Assess the link between motivational theory

and reward
"Motivation is the process by which the behaviour of an individual is influenced by
others, through their power to offer or withhold satisfaction of the individual's needs
and goals". (BPP Learning Media, 2010) Motivation theories are divided into two
different viewpoints. See content and process theories of motivation in (Appendix 1).
Content theories emphasis what motivations are, whereas process theories
emphasise the real process of motivation. On the other hand reward is something
that workers achieve during their job. It can be financial when the company pays for
their performance and it can be non-financial which in this case means that the
company rewards employees by promotion, achievement and praise.
"Maslow puts forward a theory that there are five levels of human needs which
employees need to have fulfilled at work" (Mullins, 2005). See (Appendix 2).
Maslow mentions in his theory that managers following this theory deflect their
attentiveness to offering complementary pleasing relationships, more attractive
work, and more opportunities for self-fulfillment.
On the other hand, Herzberg in his theory suggests that there are two basic needs
of individuals such as hygiene factors (environmental factors) and motivation factors.
See (Appendix 3). Managers following Herzberg's theory reject money as a
motivator and pay attention to supplying more job enhancements.
According to McGregor's theory, managers may follow two different theories which is
theory X and theory Y. Pursuant to theory X, the average employee dislikes work
and will avoid it whether he/she knows what to do or not, that is why employers
suggest Theory Y which leads them to do excellent job and managers offer
opportunities to have a job done. However, McClelland focuses interest on providing
employees with the capability to persuade their needs for success, power, and
relationship.
Companies use both positive amplification and negative amplification to motivate
employees. Managers may use positive motivation techniques to persuade

employees to create good quality job. Some managers may use negative motivation
techniques to encourage employees and stop them from bad manners. However,
companies reward their employees with both touchable products, as well as admire.
Mangers may reward their employees by providing weekly or monthly bonus or free
lunches, many managers reward their top employees by praising them.
For example: Tesco uses two motivation theories - Maslow's and Herzberg's, see
both hierarchies in (Appendix 4). Tesco uses Maslow's theory because it suggests
the company if they achieve one level then it motivates them to achieve the next
one. Also Tesco aspire to motivate its staff both by paying interest to sanitation
factors and by enabling satisfiers. For example, Tesco motivates its staff by good
communication, by giving responsibility and involving employees in decision making.
Tesco allows the staffs to be part of the talks on pay rises. This shows credit of the
work that staff does and rewards them.
In Tesco, they reward staff for their works because it keeps motivating them at work
and will carry on applying different motivation theories at work. Monetary reward
uses by Tesco in a way of getting employees to welcome the complete value of their
benefits package. Tesco also follows pension system and this usually includes
pension assistance that the employer creates on the employee's behalf and being
process in payroll department. They also reward employees by giving them extra
benefits such as car insurance and private medical insurance, by special offers and
discounts. See Tesco's reward system in (Appendix 5).

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Undoubtedly, the most important factor is human in organizations. One of the main
management strategies of the organizations is to invest in employees.
Organizations are seeking to develop, motivate and increase the performance of
their employees in a variety of human resources applications. Therefore, the reward
management system has been the most considerable practices of the human
resource management system. Reward management system is a core function of
human resource discipline and is a strategic partner with company managements.
Besides, it has an important role on employee performance. [15] Barber and Bretz
(2000) mentioned that reward management systems have major impact on
organizations capability to catch, retain and motivate high potential employees and
as a result getting the high levels of performance. [7] On the other hand, it is crucial

to invest in employee development for enhancing the skills and abilities of

employees and organization. Furthermore, social exchange theory shows that
employees behave in positive ways when the organizations invest to them. [4]
Organizational inducements are the factors for the motivation of the employees and
pro socially motivated employees make a great effort to benefit the organization.
[11] According to Steers and Porter (1987), work motivation is a factor that sustain
and manage employee behavior. In another study, Porter and Miles (1974), put
some theories about motivation and they gathered into three categories which are
job (e.g., degree of autonomy), individual (e.g., need for achievement) and work
environment characteristics (e.g., rewards). [1]
Yang (2008) has investigated the individual performance and results of his study
showed that we cannot verify individual performance. Even so, he also claimed that
if employees performance is observable than organizations can use direct bonuses
or relational contracts to motivate them based on their performance. Bishop (1987),
on the other hand has studied about employee performance and found that
recognition and reward of employee performance leads to differentiation between
the productivity of the employees. 2. Literature Review And Hypotheses 2.1. Reward
Management System Reward management system contains the organizations
policies, processes and practices for rewarding its employees in accordance with
their contribution, abilities and artifice. It is progressed within the organizations
reward philosophy, strategies and policies, and includes agreements in the form of
processes, practices, structures and procedures which will provide appropriate types
and levels of pay, benefits and other forms of reward. [2] Employee performance is
originally what an employee does or does not do. Performance of employees could
include: quantity of output, quality of output, timeliness of output, presence at
work, cooperativeness 2.1.1. Reward Management System Applications
Reward Management System Tool includes both Financial and Non-Financial Rewards
which are also called as Extrinsic and Intrinsic Rewards. Financial rewards are salary
increase, bonus system, perquisite etc. On the other hand there are non-financial
rewards which are; promotion and title, authority and responsibility, education,
appreciation and praise, certificate and plague, participation to decisions, vacation
time, comfort of working place, social activities, feedback, flexible working hours,
design of work, recognition, social rights etc. [15] 2.2. Employee Task Performance
According to Yazc, (2008), the effectiveness of an organizations performance and
reward management have an impact on moral and productivity. Many organizations
have found that far from complementing the stated aims of the business, their
performance and reward systems were actually driving counter-productive behavior.
On the other hand path-goal model is absolutely explain the relationship between
reward system and employee performance. The concept states that if a worker
sees high productivity as a path leading to the attainment of one or more of his
personal goals, he will tend to be a high producer. Conversely, if he sees low
productivity as a path to the achievement of his goals, he will tend to be low

producer. In other words, the employee would be motivated to expend a greater

amount of effort in his work if he felt his previous effort had resulted in his receiving
rewards. [8] Hypothesis 1: Reward management system applications are
significantly and positively related to employee performance.
2.3. Motivation A basic explanation of motivation is the capability to change
behavior. Motivation is a drive that holds one to act because human behavior is
directed toward some goal. [5] Grant (2008) established a study where motivation
enforced the employee outcomes such as persistence, productivity and
performance. Besides, motivated employees are found to be more selfdriven and
more autonomy-oriented than those who are less motivated (e.g. Ryan and Deci,
2000; Thomas, 2002, as cited in Grant, 2008), which suggests that they will take
more responsibility when offered developmental opportunities. Motivated
employees are also more engaged and involved with their jobs (e.g. Guay et al.,
2000; Vansteenkiste et al., 2007), they may be more involved in the work of their
colleagues, when compared with employees with low motivation. [11] Hypothesis 2:
Motivation is significantly and positively related to employee performance. Social
cognitive theory, claims that rewards given for success of challenging performance
standards may result in high motivation. [5] Hypothesis3: Reward management
system applications are positively related to motivation.

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Presentation Transcript
MOTIVATION & REWARD:
MOTIVATION & REWARD Prof. Meera Madhavan Dhruva College of Management

Motivation defined :
Motivation defined A motive is a reason for doing something for moving in a certain direction. People
are motivated when they expect that a course of action is likely to lead to the attainment of a goal a
valued reward that satisfies their particular needs. Well-motivated people are those with clearly
defined goals who take action that they expect will achieve those goals.

TYPES OF MOTIVATION:
TYPES OF MOTIVATION There are two types of motivation as originally described by Herzberg, Intrinsic
motivation this was defined by Herzberg as motivation through the work itself. It takes place when
people feel that the work they do is, intrinsically interesting challenging and important and involves
the exercise of responsibility (having control over ones own resources) autonomy or freedom to act
scope to use and develop skills and abilities opportunities for advancement and growth

TYPES OF MOTIVATION:
TYPES OF MOTIVATION Extrinsic motivation what is done to or for people to motivate them. This
includes rewards such as increased pay, recognition, praise or promotion, and punishments such as
disciplinary action, withholding pay, or criticism.

TYPES OF REWARDS:
TYPES OF REWARDS

The role of job design in motivation:

The role of job design in motivation Intrinsic motivation is provided when jobs are well designed. This is
the case when the job has the following characteristics: autonomy, discretion, self-control and
responsibility; variety; use of abilities; availability of constructive feedback; belief that the work is
significant.

The role of rewards and incentives in motivation:

The role of rewards and incentives in motivation Rewards provide recognition to people for their
achievements and contribution . If rewards are worth having and attainable and people know how they
can attain them, they can act as motivators. Rewards can be either financial or non-financial.
Incentives are designed to encourage people to achieve objectives. They are intended to provide direct
motivation: do this and we will make it worth your while. Incentives are generally financial but they
can promise non-financial rewards such as recognition, promotion or a particularly interesting
assignment.

THE BIG PICTURE:

THE BIG PICTURE . Behavior = f(M,A,E ) where M = Motivation Selection A = Ability E = Environment
Recruitment Training Performance Management Organizational training Compensation Culture Org
Development HR Planning ABILITY TRIANGLE ENVIRONMENTAL OBSTACLE TRIANGLE MOTIVATION
TRIANGLE

Motivation theories and their practical implications:

Motivation theories and their practical implications Theory Theorist Summary of Theory Practical
Implications Instrumentality Taylor People will be motivated to work if rewards and penalties are tied
directly to their performance. Conceptual basis of incentive and pay-for-performance schemes Needs
Maslow Unsatisfied needs create tension and is equilibrium. To restore the balance a goal is identified
that will satisfy the need, and a behavior pathway is selected that will lead to the achievement of the
goal. Only unsatisfied needs motivate. Identifies a number of key needs for consideration in developing
total reward policies.

Motivation theories and their practical implications:

Motivation theories and their practical implications Theory Theorist Summary of Theory Practical
Implications Two-factor Herzberg The factors giving rise to job satisfaction (and motivation) are distinct
from the factors that lead to job dissatisfaction. Any feeling of satisfaction resulting from pay increases

is likely to be short-lived compared with the long-lasting satisfaction from the work itself. Makes a
distinction between intrinsic motivation arising from the work itself and extrinsic motivation provided
by the employer, eg pay. A useful distinction is made between intrinsic and extrinsic motivation that
influences total reward decisions. The limited motivational effects of pay increases are worth
remembering when considering the part contingent pay can play in motivating people.

Motivation theories and their practical implications:

Motivation theories and their practical implications Theory Theorist Summary of Theory Practical
Implications Expectancy Vroom Motivation is likely only when: 1) a clearly perceived and usable
relationship exists between performance and outcome; and 2) the outcome is seen as a means of
satisfying needs. Provides the foundation for good practice in the design and management of
contingent pay. The basis for the concept is the line of sight, which emphasizes the importance of
establishing a clear link between the reward and what has to be done to achieve it.

Motivation theories and their practical implications:

Motivation theories and their practical implications Theory Theorist Summary of Theory Practical
Implications Goal Latham and Locke Motivation and performance are higher when individuals are set
specific goals, when the goals are difficult but accepted, and when there is feedback on performance
Provides a theoretical underpinning for performance management processes to ensure that they
contribute to motivation through goal setting and feedback. Equity Adams People will be better
motivated if they are treated equitably and demotivated if they are treated inequitably. Emphasizes
the need to develop an equitable reward system involving the use of job evaluation

THE KEY MESSAGES OF MOTIVATION THEORY:

THE KEY MESSAGES OF MOTIVATION THEORY The key practical messages delivered by motivation
theory are summarized below. Extrinsic and intrinsic rewards Extrinsic rewards provided by employers
in the form of pay will help to attract and retain employees and, for limited periods, may increase
effort and minimize dissatisfaction. Intrinsic non-financial rewards related to responsibility,
achievement and the work itself may have a longer-term and deeper impact on motivation. Reward
systems should therefore include a mix of extrinsic and intrinsic rewards.

THE KEY MESSAGES OF MOTIVATION THEORY:

THE KEY MESSAGES OF MOTIVATION THEORY The significance of needs People will be better motivated
if their work satisfies their social and psychological needs as well as their economic needs. Needs
theory underpins the concept of total reward, which recognizes the importance of the non-financial
rewards as motivators. Performance management processes provide a basis for redesigning jobs or
roles and for agreeing and implementing development programmes.

The meaning of employee engagement :

The meaning of employee engagement Employee engagement takes place when people are
committed to their work and their employer and are motivated to achieve high levels of performance.
An "engaged employee" is one who is fully involved in, and enthusiastic about, his or her work, and
thus will act in a way that furthers their organization's interests. According to Scarlett Surveys,
"Employee Engagement is a measureable degree of an employee's positive or negative emotional

attachment to their job, colleagues and organization which profoundly influences their willingness to
learn & perform at work".

Employee Engagement:
Employee Engagement The factors that influence engagement Engagement will be affected by, work
and job design the quality of life provided by the working environment the quality of leadership The
role of reward in enhancing engagement A total rewards approach is required to increase engagement.
Financial rewards are insufficient and the major levers are provided by non-financial reward, especially
those provided by intrinsic motivation, the work environment and line managers.

COMMITMENT:
COMMITMENT Commitment Commitment, sometimes referred to as organizational commitment, refers
to identification with the goals and values of the organization, a desire to belong to the organization
and a willingness to display effort on its behalf.

Impact of employee engagement and organizational commitment :

Impact of employee engagement and organizational commitment

MODEL OF FACTORS AFFECTING ENGAGEMENT:

MODEL OF FACTORS AFFECTING ENGAGEMENT

Six steps to enhancing engagement through reward :

Six steps to enhancing engagement through reward 1. Analyse the existing performance culture of the
organization and develop an engagement. 2. Define the drivers of engagement (and disengagement)
for different categories of employees. 3. Assess and define the reward elements that affect
engagement and develop reward programmes that will enhance these different aspects of
engagement. 4. Introduce a total rewards approach that brings together all the reward elements (pay
and non-pay) that engage staff. 5. Segment total reward to take account of key employee differences.
6. Implement the total rewards approach and measure and evaluate its impact and success.

THE PSYCHOLOGICAL CONTRACT DEFINED:

THE PSYCHOLOGICAL CONTRACT DEFINED A psychological contract is a system of beliefs that
encompasses the actions employees believe are expected of them and what response they expect in
return from their employer. It has been defined by Stiles, Gratton and Truss as: The set of reciprocal
expectations between an individual employee and the organization. It is concerned with assumptions,
expectations, promises and mutual obligations. It creates attitudes and emotions that form and
govern behavior.

THE PSYCHOLOGICAL CONTRACT:

THE PSYCHOLOGICAL CONTRACT The psychological contract may provide some indication of the
answers to the two fundamental employment relationship questions that individuals pose: What can I

reasonably expect from the organization? What should I reasonably be expected to contribute in
return?

REWARD MANAGEMENT & PSYCHOLOGICAL CONTRACT:

REWARD MANAGEMENT & PSYCHOLOGICAL CONTRACT The part played by reward management in
developing a positive psychological contract,

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Reward Systems
The use of reward systems within an organization's management practices makes use of the principles
found in expectancy theory and reinforcement theory, two of the many motivational theories employed by
organizations. Expectancy theory examines how employees perceive the relationship between the efforts
they exert and the expected reward for reaching a goal. The higher the level of expectation, the more
motivated an employee becomes. Reinforcement theory uses incentives, such as promotions or pay
raises, as a way to reinforce good job performance. Reinforcement theory also uses negative
reinforcements to discourage poor job performance as well as inappropriate behavior, such as negative
attitudes.

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Sometimes, simply receiving a paycheck is not enough of an incentive to keep employees
dedicated and focused. Managers must think of new ways to hold an employee's attention
and interest on a project, or the company as a whole. Many companies employ motivational
tactics and rewards systems, both of which have advantages and disadvantages.
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Motivation
Companies use both positive reinforcement and negative reinforcement to motivate
employees. Many managers believe that using positive motivation techniques encourages
employees to produce more and better quality work. For example, some companies select
an employee as "Employee of the Week." This technique praises the winning employee,
while positively encouraging other employees to keep trying to do well. Other managers
believe negative reinforcement motivates employees to stop bad behavior. For example, a
company may issue a written-warning system, or threaten employees with termination to
get them to perform a certain way.

Rewards

Companies reward their employees with both tangible goods, as well as praise. For example,
a sales department may offer a monthly bonus to the highest earner. Not all tangible
rewards come in the form of money. Some companies host free lunches, or give away
company gear to good workers. Many managers choose to reward their best employees by
simply praising them for a job well done, or by recognizing the hard work they put in to a
project.

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Explain the relationship between motivation and rewards.

Explain the relationship between motivation and rewards. Bring out the different reward systems
in an organisational setting. Describe the role of financial and non-financial reward system in
improving organisational performance with reference to your organisation or an organisation you
are familiar with. Briefly describe the organisation you are referring to.

Answer. Motivation in simple words may be understood as the set of forces that cause people to behave
in certain ways. It is a process that starts with a physiological deficiency or need that activities
behaviour or a drive that is aimed at a goal or an incentive.

The concept of motivation occupies a central place in the discipline of Organizational Behaviour. It is a
concept, which has received the maximum attention from the academicians and researchers alike.
Since a motivated employee is highly productive and highly quality oriented, the managers are also
interested the concept of motivation.
Most people understand the concept of intrinsic satisfaction or intrinsic motivation, i.e. when an
activity is satisfying or pleasurable in and of itself. Naturally, these activities are things we like and
want to do. For most of us, intrinsically enjoyable activities are things like eating, resting, laughing,
playing games, winning, creating, seeing and hearing beautiful things and people, being held lovingly,
having sex, and so on. To do these things we don't need to be paid, applauded, cheered, thanked,
respected, or anything--commonly we do them for the good feelings we automatically and naturally get
from the activity. Intrinsic rewards also involve pleasurable internal feelings or thoughts, like feeling
proud or having a sense of mastery following studying hard and succeeding in a class.
Many, maybe most, activities are not intrinsically satisfying enough to get most of us to do them
consistently, so extrinsic motivation needs to be applied in the form of rewards (positive
reinforcements), incentives, or as a way to avoid some unpleasant condition ("negative reinforcement"
or punishment). Examples: You work doing an ordinary job for pay. You study for good grades or to
avoid failing or to prepare for a good future. You do housework to get a clean, organized house and/or
a spouse's appreciation or to avoid her/his disapproval. A teenager comes home from a date on time in
order to avoid being grounded. These are all activities that are commonly sustained by external pay
offs, not because you love working, studying, cleaning, and coming home early.
Are rewards, particularly money rewards, really motivators? The answer to this question is YES and NO.

Money is understood to be powerful motivator for more than one reason. In the first place, money is
fundamental for completion of a task. The employee takes pay as the reward for his or her work, and
the employer views it as the price for using the services of the employee. Second, as a medium of
exchange. Third, money is one of the hygiene factors, and improving maintenance factors is the first
step in efforts directed towards motivation. Fourth, money also performs the function of a score card
by which employees assess the value that the organization places on their services and by which
employees can compare their values to others. Fifth, reinforcement and expectancy theories attest to
the value of money as a motivator. Sixth, money acts as a punctuation in ones life. It is an attention
getting and effect producing mechanism. Money, has therefore tremendous importance in influencing
employee behaviour. Seventh, money is easily vulnerable to manipulation. Finally, money will be a
powerful motivator for a person who is tense and anxious about lack o money. But behavioural
scientists think otherwise. They downgrade monetary rewards as a motivator. They prefer, instead,
other techniques such as challenging jobs, goals, participation in decision-making and other nonmonetary rewards for motivating employees.

Types of Reward Systems

The financial rewards are basically of three types:
profit sharing;
job evaluation; and
merit rating.
Profit Sharing
Profit sharing could be on a macro basis or on a micro basis. The former relates to the entire company
as a whole and the latter to a particular section or group dealing with a particular activity and/or
product. On a macro level, it would be difficult to identify and reward outstanding performance. This
is possible on a micro level by treating the particular activity as a cost and profit center by itself. This
is easier said than done, since overheads and other common services have to be charged and this
cannot be done completely objectively. The cost allocation in such cases is somewhat arbitrary and the
profit will therefore not be a true reflection of the performance of that particular group or activity.
Job Evaluation
In case of job evaluation, the various component factors have to be isolated and evaluated for
purposes of inter-job comparison. Each factor is assigned a rating on the basis of a scale agreed
beforehand by the union and the management joint committee. The total rating for each job then
forms the basis of wage structure. However, there must be a base level, representing, in effect, the
'minimum wage', depending on the nature of work and the geographical area. In some cases and in
some countries these are stipulated by law. A typical, though somewhat broad, list of job factors is as
follows:

working environment;
physical characteristics;
mental characteristics;
extent of responsibility;
training and experience.

In case of managers, the factors are:

responsibility;
expertise;
human relations.
Merit Rating
Merit rating has been used as an indicator of performance. Each employee is rated, typically as
excellent, good, average or poor, in respect of the following abilities:
communication;
human relations, including leadership and motivation;
intelligence;
judgment;
knowledge.
The rating, unfortunately, tends to be carried out purely mechanically and it carries a heavy bias of the
rater who may be too lenient, may not be objective and may also have favorites or otherwise in the
group being rated.
I am familiar with Nesco Ltd. Nesco is a leading producer of gas in Italy. At Nesco the following are used
to improve organizational performance.
Financial Rewards
These rewards in organizations help employees to be more committed and motivated to their job and
working environment:
System rewards are automatically given to all employees for merely being members of their
organisation. System rewards can be defined as being the basic wage rates.
Individual rewards are given to employees based on the quality and quantity of their performance.
Performance related pay (PRP) is seen as an individual reward policy, where pay is rewarded in relation
to the volume of output. PRP can cause divisions amongst workers, where employees become more
worried about the fact that their colleagues are being paid more than them.
Growth rewards are received by employees for job innovation, learning and improvement.
The key to managing performance through rewards is linking the desired performance with the
appropriate reward.
Non-financial Rewards
In an ever more competitive environment, the aim of organizations must now be to focus on increasing
the added value of their employees. This is achieved, by encouraging employees to increase their
effort and performance higher than the average standards. This has been carried out using employee
appraisals and motivational methods.
Employers have become increasingly aware of the rich potential for good constructive ideas that exist
from the employees on the job experiences. One method for using this knowledge is through suggestion
schemes, these are becoming highly recognized, as they allow for improvements in all areas of work.
These schemes are very flexible and can be readily adapted to meet all kinds of working conditions.
Suggestion schemes can be seen as a means of increasing profit and worker participation.

Suggestion schemes aim to improve employee attitudes by directing their attention to the positive and
progressive aspects of their jobs. This helps to boost employee morale and increase job satisfaction. It
can be identified that if an employee is unhappy in his/her job it reflects on a negative attitude on
his/her performance and also with other people.
Experience in many companies has shown low employee morale reflects on low productivity and
increasing costly errors. Suggestion schemes play a useful role in increasing and maintaining morale.
Another method which is not related to pay is the performance appraisal system. This method is used
as a means of raising individual performance and identifying development needs. Appraisal systems
today are becoming part of the management culture, where managers feel it necessary to appraise and
be appraised.
Self Rating, this is a form of appraisal where the employee takes a look at themselves, avoiding any
negative feedback from traditional appraisals. Self rating is an effective way of trying to get the
employee to look at what their roles are in relation to business needs.
It is fair to state that employees are not motivated by money alone. Paying different wage rates to
employees doing the same jobs can cause more problems than benefits.
There are other incentives to reward employees, other than financial such as appraisals. Appraisals can
prove to be an effective means for looking at human resources, as they allow us to:
Ensure that the abilities and energies of individuals are being used effectively.
Allow employers to identify better uses of individuals talents and experience.
Training needs can also be identified.
Future decision making as data of abilities can be kept on file for future reference.
Other examples of incentives/motivators include:
Team briefings - Management tell sub-ordinates what needs to be achieved, this opens up the lines of
communication, and makes everyone aware of what needs to be done.
Team buildings - Employees are taken on outings to pursue some systematic group exercises led by a
trainer or time spent on social activities. The logic is to enthuse a team working ethic.
Quality circles - Regular meeting sessions where a group of employees discuss quality related issues.
It can be said that if managers are to be successful, they must focus on strategies that improve the
overall performance of the business by using employees as a vital resource which needs to be nurtured
and not just developing and implementing control systems to fix short term problems.