February
1999 - Pay and motivation
How important is pay in motivating
people to work? According to a new report from
the Economist Intelligence Unit, Motivating and
Rewarding Managers ,a philosophy of motivation
is the "big missing link" in the pay
strategies of human resources specialists.
Few companies questioned had
thought about what motivated their employees.
Many are daunted by academic theory on motivation,
says the report, and rely on simple pay formulas
in the hope they will coincide with whatever motivates
their staff.
Some companies featured in the
report, however, are looking more deeply at motivation.
Microsoft, using employee surveys and focus groups
among existing and former employees, found that
enthusiasm for their work was the most important
motivational factor.
A common complaint among people
who had left was that the quality of colleagues
at their new company was poorer. Belief in the
business strategy and strength of the Microsoft
stock programme were other strong forms of motivation.
On the downside, the company
has highlighted a number of pressures influencing
the decisions of people to leave. One is burn-out
due to the pace and level of intellectual competition,
another is a desire to improve the balance of
work and domestic life. An increasing concern
of employees is the rising level of bureaucracy
associated with the company becoming more structured
and process-oriented.
Hewlett-Packard appears to be
banking on the belief that money is not a prime
motivator. After poor earnings in 1998 it asked
its 2,600 most senior employees to take a 5 per
cent pay cut.
The decision may help to increase
motivation across the workforce in that the company's
top earners can be seen to be bearing the brunt
of the pain.
At Guinness, too, there was an
admission from a human resources executive that
the performance bonuses for senior managers was
not an incentive in terms of making anyone work
harder. He looked upon such bonuses as a way of
"communicating priorities" for the business.
The report concludes that different
professional groups respond to different pay strategies.
The government is about to learn this when it
attempts to introduce performance-related pay
in teaching.
Sometimes the age of employees
can make a difference. Young managers, says the
report, tend to be more interested in cash, whereas
their older colleagues are interested in pensions
and retirement options.
One way of discovering what people
value is to ask them. When Marks & Spencer
did this in Hong Kong it found that employees
wanted share options. They were also interested
in training and broadening their education. The
company responded by introducing an education
sponsorship scheme, paying 70 per cent of fees
for courses such as MBAs.
The report includes a broad range
of case studies and analysis in the "who's
doing what" mould. My only irritation was
a reference to a wider form of 360 degree appraisal.
It calls this broader appraisal, which includes
input from customers and suppliers in addition
to appraisal by superiors, peers and subordinates,
"540 degree appraisal". This is meaningless.
Why can't human resources people talk about "all-round
appraisal" and leave it at that?
© 1999 The Financial Times
Ltd. All rights reserved
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