Management Thesis:

Motivation of Employees and performance

Name: Vedant dubey

SAP ID: 81022018009

Topic: Motivation & Employee Performance

Preface

The topic of this thesis is motivation and employee performance in the organisation. The aim
of the thesis is to study about what is Motivation and how motivation techniques can affect the
work performance of employees. Motivation can be intrinsic or extrinsic. Motivation is seen
as an important factor in increasing the performance of both employees and the organisation.

Many scholars came and gave their theories on ‘How to motivate employees?’. So who were
these scholars and what theory they gave? Are these theories of motivation is still been
followed?

Employees can be motivated in the organisation to perform better. Many leaders use motivation
techniques and tools to motivate the employees. So what are those tools and techniques?

Thus the thesis aims at studying the incentives and theories related to Motivation and see if
they are still applicable in today’s time and which are the companies who follows the
motivation techniques and theories and does their performance get influenced by it?
Management summary

The thesis is focused on studying the relationship between the motivation and its effect on
employee’s performance. The thesis is a literature research and thus a review by the work of
others.

The earlier researches on this topic conducted by many theorist and they have found that there
exists correlation between motivation and performance. There exist a positive relation between
motivation and employees performance. It appears that when the organisation provides certain
job characteristics, employees can be motivated to perform to perform well and good in the
organisation. And it also appeared that intrinsic factors have more effect on the relationship
than extrinsic factors.

The thesis is divided in few chapters, an introduction to problem, the concept of motivation,
the theory related to laws etc. At last there is conclusion of the chapters and finally finding out
what is the relation.

Since this thesis is a literature research and thus is based on the research of others, reference
are provided at a results, statements and conclusions of others. This has been done in order to
prevent plagiarism.
 Content

1. Introduction

 What is the problem

 Research questions

2. Understanding Motivation

 The concept of motivation

 Approaches to motivation

3. Theories related to motivation

 Maslow’s theory of motivation

 Herzberg two factor theory
 McGregor’s theory of law

4. Tools and Techniques of Motivation

 About
 What are tools and techniques for motivation?
 Financial incentives
 Non-financial incentives
 Motivation for workers

5. Employee motivation and performance

 Relationship between employee and motivation

 Example of companies who follows these techniques

6. Conclusion

References
1. Introduction

Motivation is an aspect of management which is been researched upon in earlier times too.
Many theorist came and gave their definition and techniques of motivation. The first important
theory was given by Mr Maslow which was named, “Maslow’s hierarchy of needs “(1943).
The another theory was given by Mr Herzberg which was also called the ‘two factor theory’
where he defined employee motivation as performing a work related action because you want
to do.

McGregor also gave his theory name ‘McGregor’s theory X and theory Y’ (1960s).

The motivation was divided into extrinsic and intrinsic motivation which attracted the focus
company towards the employee motivation.

A. What is the problem?

The problem for which we are finding solution is how we can motivate the employees so that
they perform better.

B. Research questions

Q1 what is motivation and why are various theories related to it?

Q2 what are tools and techniques of the motivation?

Q3 How can tools and techniques can be used to motivate and influence employee work
performance?

2. Understanding Motivation

Motivation refers to the process by which a person’s efforts are energized, directed, and
sustained towards attaining goal (Robbins , Coulter, & Vohra, 2013). It derived from the word
‘motive’ which means needs, desire, and wants within the individual. Motivation is the process
of influencing or stimulating a person to take action that will accomplish desired goals (Mondy,
Holmes, & flippa, 1980)

The wilful desire to direct one’s behaviour towards goal is motivation (Middlemist & Hitt,
1981).In relation to that many scholars defined motivation in their own words. According to
Staw (1983), Motivation I generally defined ‘as a proponent state that energizes and guides
behaviour’. (How motivation is defined by scholars)

 Approaches to motivation

 Intrinsic motivation means doing something because it’s personally rewarding to us.
When we are intrinsically motivated our behaviour. The individual’s motivational
stimuli comes from within. For example we play games because we like to do. We read
books because it feels us satisfied.

Thus in the same way an employee do the work he likes to do and for which he have
internal motivation to do that if he is motivated Intrinsically. Giving more responsibility
to employees with more authority, it will intrinsically motivate an employee to do the
work. Giving more challenges tasks to employees brings a sense of pride and
belongingness in the employees. Many companies like Tata and Reliance provides their
employees with more authority and responsibility to test the employee’s capability and
also to intrinsically motivate the employees.

 Extrinsic motivation includes doing something because we want to earn any reward
or to avoid any punishment. We do it because we need to achieve our goal and hit the
target. For example we study for a test to pass, we exercise to lose weight.

In the same way an employee does the work to achieve the target when motivated
extrinsically. Bonus on the achievement of any task is one of the common extrinsic
motivation technique for an employee. The company can put rewards on the completion of
tasks like extra holidays or a trip for their family etc.

‘Ultimate Software’ is the renowned company which is developer of people-management

software such as Quicken loans and it offers free vacation to its employees in every 2 years
and whole vacation family trip is been sponsored by company and all the expenses of that
deserving employee is been funded by company itself.
So different scholars gave their own definition of Motivation and each one of them was correct.
But it seems that Maslow, Herzberg and McGregor were among the first researcher to give
their theories about motivation. These theories can clear our concepts about what motivation
is and how it is done.

3. Theories of Motivation

There were different theories given by many scholars. But Maslow, Herzberg, and McGregor
were among the prominent first researchers to give their theories. Discussing those theories
will clarify our concept about motivation.

A. Herzberg Two-factor theory

Herzberg found the two factor theory of motivation in 1959. He differentiated his theory
between Hygiene factors and motivators. The point to focus upon is the factors will
either be motivators or hygiene factors, it can’t be both.

Herzberg wanted to inquire and find out when employees feel satisfied or dissatisfied.

He found that when people tend to feel good about their work, they tend to say Intrinsic
factors arising from the job itself, such as achievement, recognition, and responsibility
and this was kept under motivators. On the other hand if they felt dissatisfied they tend
to strike few extrinsic factors such as company policy and supervision was kept in the
hygiene factors. Herzberg believed that the managers can’t vanish the hygiene factors
as if they finish the ‘dissatisfaction’ then basically there would be no satisfaction left.
He suggested that the extrinsic factors must be adequate and not so many that
employees get dissatisfied. Negative extrinsic factors de-motivates employees that were
included in Hygiene factors. He suggested the future managers to focus more on
intrinsic factors that are motivators. Not all extrinsic factors were bad though. The
figure will clear us more about the factors.
 -Varied work

Motivators -work itself

-Achievement

-Recognition

-Supervision

-Company policy

-working conditions
Hygiene factors (De-motivators)
-Status

 Traditional extrinsic techniques can’t motivate employee on a daily basis, it does not
encourage long term motivation on consistent basis (By pink, 2009).
Quora is one of the biggest examples of intrinsic motivation. It tapped that people who
have the same interest in that and those who would like to share their knowledge with the
same minded people. Quora didn’t encouraged the extrinsic motivation technique but
used intrinsic motivation technique that is recognition and it rates the answers of people
to recognise them.

Tesco focuses more it’s both hygiene factors and the satisfiers.
For E.g., it gives power and motivates its employees by appropriate and timely
communication, by delegating responsibility and involving staff in decision making. It
holds forums every year in which staff can be part of the discussions on pay rises. This
shows recognition of the work Tesco people do and rewards them.

Tesco staff can even influence what food goes onto its restaurant menus. Employees thus
become motivated to make choices that will increase their use of the restaurants.

B. Maslow’s theory of motivation

“If you only have a hammer, you tend to see every problem as a nail” (Maslow,
1943).Maslow’s was a psychologist who proposed that within every person there exist
the hierarchy of five needs. “We are motivated by the desire to achieve or maintain the
various conditions upon which this basic satisfaction and by certain more intellectual
desire” (Maslow, 1943). He told that the 5 needs of the hierarchy must be fulfilled of
every employee and when lower need of an employee is completed the person desires
more and want to fulfil his higher needs that is esteem needs and self-actualisation
needs. “Lower order needs have to be satisfied in order to pursue higher level
motivators along the line of self-fulfilment” (Maslow, 1943). He specified 5 needs in
the hierarchy. They are-

1 Physiological need – The physiological needs of person include food, shelter,

clothing, water, sex etc. which completes the biological requirements of a person or
physical need of a person. If these needs won’t be satisfied then our body will not be
able to function properly.
2. Safety needs – It is the person’s needs for protection from elements, security from
physical and emotional harm.
3. Social needs – ‘Human is social animal’ it means that we require friends, work, love
and family to live. After above need are fulfilled the person desire for social needs. It
is the need for interpersonal relationships motives behaviour.
4. Esteem needs – After all above needs are fulfilled a person wants status and respect
in the society. It is person’s needs for internal esteem factors, such as self-respect, status
and achievement etc.
5. Self-actualization needs – It means realizing personal potential and seeking personal
growth. A crave to become everything that he is capable of becoming as his all needs
are fulfilled. Maslow said “What a man can be, he must be. This need we call self-
actualization”.
 Self-
Actualisation

Esteem

Social needs

Safety needs

Physiological needs

Practical implication

Kellogg's is the biggest example which follow maslow’s theory of motivation.

(Building a better workplace through motivation, 2016)

 Physiological needs – Kellogg's offers competitive salaries. This gives people the
means to acquire the basic needs for living. The Kellogg's Conflux flexible benefits
programme allows employees to choose those benefits that suit them. This includes
childcare vouchers, cash alternatives to company cars and discounted life assurance
schemes.

 Safety needs – Kellogg's values the safety of all employees. The company is committed
to providing a safe and healthy work environment to prevent accidents. Employees are
however accountable - that means they have to take responsibility for observing the
health and safety rules and practices. Kellogg's also offers employees a range of
working patterns. Some may want to work part-time, others may want career breaks or
undertake homeworking.
 Social needs – These are associated with a feeling of belonging. Kellogg’s operates
weekly group 'huddles'. These provide informal opportunities for employees to receive
and request information on any part of the business, including sales data and company
products. This helps strengthen teams and enhances workers' sense of belonging.
Having an open approach to communication keeps everybody focused on the
company’s aims helps individuals contribute to the company's K-Values. They include
values such as being positive, seeing the best in people and recognising diversity.

 Self-actualisation – Kellogg's provides employees with the opportunity to take on

challenging and stimulating responsibilities. For example, the business provides the
opportunity for individuals to take ownership of projects. This enables them to develop
and improve.

C. McGregor’s Theory X and Theory Y

Douglas Mcgregor gave his Theory C and Theory Y in 1960. He divided the people on
basis of his 2 divison that is Theory X and Theory Y. Acoording to him Theory X is a
negative view of people which assumes that workers have little ambition, dislike work,
want to avoid responsibility, and need to be closely controlled to work effectively.

Theory Y is a positive view which assumes that employee enjoys work, seek out and accept
reposibility, and exercise self direction. McGregor suggested the people included in Theory
Y should be a part of decision making and guide management practices in organisation.
They should be given more responsibilities and more challenging work and should be given
good group relation that will help to maximize their motivation.

Theory X managers tends to take negative view of their people, andthink that they are
demotivated and dislike their work. (team)

The work that is managed like this in an organisation can be repetitive, and people are often
motivated with a "carrot and stick" approach. Remuneration and performance appraisels
are usually based on visible results, product output, total sales and are used to control staff.
The people in this type :-
 They hate or dislike their work.
 They need to be forced to complete their tasks.
 They avoid their responsibilities.
 They need supervison on every step.
 They have no ambition to do work and thus need rewards to get motivated
.

Theory Y managers have an Positive view and positive opinion of their people. These
managers use decentarlization and provide their managers with more authority and
responsibility. This brings coordinated and positive working attitude while working in the
group.

Managers give them more challenging task and provide them opportunity to develpoe their
skills and abilities and also include them in decision making & take their suggestions. The
appraisals of theses employees are regular as they are dedicated to their work. The
appraisals do not include monetary incentive rewards like Theory Y.

Theory Y employees have the opportunity for promotions and development.

This style of management assumes that workers are:

 They take their own initiatives.

 They are involved in decision making.
 They are self motivated and no need of extrinisic motivation.
 They enjoy taking responsibilities.
 Seek and accept responsibility, and need little direction.
 They like to take challinging works.
 They develop creativity and imagination.
4. Tools and techniques of Motivation

 About

Tools and techniques of motivation basically are the incentives which managers offer to
employees to motivate them. "Incentive means that which incites or has tendency to incite
action." (Terry, 1980). Studying these incentives helps the managers to find out the answer
of the question that is “How we can motivate employees?”. Incentive basically means an
inducement that stimulates one to act in desired direction as the managers want them to.
Organisation uses many types of incentives to motivate employees.

Organisation generally uses two type of incentives. That are Financial and Non Financial
incentive. Financial incentive are those type of incentives which uses money as a tool of
motivation. Non Financial incentives are those incentives which doesn’t uses money as a
tool of motivation. Lets explore and search what these incentives are and how company
uses them to motivate their employees.

A. Financial Incentives

These are the incentives in which managers uses money as a tool of motivation to
motivate their employees. As we all know that money plays an important role in persons
life. These incentives comes under extrinsic motivation approach. The employees are
extrinsically motivated to the task and complete their work. Generally these incetives
are for temporary motivation and can not be used for a long period of time. What are
these incentives?

(i) Pay and allowances: Salary or money is the basic need for which an employee
works. It includes money or allowances like dear allowances. The salary of an employee
generally depends on his position and the work he does, this salary can be increased
through incremental plans if the employee deserves it as this will motivate the employee
to work more and hard. In many companies like Tata, Tesla, Kellogg's are few of the
companies who pay attention to these Incremental and allowances plans to motivate its
employees.
(ii) Productivity linked wage incentives: In the workers also the wages are linked with
their productivity. Like we saw in earlier times F.W Taylor gave the idea to link the
wage system with the productivity.

(iii) Bonus: It is an incentive which is given over and above the basic salary of a person.
Like companies gives bonus to its employees on Diwali and other festivals also. They
also offer bonus when employee performs exceptionally well and hits his target.

(iv) Profit Sharing: In this incentive the organisation shares its profit with its employees
which creates a sense of belongingness in the employees for the organisation. This
serves as a great motivation to employees to perform better.

(v) Co-partnership/ Stock option: In this incentive the company offers the employees
its shares at a very low price. Many times company allots the shares to its employees in
respect of cash that is offered above the salary. The shares allotment creates a sense of
belongingness to the employees for the organisation and which motivates them to work
for the organisation more fruitful way.
Infosys is the biggest example of this incentive which introduced the scheme of stock
option as a part of managerial compensation. ”A great leader also has the ability to
make people an inch taller in his presence” (Murthy, 2001).

(vi) Retirement Benefits: The Company offers various financial plans like provident
fund and provision plans to employees. The company offers these plans so that they
feel secured and safe about their work. It fulfils the 2nd Maslow’s hierarchical need that
is safety need.
Nowadays all the company basically provide employees with these plans. Provident
fund is the most basic example of this incentive which is provided generally by the
organisation to its employees

(vii) Perquisites: These are generally the allowances offered by the company to its
employees over and above their salary. For example car allowance, children allowance,
dear allowances etc. This motivates employees to pay more of their time to the
organisation.
 Nowadays generally most of the renowned companies like Google, reliance, Tata,
Infosys offers its employees with these allowances.

B. Non-financial Incentives

These are the incentives in which managers doesn’t uses money as an incintive. Merely
financial incentives are not enough to motivate employees. Managers uses intrinsic
approach to motivate their employees such as as status, employee empowerment etc.
Managers inrinsically motivate their employees. Intrinsic motivation is long lasting as it is
inducement to do work. What are these incentives?

(i) Status: It is ranking of the positions of the employees in the organisation. The
incentives like, rewards, recognition, authority, responsibility, perquisites and
prestige of depicts the status of a person in an organisation. Basically ‘Status’ talks
about esteem needs and managers focus on fulfilling the esteem needs of a person.
Many companies like Kellogg's, Tesco, and Dominos have the display chart of best
employee of the year. These best employees year of the company gets recognition
and status in the company which motivates the managers and employees
intrinsically.

(ii) Organisational Climate: It indicates the feature of an organisation which helps us to

differentiate between the other organisations. These characteristics affects the
performance of the employees. It is the congenial working environment in which
employees work. The better the organisational climate of the company the better
will be the motivation for the employees to work.
Nowadays generally every company has a good organisational climate but Apple
and Google are the biggest example who has the best climate for the employees to
work in. They have got all the facilities and amenities that they feel motivated for
their work.

(iii)Career Advancement Opportunity: Every employee likes to be promoted. The

managers should give carrier advancement opportunity to the employees. The
managers should give opportunities like training development to the employees so
that they can develop and grab the future career opportunities.
 Berkshere Hathaway, Wawa, OMINI Systems are some famous examples is the
company who run employee development programme every year. (Lily Martis)

(iv) Job Enrichment: Job enrichment means the designing of work which include more
responsibilities, and greater variety of work which require more skills. Manager
should provide the opportunity for personal growth and a meaningful work
experience to its employees. If job is enriched the job and work of the employees
itself get increased as they get motivated.

(v) Employee Recognition programmes: The employees wan to fulfil their esteem and
self-actualization needs so they want recognition from their managers. The
employees feel that they should be recognised and managers should encourage and
praise them. Recognition means acknowledgment with a show of appreciation.
When such appreciation is given to the work performed by employees, they feel
motivated to perform/work at higher level. Examples for employee recognition can
be that managers should praise the work of the employees, giving certificates to the
employees, putting their names on the newsletter of the company etc. “Take care of
employees better than anyone else and they will take care of customers better than
anyone else” (Quotes for employees)

(vi) Job security: Every employee wants its job to be secured. They want the stability
of income and want security about the job. FedEx express, Starbucks, UPS are the
top rated companies who provide the job security to its employees. (Top-Rated
Workplaces for Job Security and Advancement)
(vii) Employee participation: As the name specifies that employee want to get
participated in decision making process. Managers must include the Theory Y
people according to McGregor in the decision making process of the company.
Google and apple again are the biggest examples for the companies who take
employees in their decision making process.
(viii) Employee Empowerment: It means that employees should be given more
autonomy so that they work with more motivation. Managers should aim that
employees feel that their job is important for the company.
 Google is the best example who gives it employees the autonomy to design their
work and also ask them to design the Logo of Google by their own creativity.
Employees are given complete opportunity to develop and work accordingly.

(ix) 5. Employee motivation and performance

The employee motivation and its performance is directly connected. The managers should pay
attention to all the incentives that we researched upon that is financial and non-financial
incentives. The scholars like Maslow and McGregors believed that the performance of the
employees is directly connected to their motivation Google can be seen as the eprfect example
for this. Thus employee performance and motivation of employees go hand in hand. If
employees are motivated well then thet will peform better for the Organisation

Google way of Motivating employees

Google, owns world’s most renowned search engines (Google Theoretical Motivation Theory,
2017). This project was initialized by two graduate students in 1998. “The purpose of Google
was to make web pages, discussion forums, and individual words or phrase easily searchable”.
(Holden, 2008)

Larry Page and Sergey Brine are the founders of the famous search engine ‘Google’. The name
sensibly thought, represented the goal of Google to make the loads of information available
universally via a single source (Google.com, 2010). Thus Google became the most famous
search web engine in the world which is still used by majority of people in the world. (Wahla,
2006). Thus Google set up and captured the large search engine and technology business on
World Wide Web. (Wise & D, 2006)

"If we were motivated by money, we would have sold the company a long time ago and ended
up on a beach." (Page, 2005). The success of Google goes to its employees and the leaders of
it that it was also included in Merriam Webster and oxford dictionary in 2001. The Sentences
“I need to Google that and get more background. “& “I goggled him and found out that” were
commonly heard. (Scott, 2008)
“As a leader it is important to not just see your own success, but focus on the success of others”
(Pichai, 2016). Google was designated as world’s number one in “best company to work for”
in 2007 and 2008, by the fortune magazine, which was based on Google voting.

The employees working in the Google Company are proud to call themselves as the employee
of the Google (Tactics, 2016). Therefore the employees worked hard to develop the most
renowned search engine of the today’s world and also gave opportunity to Google to expand
more. Google receives as, many as 1,300 resumes per day. In response to its 3000 job vacancies
in 2006 it received 760,000 applications. (Griffen, R & Moorhead, G., 2009)

Google corporate management policies have been analysed, indicating the including of features
benefitting the employee, creating a different environment compared to others which may be
considered fallacious for a working atmosphere but still it has lead to a unique and distinct
Corporate Culture at Google (Weber, S, 2007).

Google has broken the line of human resource management and have gone beyond that. They
have delegated a corporate culture of their own by providing employees with facilities beyond
expectations (Weber, 2008). There are many ways that Google maintains a motivating work
experience throughout its entire company:

Google allows the employees to develop creativity. The employees are allowed to work on
their own project in the 20% of total time. This give the employees the freedom and chance to
develop their own creativity. Creativity of the employee is tested and this intrinsically helps to
motivate the employees and also. A more structured approach to an employee’s workload can
often lead to a lack of inspiration and a less stimulating workplace.

Google pays the same amount of time in developing and taking care of their employees as it
take in developing product. There are several facilities and amenities available at Google that
most companies do not have and offer including things such as gym membership, free haircuts,
and shuttles from work. The new parents also get extra time off and allowances and money to
welcome their new member in the family. Google also refund or repay to any to any job if it
helps them.

Google likes to make their employees life happy and easier. They say it’s all about removing
barriers so that ‘Googlers’ can focus on the things they love both inside and outside of work
(Weber, 2007). The Google provides with the medical support, a place for recreation and a big
canteen to relax and kill their stress.

Google focuses and pays more emphasis to food. In fact there is a rule that wherever ‘Googlers’
go they don’t have to go far to access food less than 150 feet for Google’s East Coast HQ
(Weber, S, 2007). Google offer free food to its employees and they have big cafes and canteens
to have their free food thus Google motivate their employees extrinsically. Linking back to the
healthiness of employees, the healthier options are clearly visible with non-healthy foods are
hidden behind opaque glasses and jars with nutritional labels to avoid over consumption.

Google emphasis on satisfaction of employees which motivates them in both intrinsically and
extrinsically manner. The emphasis of Google was to make the congenial and recreational
working environment for its most talented employees. The idea was and is simple, creating a
work culture that keeps employees happy will motivate them to do their best and will keep
them loyal to the company.

“Do not do something because someone told you to do so.” (Page , 2014)

Innovations arise from questioning and discussions. (Hamel , 2007). Giving only command to
the employees will only hamper the creativity of employees “I think I can” culture and will
nurture “no you can’t” bureaucracy. This is something the Google. Inc. would not permit. (How
Google Inc. reward its employees, 2010)

6. Conclusion

It can be concluded that the employees can be motivated to work better in the organisation.
Motivation is a critical task for every manager. But their exist a direct relationship between
employees and motivation. As we motivate employees the performance given by the employees
also increases. We saw various scholars like Maslow, Herzberg and McGregor taking the
responsibilities to find ou how managers can motivate its employees. Internal satisfaction of
the employee is very necessary as it encourages them to perform better and that’s what Maslow
theory talked about.
Maslow, Herzberg and McGregors all talked about motivation of employees. The Maslow
concentrated more on the needs of the employees that is true in todays time too as the employee
needs his needs like physiological safet and esteem needs to be fulfilled. Herzberg concentrated
more on Motivators thatbare the intrinsic motivation techniques. McGregor also talked about
concentration onn Theory Y people that are the ones who are intrinsically motivated which is
true and is still followed by the todays managers. Managers see that employee gets
recogination, responsibilities and recogination in the organisation. Thus the managers still
unnderstand the relation between motivationn and performance of the employees. Thus the
theories given by these scholars are still applicable to employees and management nowadays
focuses more on the motivation techniques as they understand that employees are the one build
an organisation and they are the one who should be taken care of as they will care for the
organisation if they are been taken care of.

Employees can be intrinsically or extrinsically can be motivated by their managers. Some

researchers also argued that employees should not only motivated intrinsically but also
extrinsically. Quora, tesco, google are the most renowned companies who is the biggest
examples to motivate their employees inrinsically. Google is the biggest example we
researched upon who basically follows every type of motivation techniques and incentives.

Thus it can be seen that motivation and performance steps up side by side. They have direct
relation and managers have to do this critical task to motivate employees for the organisational
growth.
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