Motivating Employees

Motivating Employees Chapter 10

Goals • Employees • Frederick Taylor’s scientific management • Hawthorne studies & Elton Mayo • Maslow’s hierarchy of needs • Frederick Herzberg (motivators and hygiene factors) • Job enrichment • Theory X, Theory Y and Theory Z • Goal-setting theory & Management by objectives (MBO) • Expectancy, Reinforcement & Equity Theories • Teamwork & Open Communication

Stakeholders • Since the 1970s most firms & academics subscribed to this philosophy: • INCREASE STOCKHOLDER VALUE. END OF STORY. • The problem is that most people misinterpreted this to mean “Increase stockholder value in the short-run” (accounting, quality, personnel decisions that were not good for the long-run). • Focusing on “Increasing stockholder value in the long-run” is a good goal. • The best way to increase stock value in long run is to make customers and employees happy.

Employees • Happy employees have better ideas, are more productive and are less likely to quit • Better ideas = innovation = potential profit • More productive = profits • When an employee quits, recruiting costs are expensive • When employees leave, their expertise is lost • Disengaged employees (have checked out) • Lack motivation, passion, commitment • Less productivity • This means that motivating the right people to join and stay with a firm is important

Intrinsic Vs. Extrinsic Rewards Extrinsic = Outside Recognition Praise Intrinsic = Inside Feeling of Job WellDone Promotions Salary Increase Pride Sense of Achievement Status Gifts

Early Management Theory • Scientific Methods: • Collect evidence and make reasonable conclusions from the evidence • The Principles of Scientific Management (1911) by Frederick Taylor • Studying workers to find the most efficient ways of doing things and then teaching people those techniques • The goal of Scientific Management was to increase worker productivity to the benefit of both the worker and firm

Early Management Theory • Time-motion studies • Different motions & different shovels for digging • As productivity increased, the worker could get paid more and the firm would be more productive • Scientific Management assumed that people would be motivated by pay. • To this day time-motion studies are useful in situations where repetitive tasks are done, but pay is not seen as the only motivation for work • Principal of motion economy • Theory developed by Frank and Lillian Gilbreth that every job can be broken down into a series of elementary motions

Western Electric Hawthorne plant of Western Electric in Cicero, Illinois The Literary Digest, Oct. 16, 1915

What Motivates Employees – Empirical Evidence Conducted by Elton Mayo (1927-1933) Hawthorne plant of Western Electric in Cicero, Illinois Respect, Being on a team, Managers listening to employees bigger motivators than pay

Hawthorne Studies • Conducted by Elton Mayo (1927-1933) • First Experiment: Determine if lighting was a factor in productivity. • As they lowered the lighting productivity increased. • When participants were asked about their feelings and attitudes toward the experiment they said: • They were happy to be part of a team • They felt respected and liked when managers listen to them and implemented their ideas • They worked hard to stay on the team • Hawthorne effect • The tendency for people to behave differently when they know they are being studied • These studies encouraged the study of human motivation

Maslow’s Hierarchy Of Needs • Theory of motivation based on unmet human needs: • Self-actualized needs: The need to develop to one’s fullest potential • Esteem needs: The need for recognition and acknowledgment from others, as well as self-respect and a sense of status or importance • Social needs: The need to be loved, accepted, part of a group • Safety needs: The need to feel secure at work and at home • Physiological needs: The need for food, water, shelter • If the need is met, it is no longer a motivator • Most worker’s in world: 4 & 5

Maslow’s Hierarchy Of Needs (1943) Theory of motivation based on unmet human needs: Self- Actualization Learning, growing, achievement Esteem Needs Recognition, status, advancement Social Needs Loved, accepted, part of group Safety Needs Security at work and home Physiological Needs Food, water, shelter

Herzberg’s theory allowed managers to see a hierarchy of what creates enthusiasm for workers (1960s): • Sense of Achievement • Earned recognition • Interest in the work itself • Growth • Advancement • Responsibility • Peer and group relationships • Pay • Supervisor’s fairness • Company policy and rules • Status • Job Security • Supervisor’s friendliness • Working conditions

Herzberg’s Theory Figure 10.5 Comparison of Maslow and Herzberg

Herzberg’s Theory Summarized • The best way to motivate employees is to: • Make their job interesting • Help them to achieve their objectives • Recognize their achievement through advancement and added responsibility

Theory X • Employees dislike work and try to avoid it • Employees prefer to be controlled and directed • Employees seek security, not responsibility • Employees must be intimidated by managers to perform • Employees are motivated by financial rewards

Theory Y • Employees like work and view work as a natural part of life • Employees prefer limited control and direction • Employees will seek responsibility under proper work conditions • Employees have the capacity to be creative and solve problems • Employees perform better in work environments that are nonintimidating • Employees are motivated by many different needs ($, time off, recognition, praise)

Theory Z • Long-term employment • Collective decision making • Individual responsibility • Slow evaluation and promotion • Implicit, informal control with explicit, formalized control • Moderately specialized career paths • Holistic concern for employees (including family)

Goal-Setting Theory • The idea that setting ambitious but attainable goals can motivate workers and improve performance if the goals are accepted, accompanied by feedback, and facilitated by organizational conditions

Management By Objectives (MBO) • A system of goal setting and implementation, that involves a cycle of discussion, review, and evaluation of objectives among top and middle-level managers, supervisors, and employees • Peter Drucker (1954 book 'The Practice of Management): • “Managers cannot motivate people; they can only thwart people’s motivation because people motivate themselves.” • Employees must motivate themselves • Process: 1) Team sets goals and standards, 2) monitor results, 3) reward accomplishments & fix problems • Pro: Everyone is on one team and understands goals • Con: Rigid system that does not adapt to change quickly • Examples of companies that use MBO: • Toyota uses MBO and can do so because they are stable and quick change is not required often

Management By Objectives (MBO) • A process of agreeing upon objectives within an organization so that management and employees agree to the objectives and understand what they are in the organization. • The term "management by objectives" was first popularized by Peter Drucker in his 1954 book 'The Practice of Management‘ • The essence of MBO is participative goal setting, choosing course of actions and decision making • An important part of the MBO is the measurement and the comparison of the employee’s actual performance with the standards set • Ideally, when employees themselves have been involved with the goal setting and the choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities. • http://en.wikipedia.org/wiki/Management_by_objectives • http://www.managers-net.com/managementbyobjectives.html

MBO • Motivation – Involving employees in the whole process of goal setting and increasing employee empowerment increases employee job satisfaction and commitment. • Better communication and Coordination – Frequent reviews and interactions between superiors and subordinates helps to maintain harmonious relationships within the enterprise and also solve many problems faced during the period. • Clarity of goals • It over-emphasizes the setting of goals over the working of a plan as a driver of outcomes • Companies evaluated their employees by comparing them with the "ideal" employee • It does not address the importance of successfully responding to obstacles and constraints as essential to reaching a goal Pro Con

Other Theories • Expectancy theory • Victor Vroom’s theory that the amount of effort employees exert on a specific task depends on their expectations of the outcome • Reinforcement theory • Theory that positive and negative reinforcers motivate a person to behave in certain ways • Equity theory • The idea that employees try to maintain equity between inputs and outputs compared to others in similar positions

Task: Can I accomplish the task? Outcome: Is the reward worth it? Motivated Yes Yes Expectancy Theory No No Not motivated Not motivated

Reinforcement & Equity • Reinforcement theory (Carrot & Stick) • Positive reinforcers : Reward (strive to receive): • Praise, Recognition, Raises • Negative reinforcers: Punishment (try to avoid): • Reprimands, Firing, Pay Cuts • Equity theory • If people perceive their rewards are not equitable: • Lower productivity, reduced quality, absenteeism, resignation • Perceive underrewarded: • 1) Reduce efforts or 2) “It’s not important” • Perceive overrewarded: • 1) Increase efforts or 2) “I’m important”

Job Enrichment Job enrichment A motivational strategy that emphasizes motivating the worker through the job itself Job enlargement A job enrichment strategy that involves combining a series of tasks into one challenging and interesting assignment Job rotation A job enrichment strategy that involves moving employees from one job to another

Job Enrichment: Five Characteristics Of Work That Motivates: Skill variety: Job demands different skills Task identity: Job requires doing task with a visible outcome from beginning to end Task significance: Job has substantial impact of the lives or work of others in the company Autonomy: Independence to schedule work and determine procedures Feedback: Amount of direct and clear information about job performance Maslow & Herzberg applied: achievement and recognition

Teamwork & Open Communication • Ask employees what is important to them • Create culture that rewards listening • Train supervisors and managers to listen • Effective questioning/feedback (not Yes/No answers) • Remove barriers to open communication

Tips forMotivating Employees • Thank employees for good job • Listen to employees • Give feedback • Give rewards • Keep them informed • Allow for input • Training opportunities • Remember important dates • Have and abide by policies • Celebrate goal accomplishment Source: Allfoodbusiness.com

Motivating Employees