Employees’ motivation
–
„grain” of firm’s success
I. Short introduction
Last century business environmental start evolve really fast. A lot of new technologies, new costumers’ needs, shift from small-family business to big-international company forced managers to change the shape of the firm. To survive in this variable environment, managers should start to emphasis on people in the firm – on employees. Each business consist of people (their knowledge, skills, abilities etc.) who create the value of the firm.
“Individually, we are one drop. Together, we are an ocean”
(Ryuruosuke Satoro – Japanese poet)
Therefore in this paper I want to describe how managers can achieve HRM’s objectives by employee’s motivation.
II. What is HRM ?
At the beginning is good to know what is exactly human resource management (HRM) – it’s only most important part of management of the organisation ?
“… set of activities aimed at building individuals and organizational performance. On the individual level, HRM consist of managerial attempts to influence individual ability (A), motivation (M), and the opportunity to perform (O).” ( p.5, “Strategy and HRM” Boxall and Purcell, 2008 )
In mathematical view it looks like this :
Performance = f(A, M, O)
Figure 1. Simple graph of HRM from the Boxall&Purcell’s book
In this case performance will means – individual performance and :
A – the ability to perform (knowledge and skills necessary to the job)
M – the motivation to perform (interested and incentivised to the job)
O – the opportunity to perform (support and avenues for expression provided by work structure and business environment)
III. Goals of HRM
HRM have four main goals. The most important is cost-effectiveness. It’s common goal for all activities in the company. In HR area employers must look for the best way to satisfy customers who want to pay low price for a good quality (but usually price, for them, is more important) and in the same time focus on costs of production. Is known that difference between price or customer’s willingness to pay and production cost must be as “big” as possible. This “difference” means nothing else than profit. Managers should take attention on that by providing cost-effective system of labour management.
The next economic goal is flexibility of the organisation. It is divided to short-run responsiveness and long-run agility. If firm will focus on short-run then the most important thing will be quantity – numerical and financial flexibility through labour costs. Using long-run agility firm is focusing more on the quality – changes in technologies, products and costs faster than their competitors (in labour sector it will be providing trainings to improve employees ability).
Continuously, competitive advantages are also an economic goal of HRM. In the Purcell&Boxall’s book it’s distinguish between labour-cost advantages and labour-cost differentiation. Managers should employ appropriate persons on appropriate position (looking for the best employees) or focus on better, more common way of working together (aims of employees and of firm should be the same or very similar).
HRM have also socio-political goals. This sector like whole firm exist in variable environmental and should emphasis on socio-political part. Different country, culture, behavior , law etc. lead to different desired goals of firm. Is not possible to create the same rules, objectives to achieve, … for all oragnisation over the world.
In this not predictable environment managerial autonomy occupy important position. Good communication (relationship witch workers and employers) through the firm is a core of profitable work. Therefore each organisation have hierarchy where usually on the top of this structure “sit” the most powerful manager. Leader must exist in all organisations to make difficult decision in short time, to motivate his/her personnel individually, … generally to be “father” for employees – giving suggestion about work but making decision by yourself. Now, more company try to change this structure to a more decentralised. Power to act have more people and it means more information and ideas which lead to better decision making.
Managers meet limitations during achieving describing goals. They must choose between be dynamic or be static firm. It means focus on cost-effectiveness or on flexibility, legitimacy or autonomy?
IV. What is motivation ?
As the goals are known I can move to the main part of my paper – how to achieve these objectives by motivating employees? Where is the “heart” of the motivation? Which benefits managers can gain by employee’s motivation? Is the cheapest way to improve profitability statement (?) of the firm?
Motivating as activity need someone who will take these actions, someone who will inspiring employees to perform better. The quality and type of motivation depend also of manager and her/his characteristic.
“Motivating individuals means creating an environment in which they can satisfy their goals by adding energy and effort. This is what individuals do during their leisure, without a supervisor to assist them.” (p.222 “Managing people at work” John W. Hunt, 1992)
Because talent is rare, valuable, difficult to imitate, and hard to substitute, organizations that
better attract, select, and retain this talent, are perform better . Therefore is critical for managers to don’t forgot about employee’s motivation. Increasing worker’s ability or skills, firm can gain more than by “increasing machines skills (innovation, new technologies)”. Motivation is a good solution to enhance firm’s position on the market. Doesn’t matter if the capital is small or huge, for motivation managers can spend millions or nothing. All depends of their imaginative.
V. Needs theories
It’s difficult to divide people into good or bad group. To help managers, in recognizing their personnel, scientists were provided many theory based on behavior, needs, wants, … .
The most familiar theory of needs is Abraham Maslow’s theory. He suggest that people have specific needs which they would try to satisfy in order, from 1 to 5 :
Figure 2.1 Types of needs Figure 2.2 Examples of worker’s needs
Relate to the motivation system people feel needs which encourage them to take an actions. First at all, manger must recognize on what level is his/her employee and continuously use appropriate motivation. In accordance to this theory is not possible to be fully satisfied witch the job if salary is not permanent or too low. In real is not always true, for someone who really like his/her job the money is not that important because it’s not a job it’s just a hobby.
Herzberg’s two-factor theory also can be used to determine factors that motivate people. He distinguish between :
Intrinsic/extrinsic motivators : which give satisfaction of the work because of taking advantage of all employee’s characteristics and needs (e.g challenging work, responsibility)
Hygienic factors : do not motivate, these factors are environmental and prevent workers from becoming demotivated and dissatisfied (e.g job security, salary)
More effective motivators in long-term, of course, comes from individual employee’s goals. John W. Hunt in his book ”Managing people at work” describe the most important goals. In most cases, all types of workers attempt to satisfy the following:
Comfort
Structure
Relationship
Recognition and status
Power
Autonomy, creativity, growth
There are some similarities witch Maslow’s theory but there, order not exist. The goals are different for different type of work. For managers: recognition, power and autonomy are more important but for factory workers the first three goals are more important.
Have a look on British workers, like an example of traditional European business labour environment. In period 1999 – 2000 was provided a survey : what are the top factors in searching for a job? There are the results from the “Strategy and HRM” Boxall and Purcell :
| Job faced priorities | Chosen first % | Chosen second % |
|---|---|---|
| The actual work | 27 | 18 |
| Job security | 25 | 18 |
| Pay | 22 | 26 |
| Using initiative | 10 | 13 |
| Good relation witch manager | 8 | 13 |
Figure 3. Source of some 7,000 workers : adapted from Rose (2003)
In accordance to these information people still are looking for a stability and money. Like in XIX century in manufacturer industries when earned money means surviving. It comes from human behavior. Doesn’t matter how much and what employer will offer, the security of the future will be the most important. From there managers can take a lesson that they should start to motivate from the job assurance and it will lead profits in future, like employee’s loyalty.
IX. How motivation is creating?
Porter and Lawler were reflected to the Herzberg’s motivators. They used rewards as a motivators: intrinsic (comes from the person or job itself, e.g opportunities to learn and grow) and extrinsic (result from the actions of others, e.g praise and promotion). They also provide model of motivation which looks like that :
Perceived value
of rewards
perceived probability that
effort will result in performance
perceived probability will
result in desired rewards
Figure 5. Porter and Lawler’s model of motivation (p.508 “Human resource management – a contemporary approach” I. Beardwell and Len Holden, 2001)
This model show the way of achieving satisfaction. At the beginning, employees must know: the value of the rewards, that higher performance lead to greater rewards, and quality of work (from where come their rewards) relate to the effort put into the job. Then, in the firm communication between managers and personnel must be very good – clearly objectives and expectations from managerial staff. Next, to increase employee’s expectations, rewards should be clearly and visibly linked to performance.
VII. Rose’s theory – which type of workers are most satisfied?
In 1994 M. Rose developed theory, based on social changes and economic life (SCELI) in late 1980s in Great Britain, about people satisfaction of the job. He distinguish three categories of workers depends of their own-skill and needed skills – job-skills :
| Worker’s categories | Own-skills (level of engaged talents in the job) |
Job-skills (level of engaged talents in the job) |
Satisfaction of the work |
|---|---|---|---|
| Under-utilised | High | Low | Weak |
| Matched | Approximately | Approximately | Good |
| Under-qualified | Low | High | Excellent |
Figure 4. Rose’s types of workers and their satisfaction
VIII. Vroom’s Expectancy Theory – in what employees beliefe?
In Victor Vroom’s Expectancy Theory, employees belief that: increased effort will result in increased performance, by performing well the outcome will be received and the importance of that outcome depend of the individual. The main point there is to maximize pleasure and minimize pain. Vroom categorise workers believes in three factors:
Valence - how much an individual wants the consequences of completing the task, e.g of positive valence: promotion, recognition and pay rises; e.g of negative valence: boredom and tiredness.
Expectancy - belief about whether they can achieve the task and have in mind previous experience
Instrumentality - probability of securing the desired goals and profits from this for individual
Vroom said that the valence and expectancy and motivation are linked through the following equation:
Motivation = Valence x Expectancy x Instrumentality
This theory presents a practically approach to organizational and motivational management. Is considering people’s intrinsic need for motivation and offers a low risk to getting more out of a company’s most important resource - employees.
IX. Types of motivators
Motivation process consist of motivators which are divided into the two parts : intrinsic and extrinsic. Comes from individual needs and objectives or from outside of individual, for example money rewards
X. Monetary rewards and their allocation
The most common motivators are rewards. Rajan (1997) distinguished few types of rewards in two dimensions:
Security-driven:
|
Traditional-driven:
Dimension 1 |
|---|---|
Employability-driven:
|
Contribution-driven:
|
Figure 6. Types of reward (p.511, “Human resource management – a contemporary approach” I. Beardwell and Len Holden, 2001)
In business exist many types of performance pay, the most common are (information from hrcafe.typepad.com/my_weblog/2005/10/dear_hr_executi.html) :
Piecework: a price is paid for each unit of output
Payment by results: bonus earnings depend on measured quantities or values of
output for individuals or groups, usually based on work studied time units
Plant or organisation wide incentives: bonus earnings or pay levels are based on
measured quantities or values for the whole establishment
Performance-related-pay: bonus earnings or pay levels are based on an
assessment or appraisal of an employee’s (or team’s) performance against previously
set objectives
Competence based pay: reward and training are linked to competency
frameworks, based on the worker demonstrating certain skills or achieving certain qualifications
Profit related pay: bonus or share options are based on the organisation’s profit performance
In PRP system financial rewards are closely correlated to effort, how well people are working at the workplace. The higher level of performance the more money they can earn. As an output measures we can take customer service, quality, flexibility and team-working.
PRP help also :
in encouraging certain behavior,
in improving recruitment and retention to find the best workers,
in encouraging the internalization of performance norms
to weaken trade union power – give a chance for employees who work harder than others
in increasing role of line managers
in financial controlling
in moral justification
in encouragement of flexibility – rewards move to the particular types of performance
XI. Non-monetary rewards
On the other side, managers can reward employees in different way, not only by giving money. Cash rewards are often effective in short term but firm is looking for a long-term and effective goals. Therefore they should use different type of rewards like benefits and recognition schemes. Benefits are assigned for each employee, depend not only of performance but also of individual characteristic. These motivators include, for example :
company car
flexible hours and working patterns
subsidized meals, canteen facilities and free drink
foreign travel, conferences
telephone
private health care
shopping or traveler vouchers
office accommodation and facilitates
educational courses
pension schemes
discount and company purchase plans
Using this type of motivation firm can save money. Company car is the good example of that. It help moving from client to client and employee feel more confident because of the “own” car. Sometimes worker’s benefits are lead to promoting of the firm : clothes and car witch firm’s logo. An interested motivators is discount for a company’s products or services, where workers are becoming a consumers. They increase demand and become a real advertisement, information is circulate from friends to friends and the set of costumer is getting bigger. Sometimes these benefits capture real reason and for a firm is not spending money for a employees. They invest in future firm’s profits. Proposing a free educational courses (especially language courses), foreign travel witch special mission (during which worker must meet witch few important costumers, for example) or just canteen facilities to not waste a time for eating outside the workplace, are helpful for employees and also for a achieving goals of the firm.
XII. Skinner’s theory – how to motivate?
Operant conditioning theory developed by B.F.Skinner is based on believe that is possible to change worker’s behavior. Learning process is lead to changing employees behavior. Changes are the result of an individual's response to events that occur in the environment. There are four types of operant conditioning :
positive reinforcement
negative reinforcement
punishment
extinction
In other words operant conditioning are motivation techniques. The firsts two point are strengthening behavior. In positive reinforcement, employees are rewarded after “good job” by bonuses, promotion or praises. Managers also can choose completely different way – using negative reinforcement. There managers are avoiding of having stressful situation and their consequences. Punishment and extinction are weakening strengthening. The punishment is the process of getting a punishment as a consequence of a behavior. The last method is getting no goodies when do a behavior. So if person does extra effort, but gets no thanks for it, they stop doing it. Most of economists refer to use positive reinforcement. The probability of failure is low because awards or even say “thank you” lead to the positive performance, never to negative.
XIII. Benefits from using motivation
Business theory have many type of motivation depending of type of workers, different believing, needs or wants. Years of observing employee’s behavior give these information. The more used type of motivation, the better outcomes. If managers know their employees very well then the choice will be easy and appropriate. It’s critical to understand whether of environment where employees take an actions.
The theories described before give an overview on possible benefits. If managers will distinguish workers by their needs, they can gain higher level of efficiency what leads to the better performers of the firm. Using morale booster managers can achieve this even without spending many. Nice and not stressful atmosphere in the firm can create good place of performance, because workers will feel like in home. Based on the employee’s morale, firm built loyalty – close relationship between workers and managers. Motivation process is an psychological process therefore managerial staff should use not conventional methods which save money and give better performance in long-term.
Process of motivation consist of believing that future efforts lead to the good performance and finally to the expected rewards. If the rewards are on the end of this chain managers should differ awards. The better employee’s performance the bigger/higher reward. Thanks to this firm built fairness and this means that money are “allocate” in appropriate people. Company don’t lose money for something what don’t create a profits.
Monetary rewards are the most famous type of motivators but work only in short-term. Higher salary or bonuses are good but it’s the best and the cheapest way of motivation? I think not really. Firm can spend a bigger amount of money to introduce new technologies, to create more advertisements or start to perform in new environments (international trade). The main goal of firm existence is to be effective and efficient. Therefore managers should look for advantage everywhere and try to be more imaginative – there is the real power of managers.
Taking care of employees firm also built a brand. Now, information drive really fast, especially the worst one. Having loyal employees the fair of decreasing reputation is not necessary. Workers will deny or explain bad information for a costumers. They will perceive this firm like a “friend” for who they can trust. It’s just means more costumers who will loyalty for their product even if price will rise or firm have some difficulties.
XIV. Correlation between motivation and firm success
Motivation and firm success are closely correlated. Motivation “produce” better employees and , if it’s known that this is the most important tool in the firm, it means better performance and more profits for a firm i.e more costumer, higher returns or fame.
XV. Conclusion
Motivation is the cheapest way to improve performance of the firm. It have many benefits without investing a huge amount of money. All depends of managers and their skills. Based on valuable, difficult to imitate and hard to substitute “goods” – on employees, firm can gain advantages to compete in variable environment. Managers can also take advantages from socio-political area based on different tradition or different behavior, for example: in Japan where working hard is a part of culture. It is even more than grain of firm success – it’s the core of firm success.
Contents:
Short introduction
What is HRM ?
Goals of HRM
What is motivation ?
Needs theories
How motivation is creating ?
Rose’s theory – which type of workers are most satisfied ?
Vroom’s theory–Expectancy Theory – in what employees beliefe ?
Types of motivations ?
Monetary rewards and their allocation
Non-monetary rewards
Skinner’s theory – how to motivate ?
Benefits from using motivation
Correlation between motivation and firm’s success
Conclusion
Bibliography:
1. “Human resource management – a contemporary approach” Ian Beardwell and Len Holden (2001)
2. “Managing people at work. A manager’s guide to behavior in organizations” John W.Hunt (1992)
3. “Personnel management” Edwin B.Flippo (1984)
4. “Strategy and Human Resource Management” Boxall and Purcell (2008)
5. internet : www.wikipedia.com