Motivation Theory Application In Financial and Nonfinancial Reward System


In the human resources management field, motivation as a subject can be described as one of the most studied subjects which continues to elicit exceptional attention. Motivation is variably described as the driver of all human activity, in reality, everything that contributes to any form of animal behavior can be traced back to certain motivational factors, real or imagined. Various schools of thought in motivational theories have forwarded that all major human activities have been deeply rooted in the inherent need to maximize pleasure with a resultant minimization of any form of pain.

Achievement in the business industry is one of the major, if not the concern in the business society. However, people will be better and easily motivated if their work satisfies their social and psychological needs and as well as economic needs. Work motivation is defined “as a broad construct pertaining to the conditions and processes that account for the arousal, direction, magnitude and maintenance of effort in a person’s job.”(Raymond & Donna 1990).

The main purpose of the reward system is to support the achievement of corporate objectives by motivating people to join the organization. This may raise many questions on the manner and the type of reward. Money may help in attracting people and as well motivate them, but this does not work for all the people all the time. (Armstrong 2004). This makes the dependency on money as the sole motivator to be misguiding and appropriate. To support this, money needs to be supported with a non-financial motivator and also a recognition scheme as reinforcement. This makes the motor more powerful and long-lasting making the “financial and non-financial motivators to be more reinforcing.” (Hollyforde & Whiddett 2002).

Financial rewards include the use of bonuses and fringe benefits and the non-financial benefits involve the use of recognition schemes and employee of the month schemes. Whichever the case, the reward should help in reflecting the difference in the future and the past influences, whether to encourage the future motivation or it is to reflect the past achievements. In my study, I endeavor to examine the different theories and their application on the subject of motivation. (Mowen 2000).

Theories of Work Motivation

There are various theories on motivation of workers with their various views that include certain behavioral perspectives, better payment of workers and disciplining of those who fail to meet certain goals.( Steinmetz 1983). In contrast, this led to the notion that the success of a worker is dependent on his emotional state. Through the intensive research that has been carried out in this field, the use of incentives and disincentives also has a great effect on the performance of an individual. (Raymond & Donna 1990).

There are the various theories that try to investigate and discuss the work motivation but I will cover just a few of them. The list is not exhaustive.

The Adam’s Equity Theory

This theory is based on the subjective judgments on the fairness of output in comparison with one’s inputs and also in relation to the others. Adams G.P (1963) theorized that the employees tend to compare the ratio of their inputs to the outcomes, whether financial or non-financial with the inputs and outputs of another group of people working in the same industry and performing similar jobs. The level of equality then determines the degree of performance for the workers. If the degree of equality is almost equal, the workers’ perception is on the higher side than in the opposite case. (Lee 1990).

When the level of inequality is distinct, the employees become dissatisfied and they try to make it equal through the reduction of their level of input and the outcomes. Under-payment has a more harsh impact than overpayment, where in cases of underpayment, the employees respond with the reduction of both the quality and quantity of the work done. (Goldthorpe 1968). In the case of overpayment, or equitability, there is the tendency of quality work and optimum performance. The workers feel motivated and are ready to continue with the level of output. (Sears et al 2006).

As a result, Adams concluded that people will be more motivated if they are treated equitably and de-motivated if they are treated inequitably. This calls for the development of an equitable reward system involving the use of job evaluation. (Armstrong 2007).

The major failure of this theory is that people may overestimate their participation and the success of the others. The worker may tolerate some inequality for some time but in the long term, they are offended by very minor events. This may result in a worker leaving his job on question for late arrival. From practical perspective, this is a result of the prolonged inequality that causes the comparisons to the outcomes.( Reiss 2000).

Douglas McGregor: Theory X and Theory Y

IN 1960, McGregor worked on the expansion of the Maslow’s work in the description of the behavior of the management team in relationship with their employees in the command chain. In his work, he distinguished this into two approaches namely Theory X and Theory Y.( Weightman 2008).

Theory X types of managers are very pessimistic and view the employees as full of laziness. They also consider them as uninterested in working where they are always in need of supervision and direction in order for them to successfully and effectively handle their duties and tasks. As a result, these type of managers view their employees as very irresponsible and their major role is the job security regardless of the performance. ( Bogardus 2009).

On the other side, Theory Y group of managers believe that every individual employee can achieve any task if he was allowed to do so. They view that people would seek the challenging tasks and increments in responsibilities provided the type of tasks they are working on are satisfying. (Hofstede 1984). As a result, these type of managers allows for the dissemination of the decision-making process down the chain and are more likely to request for the participation of workers in solving a particular problem. (Sudan 2004).

Herzberg Motivation/ Hygiene Theory

The Herzberg motivation theory is also called the two-factor theory. In his work, Helzberg studied the job attitudes in the 1950s. At the beginning of his study, he believed that the causes of job dissatisfaction and those of satisfaction are directly related. As he proceeded with the studying, going through the various archives on the topic, his attitude became vague. He came across numerous results that at last, he was in confusion and unable to draw a convictive conclusion. (Miller 2009).

He later worked on the study through the use of interviewing where he requested the respondents on the positive and negative feelings of their work experiences. (Miller 2009). He was able to realize that the factors of job satisfaction are very different from those of job dissatisfaction. He concluded that “what makes people happy is what they do or the way they are utilized, and what makes people unhappy is the way they are treated.” (Hofstede 1984).

However, both of the factors help in the motivation of the workers but their reasons for working are different. He grouped the motivation factors into two major groups, one for the motivation factors and the other for the dissatisfaction factors. (Robbins 2007). The nature and efficiency of the work can be changed by the use of motivation factors. These help in challenging the workers in the development of their talents and fulfillment of their potential. In this case, repetitive tasks that are boredom including the secretaries and the receptionist can be improved by adding motivation factors to the worker including the provision of learning opportunities. (Koontz 2008).

The dissatisfaction (hygiene) factors work to eliminate the unpleasant experiences by offering the workers other means of avoiding them. Some motivators including the increase in pay and other hygiene factors are short-term but the work satisfaction in itself is long-term.

As a result, the theory had a major concept on job enrichment through the effective use of the rewards where the rewards decision should be made using very useful distinction considering the motivation factor. (Miller 2009).

The Helzberg theory is on quest that he was prejudicing his results. This is considering that people are proud of their positive achievements in life as their own personal efforts and blaming others for their failures has constantly questioned this theory.

The Hierarchy of Needs Theory

This theory was developed by Abraham Maslow to help in explaining how the people meet their needs using their work. The theory describes the personal needs beginning with the basic needs. He considered the needs in an ascending order beginning with the major needs and as one achieves the need it no longer acts as a motivator. ( Wahba 1976).

Psychological needs are the major needs for the survival of a human being. These needs are aimed at sustaining the human life and they include food, clothing, water and housing. In this case, he argued that not until these needs are available to satisfaction, the level of motivation for the other needs will remain low. (Deci, 1985). There are also the safety and security needs. On top of securing oneself a place to live there is the need to sustain them. As a result, the employee is always in fight for the security from losing the job, housing or the shortage of food. ( Wahba 1976). There are social needs. In the society, there are the different social economic classes and there is always the need to retaining one’s social class. This would also allow them to be acceptable in the society by others. (Koontz 2008).

Fourth, according to Maslow, there is the need for personal esteem. On satisfying the personal needs of living, the people also require the self-esteem and also with others. This allows the individual to be objective in the society and to acquire self-confidence and other prestigious satisfactions. (Hofstede 1984). This is through the recognition of the achievements in life. Lastly, there is the need for the self-actualization. This need arises when one has fully acquired the other needs and the individual becomes motivated by eth opportunities and becomes creative in readiness to fulfillment of the potentials. The individuals now believe in themselves and look forward to achieving their best through exercising all their capabilities. ( Wahba 1976).

However, the hierarchy of needs theory has been under scrutiny with various authors disagreeing with it. Edward Lawler conducted a research on one hundred and eighty-seven managers in two organizations where he found very little seconding of the theory. In this case, he found two types of needs namely the biological and the other needs. ( Wahba 1976). It is after the achievement of the biological needs that one is able to consider the other needs. On the higher level, however, the writer found that the type of individual needs varies with the personal ways of life. In some cases, self-actualization needs may predominate and in other cases the individual social needs also dominate. (Koontz 2008).

However, this may also be related to the changes in the career as one moves up his career line rather than being related to the lower order needs.

The Skinner’s Reinforcement Theory

This controversial motivation technique was developed by B.F Skinner who came up with the theory that behavior can in many cases controlled by what he termed as “reinforcers”. These reinforcers which are any form of stimulus increase the rate of response especially if it is contingent on that stimulus.

This theory was developed by B.F Skinner after some lab experimentation with some rats in special devices or boxes that he called ‘Skinner boxes.’ The ‘Skinner boxes’ were constructed with a metal cage with a wire floor that was electrified and contained a food dispenser that could dispense food pellets at a press of a bar. Skinner observed that the pellets acted more as reinforcers and increased the rats’ rate of response (pressing the bar).

It is based on the modification of individual behavior and motivation through redesigning their work environment and the appraisal of their performance. It stipulates that punishing for poor results leads to the deteriorating of the performance.

This can be effectively done through analyzing the working situation of the workers, to help in understanding the root source of the manner of performance. In cases of the troubled areas, they are then eliminated through the engagement of the worker. (Raymond 1990). To help in the assessment of the worker, the setting of specific goals by the employer should be introduced through the participation of both parties. The worker should also be assisted in the attendance of duties and prompted through the use of regular feedbacks of his results which are availed to him. (Bhikhu 1993).

In case of any improvement in the manner of performance, this should be rewarded through the use of incentives to recognize and raise their efforts. To make the worker feel part of the company, any problems occurring in the company should be addressed to him to keep him informed more so if the issue is directly involving the worker. (Koontz 2008).

The theory is a great success and is very practical due to its close relationship to the manner of leadership. The theory calls for the careful planning and good organization in the workplace. The frequent communication with the workers helps in improving the relationship in the working environment and the expansion of the exchange of ideas. As a result, this technique works on the positive trend of motivation in the workplace. (Raymond 1990).

The Vroom Expectancy Theory

Vroom theory makes use of the individual needs and motivation in its argument. It is objectives-driven that tries the harmonization of the differences in the goals of the worker and the organization. This is through objective management.

In this theory, the assumption that different people have different perceptions of value at different times puts into consideration the real-life experiences. The writer also considers that the manager’s role in the company is to set and design the path for the performance. It also considers the various working conditions in the various situations. (Koontz 2008).

The theory makes use of three main terms: Expectancy; where people are motivated by their ability to successfully and efficiently complete a given task, instrumentality; where the individual questions himself on the rewarding of his efforts in a given task and valence, where the individual evaluates the worth of the reward in comparison to the number of efforts required. (Raymond 1990).

The Vroom theory, though difficult in application is more competent and accurate than eth Maslow and the Herzberg theories that use simple features.

The Acquired Needs Theory

This theory was developed by McClelland where he considered three types of motivation needs. The three needs drive the management of an organization if effectively implemented. The three needs were classified as:

The need for power

These are efforts in search of leadership positions in order to exercise influence and control. In his research, McClelland found that this category of people consists of characters like: “they are good conversationalists and argumentative, forceful, outspoken, hardheaded and demanding where they enjoy teaching and public speaking.” (Ricky 2000).

Need for Affiliation

There is the class of people who love to be loved and experience great pain in case of rejection in a social group. They are good at maintaining social relationships and are very understanding. They participate in finding solutions to the troubles of others and enjoy the friendly interaction with others in the society. (Ricky 2000).

Need for achievement

This group of people has a high intensity of success and a high intense fear of failure. They work with challenges and love challenges from others where they always set goals for their achievements. When it involves taking risks, they are very realistic through the in-depth analyses and assessment of the problems. They call for the prompting on their achievements and their performance where they are mostly restless with little worries of failures. (Koontz 2008).

This theory is very practical where the people who are in need of achievement are observed to be more on business and leadership and fewer affiliates.

Jeremy Bentham Carrot Approach

In this theory, Betham utilizes the power of imperative, “which is the power over the act as distinct from the passive faculties of persons.” The power calls for eh use of command in undertaking duties. This provides motives that affect the individual will by exercising punishment when there are failures and rewarding in the case of achievements. (Ricky 2000).

The major key messages of the motivation theory include:

  • The extrinsic awards are offered by the employer in the form of pay. This helps in encouragement and the retaining of the employees and even attraction of new employees which reciprocates to their increased efforts in the performance of their duties. (Ricky 2000).The intrinsic non-financial rewards draw more relationship on the responsibility, achievement, and the career itself may have a longer-term and deeper impact on motivation. The use of the two types of rewards is highly encouraged in any form of rewards to make the comprehensive impact on the employees. (Armstrong 2007).
  • The significance of the needs also plays a major role in the workers’ motivation. In this case, the overall satisfaction of one’s social economical and psychological needs is the best motivation for any type of work and development.
  • The individual expectation plays a great role in determining the level to which people are motivated. This works on top of the perceived value of the outcome of the individual actions, where the workers are more motivated if they are in a position of controlling their means of attaining their goals. (Sears 2006). The motivators are highly effective if the people are aware of the future returns for their efforts. There is also the need for a feeling of the value of the achievement where the individual is very determined to successfully get it. (Armstrong 2007).

Different people have different goals that motivate them to work, and their degree of performance is better when they are aimed at the difficult goals that they have already accepted. This calls for the need to communicate to the employees on their level of performance through feedback. (Bhikhu 1993). It also emphasizes the importance of performance management processes as motivators when they are based on agreed goals that are demanding but attainable and feedback on attainments in relation to those goals. (Armstrong 2007).

There is also the call for individual participation and awareness to enhance motivation. Consultation increases one’s motivation where the center of approach offers room for the need of problems and solutions. It also leads to recognition and appeals to the affiliation and acceptance by giving one a sense of accomplishment. (Bhikhu 1993).

The quality of working life helps in the designing and approaching of job in a motivating way. This offers room for the development and enrichment.

For this case, in conclusion, the reward systems should be designed in such a manner that they help in the provision of a mixture of different types of motivators that merges with the needs and the organization and its members. (Armstrong 2004). This would help in the elimination of confusion that might arise on the intended income and the perceived reality of it. Does it achieve what it is intended to achieve?


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