow’s Hierarchy identify
various needs of the employee and the approach management takes
to satisfy those need to motivate them.
 Intrinsic vs. Extrinsic Rewards
Intrinsic rewards Extrinsic rewards
• Intrinsic rewards are the satisfactions a • Extrinsic rewards are given by another
person receives in the process of person. They originate externally, as a
performing a particular action. result of pleasing others.
• The completion of a complex task may • The most talented and innovative
bestow a pleasant feeling of employees are rarely motivated
accomplishment, or fulfill a personal exclusively by rewards
mission
 Factors that Stimulate Motivation
2. Self-motivation
– the ability to maintain a high drive to
accomplish one’s goals without the
need for external stimulus.
– Self-motivated individuals possess
characteristics that give them a laser
focus on their goals which are:
• Risk-takers
• Persistent
• Solution oriented
 Factors that Stimulate Motivation
3. Ability to make choices
• The level of freedom to choose between various
options and select the one which is in alignment
with personal goals.
• Individuals are motivated when they have options
and can decide on their own free will.
• For example, if management gives a directive to
increase output but only provided an option to
work longer hours on weekends, this may be in
conflict with employee work-life balance.
However, if management were to present a roster
there were several days and times available for
extra work, then the employee will be more
motivated to choose based on their best interest.
 Factors that stimulate motivation
4. Environmental opportunities/threats
– Opportunities are external situations that are in
alignment with an individual’s ambitions. It can
take the form of
• employment,
• training and education
• promotion.
– Individuals are motivated to prepare themselves
for the opportunity should it arrive by displaying
certain behaviors.
– Threats are external factors that will detract an
individual from achieving their goals. It can take
the form of :
• high rates of inflation,
• Unemployment
• Job loss
 Positive and Negative Motivation
Negative approach
• research shows that people typically
respond more strongly to a potential loss
(such as a financial penalty), referred to as
loss aversion, than to an expected gain
(such as a financial reward ).
• Fear is a powerful motivator. However,
using fear to motivate people in
organizations almost always has negative
consequences for employee development
and long-term performance.
 Positive and Negative Motivation
Positive Approach At Hilcorp Energy, for example, managers
• When people aren’t expecting a offered employees the chance to earn a
reward, and receive it, it can have a bonus of $50,000 each if they help the
disproportionate psychological impact. organization meet its growth goal.
• This positive motivational approach is
useful but limited.
• External rewards are important, but
they can lose their power as
motivational tools over time.
• The most effective managers also
emphasize intrinsic rewards from their
work.
 Theories of Motivation
Content Theories Process Theories
• Content theories emphasize the needs • Process theories explain how people
that motivate people. select behavioral actions to meet their
• Needs translate into an internal drive that needs and determine whether their
motivates specific behaviors in an attempt choices were successful.
to fulfill the needs • Process theories try to explain why
• To the extent that managers understand behaviors are initiated
employees’ needs, they can design reward
systems to meet them and direct
• Adam’s Equity Theory
employees’ energies and priorities toward • Vroom’s Expectancy Theory.
attaining organizational goals.
• Maslow’s Hierarchy of Needs
• Herberg Two Factor Theory
 Maslow’s Hierarchy of Needs
• Maslow’s Hierarchy of Needs
identifies five levels of
individual needs.
• An individuals' urge to satisfy
needs will motivate them.
• Higher order needs will
include self-actualisation,
esteem and love/belonging
• Lower order needs are safety
and physiological
 Maslow’s Hierarchy of Needs
• Motivation is attained when management
provides opportunities which satisfy the
employees needs level.
• Employees lower order needs must be
satisfied first before higher-order needs
are activated.
• A person desiring physical safety will
devote his or her efforts to securing a safer
environment and will not be concerned
with esteem needs or selfactualisation
needs.
• Once a need is satisfied, it declines in
importance and the next higher need is
activated.
• Unmet needs create demotivation.
 Maslow’s Hierarchy of Needs
• Physiological Needs - These include the most basic needs that are vital to
survival, such as the need for water, air, food, and sleep.
• Security Needs - These include needs for safety and security. Security needs are
important for survival, but they are not as demanding as the physiological needs.
• Social Needs
These include needs for belonging, love, and affection.
• Esteem Needs - After the first three needs have been satisfied, esteem needs
becomes increasingly important. These include the need for things that reflect on
self-esteem, personal worth, social recognition, and accomplishment.
• Self-actualizing Needs - people are self-aware, concerned with personal growth,
less concerned with the opinions of others, and interested fulfilling their
potential.
 Maslow’s Hierarchy of Needs
`

Maslow's hierarchy Business examples

Opportunities for creativity and
Step 5 - Self-actualisation
personal growth, promotion
Fancy job title, recognition of
Step 4 - Esteem needs
achievements
Good team atmosphere, friendly
Step 3 - Social needs
supervision, informal functions
Safe working conditions, job
Step 2 - Safety needs
security, job contracts,
Salary, decent working environment,
Step 1 - Physiological needs
uniform for employees
 Maslow’s Hierarchy of Needs
Criticism:
1. Needs aren't always hierarchical.–
Maslow theory states that employees motivation must be in the exact
order of the hierarchy. However, not ALL employees needs are
satisfied in this specific order. Some employees may find greater
fulfillment in safety needs than physiological needs.
 Herzberg Two-Factor Theory
• Herzberg believed that
two entirely separate
dimensions contribute to
an employee’s behavior
at work.
– Hygiene factors and
– Motivators
• Focuses on factors exiting
at the workplace that
create satisfaction or
dissatisfaction.
 Herzberg Two-Factor Theory
Hygiene or maintenance factors
• Need to be present to ensure a reasonable level of satisfaction
• The absence of these factors can lead to workers being dissatisfied e.g. pay
or conditions.
• Improving hygiene factors should remove dissatisfaction.
• An improvement in hygiene factors alone is not likely to motivate an
individual. But if they are not met, there could be a fall in productivity
 Herzberg Two-Factor Theory
Motivators
• If these factors were not present it would not significantly have an impact on the
dissatisfaction of employees.
• Increasing these motivators is needed to give job satisfaction and make workers
more productive.
• A business that rewards its workforce for achieving its target is likely to motivate
them to be more productive. However, this is not guaranteed as other factors
can also affect productivity.
 Herzberg Two-Factor Theory
.Criticism
• Herzberg’s theory does seem to have some
merits. Improving pay or conditions, for
example may remove dissatisfaction at first.
Often, however, these things become taken for
granted.
• It is likely that better conditions will be asked
for in following years. Evidence of this can be
seen in wage claims which aim to be above the
rate of inflation in some business every year.
 Process Theories Comparison
• Maslow’s Theory is a general theory of motivation which expresses that
the urge to satisfy needs is the principle variable in motivation. In
contrast, Herzberg’s Theory on motivation reveals that there are some
variables existing at the workplace that results in job satisfaction or
dissatisfaction.
• The basis of Maslow’s theory is human needs and their satisfaction. On
the other hand, the Herzberg’s theory relies on reward and recognition.
• In Maslow’s theory, there is a proper sequence of needs from lower to
higher. Conversely, no such sequence exists in the case of Herzberg’s
theory.
• In Maslow’s theory, any unsatisfied need of an individual serves as the
motivator. Unlike in the case of Herzberg, only higher level needs are
counted as the motivator
 Hawthorne Studies
• This study was conducted at an Chicago
electric company, known as the Hawthorne
studies, and sought to determine the
correlation between productivity and
lighting (or increased use of lighting in
factories).
• Workers who participated in the study were
paid extra which increased motivation and
productivity but money was not the only
cause of the increased output.
 Hawthorne Studies
• Employees performed better when
managers treated them in a positive
manner.
• Worker productivity increased partly as
a result of the increased feelings of
importance and group pride
employees felt by virtue of being
selected for this important project.
• This extra attention and belongingness
to a special group would have meet
their need and provided an extra sense
of motivation for employees.
 Process Theories
• Equity theory (J. Stacy Adams)
focuses on individuals’ perceptions
of how fairly they are treated
compared with others.
• People will become demotivated if
they perceive their efforts to be
equal but their input (rewards) for
their efforts are not.
• Management must ensure there is
equity of compensation for
employees that deserve it.
 Process Theories
Vroom’s Expectancy Theory. • Expectancy theory is concerned
• Is the belief that increased effort will not with identifying types of
lead to increased performance i.e. if I needs, but with the thinking
work harder then this will lead to
process that individuals use to
better results.
achieve rewards
• An individual's motivation to perform a
specific task is based on their belief
that their effort will lead to high
performance and that high
performance will lead to a desirable
outcome
 Expectancy Theory Examples
• For example, one interesting study of • Walmart is using expectancy theory by
expectancy theory looked at patrol tying some senior executive
officer drug arrests in the midwestern compensation to an overhaul of its
United States. The research found that corporate compliance program
officers who produced the most drug (executives’ compliance with
arrests were more likely to have antibribery laws and other policies for
perceived that such arrests were a international behavior). By tying
management priority and were rewards directly to achieving specific
rewarded by their organization, compliance goals, top leaders are
received specialized training to hone demonstrating that the compliance
their skills related to drug interdiction, overhaul is a priority
and perceived that they had sufficient
time and resources to investigate
suspected drug activity properly.43
Learning Objective C

IMPLICATION OF MOTIVATION THEORIES TO

MANAGERS:
Financial and Non-Financial Strategies
 Financial Incentives
Payment system are the mechanism
by which firms pay their workers. It is
usually a combination of several types
including:
1. Time based pay
2. Piece-rate
3. Salary
4. Commission
5. Performance related pay
6. Profit sharing
7. Fringe benefits
 Time-based Pay
Time-based pay means the employee
is paid with a set dollar rate per hour
he works.
• hourly, daily, weekly, fortnightly.
• the most common form of pay.
• Applicable to low skilled labour.
• Overtime is generally paid at a
higher rate than the standard
time-rate
 Time-based Pay
Advantages Disadvantages
• Improves equality among employees - • Overtime pay may be a disincentive for
Because of the time rate system, the high levels of productivity during
employees of the company may feel normal working hours.
equal within themselves. • No incentive to achieve greater output
• Overtime – overtime pay is higher than as with a piece rate system
normal pay and it creates an incentive
for employees to work longer hours.
 Piece Rate Pay
• A rate is fixed for the production of
each unit and the workers wages
therefore depend on the quantity of
output produced.
• Piece rates are frequently used in
certain industries or occupations
where the work is repetitive in
nature, and where employees have a
high level of control over the results
 Piece Rate Pay
Advantage Disadvantage
Time Efficient Reduced Quality
• Paying a worker by output • When the focus is on quantity, the
encourages the worker to manage output the quality may suffer.
time so as to increase the output.
Production Efficient • Focuses on Individual effort rather
• When paid per piece, workers tend than team effort
to develop and adhere to the most
efficient means of production.
 Salary
• This is an annual sum that is usually
paid on a monthly basis. It is the
most common form of payment for
professional, supervisory and
management staff.
 Salary
Advantage Disadvantage
• Certainty of earnings - Salary jobs • No overtime pay - salaried employees
come with the benefit of knowing don’t get paid more for overtime work.
exactly how much you get paid week Thus they may be expected to work
after week. longer hours.
• Higher pay and benefits- Salaried
positions tend to pay more than hourly
positions and many come with better
benefits, retirement plans, vacations,
and bonuses.
 Commission
• Sales employees are paid a percentage
of what they sell.
• Some employers use straight
commission, meaning sales numbers
determine every dollar a worker gets.
• A commission-based incentive plan
often means that workers receive a
salary, but commissions serve as an
incentive for strong sales production.
• this is most frequently used in
personal selling eg retail, insurance
agents.
 Commission
Advantage Disadvantage
• Increased sales - The primary reason Overly Aggressive Sales Agents
companies use commission incentives • Commission selling can lead to aggressive
behavior from sales employees, causing them
is to motivate sales employees to work to use high-pressure sales techniques. This
harder, more effectively or more can scare off customers and your company’s
efficiently to convert sales. reputation could suffer.
• Fluctuations in Pay: Commission sales can
create wide variations in sales employees’
income.
• Low Job Security: There’s no guaranteed
income for employees. An economic
downturn can mean loss of income for
salespeople, causing high turnover.
 Performance Related Pay
this is a scheme to reward staff for
above-average work performance.
✔ It is usually in the form of a bonus
payable in addition to the basic salary.
It is closely linked with performance
appraisals.
✔ The analysis of performance against
pre-set and agreed targets allows the
future performance of the worker to be
linked to the objectives of the business.
 Performance Related Pay
Advantages Disadvantages
• It should improve individual • Employees can be de-motivated if the
productivity and performance if this is goals set are too hard to achieve
directly linked to pay • Too much of the process relies on the
quality of judgment made by a
• Rewarding high performance can assist manager
in retaining staff
 Fringe Benefits
• Fringe benefits – non-monetary
forms of reward but include cars,
houses, allowances, insurance,
pensions plans.
• life insurance
• company loan schemes
• flextime
• telecommuting
• gym membership
• child-care provision
• all employee car schemes
 Fringe Benefits
Advantages Disadvantages
1. Attract and retain good employees. Equity of benefits
When you can offer benefits that have • If some workers perceive to have
value, you’re more likely to attract and access to fringe benefits whilst others
keep valuable employees. don’t this may cause demotivation
2. tax free benefits Costly to the business
For both the employers and employees. • The more benefits a business offers,
3. Reduce employee absenteeism. the more it must pay for administrative
a comprehensive heal insurance plan in overhead.
place. help to reduce the number of sick
days that may be taken.
 Profit Sharing
• this scheme shares some
of the company profits
with the workers.
• ESOP – Employee Share
Ownership Plan
 Profit Sharing
Advantages Disadvantages
• Motivate employees to perform well • If the company is not profitable, of no
because the higher the profits, the fault of the employees, and they do
greater the dividend payments to the not receive dividends, then this may
employees.There is a direct link demotivate staff.
between employee productivity and • Piggyback effect – some employee may
profitability not pull their weight in performance
but receive the same dividends as
other productive employees
 Non-financial Incentives
There are five non-financial incentives which seek to motivate employees:
1. Job design
2. Participation
3. Autonomous Work groups
4. Delegation and empowerment
5. Opportunities for advancement
 Job Design
❑ Jobs are an important consideration for
motivation because performing their
components may provide rewards that meet
employees’ needs.
❑ Def:- To design the structure of the job in
such a way so to motivate workers and boost
productivity via four approaches:
1. Job Simplification
2. Job Rotation
3. Job Enrichment
4. Job Enlargement
Job Design Techniques
 Job (Work) Simplification
Job simplification pursues task
efficiency by reducing the
number of tasks one person must
do.
As complexity is stripped from a
job, the worker has more time to
concentrate on doing more of the
same routine task.
Criticism - People dislike routine
and boring jobs and react in a
number of negative ways.
 Job Rotation
❑ This systematically moves
employees from one job to another,
thereby increasing the number of
different tasks an employee
performs without increasing the
complexity of any one job.
❑ Job rotation provides variety and
stimulation for employees.
 Job Enlargement
❑ Job enlargement combines a series of tasks into one new,
broader job.
❑ Instead of only one job, an employee may be responsible for
three or four and will have more time to do them.
❑ This type of design is a response to the dissatisfaction of
employees with oversimplified jobs.
❑ Eg Maytag, jobs were enlarged when work was redesigned so
workers assembled an entire water pump rather than doing each
part as it reached them on the assembly line.
 Job Enrichment

❑ A job design that incorporates

achievement, recognition, and
other high-level motivators into the
work.
❑ In an enriched job, employees have
control over the resources
necessary for performing it, make
decisions on how to do the work,
experience personal growth, and
set their own work pace.
 Non-financial Incentives
2. Participation
▪ involvement of employees in decision making. Ways to improve employee
participation/engagement:
Democratic leadership – give employees an opportunity to have a say in the
decision making and they will contribute more to the outcome than if it was
only a directive.
Employee empowerment – give employees authority and autonomy to
complet tasks.
▪ As an example of autonomy in action, Netflix employees operate in an
environment of “no rules,” characterized by a high degree of employee
freedom and responsibility.
 Non-financial Incentives
3. Job Satisfaction
▪ Ensure workers view the job with a positive attitude.
▪ The work done coincides with interests and needs,
▪ there is no conflict with the workers norms and the job.
▪ Supervisor worker relationship is positive
 Non-financial Incentives
4. Opportunities for Promotion
▪ workers who have a sense of accomplishment will be motivated by
opportunities to reach higher levels in the hierarchy.
▪ ‘Glass ceiling’ describes a situation where employees see
opportunities for promotion but it is not available to them.
 Changes to syllabus
• Changes in the syllabus which were very specific in the old
syllabus but not given in detail in the new syllabus but are
related to financial incentives for motivation.
• Performance appraisal
• Job evaluation
• Work study
 Performance (Job) Appraisal
The process of reviewing employees’ performance.
This process is usually carried out annually and seeks to rate
employees skills and expertise in relation to the job requirements.
Management uses PA to:
▪ Promote, redeploy and transfer employees
▪ Identify strengths and weaknesses of employees
▪ Determine if any training is needed

Advantages Disadvantages
• Managers are able to keep a record of • Can be time consuming
performance • It can be somewhat subjective
• Employees are involved in the process • Can lead to demotivation if perceived
• Can improve motivation as unfair by employees
 Job Evaluation
▪ A formal process of comparing jobs so that a rank order is obtained based upon
the demands of each job
▪ A process of measuring the worth of a job using prescribed factors such as
qualification, knowledge, responsibilities and skills.
▪ It is about comparing jobs not assessing the work of the individuals
▪ The purpose is to allow for the creation of a wage structure that is fair and
objective
▪ Job evaluation methods will include:
▪ Ranking – jobs are organized from top to bottom
▪ Classification – categorization and description of jobs and the assignment of job titles
▪ Point evaluation – points awarded to set of factors for which workers receive
compensation.
▪ Market evaluation – comparison to similar jobs in similar organisations.
 Work Study
• Theory was developed by FW Taylor in his Scientific Management Theory
• It is a management tool used to higher productivity in an organisation by
carefully examining two main components
▪ Method study – analyses the way in which a job is performed
▪ Work measurement or time study – used to measure and compare the time it
takes to complete a particular job or task.
• The purpose of work study is to determine the best or most effective
method of accomplishing a necessary operation or function.
• Taylor put forward the idea that workers are motivated mainly by pay.
• Workers do not naturally enjoy work and so need close supervision and
control
 Work Study
Theory of Scientific Management argued the following:
❑ Workers do not naturally enjoy work and so need close supervision and control
❑ Workers are then paid according to the number of items they produce in a set
period of time- piece-rate pay.
❑ As a result workers are encouraged to work hard and maximise their productivity.
❑ Taylor's methods were widely adopted as businesses saw the benefits of
increased productivity levels and lower unit costs.
• Taylor's approach has close links with the concept of an autocratic management
style (managers take all the decisions and simply give orders to those below
them) and Macgregor's Theory X approach to workers (workers are viewed as lazy
and avoid responsibility).