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the institute for employment studies
Motivation and Reward:presentation to e.reward conference
Peter Reilly
Agenda
The terms of debate
The importance of motivation
Link between motivation and reward
How to develop workforce motivation through reward
Words, words, words …
Motivatio
n
Commitment
Engagement
Citizenship
What does motivation deliver?
Higher productivity Improved customer service
Inputs
Outputs
Lower staff turnoverBetter attendance Improved safetyBeneficial engaged behaviours
● taking initiative● wanting to develop● organisationally aligned
Some evidence
Corporate Leadership Council● the most engaged employees perform 20% better
than the average and 87% less likely to leave
Gallup/CIPD ● positive health● lower sick leave taken
SHRM● better safety performance
Salanova et al. ● improved customer service
Cohen● lower intention to leave
Line Manageme
nt
Company Culture
EmployeeCommitmen
t
Customer spending intention
Changein sales
Customer satisfaction
with service
Employee Absence
IES service-profit-chain model
Service satisfaction chain in government
Confidence ingovernment
Canadian Government
Servicesperceived tobe beneficial
Servicequality
Services perceived tomeet needs
Employee input to service
Canadian Government
Employeesatisfaction/commitment
Work environmentFair pay
Perception of management
Career development
Clientservice
satisfaction
Timeliness
competence
CourtesyFairnessOutcome
Citizen trust/confidence ingovernment
Social/cultural factors
Government performance
Service satisfactionService benefit
Service adequacy
the institute for employment studies
Link between Motivation and Reward
The positive impact of reward
Corporate Leadership Council● Connecting pay to performance has
the greatest effect on discretionary effort
Guzzo et al.● Financial incentives had a greater effect on
commitment than a wide range of motivational levers: training, work design, etc.
The Work Foundation● The higher proportion of staff getting PRP,
the higher organisational added value
Pay practice cont.
The WorldatWork● PRP’s impact on engagement
Improved for 57% among top performers Improved for 30% for average performers Improved for 12% for low performers
York University Canada● Those who received performance feedback &
linked reward were more satisfied with pay than those without an appraisal or PRP not linked to appraisal.
IES● Pay and benefits links to employee engagement
in the NHS
The negative side of poor rewardCIPD top 3 factors leading to work
disengagement:1. ‘the way the organisation is managed’ 2. ‘chances for promotion’ 3. the ‘pay package’ Poor communication of reward
leads to employee dissatisfaction (LeBlanc)
Staff in public sector resent systems that seem designed for ‘naturally shirking employees’ (Henry)
Managers key objective is maintain trust and relationships with staff, so IPRP is operated to maintain equity not reward high performers (Harris)
There are other factors
Importance of equity● Employees are more concerned with fairness
and equity than with levels of pay (Towers Perrin)
● People are uncomfortable about being better rewarded than others - depending on the social setting (Adams)
Satisfaction● Organisational commitment was more
strongly related to pay satisfaction than to actual income (Cohen and Gattiker)
There are other factors, cont
Process●Pay fairness (particularly process
fairness) 25 times stronger predictor of employee commitment than pay satisfaction (Compensation Round Table)
Understanding●Pay knowledge is associated with
organisational effectiveness and pay satisfaction (LeBlanc Group)
WorldAtWork knowledge of pay model
Payamount
Payprocess
Payknowledge
Paysatisfaction
Workengagement
To sum up
In some circumstances financial rewards can increase motivation when●it’s a proxy for value?●it’s a symbol of competence? ●pay is low and vital to survival?●it’s a matter of mutual dependence?●there are no better alternatives?●when it is the occupational norm?
To sum up, cont.
For others financial reward a hygiene factor ― get it wrong & problems result
Fairness, understanding & satisfaction (more than level) seem to be important
Different reward systems produce different results, depending upon aims
Merit increase v bonus Team/group v individual Incentive v recognition
the institute for employment studies
What Actions Can You Take?
Understand your workforce
‘The cat bringing you a dead rat as a
reward shows that the cat
knows nothing of what interests you’
Graham White HR DirectorWestminster City Council
Measure motivation, etc
Gallup Q12 Towers Perrin Saratoga Hewitts Valuentis Hay ISR YouGov etc., etc. Own company approach
The engagement index
Surveys, surveys, surveys …
Understand differences
Personal/job characteristics● age● grade/role/occupation● length of service● ethnicity ● gender
Work experiences● harassment/bullying/work accidents● interactions with managers
(especially appraisal and development) Individual attitudes
Motivation varies by …
Examine linkages
How does motivation link to:● organisational performance/profitability● productivity● quality levels/innovation evidence● customer satisfaction etc● resignation rate (and intention to stay)● absence statistics● performance indicators ● pay level and size of award (base/bonus)● benefit take up● reward policy change
Some tools
Total reward
Total reward includes all types of reward ― non-financial as well as financial, indirect as well as direct, intrinsic as well as intrinsic. It is a value proposition which embraces everything that people value in the employment relationship and is developed and implemented as an integrated and coherent whole.
Michael Armstrong’s definition of total reward
attractmotivate
retain
employeesatisfaction
& engagement
businessperformance
&results
organisational culture
businessstrategy
HR strategy
compensation
benefits
work/life
performance & recognition
development& career
opportunities
Totalreward
sstrateg
y
WorldatWork’s total reward & employee engagement model
Components of total reward
Adapted from Schuster and Zingheim, 2000
Compelling future
Vision/valuesGrowth/successPositive brand
Individual growthDevelopment/trainingCareer enhancement
Positive workplacePeople focusLeadershipCollegiality
Trust/recognition Involvement/
opennessTotal remuneration Base
VariableBenefits
Some tools
Total reward
Flexible benefits
Profit sharing or similar
Well designed incentives
Expectancy theory and pay satisfaction
Source: Ducharme, Singh and Podolsky, York University, CBR, 2005
Expectancy
Reward
ValenceInstrumentality
Performanceevaluation
Goalsetting
Paysatisfaction
Motivation
Some tools
Total rewardFlexible benefitsProfit sharing or similarWell designed incentivesNon financial recognition …
Demonstration of caring,concern and fairness
… thank you
www.employment-studies.co.uk
For further information contact:www.employment-studies.co.ukpeter.reilly@employment-studies.co.uk