Case 5: The puzzle of motivation
Key points and challenges
- There is a mismatch between what science knows and what business does. Businesses are not doing things according to science.
- Nowadays how we motivate people in HRM is built entirely around extrinsic motivators.
- Too many organizations are making their decisions, their policies about talent and people, based on assumptions that are outdated, unexamined, and rooted more in folklore than in science.
- Challenges in pay-for-performance plans
Good points taken
- Rewards work really well for those sorts of tasks, where there is a simple set of rules and a clear destination to go to.
- Rewards narrow our focus by nature, and concentrate our mind.
- Left-brained, routine kind of work can easily be outsourced, what really matters are the right-brained, creative, conceptual kind of abilities.
- In 21st century we need a new approach, the reward-and-punishment is simply outdated.
Problems in pay-for-performance plan
- The "do only what you get paid for" syndrome
- Incentives might induce employees to engage in undesirable behaviours
- Individual merit system assume that the employee is in control of the major factors affecting his or her work output
- Individual performance is difficult to measure, and tying pay to inaccurate performance measure is likely to create problems.
- The credibility gap
- Merit pay can place employees under a great deal of stress and lead to job dissatisfaction
- Decrease employees' intrinsic motivation (block talents and creativity)
Solution
- Promote the belief that performance makes a difference
- Build employee trust
- Use motivation and nonfinancial incentives
- Use multiple layers of rewards
- Increase employee involvement
Sources: Gomez-Mejia, L.R., Balkin, D.B. and Cardy, R.L. 2016. Managing Human Resources. Global Edition 8/E. Pearson. London. ISBN-10: 1292097248
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