Some managers assume that money is the only motivation for all their employees. Do theory and practices support this assumption?

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Some managers assume that money is the only motivation for all their employees. Do theory and practices support this assumption?

Money is increasingly thrust upon society with the increasing costs of living and the expense of supporting and maintaining a comfortable lifestyle. Money is in high demand and is often seen as the way to happiness by the average worker. This has led to tendencies in the management of workers, within business, to use money as the sole motivator for staff and dismissing all other motivating factors. In 1996 a survey found that nearly 2/3s of all managers saw monetary incentives as a good way to motivate8. But is money the only motivator? To make things clearer, motivation is defined as a process which accounts for a person’s intensity, direction and persistence of effort towards attaining a goal44. This essay will argue the point that, in general, employees are motivated by more than just a financial incentive and seek motivation from achieving goals and furthering their personal development amongst other things. This the essay contains information gathered from many different resources including making use of books, journals, articles, relevant case studies, secondary research and the huge knowledge store that is the Internet. To argue the point, this essay will break motivation down into extrinsic rewards (rewards conferred from outside the individual) and intrinsic rewards (psychological). There have been many theories written to define what employees are motivated by and how motivation can be achieved and, in order to argue against financial incentives being the only valid form of motivation, it is necessary to investigate these theories and to understand their findings with the purpose of discovering if they support the argument.

Many methods of employee motivation have been developed. So, firstly, we will look at the theorists in motivation and see how their views and research have affected motivation.

Taylor suggests only one thing motivates and that is money. He introduced piece rate to increase productivity. He also believed people acted as individuals, not as groups. Maslow suggests we are motivated by needs and that we must satisfy each need in turn. Only when the lower basic needs are met are we concerned with achieving with higher ones. If the thing that is satisfying the lower needs is taken away, we need to re-meet those needs. Alderfer’s ERG theory also has a hierarchy of needs; existence, relatedness and growth. It has similarities to Maslow but suggests all levels can be active at the same time.  Herzberg’s theory suggests money alone will not motivate. Motivators include praise and recognition of effort whereas hygiene factors prevent dissatisfaction but will not motivate, e.g. pay.  Mayo suggests changing physical needs does not improve peoples work performance and teamwork but interest shown in workers does. McClellend’s theory is based on meeting intrinsic needs through achievement, authority and affiliation. The importance of each need differs from individual to individual. McGregor’s theory shows that management style and decision-making depends on which theory management believes applies to their employees. This suggests that managers think some workers are motivated by money.

Although all the theories have strong appeal they also have a number of criticisms which we are going to explore in the following paragraph.

Maslow’s theory has little empirical evidence to support it. It is seriously flawed as it is based on animals and cannot really be generalized to humans. Also, it doesn’t take into account cross cultural differences. Empirical work by Wahaba and Bridewell (1976)1 failed to find any evidence that a satisfied need no longer has a motivational effect. A longitudinal study by Hall and Naugain (1968)2 contradicted Maslow’s findings. Overall, Maslow ignores individual differences and the effect of change in needs but does give a good general framework. Herzberg’s methodology is seriously flawed. Replication study by Wernimont (1966)3 suggested that both motivators and hygiene factors are able to provide satisfaction and dissatisfaction .House and Wigdor4 argue that Maslow over-simplifies the sources of job satisfaction and dissatisfaction. Additionally it does not take into account cross cultural differences and has a limited range of application .On a positive note; however, it does draw attention to the idea of job design. Overall, this theory assumes that everybody has similar needs to be satisfied there is a contradiction within McClelland’s theory. McClelland suggests that traits such as N.Ach are acquired in early childhood but says adults can be retrained, whereas Stahl and Harrel (1982)5 have strong apprehensions about effecting permanent change. Furthermore, it doesn’t take into account lower needs. Alderfer’s theory has had little empirical testing. The criticisms of Taylor are more criticism of scientific management in general. It ignores situations where people exhibit highly motivated behaviour where economic rewards are low. This is an over-simplified theory but it was a starting point. After this was published many other theorists started research ideas. Overall, to some extent, all of the theories are known to have appeal to mangers (Hollyforde and Whiddet 2002)6 as they are simple and easy to understand (Salancick and Preffer)7.

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Now we will look at how companies motivate their staff and how successful these actions appear to be starting with the financial reward systems.

In 1996, a survey found that nearly two-thirds of managers saw monetary incentives as a good way to motivate their staff8. 56% of private sector companies use Performance related pay9. Only 12% of people believe that this increases motivation10, while others question if the small percentage staff actually receive is really enough to motivate. Piece rate was born from Taylor’s theory although, as Herzberg pointed out, “the worst way to motivate people is piece rate…it ...

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