Money as a Motivator Essay Example for Free

M championy as a Motivator EssayThis paper will discuss the subject of silver as a inducement. In access to research and a cohesive review of literature it will include two interviews with prominent managers which will be analyzed to advertise enrich the knowledge of the subject by taking advantage of their hands-on experience.I- Introduction silver, A motivator?Money That is the violent war amidst employers and employees. Indeed, motive employees through the use of specie as a material reward or motivator for give-up the ghost achievement is and has always been a matter of controversy. many an(prenominal) theorists tackling motivation theories, human nature in general and motivation in particular, have accordingly examined this issue and yet they did non pass away the same resolution as whether currency can motivate workers for work or non. This sh only form the main core of this projectBut before tackling this sensitive issue, let us see what does penury in gen eral entails? Motivation suggests the secure desire to do ones job well with an initiation to receive a complement either of moral or material satisfaction. Employers have employed material incentives in the form of extra hours with extra pay, some others nominate too much importance to the st cogency of the workers with satisfy their necessaries of life whereas others have much stressed human relations, good contacts with prospective popcomes, promotion, and occupation with high responsibilities potential. in that location is no in briefage of theories just about motivation, and the relation amid bills and motivation in particular was central to about of them since money has always been held as the bread and butter of each worker and the carrot or the stick with which the employers control the goal achievement processes. Next we briefly review some of the most important motivation theories and on that point barbel on money.II- critical review of literature and previous studies(A) Theories of Human motivation and their relation to money* The Hierarchy of NeedsThis theory is probably the best-known motivation theory. It was coined by Abraham Maslow during the 1940s and 1950s. In essence, it states that our motivations atomic number 18 dictated primarily by the circumstances we find ourselves in, and that certain lower needs need to be satisfied before we bemotivated towards high accomplishments. Maslow indicated five distinct stages, starting at physiological needs and ending at self-actualization needs. In practice, the number one stage in the hierarchy, the physiological stage, which contains the needs the employee first tries to satisfy such(prenominal)(prenominal) as food, shelter indicates that pay is a good motivator at bottom this stage. Money is the supplier of food, medicine, shelter, clothing but as short as thee basic needs become satisfied and the employee moves to higher(prenominal) stages within the hierarchy, pay becomes sligh t and less a motivator. Money cant buy safety, a signified of be, self esteem or self actualization.* possibleness X and Theory YIn 1960, Douglas McGregor advanced the idea that managers had a major part in do staff. He essenti tout ensembley divided managers into two categories Theory X managers who view that their staff be lazy and will do as little as they can get away with and Theory Y managers who believe that their throng really want to do their best in their work. Theory X managers believe that staff will do things if they ar given explicit instructions with no wiggle room, and plenty of stick if they dont do what they are supposed to do. Theory Y managers believe their mountain work their best when empowered to make appropriate decisions. Managers who follow theory Xs approach, tend to rely greatly on money as both a motivator and a tool of control. Theory Y managers tend to focus also on non-monetary motivators and rely less and less on money in do their staff. W ith advances in management theories, Theory Y has begun to replace Theory X as the dominant management philosophical system in many organizations and money began to seem as a less rough-and-ready tool for motivation as we will later see.* Dual fixings TheoryAnother theory to gain prominence at this time was Frederick Hertzbergs Dual Factor theory. He identified two separate groups of factors that had a strong bearing on motivation. He called the first group hygiene factors, because they strongly influenced feelings of dissatisfaction amongst employees. Hygiene factors include functional conditions, pay, and job security. According to Hertzberg, they dont motivate employees as such, but if they are not in that respect, they can adversely affect job operation. He referred to the other group as motivation factors because they had a role in substantiatingly influencing exercise such as achievement, life story progression and learning. Hertzberg went on to state that you can for get about workforce motivation if you dont get the hygiene factors right first of all, so you have to get the pay part of the equation right. But he adage pay as not being an actual motivator in the work place. You can create disgruntle employees with less money, but you cant create a motivated employee with more change.* Equity TheoryJohn Stacy Adams posited another theory in 1965, looking at how motivation was affected by the degree of fairness within an organization, specially within a group of peers. Consider the situation where ball club sales representatives are given a company Mercedes, but one of them is given a Toyota, even though that person believes he did however as good a job as his colleagues. How would that last sales representative feel? Now theres nothing wrong with a Toyota, but by compare ones own circumstances to the treatment of others in a similar situation, very intense feelings can be experienced. These feelings could lead to intense positive or negati vely charged motivations. Its here that money can become a serious de-motivator or even a source of conflict if distribution was not seen as fair. No matter how insignificant the monetary value, a lower facelift will be seen as an unfair military rank of ones self-conceived performance relative to others and the intended motivation effect will be transformed into a strong feeling of inferiority and injustice. In practice, managers need to be careful in distributing money incentives within a group of peers because of the emotions this can engender.*Expectancy TheoryVictor Vroom in 1964 mold forward the notion that people are driven by the likelihood of certain success in achieving particular objectives. Three barriers need to be jumped by managers if they want to motivate their people to succeed. First of all, they need to connect the task to be performed to the likelihood of better results. Secondly they need to set expectations that there are positive benefits to the employee i n achieving those results, and thirdly they need to ensure that these benefits are of value to the employee. For instance, there is no point asking your employees to be happy about coming in a half-hour early in future if you cant decent explain how this will lead to eventual real benefits for theemployees themselves. Benefits also should be properly assessed, some employees rank money low on their priority lists, and others give it precedence over other benefits. Setting expectations for benefits that are not valued by employees will not work, managers should not take for granted that money is all that matters and probe for other benefits the employees may consider superior.* Money as a MotivatorThis theory states that all workers are motivated primarily by the need for money so if you want to get the most out of your workforce, you pay them more. This has particular effectiveness in areas where payment is directly linked to the accomplishment of objectives. This theory is overabu ndant in many crinklees in the form of performance- link pay, incentives, bonuses and promotion schemes. While few would argue that it does not have some validity (indeed it is the driver behind most sales forces the world over), it is not an all-encompassing theory. It doesnt really address the some measure complex reasons why people are motivated by money. It excludes people who are not driven primarily for money. It does not, for example, apply to voluntary organizations. In addition, it may not work if meeting the financial objectives might threaten other entitlements, creature-comforts or rights, such as an employees location, network of friends, employment conditions or current level of job satisfaction.Several other related theories such as the ERG and AAP theories also move to find out what motivates employees the most, and where does pay rank among motivators. The motivational power of money is clear in the sense datum that more dollars buy more things (but not all thing s as we discussed before), but why is money sometimes seen as a low quality motivator?(B) Money, an Over Estimated MotivatorIn our research and readings we were able to identify some(prenominal) problems with using money as a motivator in the work place. These points are summarized below and should be taken into consideration by the manager in his efforts to promote effectiveness and efficiency.(1) coin becoming compensation The great thing about choosing a monetary reward is that theres no extra distribution method acting necessary. Employees view cash incentives and concedes as part of their annual compensation,Because those dollars just become part of what you take home, theres nothing special about them. The money tends to get played out paying bills, and you dont really do anything thats memorable, so theres no lasting effect relative to the dollars that youre putting into those incentive schemes. It just becomes a part of that pile of money that you find a way to spend all (prenominal) month and every year.(2) A Tough Incentive to Take Away Beyond cashs poor ability to change behaviors, it actually can be harmful. In good sparing times, when everyone is flush and goals are being reached, cash can be lite to give out, but when times are bad, and the cash goes away, employees will wonder where their money went. And studies show that they will consider it their money. Discontinuing a noncash incentive program has a easily less negative impact on employee motivation than killing a cash program.(3) Buyers Remorse Affects Money Incentives A family man receiving a cash booty from his company is faced with a tough decision Put the money in savings or a college fund, or use it to pay bills, or splurge on a family vacation or buy them something special. If he decides to splurge, he may regret the decision later on when a particularly large bill comes due. That quandary can have a negative effect on the overall quality of the award, an opportunity will be co nsidered as wasted if the money is spent or saved. Many non-cash incentive awards are considered luxuries, and earning them through hard work can give employees a sense of achievement.(4) busted Trophy Value Cash lacks trophy value and social reinforcement attributes that increase the perceived value of the non-cash award over cash, the trophy value associated with noncash incentives is just immense. An employee will always find it more pleasant to talk about a company all-expenses- paid trip, movie tickets or even a tender pad on the back from the boss, than a two hundred dollars bonus check.(5) Money Is Not Promotable The trophy value associated with non-cash awards can have a positive effect on other employees who didnt reach their goals and take home the award. Its harder for the boss to say do better and youwill get a certain cash reward, than to advertise a position for the employee of the month award for example. Money is less promotable than other forms of motivation.(6) C ash Satisfies Needs-Not Wants Cash is well for companies to give away, and everybody needs it. But for legitimate motivation, you need to give people something they want or desire, not something they need. A trip to Hawaii, on the other hand, generates memories, and a plasma-screen TV is something theyll look at every day for years to come-and remember how they got it, a hundred dollar bill gained for an extra ordinary selling week is soon not different from a hundred dollar bill received as wage.(7) Money Is Impersonal Sure, everyone could use more money, but whats special about that? The best rewards cater to a particular groups diverts, and having that personal edge makes a big difference in how effective your program will be.(8) One Size Doesnt Fit All There are no average employees, average has become wider and wider around the means over the past few years, and will continue to do so. So one really cant provide one option and think that its deprivation to be appealing or m otivating to the entire staff.(9) Managers Prefer Noncash A youthful study of 235 managers by the Forum for People Performance Management and Measurement showed that managers prefer non-cash employee recognition programs. According to the study, managers view non-cash awards as more important, more effective and generally superior for achieving the majority of specific organizational objectives.(10) No Global Parity In economical terms, its called purchasing power parity, which means, roughly, that the cost of living-everything from the hurt of a nice dinner for two to a months rent-can be vastly different in different parts of the world. Companies with worldwide footprints need to make sure their award offerings are equal on a global scale. A dollar, by and by all, goes a lot farther in some corners of the world than in others. Non-cash awards such as gift cards allow companies to offer parity in termsof the overall worth of the award.(11) Money Is Insufficient for Some Employe es in addition for the individual idiosyncrasies of individual employees, money may not be sufficient for some people. Highly paid employees for example may prefer other benefits such as an award ceremony, a club membership, a parking space closer to the office(12) Evaluation of Performance its hard to put a price tag on performance. Even clear rules, such as sell x items and y dollars, may be seen as unfair. Employees may complain about their store location, their shifts, and their managers to give an unfair flavor to a peers bonus. Non-cash motivators are less likely to be thoroughly criticized and have a greater motivational value.(13) A Trouble Maker money may set employees against each other, leading to conflict in the company. Employees may also feel forced to compete and thusly Money becomes a fosterer of a hostile work environment quite a than a motivational tool.(C) Research Study resultsSeveral research studies were done on the effects of money as a motivator, and its po sition relative to other motivational incentives. The results of a NOVA Group study under the title Factors employees Find propel re affirmed several previous studies in which employees ranked money as fifth among motivation factors. Money was proceeded by Interesting Work, Appreciation and Recognition, legal opinion of being in on things, and Job Security. A more recent study on done by the Hay Group on belongings factors found that money ranked a staggering tenth among employee memory factors. A research study for 57 managers conducted by Meudell Rodham showed through analysis of questionnaires that managers saw an increase in performance among their employees for an average of just two weeks after a pay raise followed by a relapse into the prior performance levels. Several other research papers we saw which conduct research on the effects of money as a motivator on employees of discordant professions showed similar results. Although the position of cash as motivator varied slightly among different functional groups, it still showed that money has limited motivational power. For example In a much publicized study, Gupta and her colleagues analyzed thirty-nine studies conducted over four decades and found that cold-hard cash motivates workers as expected, but the research team acknowledges that money is not the only thing that concerns employees, noting that beyond a certain point higher salaries will make employees happier, but it will not buy better performance.III- Interviews, compendium and Findings(A) The interviewsIn the process of researching the motivational power of money, we were lucky to interview two prominent managersMr. Sami Gheriafi , Process and Institutional Planning Manager -AUBDr. Saad Andary , Deputy General Manager -BBAC BankAs a basis for the interviews, we prepared a questionnaire to address all the questions that were raised during our review of literature. Through out the interviews many more clarifying questions were asked, t he end result was put into a QA format, and both interviews are posted in the annex at the end of the paper.(B) Interviews analysisIt was striking how the answers of two managers from two different organizations overlapped in key issues. Of strain one will find differences in some approaches, but the overlap in addition to the findings we uncovered in our literature review gave us self-assertion in our results.Both managers gave non-monetary forms of motivation priority over money. Whether sending over-performers out of the country for advanced training to show the organizations trueness in improving their career opportunity, or verbal and written appreciation, non-monetary motivators were found to be superior. Empowerment, delegation of authority and freedom of decision are also very important tools used in the organizations to motivate employees. On the other hand, and in compliance with our research, both managers agreed that money is important especially in a region under eco nomic stress, butthey also argued against using it primarily. Dr. Saad Andary noted that money according to his experience may play a good role as a retention factor, noting the huge pay gap between Lebanon and the Gulf, but he doesnt consider it as motivating. Both Mr. Sami Gheriafi and Dr. Saad Andary also indicated that money has a timed impact that is they as managers acknowledge an increase in performance when a monetary reward is handed out, but this increase tend to dwindle down as the raise is spent. Non-monetary motivators tend to have a longer lasting effect on performance.On the use of money, Dr. Saad Andary pointed out that in current economic conditions, money is the managements easy way out, and even though both managers disagreed on managements ability to put a financial tag on performance, both agreed that it is not productiveness that should be an issue, but also commitment to work, enthusiasm and the feeling of belonging to the company that should matter to manage rs. Money has a tempting impact on youthful comers it refreshes the employees and energizes their performance is an expected part of the motivational basket and if used properly and in an accurate sense will boost performance in times when a push is needed. But the use of money has its negative side as well. Money has shorter lasting effect on employees, it is less effective with employees higher up in the organizational hierarchy, money is also coupled with the firms profitableness rather the employees performance in a sense that a hard workings employee may not get a raise because the firm is not profitable that year, a thing which will discourage the employee especially if in more profitable years less effort lead to more money.Money also will put a huge financial burden on the company especially when employees begin to see bonuses and raises as part of their pay, they will grow more dependent on monetary rewards and this will produce a high employee turnover rate and a decrea se in performance. Money, and depending on the management approach, might easily become a tool for manipulation rather than motivation. For these reasons Dr. Saad Andary forecasts that management will try to limit the negativities of money as a motivator by making reward more institutionalized, in a sense that staff will become shareholders and be granted stocks rather than raises. This will give rise to a partnership between the staff and the firm, the employees will no longer feel as pones moved by management, but ratherthey will develop a genuine sense of belonging, and a true interest in the well being of the organization.IV- Conclusion Money as a MotivatorAll the popular motivation theories have their flaws and detractors, but they do give us an shrewdness into some of the mechanisms at work in day-to-day organizational life. A number of key messages ring true firstly, people are not automatons and their reasons for behaving in a certain way are more complex than just money or laziness. Secondly, different people are motivated differently there is no such thing as a simple, all-encompassing solution. Thirdly, its important to get the work environment right if you want to get the most from people and finally, managing perceptions and expectations is very important if you want to help people get the most from their work. As a summary, Money is found not to be a nonpayment and automatic motivator, its importance is subjective and its effectiveness in motivating is relative to the type of job and the way management uses it, non-monetary motivational approaches are superior in many ways (as explained above). So if we want to finish up with one message we think that the best conclusion might be Avoid the Cash Trap.V-Annex(A) Dr. Saad Andary interview1)What are the motivation techniques followed in your Institution?What is the role of money in the above techniques?One major form of motivation is to send staff out for training ( specially out of the country Ne w York, London) this is major motivating because it enhances the employee career and gives exposure to more advanced markets ( only the outstanding people are selected) . The other form of motivation is to promote and to empower the staff (to give him the freedom of decision).Money incentives an environment which is under economic stress with high unemployment and downcast salaries and wages and also coupled with price inflation required to have constant individual raises , although this does not compensate to the huge job pricing first derivative between Lebanon and the Gulf) so money plays the role of retaining employees here and not motivating.2)Do you think Money is the easy way out?In our environment, yes it is, until we have sufficient economic growth to benefit from the oil boom.3)How can you put a price tag on performance?The appraisals to be reflected in the annual raises. BBAC is an institution working in the financial market where jobs can be easily assessed and priced (especially jobs related to sales, dealing, treasury, marketing) where the management can pinpoint revenues or loss leading to the evaluation of the employee performance.4)Do you notice an increase in performance after a money raise (bonus, financial reward)? And how long does it last?It gives an immediate improvement in performance and lasts until the raise fade according to its amount (depend on the value of the reward). The bad thing about this is that if its regular bonus or reward then its no longer conceived as merit where it becomes more as a salary = thats why a money raise cant be that effective motivator to count on.5)From your experience, how did the concept Money as a Motivator develop through the past years? And where do you see it going?In the banking intentness money became a norm ( bonus at end of the year for example) which is reflected by the profit of the form , so staff is identified with the concept of the profitability = there is functional relationship betwe en money as motivator and profitability .See it going towards becoming more institutionalized , in the sense that staff will become share holders (partners) employees will not be granted money but stocks which is a way of partnership that involves the staff in ownership = develops sense of belonging and last relation of employees with the firm.6)What are the positive/negative aspects in using money as motivator (conflicts and competition between employees)? Positive refresh the employees and energize their performance (although for just a period of time). Negative money is coupled with the firm profitability and not directly related to the employee performance and results the criteria setfor the rewards are not usually clear and standardized decreases the sense of belonging towards the firm.7)Doesnt money trivialize work and weaken sense of belonging?Yes, money trivialize work and stock option can be the right alternative for improving sense of belonging8)Money Motivation or Mani pulation?Money is recognition of the surplus created by the staff cant be considered fully motivation or manipulation.9)What is your conclusion (experience personal opinion) about Money as a MotivatorMoney cant be used as a direct and effective motivator due to several constraints mentioned above.(B) Mr. Sami Gheriafi interview1)What are the motivation techniques followed in your Institution?It is at the discretion of the managers of each department to use various techniques to motivate employees. Among many, there is empowerment, delegation of authority, added responsibility commensurate with seniority and financial incentives, promotions, commitment to employee professional development (mostly through training and development of talent, skills and competencies), and appreciation either verbally or in writing (aka psychological support) or, as specific to AUB, advancement of Presidents Service Excellence Award, an annual award given to employees with exceptional and superior cus tomer service and notable productivity over the prior 3 years. My personal experience has led me to the following equation Productivity = Satisfaction x Appreciation.What is the role of money in the above techniques?Money is a major motivator, however, in my opinion it has a times impact By virtue of human nature, people tend to feel motivated with money, but after a short period of time, usually not more than 3 6 months, people tend to forget about the financial increase. The money reward will surely help improving the employees performance in the short term, but its impact will fade out as time passes.2)Do you think Money is the easy way out?The use of easy way out is a biton the negative side, as when you refer to a situation where people circumvent a process or get a way with minimal loss or damage. On the other hand, Money has a strong buy-in and buy-out impact in that it elevates the level of personal satisfaction notwithstanding the longer term fading effect. Money losses i ts value with time and so does the money based motivation techniques.3)How can you put a price tag on performance?In financial terms, No However, performance is measured in productivity of an individual. If the individual is satisfied with the job responsibilities and is being appreciated (both soft and hard), the performance is priced and reflected by commitment to work, enthusiasm, and personal ownership (not physical but psychological).4)Do you notice an increase in performance after a money raise (bonus, financial reward)? And how long does it last?Performance increase is always noticed after a financial reward. What I would like to point at is that the financial reward should be the consequence not the pre-requisite for an improved or increased performance. In my business life, I have seen many people who work and enjoy what they do with lesser amount of money, but have a great working atmosphere and very appreciative bosses.5)From your experience, how did the concept Money as a Motivator develop through the past years? And where do you see it going?From what I have seen in the past +15 years, money may have a tempting impact on a new employee or a new comer, but as time passes, and as people grow in hierarchy and mature on the personal level, the more motivating is the work responsibilities, assignments, business setting, atmosphere, stability of the organization, etc. and this is where the motivation is heading. In some cases, money becomes a way to walk out when an offer is made If the business setup, setting, culture, modus operandi is not appealing, people might not want to burn bridges by refusing an offer, but might as well increase their expectation to a higher level that the employer might and/or will not be able to afford.6)What are the positive/negative aspects in using money as motivator (conflicts and competition between employees)? Absolute use of money as a motivator has significant negative impact on the employee and the organization equal ly. The organizations run budget will inflate with sky rocketing salary budgets and employees will be heavily dependant on monetary rewards. There will be a high employee turnover, resultant reduced productivity, resultant impact on the organizations turnover, etc. This is a vicious cycle.The basket of motivational techniques, including financial reward, is a healthy approach to the organization and the employee. Both will benefit from what each party will give to the other. Organizations will receive productivity, commitment, ownership, improvement on the part of the employee who in reelect will also enjoy the basket of appreciation, work atmosphere, investment in his/her professional development, etc. This is what I call a win-win approach.7)Doesnt money trivialize work and weaken sense of belonging?Yes, sometimes it does.8)Money Motivation or Manipulation?Again, the answer depends on the approach. In absolute term of motivation, money will be manipulative.9)What is your conclus ion (experience personal opinion) about Money as a MotivatorMoney is one of the motivating factors, but certainly not THE motivator. There are more for people to receive from organizations than money. Let us remember that people make money not the other way around.Referenceshttp//www.forexprofitingpro.com/sites/ldintino/_files/Image/MoneyGlobeOnFinger.JPGClarifying moneys role in motivating- Lynn W. Robbins University of Kentucky- Journal of Food Distribution ResearchGetting more bang for your buck- Martin Price is the director of HR Equations Ltd- employment today NOVEMBER 2005Motivating the work force (chapter ten) McGraw -Hill/IrwinMoney not the motivator The give out Sun Thursday, 08 December 2005Money can be a big demotivator- John Fisher, Managing director,