This report will explain the link between motivational theory and reward, evaluate the process of job evaluation and other factors determining pay, asses the effectiveness of reward systems in different contexts, examine the methods organisations use to monitor employee performance, identify the reasons for cessation of employment with an organisation, describe the employment exit procedures used by two organisations, and this report will also consider the impact of the legal and regulatory framework on employment cessation arrangements.
Most companies motivate their staff in order to receive better results, performance, good attendance, growth of the company and improved individual behaviour. Motivation can show a business an individual’s ability to perform, which will enable the company to see if any training or development is needed. However, reward systems can also be put in place by businesses. Rewards can be things such as; bonuses, flexible working, staff discount, free or reduced rate health benefits, discounted gym membership etc. Motivation focuses on the individual and how they can achieve better results for both the company and the individual, whereas rewards are giving the individual something extra outside of work to compliment good work. “Guest et al (1998) notes that in recent years there is evidence of the formation of the psychological contract – this has resulted in better organisational commitment and motivation for employees.” Bratton & Gold (2003)
The Psychological contract is over and above the written contract, the written contract includes: hours, wages, holidays, health & safety, job title, pensions, length of contract, probationary period etc. The Psychological contract includes training – up skilling, it looks at future opportunities, career paths, and work/life balance (i.e. flexible hours). “Primarily, the Psychological Contract refers to the relationship between an employer and its employees, and specifically concerns mutual expectations of inputs and outcomes.” Business Balls (2010)
“There are many academic theories that exist within the field of employee motivation. Some of the arguments of the theories are identical and the differences are the proponents of the same. However, the provisions and arguments of some of the theories are different, depending on the motivation of the proponents and their worldview.” Smith, C (2010) Maslow’s Theory focuses on fundamental human needs, Maslow suggests that individuals are motivated by different factors at work, the hierarchy of needs includes:
This theory can allow managers to create career paths for their employees and build a better relationship with them. Not only can the hierarchy of needs be used for an individual, but for an organisation as well.
Maslow’s theory can be applied to many different job descriptions and organisations which is why it is such a great motivational theory, however there is one point which may be a disadvantage; everyone’s hierarchy of needs are different, so if you are a business you cannot build one hierarchy and expect a good performance for all of your employees because it will not satisfy every employee’s needs. Everyone is different and everyone has different thoughts to each other. Elton Mayo’s theory of Human Relations suggests that teamwork is an important motivator, and managers should take an interest in their workers. Also while Mayo carried out this experiment at the Hawthorne factory of the Western Electric Company he stated that physical conditions and pay matter less than social interaction when motivating employees. Elton Mayo believed that workers could be “better motivated by having their social needs met whilst at work (something that Taylor ignored). He introduced the Human Relation School of thought, which focused on managers taking more of an interest in the workers, treating them as people who have worthwhile opinions and realising that workers enjoy interacting together.” Tutor2U (2012) The two factor theory by Herzberg doesn’t just analyse the workers, it analyses the business as well.
Herzberg’s research shows that some factors are satisfiers and not motivators. Satisfiers/motivators are factors that can motivate workers providing job satisfaction, and they are concerned with the job itself and include achievement recognition and responsibility. Hygiene factors are external to the job itself and can cause dissatisfaction if not fulfilled. Hygiene factors include: company policy, supervision, pay and working conditions. To make workers feel fulfilled at work business need to create conditions which will enable this. From these theories you can see each person has a different view on what motivates employees, some theories older than others, F W Taylor’s theory was one of the earliest motivational theories, and he declared that workers are only motivated by pay. This theory could be seen as out of date, because now more and more organisation are offering extra rewards which may give employees the impression that pay is something that should be given regardless.
However, Taylor identified that employees would work harder for more money, so piece rate was introduced. If you look at what organisations offer now you can relate Taylor’s theory to how some organisations use motivational theory. For Example: A lot of organisations offer rewards now in exchange for good/hard work, so instead of working harder for more pay or being paid for how much work you do (Taylor’s Theory); employees are working harder for extra rewards. If you look at it like this then Taylor’s theory is still being used today. Organisations may not just stick to one motivational theory because everyone is different so they may mix and match, they may use some factors of two or three different theories to ensure their employees are motivated and give good performance at work.
Rewards are given to employees for good work and/or behaviour. Most businesses have reward systems or programmes in place and they can have some similarity to motivational theories. For Example: Tesco’s employee reward programme (Appendix 1, case study) is similar to Taylor’s theory, Tesco’s financial reward packages are one motivational factor however, Tesco realises that pay/increases are not the only factor to motivate or reward, they support the varied lifestyles of individual employees through relevant and targeted benefits. Tesco’s rewards for hard work include:
•Free shares after one years’ service
•Save as your earn shares
•Pension scheme with equal contributions from Tesco
•Employment discount card
•Christmas or pay slip vouchers
•Private healthcare (free or special rates)
•Contract free phones with o2
These are only some of the rewards that are given to Tesco’s employees, but as you can see they offer some great rewards. This helps towards employee motivation and faithfulness to the company. Not all organisations offer what Tesco offers, Ramfoam Ltd does not offer many rewards to their employees, they offer: Bonuses
Christmas buffet (in work hours)
From the information above Tesco’s employees would be far more motivated and faithful than Ramfoam’s employees because of what they offer. This shows new potential employees what sort of organisation they would be working for. Tesco would be reviewed as a flexible, fair, and loyal to employees, whereas Ramfoam may be reviewed as a tough organisation, not very flexible and more work for less pay/rewards. Other rewards that could be given from organisations are:
All rewards help the organisation to reach its targets/
objectives, and boost the performance of employees.
There are a number of different performance cycles that organisations can use to monitor employee performance. Some of which are; Planning Performance – this is where manager and employee create a shared view of performance. Supporting performance – The manager should take on board an enabling role. Medal & mission, keep up to date with organisational changes, it is employee’s duty to meet the objective set.
On-Going review – This is can be informal or formal (well done or objective signed off) The most popular system used by organisations to monitor employee performance is the appraisal system. An appraisal system normally takes place every 3, 6, 12 months with your manager and or team leader, and sometimes HR or personnel manager. Appraisals can be used to; motivate employees, identify areas for improvement, possible career/training opportunities, identify problems, set targets (sales/attendance/punctuality), give praise, review last period, and match objectives with company objectives. “According to a recent IRS Survey (IRS Employment review 769a, 2003, p8) the main reasons for appraisal are: to identify training/development needs (89%), to evaluate individual performance (82%), to identify and acknowledge good performance (32%), to ensure managers and staff communicate (31%), to help make reward decisions (19%), to identify and deal with poor performance (17%), to increase productivity (9%) and to measure the standard of people management (5%). Marchington, M and Wilkinson, A (2005)
Both organisations and employees can achieve a lot with an appraisal system, however, if it is just the typical routine/procedure that an organisation uses then it can be referred to as just a box ticking exercise. Typical appraisals include a self-appraisal form and questions such as; where do you want to be in 1, 3, and 5 years’ time. Then your manager/HR/Personnel will rate and discuss with you your knowledge, skills, job performance, behaviour and any issues you wish to bring up. Then to conclude you will go over new targets and any improvements you need to make.
There are a few academic theories which describe appraisals and suggest how they should be carried out.
Randell et Al – 1984 suggests that appraisals fall into three broad categories:
– Reward Review
– Potential Review
– Performance Review
He believes that performance reviews have the greatest advantage, such reviews including appraisal of past performance, meeting objectives, identification of training needs and problems preventing better objectives. This theory is very similar to how most private organisations conduct performance appraisals, private sector workers are more likely to do more work for less pay which means organisations can/should set targets and objectives for their employees to meet. This is an easy way for organisations to see what their employees are capable of and how well they can meet targets, however for the employee this type of appraisal can be like a box ticking exercise and it doesn’t really make a difference. Fletcher’s academic theory is the 360 ° appraisal, Fletcher identifies this system is where there is a range of contributors. Often a quantitative approach is taken with a range of raters’ completing a questionnaire on behaviour and actions of the appraisee.
Fletcher 1993 notes that appraisal systems have a shelf life, he considers that changes to systems are necessary to renew interest and energy. Fletchers approach to an appraisal system is more informative and has more structure; this system would work very well within the nursing sector. Nurses work for self-satisfaction unlike most private sector workers so for a nurse to have an appraisal like what Randell Al suggests it would not be very satisfying or helpful. Setting targets and reviewing past objectives would not do any justice for a nurse. Nurses should be reviewed by the service they give and how well they work with their patients and other nurses on their ward. Patients should be given a choice to complete a short questionnaire which would review/rate the nurses who looked after them. Some questions which could be asked are;
•Rate from 1-5 in team working (which shows the appraiser how well they work with colleagues) •Rate from 1-5 in bedside manner/helpfulness (which shows how well they treat/help their patients) •Rate from 1-5 in individual working (which would show how well they can work on their own and if they need any further training/development)
An additional comment box could also be added for any extra comments the patient would like to make. The 360 ° is a great way to boost motivation and performance; both nurses and appraisers would have the opportunity to look at outside reviews from their patients, this would show them both how well they do their job and if there is any room for improvement. This approach is better and more suited for public sector workers because it shows how well they serve. This theory could work for some private sector workers if they dealt with customers face to face, but realistically private sector workers are working to the organisations objectives so they must have objectives themselves to help the growth and success of the organisation. This is why Randell et Al’s theory is better suited for private sector industries.
There are different types of payment systems which organisations can use, such as;
Time Rate (paid hourly/weekly or monthly wage)
Payment by results
and there are quite a few factors which can determine pay and they are:
Public Sector – pay grades or pay rises every year.
Attendance/punctuality – can reduce pay
National Minimum Wage
Because private sector industries can negotiate pay, any of these factors could be used to determine this.
Some of the reasons why employees leave an organisation or for terminating a contact can be; move to another job, sacked/fired, personal reasons, unhappy in current role, redundancy, or retirement. If an employee does want to leave, they should provide the organisation with the resignation in writing, and they may need an exit interview so the employer can determine the cause. The reasons for an employer terminating an employee’s contact can be; Dismissal (Wrongful, unfair, justified), termination of employment ;( resignation, retirement, termination of contract) redundancy; redeployment, re-training.
Dismissal of an employee occurs when:
•The employer terminates the contract either with or without giving notice
•A fixed term contract ends and is not renewed
•The employee leaves, with or without giving notice, in circumstances in which they are entitled to so do because of employees conduct.
Potentially fair reasons for dismissal:
•Capability or qualifications
•Illegality or contravention of a statuary duty
•Some other substantial reason
Employment exit procedures are handled differently in each organisation, see appendix 2 for Dudley College’s procedure and appendix 3 for Ramfoam’s exit procedure. Both Dudley college and Ramfoam’s procedures are similar, however as you can see Ramfoam has little detail in the way they deal with a disciplinary, for example: Ramfoam state that before any grievance is made the purpose of the procedure is first to allow an employee freely to express a complaint of matter of concern, then try and resolve the issues by means of a discussion. Ramfoam do not make it clear who the employee should speak to or raise the issue to, whereas Dudley college have stated in their procedure that the matter should be raised orally with the employees immediate supervisor, and if the issue is with this supervisor then it should be referred to the immediate supervisors own manager.
Dudley College have covered this detail to ensure the employee can feel satisfied and knowledgeable about the procedure, Ramfoam have not done this and have not gone into much detail, so the employee may feel unsure and may not speak up about the problem because they do not know who to speak to. Also Ramfoam only have 3 simple steps for their employees to follow, again not in much detail, and Dudley College have put in place 4 stages which are very detailed instructions. Ramfoam have a good procedure to how they deal with a disciplinary although more detail should be included for the benefit of their employees.
“In Britain employment law has traditionally played a minor role compared with any other countries, the system having been moulded by employers and trade unions rather than by legal enactment… Accordingly, the legal impact of intervention needs to be assessed not only against its desirability but also against the likelihood of attaining it objectives. As we know with any area of legal intervention (e.g. speed limits, smoking bans or limits on noise), the more this is accepted as appropriate behaviour by citizens, the more successful – and less interventionist – the law needs to be. Marchington, M & Wilkinson, A (2005) HR has to follow all legal and regulatory frameworks on employment cessation arrangements; the legal and regulatory framework consists of: Employment Rights Act 2008 – increase protection for vulnerable workers and lightening the load for law, the Employment act also looks at other acts such as; National Minimum wage.
If an organisation does not comply with the legislation acts or an employee or an employer get tied up in a legal dispute, then this can either be dealt with by the trade union within the organisation or lead to employment tribunals where legal disputes are dealt with in the work place. “Tribunals play a major role in the HR area, dealing with unfair dismissal, equal opportunities, and redundancy payments. Over the years, the tribunal system has had a significant influence on the way in which managements handles employment issues, and it has led to an increasing formalisation of procedures in employing organisations.” Marchington, M & Wilkinson, A (2008) All of these legislations are there to protect employees and make sure that organisations are dealing with and treating people fairly.
This report clearly asses the link between motivational theory and reward, along with discussing the effectiveness of reward systems in two different organisations which are Tesco and Ramfoam ltd. Performance cycles and appraisals methods were looked at in details to show why organisations used them to monitor employee performance, also the process of job evaluation and other factors determining pay have been evaluated. Within these points creative/lateral thinking has been demonstrated, and critical evaluation has also been used to justify valid conclusions. Cessation of employment has been mentioned with various reasons for this with an organisation, descriptive details have been given for the employment exit procedures used by Dudley College and Ramfoam Ltd. The impact of the legal and regulatory framework on employment arrangements has been clearly identified.
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