INTRODUCATION

MEANING OF MOTIVATION

Motivation is derived from the word motive A motive is an inner state that energixes ,
activates or moves and directs or channels behaviour towards goals.

DEFINATION OF MOTIVATION
According to encyclopedia of management, Motivation refers to the degree of readiness
of an organization to pursue some designated goadl and implies the determination of the
nature and locus of foarces, including the degree of readiness.

Motivation is a process that starts with a physiological or psychological deficiency or

need that activaties behaviour or a drive that is aimed at a goal or incentive.
Thus the process of motivation lies in the meaning of and relationship among needs..

LITERATURE REVIEW

THEORIES OF MOTIVATION

There are several theories on motivation. The singnificant among them are
1. maslows theory of hierarchy of needs
2. herzbergs towl factor theory
3. vroom expectancy theory.
4. alderfers ERG theory
5. the poerter and lawlers expectancy theory
6. equity theory of work motivation.
 maslows theory of hierarchy of needs

• Physiological needs: These are the basic necessities of huyman life- food,
water, warmth, sheltere, sleep andssexual satisfaction. As far as work
organization is concerned , these needs include basic needs like pay ,
allowance, incentives and benefits.
• Security/safety needs: These refer to the need to be free of physical danger
or the feeling of loss of food, job or shelter.
• Social needs whe physiological and security needs are satisfied, these
social needs begin occupying the mind of a man. This is exactly why he
looks for the association of other human beings and strives hard to be
accepted by its group. Social needs at the work place include human
relations, formal and informal work groups.
• Esteem needs: These needs are power , prestige , status and seld –
confidence . Every amn has a feeling of importance and he wants others to
regard him highly. These needs make people aim high and make them
achieve something great . These needs for employess include status
symbols , awards, promotions., titles etc.
• Self actualization needs: this refers to the desire ot become what one is
capable of becoming . man tries to maximize his potential and accomplish
something , when this need is activated in him.

Herzbergs two factor theory

According to this theory first group of needs is such things as company policy
and administration , supervision, working conditions, interpersonnel relations,
salary, status, job security, and personal life. Herzberg called these factors as
disstisfiers and not motivators. By this, he means that their presence or
existence does not motivate in the sense of yielding satisfaction, but their
absence would result in dissatisfaction. These are also referred to as hygiene
factors.

In the second group are the satisiers in the send that they are motivators , ,
which are related to job content. He included the factors of achievement ,
recognition, challenging work, advancement and growth in the job. He says
that their presence will yield feelings of satisfaction or no satisfaction. But not
dissatisfaction.

vroom expectancy theory.

victor vroom felt that content models were inadequate explanations of the complex
process of work motivation and he developed the relatively new theory of motivation.
According to his theory, motivation of any individual depends on the desired goal and the
strength of his expectation of achiving the goal. Vrooms model is build mainly on three
concepts- balance instrumentality and expectancy.

Valance : vroom says that valance is the strength of an individual preference for a
particular outcome. It can be taken as equalant of value , incentive , attitude and expected
utility. for the valance to be positive, the person must prefer attaining the outcome to not
attaining. A valance of zero occurs , when the individual is indifferent towards the
outcome . the valance is negative when the individual prefers not attaining outcome to
attaining it.

Instrumentality: another major input in to the valance is the instrumentality of the first
level outcome in obtaining the desired second level outcome.

Expectancy:
Through the expectancy and the instrumentality appears to be the same at first glance,
they are quite different .expectancy is a probability ( ranging from 0 to 1) are strength of
a beleafe that a particular action or effort will leave to a particular first level outcome.
vroom says the sum of these variables is motivation.

alderfers ERG theory

alderfer identify three groups of needs , w.i.z. , existence , relatedness and growth and
that is why his theory is called ERG theory.
• The existence needs are concerned with survival or psychological well- being .
• Relatedness needs talk of the importance of interpersonal and social relationships.
• The growth needs are concerned with the individual intrinsic desire for personnal
development.

the poerter and lawlers expectancy theory

lyman w. porter and Edward E lawlers exploded the complex relationship

between motivation , satisfaction and performance.

The following are the key- variables in this model

• Motivation : satisfaction and performance

• Effort : effort is only amount of energy exerted by an individual to
achive a specific task.
• Performance : performance results only when the effort is continued
with ability.
• Reward: a person intrnsic reward himself by performing a task well.
Intrinsic reward will be a feeling of accomplishment . extrinsic reward
like pay , promotion , status are offered by the organization.
• Satisfaction: it depends on the perceived reward and actual reward .
Equity theory

This theory is developed by J. Stacy adams. This theory argues that a major input
into job performance and satisfaction is the degree of equity ( or inequity) that
people perceive in there work situation. Inequity occur when aperson perceive that
ratio of his or her outcomes to input and the ratio of relevant other`s outcome to
input are unequal.

Both the input and output of a person and others are based upon the person
perception. Outcome consist of rewards like pay , status , promotions and intrinsic
interest in the job.

If the person`s perceived ratio is not equal to the other`s, he or she will strive to
restore the ratio to equity . thus , the work motivation of one self depends upon
other`s input, output and once perceived output.

Organization wide incetive plans

It rewards employees on the basis of the success of the organization over a specified
time period. These plans seek to promote a culture of ownership by developing a
sense of belongingness, co-operation and team work among all employees . there are
three basic types of organization:- wide incentive plan , profit sharing, gain sharing
and employee stock ownership plans.

Profit sharing:

Profit sharing is a scheme where by employer undertake to pay a particular portion

of net profit to there employees on compliance with certain service conditions and
qualifications. The purpose of introducing profit sharing schemes has been mainly
to strengthen the loyaltyof employees to the firm by offering them an annual bonus.
( over and above normal wages) provided they are on the service rolls of the firm for
a definite period. The share of profit of the worker may be given in cash or in the
form of shares in the company. These shares are called bonus shares.

Merits:

1. The idea of sharing profits inspire the management and the worker to be
sincere, devoted and loyal to the firm.
2. It helps in supplementing the remunartion of worker and enable them to lead
a rich life.
3. It is likely to induce motivation in the workers and other staff for quicker
and better work so that profit of the firm are increased which in turn
increases the share of worker therein.
 4. Workers do not require close supervision , as they are self –motivated to put
in extra labour for the prosperity of the firm.
5. It attracts talented people to join the ranks of a firm with a view to share the
profits.

Demerits

1. Profit sharing scheme is, in practice, a fair – weather plan. Workers may get
nothing if the business does not succeed.
2. Management may dress up the profit figure and deprive the worker of there
legitimate share its profit.
3. Worker tend to develop loyalty towards firm discounting there loyalty
towards trade unions , thus impairing the solidarity of trade unions.
4. Fixation of workers share in the profits of firm may prove to be a bone of
contention in the long run.

Gain sharing

Gain sharing plans aims at increasing productivity or decreasing labour cost and
sharing the resultant gain( usually a lumpsum payment) with employees. It is based
on mathermatical formula that compare a baseline of performance with actual
productivity during a given period. When productivity exceeds the base line an
agreed -upon savings is shared with employees. Gain sharing is built around the
idea that involved employees will improve the productivity through more effective
use of orgnasational resources.

Three major types of gain sharing plan are currently in use: Scanlon plan , rucker
plan and improshare .
Scanlon plan: under this plan constant propotion (i.e ratio of wages to sales value) of
the added value of output is paid to the worker who are responsible of the addition
of value. The added value is the change in market value ( including profit ) resulting
from an alteration in the form , location are availability of product service ,
excluding the cost of purchased material or services used in production.

Rucker plan: in this plan, employees receive a constant proportion of the added
value. The term added value means the change in market value resulting from an
alteration in form, location are availability of product or service , excluding the cost
of bought –out material or services.

improshare stands for improved productivity through sharing . this plan is similar
to a peace rate exept that it rewards all employees in an organization. Input is
measured in hours and output in physical units . a standard is calculated and weekly
bonus are paid based on the extent to which the standard is exceeded. The
employees and the organization each receive payment for 50% of improvement.

Unlike profit sharing plan which have deferred payments, gain sharing plans are
current distribution plan. They are directly related to individual behavior and are
distributed on a monthly or quarterly basis. Gain sharing plan tent to increase the
level of co-operation across workers and teams by giving them a common goal.
Managers are not require to base there calculation on complex mathematical
formulay, nor they are require to closely look in to the specific contributions of
individuals or independent team. It is easier for both , to formulated bonus
calculation and to achive employee acceptance of those plans. Gainsharing plans,
however protects low performers. Where rewards are spread across a large number
of employee , poor performers may get rewards for non performance at he cost of
the bright performers.

Gain sharing plan may fail due to others reasons as well.

 Poorly designed bonus formula.
 Lack of management support for employee participation
 Increasing cost factor that undermine the bonus formula
 Poor communication
 Lack of trust
 Apathy on the part of employees.

To develop an organization – wide incentive plan that has a chance to survive

let alone succeed carefull in depth planning must precede implementation . a
climate of trust worthy labour- management is also absolutely essential.
The financial formula should be simple and should measure and reward
performance with a specific set of measurable goals and a clear allocation
method.

EMPLOYEES STOCK OWNERSHIP PLAN

Under employee stock option plan the eligible employees are allotted
company shares below the market price. The term stock option implies the
right of an eligible employee to purchase a certain amount of stock in future
at an agreed prize. The eligibility criteria may include length of service,
contribution to the department/division where the employee work , etc
The company even permit employees to pay the price of the stock allotted to
them in instalments or even advanced money to be recovered from there
salary everymonth. The allotted shares are generally held interest and
transferred to the name of employees when ever he or she decides to exercise
 the options. The stock options empowers the employees to participate in the
growth of the company as a part owner. It also helps the company to retain
talented employee and make them more committed to the job.

Merits of esop

o Stock options are tremendous motivator because they directly link

performance to the market place. The underlying rational is to let
employees add value to a company and benefits from it on the same
terms as any other provider of risk- capital.
o Employees remain loyal and commited to the company. To become
part owners, everyone has to stay for a while , contribute there best
and then shares the resultant gains according to agreed criteria. The
stock options motivate people to give there best to company because
individual performance will translate in to share price increases only
if it is part of a larger collective effort.
o By transforming your employees in to a stock holder stock options
foster a long term bond between the employee and the company.
Employees begin to look at themselves as real owners in place of just
paid servents of a company. ESOP s give employees a piece of the
action so that they can share in the growth and profitability of the
company. Everyone also loves the concept of employee ownership as a
kind of people capitalism.

o Esop underscore the importance of team efforts among employees.

o Better industrial relation, reduced employee turnover lesser supervision ,
increased dividend income etc . are other incidental benefits.

Demerits

o only profitable company can use the tool

o stock prices do not always reflect fundamental.
o Falling share price could mean losses for employees
o The inability to cash in quickly can dampen interest.
o Lack of transparency can earn accusations of favouratism.

In my opinion management has to consider the variable pay programme which is the
sound incentive plan and it can be implied depending on the organizational capacity.
A number of organizations – business firm as well as school districts and other
government agencies that are moving away from paying people based solely on
credentials or length of service and toward using variable –pay programmes.

Piece rate pay plan: in piece rate pay plans workers a paid a fixed sum for each unit
of production completed. When an employee no base salary and he is paid only for
what he or she produces this is pure piece rate plan.

Merit based pay: merit based pay are based on performance appraisal rating. A
main advantage of merit based pay plan is that they allow employer to differentiat
paybased on performance so that those people thought to be high performers are
given bigger raises. The plans can be motivating because, if they are desingned
correctly , individual perceive a strong relationship between there performance
they reward they receive. The evidence support the importance of this linkage .

Most large organization have merit pay plan, especially for salary employees. IBM
merit pay plan for example, provides incresas to employees base salary based on
there annual performance evaluation.

Bonus: for many jobs annual bonuses are significant component of the total
compensation. Among fortune 100 CEOs, the bonus ( with mean of 1.01 mil dollors.)
generally exeeds the base salary. ( with a mean of 863000 dollors) increasingly bonus
plans are casting a larger net within organization to include lower ranking
employees. Many companies routinely reward production employees with bonuses
in the thousands of dollors when company profits improve. One advantage of
bonuses over merit pay is that bonuses reward employees for recent performance
rather than historical performance.

FACTORS THAT NEED TO BE CONSIDERED FOR INCREASING THE PAY

CONCLUSION

UNFAVORABLE

MY OPINION