Strategic Rewards Systems

SRS and Motivation

SRS and Motivation

What is Motivation
In order to understand how strong the relationship between rewards and motivation is we should know what motivation is.
Motivation is the processes that account for an individuals intensity, direction, and persistence of effort toward attaining a goal

The three key elements in our definition are intensity, direction, and persistence. Intensity is concerned with how hard a person tries. This is the element most of us focus on when we talk about motivation. However, high intensity is unlikely to lead to favorable job-performance outcomes unless the effort is channeled in a direction that is beneficial (Serve the organizational goals). Finally, the effort requires persistence. This is a measure of how long a person can maintain his or her effort. Motivated individuals stay with a task long enough to achieve their goal. Motivational theories could be classified under two categories, early theories of motivation and contemporary theories of motivation. The most important theory in early theories of motivation is

Hierarchy of Needs its probably most well-known theory of motivation is Abraham

Maslows hierarchy of needs. Maslow hypothesized that within every human being there exists a hierarchy of five needs: Physiological. Includes hunger, thirst, shelter, sex, and other bodily needs. Safety. Includes security and protection from physical and emotional harm. Social. Includes affection, belongingness, acceptance, and friendship. Esteem. Includes internal esteem factors such as self-respect, autonomy, and achievement; and external esteem factors such as status, recognition, and attention. Self-actualization. Includes growth, achieving ones potential, and self-fulfillment. This is the drive to become what one is capable of becoming.

As each of these needs becomes substantially satisfied, the next need becomes dominant.

Goal setting theory is a theory that says the specific and difficult goals, with feedback
lead to higher performance. Research on goal setting theory in fact reveals impressive effects of goal specificity, challenge and feedback on performance. Evidence strongly suggest that specific goals increase performance the easy ones, and that feedback leads to higher performance than none feedback.

MBO is one of the well-known methods in implementing goal setting theory but How Does Goal Setting Motivate, goal setting motivates in four ways: Goals direct attention. Goals indicate where individuals should direct their efforts when they are choosing among things to do. For instance, recognizing that an important assignment is due in a few days, goal setting may encourage you to say no when friends invite you to a movie this evening. Goals regulate effort. Goals suggest how much effort an individual should put into a given task. For instance, if earning a high mark in accounting is more important to you than earning a high mark in Strategic rewards, you will likely put more effort into studying accounting. Goals increase persistence. Persistence represents the effort spent on a task over time. When people keep goals in mind, they will work hard on them, even in the face of obstacles. Goals encourage the development of strategies and action plans. Once goals are set, individuals can develop plans for achieving those goals. For instance, a goal to become more fit may include plans to join a gym, work out with friends, and change eating habits. In order for goals to be effective, they should be SMART. SMART stands for Specific: Individuals know exactly what is to be achieved. Measurable: The goals proposed can be tracked and reviewed. Attainable: The goals, even if difficult, are reasonable and achievable. Results-oriented: The goals should support the vision of the organization. Time-bound: The goals are to be achieved within a stated time.

Self-efficacy Theory is an individuals belief that he or she is capable of performing a

task. The higher your self-efficacy, the more confidence you have in your ability to succeed in a task. So, in difficult situations, we find that people with low self-efficacy are more likely to lessen their effort or give up altogether, while those with high self-efficacy will try harder to master the challenge. Researchers propose four ways to increase self-efficacy: Enactive mastery is gaining relevant experience with the task or job. If an individual has been able to do a job successfully in the past, then he or she will be more confident to be able to do it in the future. Vicarious modeling or becoming more confident because you see someone else doing the task. For example, if X loses weight then it increases Ys confidence that he can also lose weight too. Verbal persuasion, which is becoming more confident because someone convinces you that you have the skills necessary to be successful. Arousal increases self-efficacy. Arousal leads to an energized state, which drives a person to complete the task. The person gets psyched up and performs better

Equity theory Individuals compare their job inputs and outcomes with those of others
and then respond so as to eliminate any inequities. Equity theory suggests that individuals compare their job inputs (effort, experience, education, competence, creativity, etc.) and outcomes (salary levels, raises, recognition, challenging assignments, working conditions, etc.) with those of others.

We perceive what we get from a job situation (outcomes) in relation to what we put into it (inputs), and then we compare our outcome-input ratio with the outcome-input ratio of relevant others. If we perceive our ratio to be equal to that of the relevant others with whom we compare ourselves, a state of equity is said to exist. We perceive our situation as fairjustice prevails. When we see the ratio as unequal, we experience this as inequity. There are four referent comparisons that an employee can use: Self-inside. An employees experiences in a different position inside his or her current organization. Self-outside. An employees experiences in a situation or position outside his or her current organization. Other-inside. Another individual or group of individuals inside the employees organization. Other-outside. Another individual or group of individuals outside the employees organization. Based on equity theory, when employees perceive an inequity, they can be predicted to make one of six choices: 1. Change inputs: (exert less effort if underpaid or more if overpaid) 2. Change outcomes: (individuals paid on a piece-rate basis can increase their pay by producing a higher quantity of units of lower quality). 3. Distort perceptions of self: (I used to think I worked at a moderate pace, but now I realize I work a lot harder than everyone else.). 4. Distort perceptions of others: (Mikes job isnt as desirable as I thought.). 5. Choose a different referent: (I may not make as much as my brother-in-law, but Im doing a lot better than my Dad did when he was my age.). 6. Leave the field (quit the job). Finally researchers expanded the meaning of equity to Organizational justice which is An overall perception of what is fair in the workplace, composed of distributive, procedural, and interactional justice. Distributive justice is Perceived fairness of the amount and allocation of rewards among individuals. (I got pay raise I deserved) Procedural justice is the perceived fairness of the process used to determine the distribution of rewards. (I had input into the process used to give raises and was given a good explanation of why I received the raise I did) Two key elements of procedural justice are process control and explanations. Interactional justice is the perceived degree to which an individual is treated with dignity, concern, and respect. (My supervisor is very nice to me) Evidence shows individuals in both individualistic and collectivistic cultures prefer an equitable distribution of rewards (the most effective workers get paid the most) over an equal division (everyone gets paid the same regardless of performance)

Expectancy Theory A theory that says that the strength of a tendency to act in a
certain way depends on the strength of an expectation that the act will be followed by a given outcome and on the attractiveness of that outcome to the individual.

In more practical terms, employees will be motivated to exert a high level of effort when they believe it will lead to a good performance appraisal; that a good appraisal will lead to organizational rewards such as bonuses, salary increases, or promotions; and that the rewards will satisfy the employees personal goals. The theory, therefore, focuses on three relationships. 1. Effortperformance relationship. The probability perceived by the individual that exerting a given amount of effort will lead to performance. 2. Performancereward relationship. The degree to which the individual believes performing at a particular level will lead to the attainment of a desired outcome. 3. Rewardspersonal goals relationship. The degree to which organizational rewards satisfy an individuals personal goals or needs and the attractiveness of those potential rewards for the individual.

Intrinsic and extrinsic motivation Intrinsic motivation refers to the motivation that comes from inside an individual. The
motivation is generated through satisfaction or pleasure that one gets in completing or even working on a task. Factors that influence on intrinsic motivation include responsibility, freedom to act, scope to use and develop skills and abilities, interesting work and opportunities for advancement. These motivators, which are concerned with the quality of work life, tend to have a longterm effect since they are inherent in individuals and not imposed from outside. (Armstrong 1988, p. 109-110).

Extrinsic motivation is something that is done to or for people to motivate them. It

arises from factors outside an individual, such as money, grades, criticism or punishments. These rewards provide satisfaction and pleasure that the task itself might not provide. An extrinsically motivated person might work on a task even when they have little interest in it. This type of motivation usually has an immediate and powerful effect, however it does not tend to last for long. (Armstrong 1988, p. 109-110).

Conclusion
Majority of literature emphasis that the strong relationship between reward and recognition respectively, and motivation and satisfaction. A well designed reward system will defiantly help the organization to achieve its goals and alter or change the organization culture as this will be based on understanding of the employees need and would align their objective and performance with the organizational objective achievement.