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 reinforces behaviour”11. Profit sharing can add a substantial bonus on top of an employee’s regular wage. John Lewis pay 20% of an employee’s wages whereas Tesco pay less than 5%12 and this can be seen as ‘thank you’ rather than an incentive. Fringe Benefits are offered to encourage loyalty and improve human relations. Research into the usefulness of financial rewards systems has found that cash incentives reduced teamwork. “Cash rewards seem to have an overall de-motivating effect” (Cecil Hill) 13. Furthermore, at least 70studies have found that rewards tend to undermine interest in the task14 while laboratory and field experiments alike appear to be in agreement: financial incentives do not improve performance quality15. What this has shown is that money can be seen as a quick fix and is more like a supplement to go alongside other rewards. Overall money will never be a substitute for motivation.
The second way companies motivate their staff is by their approach to management. Job enrichment “gives people the opportunity to use their ability” (Herzberg)16. It is commonly believed that motivation is achieved by the job itself; this is the back bone of Herzberg’s theory which supports job enrichment. Employees see job enrichment as alluring whereas managers expect to see additional improvement in their employees such as an increase in productivity. Therefore it does not satisfy the needs of both managers and employees. Research evidence on job enrichment is extremely mixed. Job enlargement is increasing the scope of a job. Work motivation should be greater but it has been found that this is only true in the short term. Empowerment is basically delegation; more control over your work life. It should lead to employees having more autonomy, discretion and responsibility. It is a practical application of Herzberg’s and McGregor’s theories. Empowerment is not often implemented accurately; therefore its power as a motivator is limited. Teamwork is backed up by Mayo and the Hawthorne studies; “found employees are not motivated solely by money and employee behaviour is linked to their attitudes” (Dickson)17, also Maslow in meeting social needs. Furthermore, it gives scope for job enrichment. The success of this method is strongly backed up by the following studies and research. Robert half18 found that limited praise and recognition was ranked as the primary reason why an employee would leave their job. Research by Teresa Amabile19 shows that people put far more value on work environment where creativity is supported, valued and recognized. “If you want people to do a good job, give them a good job to do” (Herzberg)20. What this has shown is that successful motivation in the long term results in an environment that employees want to work in, doing jobs they want do.
Now we need to explore the idea of money as a sole motivator. “Pay is important for everyone” (Coffman)21. McClelland suggests, “Extrinsic rewards can play a positive role”22. Evidence of this can be found in a study of nearly 2,500 employees which suggested that although these people disagreed over what was their number one motivator, they unanimously chose money as their number two. James R Linder’s23,Harpaz’s24 and Kovach’s25research also found this, which promotes the idea that money might not be the primary motivator but it does play a very important role. Another factor that can play an important role could be age; Edge Hill research newsletter stated “students value money as a motivator more than workers” or individual differences; “there is no reason that money can’t be an effective motivator...it’s all a matter of individual differences” (Steven Reiss)26. Edward Deci showed in his studies that “money may work to buy off one’s intrinsic motivation for an activity”27. 32% of US people studied work to make money (George Dudley)28. All this evidence shows that money is an important motivator but there is nothing to suggest that it is the primary motivator or the sole motivator. Therefore, there must be other factors we need to explore.
From the above research we know that other factors, besides money, are considered as motivators. In the following paragraph we are going to explore these.
Workplace motivators are considered to include both monetary and non-monetary incentives (Ballentine et al, 2003)29.Empirical research has reportedly revealed that non-monetary rewards may often be more important than monetary rewards (Merchant, 1989)30. The 2004/2005 Mercer Australian Benefits Review31 found that the use of non-monetary rewards has increased significantly over the past two years, from 55 percent in 2002 to 76 percent of organizations surveyed in 2004. These findings suggest that money is clearly not the sole motivator and that, as times change, companies are realizing the mistake they are making in assuming that this is the case and they are rectifying this by introducing other means of motivating staff. A 2003 Mercer Survey of Commonwealth Agency32 of what satisfies employees found that the top four reasons were: the nature of work, good work relations, an enjoyable work environment and flexible employment conditions. The survey found that financial rewards did not rate among the top four at all. Studies carried out by James R Linder33, Kovach34 and Harpaz35 found the number one motivator was interesting work. “The most important factor is individual recognition – more important than salaries, bonuses or promotions”36. These findings suggest it is the nature of the work and an employee’s psychological needs being meet that is the best motivator, not money. Overall, all this research implies that money is not considered a main motivator by employees and now, even managers are starting to see this and change their ways.
Having looked at financial and non financial rewards as motivators, you also need to consider individual differences. In the following paragraph, gender, age, personality and socio-economic class will be investigated to see their effect on motivation.
Women are often in lower paid jobs with lower quality employment yet they still manage to maintain a similar job satisfaction to men. Clark et al37 even suggest some women report higher levels of job satisfaction. Puglies38 suggests autonomy is a more important factor for men. However, Mottaz39 suggests supportive supervision has more impact on women. Therefore, this shows that gender does play a role in motivation. Younger workers are more easily satisfied; this could be as they have no financial responsibilities, whereas older employees have families and lifestyles to support therefore have different needs than their younger counterparts. What motivates employees changes constantly (Bowen and Radhahrishna, 1991)40, for example, suggests that as an employee’s income increases, money becomes less of a motivator (Kovach, 1987)41. Also, as employees get older, interesting work becomes more of a motivator. This shows that age can be a factor in motivation. DeJonge et al42 indicate that our personalities affect the way we feel about our job. Goldthorpe et al43 study shows that variables such as socio-economics status might cause different groups of workers to attach different meanings to the phrase ‘job satisfaction’. Salary Survey – market research bulletin says that “Motivation factors vary by sectors (of the industry)”. This suggests that social class can be a factor in motivation.
To conclude this essay, by looking back at the question, Some managers assume that money is the only motivation for all their employees. Do theory and practices support this assumption?, it has been clearly proven that, although many managers within the modern business environment assume the best and only way to motivate staff is via monetary means, theory does not support this line of thought and thus has taken a dim view on this method and suggest that satisfying needs and meeting personal goals are a better means of motivating. Many theorists, such as Herzberg, Maslow, McClellend, Alderfer and McGregor, have developed this idea of personal development and environment enrichment and propose that although money may motivate there are by far more effective methods available. Although theory fails to support the assumption practices however have taken a wider approach to motivation and thus have fallen into two main categories, financial and non-financial rewards. Financial rewards tend to support the idea of money being the sole motivator as some managers can often be seen using them as the only visible means of staff motivation. Rewards such as bonuses, commission and salary rises are commonly used in such cases. Non-financial rewards are closely linked to the ideas of theorists, and methods such as job enrichment seek to motivate employees via the meeting of personal requirements. There has also been a large number of research studies carried out to divulge what employees feel is the best motivator for themselves. Studies such as those carried out by James R Linder discovered that although money was often recognised as a means of motivation there were many other methods such as interesting work that always ranked above. These findings all counter argue the assumption proposed in the question and display evidence that clearly show that both theory and practice see money as an effective motivator however neither show significant backing to it being the sole motivator.
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Appendix
Maslow’s theory
McClellend’s theory
Alderfer theory