Motivation and Employee Reward Systems

MOTIVATION is the process that accounts for individual’s intensity (how hard the person tried), direction (attaining goal), and persistence (how long a person tries) of effort toward attaining goal. A driving force behind an individual’s actions. The primary task of the managers is to motivate people toward excellent performance. The more motivated the employees are, the more empowered the team is. Team work and individual employee contribution are more profitable in the business. Motivation will lead to an optimistic ad challenging attitude at workplace. REWARDS AND INCENTIVES have benefits for both employers and employees. When employees recognized for stellar performance and productivity it can be resulted to have increased in morale, job satisfaction and involvement in organizational functions. Through this, employers and employees enjoy a positive and productive work environment. TYPES OF REWARDS INTRINSIC REWARDS are non-physical rewards. It cannot be seen or touched but are emotionally connected with the employees. There is a feeling of contentment one finds in completion of any task. This is directly related to job performance as a successful task automatically produces it. Individual differences perceived various forms of intrinsic rewards: • • • • • recognition sense of achievement words of praise from senior and peers taking pride from the job work freedom or autonomy EXTRINSIC REWARDS are physical rewards that comes from external sources. It is also directly related to job performance of the employees but it is necessary that employees receive reward every time they accomplished the task. It depends upon the policy of the company. There are various ways a company can choose to reward its employees: • • • • Pay Bonus or commission Fringe benefits Improve condition MOTIVATIONAL THEORIES Needs Theory of David McClellands (McClelland’s Theory of Needs) • Need of Achievement (nAch) are people motivated by achievements. It is their drive to excel, to achieve in relation to a set of standards. They desire to do better solve problems or master complex problems. Part their nature is to be self-motivated, likes to receive regular feedback on the progress and achievement and perform better if monetary reward is linked with their achievements. • Need of Power (nPow) are people motivated by power. It is a need to make others behave in a way that they would not have behaved otherwise. They desire to control other and influence their behavior. It is their nature to enjoy status and recognition, providing leadership roles, giving direct feedback, offering career development opportunities. • Need of Affiliation (nAff) are people motivated by affiliation. They desire for friendly and close personal relationships. It is their nature to want to belong in a group, cooperative, and do not like high risk or uncertainty. Maslow’s Hierarchy of Needs Theory (Abraham Maslow) This theory explains that motivation in humans is founded on pursuing different levels of needs in hierarchal order. It is made up of five tiers that motivate human behavior, ranked from the most basic to more complex needs. Maslow’s theory suggests that only when basic needs are fulfilled that the higher-level needs can be addressed. The hierarchy of five needs – physiological, safety, social (belongingness), esteem, and selfactualization. ERG Theory was developed by Clayton Aderfer, it explains how people are motivated by three core needs: Existence, Relatedness, and Growth. ERG theory is the modification of Maslow’s hierarchy of needs. In this theory, people can be motivated by more than one need at the same time. It also acknowledges that the importance of needs varies for each person and as circumstances change. ERG theory suggests that performance and motivation can be increased by providing opportunities for people to satisfy these needs in a balanced way. ERG theory differs from Maslow's hierarchy of needs in the following ways: • ERG theory has three levels, while Maslow's hierarchy of needs has five. • ERG theory suggests that people can meet multiple needs at once, while Maslow's hierarchy of needs suggests that people meet one need before moving on to the next. Desire for personal growth and development Desire for relationship Provision of basic material needs Equity Theory was developed by John Stacey Adams that suggests that people are motivated by fairness and that employee motivation are largely based on their sense of fairness at work. Individuals compares their job inputs and outputs wit those of others and then respond to eliminate any inequities. Inputs are the actions an employee takes to help an organization achieve a goal such as effort, performance, skills, commitment, experience, etc. Outputs are the outcomes an employee receives as a result of their actions such as pay, benefits, promotions, appreciation and recognition. Possible choice for dealing with inequity: • • • • • Change inputs (slacks off) Change outcomes (increases output) Distort/change perception of others Choose a different referent person Leave the field (quit the jobs) Over rewarded employees may produce lower quality work. Under rewarded employees produce larger quantities of lower-quality piece work than equitably rewarded employees. Simply, employees who perceive their input-to-output ratio as equitable are more motivated, while those who perceive it as inequitable are less motivated. Expectancy Theory was developed by Victor Vroom it explains how people choose actions based on their expectations of the outcomes. • Expectancy (performance expectancy): The belief that increased effort will lead to better performance. It is influenced by factors such as possession of appropriate skills for performing the job, availability of right resources, availability of crucial information and getting the required support completing the job. • Instrumentality (rewards expectancy): The belief that better performance will lead to a desired outcome (reward). It is affected by factors such as believe in people who decide who receives the outcomes are, the simplicity of tasks, and clarity of relationship between performance and outcomes. • Valence: The perceived value of the outcome's rewards. It is an expected and not the actual satisfaction that an employee expects to receive after achieving the goal. Example: Sarah, who works in a sales department. Sarah believes that if she works harder and makes more sales calls (expectancy), she will increase her sales performance and earn more commission (valence). She also trusts that her manager will promote her for her efforts (instrumentality). This belief motivates Sarah to put in more effort in her sales activities. This theory stresses upon the expectations and perception emphasizing on rewards and pay-offs. It is based on self interest individual who want to achieve maximum satisfaction and who wants to minimize dissatisfaction. The application of this theory is limited as reward is not directly correlated with performance in many organizations. It is related to other parameters also such as position, effort, responsibility, education. Etc. Two-Factor Theory developed by Frederick Herzberg, it states that job satisfaction and dissatisfaction are caused by two different factors – hygiene factors and motivation factors (motivators). Hygiene Factors is an extrinsic motivators that help prevent dissatisfaction such as: status, job security, salary, fringe benefits Motivation Factors (Motivators) is an intrinsic motivators that help create satisfaction, such as challenging work, recognition, relationship, growth potential. The theory suggests that hygiene factors are necessary to prevent dissatisfaction, but they alone are not enough to create high levels of satisfaction. Motivation factors are necessary to create high levels of satisfaction, but their absence will not cause extreme dissatisfaction. People's performance at work depends on their level of satisfaction in their work environment it includes that increasing satisfaction requires increasing motivation.