A COMPREHENSIVE APPROACH

TO MOTIVATION AND
INCENTIVE SYSTEMS
People don't change their behavior unless it makes a
difference for them to do so."
Tarkento

-- Fran
.

One element in production and operations that persists as a

management concern is the attention to productivity. An efficient
manager will continually strive to draw a better return on his capital
investment. When this effort is directed towards the human portion of
the firms capital, the manager focuses on a recurrent problem in
business activity-employee motivation. This paper deals with this
aspect of job design, i.e. the specifications of the contents, methods,
and relationship of jobs in order to satisfy technological and
organizational requirements of the jobholder.

Purpose
The main purpose of this term paper is to review what is currently
known about motivation, identify some situational constraints on the
utilization of this knowledge, and give organizational implications in
order to maintain and develop efficient personnel. This paper will
later concentrate on the affect of the absence of adequate
motivational systems in private schools in Karachi.

Motivation
Literally, motivation is the driving force within that causes an
individual to act in order to achieve a specific goal. Technically,
motivation is the psychological process that causes arousal, direction,
and persistence of behavior. When it comes to organizational
programs and management behaviors, motivating factors encourage
employees to act as desired.

Motivational Theories
The purpose of motivational theories is to predict behavior.
Motivation is not the behavior itself and it is not performance, it is
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concerned with the strength and direction of behavior. The basic

element underlying motivation is need satisfaction.
Maslow postulated a hierarchy of needs starting from the basic
physiological needs to the higher order self-actualization needs within
people to demonstrate this concept.
Later, Alderfer condensed this hierarchy into three need stages of
existence, relatedness, and growth.
Another issue to consider is that things that make people satisfied on
job are different from the things that make them dissatisfied. What
makes worker unhappy at work will probably include an annoying
boss, a low salary, an uncomfortable workplace, or ridiculous rules.
This enables us to distinguish between Hygiene factors, whose
presence alleviates dissatisfaction; and Motivators, which are factors
conducive to satisfaction at work, proposed by Herzberg.

Incentive Systems
An incentive is a benefit or consideration, financial or otherwise, given
to induce specific action. Incentives include financial compensation,
public recognition or other benefits. Organizations use incentive
systems to motivate their employees.
The ideal incentive system is the work content itself which must be
satisfactory and fulfilling for the employees. Providing incentive
systems to the workforce is a strategic business tool that improves
productivity and quality of life for the employees. It is a device or an
inducement to stimulate or spur-on activity that motivates people to
take action.
There are a variety of different types of incentive plans designed to
motivate the workforce:

Pay for Performance:

These incentives value an individuals hard work. These are
successful only when individuals are clear about their standards of
performance. It also requires having a visible link between
performance and reward that should be meaningful enough to make
the effort worthwhile.

Pay for Skill:

In response to the growing pressure on companies to increase the
ability of employees to meet the greater range of skills, essential for
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the new technologies and working practices, the skill based pay
schemes are developed.

Flexi time:
Flexible scheduling is used to combat the problems of
communication and hostility among employees, giving them an
incentive to choose flexible arrangements and still be competent.
This is one way to empower people to decide how, they get their jobs
done. It is a strategic business tool that overcomes the stress level
of the employee reducing the overtime cost for the organization.
Many organizations believe that giving employees the freedom and
power to create schedules that accommodate their work/ life balance
issues makes them more productive, enabling them to meet their
personal commitments while staying committed to the job.

Other Employee Benefits: There are various types of

such benefits including:
Required Security: includes workers compensation,
employment compensation, disability insurance, medical
benefits etc.
Time-Off: include leave or an off day on occasions like
birthdays, sick leave, vacation time, etc.
Insurance: include insurances against medical, accident, life,
disability, to protect employees.
Financial: include credit unions, stock plans, purchase
discounts etc.
Recreational: involve club membership, service awards, child
care services etc.
Retirement: involve pension funds, retirement gratuity,
annuity, etc.

Extrinsic Vs. Intrinsic Incentives

Incentive systems just dont involve monetary or extrinsic benefits,
but are also concerned with intrinsic rewards. Such non-financial
reward systems will be satisfying the individual needs for autonomy,
task identity, variety, challenge, achievement, and career
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opportunities. Thus, the financial reward system will incorporate

procedures for valuing jobs, designing and pay structures, paying for
performance and skill, and providing employee benefits.

Motivational Energy
Behavioral scientists have researched meticulously on motivational
energy. They have compared this energy to Einsteins formula E = mc2
(Energy = mass x speed of light squared), such that E = energy
(released by employees), m = mass (of employees), c = capacity to
motivate productive human energy). This deduces that the dominant
factor in increasing productive energy is the capacity to motivate and
not the increased mass of workforce.

Motivation and Performance

To show how motivation affects performance, Vroom suggested the
equation:
Performance = ability x motivation.
More recently, Campbell and Prichard expanded on this definition,
and revealed that performance is a function of: skill level, aptitude
level, understanding of the task, choice to expend effort, choice to
persist, and facilitating/ inhibiting conditions not under the control of
an individual.
There might be occasions when other factors, such as ability
differences, override the importance of motivation

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Motivation and Labor Retention

Labor retention varies directly with the motivational level of the
workforce. If an organization has unstable workforce, it is forced to
invest millions in recruiting, orienting, training, and supervision. The
most valuable asset of an organization is a stable workforce of
competent and dedicated employees.
To retain a competent workforce, the organization should aim at
making the jobs more challenging and energizing, so that the
employees dont want to leave. The managers should intrinsically
motivate the employees. To support retention, the job descriptions
should clearly specify what the organization is looking for, and
identify the competencies and skills required.

Role of Money as Motivator

Money undoubtedly is a motivator for majority of the workforce. It
acts as an incentive to improve performance, and as a reward which
recognizes success in a highly tangible way. This is why many
organizations employ wage incentive plans like piece rate plans,
standard hour wage plan, yearly bonus, etc.

Motivation as a Function of Leadership

Managers should act like leaders and stimulate employees motivating
them to accomplish company goals. They should be more goaloriented than authority oriented, and make employees see their longterm personal goals in terms of attainment of organizational goals.

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Problems and Constraints

Different factors motivate different people in a work setting.
Identifying the inspiring determinants for each individual employee is
not an easy task for the managers.
Inability to communicate the motivational schemes effectively also
acts as a major constraint.
Organizations find it hard to provide intrinsic motivation because it
has to come from within the employee. Giving perks might act as a
temporary motivator, but in the long run, it is the intrinsic motivation
that works.
Usually organizations find it easier to provide extrinsic motivation
rather than intrinsic because for them changing intrinsic motivation is
more difficult, making the outcome more uncertain.
When employees are motivated extrinsically, they end up producing
stereotyped repetition of what already works, instead of being
innovative and creative.

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Application of Motivation and

Incentive Systems at Private
Schools
We researched on the incentive systems applied at some of the well
known private schools of Karachi providing high quality education.
Their names cannot be classified, as permission for publishing them
could not be obtained. These institutions are known for paying high
salaries. We interviewed a number of teachers at different schools and
the results proved that many of these institutions were unable to
provide adequate incentive schemes motivating their staff.
Although the teachers confirmed that they were paid high salaries,
they expressed their discontent on the absence of other motivating
perks.

Problems:
The following points summarize our findings:

Lack of job security

Excessive workload
Lack of special increments for competent teachers
Absence of high performance recognition
Very few officially sponsored events for leisure and
entertainment
Gender discriminations
Limited career development opportunities.
Lengthy bond periods for career development opportunities
de-motivates the teachers
Limited casual, sick leaves
Health insurance

The above problems not only are a cause of dissatisfaction of

teachers, but also a difficulty for the administration. The decreased
loyalty of teachers leads to a high turnover rate and retention
problems. This research also recognizes that the teachers are not
content only with high monetary benefits, they also require intrinsic
motivators and work/ life balance.

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Recommendations & Implications

We identified certain measures that can be applied in order to solve
these indicated problems and increase teachers motivation at these
institutions. The current situation calls for a capable incentive system,
Staff Motivation Scheme, to be installed at these schools.

Staff Motivation Scheme

This scheme should be implemented to enhance commitment and to
motivate staff towards continuous improvement of service in
pursuance of the spirit of serving the institution. It may include the
following measures for management implementation:

Discuss with staff from time to time what their goals and targets
are and how they should be accomplished.

Provide feedback on what staff has done well and where

improvement could be made. Identify the specific actions that you
found admirable.

Offer considerable monetary benefits like end of the year

bonuses, attendance bonuses, etc.

Long and meritorious service awards may be granted

Commendation letters may be issued to the teachers who have

made a substantial contribution towards enhancing the image of
their institution or carrying out an exceptionally good
performance warranting special recognition.

Encourage staff to express their views on their performance.

Assess the staff's performance throughout the appraisal period

rather than focusing on periods where their performance was
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particularly good or bad.

Discuss ways to empower staff.

Consider training or development needs of staff, and work out for

them these plans to raise the capability of staff for performance
improvement.

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Conclusion
The recommendations emphasized can be implemented to other
organizations as well. Managers need to understand how their
subordinates think, and how they feel towards manipulations,
rewards, and punishments. This aspect is particularly important when
motivating problem people.
For effective motivation systems, motivation should be a major
contributor to performance, and there should be good performance
appraisal system available.
Through motivation, we seek to secure staff commitment; develop and
manage them to give of their best to support departmental aims and
objectives; and achieve the ultimate aim of serving the community
better by providing quality service which our community deserves.

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