Areas of Knowledge in Human Resource Managements

The areas of knowledge in human resource managements are

1. Industrial Relation
2. Performance Management
3. Organizational Behaviour

Industrial Relation
Industrial relations has become one of the most delicate and complex problems of modern
industrial society. Industrial progress is impossible without cooperation of labors and harmonious
relationships. Therefore, it is in the interest of all to create and maintain good relations between
employees (labor) and employers (management).
industrial

relations

is

increasingly

being

called employment

relations or employee

relations because of the importance of non-industrial employment relationships; [3] this move is
sometimes seen as further broadening of the human resource management trend.[4] Indeed, some
authors now define human resource management as synonymous with employee relations.
Concept of Industrial Relations:
The term Industrial Relations comprises of two terms: Industry and Relations. Industry
refers to any productive activity in which an individual (or a group of individuals) is (are)
engaged. By relations we mean the relationships that exist within the industry between the
employer and his workmen..
The term industrial relations explains the relationship between employees and management
which stem directly or indirectly from union-employer relationship.

Definitions:
The term industrial relations has been variously defined. J.T. Dunlop defines industrial
relations as the complex interrelations among managers, workers and agencies of the
governments.
According to Dale Yoder industrial relations is the process of management dealing with
one or more unions with a view to negotiate and subsequently administer collective
bargaining agreement or labour contract.
The HR Employee Relations Manager directs the organization's employee relations function.
They develop employee relations policies and ensure consistent application of company policies
and procedures. In addition, they are responsible for employee dispute resolution procedures,
performing internal audits, and taking appropriate action to correct any employee relations
issues.
Importance of Industrial Relations:
The healthy industrial relations are key to the progress and success. Their significance may be
discussed as under

Uninterrupted production The most important benefit of industrial relations is that

this ensures continuity of production. This means, continuous employment for all from
manager to workers. The resources are fully utilized, resulting in the maximum possible
production. There is uninterrupted flow of income for all. Smooth running of an industry
is of vital importance for several other industries; to other industries if the products are

intermediaries or inputs; to exporters if these are export goods; to consumers and

workers, if these are goods of mass consumption.

Reduction in Industrial Disputes Good industrial relations reduce the industrial

disputes. Disputes are reflections of the failure of basic human urges or motivations to
secure adequate satisfaction or expression which are fully cured by good industrial
relations. Strikes, lockouts, go-slow tactics, gherao and grievances are some of the
reflections of industrial unrest which do not spring up in an atmosphere of industrial
peace. It helps promoting co-operation and increasing production.

High morale Good industrial relations improve the morale of the employees.
Employees work with great zeal with the feeling in mind that the interest of employer and
employees is one and the same, i.e. to increase production. Every worker feels that he is a
co-owner of the gains of industry. The employer in his turn must realize that the gains of
industry are not for him along but they should be shared equally and generously with his
workers. In other words, complete unity of thought and action is the main achievement of
industrial peace. It increases the place of workers in the society and their ego is satisfied.
It naturally affects production because mighty co-operative efforts alone can produce
great results.

Mental Revolution The main object of industrial relation is a complete mental

revolution of workers and employees. The industrial peace lies ultimately in a
transformed outlook on the part of both. It is the business of leadership in the ranks of
workers, employees and Government to work out a new relationship in consonance with
a spirit of true democracy. Both should think themselves as partners of the industry and

the role of workers in such a partnership should be recognized. On the other hand,
workers must recognize employers authority. It will naturally have impact on production
because they recognize the interest of each other.

Reduced Wastage Good industrial relations are maintained on the basis of cooperation
and recognition of each other. It will help increase production. Wastage of man, material
and machines are reduced to the minimum and thus national interest is protected.

Thus, it is evident that good industrial relations is the basis of higher production with minimum
cost and higher profits. It also results in increased efficiency of workers. New and new projects
may be introduced for the welfare of the workers and to promote the morale of the people at
work. An economy organized for planned production and distribution, aiming at the realization
of social justice and welfare of the massage can function effectively only in an atmosphere of
industrial peace. If the twin objectives of rapid national development and increased social justice
are to be achieved, there must be harmonious relationship between management and labor.
Objectives of Industrial Relations:
The main objectives of industrial relations system are:

To safeguard the interest of labor and management by securing the highest level of
mutual understanding and good-will among all those sections in the industry which
participate in the process of production.

To avoid industrial conflict or strife and develop harmonious relations, which are an
essential factor in the productivity of workers and the industrial progress of a country.

To raise productivity to a higher level in an era of full employment by lessening the

tendency to high turnover and frequency absenteeism.

To establish and promote the growth of an industrial democracy based on labor

partnership in the sharing of profits and of managerial decisions, so that ban individuals
personality may grow its full stature for the benefit of the industry and of the country as
well.

To eliminate or minimize the number of strikes, lockouts and gheraos by providing

reasonable wages, improved living and working conditions, said fringe benefits.

To improve the economic conditions of workers in the existing state of industrial

managements and political government.

Socialization of industries by making the state itself a major employer

Vesting of a proprietary interest of the workers in the industries in which they are
employed.
THE PARTIES TO INDUSTRIAL RELATIONS

The parties to industrial relations are:

the trade unions;
shop stewards or employee representatives;
the Trades Union Congress (the TUC);
management;
employers organizations;
various institutions, agencies and officers.
The role of each of these parties is summarized below

The trade unions

Traditionally the fundamental purpose of trade unions is to promote and protect the interests of
their members. They are there to redress the balance of power between employers and
employees. The basis of the employment relationship is the contract of employment. But this is
not a contract between equals. Employers are almost always in a stronger position to dictate the
terms of the contract than individual employees. Trade unions, as indicated by Freeman and
Medoff (1984), provide workers with a collective voice to make their wishes known to
management and thus bring actual and desired conditions closer together. This applies not only to
terms of employment such as pay, working hours and holidays, but also to the way in which
individuals are treated in such aspects of employment as the redress of grievances, discipline and
redundancy. Trade unions also exist to let management know that there will be, from time to
time, an alternative view on key issues affecting employees. More broadly, unions may see their
role as that of participating with management on decision making on matters affecting their
members interests.
Within this overall role, trade unions have had two specific roles, namely to secure, through
collective bargaining, improved terms and conditions for their members, and to provide
protection, support and advice to their members as individual employees.
An additional role, that of providing legal, financial and other services to their members, has
come into prominence more recently.

Trade union structure

Trade unions are run by full-time central and, usually, district officials. There may be local
committees of members. National officials may conduct industry-wide or major employer pay

negotiations while local officials may not be involved in plant negotiations unless there is a
failure to agree and the second stage of a negotiating procedure is invoked. Major employers
who want to introduce significant changes in agreements or working arrangements may deal
direct with national officials. The trade union movement is now dominated by the large general
unions and the merged craft and public service unions.
Shop stewards
Shop stewards or employee representatives may initially be responsible for plant negotiations,
probably with the advice of full-time officials. They will certainly be involved in settling
disputes and resolving collective grievances and in representing individual employees with
grievances or over disciplinary matters. They may be members of joint consultative committees,
which could be wholly or partly composed of trade union representatives. At one time, shop
stewards were the ogres of the industrial relations scene. Undoubtedly there were cases of
militant shop stewards, but where there are recognized trade unions, managements have
generally recognized the value of shop stewards as points of contact and channels of
communication.
The Trades Union Congress (TUC)
The TUC acts as the collective voice of the unions. Its roles are to:
conduct research and develop policies on trade union, industrial, economic and social
matters and to campaign actively for them;
regulate relationships between unions;
help unions in dispute;
provide various services (eg research) to affiliated unions.
The role of management
The balance of power has undoubtedly shifted to managements who now have more choice over
how they conduct relationships with their employees. But the evidence is that there has been no

concerted drive by managements to de-recognize unions. As Kessler and Bayliss (1992) point
out: If managers in large establishments and companies wanted to make changes they looked at
ways of doing so within the existing arrangements and if they could produce the goods they used
them. Because managers found that the unions did not stand in their way they saw no reason for
getting rid of them. They argued that managements industrial relations objectives are now
generally to:
control the work process;
secure cost-effectiveness;
reassert managerial authority;
move towards a more unitary and individualistic approach.
As Storey (1992a) found in most of the cases he studied, there was a tendency for managements
to adopt HRM approaches to employee relations while still coexisting with the unions. But they
gave increasing weight to systems of employee involvement, in particular communication, which
bypass trade unions.

Employers organizations
Traditionally, employers organizations have bargained collectively for their members with trade
unions and have in general aimed to protect the interests of those members in their dealings with
unions. Multi-employers or industry-wide bargaining, it was believed, allowed companies to
compete in product markets without undercutting their competitors employment costs and
prevented the trade unions picking off individual employers in a dispute. The trend towards
decentralizing bargaining to plant level has reduced the extent to which employers organizations
fulfil this traditional role, although some industries such as building and electrical contracting
with large numbers of small companies in competitive markets have retained their central
bargaining function, setting a floor of terms and conditions for the industry.

Performance Management
Performance management is the systematic process by which an agency involves its employees,
as individuals and members of a group, in improving organizational effectiveness in the
accomplishment of agency mission and goals.
Employee performance management includes: planning work and setting expectations,
continually monitoring performance,

developing the

capacity

to

perform,

periodically rating performance in a summary fashion, and rewarding good performance.

Planning
In an effective organization, work is planned out in advance. Planning means setting
performance expectations and goals for groups and individuals to channel their efforts toward
achieving organizational objectives. Getting employees involved in the planning process will
help them understand the goals of the organization, what needs to be done, why it needs to be
done, and how well it should be done.
The regulatory requirements for planning employees' performance include establishing the
elements and standards of their performance appraisal plans. Performance elements and
standards should be measurable, understandable, verifiable, equitable, and achievable. Through
critical elements, employees are held accountable as individuals for work assignments or
responsibilities. Employee performance plans should be flexible so that they can be adjusted for
changing program objectives and work requirements. When used effectively, these plans can be
beneficial working documents that are discussed often, and not merely paperwork that is filed in
a drawer and seen only when ratings of record are required.

Monitoring
In an effective organization, assignments and projects are monitored continually. Monitoring
well means consistently measuring performance and providing ongoing feedback to employees
and work groups on their progress toward reaching their goals.
Regulatory requirements for monitoring performance include conducting progress reviews with
employees where their performance is compared against their elements and standards. Ongoing
monitoring provides the opportunity to check how well employees are meeting predetermined
standards and to make changes to unrealistic or problematic standards. And by monitoring
continually, unacceptable performance can be identified at any time during the appraisal period
and assistance provided to address such performance rather than wait until the end of the period
when summary rating levels are assigned.

Developing
In an effective organization, employee developmental needs are evaluated and addressed.
Developing in this instance means increasing the capacity to perform through training, giving
assignments that introduce new skills or higher levels of responsibility, improving work
processes, or other methods. Providing employees with training and developmental opportunities
encourages good performance, strengthens job-related skills and competencies, and helps
employees keep up with changes in the workplace, such as the introduction of new technology.

Carrying out the processes of performance management provides an excellent opportunity to

identify developmental needs. During planning and monitoring of work, deficiencies in
performance become evident and can be addressed. Areas for improving good performance also
stand out, and action can be taken to help successful employees improve even further.
Rating
From time to time, organizations find it useful to summarize employee performance. This can be
helpful for looking at and comparing performance over time or among various employees.
Organizations need to know who their best performers are.
Within the context of formal performance appraisal requirements, rating means evaluating
employee or group performance against the elements and standards in an employee's
performance plan and assigning a summary rating of record. The rating of record is assigned
according to procedures included in the organization's appraisal program. It is based on work
performed during an entire appraisal period. The rating of record has a bearing on various other
personnel actions, such as granting within-grade pay increases and determining additional
retention service credit in a reduction in force.
Note:
Although group performance may have an impact on an employee's summary rating, a rating of
record is assigned only to an individual, not to a group.

Rewarding
In an effective organization, rewards are used well. Rewarding means recognizing employees,
individually and as members of groups, for their performance and acknowledging their
contributions to the agency's mission. A basic principle of effective management is that all

behavior is controlled by its consequences. Those consequences can and should be both formal
and informal and both positive and negative.
Good performance is recognized without waiting for nominations for formal awards to be
solicited. Recognition is an ongoing, natural part of day-to-day experience. A lot of the actions
that reward good performance like saying "Thank you" don't require a specific regulatory
authority. Nonetheless, awards regulations provide a broad range of forms that more formal
rewards can take, such as cash, time off, and many nonmonetary items. The regulations also
cover a variety of contributions that can be rewarded, from suggestions to group
accomplishments.

Managing Performance Effectively

In effective organizations, managers and employees have been practicing good performance
management naturally all their lives, executing each key component process well. Goals are set
and work is planned routinely. Progress toward those goals is measured and employees get
feedback. High standards are set, but care is also taken to develop the skills needed to reach
them. Formal and informal rewards are used to recognize the behavior and results that
accomplish the mission. All five component processes working together and supporting each
other achieve natural, effective performance management.

PERFORMANCE MANAGEMENT AS A PROCESS

Performance management should be regarded as a flexible process, not as a system.
The use of the term system implies a rigid, standardized and bureaucratic approach that is
inconsistent with the concept of performance management as a flexible and evolutionary, albeit

coherent, process that is applied by managers working with their teams in accordance with the
circumstances in which they operate. As such, it involves managers and those whom they
manage acting as partners, but within a framework that sets out how they can best work together.

PERFORMANCE MANAGEMENT AS A CYCLE

Performance management can be described as a continuous self-renewing cycle, as illustrated in
Figure below

PERFORMANCE AGREEMENTS
Performance agreements form the basis for development, assessment and feedback in the
performance management process. They define expectations in the form of a role profile that sets
out role requirements in terms of key result areas and the competencies required for effective
performance. The role profile provides the basis for agreeing objectives and methods of
measuring performance and assessing the level of competency reached. The performance
agreement incorporates any performance improvement plans that may be necessary, and a

personal development plan. It describes what individuals are expected to do but also indicates
what support they will receive from their manager.
Performance agreements emerge from the analysis of role requirements and the performance
review. An assessment of past performance leads to an analysis of future requirements. The two
processes can take place at the same meeting.
Defining role requirements
The foundation for performance management is a role profile that defines the role in terms of the
key results expected, what role holders need to know and be able to do (competencies), and how
they are expected to behave in terms of behavioural competencies and upholding the
organizations core values. Role profiles need to be updated every time a formal performance
agreement is developed

Objectives
Objectives describe something that has to be accomplished. Objective setting that results in an
agreement on what the role holder has to achieve is an important part of the performance
management processes of defining and managing expectations, and forms the point of reference
for performance reviews.

Types of objectives
The different types of objectives are:
On-going role or work objectives all roles have built-in objectives that may be expressed as
key result areas in a role profile.

 Targets these define the quantifiable results to be attained as measured in such terms as
output, throughput, income, sales, levels of service delivery, cost reduction, reduction of reject
rates.
Tasks/projects objectives can be set for the completion of tasks or projects by a specified date
or to achieve an interim result.
Behaviour behavioural expectations are often set out generally in competency frameworks
but they may also be defined individually under the framework headings. Competency
frameworks may deal with areas of behaviour associated with core values, for example
teamwork, but they often convert the aspirations contained in value statements into more specific
examples of desirable and undesirable behaviour, which can help in planning and reviewing
performance.

Measuring performance in achieving objectives

Measurement is an important concept in performance management. It is the basis for providing
and generating feedback, it identifies where things are going well to provide the foundations for
building further success, and it indicates where things are not going so well, so that corrective
action can be taken.
Measuring performance is relatively easy for those who are responsible for achieving quantified
targets, for example sales. It is more difficult in the case of knowledge workers, for example
scientists. But this difficulty is alleviated if a distinction is made between the two forms of results
outputs and outcomes.

An output is a result that can be measured quantifiably, while an outcome is a visible effect that
is the result of effort but cannot necessarily be measured in quantified terms.
There are components in all jobs that are difficult to measure quantifiably as outputs. But all jobs
produce outcomes even if they are not quantified. It is therefore often necessary to measure
performance by reference to what outcomes have been attained in comparison with what
outcomes were expected, and the outcomes may be expressed in qualitative terms as a standard
or level of competency to be attained.
That is why it is important when agreeing objectives to answer the question: How will we know
that this objective has been achieved? The answer needs to be expressed in the form: Because
such and such will have happened. The such and such will be defined either as outputs in such
forms as meeting or exceeding a quantified target, completing a project or task satisfactorily
(satisfactory having been defined), or as outcomes in such forms as reaching an agreed standard
of performance, or delivering an agreed level of service.
However, when assessing performance it is also necessary to consider inputs in the shape of the
degree of knowledge and skill attained and behaviour that is demonstrably in line with the
standards set out in competency frameworks and statements of core values. Behaviour cannot be
measured quantitatively but it can be assessed against definitions of what constitutes good and
not so good behaviour, and the evidence that can be used to make that assessment can be
identified.
506 Performance management
Use of performance measures
The CIPD survey of performance management in 2003 (Armstrong and Baron, 2004) revealed
that in order of importance, the following performance measures were used by the respondents:

1. Achievement of objectives.
2. Competence.
3. Quality.
4. Contribution to team.
5. Customer care.
6. Working relationships.
7. Productivity.
8. Flexibility.
9. Skills/learning targets.
10. Aligning personal objectives with organizational goals.
11. Business awareness.
12. Financial awareness.
Performance planning
The performance planning part of the performance management sequence involves
agreement between the manager and the individual on what the latter needs to do to
achieve objectives, raise standards, improve performance and develop the required
competencies. It also establishes priorities the key aspects of the job to which attention
has to be given. The aim is to ensure that the meaning of the objectives, performance
standards and competencies as they apply to everyday work is understood.
They are the basis for converting aims into action.
Agreement is also reached at this stage on how performance will be measured and
the evidence that will be used to establish levels of competence. It is important that
these measures and evidence requirements should be identified and fully agreed now

because they will be used by individuals as well as managers to monitor and demonstrate
achievements.
REVIEWING PERFORMANCE
Although performance management is a continuous process it is still necessary to have a formal
review once or twice yearly. This provides a focal point for the consideration of key performance
and development issues. This performance review meeting is the means through which the five
primary performance management elements of agreement, measurement, feedback, positive
reinforcement and dialogue can be put to good use.
The review should be rooted in the reality of the employees performance. It is concrete, not
abstract and it allows managers and individuals to take a positive look together at how
performance can become better in the future and how any problems in meeting performance
standards and achieving objectives can be resolved.
Individuals should be encouraged to assess their own performance and become active agents for
change in improving their results. Managers should be encouraged to adopt their proper enabling
role: coaching and providing support and guidance.
There should be no surprises in a formal review if performance issues have been dealt with as
they should have been as they arise during the year. Traditional appraisals are often no more
than an analysis of where those involved are now, and where they have come from. This static
and historical approach is not what performance management is about. The true role of
performance management is to look forward to what needs to be done by people to achieve the
purpose of the job, to meet new challenges, to make even better use of their knowledge, skills
and abilities, to develop their capabilities by establishing a self-managed learning agenda, and to
reach agreement on any areas where performance needs to be improved and how that

improvement should take place. This process also helps managers to improve their ability to
lead, guide and develop the individuals and teams for whom they are responsible.

DEALING WITH UNDER-PERFORMERS

The improvement of performance is a fundamental part of the continuous process of
performance management. The aim should be the positive one of maximizing high performance,
although this involves taking steps to deal with under-performance.
When managing under-performers, remember the advice given by Handy (1989) that this should
be about applauding success and forgiving failure. He suggests that mistakes should be used as
an opportunity for learning something only possible if the mistake is truly forgiven because
otherwise the lesson is heard as a reprimand and not as an offer of help.
When dealing with poor performers, note should be made of the following comments by Risher
(2003): Poor performance is best seen as a problem in which the employer and management are
both accountable. In fact, one can argue that it is unlikely to emerge if people are effectively
managed. This is another way of putting the old Army saying: There are no bad soldiers, only
bad officers.
Managing under-performers is therefore a positive process that is based on feedback throughout
the year and looks forward to what can be done by individuals to overcome performance
problems and, importantly, how managers can provide support and help.
The five basic steps required to manage under-performers are as follows.
1. Identify and agree the problem.

2. Establish the reason(s) for the shortfall.

3. Decide and agree on the action required.
4. Resource the action.
5. Monitor and provide feedback.

Organizational Behaviour
Organizational behavior (OB) or organisational behaviour is "the study of human behavior in
organizational settings, the interface between human behavior and the organization, and the
organization itself. Organizational behavior refers to the way individuals and groups interact
within and toward an organization. The combined behaviors create a company climate that can
bolster or undermine an organization's success. Operating from within a company's system, both
management and staff might have difficulty recognizing patterns of behavior and also how
profoundly those patterns can influence a company's performance. To make sure that influence is
positive, leaders must help others grasp the importance of organizational behaviors so that
everyone involved in a company's future can better understand and shape the internal conditions
of an organization.
To manage people effectively, it is necessary to understand the factors that affect how people
behave at work. This means taking into account the fundamental characteristics of people as
examined in this chapter under the following headings:

 individual differences as affected by peoples abilities, intelligence, personality, background

and culture, gender and race;
attitudes causes and manifestations;
influences on behaviour personality and attitudes;
attribution theory how we make judgements about people;
orientation the approaches people adopt to work;
roles the parts people play in carrying out their work.

INDIVIDUAL DIFFERENCES
The management of people would be much easier if everyone were the same, but they are, of
course, different because of their ability, intelligence, personality, background and culture (the
environment in which they were brought up), as discussed below. Gender, race and disability are
additional factors to be taken into account.
Importantly, the needs and wants of individuals will also differ, often fundamentally, and this
affects their motivation.The headings under which personal characteristics can vary have been
classified by Mischel (1981) as follows:
competencies abilities and skills;
constructs the conceptual framework which governs how people perceive their
environment;
expectations what people have learned to expect about their own and others behaviour;
values what people believe to be important;

 self-regulatory plans the goals people set themselves and the plans they make to achieve
them.
Environmental or situational variables include the type of work individuals carry out; the culture,
climate and management style in the organization, the social group within which individuals
work; and the reference groups that individuals use for comparative purposes (eg comparing
conditions of work between one category ofemployee and another).
Ability

Personality
As defined by Toplis et al (1991), the term personality is all-embracing in terms of the
individuals behaviour and the way it is organized and coordinated when he or she interacts with
the environment. Personality can be described in terms of traits or types.
The trait concept of personality
Personality can be defined as the relatively stable and enduring aspects of individuals that
distinguish them from other people. This is the trait concept, traits being predis- positions to
behave in certain ways in a variety of different situations. The assumption that people are
consistent in the ways they express these traits is the basis for making predictions about their
future behaviour. We all attribute traits to people in an attempt to understand why they behave in
the way they do. As Chell (1987) says: This cognitive process gives a sense of order to what
might otherwise appear to be senseless uncoordinated behaviours. Traits may therefore be

thought of as classification systems, used by individuals to understand other peoples and their
own behaviour.
The so-called big five personality traits as defined by Deary and Matthews (1993) are:
neuroticism anxiety, depression, hostility, self-consciousness, impulsiveness, vulnerability;
extraversion warmth, gregariousness, assertiveness, activity, excitement seeking, positive
emotions;
openness feelings, actions, ideas, values;
agreeableness trust, straightforwardness, altruism, compliance, modesty, tendermindedness;
conscientiousness competence, order, dutifulness, achievement-striving, selfdiscipline,
deliberation.

Motivation
All organizations are concerned with what should be done to achieve sustained high levels of
performance through people. This means giving close attention to how individuals can best be
motivated through such means as incentives, rewards, leadership and, importantly, the work they
do and the organization context within which they carry out that work. The aim is to develop
motivation processes and a work environment that will help to ensure that individuals deliver
results in accordance with the expectations of management.
Motivation theory examines the process of motivation. It explains why people at work behave in
the way they do in terms of their efforts and the directions they are taking. It describes what
organizations can do to encourage people to apply their efforts and abilities in ways that will
further the achievement of the organizations goals as well as satisfying their own needs. It is
also concerned with job satisfaction the factors that create it and its impact on performance.

In understanding and applying motivation theory, the aim is to obtain added value through
people in the sense that the value of their output exceeds the cost of generating it. This can be
achieved through discretionary effort. In most if not all roles there is scope for individuals to
decide how much effort they want to exert. They can do just enough to get away with it, or they
can throw themselves into their work anddeliver added value. Discretionary effort can be a key
component in organizational performance.
THE PROCESS OF MOTIVATION
What is motivation? A motive is a reason for doing something. Motivation is concerned with the
factors that influence people to behave in certain ways. The three components of motivation as
listed by Arnold et al (1991) are:
direction what a person is trying to do;
effort how hard a person is trying;
persistence how long a person keeps on trying.
Motivating other people is about getting them to move in the direction you want them to go in
order to achieve a result. Motivating yourself is about setting the direction independently and
then taking a course of action which will ensure that you get there. Motivation can be described
as goal-directed behaviour. People are motivated when they expect that a course of action is
likely to lead to the attainment of a goal and a valued reward one that satisfies their needs.
Well-motivated people are those with clearly defined goals who take action that they expect will
achieve those goals. Such people may be self-motivated, and as long as this means they are going
in the right direction to achieve what they are there to achieve, then this is the best form of
motivation. Most people, however, need to be motivated to a greater or lesser degree. The
organization as a whole can provide the context within which high levels of motivation can be

achieved by providing incentives and rewards, satisfying work, and opportunities for learning
and growth. But managers still have a major part to play in using their motivating skills to get
people to give of their best, and to make good use of the motivational processes provided by the
organization. To do this it is necessary to understand the process of motivation how it works
and the different types of motivation that exist.
A needs-related model of the process of motivation suggests that motivation is initiated by the
conscious or unconscious recognition of unsatisfied needs. These needs create wants, which are
desires to achieve or obtain something. Goals are then established which it is believed will
satisfy these needs and wants and a behaviour pathway is selected which it is expected will
achieve the goal.
If the goal is achieved, the need will be satisfied and the behaviour is likely to be repeated the
next time a similar need emerges. If the goal is not achieved, the same action is less likely to be
repeated. This process of repeating successful behaviour or actions is called reinforcement or the
law of effect (Hull, 1951). It has, however, been criticised by Allport (1954) as ignoring the
influence of expectations and therefore constituting hedonism of the past.
TYPES OF MOTIVATION
Motivation at work can take place in two ways. First, people can motivate themselves by
seeking, finding and carrying out work (or being given work) that satisfies their needs or at least
leads them to expect that their goals will be achieved. Secondly, people can be motivated by
management through such methods as pay, promotion, praise, etc.
There are two types of motivation as originally identified by Herzberg et al (1957):
Intrinsic motivation the self-generated factors that influence people to behave in a particular
way or to move in a particular direction. These factors include responsibility (feeling that the

work is important and having control over ones own resources), autonomy (freedom to act),
scope to use and develop skills and abilities, interesting and challenging work and opportunities
for advancement.
Extrinsic motivation what is done to or for people to motivate them. This includes rewards,
such as increased pay, praise, or promotion, and punishments, such as disciplinary action,
withholding pay, or criticism.
Extrinsic motivators can have an immediate and powerful effect, but it will not necessarily last
long. The intrinsic motivators, which are concerned with the quality of working life (a phrase
and movement that emerged from this concept), are likely to have a deeper and longer-term
effect because they are inherent in individuals and not imposed from outside.
MOTIVATION THEORY
Approaches to motivation are underpinned by motivation theory. The most influential
theories are classified as follows:
Instrumentality theory, which states that rewards or punishments (carrots or sticks) serve as the
means of ensuring that people behave or act in desired ways.
Content theory, which focuses on the content of motivation. It states that motivation is
essentially about taking action to satisfy needs, and identifies the main needs that influence
behaviour. Needs theory was originated by Maslow (1954), and in their two-factor model,
Herzberg et al (1957) listed needs which they termed satisfiers.
Process theory, which focuses on the psychological processes which affect motivation, by
reference to expectations (Vroom, 1964), goals (Latham and Locke, 1979)and perceptions of
equity (Adams, 1965).
MOTIVATION AND MONEY

Money, in the form of pay or some other sort of remuneration, is the most obvious extrinsic
reward. Money provides the carrot that most people want.
Doubts have been cast by Herzberg et al (1957) on the effectiveness of money because, they
claimed, while the lack of it can cause dissatisfaction, its provision does not result in lasting
satisfaction. There is something in this, especially for people on fixed salaries or rates of pay
who do not benefit directly from an incentive scheme.
They may feel good when they get an increase; apart from the extra money, it is a highly tangible
form of recognition and an effective means of helping people to feel that they are valued. But
this feeling of euphoria can rapidly die away. Other dissatisfactions from Herzbergs list of
hygiene factors, such as working conditions or the quality of management, can loom larger in
some peoples minds when they fail to get the satisfaction they need from the work itself.
However, it must be re-emphasized that different people have different needs and wants and
Herzbergs two-factor theory has not been validated. Some will be much more motivated by
money than others. What cannot be assumed is that money motivates everyone in the sameway
and to the same extent. Thus it is naive to think that the introduction of a performance-related
pay (PRP) scheme will miraculously transform everyone overnight into well-motivated, highperforming individuals.
Nevertheless, money provides the means to achieve a number of different ends. It is a powerful
force because it is linked directly or indirectly to the satisfaction of many needs. It clearly
satisfies basic needs for survival and security, if it is coming in regularly. It can also satisfy the
need for self-esteem (as noted above, it is a visible mark of appreciation) and status money can
set you in a grade apart from your fellows and can buy you things they cannot to build up your

prestige. Money satisfies the less desirable but still prevalent drives of acquisitiveness and
cupidity.
Money may in itself have no intrinsic meaning, but it acquires significant motivating power
because it comes to symbolize so many intangible goals. It acts as a symbol in different ways for
different people, and for the same person at different times. As noted by Goldthorpe et al (1968)
from their research into the affluent worker, pay is the dominant factor in the choice of
employer and considerations of pay seem most powerful in binding people to their present job.
Do financial incentives motivate people? The answer is yes, for those people who are strongly
motivated by money and whose expectations that they will receive a financial reward are high.
But less confident employees may not respond to incentives that they do not expect to achieve. It
can also be argued that extrinsic rewards may erode intrinsic interest people who work just for
money could find their tasks less pleasurable and may not, therefore, do them so well. What we
do know is that a multiplicity of factors are involved in performance improvements and many of
those factors are interdependent.
Money can therefore provide positive motivation in the right circumstances, not only because
people need and want money but also because it serves as a highly tangible means of
recognition. It can also be argued that money may be an important factor in attracting people to
organizations and is one of the factors that will influence their retention. But badly designed and
managed pay systems can demotivate.
Another researcher in this area was Jaques (1961), who emphasized the need for such systems to
be perceived as being fair and equitable. In other words, the reward should be clearly related to
effort or level of responsibility and people should not receive less money than they deserve
compared with their fellow workers. Jaques called this the felt-fair principle.