An effective performance management system is based on a general understanding of the performance standards on the side of the employees. Therefore, it is important that performance standards are clearly and fairly formulated, transparently communicated and effectively linked to the organizational success and strategy. Focus should be equally placed on how things are done, as well as on the final results. To ensure qualitative improvements, feedback has to be collected from multiple sources (360° degree feedback) and it needs to allow for open and honest communications. It is also important to realize that managers tend to differently (individually) treat and evaluate performance.
APPLICATION OF MOTIVATIONAL THEORIES
A successful business is one that is gaining profit and is satisfying the external and internal stakeholders. As stated by the chairman of the UK’s 2004 National Business Awards Committee, “34% of current barriers to business success are people related. It would seem not only desirable, but indeed essential, that staff are kept motivated”. Hence, it is obvious that
with motivation, people reach their potential, and sometimes even excel it. However,
without motivation, performance suffers.
Due to the fact that employees are an essential feature to a company’s growth and success,
a well-motivated staff can be regarded as a valuable long-term asset.
In motivating employees, it is essential to understand one’s employees in terms of their motivational needs and drives, strengths and learning processes. After gaining an understanding of those aspects, a company should design a tailor-made motivational package that helps to utilize the employees’ potentials and enables them to even excel.
TESCO VERSUS WALMART
To illustrate an adequate and an insufficient application of motivational theories, we contrast two leaders of the retail industry, Tesco (UK) and WalMart (US). Both are the market leaders in their respective countries, and although they share the same Anglo-Saxon cultural background, the two companies take different approaches on “motivating” their employees. While Tesco sees motivated employees as an asset/driver to profit maximization and market-share growth, WalMart focuses on maximum cost reduction (at all levels) as a driver to profit maximization. As a result of its practices, Tesco enjoys a good reputation among the public and its employees, with 81% being very or extremely satisfied. This has led to Tesco being awarded with the ‘Employer of the Year Award’ in the UK in 2004. In contrast, WalMart is widely criticized for its policies and business practices, which results in an estimated average of 1500 lawsuits running against the company at any given time. Consequently, an average of 44% annual employee-turnover is not surprising and contributes to the company’s ambiguous reputation.
The differences between the two companies become even more obvious when contrasting them using the motivational theories of Maslow’s Hierarchy of Needs and Herzberg’s Two-Factor Theory.
Maslow’s Hierarchy of Needs
The fundamentals of Maslow’s hierarchy form the physiological needs. They encompass basic human needs to sustain life itself and family.
Tesco responds to those needs through fair and adequate payment and offering flexible working hours to its employees.
On the other hand, WalMart only pays the minimum wage which is just enough for its employees to live above the poverty line. Furthermore, WalMart employees are forced to work off-the-clock if necessary without getting paid for the overtime.
The second level are the safety, security and self-preservation needs, which particularly concern the future. While Tesco provides sick pay, extensive health benefits and pension arrangements, WalMart does neither offer an affordable corporate health insurance, nor compensates for sick days. Additionally, Tesco takes a positive approach towards unionisation, while WalMart follows an aggressive anti-union policy.
Social needs form the third level of the hierarchy. To satisfy those needs, it is crucial to establish a sense of community and belonging. Sport teams, parties and celebrations are just a few components of addressing these needs, and within an organization, these factors can help employees to feel integrated. A family-like atmosphere, flat hierarchies and close personal relationships among employees contribute to an atmosphere of belonging at Tesco. Further, employees are encouraged to participate in various team events and parties offered throughout the year. Uniforms are being used at Tesco as well as WalMart and they contribute to establish a group feeling. However, high hierarchies and a ‘no-personal-relationship-policy’ at WalMart work against achieving the satisfaction of these social needs.
Ego/Esteem needs form the fourth level of Maslow’s hierarchy. In general, an organization can satisfy an employee’s esteem needs by matching his/her skills and abilities to the job. Supervisors can help fulfil esteem needs by showing workers that their work is appreciated. Both, Tesco and WalMart use employee awards to address these needs. While Tesco provides equal treatment, WalMart does not offer equal opportunities, especially regarding women, i.e. less than one third of management positions are occupied by women, moreover, on average they earn 5-15% less than their male counterparts.
The last level of Maslow’s hierarchy of needs is concerned with self-fulfilment and the release of an individual’s full potential. An organization’s manager can help fulfil these needs by assigning tasks that challenge employees’ minds, providing training, job enrichment, empowerment, etc. Tesco provides its employees with various possibilities for development, by offering free training programs for all employees, regardless of their position. In addition, Tesco has a 98% internal promotion rate and it openly welcomes employee input and initiatives. In contrast, WalMart focuses on the availability of career development programs for its higher-level workers and blocks minorities from organic advancement.
Herzberg´s Two Factor Theory
This theory is closely linked to Maslow´s Hierarchy of Needs, for the hygiene factors (those preventing dissatisfaction) reflect the lower level needs, whereas the motivators (satisfiers per-se) are mainly focused on the higher level needs; it mainly describes needs in terms of satisfaction and dissatisfaction.
According to this theory, motivating employees is a two-step process, consisting of firstly providing the hygienes and then motivators. The key point is that hygiene factors do not motivate, but if they are not very good, then the satisfiers will not motivate either.
As illustrated in the case of WalMart, its motivational plan is condemned to fail, because the emphasis on motivating employees by merely creating a sense of belonging (as motivator) is not enough, as long as the basic hygiene factors are not covered. On the other hand, Tesco seems to fully understand this concept and its application, since it further empowers the effect of motivators through providing a solid basis to build upon (correct implementation of hygiene factors).
CONCLUSION
When companies see employees as an asset and manage them well
(performance management, and motivation) these valuable “assets” will
generate the maximum, and live up to their fullest potential.
Thus, companies should design a tailored motivational package that, when implemented, will lead to optimal employee satisfaction/motivation . As a result, this will cause a change in performance and help employees utilize their full potential, and even excel. Ultimately, the employees will contribute to the company’s success and growth through meeting its objectives, and eventually maximize its profit.
SOURCES
Key point: hygiene factors do not motivate but if they are not very good then the satisfiers will not motivate either
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