Reference no: EM133452489

Assignment:

Money Motivates

The importance of money as a motivator has been consistently downgraded by most behavioural scientists. They prefer to point out the value of challenging jobs, goals, participation in decision making, feedback, cohesive work teams, and other nonmonetary factors as stimulants to employee motivation. We argue otherwise here-that money is the crucial incentive to work motivation. As a medium of exchange, it is the vehicle by which employees can purchase the numerous need-satisfying things they desire. Money also performs the function of a scorecard, by which employees assess the value that the organization places on their services and by which employees can compare their value to others Money's value as a medium of exchange is obvious.

People may not work only for money, but remove the money and how many people would come to work? A study of nearly 2500 employees found that while these people disagreed over what their primary motivator was, they unanimously ranked money as their number two. This study reaffirms that for the vast majority of the workforce, a regular paycheque is absolutely necessary in order to meet basic physiological and safety needs. The best case for money as a motivator is presented by Professor Ed Locke at the Robert H. Smith School of Business at the University of Maryland, who reviewed a number of studies. Locke looked at four methods of motivating employee performance: money, goal setting,. participation in decision making, and redesigning jobs to give employees more challenge and responsibility. He found that the average improvement from money was 30 percent; goal setting increased performance 16 percent; participation improved performance by less than 1 percent; and job redesign positively affected performance by an average of 17 percent. Moreover, every study Locke reviewed that used money as a method of motivation resulted in some improvement in employee performance.

Such evidence demonstrates that money may not be the only motivator, but it's difficult to argue that it does not motivate!

Money Doesn't Motivate Most Employees Today!

Money can motivate some people under some conditions, so the issue isn't really whether money can motivate. The answer to that is "It can!" The more relevant question is this: Does money motivate most employees in the workforce today to higher performance? The answer to this question, we will argue, is "no."

For money to motivate an individual's performance, certain conditions must be met. First, money must be important to the individual. Second, money must be perceived by the individual as being a direct reward for performance.

Third, the marginal amount of money offered for the performance must be perceived by the individual as significant. Finally, management must have the discretion to reward high performers with more money. Let's take a look at each of these conditions.

Money is not important to all employees. High achievers, for instance, are intrinsically motivated. Money should have little impact on these people. Similarly, money is relevant to those individuals with strong lower-order needs; but for most of the workforce, lower-order needs are substantially satisfied.

Money would motivate if employees perceived a strong link between performance and rewards in organizations. Unfortunately, pay increases are far more often determined by levels of skills and experience, community pay standards, the consumer price index, and the organization's
current and future financial prospects than by each employee's level of performance.

For money to motivate, the marginal difference in pay increases between a high performer and an average performer must be significant. In practice, it rarely is. How much motivation is there in knowing that if you work really hard you will end up with $20 a week more than someone who is doing just enough to get by? For a large number of people, not much! Research indicates that merit raises must be at least 7 percent of base pay for employees to perceive them as motivating. Unfortunately, recent surveys find nonmanagerial employees averaging merit increases of only 4.9 percent.

In most organizations, managers have a very small area of discretion within which they can reward their higher performing employees. So money might be theoretically capable of motivating employees to higher levels of performance, but most managers are not given enough flexibility to do much about it.

Questions:

1. Which of the two readings do you agree with and why?

2. If you were a manager in Pakistan how would you motive employees to not just work hard but to do their best? How would the above approaches help you?

3. What do you think motivates employees in Pakistan? Discuss.

4. Was this assignment difficult and would you have preferred to do this alone? (Anyone giving a 'no, yes' or yes/no answer will get no marks. You have to write at least a line)