McClelland (1967), following the work of Murray in the 1930's, emphasized the importance of needs for achievement, power and affiliation
These people were the glamorous management guru's of the 1960's. Their theories were simple, their remedies straightforward. If you followed Maslow then you accepted his assurance that most Western working people had their basic needs satisfied, so were not to be motivated by money (which can buy basic necessities but cannot buy relationships, affection, self esteem etc.). Managers following this theory turned their attention to providing more satisfactory relationships, more interesting work, and more opportunities for self-fulfillment.
Employers who followed Herzberg also rejected money as a motivator, and focused their efforts on providing more enriched jobs. McGregor led them to abandon the view of working people as lazy and reluctant to work without threats and incentives (Theory X). Instead he proposed Theory Y, which told them that people basically wanted to do a good job and they should provide opportunities for satisfaction from a job well done. McClelland focused attention on giving people the opportunity to satisfy their needs for achievement, power, and affiliation.
In the 1970's we read about the case studies of organisations which had followed these exhortations. Unlike the first rash of converts, whose massive efforts and successful results had contributed to the popularity of the "needs" approach in the 60's, these second generation studies showed an array of mixed results. There were job enrichment programmes which had resulted in most of the staff leaving; human relations programmes which had reduced conflict but at the expense of causing output to fall; and companies which removed incentive payment systems and found they could not manage the resulting need for more directive supervision. At the same time there were other companies achieving the good results promised of the programmes they introduced.
The response to these results was also mixed. Some people adhered to their favourite theory and blamed ineptness of implementation or management or the workforce for failure. Some turned back to earlier theories, influenced by researchers such as Donald Roy (1952). Others looked for more sophisticated theories, turning away from over-simplification and general solutions.
Contingency Theory had been developed in response to research findings that the same management practice could be a resounding success in one organisation and a miserable failure in another. Joan Woodward (1958) advocated adapting the structure of an organisation to its technology; Burns and Stalker (1961) showed that different styles of management fitted firms facing different rates of change; and Tom Lupton and his research team at Manchester Business School developed the "best fit" approach to designing remuneration systems (1968 and 1974). This approach involved identifying the most suitable payment system for each organisation, and even for different sections within an organisation.
There is a growing body of research findings that show motivation varies between individuals, between groups, and between cultures, and that this can affect the operation of a remuneration system. Karen Legge and Neil Millward (in Millward 1968) reported an interesting example when they were asked to study a television components factory in the north-west of England. The objective of the study was to help management understand why some staff responded well and were highly motivated by the incentive bonus scheme in operation, whilst others showed no interest in it at all. The explanation lay in the family situation of the employees. Those who were recent school-leavers were expected, in that community, to give their unopened pay packet to their mother, and receive "spending money" out of it. Those who were a little older kept their own pay packet and gave their mother an allowance for their lodgings at home. Consequently the younger staff had no interest in any extra money which might make its way into their pay packet, as their mother would keep this. The situation changed, and they become more highly motivated by the incentive bonus scheme, when they started to keep their own pay packet.
Other researchers have reported variations in motivation. Michael White (1973) found UK managers in a sample of 2246 showed six distinctive patterns of motivation (material rewards, status and prestige, security and social issues, job interest, variety and challenge, and leadership). Blackburn and Mann (1979) found in a sample of 1000 low skilled workers a wide range of "orientations", or motivations to work. These included such things as pay, hours of work, promotion opportunities, autonomy, working indoors, intrinsic features of the work, how worthwhile the work was, relationships with colleagues, and working conditions.
These kinds of studies certainly support the "contingency theory" approach, which says that management strategies (including payment systems) should be designed specifically to suit the host organisation and its employees and managers.
However the picture is very much complicated by the fact that there is also a body of research which indicates that needs are neither instinctive nor fixed for individuals. They vary with changes in personal circumstance, and can be modified by making desired rewards more available or less available. White's study showed that the managers who were most likely to be motivated by security and social needs were those who had reached a peak in their careers, and for whom some of the other motivators were no longer available. Job interest was a motivator for people who had interesting jobs, variety and challenge were motivators for people with challenging jobs, and so on. In many cases it is impossible to ascertain which came first, the motivation or the choice of career. But this is not so with those people whose careers had peaked. If it is true that people often adapt their needs to match the rewards which are available to them, then this would explain why Goldthorpe (1968) had found so many Coventry car assembly workers motivated by the high wages they could earn in their boring, repetitive jobs rather than choosing more interesting work for lower pay which they could have found.
What should we conclude about "Needs Theories" and "Contingency Theory"? Firstly it has become very clear that we cannot accept any simple model which seeks to explain human motivation as deriving from generally applicable needs, such as the need for money, or the need for achievement, or for interesting work, or for relationships at work. People have differing needs, both between and within organisations.
This could lead to a "contingency" approach with reward systems tailored to each individual's needs. That would be a managers' nightmare and has never been seriously advocated except for fringe benefits (the Cafeteria Plan, see Thierry, 1978). There is another major consideration that should influence our thinking here. It appears to be possible to encourage people to seek the rewards employers are able or willing to offer. Employees do not expect individually tailored rewards, and there is ample evidence that SOME organisations have motivated their employees with money, some have motivated them with enriched jobs, some with growth opportunities, some with improved relationships, and so on.
Research at Strathclyde University in the 1980's investigated this possibility (Bowey, Thorpe and Hellier, 1986). 63 organisations were studied in depth to identify the factors which had contributed to the relative success of one third of them from introducing a new performance-related payment system, whilst the other two thirds had no improvements to show for their efforts. The work took three years, and the results showed that companies could succeed or fail with the same kind of payment system. Even very similar companies in similar circumstances could succeed or fail with the same kind of scheme. Similarly, the age distribution, sex, degree of skill, of the workforce, the region, the economic sector or the size of the organisation offered no explanation of the variations in results. In other words there was no support for Contingency Theory from this study, the largest and most detailed of its kind (most studies of payment systems are case studies of a very small number of sites, often only one).
The only factor which correlated well (statistically) with the results of the changed payment systems in the Strathclyde study was "involvement/consultation" -the amount of time and effort the management had spent discussing the proposed new scheme with their employees and with other managers before its introduction. The implications of this for motivation theory seem to support what some have called "Reactance Theory". People need to feel they have some control and freedom in their work situation, they are not passive receivers of motivational stimuli, but act in ways to secure control, freedom, and improved chances of obtaining rewards.
Another major development in motivation theory in the 1970's was based on Vroom's Expectancy Theory (1964). This emphasised the importance of employees believing that they COULD improve their effort, believing that this WOULD lead to improved performance, and believing that this improvement would be recognised and WOULD lead to a reward which they did DESIRE. Expectancy Theory is really a model of the process of being motivated by an incentive reward system, and it emphasises the importance of certain requirements for that process to operate. Research has shown that where employers have ensured that their workers understand what rewards will result from higher effort, where the employer has made sure that these rewards are desired by the workers, where supervisors and managers have made sure that employees know what effort is required from them and where the employees have confidence that they will have the facilities, the resources and the ability to achieve the effort and produce the results, THEN they will be motivated by the incentives offered by the payment system. And where these constituents of the process are missing, the attempt to motivate has a high probability of failing. This seems on the surface to support Expectancy Theory.
On the other hand, there is evidence from research (see Wannus, Keon and Latack, 1983) that workers do not usually go through the process of information processing and rational decision-making when they are deciding how hard to work. Rather they base their actions on habit, on expectations derived from previous experience, and on advice from respected co-workers.
There can be little doubt that an employer who spends the time necessary to ensure all the requirements of Expectancy Theory, will have spent a considerable amount of time involving and consulting managers, supervisors and employees. The good results from this approach are quite consistent with the findings of the Strathclyde Study. The remuneration schemes that succeeded were the ones where the most time and effort was spent in consultation and involving workers and their managers.
Theories of goals and targets have become popular in recent decades, for instance Locke's argument that people are motivated by relatively difficult goals that they have agreed to seek (Latham and Locke, 1979). This puts the source of motivation not on some "need" of the employee, but on the achievement of a goal with which he/she has been involved (in setting). MBO (Management by Objectives) was an approach to management based on motivation to achieve goals first proposed by Drucker in 1964, but its overly bureaucratic application often produced poor results. Similar to goal theory are those theories of behaviour modification which suggest identifying the behaviour to be changed and what is required, applying influences such as guidance, prompting, feedback and reinforcement to bring about the desired changes (for a summary see Guest, 1984).
Theories of Motivation and Design of Reward Systems
Much of the literature on motivation which was discussed above links directly to reward and remuneration systems theory, but some of it has only indirect implications for reward systems. Taking the various stages in motivation theory and linking them to their remuneration system implications, we have:
Motivation Principles
None of the above theories is entirely satisfactory, but most of the recent ones have elements that support one another and are consistent with empirical research findings. If we take an eclectic approach, the following key principles, which have held up in the face of research, are worthy of incorporation into reward systems strategies:
1: INVOLVEMENT: Employees should be involved in the development of any new remuneration system and consulted about problems they may foresee with it. They should be encouraged to develop a commitment to its success and a sense of ownership which will carry the system through its teething difficulties (from: Reactance Theory: also Goal Theory; also Expectancy Theory)
2: DEMOTIVATORS: Remove all the difficulties which frustrate employees from achieving high levels of performance. It is no use trying to motivate high performance if employees' efforts to perform well are frustrated by not having the right quality and amounts of equipment, tools, space, materials, spare parts, instructions, support systems, co-operation form others, or other resources which they need. (from: Expectancy Theory; Behaviour Modification Theory; Reactance Theory)
3: EQUITY: Any performance standards which are to be applied to goals, targets, or behaviour changes for remuneration calculations, should be fair and comparable for all employees doing the same job in the same organisation (from: Equity Theory, referred to in a later chapter)
4: REINFORCEMENT: Procedures should be put in place with care to give employees reinforcement, encouragement, guidance, and feedback so that they are aware of their employers' interest in their performance and they can quickly learn how to earn the desired reward (Expectancy Theory; also Behaviour Modification Theory; also Reactance Theory)
5: RELEVANCE OF REWARD: Time should be spent making sure employees are interested in earning the proposed rewards (from: Expectancy Theory; also Contingency Theory)
6: GOALS: Employees should be consulted about the goals, targets, or behaviour changes which will earn the reward, and these should be made as specific and clear as possible (from: Goal Theory; also Expectancy Theory; also Reactance Theory)
It will be noticed that many of the above principles require as much if not more effort from supervisors and managers as from the workers they are managing. Too often in the past poor performance has been blamed entirely on workers, and only recently have writers recognised that poor employee performance is often related to poor management. Seeking to motivate employees is a red herring that has sometimes used to turn attention on others, rather than face up to one's own responsibilities and faults in this area.
Reward Systems and other Human Resources Management Strategies
Pay is a topic guaranteed to hold the attention of most employees in most organisations. For that reason, a programme involving changing a reward system can be used as a mechanism for easing in other kinds of changes such as re-structuring.
It is a common mistake for employers to assume that they should delay any changes to their remuneration or reward structure until after they have completed other changes, especially when these changes involve extensive internal re-structuring. By doing this they miss the opportunity to involve employees closely in the process and to gain their co-operation with change as part of the package associated with the new remuneration system.
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