Strategies in Striving for Peak Performance and Applying to Sales in the Insurance Industry - Essay Example

Implication of motivational theories in the insurance industry Introduction The life insurance sector is a complex yet a very important part of the financial services industry. Given the increasing number of the companies entering the insurance sector, the market is being driven by a highly competitive environment. The circumstances are such that the companies need to improve their efficiency level and productivity through greater degree of flexibility and innovation under constant internal as well as external pressure. Since the insurance companies provide services that can be counted under the purview of the retail industry, the selling capabilities of the employees are constantly challenged. Employees not only require technologies but need to integrate creativity in their approaches for better productivity. With a number of players in the market, the insurance business is about to touch the saturation point. This explains that even though the services are increasing, the buyers of services are declining at a steady rate. As a result, employees and managers are facing tremendous work pressure giving rise to feelings of frustration and low motivation. In this respect, people management in insurance companies has assumed a highly prioritized position. Managers are getting instructions from higher authorities to supplement the traditional method of motivation with various contemporary approaches so as to uplift the working spirit of employees at different level (Cummins & Weiss, 2013). Keeping in view the current scenario of the insurance industry, the present paper focuses on various motivational strategies and skills that can be implemented therein. The objective and purpose of this piece of work is to examine various motivational theories and its implication in the insurance industry. Theoretical framework In simple words, motivation can be defined as rationales underlying a particular behavior. Broussard and Garrison defined it as an attribute that influence individual to undertake a particular activity. In broad sense, it is a set of beliefs, values, perceptions, actions and interests that are highly interlinked (Chalofsky & Krishna, 2009). In the following section various motivational theories has been discussed which will be further discussed in context of insurance industry in the later section. Overview of management motivational theories In a stress environment similar to that of the insurance industry, it is very natural for employees to develop feelings such as aggression, discomfort and frustration due to monotony and repetitive nature of task. Motivation can be considered as an important antidote to the given problem of low morale. In this context, motivation theories can be explained from the perspective of process and content. Content approach mainly focuses upon indentifying specific factors that motivates individuals. The theories that are under explaining under this approach are Maslow’s hierarchy of needs, ERG (Existence, relatedness and growth) theory, Herzberg’s two factor theory and McClelland’s achievement theory. Contrastingly, process approach mainly focuses on the process through which employees are motivated. It is mainly concerned with the cognitive process of human beings so as to influence the persistence, intensity and direction of their behavior. The theories that are considered under this approach are Vroom’s expectancy theory, equity theory and goal setting theory (Latham, 2011). Process approach Goal setting theory Edwin Locke postulated the theory and he put forward that specifically defined goals have a positive impact on human performance as specific activities affect strongly the direction of behavior. Moreover, the theorist added that intention to work towards a particular goal is an important source of motivation. A goal defines the job clearly as well as explains the amount of effort an employee needs to put therein. The main features of the goal setting theory explain that individuals draw job motivation from difficult yet clearly defined tasks or goals that are achievable through hard work. While vague goals may question ability of an employee, clearly defined goals act as a challenge to individuals. Under this theory, the goal setting activity is of utmost importance and the process is affected by a number of factors such as goal commitment, specificity, commitment, participation, difficulty and feedback. Acceptance or commitment to goal explains that individuals in the insurance industry should set their goals and treat it with utmost importance for maintaining high commitment level. Goal specificity explains that a goal should be specific and measurable. Specificity and measurability removes ambiguity and result in higher output and sense of achievement. Insurance similar to retail business and an employee will only face dissatisfaction if the goals are too easy or too difficult. Thus, employees and managers need to set an appropriate level of difficult for the goals. Lastly, feedback is important for maintaining effectiveness of the goal (Petri & Govern, 2012). Vroom’s Expectancy theory Victor Vroom proposed the expectancy theory which deals with management and ability of managers in securing a well-motivated workforce. Essentially, the expectancy theory emphasizes on behavior and actions of individuals based on a particular activity or objective intending at minimization of pressure and pain while maximizing pleasure. Thus, expectation acts as a strong source of motivation. In other words, given in an insurance company, if the rewards are high and can be obtained through moderate effort then the employees will pursue activities associated with the same. There are three main components of the expectancy theory, namely, expectancy, instrumentality and valence. Expectancy focuses on confidence level of individuals, which is necessary for accomplishing a particular task. For instance, if an employee does not consider himself or herself as competent then reward would not act as a motivating factor for such individuals. Instrumentality can be defined as a consideration that if and when individuals perform, reward definitely follows as an outcome. In insurance industry, as employees get clients insured, they are rewarded by means of commission. Instrumentality is supported by clear understanding of individual performance and outcome of the same. Valence stands for value and is related to desirability of the outcome. In other words, it is importance that an employee associates with the expected outcome. In this context, motivation is directly proportional to the expected outcome and the amount of importance an individual attaches with it (Mackay, 2010). Equity theory The equity theory was proposed by behavioral psychologist, Adams. He posited that perception of individuals regarding their work as well as work relation with their seniors and employer is affected by certain subtle and variable factors. Equity theory is considered more effective compared to other motivational theories because of it broad scope. It acknowledges and compares situations of individuals to determine the advantages of their position in the particular situation. According to the theory, individuals feel motivated when they enjoy comparatively high advantages or treated fairly. In the common parlance, the equity model weighs the efforts taken by individuals in a particular situation with respect to the outcome of their efforts. The way individuals are treated is generally considered as output of the model. The sense of fairness is the core value of this theory. Therefore, when the outcomes in terms of appreciation and rewards are lower than the effort put by an employee, they feel demotivated and dissatisfied. On the other hand, when the outcomes meet or exceed expectation of employees, they feel highly motivated and the productivity increases. In the scale of equity measurement, the inputs that are added by an employee are loyalty, flexibility, commitment, personal sacrifices, reliability and integrity and the output that they expect are job security, regular compensation as well as bonus, recognition, personal development, greater job responsibility and challenges and satisfactory work environment (Parks & Guay, 2009). Content approach Maslow’s hierarchy of needs The theory was proposed by Abraham Maslow and he explained that there are five levels in the hierarchy of needs theory, which can be related to basic needs of human beings. These needs are: physiological needs, safety needs, social needs, esteem needs and self-actualization needs. From an insurance company’s perspective, the physiological needs are basic pay, safe work environment, limited stress and fair competition. These needs are the most basic needs for an employee from his/her organization or employer. The safety needs include job security, emotional support from family, family safety, financial security and health issues. Each level of Maslow’s hierarchy has its own importance. The safety needs create the basic comfort level for the employee in the organization. The social needs, self-esteem needs and self-actualization are considered as needs of higher order. The social needs ought to include appropriate behavior of various members of the organization, better interpersonal work relationship, open communication, proper team interaction and helpful attitude. In a highly competitive industry similar to the insurance industry, it is not possible for individuals to survive on their own abilities. They need support from manager and colleagues to pursue goals and objectives. The esteem needs can be of two types: internal needs and external needs. The internal needs include self-respect, confidence, challenges, competency and achievement. The external needs include recognition, power, position, admiration and status. The need of self-actualization is the need of highest order and is defined by very high level of satisfaction as a result of growth and opportunities. However, the self-actualization needs of any individual are rarely satiable (Petri & Govern, 2012). Herzberg’s two factor theory of motivation The theory was primarily proposed by behavioral scientist Frederick Herzberg and he underlined the two factors as motivation and hygiene. Herzberg advocated that there are a number of jobs that cause satisfaction while other jobs take the role of preventing dissatisfaction in employees. He explained that motivating factors are those factors which when gained result in satisfaction and when these factors are absent, it result otherwise. Similarly, the hygiene factors can be considered as preventing elements of dissatisfaction, absence of which result in high level of dissatisfaction. Workplace motivation is highly affected by hygiene factors as these factors are mainly related to job of an individual. These factors are necessary to avoid employee dissatisfaction at the workplace. The hygiene factors include pay structure, organizational and administrative policies, job security, fringe benefits, interpersonal relations, job status and work environment. While hygiene factors keeps dissatisfaction at bay, they are not exactly counted as satisfaction factors. The factors that enhance satisfaction are motivators. The motivators include recognition, achievement, challenges at work, responsibilities and growth opportunities (Katt & Condly, 2009). Theory X and theory Y Douglas McGregor, for the purpose of establishing a strong connection between human resource management and motivation, present the Theory X-Y. According to this theory, management style can be classified in two kinds based on assumption of workers. The Theory X is known as Authoritative style and the Theory Y is known as Participative style. This theory as a whole defines two kind of behavior that is exhibited by workers and the kind of leadership respective managers should practice to maximize productivity. The theory X states that generally employees are lazy, dislike their work and given a choice, they would contribute little towards productivity. In this context, managers should strictly supervise them and control them through rewards and punishments. Such authoritative practices are frequently observed in insurance industry as with increased competition, employee express their dissatisfaction towards work. On the other hand, the theory Y acknowledges that individuals have appetite for good work and they are enthusiastic about challenging tasks. However, their motivation highly depends on the nature of task. Hence, it is the work that defines performance of individuals. Theory Y suggests that managers should be motivating and liberal so as to create greater room for productivity (Petri & Govern, 2012). ERG theory The ERG theory was postulated by Clayton Alderfer who stated that although Maslow’s hierarchy of needs present a clear understanding of various needs that add to motivation, it however, does not very accurately categories and identify human needs. Through the ERG theory, he presented a rework. He arranged various lower and higher lever needs in broad categories so that frustration of individuals in each level can be minimized. The ERG theory is developed on Maslow’s hierarchy but is comparatively flexible as it explains that the motivation level of an employee can be increased through two or more need levels simultaneously. ERG stands for need for existence, relatedness and growth. The existence needs are the basic needs such as physiological needs and safety needs. These needs are essential for individuals to feel comfortable and safe. The next level explains relatedness in terms of personal as well as interpersonal work relations. An employee feels motivated and his performance improves as he/she is supported by family members and colleagues. In context of hierarchy of needs, relatedness needs comprise social and external self esteem needs. Given the existing work pressure at insurance industry worldwide, employees require motivational support from their family as well as from managers. This boosts their self-esteem and consequently, they can perform better. The growth needs comprise needs of highest order, such as, self-actualization and internal esteem factors. Every employee requires internal motivation such as confidence, self-assurance and self-respect to perform better along with other needs for performing better and excelling in their career. The theory implements the frustration-regression principle where it is explained that when employees fail to achieve satisfaction at needs of higher order, they eventually regress to lower levels. For instance, if an insurance agent fails to achieve the sales target, the dissatisfaction at growth level will cause the individual to regress at the relatedness level. At this level the employee can be motivated by family, colleagues and seniors (Schunk & Zimmerman, 2012; Weiner, 2013). McClelland’s theory of needs McClelland in his theory of needs defined three primary needs that have strong impact on workplace motivation. These needs are achievement, affiliation and power. He put forward that individuals feel motivated when they develop strong association with team members, achieve certain objectives together and is given authority to a certain extent. The need of affiliation explains that employees prefer maintaining good terms with most of their co-workers. In this context, an important strategy for improving sales performance of employees, organizations can focus on grouping employees in teams so that affiliation acts as a source of motivation. The power needs are essential part of every individual at personal and professional front. Power needs comprises challenging tasks, responsibility, healthy competition and goal oriented activities. In the insurance sector, convincing and negotiation power are very important motivators which along with a goal to achieve sales target may boost confidence level of individuals. Once the target is achieved, it again acts as a source of motivation (Schunk & Zimmerman, 2012; Weiner, 2013). Motivational strategies adopted by managers in the insurance industry In context to the previous discussion, in this section the literature relevant to motivation in insurance sector will be critically assessed while presenting strategies for motivating sales persons by managers. Motivating sales personnel at various career stages A number of researchers have agreed that the main purpose of sales management research has been to determine ways to motivate sales personnel for increasing their efforts and improve performance at different stages of career. Authors suggest that in every career stage, managers need to implement different techniques for motivating their subordinates. Slocum and Cron underlined that in exploration stage the commitment level of sales personnel are comparatively less and therefore, it is imperative for managers to motivate them using rewards which they can earn with superior performance. In addition, managers need to adopt proactive measures to manage with feeling of uncertainty that employees feel about their career choice, thereby motivating them to be more productive. The establishment stage for any sales personnel is defined by stabilized career platform. Personnel feel motivated by achievements and activities such as promotion. Authors suggest that establishment stage significant as it implies climbing of personal success ladder. At this stage, for stimulating motivation in personnel, managers require communicating specifically the various requirements of promotion. In addition, Levinson added that individuals need to focus on their personal lives as well such as marriage. The last stage in individuals’ career is maintenance stage where individuals mainly focus on aggressive career orientation. Researchers identified that in the insurance sector, creativity and self-assurance is very important to close a sale successfully and a successfully closed sale is further followed by rewards. However similar rewards can be dissatisfactory at this level, therefore managers need to offer a variety of incentives that are different from each other for motivating the sales force (Balachandar, Panchanatham & Subramanian, 2010). Financial incentives In every organization across different industries, financial rewards or incentives are of paramount importance. Especially, in industries that are primarily supported by sales activities financial incentives are considered as a very powerful motivational tool for sales personnel and sales teams. Authors, such as, Steinbrink stated that one of the important element in motivational and management programs related to sales force is compensation. In addition, Churchill, Gilbert and Pecotich ascertained that pay structure and compensation may not act as an exclusive source of motivation but it is an inherent component of sales force motivation system in insurance industry. The authors further added that keeping aside impact of external circumstances on motivational level of individuals, effectiveness of sales force is highly affected by reward system of the organization. On the other hand, authors such as Lawler and Pearce, Stevenson & Perry, advocated that compensation ought to be related to work performance of employees. They voiced their opinion in favor of performance based compensation programs. Although such practices are limited in most organizations but in insurance industry, apart from basic pay, sales force are paid heavy compensation based on their selling capabilities. In other researches, it was suggested that a possible reason for an individual’s valence for monetary reward being negatively correlated with the level of the individual’s earnings is that as these sales personnel climb the ladder of success and reaches a position where they are generally well-paid, the monetary rewards become less valuable. Oliver, in this context, added that in life insurance companies sales personnel’s valence for money and age of the person are positively correlated while the former exhibit negative correlation with satisfaction level that should be earned with the pay. Overall, it can be suggested that at the initial struggling period and when personnel are young, the monetary rewards are highest motivator which decline with increasing age and positional power (Balachandar, Panchanatham & Subramanian, 2010). Personal goal-setting and competition as motivators for sales personnel In insurance sector, strategies employed by sales personnel can be observed to be consistent with the goal setting theory. Studies and researches suggest that sales personnel and sales teams who set high and specifically defined goals, exhibit greater chances of effective performance. Authors, such as, Brown, Austin and Vancouver and Locke and Latham highlighted that persistence, intensity and direction of goal oriented behavior is vastly affected by personal goals. In addition, many researchers also suggested that personal goals direct individual actions. In other words, personal goal setting can be considered as an intermediate step for achieving high performance by setting challenging personal goals for sales personnel. Competition is another important element that is usually observed as a part of the goal setting process. Brewer pointed out in a research that the successful sales personnel are the most aggressive competitors among other employees. In addition, the author noted that challenging goals are set by salespersons as a result of highly competitive organizational environment along with strong traits of competitiveness. Deci and Reeves proposed that intrinsic motivation is a result of challenging work and competition. By and large, it can be suggested that in insurance companies, competition can be stimulated by recruiting competitive individuals as well as developing competitive management practices. This will, further, cause efficient goals and high degree of motivation and performance level (Grant & Berry, 2011; Colquitt, Lepine & Wesson, 2009). Importance of the role played by sales managers Many well-known authors have been highly assertive about successful sales personnel being created through training and extensive practices. In other words, it can be suggested that the degree to which a salesperson is motivated depends to a great extent on the managers, their techniques of motivation and implementation process. Studies suggest that leadership behavior has a crucial role to play in enhancing work motivation among sales personnel. Therefore, it is the primary responsibility of the sales manager to determine the factors that positively influence behavior of sales personnel. It has been observed that motivation of sales force is highly affected by the way their sales managers treat them. For instance, an uncaring and indifferent manager may act as a source of low motivation despite high compensation for his/her sales force. On the other hand, a participative manager can motivate the team members in working harder despite low compensation. Apart from conventional motivational techniques, the leadership skills of the sales manager are very important in determining the performance level of the salesperson. Authors such as Jolson and Dubinsky indicated that dramatic improvement can brought in the performance of sales person through the leadership style practiced by the manager. On the other hand, some authors advocated the Pygmalion effect, suggesting that the productivity of sales personnel is also significantly influenced by the expectation of their respective sales manager. It can be ascertained from these discussions that managers act as role models to sales force in a positively competitive environment. Therefore, efficiency and productivity of sales force can be enhanced if they are managed as well as given directions by the manager about the way to execute the task. Authors such as Dubinsky further added that although performing tasking is responsibility of salesperson but enhancing their performance through appropriate guidance and direction (Dewhurst, Guthridge & Mohr, 2009). Proposed solutions to improve sales performance through motivation There are a number of components within the organization as a complete interactive system that plays an important role in motivating sale personnel to improve their productivity: Motivation: It has already been highlighted in the paper that at different career stage, insurance employees require different kind of motivation for better performance. One of the criteria of high motivation is positive communication. Sales managers should be open to two-way communication so that as employees are made aware of their flaws and appreciated for their achievements, the employees should be given the opportunities to share their source of motivation with managers. This will ensure that managers develop appropriate motivational strategies for the employees. Appropriate motivation will make personnel undertake extra effort for better contribution even if that cost minor personal sacrifices. Financial incentives: Monetary benefits are often considered as a way to encourage sales personnel to achieve greater targets. However, such trend is generally common when a salesperson is comparatively young and new to the field work. As they gain experience, contacts and learn various quick selling methods, their aspiration changes. At this point non-financial incentives play a very important role. For instance, a well-paid personnel, who works for long hours, will not be motivated by monetary incentives but a small family trip at company’s expense may motivate that individuals. Thus, management needs to study carefully individuals’ needs and craft incentives packages accordingly. Specific goals and healthy competition: Competition is a very complicated factor from organizational perspective primarily because it has two faces: healthy and unhealthy. Healthy competition should always be encouraged in an organization so that individuals compete to have better productivity from organizational perspective but when personal interest is mixed in the same it give rise to unhealthy competition. Managers should, therefore, specifically define goals of individual personnel so that their goals and activities do not clash with one another. Participation and feeling of association: Generally, in insurance companies, workforce is made to do operational activities such as lead generation and closing of sale. However, the commitment level of workforce can be enhanced if they are involved in policy making regarding sales-oriented activities. Furthermore, level of motivation and commitment can be enhanced among employees by making them feel more associated in the organization with greater delegation of responsibilities. The feeling of association often makes salespersons perform above the level of expectation. Recommendations and Conclusion In the present competitive environment, the insurance industry requires a number of motivational techniques to improve its sales performance. These techniques include promotion, responsibility sharing, and delegation of authority, participation in decision making and monetary and non-monetary bonuses and commission. It was also observed in the paper, that most researchers supported employee motivation is highly affected by managers and their motivational and leadership practices. In this paper, a number of motivational theories have been discussed which has been proposed by prominent authors and which can be related to the motivation of sales force in the insurance sector. Since the nature of job of the sales personnel in insurance industry require high degree of commitment, hard work and determination, only monetary compensation does not suffice as a motivating factor. It was ascertained from the theories that interpersonal relationships as social needs are very important for motivation. Overall, every theory has its own implication as well as can be related with other theories for describing workforce motivational strategies. References Balachandar, G., Panchanatham, N. & Subramanian, K. (2010). 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