EMPLOYEE MOTIVATION

Employee Motivation

Employee Motivation

Introduction

In today's turbulent, often chaotic, environment, commercial success depends on employees using their full talents. Yet in spite of the myriad of available theories and practices, managers often view motivation as something of a mystery. In part this is because individuals are motivated by different things and in different ways. In addition, these are times when de-layering and the flattening of hierarchies can create insecurity and lower staff morale. Moreover, more staff than ever before are working part time or on limited-term contracts, and these employees is often especially hard to motivate.

Discussion

Labor Productivity

Researchers (Wall, Kemp, Jackson and Clegg, 1986; Thomas and Velthouse, 1990; Spreitzer, 1995) generally agree that firms offer profit sharing in order to promote higher employee productivity, which is achieved through higher employee motivation and involvement. This can be achieved by aligning employees' goals with those of the firm. When a firm's profits are shared between owners and employees, employees have a higher stake in the success of the firm. Research generally supports this motive for profit sharing adoption across the examined countries. In the U.S., for example, Kruse (1996) found that there is a positive relationship between the adoption of profit sharing and the existence of job enrichment programs, where enrichment programs were offered to encourage higher employee input and involvement. In the U.K., profit sharing was used to improve employee involvement in decision-making, measured by the simultaneous existence of profit sharing schemes and workers' councils (Estrin and Wilson, 1989). In Canada, Wagar and Long (1995) found a relationship between a higher number of self-directed work teams and the existence of profit sharing, a result that reflects the fact that self-directed work requires greater motivation and involvement.

Wage Flexibility

It has been argued that a firm may use profit sharing for the purpose of wage flexibility, to avoid costly wage decreases at times of low profitability. According to this argument, the marginal cost of labor is lower when profit sharing is adopted because part of labor cost becomes variable and changes with increases and decreases in the firm's profit. Therefore, firms pay employees less when profit is lower and pay more when profit is higher. According to this argument, firms with unstable financial circumstances and lower financial prospects are more likely to adopt profit sharing because they are in greater need of avoiding fixed wage commitments to employees. Studies of the wage flexibility motive have reached contrary ...