Company management. How can employee motivation be increased through incentive systems?

Modes, possibilities and limits of monetary and non-monetary incentives

Mémoire (de fin d'études) , 2017 , 52 Pages , Note: 1,3

Gestion des ressources humaines - Motivation des employés

The motivation of employees is an important task of today's corporate management. In order for managers to do justice to their tasks and encourage employees to perform at their best, they must know how to influence the attitude and motivation of their employees in a positive and performance-enhancing way.

Since each employee pursues different goals and the company's goals must not be neglected, managers must develop a flexible incentive system in order to reconcile the goals of the employees and the company's management. But how exactly does an incentive system have to be designed in order to be able to motivate employees?

In this book, the author takes a critical look at increasing employee motivation using incentive systems. To this end, he compares basic motivation theories by Maslow, Herzberg and Vroom, among others, and illustrates the benefits for today's personnel policy. The author also shows how incentive systems work. In doing so, he makes it clear where the possibilities and limits of monetary and non-monetary incentives lie in relation to the willingness to perform of a company's employees.

From the content:
- Motivation theory;
- Attraction;
- Extrinsic motivation;
- Intrinsic motivation;
- Monetary incentive schemes;
- Non-monetary incentive systems

Table of contents

List of abbreviations

1 Introduction
1.1 Problem statement
1.2 Objective
1.3 Course of work

2 Basic concepts of motivation theory
2.1 Goals
2.2 Motives
2.3 Incentives
2.4 Interaction of goals, motives and incentives

3 Motivation theories
3.1 Content theories
3.2 Process Theories

4 Incentive systems for the motivation of employees
4.1 Monetary incentive systems
4.2 Non-monetary incentive schemes

5 Possibilities and limits of employee motivation through incentive systems
5.1 Monetary incentive systems
5.2 Non-monetary incentive schemes

6 Conclusion / Outlook

7 Bibliography

List of abbreviations

Abbildung in dieser Leseprobe nicht enthalten

1 Introduction

"If you don't know the port you want to sail into, no wind is the right one for you."¹

1.1 Problem statement

The motivation of employees is an important aspect in today's corporate management. In order for managers to be able to live up to their task of encouraging employees to perform at their best, they must find out how the behavior of their employees can be influenced.²

In earlier times, little attention was paid to employee motivation. The employee served as a tool for executing a structured schedule of the organizational structure. A precise fulfillment of the tasks of his job profile was the basic prerequisite for an economically efficient and functioning company structure. Consequently, work was regarded exclusively as a duty for which the employee received a corresponding monetary remuneration, giving up his free time. It followed that employees regarded work as a disruptive factor in their satisfaction of needs. In today's times, however, people increasingly seek the satisfaction of their needs in the exercise of their profession. Hr management has recognized that this change can affect the motivation of employees both positively and negatively. Employers nowadays also expect more from their employees, as the so-called "service according to regulations" from earlier times is regarded as an inferior service. Rather, thinking "outside the box" is required in order to improve work processes and drive forward the company's goals.³

The problem of corporate management now consists of finding out which possibilities are available to have a positive effect on employee motivation and through which incentive systems this can be influenced to promote performance.⁴ Since each employee pursues different goals and the company's goals must not be ignored, a flexible incentive system must be developed so that the goals of the employees and the company management can be reconciled.⁵

1.2 Objective

The aim of this work is to take a critical look at the increase in employee motivation on the basis of incentive systems. To this end, the basic motivation theories are compared and the benefits for today's personnel policy are illustrated. Furthermore, the effects of incentive systems are to be shown in order to make it clear where the possibilities and limits of monetary and non-monetary incentives lie in relation to the motivation of the employees of a company. The knowledge gained will be used to answer the question of how an incentive system should be designed to motivate employees.

1.3 Course of work

The entry of the thesis deals with the basic concepts of motivational science and the functioning of motivation. Based on this, the third chapter provides an insight into the basic motivation theories. It shows the difference between content and process theories and how they can contribute to employee motivation. The fourth chapter is devoted to the topic of incentive systems and their functioning, divided into monetary and non-monetary incentives. The fifth chapter focuses on the possibilities and limits of employee motivation through incentive systems. It illustrates the relationship between the various motivation theories and the monetary or non-monetary incentives. A conclusion and a brief outlook on further instruments for increasing employee motivation round off this work.

2 Basic concepts of motivation theory

As an introduction to the field of motivational psychology, this section explains not only the basic terms - goals, motives and incentives - but also their interaction. This basic knowledge serves the purpose of providing a better understanding of the following chapters. Likewise, the topic of motivation is taken up and brought closer on the basis of the "intrinsic motivation" and the "extrinsic motivation" differentiated in science.

2.1 Goals

In common parlance, a goal is defined as a desired target state. In order to achieve this state, an actual state is revised until it corresponds to the desired target state.⁶

In motivational psychology, on the other hand, the term is used as a basis to explain why a person chooses to start, execute, and end an activity at a given time. As soon as a certain goal is set in this context, it uses the means at its disposal to achieve the set goal and aligns its behavior in a result-oriented manner. In addition, goals serve the purpose of analyzing action results and classifying them as success or failure. Such experiences promote a person's personal development and shape their identity.⁷

The desire to set a goal is stimulated by a person's various motives, such as: the pursuit of power or social connection. But even lower needs, such as hunger or thirst, can be decisive for a certain goal.⁸

A definition of motifs and their use in psychology follows in chapter 2.2.

2.2 Motives

The term "motiv" comes from the Latin word "motivum" and means translated: Motivation or motivation for action.⁹

In psychology, the motive is called a need, desire or urge. It forces the action of an individual in a goal-driven direction. The motif is not a directly measurable quantity, but a so-called "theoretical construct", which allows conclusions to be drawn about the underlying motives through observations of human action.¹⁰

In contrast to the general psychological approach, the motives relevant to work behavior are divided into extrinsic and intrinsic motifs. Extrinsic motifs are motifs whose satisfaction comes from the result of the work, e.g. the salary of an employee. Intrinsic motives, on the other hand, are motives whose fulfillment comes about as a result of an activity itself. An example of this is the need to accomplish a feat.¹¹

As an interim result, it can be stated that motives serve the purpose of stimulating goal-oriented behavior. Since people are moved to action by different motives, they also evaluate their goals in different ways. Because of this, the motive is also referred to as valuation disposition.¹²

2.3 Incentives

Another aspect of motivational psychology that follows after the previous explanation of goals and motives is the incentive.

Incentives are behavioral stimuli that encourage a person to direct their actions in a desired direction. In corporate management, for example, bonus payments are used as an incentive to increase the motivation of employees.¹³ Their willingness to perform depends on the amount of incentive value offered to them. The incentive value, in turn, varies depending on the goals or motives set by an employee.¹⁴ The latest findings show that not only real incentives can generate motivated behavior. Even imaginary incentives, which arise solely in the imagination of a person, can achieve this effect.¹⁵

2.4 Interaction of goals, motives and incentives

After some basic terms of motivational psychology have been explained, the description of how motivation can arise through the interaction of goals, motives and incentives now follows. The process is illustrated by mapping a general model of motivation.

Abbildung in dieser Leseprobe nicht enthalten

Figure Scheme of a general model of motivation¹⁶

At the beginning of a motivation process, the concrete goal of a person is achieved through the combination of motive and incentive. The desired goals are evaluated according to attractiveness and checked for chances of realization. This process puts a person in a willingness to act. The intensity of the willingness to act, in turn, depends on the prospect of success or failure. The motivation to act is great, if a goal achievement is likely. A low chance of success, on the other hand, leads to demotivating behavior.¹⁷

This is illustrated by an example of two students preparing for a math test. The students hope for a good grade by means of intensive preparation for the test, but they assess their chance of success differently. While student A is inherently a gifted student who has less effort to put into preparation, student B is less gifted and considers the fulfillment of his task too difficult. Accordingly, the motivation of both students to prepare for the exam varies.¹⁸

From this it can be concluded that motivation arises from a combination of motives, incentives and the resulting goal. In connection with a person's expectations, it is possible to determine whether the motivation is positive or negative.

2.4.1 Motivation

At the end of the chapter, the description of the technical term of motivation follows at this point. In addition to the distinction between extrinsic and intrinsic motivation, their interaction is also presented.

The term "motivation" is derived from the Latin verb "movere" and provides information about the motivations that lead to the recording of an action.¹⁹

However, motivation does not only mean analyzing which motives (motives) a person has for a certain course of action, but also the possibility of influencing motives and the resulting actions, i.e. motivating them.²⁰ Motivation is not a character trait of a human being. Rather, it is composed of various sub-processes that relate to the goal-oriented behavior of a person through the state of desire and will.²¹

In psychology, a distinction is made between "intrinsic motivation" and "extrinsic motivation".²²

2.4.2 Extrinsic motivation

Extrinsic motivation is a condition that causes a person to take up an activity driven by an externally controlled incentive.²³

This condition can also be seen as an enhancer that affects the person through external factors in their actions. External factors include the expectation of a reward, e.g. a good grade, or the avoidance of negative criticism or penalties. The extrinsic motivation can be done both by a third person and by one's own drive, provided that the activating incentive comes from outside (e.B reward yourself for a performance with a visit to the cinema).²⁴

2.4.3 Intrinsic motivation

Unlike extrinsic motivation, intrinsic motivation is a state that causes a person to take an action for their own sake.²⁵ This means that the drive to act is done from "within" and an act is carried out without the use of an incentive. The action itself is perceived as pleasant and rewarding.²⁶

Some motivation theories distinguish the concept of intrinsic motivation in which point of reference can be considered "inside". Accordingly, not only the action itself is considered intrinsic, but also the result of this activity. With this approach, the impression can arise that the result of the action equals an external incentive and is thus classified as extrinsically motivated. For a better understanding, therefore, the newer psychological approaches define intrinsic motivation predominantly in terms of whether the drive takes place from within.²⁷

2.4.4 Interactions of extrinsic and intrinsic motivation

Extrinsic motivation does not necessarily exclude intrinsic motivation. Rather, there is a reciprocal effect if the motives of a person have been stimulated on both sides. However, an original intrinsic motivation can pass into extrinsic motivation through a stronger external incentive.²⁸

An example is the learning behaviour of a primary school child. At the beginning, the child learns to read and write out of joy at the progress made (intrinsic motivation). Later, however, the parents reward it for each good performance e.g. with money, which pushes the joy of writing itself into the background. This external incentive can cause the transition to extrinsic motivation, because the child performs well predominantly in anticipation of a reward and no longer out of joy in the matter itself.²⁹

Finally, it can be stated in this chapter that it is important to know the goals and the underlying motivations of a person. Without these findings, it is difficult to understand why a person has chosen a certain course of action. However, if a person's motivations for a certain goal are known, this knowledge can be used to promote motivation.

3 Motivation theories

In order to answer the question of how incentive systems can contribute to employee motivation later in the course of the work, this section provides an insight into the most important motivation theories. After presenting the content theories most commonly used in the literature, a description of the two best-known process theories follows. In addition, it will be shown how the various theoretical approaches can be transferred to personnel policy.

Over time, various theories have been developed in motivational research, which differ in orientation and focus. Despite different points of view, motivation theories try to shed light on the effectiveness of motives on human behavior.³⁰ In order for the company management to be able to motivate its employees accordingly, it is important for them to know how motivation processes work. They can gain this knowledge from the findings of various motivation theories. The scientific literature distinguishes between content and process theories. The illustration of the motivational theoretical approaches illustrates the structure of this chapter:³¹

Abbildung in dieser Leseprobe nicht enthalten

Figure Motivational theoretical approaches³²

3.1 Content theories

Before the process theories are discussed in more detail in the second section of the chapter, a general description of the content theories is given in advance. Subsequently, the four best-known theories of this category are presented and their significance for personnel management is explained.

Content theories explain what factors move a person to motivated action. In the context of corporate management, they provide insights into what guides and drives an employee. Based on this research, management can use targeted incentives to profitably influence the behavior of their employees for the benefit of the company. The content theories presented in this paper are:³³

- Pyramid of Needs by Maslow
- ERG theory by Alderfer
- McClelland's Performance Motivation Theory
- Two-factor theory by Herzberg

3.1.1 Pyramid of Needs by Maslow

The pyramid of needs, also called the hierarchy of needs, was developed by the American psychologist Abraham Maslow. It is based on the assumption that humans can be motivated by needs comparable to the instincts of an animal. According to Maslow, these claims are placed in a hierarchy, whereby the needs of the lowest level must first be satisfied before those of the next level can become behaviorally effective.³⁴

Maslow categorizes five classes of needs, which he in turn divides into deficit needs and growth needs. Deficit needs are those needs that a person tries to satisfy as soon as a deficiency of them occurs. Therefore, they are also called deficiency needs. Growth needs, on the other hand, are those whose satisfaction is sought in self-realization and recognition. The attached figure illustrates the basic idea of Maslow's theory.³⁵

Abbildung in dieser Leseprobe nicht enthalten

Figure Maslow's Pyramid of Needs³⁶

The five categories can be described as follows:³⁷

1. Physiological needs: To the Physiologicaln Needs include the need for food, warmth or maintaining health. A high priority is attached to this basic security, as it forms the basis of life of every human being.
2. Security needs: All events that can endanger physiological needs are among the safety needs. The needs of this stage are therefore designed to take precautions against possible hazards. While in the past stocks were created to ensure survival, today, for example, savings deposits, insurance or the purchase of real estate serve the purpose of basic security.
3. Social needs: If the basic needs of a person are secured, the desire for social contacts acquires a superordinate role. Consequently, social needs arise from the desire for attention, belonging, recognition and love by other people.
4. Appreciation needs: The fulfillment of social needs is followed by the desire for appreciation and self-respect. The appreciation needs therefore mentioned include the right to recognition and respect both from other persons and from oneself.
5. Self-realization needs: If the needs of the lower four levels have been satisfied, the will for self-realization comes into play. This manifests itself, among other things, in the striving for independence and the free development of one's own personality.

[...]

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¹ Bürkle, H., Aktive Karrierestrategie, 2013, p. 113.

² cf. Nerdinger, F., Motivation von Mitarbeitern, 2003, p. 1.

³ cf. Steinmann, H. et al., Management, 2013, p. 483 f.

⁴ cf. Stock-Homburg, R., Personalmanagement, 2013, p. 67 .

⁵ cf. Wickel-Kirsch, S. et al., Personalwirtschaft, 2008, p. 176.

⁶ cf. Watzka, K., Zielvereinbarungen in Unternehmen,, 2011, p. 19.

⁷ cf. Heckhausen, J. / Heckhausen, H., Motivation und Handeln, 2010, p. 285.

⁸ cf. Nerdinger, F., Motivation von Mitarbeitern, 2003, p. 3.

⁹ cf. Laufer, H., Praxis erfolgreicher Mitarbeitermotivation, 2015, p. 34.

¹⁰ cf. Steel, H., Leistungsmotivation in Organisationen, 2011, p. 5.

¹¹ cf. Hub, H., Unternehmensführung, 1990, p. 34.

¹² cf. Schmalt, H. / Langens, T., Motivation, 2009, p. 16.

¹³ cf. Nerdinger, F., Motivation von Mitarbeitern, 2003, p. 3.

¹⁴ cf. Niermeyer, R., Motivation, 2007, p. 22.

¹⁵ cf. Schmalt, H. / Langens, T., Motivation, 2009, p. 22.

¹⁶ Own presentation based on Schmalt, H. / Langens, T., Motivation, 2009, p. 16.

¹⁷ cf. Schmalt, H. / Langens, T., Motivation, 2009, p. 15.

¹⁸ Ibid.

¹⁹ cf. Wagner, R. et al., Pädagogische Psychologie, 2014, p. 48.

²⁰ cf. Steinmann, H. et al., Management, 2013, p. 483.

²¹ cf. Rheinberg, F. / Vollmeyer, R., Motivation, 2012, p. 15.

²² cf. Wagner, R. et al., Pädagogische Psychologie, 2014, p. 51.

²³ cf. Kirchler, E. / Rodler, C., Motivation in Organisationen, 2001, p. 12.

²⁴ cf. Rudolph, U., Motivationspsychologie, 2013, p. 153.

²⁵ cf. Kirchler, E. / Rodler, C., Motivation in Organisationen, 2001, p. 12.

²⁶ cf. Rudolph, U., Motivationspsychologie, 2013, p. 153.

²⁷ cf. Rheinberg, F. / Vollmeyer, R., Motivation, 2012, p. 153.

²⁸ cf. Rudolph, U., Motivationspsychologie, 2013, p. 153 f.

²⁹ cf. Wagner, R. et al., Pädagogische Psychologie, 2014, p. 51.

³⁰ cf. Steinmann, H. et al., Management, 2013, p. 484.

³¹ cf. Stock-Homburg, R., Personalmanagement, 2013, p. 67.

³² Own presentation based on Stock-Homburg, R., Personalmanagement, 2013, p. 68.

³³ cf. Stock-Homburg, R., Personalmanagement, 2013, p. 68.

³⁴ cf. Wagner, R. et al., Pädagogische Psychologie, 2014, p. 49.

³⁵ cf. Niermeyer, R., Motivation, 2007, p. 29 f.

³⁶ Own presentation based on Steinmann, H. et al., Management, 2013, p. 505.

³⁷ cf. Laufer, H., Praxis erfolgreicher Mitarbeitermotivation, 2015, p. 41 f.

• Note: 1,3
• Auteur: Nadine Schmidt (Auteur)
• Année de publication: 2017
• Pages: 52
• N° de catalogue: V1181385
• ISBN (PDF): 9783346593726
• Langue: anglais
• mots-clé: company, modes