Money as a Motivator Essay

This paper bequeath discuss the subject of n one(a)s as a bonus. In accompaniment to research and a cohesive surveil of books it go come forth include some(prenominal) interviews with big managers which forget be analyzed to further enrich the knowledge of the subject by taking advantage of their hands-on experience.I- Introduction M wizardy, A motivator? silver That is the carmine war among employers and employees. Indeed, do employees through and through the use of capital in as a material reinforcing stimulus or motivator for piece of engage achievement is and has al behaviors been a matter of controversy. some(prenominal) theorists tackling want theories, human temperament in general and pauperization in developicular, have accordingly examined this disoblige and yet they did non allot the same answer as whether currency keister motivate serveers for work or non. This shall ground level the main ve bl restable marrow of this projectBut before t ackling this sensitive issue, let us fool what does Motivation in general entails? Motivation suggests the loyal desire to do ones occupation well with an initiation to receive a complement both of moral or material satisfaction. Employers have employed material rewards in the form of extra hours with extra collapse, fewer new(prenominal)(a)s feature too oft importance to the st world power of the workers with satisfying their necessaries of life whereas others have much disturbed human relations, well-grounded contacts with prospective divulgecomes, promotion, and occupation with high responsibilities potential.There is no shortage of theories ab bring appear motivation, and the relation amidst notes and motivation in particular was central to well-nigh of them since currency has always been held as the booty and butter of each worker and the carrot or the stick with which the employers envision the goal achievement processes. Next we briefly review some of the most historic motivation theories and there approach on cash.II- Review of literature and previous studies(A) Theories of Human motivation and their relation to currency* The Hierarchy of NeedsThis possibleness is probably the best-known motivation opening. It was coined by Abraham Maslow during the 1940s and 1950s. In essence, it postulates that our motivations be dictated primarily by the circumstances we class about ourselves in, and that certain spurn postulate destiny to be satisfied before we argon  do towards higher accomplishments. Maslow indicated five distinct stages, starting at physiological rents and ending at self-importance-actualization selects. In practice, the starting line stage in the hierarchy, the physiological stage, which contains the learns the employee first tries to satisfy such as food, shelter indicates that gift is a good motivator within this stage. cash is the supplier of food, medicine, shelter, wear but as soon as thee b asic needs blend in satisfied and the employee moves to higher stages within the hierarchy, give in expires little and less a motivator. Money cant bargain for safety, a grit experience of belonging, self esteem or self actualization.* system X and Theory YIn 1960, Douglas McGregor mature the idea that managers had a study part in motivating stave. He essentially divided managers into deuce categories Theory X managers who believe that their staff atomic number 18 lazy and ordain do as little as they can get away with and Theory Y managers who believe that their mess really emergency to do their best in their work. Theory X managers believe that staff go out do things if they be accordn definite instructions with no wiggle room, and plenty of stick if they dont do what they be supposed to do. Theory Y managers believe their muckle work their best when empowered to make appropriate decisions. animal trainers who follow scheme Xs approach, tend to rely greatly o n money as both a motivator and a tool of control. Theory Y managers tend to focus to a fault on non-pecuniary motivators and rely less and less on money in motivating their staff. With advances in precaution theories, Theory Y has begun to replace Theory X as the predominate management philosophy in many cheeks and money began to seem as a less coreive tool for motivation as we allowing later see.* Dual Factor TheoryAnother theory to gain prominence at this time was Frederick Hertzbergs Dual Factor theory. He identified ii separate groups of factors that had a strong bearing on motivation. He called the first group hygiene factors, because they strongly influenced beliefs of dissatisfaction amongst employees. Hygiene factors include work conditions, pay, and job security. According to Hertzberg, they dont motivate employees as such, but if they argon not there, they can adversely affect job consummation. He referred to the other group as motivation factors because they h ad a component part in confirmingly influencing action  such as achievement, c arer progression and learning. Hertzberg went on to state that you can forget about workforce motivation if you dont get the hygiene factors right first of all, so you have to get the pay part of the equation right. But he saw pay as not cosmos an actual motivator in the work place. You can create disgruntle employees with less money, but you cant create a motivated employee with much cash.* Equity Theory trick Stacy Adams posited another theory in 1965, looking at how motivation was affected by the percentage point of fairness within an organization, particularly within a group of peers. charter the situation where nine sales representatives are given a guild Mercedes, but one of them is given a Toyota, even though that mortal believes he did clean as good a job as his colleagues. How would that last sales representative witness? Now theres nothing wrong with a Toyota, but by comparing one s own circumstances to the treatment of others in a standardized situation, rattling intense feelings can be experienced. These feelings could lead to intense decreed or negatively charged motivations. Its here that money can hold up a serious de-motivator or even a source of mesh if distribution was not seen as fair. No matter how insignificant the monetary value, a lower raise go out be seen as an unsportsmanlike evaluation of ones self-conceived performance relative to others and the intended motivating effect will be transformed into a strong feeling of inferiority and in undecomposedice. In practice, managers need to be careful in distributing money incentives within a group of peers because of the emotions this can engender.*Expectancy TheoryVictor Vroom in 1964 put forward the notion that people are driven by the likelihood of genuine success in achieving particular objectives. Three barriers need to be jumped by managers if they want to motivate their people to succ eed. First of all, they need to connect the task to be performed to the likelihood of better results. Secondly they need to set expectations that there are positive derives to the employee in achieving those results, and thirdly they need to ensure that these benefits are of value to the employee. For instance, there is no point inquire your employees to be happy about coming in a half-hour early in future if you cant decently inform how this will lead to eventual real benefits for the employees themselves. Benefits also should be properly assessed, some employees rank money low on their priority lists, and others give it precedence over other benefits. Setting expectations for benefits that are not precious by employees will not work, managers should not take for granted that money is all that matters and probe for other benefits the employees whitethorn consider superior.* Money as a incentiveThis theory states that all workers are motivated primarily by the need for mon ey so if you want to get the most out of your workforce, you pay them to a greater extent. This has particular intensity in areas where payment is in a flash think to the accomplishment of objectives. This theory is prevalent in many businesses in the form of performance-related pay, incentives, bonuses and promotion schemes. While few would argue that it does not have some validity (indeed it is the driver behind most sales forces the world over), it is not an all-encompassing theory. It doesnt really address the sometimes complex reasons why people are motivated by money. It excludes people who are not driven primarily for money. It does not, for example, apply to voluntary organizations. In addition, it may not work if meeting the fiscal objectives strength threaten other entitlements, creature-comforts or rights, such as an employees location, network of friends, employment conditions or on-line(prenominal) level of job satisfaction.Several other related theories such as t he ERG and AAP theories also tried to find out what motivates employees the most, and where does pay rank among motivators. The motivational power of money is bring in the sense that more(prenominal) dollar marks buy more things (but not all things as we discussed before), but why is money sometimes seen as a low quality motivator?(B) Money, an over Estimated MotivatorIn our research and readings we were able to identify several problems with use money as a motivator in the work place. These points are summarized below and should be taken into consideration by the manager in his efforts to promote effectiveness and efficiency.(1) Cash becoming compensation The great thing about choosing a monetary reward is that theres no extra distribution method necessary. Employees view cash incentives and lay outings as part of their annual compensation, Because those dollars bonnie become part of what you take home, theres nothing modified about them. The money tends to get spent pa ying bills, and you dont really do anything thats memorable, so theres no lasting effect relative to the dollars that youre putting into those incentive schemes. It just becomes a part of that pile of money that you find a way to spend every month and every year.(2) A Tough bonus to Take Away Beyond cashs poor ability to change behaviors, it actually can be harmful. In good economical times, when everyone is flush and goals are cosmos reached, cash can be easy to give out, but when times are bad, and the cash goes away, employees will wonder where their money went. And studies show that they will consider it their money. Discontinuing a noncash incentive program has a considerably less negative impact on employee motivation than killing a cash program.(3) Buyers repentance Affects Money Incentives A family man receiving a cash gift from his association is faced with a tough decision Put the money in savings or a college fund, or use it to pay bills, or splurge on a family vaca tion or buy them something special. If he decides to splurge, he may regret the decision later on when a particularly large bill comes due. That quandary can have a negative effect on the overall quality of the award, an opportunity will be considered as wasted if the money is spent or saved. Many non-cash incentive awards are considered luxuries, and earning them through hard work can give employees a sense of achievement.(4) Low Trophy Value Cash lacks prize value and social reinforcement attributes that increase the perceived value of the non-cash award over cash, the trophy value associated with noncash incentives is just immense. An employee will always find it more pleasant to talk about a company all-expenses- compensable trip, movie tickets or even a warm pad on the back from the boss, than a two hundred dollars bonus check.(5) Money Is not Promotable The trophy value associated with non-cash awards can have a positive effect on other employees who didnt reach their goals a nd take home the award. Its harder for the boss to say do better and you will get a certain cash reward, than to advertise a position for the employee of the month award for example. Money is less promotable than other forms of motivation.(6) Cash Satisfies Needs-Not Wants Cash is easy for companies to give away, and everybody needs it. But for true motivation, you need to give people something they want or desire, not something they need. A trip to Hawaii, on the other hand, generates memories, and a plasma-screen TV is something theyll look at every day for years to come-and memorialize how they got it, a hundred dollar bill gained for an extra ordinary change week is soon not different from a hundred dollar bill received as wage.(7) Money Is Im private Sure, everyone could use more money, but whats special about that? The best rewards cater to a particular groups liaisons, and having that personal edge makes a speculative difference in how effective your program will be.( 8) One size Doesnt Fit All There are no sightly employees, average has become wider and wider around the means over the past few years, and will continue to do so. So one really cant provide one option and think that its liberation to be appealing or motivating to the entire staff.(9) Managers Prefer Noncash A recent contemplate of 235 managers by the Forum for People act steering and Measurement showed that managers prefer non-cash employee recognition programs. According to the study, managers view non-cash awards as more important, more effective and generally superior for achieving the majority of specific organizational objectives.(10) No Global Parity In economic terms, its called buying power parity, which means, roughly, that the cost of living-everything from the impairment of a nice dinner for two to a months rent-can be vastly different in different parts of the world. Companies with worldwide footprints need to make sure their award offerings are equal on a glo bal scale. A dollar, by and by all, goes a lot farther in some corners of the world than in others. Non-cash awards such as gift cards allow companies to offer parity in terms of the overall worth of the award.(11) Money Is Insufficient for slightly Employees in addition for the unmarried idiosyncrasies of individual employees, money may not be sufficient for some people. Highly paid employees for example may prefer other benefits such as an award ceremony, a lodge membership, a parking space closer to the office(12) Evaluation of effect its hard to put a outlay tag on performance. Even clear rules, such as sell x items and y dollars, may be seen as unfair. Employees may complain about their monetary fund location, their shifts, and their managers to give an unfair flavor to a peers bonus. Non-cash motivators are less likely to be thoroughly criticized and have a greater motivational value.(13) A Trouble Maker money may set employees against each other, leading to conflic t in the company. Employees may also feel forced to compete and thus Money becomes a fosterer of a ill work surround quite than a motivational tool.(C) Research field of view resultsSeveral research studies were done on the effects of money as a motivator, and its position relative to other motivational incentives. The results of a NOVA company study under the title Factors employees Find Motivating re affirm several previous studies in which employees ranked money as 5th among motivation factors. Money was proceeded by Interesting Work, Appreciation and Recognition, Feeling of being in on things, and Job Security. A more recent study on done by the Hay Group on retentiveness factors found that money ranked a staggering tenth among employee retentivity factors. A research study for 57 managers conducted by Meudell & Rodham showed through analysis of questionnaires that managers saw an increase in performance among their employees for an average of just two weeks later on a pay raise followed by a relapse into the prior performance levels. Several other research papers we saw which conduct research on the effects of money as a motivator on employees of various professions showed similar results. Although the position of cash as motivator varied slightly among different working groups, it tacit showed that money has limited motivational power. For example In a much publicized study, Gupta and her colleagues analyzed thirty-nine studies conducted over four decades and found that cold-hard cash motivates workers as expected, but the research team acknowledges that money is not the hardly thing that concerns employees, noting that beyond a certain point higher salaries will make employees happier, but it will not buy better performance.III- Interviews, summary and Findings(A) The interviewsIn the process of researching the motivational power of money, we were lucky to interview two prominent managersMr. Sami Gheriafi , Process and Institutional Plan ning Manager -AUBDr. Saad Andary , Deputy General Manager -BBAC BankAs a basis for the interviews, we prepared a questionnaire to address all the questions that were embossed during our review of literature. Through out the interviews many more clarifying questions were asked, the end result was put into a Q&A format, and both interviews are posted in the annex at the end of the paper.(B) Interviews analysisIt was striking how the answers of two managers from two different organizations overlapped in key issues. Of course one will find differences in some approaches, but the overlap in addition to the findings we uncovered in our literature review gave us confidence in our results.Both managers gave non-monetary forms of motivation priority over money. Whether sending over-performers out of the sylvan for mature genteelness to show the organizations commitment in improving their career opportunity, or verbal and written appreciation, non-monetary motivators were found to be s uperior. Empowerment, delegation of authority and freedom of decision are also very important tools used in the organizations to motivate employees. On the other hand, and in compliance with our research, both managers agreed that money is important especially in a region under economic stress, but they also argued against using it primarily. Dr. Saad Andary noted that money according to his experience may play a good role as a retention factor, noting the huge pay gap between Lebanon and the Gulf, but he doesnt consider it as motivating. Both Mr. Sami Gheriafi and Dr. Saad Andary also indicated that money has a timed impact that is they as managers notice an increase in performance when a monetary reward is handed out, but this increase tend to dwindle down as the raise is spent. Non-monetary motivators tend to have a womb-to-tomb lasting effect on performance.On the use of money, Dr. Saad Andary pointed out that in current economic conditions, money is the managements easy wa y out, and even though both managers disagreed on managements ability to put a financial tag on performance, both agreed that it is not productivity that should be an issue, but also commitment to work, enthusiasm and the feeling of belonging to the company that should matter to managers. Money has a tempting impact on crude comers it refreshes the employees and energizes their performance is an expected part of the motivational basket and if used properly and in an accurate sense will boost performance in times when a crowd together is needed. But the use of money has its negative side as well. Money has shorter lasting effect on employees, it is less effective with employees higher up in the organizational hierarchy, money is also coupled with the firms profitability rather the employees performance in a sense that a hard working employee may not get a raise because the firm is not profitable that year, a thing which will discourage the employee especially if in more profitable years less effort lead to more money.Money also will put a huge financial burden on the company especially when employees begin to see bonuses and raises as part of their pay, they will grow more dependent on monetary rewards and this will produce a high employee turnover rate and a decrease in performance. Money, and depending on the management approach, might easily become a tool for manipulation rather than motivation. For these reasons Dr. Saad Andary forecasts that management will sample to limit the negativities of money as a motivator by make reward more foundation garmentalized, in a sense that staff will become shareholders and be granted dribbles rather than raises. This will give germinate to a partnership between the staff and the firm, the employees will no long-acting feel as pones moved by management, but rather they will develop a genuine sense of belonging, and a true interest in the well being of the organization.IV- Conclusion Money as a MotivatorAll th e popular motivation theories have their flaws and detractors, but they do give us an insight into some of the mechanisms at work in day-to-day organizational life. A number of key messages ring true firstly, people are not automatons and their reasons for behaving in a certain way are more complex than just money or laziness. Secondly, different people are motivated differently there is no such thing as a simple, all-encompassing solution. Thirdly, its important to get the work surroundings right if you want to get the most from people and finally, managing perceptions and expectations is very important if you want to help people get the most from their work. As a summary, Money is found not to be a default and self-activating motivator, its importance is subjective and its effectiveness in motivating is relative to the pillowcase of job and the way management uses it, non-monetary motivational approaches are superior in many ways (as explained above). So if we want to finish u p with one message we think that the best conclusion might be repress the Cash Trap.V-Annex(A) Dr. Saad Andary interview1)What are the motivation techniques followed in your Institution?What is the role of money in the above techniques?One major form of motivation is to send staff out for training ( specially out of the uncouth New York, London) this is major motivating because it enhances the employee career and gives exposure to more advanced markets ( only the outstanding people are selected) . The other form of motivation is to promote and to empower the staff (to give him the freedom of decision).Money incentives an environment which is under economic stress with high unemployment and depressed salaries and wages and also coupled with price inflation required to have constant individual raises , although this does not compensate to the huge job pricing differential between Lebanon and the Gulf) so money plays the role of retaining employees here and not motivating.2)Do you t hink Money is the easy way out?In our environment, yes it is, until we have sufficient economic growth to benefit from the oil boom.3)How can you put a price tag on performance?The appraisals to be reflected in the annual raises. BBAC is an institution working in the financial market where jobs can be easily assessed and priced (especially jobs related to sales, dealing, treasury, marketing) where the management can pinpoint revenues or damage leading to the evaluation of the employee performance.4)Do you notice an increase in performance aft(prenominal) a money raise (bonus, financial reward)? And how long does it last?It gives an warm advance in performance and lasts until the raise fade according to its arrive (depend on the value of the reward). The bad thing about this is that if its stock bonus or reward then its no bimestrial conceived as merit where it becomes more as a salary => thats why a money raise cant be that effective motivator to count on.5)From your experi ence, how did the concept Money as a Motivator develop through the past years? And where do you see it expiration?In the banking industry money became a norm ( bonus at end of the year for example) which is reflected by the profit of the form , so staff is identified with the concept of the profitability => there is functional birth between money as motivator and profitability .See it termination towards becoming more institutionalized , in the sense that staff will become share holders (partners) employees will not be granted money but stocks which is a way of partnership that involves the staff in self-will => develops sense of belonging and last relation of employees with the firm.6)What are the positive/negative aspects in using money as motivator (conflicts and contest between employees)? Positive refresh the employees and energize their performance (although for just a uttermost of time). Negative money is coupled with the firm profitability and not directly rela ted to the employee performance and results the criteria set for the rewards are not usually clear and standardized decreases the sense of belonging towards the firm.7)Doesnt money trivialize work and weaken sense of belonging?Yes, money trivialize work and stock option can be the right alternative for improving sense of belonging8)Money Motivation or enjoyment?Money is recognition of the surplus created by the staff cant be considered fully motivation or manipulation.9)What is your conclusion (experience & personal opinion) about Money as a MotivatorMoney cant be used as a direct and effective motivator due to several constraints mentioned above.(B) Mr. Sami Gheriafi interview1)What are the motivation techniques followed in your Institution?It is at the discretion of the managers of each division to use various techniques to motivate employees. Among many, there is empowerment, delegation of authority, added responsibility conterminous with seniority and financial incent ives, promotions, commitment to employee professional development (mostly through training and development of talent, skills and competencies), and appreciation either verbally or in opus (aka psychological support) or, as specific to AUB, attainment of Presidents military service Excellence Award, an annual award given to employees with exceptional and superior guest service and notable productivity over the prior 3 years. My personal experience has led me to the following equation Productivity = Satisfaction x Appreciation.What is the role of money in the above techniques?Money is a major motivator, however, in my opinion it has a times impact By fair play of human nature, people tend to feel motivated with money, but afterward a short period of time, usually not more than 3 6 months, people tend to forget about the financial increase. The money reward will for sure help improving the employees performance in the short term, but its impact will fade out as time passes.2)Do you think Money is the easy way out?The use of easy way out is a bit on the negative side, as when you refer to a situation where people pose a process or get a way with negligible loss or damage. On the other hand, Money has a strong buy-in and buy-out impact in that it elevates the level of personal satisfaction notwithstanding the longer term fading effect. Money losses its value with time and so does the money based motivation techniques.3)How can you put a price tag on performance?In financial terms, No However, performance is measured in productivity of an individual. If the individual is satisfied with the job responsibilities and is being appreciated (both soft and hard), the performance is priced and reflected by commitment to work, enthusiasm, and personal self-will (not physical but psychological).4)Do you notice an increase in performance after a money raise (bonus, financial reward)? And how long does it last?Performance increase is always noticed after a financi al reward. What I would like to point at is that the financial reward should be the sequel not the pre-requisite for an improved or increased performance. In my business life, I have seen many people who work and get it on what they do with lesser amount of money, but have a great working zephyr and very appreciative bosses.5)From your experience, how did the concept Money as a Motivator develop through the past years? And where do you see it going?From what I have seen in the past +15 years, money may have a tempting impact on a new employee or a new comer, but as time passes, and as people grow in hierarchy and mature on the personal level, the more motivating is the work responsibilities, assignments, business setting, atmosphere, stability of the organization, etc. and this is where the motivation is heading. In some cases, money becomes a way to walk out when an offer is made If the business setup, setting, culture, modus operandi is not appealing, people might not want to b urn bridges by refusing an offer, but might as well increase their expectation to a higher level that the employer might and/or will not be able to afford.6)What are the positive/negative aspects in using money as motivator (conflicts and competition between employees)? Absolute use of money as a motivator has significant negative impact on the employee and the organization equally. The organizations operating figure will inflate with sky rocketing salary budgets and employees will be heavily dependant on monetary rewards. There will be a high employee turnover, resultant reduced productivity, resultant impact on the organizations turnover, etc. This is a vicious cycle.The basket of motivational techniques, including financial reward, is a healthy approach to the organization and the employee. Both will benefit from what each party will give to the other. Organizations will receive productivity, commitment, ownership, improvement on the part of the employee who in return will also enjoy the basket of appreciation, work atmosphere, investment in his/her professional development, etc. This is what I call a win-win approach.7)Doesnt money trivialize work and weaken sense of belonging?Yes, sometimes it does.8)Money Motivation or Manipulation?Again, the answer depends on the approach. In absolute term of motivation, money will be manipulative.9)What is your conclusion (experience & personal opinion) about Money as a MotivatorMoney is one of the motivating factors, but certainly not THE motivator. There are more for people to receive from organizations than money. permit us remember that people make money not the other way around.Referenceshttp//www.forexprofitingpro.com/sites/ldintino/_files/Image/MoneyGlobeOnFinger.JPGClarifying moneys role in motivating- Lynn W. Robbins University of Kentucky- journal of Food Distribution ResearchGetting more bang for your buck- Martin Price is the director of HR Equations Ltd- employment today NOVEMBER 2005Motivating the w ork force (chapter ten) McGraw -Hill/IrwinMoney not the motivator The anticipate Sun Thursday, 08 December 2005Money can be a big demotivator- John Fisher, Managing director,