Motivation in Theory and Practice

Financial Methods of Motivation

Piecework:

• Pay is based on the number of items completed, not time spent.

• Example: A fruit picker paid $2$$$2$$ euro per kilogram of strawberries picked.

• Higher production leads to higher pay.

• Suitable only where individual contribution is easily identified.

Disadvantages:

• Health and safety concerns: Workers may take dangerous shortcuts to save time.

• Quality may suffer due to rushing production.

Commission:

• Wages paid after completing a task, often selling products or services.

• Common in sales and marketing (e.g., cars, real estate).

• Can be part of the salary or a separate income stream.

• Calculated as a percentage of total sales.

• The more an employee sells, the higher the commission.

• Can be combined with a base salary.

Advantages:

• May encourage employees to work harder.

Disadvantages:

• Can negatively impact team dynamics due to income disparities, leading to envy and resentment.

• May lead to overly aggressive sales tactics, turning off customers.

Bonus:

• Financial compensation above normal payment expectations.

• Awarded as an incentive or to reward good performance.

• Example: Loyalty bonus paid at the end of the year to reward workers for staying with the company.

• Helps motivate employees to reach targets.

• Profit Sharing:

  • A portion of the business's profits is given to workers in addition to shareholders.

  • Motivates workers to achieve business objectives.

  • Shows employees they are appreciated.

• Disadvantages:

• No direct link between individual effort and reward.

• May not be a strong motivator if the amount received is small.

• Performance Related Pay (PRP):

  • Financial reward for employees whose work meets or exceeds required standards.

  • Used where performance cannot be easily measured by output or sales (e.g., banking).

  • Common features:

    • Regular performance reviews (usually annually) against agreed objectives or standards (performance appraisal).

    • Employees are categorized into performance groups, determining the reward.

    • Reward methods vary but often include cash bonuses and/or wage/salary increases.

Evaluation of PRP

• Advantages:

  • Incentive for harder, more efficient work, leading to improved performance and productivity.

  • Recognizes and rewards high-performing employees, increasing morale and job satisfaction.

  • Aligns employee performance with organizational goals and values.

• Disadvantages:

  • Disputes over performance measurement and whether an employee has earned the reward.

  • Targets may be seen as too difficult or impossible, reducing effort.

  • Perception of favoritism towards highly-rated employees, leading to resentment and demotivation.

  • Individual rewards do little to encourage teamwork, impacting productivity and efficiency.

• Overall: PRP is widely used due to its direct link between performance and pay.

  • It can motivate workers to achieve organizational goals but can also demotivate.

  • Failure to receive a bonus can deprive employees of money and impact self-esteem.

Non-Financial Methods to Improve Staff Performance

• Delegation

• Empowerment

• Job Rotation

• Job Enrichment

• Job Enlargement

• Team Working

• Flexible Working

Non-Financial Methods Explained

• Delegation:

  • Authority is passed down to employees, who are given responsibility for tasks.

  • Closely associated with a democratic leadership style.

  • Increases motivation by contributing to an employee's esteem needs and self-actualization (Maslow).

  • One of Herzberg's motivators (increased responsibility).

  • Caution: Managers should not over-delegate, and employees must be capable and willing to take on extra responsibility.

• Empowerment:

  • Provides employees with more authority to make decisions and control over how they plan and achieve work.

  • Powerful motivator by granting workers more control over their work, leading to growth and advancement (Herzberg).

  • Potential Issues: Employees may take advantage of increased power.

• Job Rotation:

  • Employees move through a range of jobs to increase interest and motivation.

  • Facilitates multi-skilling but requires greater training.

  • Example: An administrative employee rotates between reception, switchboard, and data entry.

  • Advantages: Easier to cover absent colleagues.

  • Disadvantages: Reduced productivity due to unfamiliarity with new tasks, and some employees may dislike certain rotations, leading to demotivation.

• Job Enrichment:

  • Gives employees greater responsibility and recognition by making their work more challenging, vertically extending their role.

  • Motivates employees by allowing them to fully use their abilities.

  • Herzberg: Job enrichment should be central to improving motivation through motivators.

  • Enriched jobs should include a range of tasks and challenges at different ability levels, with clear opportunities for achievement and feedback.

  • Requires necessary training and skills; otherwise, it could lead to reduced quality, lower productivity, and dissatisfaction.

• Job Enlargement:

  • Involves adding extra, similar tasks to a job.

  • Additional tasks are at the same level and in the same job area; the job remains essentially the same.

  • Aims to reduce repetition and boredom by widening the range of tasks.

  • Limitations: Employees rarely need to acquire new skills, and motivational benefits of job enrichment are not usually experienced.

  • Negative aspect: Employees may view it as more work for the same pay.

• Team Working:

  • Meets workers' social needs (Maslow) and can lead to a more multi-skilled workforce with shared responsibility, improving motivation.

  • Productivity may increase through combined talents, specialization, and idea-sharing.

  • Potential Issues: Finger-pointing when things go wrong, resentment if some members are perceived as not contributing enough, leading to conflict and reduced effectiveness.

  • Some tasks are better accomplished by individuals.

• Flexible Working:

  • Workers have a degree of choice relating to how and when they work.

  • Helps businesses cope with changes in demand or extend opening hours.

  • Allows workers to balance personal needs with business needs.

  • Methods include multi-skilling, part-time and temporary work, flexible hours, and home working.