- Academy of Economic Studies -

MOTIVATION Case Study : DATIS

Coordinating professor: GHINEA Mihaela Valentina

Students: SCHMIDT Andra SCOPELITIS Diana Maria Group 136

Abstract The key factor in the field of software development is represented by the human input. Additionally, the level of motivation achieved among the employees also plays an important role in the productivity of such a company. Using Datis as a case study, the relevance of the employee motivation with regard to the successful realization of projects for improving software development processes will be discussed. An analysis of what motivates the employees at Datis will reveal their needs in developing efficacious projects. Key words intrinsic, extrinsic, motivation, reward, theory x, theory y, theory z, Maslow, McGregor, vision, mission, strategic objectives, operational activities, advantages, disadvantages, suggestions

BUCHAREST 2011

There is an old saying you can take a horse to the water but you cannot force it to drink; it will drink only if it's thirsty - so with people. They will do what they want to do or otherwise motivated to do. Whether it is to excel on the career level or in their personal life, they must be motivated or driven to it, either by themselves or through external stimulus. Are they born with the self-motivation or drive? Yes and no. If no, they can be motivated, for motivation is a skill which can and must be learnt. This is essential for any business to survive and succeed. The job of a manager in the workplace is to get things done through employees. To do this the manager should be able to motivate employees. But that's easier said than done! Motivation practice and theory are difficult subjects, touching on several disciplines. In spite of enormous research, basic as well as applied, the subject of motivation is not clearly understood and more often than not poorly practiced. To understand motivation one must understand human nature itself. And there lies the problem. Maslow and Herzberg, the best known theorists on motivation, conceived it as an individual response to an unfolding pattern of inner needs, ranging from food an safety to achievement, and self-fulfillment. A satisfied need ceases to motivate, said Maslow. 1 Extrinsic and Intrinsic Motivation Employees may work hard because they are interested in the work itself (intrinsic motivation) or because they are being paid (extrinsic motivation). These two forms of motivation are interlinked and, as such, companies cannot opt for one or the other in isolation. There are some cases where an extrinsic incentive regarding a variable performance- pay can undermine intrinsic motivation, and this crowding-out effect in a work context can be illustrated by a reduction in self-determination which is the result of the performance-related pay and the breaking of a psychological contract based on mutual trust. 2 In the case of intrinsic motivation, the activity itself performed by a person is a direct satisfied need, therefore a direct source of satisfaction. This type of motivation is imperative in a company in order to effectively use the pooled resources, because not all the activities can be accurately evaluated in terms of remuneration and, taking into account the problem of fuzzy tasking, we can also say that many activities cannot have a precise expressed objective. Moreover, intrinsic motivation is mandatory in order to successfully achieve a high level of creativity and innovation. The extrinsic motivation serves to satisfy indirect or instrumental needs. In the working context, the extrinsic motivation comes from the desire to directly satisfy the non-work-related needs, by the means of the received salary. The extrinsic motivation is also important in a company, because, taking into consideration that the intrinsic one is not easily generated, the first can be targeted and it represents an easier way to maintain discipline.

1 2

John Adair, 2006, Leadership and Motivation, Kogan Page Limited Bruno S. Frey & Margit Osterloh, 2002, Successful Management by Motivation, Springer-Verlag Berlin.

Ways of motivating -personal recognition Giving the employees the choice of their reward, by that, making them enjoy it more and providing future motivation to work towards the same. - encouraging leadership qualities A manager can give the chance to one person in the team to be the leader for a determined period of time; the boost in confidence will surely bring positive consequences in his/her work. - training sessions and workshops This method gives the employee the inclination that the organization is interested in his development and future in the company, thus motivating him/her to target a better performance. - work environment It includes employee-manager relationship, recreation facilities, cosmetic look of the office, etc. Managers should try to create a more relaxed work environment, in order to make the employees want to come in at the office at every possible opportunity. - informal awards They include sense of humor or keen observation qualities to create fun awards with which employees are presented. The whole session should be light hearted and it should have as a central point the people enjoying the awards. - encouraging informal talks Is important in making employees feel comfortable and relaxed in the presence of their managers and also getting them to share their thoughts and ideas openly. - gift of time The managers can offer flexible working hours, extended weekend holidays or personal holiday grants in order to compensate for the lack of monetary benefits. - honesty By including the employees in the financial status of the company in order to give them a certain amount of security regarding their bonuses or raises. Rewarding is one of the human resources managements most important methods of motivating an employee. The rewards offered by the company can be of two kinds: 1. The direct rewards are represented by the sums of money offered to an employee for his/hers services or final results. They can be: salary, pay rises, incentives (individual, group or organizational incentives), premiums, commissions, participation to the profit. 2. The indirect rewards can come in forms of: facilities (any kind of advantages that would benefit the employee, for example, discounts), social protection programs and payments for time spent away from work. Reward can act as the 'catalyst' for improved performance and better productivity. But reward, as such, is not enough and in any case it is not a substitute for good management. Rather, it is a part of management. Certain basic criteria are essential for rewards to be effective. Therefore, in order to achieve effectiveness the next point must be considered: Reward should be quick. Reward should be significant. The goals and rewards must be; known, understandable, and attainable. Reward must be distinctly and directly related to performance. Reward should be irrevocable. Reward should be compatible with job measurement.

Motivational theories 1. Traditional Theory X Theory X assumes that people are lazy, they hate work to the extent that they avoid it, they have no ambition and take no initiative, they avoid taking any responsibility. It states that all is wanted is security, and to get them to do any work, they must be rewarded, coerced, intimidated and punished. This is the so-called 'stick and carrot' philosophy of management. If this theory were valid, managers will have to constantly police their staff, whom they cannot trust and who will refuse to cooperate. In such an oppressive and frustrating atmosphere, both for the manager and the managed, there is no possibility of any achievement or any creative work. 2. Theory Y Douglas McGregor This is in sharp contrast to theory 'X'. McGregor believed that people want to learn and that work is their natural activity to the extent that they develop self-discipline and self-development. They see their reward not so much in cash payments as in the freedom to do difficult and challenging work by themselves. The managers job is to encourage the wish for selfdevelopment, by that fulfilling the organizations need for maximum productive efficiency. The basic objectives of both are therefore met and creativity and innovation can be maximized. 3. Theory Z Abraham Maslow Maslow is the main founder of the humanistic school which holds that all the good qualities are inherent in people, at least, at birth, although later they are gradually lost. This theory is more commonly known as Maslows Hierarchy of Needs. According to him, the basic human needs are illustrated below.

- The physiological needs are the literal requirements for human survival and if not met, the human body can not continue to function. - The safety needs have to do with the peoples desire for a predictably orderly world which includes: personal and financial security, health and well being and protection against accidents or diseases. - The love and belonging needs involve emotionally based relationships such as friendship, intimacy and family. - Esteem needs. Maslow noted two versions of esteem needs, a lower one and a higher one. The lower one is the need for the respect of others, the need for status, recognition, fame, prestige, and attention. The higher one is the need for self-respect, the need for strength, competence, mastery, self-confidence, independence and freedom. - Self-actualization needs refer to that a persons fool potential is and achieving it. Maslow describes this desire as the desire to become more and more what one is, to become everything that one is capable of becoming. 3 In order to reach a clear understanding of this level of need one must first not only achieve the previous needs, physiological, safety, love, and esteem, but also master them. 4. Hygiene / Motivation Theory - Frederick Herzberg According to Herzberg, peoples needs are of two types: Animal Needs (hygiene factors) - that do not give positive satisfaction, though dissatisfaction results from their absence. These are extrinsic to the work itself Supervision Interpersonal relations Working conditions Salary Human Needs (motivators) - that give positive satisfaction, arising from intrinsic conditions of the job itself Work Responsibility Advancement Recognition Essentially, hygiene factors are needed to ensure an employee is not dissatisfied. Motivation factors are needed to motivate an employee to higher performance. Herzberg also further classified our actions and how and why we do them, for example, if you perform a work related action because you have to then that is classed as movement, but if you perform a work related action because you want to then that is classed as motivation. 5. Reinforcement theory The behaviorist approach This is one of the motivation theories which states that reinforced behavior will be repeated, and behavior that is not reinforced is less likely to be repeated . 4 Other theories may focus on additional factors such as whether the person expected the strategy to work at some point, but in the behavioral theory, reinforcement is descriptive of an increased probability of a response.

3 4

Maslow, Abraham. Motivation and personality. Harper and Row New York, New York 1954 pg 92 Montana J. Patrick & Charnov H. Bruce, 2008, Management, 4th Edition. Barron's Educational Series

There are four reinforcement methods which can be used: Positive reinforcement is the adding of an attractive stimulus to increase a certain behavior or response. Negative reinforcement is the removing of any potentially negative influences in order to conserve a desired behavior. Punishment is the approach taken when you want to eliminate a certain undesired behavior. Behavior retrenchment is used by omitting positive behaviors in order to encourage the elimination of certain behavioral aspect that are negative.

DATIS About the company SC Datis SRL is a software company. It was set up in 1998 and has its headquarters in Campina, Prahova county. For more than a decade Datis has been designing software for city halls and educational institutions all over Prahova. Their software manages: accounting, salaries, taxes, financial administration. Datis has 12 employees working in two departments: the software department and the hardware repair department. The general manager, the executive manager, the accountant and one of the programmers have been working in the company since it was founded in 1998 and they are very dedicated to what they are doing. They helped the new employees along the years accommodate in the company and feel at ease by creating a pleasant and friendly atmosphere in the company Mission The reason of existing for Datis is to meet the needs of the clients by supplying high quality software and prompt assistance. More and more clients ( represented mostly by cityhalls and educational institutions ) tend to do everything on the computer and for this they need programs, sometimes custom-made, along with assistance with implementing the software and other problems that might occur. Vision Datis plans to be one of the biggest software-designing companies in the country. They already have a monopoly on Prahova and are now fighting some competitors from Dambovita. The strategic objectives of the company are: obtaining, keeping and improving the loyalty of the clients decreasing the expenditure in the sales department increasing the efficiency of services decreasing the problems that occur at the implementation of the software For all the above, a good HR management is needed so the HR function must be made a partner in the formulation and implementation of the companys strategies5.

Valentina Mihaela Ghinea, 2010, Conducting the company, BREN Publishing House, Bucharest.

Regarding the operational activities, in charge of the administration of HR, the elaboration of job descriptions, discipline procedures etc, is the executive manager. Being a small company, they dont have an HR department yet. Organizational culture and leadership. The managers of the company are moral and fair, examples to be followed by the employees. The company has created a strict environment when it comes to work. Chatting, being late, leaving early are not very tolerated things. On the other hand, the company organizes informal meetings for the employees to know each other better or talk business in a relaxing environment. The leader of the company is considered the executive manager. He used to be top manager before they became associates with a company named Mondosoft. Now the general manager is someone from Mondosoft that hasnt involved very much, he has not taken the time to know the employees and discuss about the problems of the company. The leader of the company is selfaware, motivated, involved, he knows well his employees and he is very respected and relied on. Ways of motivating The companys manager has a strict way of doing things meaning that he uses his power when it comes to making employees achieve goals. Employees dont have much power of decision and autonomy themselves, the companys hierarchy is very well established and respected. Trials to motivate employees by educating them and providing access for everybody to the companys figures and objectives are made. For example, every year a comparison between the figures achieved and the objectives that were set is made and displayed on a wall inside the company. On what is concerning the needs of the employees, the manager mainly assures the hygiene or basic needs. He makes sure that the employees get the salary they deserve, that they have good working conditions ( this is why Datis moved to a bigger and better location last year ), he makes sure that the relationships between employees are good by teaching them what respect is, acting fairly and respectfully himself. He tries to maintain the sense of equity among the employees, meaning that the effort-reward ratio is the same for all the employees. The rewarding and the performance evaluation are made in a visible and transparent manner to all the employees. On the salary day, the employees have access to the table of salaries, when recognition is made, ( that might announce a raise, for example ) it is made in front of everybody. For assuring good relations between colleagues, the company also organizes workshops and informal meetings for the employees to interact in a more social than work related way. Regarding the higher needs, the company can only provide its employees with recognition for their work and with material rewards. Being a small company, the possibility of advancement, promotion, personal growth is rather limited. In order to modify employees behavior the manager uses positive reinforcement such as rewarding an employee through a salary raise and by offering recognition in front of other employees; negative reinforcement, for example an employee will not be scolded and threatened by a cut in the salary if he stays after the program willingly, to finish a task; as well, giving a good and easy to prove reason of being late would save the employee from being punished. Direct punishment is avoided and not desired by the manager unless it is about and extreme case.

The main method of motivating employees has remained the rewarding approach. Taking into consideration the small town and the average salary of a programmer ( and other factors such as experience and knowledge), the company offers satisfying salaries to its employees. Extra hours for example are paid double, doing very well guarantees the employees a salary raise, remarkable activities that make the company additional profit win the employees a premium and so on. The executive manager was put in the situation of bargaining with the top manager for the employees sake many times. The reason is usually because the top manager ( an employee of the associated company, Mondosoft ) is not very involved in Datis activity and he doesnt know the employees and their capabilities. The latest 2 cases were an employees raise and the improvement of the conditions at the headquarters, and in both cases it took a lot of time to obtain the approval. Analysis Datiss way of motivating the employees is done in an ethical and fair way, but in a rather old-fashioned manner: the managers makes the assumption that the employees are lazy by nature, that they avoid work, they dont have ambition and initiative ( Douglas McGregors X theory ) so he approaches them through the awarding system, pressures and intimidates them. The employees do their work mostly based on respect and even fear rather than on inner motivation. The rewarding system had worked for some employees but some of them are old in the company and they are now looking for incentives such as the possibility of promotion and continuous personal growth and besides that, intrinsic motivation of staying in the company and working for its sake. Basically, the rewards and punishments have lost their values over time. Here are some relevant aspects obtained after a survey on the employees of Datis conducted for the first years subject Quality Management. On the scale Very Low, Low, Medium, High, Very High the answers were: - The managers involve in attaining the objectives of the company High - The objectives of the company are sustained by policies, plans and resource allocation Medium - The values promoted by the company are accepted and implemented by all the employees of the company Medium - There are situations when the managers of the company delegate their employees with the power of making decisions Very Low - The managers of the company let the employees know about the mission, vision and strategy of the company Medium - The company organizes team buildings, discussions and informal meetings for the employees. Medium - The employees of the company are rewarded for their results through other methods besides the material ones Low - All the employees involve themselves in attaining the goals of the company Medium - The mission of the company is realistic and the fundamental objectives of the company are feasible Medium - The managers of the company take time to discuss and meet with the employees, whenever the employees need to tell them something Medium

- The employers are well informed about the way in which the activity of the company takes place Medium - The company has developed its own ways of evaluation and measurement of the performances High - The managers appreciate and give rewards for the efforts of their employees Medium - The managers of the company promote a system of moral values and principles inside the company High - Inside the company there is an open communication between departments, employees and managers High - The employees of the company prove to be energetic and enthusiastic about their activity Low - The managers pay attention that the professional development of the employees is in concordance with the needs and objectives of the organizational strategy Medium Advantages - for the newest and inexperienced employees, the punish and award system works better - the fact that the manager inspires so much respect makes some of the employees discover and intrinsic motivation of doing something for the managers sake - the system of moral values and principles determines the employees to respect the rules and values themselves, for example not being late - for the manager, the extrinsic motivation approach consumes little time - the lack of responsibility and power of decision demotivates most of the employees Disadvantages - this method of motivating employees is old and has lost most of its efficiency over time; employees aspirations have changed, times have changed - it even leads to demotivation when the method is used on the wrong target - the low motivation brings disadvantages to the company ( for example one old employee of the company has quitted recently because she felt she was stagnating in her career ) Suggestions The main suggestion would be taking the time to approach the intrinsic motivation method and thinking of employees as people waiting to learn, to take responsibilities, have initiatives, discipline and develop themselves. In order to do this, the motivation should be done at individual level, by learning about each employees wants and needs and providing them the opportunity to fulfill those wants and needs. Some ways of achieving this are: giving more control and responsibility to the employees, making them feel competent and independent, give them the possibility to grow and develop themselves, gain recognition and respect from other colleagues, offer them challenges and variety.

References

Adair John, 2006, Leadership and Motivation, Kogan Page Limited Anon., 2002-2010, Herzberg's Motivation-Hygiene Theory (Two Factor Theory) [online], Available at: http://www.netmba.com/mgmt/ob/motivation/herzberg/ Frey S. Bruno & Osterloh Margit, 2002, Successful Management by Motivation, SpringerVerlag Berlin Ghinea Mihaela Valentina, 2010, Conducting the company, BREN Publishing House, Bucharest Harold F. ONeil, Jr. & Michael Drillings, 1994, Motivation: theory and research, Lawrence Erlbaum Associates, Inc., Publishers Hoffman Stefanie, 2006, Classical Motivation Theories: Similarities and Differences between them, Grin Verlag Maslow Abraham, 1954, Motivation and personality, Harper and Row New York Mehta Suketu, 2010, Motivating Employees [online], http://www.buzzle.com/articles/motivating-employees.html Available at:

Montana J. Patrick & Charnov H. Bruce, 2008, Management, 4th Edition. Barron's Educational Series Stancioiu I. & Militaru Gh, 1999, Management. Elemente fundamentale, Ed. Teora, Bucuresti