Motivation and Money - Essay Example

Motivation and Money How would you respond to a manager who said, “Employees cannot be motivated with money”? Use at least, one content and one process theory of motivation to validate your response. Introduction My response to the manager would be to agree with him/her to some extent and I would have to say that the statement could be better put as people can not be motivated by money alone. Money is a significant factor in motivating individuals but higher order needs of some people as well as the expectations of others may require the presence of cash rewards as well as recognition of the peers and superiors. This can be shown to be true by using applicable content and process theories of motivation as well as practical examples. The examples themselves come from GE since as a company it has been focused on HR and committed to its employees in many ways which go beyond the norms of motivation as compared to other companies. It has an innovative way of rewarding employees who uphold the values considered important by GE and this has given the company the respect and admiration of many business gurus (Demos, 2006). While the rewards for working at GE are many, the reward selection process uses a ranking system that connects with both the process and content theories by punishes those employees who do perform up to the expected level. The overall effect of GE’s motivation techniques has been very positive and is well regarded by industry experts therefore it becomes a good example for matching with the theories of motivation. Content Theory A theory based on content considers the idea that individuals are motivated by inner desires to fulfil their needs and such fulfilment can come from their work if the work they do is able to combine the rewards for working with their desires. The primary work in this branch of motivation comes form Maslow’s Hierarchy of Needs which includes five levels including the basic needs of nourishment, second order needs for safety and security, third order needs for social affiliations, fourth order needs for esteem and fifth order needs for self-actualization of the individual. Clearly while the first, second and third order needs might be fulfilled by having enough money, fourth and fifth order needs might not be obtainable just by getting a salary alone. GE is one company that recognises this and uses a peer recognition system called QuickThanks! to show appreciation of the work done by one member of the company to another. Kerr (1996) gives an inside view of what happens at GE where this program is used for increasing the level of motivation of employees. Broadly speaking, this system allows employees to nominate other employees (even across departments) with a $25 gift certificate for certain stores and restaurants in appreciation of their work. In 1995, ten thousand such certificates were handed out by GE employees to their peers. Even though it may seem like a huge number, the rewards are only given for exemplary performance and the peers are not free with their recognition. They often have stricter personal criteria for giving these certificates and the receiver often gets the award from the person who nominated them (Kerr, 1996). Clearly, the amount of money associated with the award is nominal at best for a professional working as a midlevel manager in a company or even as office support staff at a company like GE. However, it is the recognition of a job well done by their peers and associates which is helpful in motivating employees towards higher performance levels and towards making improvements in their work for the company. Additionally, GE also combines awards with rewards even when the award for their employee comes from outside the company. Welch (2005) discusses the case where a scientist working for GE won an award for his achievements in science. Mr. Welch asked that the GE board immediately connect the scientist’s achievements with a large cash bonus since even the Nobel peace prize comes with a significant dollar figure attached to it. In this case, recognition by the peers as well as those outside the company was not seen to be enough since recognition alone or cash alone can not be the only answer to the needs of motivating individuals. In terms of rewarding the top employees of his company Welch reports that: “The top 20 percent of employees are showered with bonuses, stock options, praise, love, training, and a variety of rewards to their pocketbooks and souls. There can be no mistaking the stars at a company that differentiates. They are the best and are treated that way (Welch, 2005, Pg. 41)”. Process Theory The process theories such as the Expectancy Model suggest that people may choose between several different behaviours based on external influences which make them choose one course of action over another. This choice is based on their expectancy of an outcome which may be desirable or undesirable. Simply put, if a person knows that working hard for their company will get them a promotion or a higher salary s/he will work hard towards seeking that particular goal. At the same time, if s/he knows that slacking off will get them to join the ranks of the unemployed, they will be unlikely to slack off at work. The process theory is very applicable to how GE selects the individuals it is going to reward at the company. The idea of rewards being based on the overall merit of an employee is not a new one but GE applies this idea to the letter by heavily rewarding the top 20% and normally rewarding the middle 50%. Their review and evaluation process ensures that no person gets heavily rewarded for a mediocre level performance and every star in the company is properly given the attention s/he deserves. At the same time, to keep the bottom of the barrel on their collective toes, GE has the policy of removing the bottom 10% of its employees every year (Welch, 2005). Thus, for the top performers, GE creates expectancies of cash rewards and recognition by their peers. All divisions at the company are required to list by name, position and compensation the amount of money and bonuses given to the top 20% of the management as well as the bottom 10% (Schmitt, 2001). So if an employee is given some stock in the company as a reward for creating a new product, the information will be disclosed to all member of his/her department to publicly celebrate his/her achievement. While this public disclosure may be seen as difficult to swallow, Jack Welch defends this by saying that even though we may seek to protect the reward system from criticism by not letting others know about the bonuses and rewards given to their co-workers, people seem to know this information anyways. By making it public, the information can be used as a motivational factor and it lets all employees see which persons are the stars of their divisions and who are facing the risk of being let go (Welch, 2005). Therefore, as recommended by Boxall and Purcell (2003) GE is using rewards as a tool for strategic management as well as motivation. The ideas presented by the process theory are firmly established with the timing of the rewards used by GE. A key factor about the system of rewards at GE is the response time for the reward to come as a result of performance. The calendar is a useless tool for rewards at GE since a delayed reward loses its effects (Welch, 2005). Kerr (1996) goes further to prove his point and uses the example of rewarding rats in a cage for pulling a lever and says that if a sugar cube comes 9 months after the lever was pulled there would be little association between the two actions. In certain companies, the reward process is so far delayed that when an extra sum comes up in the employee’s bank account, they are not sure why it has happened and the expectancy which was supposed to establish good behaviour does not hold true anymore. Conclusion It is to GE’s credit that their differentiation system for creating motivation and managing the rewards given to employees has been respected, tested and accepted by some of the biggest names in the world. This ranking system for bonuses etc is used by Microsoft, Cisco, HP, Sun, Capital One, PepsiCo and Intel amongst many others. Sun exactly mirrors GE’s system to discriminate employees by saying that 20% are superior, 70% are “Sun Standard” and 10% are underperforming (Grote, 2002). On average a quarter of all the companies in the Fortune 500 list have established this practice as a primary method of motivating employees with money and with other benefits (Grote, 2002). Clearly, money alone is not enough to motivate all individuals since they need satisfaction which comes from other sources. A manager which recognises the other sources of motivation is likely to be more successful who does not. Word Count: 1,589 Works Cited Boxall P. and Purcell J., 2003, Strategy and Human Resource Management, Palgrave & Macmillan. Demos, T. 2006, ‘The World’s Most Admired Companies’, Fortune, 153(4): 72. Grote, D. 2002, ‘Forced Ranking: Behind the Scenes’, Across the Board, 39(6): 40-46. Kerr, S. 1996, ‘Risky business: The new pay game’, Fortune, 134(2) 94-97. Schmitt, J. 2001, ‘Welch has a lesson, even for small shops’, Contractor Magazine, 48(10): 16. Welch, Jack. 2005. Winning. HarperCollins: New York. Read More