077 Motivation and Financial Incentives

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MOTIVATION
&
FINANCIAL INCENTIVES

BASIC MODEL OF MOTIVATION (NEEDS
AND EXPECTATION)

BASIC MODEL OF MOTIVATION
(NEEDS AND EXPECTATION)

MOTIVATION &
In the past, threat has been used as a
motivating device in our society.
Threat is used in authoritarian societies
today to achieve objectives.
Is threat working in the workplace, in
order to increase productivity or reduce
absenteeism?

MOTIVATION &
Management today, for many reasons,
gives rewards in order to motivate workers
and increase productivity.
By the 70TH
incentives had become an
inherent part of the operating system of
the construction industry.
Trades unions recognized the importance
of incentives as a means of enhancing
their members.

MOTIVATION &
They used it as a general expectation of
regular incentive bonus payments,
As an essential part of an operative’s
earning.
Financial incentives stimulate workers to
put more effort into their work.
There are five theories of the role of
money in affecting the job behaviour of
employees.

MOTIVATION &
These are:
1. Money as a generalized conditioned re-
enforcer
2. Money as a conditioned incentive
3. Money as anxiety reducer
4. Money as a “hygiene factor”
5. Money as instrument for gaining desired
outcome

MOTIVATION &
Theorists on motivation have generally
assumed that:
intrinsic motivations such as:
achievement,
responsibility,
competence, are independent of extrinsic
motivation.

MOTIVATION &
Extrinsic motivation such as:
high pay,
promotion,
good working relations.
The cognitive evaluation theory suggests that:
when extrinsic reward is used, such as one used
by organizations (bonus pay for performance
improvement), the intrinsic rewards of the
individual are reduced.

MOTIVATION &
Pay or other extrinsic rewards can be effective
motivators.
However, they should be made contingent as an
individual’s performance.
Another definition for the term incentive is
“something that inspires action”.
In the construction industry it means the
attempts to increase production,
Have better performance,
 To receive increased psychological or material
rewards.

MOTIVATION &
In order to benefit most from an incentive
scheme;
Managers need to define workers needs,
develop the goals of an incentive
programme.
If the incentives are offered in an
unstructured manner the result will be:
the opposite of what was intended.

MOTIVATION &
Those firms who use financial and non-
financial incentives side by side are
those that produce the best results.
Motivation with pay increases,
 and promotion can often back fire,
and decrease workers motivation.

MOTIVATION &
Managers can motivate workers without a pay
increase,
by using a simple model based on co-workers
traits and orientation.
Pay increases, or bonus payments for better
performance are an acceptable practice by
managers.
People are motivated if they are enjoying doing
what they like to do.

MOTIVATION &
During the recession of the 1990s Lincoln
Electric Co. lost money in its foreign
operation.
Managed not to lay off any workers,
and the company even managed to
reward workers 75% of their salary in
bonus pay.

MOTIVATION &
The production of Lincoln Electric Co. is
twice that of its rival manufacturers,
which is due to incentive plans,
which give bonuses for the company’s
additional production.
Lincoln uses a multi-faceted incentive
system comprising of:
Piecework pay.
Shared profits.

MOTIVATION &
Year-end bonuses.
Stock ownership opportunities.
Job Security.
This incentive policy improved the
performance of the company,
which gained them a competitive
advantage within the industry.

MOTIVATION &
 The company rewards the workers for:
1. turning out high-quality products
2. high efficiently
3. while controlling cost.
 Piecework system rewards high
productivity in Lincoln Electric Co.
 Each job is carefully rated according to
skill, effort required, and responsibility.

MOTIVATION &
Some controversy regarding the use of
money as a motivator.
Some researchers have chosen not to
link money to workers performance,
Others have reached the conclusion
that money is a way to motivate
workers.

MOTIVATION &
The reason for uncertainty amongst
researchers is that:
financial incentive in itself can be
satisfying depending on worker’s deferring
levels of needs.
The motivational value of money can
change according to the economic
situation of the nation.

MOTIVATION &
During a recession, when incomes are
falling,
it will remain static,
while other expenses increase the
importance of money as a motivator
increases.

MOTIVATION &
There are certain ways that people can be
motivated to give better performance.
It is a manager’s task to find the best way to
improve performance.
In the UK the methods in general are that:
Manual workers are motivated with financial
incentive.
Non-manual workers, especially managers, are
given none or semi-financial incentives,
or with promotion,
Or a big financial incentives such ads banks.

MOTIVATION &
There are four determinants of labour
productivity:
1. The duration of worker effort.
2. The intensity of worker effort.
3. The effectiveness of worker effort
combined with the technology used.
4. Efficiency of worker effort.

MOTIVATION &
Individuals seek a job, which will satisfy
their needs.
Some such as nurses or teachers seek
jobs with high intrinsic satisfaction.
So what determines motivation in the job?
Is it mainly to do with individual needs?
Or is motivation more strongly influenced
by incentives given on the job itself?

MOTIVATION &
The job people hold is a key variable for
their motivation.
Understanding what a job requires is a
complex,
A vital requirement in trying to find ways
to improve employee performance is the
key.
There are constant changes within most
work environments,
As well as peoples performance
expectations.

MOTIVATION &
The implication of such changes may not
be so clear to the employer and
employee.
The company reward system,
the environment,
culture of the organization,
Personal condition,
They can greatly influence the individual’s
performance.

MOTIVATION &

MOTIVATION &
Examine the factors,
Find which motivate your workers at work,
The style of management has an
important role to play.
In the last 2 years insecurity has become
an important and significant factor.

MOTIVATION &
In part, this has been due to a significant
change in employment patterns,
short term contracts,
rationalization,
Agency work,
the elimination of millions of permanent
jobs being replaced increasingly by
temporary work.

MOTIVATION &
There are two reasons why a worker is motivated
to work and perform well:
1. the nature of work,
2. the actual content of the tasks assigned to the
worker,
The most challenging and demanding task will
have less effect on motivation if:
 the content of work is congruent to the needs
and expectations of the workers involved.

MOTIVATION &
The other reason for motivation to work
well is the work content.
This includes aspects of the work such as:
 supervision,
material resources,
work environment
etc.

077 Motivation and Financial Incentives

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