Pay as Motivator in Contemporary Work Organizations - Essay Example

Pay as Motivator What the Theories Say This paper critically discusses the notion that pay as a motivator in many contemporary work organisations is seen as being of little or no consequence. A look at the early theories would lead us to conclude that pay is neither the main nor the only motivator for work. Motivation is a complex process, and no single theory exists to satisfactorily explain how it works. Rather, like the mythical blind men trying to define what an elephant is, modern management scientists have been touching different parts of the motivation beast and coming out with their own sets of theories of what works, when it does, and why. Skinner's reinforcement theory (1953) is perhaps the foundation for every study on the matter. By stating that behaviour can be shaped, changed, or maintained through positive and negative reinforcement, he implied that people can be made to behave in certain ways using levers of motivation. Later studies merely attempted to find what those levers were. Maslow (1954) proposed five levers he called human needs, with the lowest being physiological, and self-actualisation the highest; in between are the safety, social, and esteem needs. He said meeting these needs is the motivational key, which leads others to ask: if pay helps meet each of these needs, why is it that even highly-paid CEOs continue to milk their corporate cow, sometimes fatally Pay does not seem to give the complete answer. Perhaps Herzberg (1959) had an answer in his hygiene and motivational factors. He argued that a worker would be satisfied if the motivation factors are met, but not if hygiene factors are unmet. However, hygiene factors do not necessarily lead to job satisfaction. And like these other content theories, MacGregor's (1960) simplistic categorisation of employees does not fully explain the behaviour of greedy managers who used to be honest. An interesting trilogy of process theories (Adams, 1963; Vroom, 1964; Porter and Lawler, 1968) goes beyond the tangible and crosses the line into the realm of the mystical. Balance (Adams's Equity Theory), values and beliefs (the expectancy and instrumentality of Vroom), and intrinsic/extrinsic motivation (Porter and Lawler) point out that money is important, but there are others of greater value that managers need to know about workers so they can trigger the right behaviour. Fifteen years (1953-1968) of research concluded that to motivate others, one has to find out why people do the things they do. And now, some four decades later, as researchers continue investigating the human psyche in search of answers, the list of motivational levers just keeps on getting longer. Pay has never been near the top of the list, superseded by more important ones like job security, the loftiness of goals, and the meaningfulness of work (Ambrose and Kulik, 1999; Gagne and Deci, 2005). Are these findings supported by empirical evidence in the real world of the workplace We find out by looking at two well-known U.K. companies: The Royal Mail Holdings plc, a government-owned firm, and J. Sainsbury plc, the publicly listed owner of the third largest supermarket chain in the U.K. Both companies, just getting out of a serious business crisis, offer us a good look at the "pay as motivator" issue by considering the behaviour of managers and workers. We may find some evidence of how our motivation beast really looks like, discover whether the theories are right and, if not, gain some practical lessons from this exercise. The Reality: Hard Facts The Royal Mail Experience The Royal Mail is a 370-year old organisation that began when King Charles I introduced the postal services in Britain (Steven-Jones, 2004, p. 8-9). It was a government monopoly until the passage of the Postal Services Act of 2000 that liberalised the U.K. postal services market. The law was the culmination of several factors, but what triggered it was an event that took place three decades earlier, when in 1971 postal workers staged a six-week strike that threatened to cripple the U.K.'s social and economic fabric (Consignia, 2001). Of greater interest to us were the main reasons why the strike occurred: postal service workers felt bullied and harassed by management. The almost 200,000 workers were paid well and enjoyed job security, but they were overworked and abused. What made matters worse was the seeming indifference of management. The new law passed in the year 2000 took away job security due to the "threat" of liberalisation and downsizing. Crushed, the workers again staged a crippling strike in 2001 (Consignia, 2002). Brought in to save the postal services (despite the strike, the U.K. Mail is universally acknowledged as one of the best, if not the best, in the world) were two professionals who were motivation experts: Alan Leighton from the supermarket chain Asda and Adam Crozier from the U.K. Football Association. In three years, they turned the Royal Mail from a company with record financial losses and atrocious human resources and operations management records into one that was profitable, efficient, and competitive. In fact, their main problem at present is convincing the government that postal workers should be allowed to own shares in the company (Royal Mail, 2005). How did they do it They transformed the work culture into one where everyone feels valued and respected, treated with dignity and respect and where they can reach their potential regardless of race, religion, gender or sexual orientation. They created a more inclusive workplace that radically reduced the incidences of bullying and harassment that proved damaging in the past (Royal Mail, 2004). Conflicts were resolved using a combination of unitarist and pluralist industrial relations approaches, thus securing the union's support for most of management's strategic decisions. Despite its huge size, the Royal Mail workers now feel part of a team competing with world-class companies to deliver postal services. Training programmes, forums for workers, and direct communication lines with top management gave workers a sense of improved commitment, with the result that they delivered profit growth (Royal Mail, 2005). The new management also fully and consistently supported the human resources department. Was pay an issue Not really, since like all other government employees, Royal Mail workers follow government mandated pay scales. What improved were the environment of work, which the workers appreciated, and the ability of the new team to push the right levers. The Sainsbury Experience J. Sainsbury plc owns Sainsbury's Supermarkets (hereafter Sainsbury's), the U.K.'s third largest retailer after Tesco and Asda. For many years since 1869, Sainsbury's was the country's biggest supermarket, the undisputed market leader. A series of mis-steps allowed competitor Tesco to catch up in 1995. In 2003, Asda passed Sainsbury's, relegating the latter to third position where it currently stays (Sainsbury, 2004). Sainsbury's is now playing catch up, regaining market share one percentage point at a time. A publicly listed corporation since 1973, the company is on the renewal trail as it attempts to regain its leading position in the industry. What went wrong The company committed a tactical mistake that allowed its competitors to overtake it: they forgot to talk to their employees and get their feedback. In the late 1990s, in their effort to catch Tesco, Sainsbury's embarked on a strategic effort to revamp its supply chain management system. It wanted to make operations more efficient so it could pass the savings to customers and make the lives of their workers more pleasant. After all, being number one for over a century could only mean that it enjoyed several advantages over its rivals (Sainsbury, 2005). What top management failed to realise was that underneath the calm surface was a river of discontent amongst the workers who suffered at seeing the company losing ground to their rivals. Apparently, Sir George Bull (Chairman) and Sir Peter Davis (CEO) focused too much on the toys, they forgot the children: shelves not fully stocked, employees kept in the dark, and customers leaving in droves. After recording its first-ever loss in 2004, the two men of peerage were replaced by two competent executives, Philip Hampton (Lloyds TSB) and Justin King (Marks & Spencer), whose expertise in managing people proved very useful. The new team strengthened Sainsbury's human resources department, and with a combination of common management tools in a wide range of areas, from stocking its shelves full with items customers want to buy to executing on a complete revamp of its information technology and supply chain management systems, they embarked on the work of revitalising the whole organisation from top to bottom. In two years, positive results showed that Sainsbury's - managers and workers - are once again right on track towards its goal of taking over its top rivals by keeping their focus on the customer (Sainsbury, 2006). Was pay an issue at all in the turnaround No. In fact, Sir Peter left in controversial circumstances after receiving the highest compensation in history the same year the company recorded its worst-ever loss. The real problem was poor communication by management with their employees and a lack of focus on the latter's needs and inputs. When management clarified goals (they even cancelled IT outsourcing and systems contracts) to employees, their performance improved, and they began winning back their customers in droves. Conclusion What we can learn from these two cases is that pay never is the main issue that leads to job satisfaction, but it doesn't prove that it is not important. It seems to us that pay is a good way of attracting an employee to work for a company, but once the material need is met, s/he begins to look for other sources of fulfilment. In both examples, however, the top executives agreed to lower pay but a bigger share in the profits and the success of their work. This can be interpreted to mean that more than pay, what motivates people is seeing that a good job is done, that they succeed in setting goals and attaining them, and that the satisfaction of having accomplished something is shared with the rest of the team. Pay may not be the main motivator, but it certainly is an important form of reward, especially for managers and workers who may be getting more than what they could spend. As the two cases show, the prestige of the job, the challenge of turning around a sinking ship, and the sense of accomplishment in the face of seemingly overwhelming odds can be more effective and powerful motivators than pay. This lesson, if shared with workers, would mean that rather than being a stick, pay would be more effective as a carrot. We can make two conclusions from our observations. The first is that anyone can be motivated to act (for example, to change one's behaviour, work towards a goal, or to work harder), and that by pulling on the right levers, behaviour can be shaped. Managers also need to know when to adopt a unitarist (no conflicts and confrontations) or pluralist (conflicts welcome but must be resolved peacefully) approach to dealing with workers, depending on which would be deemed more effective for the given situation, provided they work for the good of all, or at least the majority is convinced that their efforts are worth the reward - the company's survival and their continued employment. The second is that each of us is unique and different. Therefore, each one has different levers of motivation. The manager's job is to know which sets of levers will work for each employee at each moment in time, so that s/he is motivated to act. Knowing what makes one behave as s/he does is a constant, never-ending management challenge. Pay may not be the most important motivator, but in a labour market where employment is sold to the highest bidder, pay could attract but would guarantee neither loyalty nor performance. Bibliography Adams, J. S. (1963) "Toward an understanding of inequity". Journal of Abnormal and Social Psychology. 67, p. 422-436. Ambrose, M. L. & Kulik, C. T. (1999) Old friends, new faces: Motivation research in the 1990s. Journal of Management, 25, p. 231-292. Gagne, M. and Deci, E.L. (2005) Self-determination theory and work motivation. Journal of Organizational Behavior, 26, p. 331-362. Herzberg, F., Mausner, B., and Snyderman, B.B. (1959) The motivation to work. New York: Wiley. Jensen, M.C. and Meckling, W.H. (1976) Theory of the firm: Managerial behaviour, agency costs and ownership structure. Journal of Financial Economics, 3, 305-360. MacGregor, D. (1960). The human side of enterprise. New York: McGraw-Hill. Maslow, A. (1954) Motivation and personality. (3rd ed.) New York: Harper. 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