MBA-1 MHC

“Motivating employees at the

workplace”.

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Marianna Katerusha 0993KDNF1009
MBA-1 MHC

Assignment Structure

1. Introduction 3

2. Motivating employees: pro and contra.

3. Motivating methods (case studies)

4.

Conclusion

References

Bibliography

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Marianna Katerusha 0993KDNF1009
MBA-1 MHC

Introduction.

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Marianna Katerusha 0993KDNF1009
MBA-1 MHC
Due to the financial crises companies all around the world are cutting back their financial
motivating programs. In many cases organizations feel that can decrease rewarding long service
during recession as opportunities for employees for moving jobs are limited. Nevertheless the
need to motivate employees in this situation is strong than ever. Many companies do not have
enough cash to recruit and train the new staff, so they have to relay on their skilled workers to
run the business and be competitive in the market.

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Marianna Katerusha 0993KDNF1009
MBA-1 MHC

2. Motivating employees: pro and contra.

The main theories that explain what make people work harder are: Maslow ‘hierarchy of
needs’ theory, Taylors ‘scientific management’, Herzberg ‘two factors’. According to the
Maslow theory the employees have to satisfy their basic needs like safe and secure and then they
may help company to develop. Taylors’ theory assumes that every work should be measured by
the work done. Workers work harder as they receive more money. Herzberg in his theory pointed
out that there were certain factors that must be in the first place. For instance clean work place,
payment. Only in this case these factors may influence others motivation factors.

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Marianna Katerusha 0993KDNF1009
MBA-1 MHC
Today there are a lot of methods how to motivate employees in the workplace: financial,
methods like profit sharing, remuneration packages, annual bonuses, merit plans, non financial
incentives like leadership, projects, promotion. The types of gifts presented by the companies
have changed with years. Instead of traditional golden watch, tie or scarf with company brand
many organizations rewards vouchers, retail discount cards, pre-paid electronic cards with cash
sums, etc.
A lot of studies were conducted and proved that people who have satisfactory salary
prefer more nonfinancial incentives than extra money. Financial rewards mainly generate short-
term rise of people activity. The McKinsey survey examined three non-cash motivators: praise
from managers, leadership attention, chance to lead projects or tasks forces. McKinsey also
studied financial incentives like: cash bonuses, increased payment, stock or stock options (2010,
p. 14) The survey showed that non financial factors play the important role for the employees as
make them feel that company value them and provide them opportunity for career growth. The
interview with HR directors in various companies showed that a lot of companies this year cut
their remuneration programs. Moreover today situation is challenging to the companies to retain
the talented people. The reliance on financial incentives has fell during the last 12 months. 13
percent of survey respondents reported that managers praise employees less often in comparison
to the previous years, 26 percent reported about lack of leadership attention.
Motivating employees in non-financial way require more time and managers efforts. The
lack of interactions between manager and employee leads to the situation when manager cannot
objectively evaluate the employees’ performance. For this reason face-to-face meeting with staff
are highly motivational. To develop the leadership capabilities and motivate people managers
also give chance to some employees to lead a project. The retaining the top talent is an important
issue for the company. The company may select few people to the leadership program and create
special projects for them. The big challenge to the companies is to identify which motivators
really influence the people activity and what satisfy employees.

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Marianna Katerusha 0993KDNF1009
MBA-1 MHC
Many businesses and executives may implement also employee share ownership plans
(ESOP) to motivate employees. ESOP assumes that employee can be a companies’ shareholder
if he meets the specified criteria. Employees may be granted shares or may buy them in specified
price. The first issue in designing the ESOP is selecting the criteria for participation (those who
are ESOP eligible and those who are not). The other key in building ESOP program is to
determine the size of ESOP pool (the proportion of ownership shareholders may give for ESOP
rewards). Nevertheless owners have to bear in mind that ESOP pool will grow over time, new
shares issued each year. The other important issue is establishing characteristics of shares. For
instance, there are shares that have different rights, non voting shares or limited voting rights.
Liquidity provision and restrictions must be clearly established. The restrictions provide
information if the shares can be traded and when. It can be problematic as sometimes when the
employee leave the company the company do not want former employee holding shares and start
purchasing in lower price. The major benefit of ESOP is that it: reduce cash compensation,
attract and motivate employees, income tax efficiency, obtaining financing. However, this
method has also several risks like: government requirements, cash required, decline in share
value, possible dividing employees into two classes (Howard E, Johnson, 2009). Procter &
Gamble company is a good example of enterprise that use ESOP method to motivate their
employees. The company started to use this method in the middle of nineteen century. This share
program spread across Atlantic. Today more than 4,500 UK staff have an advantage to spend
2,5% of their salary for shares. According to the Andy Sharman, between 80% and 90% of
employees own shares. Nine years ago the company practiced free shares to the employee to
attract interest to this program. The company also provides financial advising services to its
employees. Now employees may have face to face meeting with financial adviser regarding their
pension plan (‘Majority of Procter & Gamble staff take advantage of share scheme’, 2006).

3. Motivating methods (case studies).

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Marianna Katerusha 0993KDNF1009
MBA-1 MHC
The most elaborative studies in employee motivation occurred in Minneapolis Gas
company and involved 31,000 of men and 13,000 of women. The study was carried between
1945 and 1965. The factors that motivates people most of all were: promotion, type of work,
company proud to work for. Such factors as pay, benefits, working conditions received less votes
among the employees. So the common belief that money is the main motivator was uncertain
(Employee motivation: theory and practice, 2010).
Today a lot of companies use recognition methods, promotion and rewards to motivate
their people. The Royal Bank of Scotland uses all these methods to award employees and inspire
them for the better performance. RBS has special rewards called Total Rewards. The core of the
project is satisfactory pay. It provides also flexible benefits like health cover, pension, and
childcare. The financial rewards are bonuses on achieving targets and profit-sharing scheme. All
employees are paid bonuses on 10% if the company does well in the market. The company has
also community projects and charity funds. The other reward for employees is work life benefits
like flexible time programs (‘Motivating through total reward’, 2010). The other company that
uses promotion as motivation method is Starbucks Corporation. The famous retail coffee shop in
the world use motivation as a vital factor for business. The managers in Starbucks treat all
employees equally. The employees who work over 20 hours per week are granted benefits. The
company also provides weekly interview to find out the employees needs. Employees are also
provided with good welfare policy including medical insurance. In general, the company
combines the financial method and emotional to motivate employees. The good relations
between managers and employees lead the company to the successful path (Starbucks, 2007).
One of the financial methods of motivating employees is retail vouchers. In 2006 DHL
Express rewarded the staff who stayed with them 10, 20 and 30 years. The retail vouchers worth
between £100 and £500 that depended on employee length of service. The project also included
vouchers to the various stores and restaurants. On the words of Senior Director of DHL Express,
that was the action to value loyalty as a lot of people had significant services in the company
(Sullivan Nicola, 2009).

Conclusions.

After analyzing the theoretical and practical part of this assignment we may point
out that…

(2,308 words)

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Marianna Katerusha 0993KDNF1009
MBA-1 MHC

References:

Dewhurst Martin, Guthridge Matthew, Mohr Elizabeth, 2010, ‘Motivating people:

Getting beyond money’, McKinsey Quarterly, Issue 1, pp.12-15.

Sullivan Nicola, Dec. 2009, ‘Loyalty counts ’, Employee Benefits, pp. 23-24.

Howard E, Johnson, 2009, ‘Employee share ownership plans: Are they right for your
company’, CMA Management, Vol. 83, Issue 6, pp. 26-28.

Employee motivation: theory and practice, 2010. Retrieved April 7, 2010, from
http://www.accel-team.com/motivation/

‘Motivating through total reward’, 2010, The Times 100. Retrieved April 7, 2010 from
The Times data base.

Starbucks, 2007. Retrieved April 7, 2010, from http://www.starbucks.com/

‘Majority of Procter & Gamble staff take advantage of share scheme’, 2006, Employee
Benefits. Retrieved April 8, 2010, from
http://www.employeebenefits.co.uk/item/1641/pg_dtl_art_news/344/pg_ftr_art

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Marianna Katerusha 0993KDNF1009
MBA-1 MHC

Bibliography:

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Marianna Katerusha 0993KDNF1009