Chasing the carrot

How to motivate employees

Why do employees work? The question almost seems silly, yet to business organisations the question of "motivation", the force that energises and gives direction to a person's behaviour (Di Cesare & Sadri 2003), is an important one. Managers often hope to improve the performance of their employees by providing them with increased motivation, but how and why do they attempt to do this, and do their efforts generally succeed?


Reasons for motivation

It is widely assumed by managers that motivation of employees will lead to an increase in productivity. For workers who are "deeply involved with their work", this may be true (Mullins 1996), but perhaps surprisingly, overall evidence suggests that there is no strong correlation between positive motivation and high productivity (Wilson & Rosenfeld 1990).

The problems caused by demotivation, however, are well understood. "Frustration" among employees with unrewarding jobs can lead to "aggressive", "regressive" (childish), "fixated" (pointless) or "withdrawn" behaviour (Mullins 1996), all of which may harm a firm's productivity. A lack of motivation increases the rate of absenteeism - which is generally highest among workers doing mundane and repetitive jobs (Cully et al 1999) - and the rate of employee turnover. In call centres, for example, the tedious and demotivating nature of jobs often leads to very high rates of employee turnover - up to 35% per year in some cases (Gray 2004). Continual replacement of staff is bad for business, since it results in high training and recruitment costs and an inexperienced workforce, so the desire to retain employees (often in the face of competition from other employers) may be a major reason why firms seek to motivate their staff. Motivational benefits such as flexible working hours are most commonly offered to employees who are highly-skilled; it is been suggested that this is because firms are especially keen to retain such employees, due to the difficulty and cost of replacing them (Cully et al 1999).


Theories of motivation

Over the past century, many elaborate theories have been developed to explain what factors motivate employees. Perhaps the simplest view, put forward by Frederick Taylor in the early 20th century, is the 'rational-economic' idea that employees are motivated mainly by money (Peña & Reis 2001). For workers in mundane jobs, this may generally be the case, but for more highly-skilled employees 'psychological factors' such as recognition and a sense of achievement may be more important. Even among low-skilled manual workers, studies have found that pay is not the only major concern for employees (Mullins 1996).

Abraham Maslow famously identified a 'hierarchy of needs' that individuals have; his five-level hierarchy was later simplified by Clayton Alderfer into three levels. The most basic are 'existence needs' (concerned with survival), followed by 'relatedness needs' (concerned with the desire to fit in socially with others), and finally there are 'growth needs' (concerned with "self-actualization" and the development of one's potential). An individual will seek to satisfy each set of needs in turn - when basic needs have been largely fulfilled, they will cease to be a source of motivation and the individual will move up to the next level in the hierarchy (Wiley 1997). Frederick Herzberg's "motivation-hygiene theory" also makes a distinction between lower-level needs and higher-level ones, although Herzberg argues that the provision of basic needs such as adequate pay as cannot truly provide employees with satisfaction; such 'hygiene factors' merely serve to prevent dissatisfaction (Tietjen & Myers 1998).

Such rigid theories are often criticised because they fail to take into account differences in personality: some needs may be more important to certain individuals than to others (Mullins 1996). Cultural differences may also have an effect: workers in Asian countries may be strongly motivated by a loyalty to an organisation, whereas in Western societies, which are more individualistic, self-fulfilment is of greater importance (Schein 1985). It has been argued that all humans have essentially the same needs regardless of culture, but that a person's cultural background may nonetheless have an impact upon how they define satisfaction of a particular need (Di Cesare & Sadri 2003).

Numerous other concepts have been put forward to explain motivation. These include: "expectancy theory", the idea that employees' motivation to work depends upon their expectation of a particular reward; "equity theory", the idea that employees are motivated by a desire to be rewarded fairly for their work; and "reinforcement theory", the idea that positive recognition of good performance will motivate employees to perform well in future (Wilson & Rosenfeld 1990).


Methods of motivation and their results

Companies can seek to motivate their employees with many different types of financial reward. In a study by Hong et al (1995), the three types of benefit that were found to have the greatest impact on workers' performance were end-of-year bonuses, dividends and pensions. These benefits had a strong effect upon employees' perceived levels of motivation, although their impact upon productivity was less dramatic. Larger firms often offer share ownership schemes as an incentive to their employees, but Cully et al (1999) found that the presence of such a scheme has no measurable effect upon workers' motivation or performance. This is perhaps because participation in share-ownership schemes tends to be low among non-managerial employees.

Over the past two decades, a major theme in organisations has been the "reengineering" of jobs in an attempt to make them more psychologically rewarding (Peña & Reis 2001). The idea of motivating workers by reorganising their jobs (which costs little and may actually result in financial savings), rather than by providing material benefits, has obvious appeal to cash-strapped firms. Reengineering may involve "job rotation" (switching employees between tasks to avoid boredom), "job enlargement" (expanding the range of tasks carried out by an employee), or "job enrichment" (altering the nature of an employee's job to increase their freedom and responsibility) (Mullins 1996). Job rotation and enlargement, which represent "adding nothing to nothing" in terms of job satisfaction, may be resented by employees and can at most achieve short-term increases in productivity (Thompson & McHugh 1990). However, there is evidence that the enrichment of jobs by organising workers into self-managing teams leads to improvements in productivity and in employee relations (Cully et al 1999). Of course, like most motivational schemes, the success of job enrichment will depend on an individual's personality - there will always be some workers who prefer simple tasks to jobs in which they are given responsibility and autonomy (Mullins 1996).

Another recent trend in employment has been the introduction of 'family-friendly' attitudes, such as permitting employees to work from home or to work only during school term times. This has clear motivational benefits: in a recent survey , 50% of managers believed that family-friendly policies resulted in "happier staff", and some noted that the policies also reduced employee turnover and absenteeism (Cully et al 1999). However, Hong et al (1995) listed "flexible working time" among the benefits that had the least impact upon employee's performance. It is possible that this discrepancy - between a British study and a Taiwanese one - is due to cultural differences.

Social interactions with colleagues are an important source of motivation in many jobs. To some extent these are beyond managers' control, but firms can seek to reduce the risk of demotivating personal conflicts occurring, by taking care during the recruitment and selection process to hire appropriate individuals who will fit in with a team's culture (Bent et al 2002).

There is evidence that employees are best-motivated when they are pursuing specific "goals". This works best when the goals set are challenging but realistic, and when employees themselves are given the opportunity to participate in deciding upon the goals (Mullins 1996).

Proponents of 'reinforcement theories' of motivation argue that it is particularly important for managers to recognise and reward employees who perform well. Such recognition also helps individuals to fulfil the higher needs in Maslow and Alderfer's hierarchies, providing workers with self-esteem and a sense of accomplishment. An experiment by Graen, in which workers were induced to perform better in their jobs either by verbal recognition of good work or by a pay increase, found that performance was improved more significantly by the 'intrinsic' reward of verbal recognition than by the 'extrinsic' reward of additional money (Mullins 1996). Cully et al (1999) also found evidence that regular performance appraisals and monitoring of individual quality do help to "boost morale" and improve "workplace well-being" (as measured by indicators such as the levels of absence and resignations). However, regular monitoring can have the disadvantage of creating stress amongst workers.



The search for a simple explanation of what motivates employees may be a "vain quest" (Mullins 1996). Not all individuals have the same needs and desires, and the success of a particular motivational technique will depend upon an individual's personality, occupation, and cultural background: there are no "magic bullets" that are guaranteed to improve all workers' performance (Cully et al 1999). Nonetheless, some generalisations can be made.

Nearly all employees, regardless of their occupation or their status in an organisation's hierarchy, are motivated to some extent by pay (Wiley 1997). For relatively unskilled workers in mundane jobs, money is usually the major motivating factor (although not necessarily the only one), but higher-level employees will also desire less tangible rewards. Maslow, in drawing up his hierarchy of needs, believed that "needs which are satisfied are no longer motivators" (Wilson & Rosenfeld 1990). For senior employees whose salaries are already adequate to meet their basic needs, motivation may come instead from the fulfilment of 'higher-level' needs such as friendship, self-esteem, recognition, opportunity and achievement. Managers can help their employees fulfil these needs, and thus provide motivation, by measures such as 'reengineering' jobs to make them more rewarding, creating a good social environment in the workplace, setting clear goals and offering recognition to individuals who perform well, and providing non-material benefits such as flexible working hours that allow employees to spend time with their families.

Although managers who seek to improve employees' motivation may do so in the hope that this will improve their performance, the evidence suggests that there is generally no strong link between motivation and productivity. Motivational schemes can, however, be useful in helping firms to avoid the clear negative consequences of demotivation, such as absenteeism and high staff turnover. And it should not be forgotten that managers may wish to motivate their workers for ethical reasons as well as material ones. It is nice to have employees who are happy.



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This was originally written as a university Business Studies essay

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© Andrew Gray, 2004