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The Importance of Financial Motivation Essay

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One of the main responsibilities of the manager is to motivate people in the organisation to perform above par at what they have been asked to. It is believed that the more accurately managers find the ways to motivate their employees, faster they would be able to get the jobs done with maximum efficiency and productivity and with minimized loses. It is said that 10% of a manager’s time is spent on developing motivational tactics (Locke 1982) but it is the established conclusion that managers in general do not have an accurate idea as to what really motivates their employees (Locke 1982).

It is for this reason research on motivation has been a continual process. This essay is aimed at introducing pragmatic evidence into the thus far findings, research, practices and conclusions surrounding the employee motivation. Further, different motivational theories will be discussed to conclude which theory best fits in the respective organization and the environment within. This study holds great significance as to it would assist decisions on motivation, and how in different sectors set motivational goals and how with respect to people, strategies change.

Further, readers would be able to conclude the effectiveness of either financial or non-financial motivation or both, depending on the structure of the job and the organisation. Theorists and research often have argued whether it’s the financial rewards that pull the best out of their employees or has it been the non-financial benefits that have motivated the employees thus far. In conclusion, it has been a race between financial aspects and the non-financial aspects and so far, different organizations have argued differently on the issue.

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This study aims to analyse both forms of motivational strategies by comparing F. W Taylors theory and research on it to what other theorists like Maslow, Mayo and Herzberg has urged upon. Thus, the essay is structured in such a way that it is a comparison between the two strategies. Since research on motivation has been a continual process and to understand motivation, one must have a good understanding on human-nature. As it is believed that organization with different employees would have employees of different nature, it is clear that every employee would be motivated through different, many ways.

This is why, first part highlights the importance of financial motivation within an organization while the second part discusses the impacts of non-financial motivation on the employees. The theories are then applied to a case study, where comparisons of the two banks is conversed. In order to conduct proper research, I was able to extract information through phone and email contact with Mr. Ali Rizvi (Relationship manager at Barclays) and Mr. Abdul Razaq (Vice President Faysal Bank). Further, my own experience working at both the banks has also been an integral part of the information provided in the case study.

Further, Mr. Rehan, the business manager at McDonalds was kind enough to let me conduct short interview with its employees for the financial motivational aspects. ANALYSING THE INFLUENCE OF FINANCIAL MOTIVATION ON THE PERFORMANCE AND COMMITMENT OF EMPLOYEES The concept of money as a motivational tool was first brought in by Frederick Taylor in 19th century, where through an experiment, Taylor concluded that workers would put in extra efforts into their job to maximise their gains (Opsahl and Dunnette 1966).

It has been an important motivational tool since the start of 19th century and experiments have proved how effective money plays its role in motivating the employees, however, it has been deeply criticized as not being the prime tool for motivation. In order to analyse that, Rynes Colbort and Brown presented conducted a survey and found out that pay is more imperative in employees’ actual choices than it is in their reports of what motivates them. It means, the behavioural aspect greatly supports motivation.

The finding were supported by the evidence when in 1980, Locke, Feren, Shaw and Denny in their experiment of productivity enhancing interventions found that the introduction of pay incentives enhanced the productivity by an average 30% compared to a 9-17% increased due to job enrichment, while employee motivational programs only contributed to a mere 1% increase. Judiesch in 1994 experimented that pay incentives increased the productivity level by 43. 7% (Rynes, Gerhart et al. 2004). One more research was conducted which claimed that since 1946, good wages are among the top 5 motivators for an employee (Wiley 1997).

In support to that, a study on 1000 industrial employees took place in 1992 by Kovach. The study was based on yearly changing comparisons which started from 1946. In 1946, the most important factor to the people was appreciation, and discipline being the least important. Then in 1980 and 1986, interesting work seemed to be the most important motivational factor while in 1992, people rated ‘good wages’ as the most important one (Opsahl and Dunnette 1966). Whereas when the employees were asked about the importance of pay, according to Herzberg, Peterson, and Capewell; Pay was ranked 6th in importance.

Lawler’s review of 49 studies in 1971 ranked pay as the third most important motivational tool. Further, Towers Perrin survey in 2003 based on 35000 employees found that employees ranked pay as 8th best motivational tool (Rynes, Gerhart et al. 2004). It can clearly be judged the difference between what people say and what they actually do. From the evidence above, it can be concluded that the inner feeling of a worker does seek for financial incentives and the level of commitment and performance is affected by it.

However, due to heavy criticism on the Taylors theory and the phrase that money is not a genuine motivator, most of the employees follow what they have heard and read elsewhere. Reviewing Taylors theory in the light of its critics, Maslow regularly mentioned the ‘lower order’ needs like shelter and food and then going higher towards the hierarchy of needs (Rynes, Gerhart et al. 2004). It can be judged from the fact that the lower order needs are best fulfilled through good financial background.

Thus, if an employee at initial stages can be financially motivated, he would be best able to meet the social needs, and would progress up towards the hierarchy with strong motivation, leaving a positive impact on his productivity. However, research in the article has suggested that financial rewards such as individual incentives, bonuses, and merit pay are all important for high-achievers and the most efficient employees (Pritchard, Campbell et al. 1976). Keeping that in mind, if it’s important to the high-achievers, then what factor is important to the employees working at the lower levels of hierarchy and who are on wages?

In order to find that out, I conducted a small interview questionnaire with the help of business manager of McDonalds restaurants in Slough. Mr. Rehan did allow me ask questions with the employees working there. The overall result I got was, the employees were actually motivated through financial means. They responded to it by claiming that for the workers, the work is mostly repetitive and job-rotation does help them overcoming the boredom, however, due to the same nature of the task, it doesn’t leave such a great impact.

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