Incentives based motivation

Last Updated: 28 Jul 2020
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Introduction The concept of incentives-based motivation is predicated upon the idea that persons are inclined to perform actions that lead to outcomes that they find favorable (Huseman, Hatfield & Miles, 1987; Muchinsky, 2005). Managerial theories of motivation utilize this concept of incentives in order to explore methods of stimulating employees to perform optimally in the workplace. Motivation can be classified into two types: internal and external (Bateman & Crant, n. d. ).

Internal motivation involves a person’s self-stimulation toward the performance of an action. In such a case, persons are inclined to act because the job itself is a form of incentive or reward for him or her. External motivation, on the other hand, involves the addition of a benefit as an outcome that attends the completion of a job. Therefore, though the particular job may hold no charm for a person, the promise of a benefit to be given by another upon the completion of the job serves as an external motivating factor.

Current ideas that drive incentive-based motivation within organizational management include equity, Vroom’s expectancy, reinforcement, and needs-based theories. Motivational ideas have also been encapsulated also in Young & Rosen’s Theory O and Douglas McGregor’s Theories X, which focus on the development of employees and the improvement of their positions within the company. These theories use the ideas of intrinsic (internal) and extrinsic (external) motivation as strategies for motivating employees and which lead to the overall benefit of the company.

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The incentives involved in these theories range widely: from exploring the goals and talents of employees and matching them with those of the company, to creating incentives to match these goals where they do not exist otherwise. Literature Review Equity and expectancy theories as incentive-based theories are formulated on the idea that persons expect an incentive to result from the effort that they make on the job. For the expectancy theory of motivation, the person works under the impression that he or she will be rewarded at the end of the job.

Expectation theory links the overall outcome of the situation within the organization to that which the individual gets from his or her input (Muchinsky, 2005). Therefore, it is to the benefit of the entire body that the individual be rewarded in the way that he or she expects. Equity theory takes expectancy theory a step further in that it quantifies the expectation. The person hopes to get a certain level of compensation from the job that is equal to the effort that he or she puts in at it (Huseman, Hatfield & Miles, 1987; Muchinsky, 2005).

Reinforcement theory is based on the ideas put forth by Albert Bandura, which states that a person’s current actions regarding a certain project will be guided by previous reinforcement given towards those same actions. Therefore, if rewards or incentives are given for acting in a particular way, persons will usually continue in that course. Reinforcement of this type may be experienced first-hand or vicariously by persons. According to this, individuals are likely to change their behaviors to accord with other behaviors that have been positively reinforced (through incentives) in the past (Muchinsky, 2005).

The needs-based theory of motivation put forward by David McClelland stipulates that certain needs are present within managers and workers within an organization (Pardee, 1990). It is a theory geared specifically toward managerial and organizational behaviors, and it postulates three specific needs: the need for achievement, the need for power or authority, and the need for affiliation. The achievement aspect of the theory describes the person in question as desiring to achieve goals that are at once realistic and challenging.

This need is strongly tied to the idea of advancement, which may accompany or even define such a goal. The person’s need for power or authority is defined by his desire to be in charge within certain areas of his personal and professional life. He or she needs to have influence over people and to have an impact within his/her surroundings. This coincides with a person’s desire to lead and to have their ideas sanctioned and implemented within a given setting.

The need for authority is also tied to the desire for advancement, as promotions generally involve increase in rank and responsibility (Pardee, 1990). Persons’ need for affiliation represents their desire to be a part of something greater themselves. This includes the formation of friendships and working relationships in which a certain level of synergy exists. It also refers to the need to be regarded by others and held in their esteem. Such persons are content to work as part of a team and are always ready to provide their input as part of the team’s collective effort (Pardee, 1990).

This need can be catered to within organizations that provide a culture of involvement and collaboration between and among employees and managers. Theory O is a theory of motivation that is specifically geared toward organizational management. This theory, developed by Karen Young and Corey Rosen finds management working to create a more harmonized environment within the company (Winther, 1999). The incentive involved here is one of ownership of the project in question.

A major goal of managers who operate according to Theory O is human capital development and the utilization of the organization’s own human resources in formulating and implementing strategies. This places the employees in such a position of involvement that a sense of ownership is created, and this sense further motivates the employee to work diligently in his or her own field. The managerial position according to theory O is that the organization and its employees hope to benefit through the opportunities for learning and enrichment provided through the implementation of these harmonization strategies.

The managers therefore involve the employees in key processes of the company’s decision making, and change emerges gradually and spontaneously, usually keeping pace with the growth and development of the human resources themselves. As a result of the employees’ investment in the company, according to this theory, the growth of the company itself becomes their incentive as they feel that such growth would be of benefit to themselves (Beer and Nohria, 2001). Theory O takes a participative approach to the role of the employee within the organization.

Theory O is concerned with building a culture among employees through inclusion and widespread collaboration within the environment (Beer and Nohria, 2001). The theory seeks to increase the company’s profits, but takes a more longitudinal approach of seeking first to strengthen the stakes of the employees and increase productivity. Here, one finds that theory O accords with McClelland’s needs-based theory in that it caters to the employees’ need for affiliation within the organization and so becomes an incentive for continued loyalty and effort.

Theory Y, propounded by Douglas McGregor, holds managers responsible for organizing production elements toward the goal of economic profit-making. However, it operates under the belief that people are naturally inclined to work toward the needs of the organization and need only to be probed and motivated in order to uncover this natural tendency. Management therefore directs its efforts toward creating an environment in which people may realize their own propensity for completing tasks that benefit the company. The behavioral theory behind this is that humans seek and are able to find self-actualization in their work.

Employees can be self-motivated to do their jobs and accept changes to it given the right atmosphere and the proper encouragement from their managers. The incentive involved in this theory is the achievement of the individuals’ goals through the completion of projects mandated within the organization (Barnett & Droege, 2005). Application to Organizational Behavior Incentive-based management capitalizes on expectation and equity theories through the employment of a psychological contract, in which managers understand precisely what this equity entails and offers it to the employee.

Employees, in turn, understand that this reward is in store and are therefore motivated to continue working (Morrison & Robinson, 1997; Muchinsky, 2005). The inputs involved in equity theory include effort, commitment, and skill, while outputs include financial rewards, promotion, and job security (Huseman, Hatfield & Miles, 1987). Managers plan their incentives under the knowledge that employees expect better rewards for harder work.

Therefore, to encourage increased effort and commitment, managers take care to record and reward overtime or other displays of effort. Managers will also reward employees’ skills in certain areas by allocating to them more of the projects that fit their expertise and compensating them well for the proper performance of these jobs. Managers within an organization also have the opportunity to utilize reinforcement theory in the workplace, as employees are likely to continue behaviors that are positively reinforced through the use of incentives (Muchinsky, 2005).

Such incentives may be financial or positional, and because employees are likely to appreciate such rewards, managers are able to promote the desired behaviors by providing these incentives. Openly offering rewards also utilizes reinforcement theory, as employees who have not been practicing desired behaviors will have the chance to view the positive reinforcement and adjust their work attitudes and habits accordingly. Employers and managers may also capitalize on McClelland’s needs-based motivational theory as a means of providing incentives to employees in order to assure their optimal efforts and support.

Since employees express a need for achievement, tasks and challenges equal to an employee’s abilities may be provided for him or her in order to promote a sense of accomplishment that will encourage him or her to keep working hard. The employee’s need for authority and power may also be gauged and satisfied by providing incentives that accord him/her jurisdiction over certain projects. When the employee finds him-/herself in charge of a given project, it usually has the effect of inducing him/her to perform well in that office (Pardee, 1990).

The organization that is managed according to Theory O places itself in the position of having a strong foundation, through which employee satisfaction leads to increased productivity and eventually to greater shareholder value. One pitfall of implementing this managerial theory within an organization is that the effects (monetary gain) for shareholders, as a result of the method, might be slow in materializing. Necessary investment capital is often lost before such profitable economic ends can be realized.

However, organizations that manage change without implementing such employee incentives, while they possess the ability to survive in the short run, usually prove to be unstable over the long run. This occurs because their human capital base often displays a lower level of development, loyalty, and commitment to the organization’s goals (Beer and Nohria, 2001; Winther, 1999). Theory Y presents a favorable view of the human individual and, therefore, employees hired by managers who subscribe to this theory garner a high level of trust from their employees through the provision of incentives.

The environment created by those who view the human as having the ability to be self-motivated would appear to resemble a Theory O environment, and the incentives created in such an organization would occur in the form of human resource development initiatives. Efforts made by the managerial staff to discover and enhance the capabilities of employees acts as an incentive in that it allows employees to self-actualize within the job. This means that an alignment of employee goals and organization goals would be effected, so that the objectives the organization presents to employees would be seen as a means of achieving their own goals.

In effect, employee development would uncover their own drive to achieve their own goals, which would in fact be almost identical to those of the organization. Conclusion Organizations can utilize a wide range of incentive-based motivational theories in order to cater to the needs of its members. Such theories include equity and expectation theories, which are based on the idea that employees expect to get rewards that are at least equal to the effort they put into their work.

Reinforcement theory points toward the idea that rewards or incentives received or witnessed by employees will motivate them to act in a similar manner in order to receive such incentives. The needs-based motivation theory serves a method of demonstrating the types of rewards that are suitable for or likely to be appreciated by different employees. Finally, theories O and Y demonstrate methods of including employees in decision making and increasing their ownership of the goals and visions of the organization.

They also highlight the fact that employee development can become an incentive by pointing out ways in which the achievement of the organization’s goals can coincide with the achievement of employees’ own goals.

References Barnett, T. & S. B. Droege. (2005). “Theory X and Theory Y. ” Encyclopedia of Management. Accessed on May 5, 2007. Available: http://www. referenceforbusiness. com/management/Str-Ti/Theory-X-and-Theory-Y. html Bateman, T. S. & J. M. Crant. (n. d. ) Revisiting intrinsic and extrinsic motivation.

Charlottesville: University of Virginia. Retrieved on May 5, 2007 from http://www. commerce. virginia. edu/faculty_research/Research/Papers/IMOBHDP24. pdf Beer, M. & N. Nohria. (2001). “Breaking the code of change. ” Working Knowledge. Harvard Business School. Accessed on August 4, 2006. Available: http://hbswk. hbs. edu/item/2166. html Huseman, R. C. J. D. Hatfield, E. W. Miles. (Apr. , 1987). “A New Perspective on Equity Theory: The Equity Sensitivity Construct. ” The Academy of Management Review, 12(2), 222-234 Morrison, E. W. , & S.

L. Robinson. (1997). “When employees feel betrayed: A model of how psychological contract violation develops. ” Academy of Management Review, 22(1), 226- 256. Muchinsky, P. M. (2005). Psychology Applied to Work. Belmont: Thomson’s Higher Education. Pardee, R. L. (1990). “Motivation Theories of Maslow, Herzberg, McGregor & McClelland. A Literature Review of Selected Theories Dealing with Job Satisfaction and Motivation. ” ERIC. NO: ED316767 Winther, G. “Theory O—Is the case closed? ” Economic and Industrial Democracy. 20(2). 269- 293.

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