6.Emp Motivation.pdf

8/18/2019 6.Emp Motivation.pdf

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© Oxford University Press 2015. All rights reserved.

Dipak Kumar

Bhattacharyya

Compensation

Management, 2e


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CHAPTER

Employee Motivation

and Compensation


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Introduction

Designing compensation with employee motivation requires understanding of

factors that motivate them and so also their perceived reinforcers that can be

included in the compensation structure.

A well-designed compensation structure can motivate employees.

A motivating compensation design not only motivates the employees to become

good performers and continue with it, but also attracts others to join theorganization.

For compensation design to derive the benefit of motivation, it needs to focus on

all these aspects so that the desired behavioural outcome in employees could lead

to significant changes in the organizational performance.

Motivation is a dynamic human resource (HR) process and it is difficult to specify

an organization-specific motivation tool.


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Objectives of Motivation

Motivation enhances performance and improves productivity. Motivation fulfils

several important objectives of an organization, as explained below:

• Productive use of resources

• Increased efficiency

• Quality consciousness

• Goal-directed behaviour

• Friendly work culture• Increased morale

• Increased sense of responsibility and belonging

• Integration of individual identity with organizational identity

• Teamwork

• Participative decision making

• Creativity and growth

• Reduced employee turnover

• Organizational stability


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Mechanism of Motivation

The process starts with physiological (extrinsic) or psychological (intrinsic)

needs of an employee.

The satisfaction of extrinsic or intrinsic needs activates the drive of the

employee to achieve a goal.


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Relationship between motivation and compensation

Employee compensation is linked to both intrinsic and extrinsic factors of

motivation of an individual.

Any compensation system needs to be motivating in order to:

• attract individuals with knowledge, ability, and talent as demanded

by specific organizational tasks

• retain effective, valued, and productive employees to get the

desired level of performance

• promote high degree of job involvement and job satisfaction, and anattitude conducive to loyalty and commitment to the organization


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Theories of Motivation

Process of development of work motivation theory is documented in figure below:



Theories of Motivation

Megginson (1977), for the sake of our convenience, classified the leading theories

of motivation into three groups:

1. Perspective theories Taylor’s scientific management approach, various

human relations theories, McGregor’s theory Y, etc., which, in reality,

stress upon the management to motivate employees.

2. Content theories Maslow’s hierarchy of needs theory, Herzberg’s two-

factor theory, McClelland’s achievement need theory, etc., which try toidentify the causes of behaviour.

3. Process theories Various behavioural theories, which believe in stimulus –

response relationship vis-à-vis motivation (e.g. Skinner’s behaviour

modification theory) and cognitive theories (e.g., Vroom’s expectancy

theory and Porter –Lawler’s future-oriented expectancy theory), which

deal with the genesis of behaviour.



Motivation and Morale

Morale is `a mental condition or attitude of individual and groups which

determines their willingness to cooperate’ (Flippo, 1989).

Morale is `the overall tone, climate or atmosphere of work’ (Dale, 1970).

Motivation stimulates individuals into action to achieve the desired goals.

Motivation thus is the function of need and drives. Motivation enhancesthe potential for morale.

Morale is an individual’s or a group’s attitude towards a particular subject,

which contributes to a general feeling of satisfaction at the workplace.

High morale is an index of good human relations, which reduces labour

turnover, absenteeism, indiscipline, grievances, etc.



Motivational Research and Compensation Design

Understanding of effective motivational research process can help

in identifying the appropriate compensation components.

For effective compensation design, we need a deeper

understanding as the perceived need factors of employees differ

from one organization to another. Motivational surveys are used in

organizations to understand whether employees are motivated and

are contributing their best.



Motivating Generation Y

Millennial or Generation Y employees are those who were born

between 1976 and 1996.

These employees are considered to be attitudinally different from

Generation X (born between 1965 and 1975) and Baby Boomers

(born between 1945 and 1964).

Generation Y employees show more interest for career options, that

can meet their job expectations. They are more demanding from

their employers, and expect their workplaces should have the state-

of-the art technology, with access to internet.



Compensation practices for talented employees

Attracting and retaining talent in organizations require designing

compensation plan that matches with the expectations of talentedemployees.

Employee stock option plan (ESOP) is extensively used by

organizations to motivate talented employees.

Most of the companies, in India and abroad, have now embraced

ESOP as a compensation element to attract and retain talent in their

organizations.

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