How are People Motivated to Work?

How are People Motivated to Work?


What is the most important asset that a business may have? The answer to this is usually considered and quoted not as capital, its site, or any other, but as ‘labour’. A workforce that is praised, feels safe, valued, and secure, is proved to be a lot more efficient than one that doesn’t. Firms whose workers are motivated for reasons other than pay and who enjoy their work, are almost certainly going to be a lot better and more efficient than businesses whose aren’t. Among other things, this is attributed to by illness, lateness, and general absenteeism being tenfold lower.

Businesses can motivate workers to do a good job by offering various possible inducements and incentives. A well-motivated worker has conspicuously defined targets and will take the appropriate action that they believe will achieve these goals. So, although money is arguably the biggest incentive, there is a lot more to motivation. Businesses should provide ways for workers to succeed, set-out a structure for promotion, and show that they value their workforce.

Theories of Motivation
There are several respected motivational theories that have been used by countless businesses to employ a successful motivational structure. I have outlined the most important of these below –

Herzberg’s Theory
After conducting numerous and huge surveys, F. Herzberg (1959) constructed a two-dimensional paradigm of factors affecting people's attitudes towards work. He concluded that factors such as company policy, supervision, interpersonal relations, working conditions, and salary are ‘hygiene factors’ as apposed to motivators. According to the theory, the absence of hygiene factors can create job dissatisfaction, but their presence does not necessarily motivate or create satisfaction.

Herzberg also concluded from his data that the motivators were elements that enriched a person’s job. He found that achievement, recognition, the work itself, responsibility, and advancement were the most common motivators (satisfiers). These satisfiers were associated with long-term positive effects in job performance whilst the hygiene factors (dissatisfiers) consistently produced only short-term changes in job attitudes and performance, which quickly fell back to its previous level.

McGregor’s Theories
In his book, ‘The Human Side of Enterprise’ (published 1960), D. McGregor he details two models, theory X and theory Y. Both of his theories were based on different assumptions. I have detailed these below -

Theory X Assumptions:
Because of their dislike for work, most people must be controlled and threatened before they will work hard enough;
The average human prefers to be directed, dislikes responsibility, is unambiguous, and desires security above everything;
These assumptions lie behind most organizational principles today, and give rise both to ‘tough’ management with punishments and tight controls, and ‘soft’ management which aims at harmony at work;
Theory X managers do not give their staff this opportunity so that the employees behave in the expected fashion.

Theory Y Assumptions:
The expenditure of physical and mental effort in work is as natural as play or rest;
Control and punishment are not the only ways to make people work, man will direct himself if he is committed to the aims of the organization;
If a job is satisfying, then the result will be commitment to the organization.
The average man learns, under proper conditions, not only to accept but to seek responsibility;
Imagination, creativity, and ingenuity can be used to solve work problems by a large number of employees;
Under the conditions of modern industrial life, the intellectual potentialities of the average man are only partially utilized.

McGregor believed that the Theory Y model was the more typical example. He believed that if people were treated as if they were Theory Y type workers, then business would be more efficient and better managed. He also believed that workers could be motivated with the sense of a job-well-done, trust, and reliability, just as much as with money.

Maslow’s Theory
As an American psychologist, A. H. Maslow (1908-1970) believed that the reason people worked was to gain certain things. He constructed a ‘hierarchy of needs’ whereby the most basic of needs are at the bottom, and once people have met these needs they move on to the next level up and so forth. I detail each level below –

Level 5 = Self-Actualization
Need for self-fulfilment. Desire to realize your full potential and become the best you are capable of becoming.
Level 4 = Self-Esteem
Need for reputation, prestige, and recognition from others. Contains the desire to feel important, strong and significant.
Level 3 = Love & Relationships
Need to be loved and to love. Includes the desire for affection and belonging.
Level 2 = Your Family & Work
Need to be safe from physical and psychological harm in the present and future, and trust in a predictable future.
Level 1 = Your Body
Need to stay alive! Biological and cultural imperatives to live. Includes having enough healthy food, air, and water to survive.

Motivational Methods
I have listed some of the major methods of motivation –

It is not a good idea to use pay as a motivator because it is only a hygiene factor, as discovered from the motivational theories. The amount of money workers earn in their jobs can be varied to try and make them work harder. There are several ways of paying workers, including – time rate, rate per piece, overtime rate, and bonus payments.

Fringe Benefits
More commonly known as ‘perks’, fringe benefits are a popular way of motivating staff on a salary to work well. These are extra benefits that the worker receives in addition to their regular pay and can include things like company cars, subsidised travel, health insurance, cheap mortgages, and store discounts.

Employers can formally show their staff appreciation in numerous different ways. Schemes such as Investors in People, annual reviews, quality circles, and evaluations and appraisals show employers care and appreciation. Simple things like involving staff in decision making can also help.

Function of Personnel
The firm’s personnel department will make sure that systems are in place so that any problems that may arise do not become out of hand. They will listen to what staff have to say as well as make sure that the staff receive the awards when they do a good job.

Case Study – Tesco – Sharesave Scheme
In 2002, Tesco paid out £50 million to just over 100,000 of its workers after holding £38 million-worth of shares on their behalf for three years in its profit-share scheme.

Since 1999, when the shares were placed in trust for the employees, Tesco's share price had risen by more than 30 per cent, from 188p to 258p when the scheme matured. Employees were able to keep the shares or cash them in.

Staff can join Tesco's profit-share scheme after two years' service. The number of shares allocated to each employee depends on the number of hours they work each week.

During 2002, Tesco, which has 195,000 staff, distributed more than £200 million through sharesave and bonus schemes.

In February 2002, two Save As You Earn share schemes matured and released £116 million to 37,000 staff who had been saving into the schemes for either three or five years.

Savers who had started the scheme three years before could buy Tesco shares at the 1998 option price of £1.36, while savers in the five-year scheme could buy at 83p per share. The shares they bought at these prices were actually worth about £2.35 each.

Those who had saved the maximum £250 per month saw an investment over five years turn into a maturity value of £49,000, a return of almost three times what they put in.

Savers who put away as little as £10 per month saw the value of their investment soar from £600 to £1,953 once the savings had been used to buy shares at the end of the five-year term.

By contrast, if these employees had saved the same £10 per month into a savings account paying the building society average of 4.8 per cent gross per year, each would have £695.96 before tax after five years.

Terry Leahy, chief executive of Tesco, said: "The popularity of SAYE has increased dramatically in 21 years as staff recognise the value of the benefit. The most recent three and five-year schemes to be offered to Tesco staff in October 2001 attracted more than 63,000 applications. This equates to over one in four staff - more than 66 times the 1981 figure when 942 employees signed up for the scheme."

Most large companies operate share-save schemes for their staff. Under government rules, employees can save between £5 and £250 per month into a scheme, which can run for three, five or seven years with an option to buy shares in the company at a price determined at the outset. This price is often the market price at outset, but companies have the right to discount the market price by up to 20 per cent - which Tesco did.

Contributions are paid into a bank or building society account nominated by the employer and interest is paid at a rate set universally by the Treasury. This year, the rates were 3.67 per cent gross per annum for three-year schemes, 3.99 per cent for five-year schemes, and 4.07 per cent for seven-year schemes.

Staff make 36 payments into the three-year scheme, and 60 payments into the five and seven-year schemes. Their savings are left in the deposit account for an extra two years under the seven-year scheme.

At the end of the period, the employee has the right to choose whether to buy the shares at the pre-determined option price with the savings they have made; or, if the current market price has dipped below the price at outset, to take the savings in cash, free of tax, instead.

Source: Extracted from articles in the Daily Telegraph, Independent and Guardian.

Certainly the majority of hastonians that are in the age category of 16 to 26 years will be motivated primarily by money/pay, whilst older and more experienced working hastonians will find other motivators such as ‘appreciation’ more valuable.

I have constructed my hypothesis above based on the motivational theories that I earlier detailed. Primarily I have employed Maslow’s hierarchy of needs to compile the hypothesis – younger people who are just starting out in work will be working to fulfil the first two levels which are critically dependant on money, whilst older and more experienced people will be working for the higher levels (after already satisfying the lower) which are reliant on other motivators.

Primary Data
To try and ascertain whether my hypothesis is accurate, I shall collect some primary data by use of questionnaires. I shall deliberately sample ten people of each age group, so that I can produce accurate results. The age groups I will sample are: 16-22, 23-32, 33-42, 43-52, & 53+. See appendix for completed questionnaires.

Unfortunately, after searching for a considerable amount of time, secondary data appears to be non-existent.