mba 820 evolution of hrm

MOI UNIVERSITYEXECUTIVE MBA PROGRAMME

MBA 805: HUMAN RESOURCE MANAGEMENT

1.0 HUMAN RESOURCE MANAGEMENT IN PERSPECTIVE1.1 Evolution of the HRM function1.2 Role of the HR function 1.3 Models of HRM 1.4 HRM and personnel management1.5 HRM and management theory

1.1 EVOLUTION OF HUMAN RESOURCE MANAGEMENTObjectives:

Explain the meaning and evolution of HRM Identify the factors that have shaped modern HRM in organizations

HRM practices emerged during the industrial revolution in the 18th century when factories employed a large number of people to operate machines. Recruitment, payment and training became specialized activities, which required specialized people to do them for the organizations.

Since then, the HRM function has evolved both in its functions, roles and even in terminologies. For example:

- Personnel administration- Manpower management- Personnel management- Human resource management- Strategic human resource management

This change in terminologies is a reflection of the paradigm shifts in business life.“A paradigm refers to a particular way of thinking about, seeing and doing things”

Kathryn McKee, cited in Brewster (2000), has identified four periods in the evolution of HRM1) Mechanistic period – This is the period from the 1900’s – 1950’s when manufacturing

was the driving force in industry. The main focus was on administrative functions such as recruiting, dismissing, paying, dealing with labour unions and keeping records. Management of people was guided by the principles and ideas of scientific management advocated by Fredrick Taylor and Henri Fayol. As such efficiency was more important than human relations

2) Legalistic period – This is the 1960’s – 1970’s which was characterized by legislation in the civil, social, political and employment areas. This involved regulation of the employment and labour markets through laws and policies such as Africanization and Kenyanization in Kenya, Equal Opportunities Acts in the USA and many others to

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regulate labour unions and employment contracts. This period also ushered the computerization of HR information.

3) Organistic Period –This is the period of organizational change associated with the 1980’s. Globalization as a result of technological change led to mergers, acquisitions, downsizing and rightsizing of organizations. Workforce became more diverse as a result of immigration, expansion of cross-border businesses, more educated workers with increased awareness. These changes required specialist personnel systems.

4) Strategic period – 1990’s – This is a period of more complicated organizations with complex structures and networks. The hallmarks of this period are increased competition due to globalization hence the need for survival. Organizations adopted strategic planning. The role of HR was elevated to the highest level in the organization reporting to the CEO and the Board of Directors.

The future in the 21st century is predicted to be catalytic (a catalyst for change and the key for competitive advantage due to:

- Cross border employment- Cultural mix- Use of part time workers- Innovative compensation practices- Flexi time- Team work

Reasons for Growth of Human Resource Management Technical factors:

Industrial revolution – changes in the methods and techniques of production, which required new principles, and methods of dealing with them.

New experiments of social scientists - parallel work by social scientists, anthropologists and psychologists e.g. Taylor, Fayol, Mayo and McGregor influenced how industries managed workers.

Growth in the size of organizations – increased production, number of workers needed specialized departments to handle worker’s issues.

Labour Unions – after World War 1, trade unions developed in response to poor working conditions, exploitation, politics etc. Organizations were forced to cooperate.

Cultural and social /political factors: Better workers’ education Immigration – rural-urban, inter - country. Labour mobility- across industries and organizations Composition of labour in terms of gender, racial and age Liberation/democratic movements e.g. independence, welfare states e.g. Russia

(communist countries

Others: Change in managerial outlook – seeing labour as a partner rather than an enemy. Change in form of business organization, mergers, acquisitions, MNC More complex production techniques.

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New policies, strategies etc due to globalization, competition etc. Contribution of the social sciences – views and theories on human relations have been

developed.

1.2 ROLE OF THE HR FUNCTION AND THE HR SPECIALIST

Relationship between personnel management and other organization’s functionsObjectives:

Distinguish between line and staff functions Explain the staff functions of the personnel department Discuss the sources of conflict between line and staff managers Suggest how such conflicts may be overcome

Line FunctionsRefers to those functions that contribute directly to the accomplishment of the basic objectives of the firm. For example in a manufacturing firm, production, quality control and procurement may be seen as line functions.

Staff functionsRefers to those functions of the organization that help the line to work most effectively in accomplishing the primary objectives of the organization. These may include HRM, research and development, purchasing and supplies, public relations and finance.

The relationship between staff functions and other organizational functions is advisory and consultative. They investigate, research, and give advice and guidance. It is important to note that within even a staff department there are line authorities – manager- subordinate. Hence a staff function also has line authority within it. Staff function occurs only in relation to other functions/departments in the organization.

Importance of understanding line and staff Authority

Staff sells ideas, persuades, advocates, and acts as change agents. e.g. auditors or economists who advice the CEO

Line managers make decisions, command and issue instructions through the chain of command.

Roles of the HRM function

The overall role of the HR function is to provide support and services to line management to enable the organization achieve its core objectives. These roles should be performed without appearing to usurp or police line management. HR should not force findings, ideas or suggestions on unwilling line managers but should sell, market, persuade and consult by acting as consultants.

Role of the HR professional

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The HR specialist functions as a business partner, delivers effective people strategies, upholds ethical standards, manages change and is committed to continuing professional development. Some roles are: enabling role, guidance role, support role, facilitating role, empowering role, interventionist role, business partner, strategist role, innovation role and internal consultancy role.

Activity: What are the likely sources of conflict between line and staff employees?

1.3 THE MODELS OF HRM Objectives:At the end of this topic you should be able to: State and explain the models of HRM Discuss the relationship between Guest’s soft and hard HRM approaches and the Michigan

and Harvard models of HRM

HRM modelsScholars in HRM have developed various models or theories to explain the concept and practice of HRM. Some of these models are:

(i) The matching model of HRM by Fombrun et al (1984) also known as the Michigan Model

(ii) The Harvard Model by Beer et al (1985) (iii) The soft and hard models by Guest (1987)

The Matching Model of HRM (Fombrun et al 1984)In this model the writers propose that HR systems and the organization structure should be managed in such a way that they are congruent or match with the organizational strategy – hence the name matching model. The writers suggest that the HRM function should be linked to the line functions by doing the following:

Providing the business line with HR information Ensuring that HR mangers give HR issues equal attention with other functions Measuring the contribution of the HR function at the strategic managerial and operational

levels Match available HR to existing jobs Appraise performance Reward good performance Develop high quality employees This model is instrumental and calculative and emphasis is on the term ‘resource’ Aligned to the ideas of Fredrick Taylor on productivity and cost effectiveness

The Harvard ModelBeer et al (1984) developed this model at the Harvard school. The model is based on the belief that:

People must be seen as potential assets rather than merely as a variable cost HRM belongs to line managers

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HRM involves all management decisions Line managers should accept more responsibility for ensuring the alignment of

competitive strategy and HR policies Recognizes the importance of trade offs between the interest of employers and employees The context of HRM includes employee influence and participation HRM is composed of policies that promote mutuality of goals, influence, respect,

rewards and responsibility HRM outcomes are commitment, congruence and cost-effectiveness.

The soft and Hard HRM Models

Guest (1987) identified two versions of HRM which he referred to as soft and hard.

Soft HRMThis model proposes that: Employees are not like any other resource because they think and react Employees should participate in decision making Employees need opportunities for personal growth and advancement Employees needs for empowerment and influence should be consistent with the overall

business strategy and management philosophy HRM should encourage high employee commitment to the organization There should be high workforce flexibility and adaptability

From the foregoing soft HRM is more developmental oriented with a humanistic focus based on explicit statements about the value of employees. Employees are seen as active partners who are creative and innovative rather than passive inputs. An organization practicing soft HRM would be expected to stress the importance of employee commitment, trust and loyalty. The values of soft HRM are consistent with the Harvard model.

The Hard HRM ModelThe hard HRM model is more consistent with the Michigan Model developed by Fombrun et al (1984) which emphasizes matching employees with the organizations business strategies. Legge (1995) refers to it as strategic HRM. The model proposes that:

Employees are just like any other factor of production in the input – output equation Need to improve employee utilization by using them cost effectively Employee interests are the same those of the organization (unitarism) Concerned with developing direct links with individuals rather than trade unions Employees are more involved in improvement of quality and productivity rather than

business decision making Emphasis is on the term resource which implies the deployment of HR in a calculative

and instrumental way for economic gain Hard HRM is associated with efficiency seeking devices such as assessment of HR and

performance related pay Investment in training and development must fit with the firms business strategy

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Hard HRM assumes that the needs of the firm are paramount and increasing productivity is the managements’ principle reason for improving efficiency. It also assumes that organizational needs come first.

The Michigan Model or matching model is consistent with the hard HRM model because it is based on strategic control and systems fro managing people.

1.4 HRM AND PERSONNEL MANAGEMENTObjective:At the end of this topic you should be able to: Identify the practices, beliefs and values that distinguish personnel management and HRM

Writers have debated the difference between personnel management and HRM. While both concepts are concerned about the management of people in organizations, there are fundamental differences in their beliefs, values and practices. Many writers have asked if there is a difference between HRM and personnel management (Guest 1989; Guest and Sisson, 1993; Armstrong, 2000). Armstrong (1999) for instance observes that although HRM has been perceived just as another term for personnel management, it has the virtue of emphasizing treating people as a key resource and the way they are managed is seen as a direct concern of top management and part of the strategic planning processes of the firm.

Torrington (1989) argues that HRM are similar but only to some extent in that both are derived from the organization’s overall strategy, they both provide guidance and support to line management and they develop people and match them to the right jobs. Personnel management has even been described as same as the soft version of HRM. However, that appears to be where the similarity ends.

The differences are highlighted in the table below:

Personnel Management Human Resource Management Is instrumental, utilitarian and

practical Mostly concerned with the

administration and implementation of policies and procedures

Tends to be reactive and diagnostic by responding to changes in employment law, labour market conditions and trade union actions

Imposes compliance with company rules and procedures rather than loyalty and commitment to the firm

It has short-term perspectives Is concerned primarily with hourly,

operational and clerical employees

HRM has a strategic approach where employees needs are integrated with the firm’s overall corporate strategy

It is proactive by constantly seeking to discover new ways of HR utilization and giving the organization a competitive edge

Recruitment and selection strategies are designed to get people who can fit in with the firm’s strategies

Head of the HRM function sits on the board of directors

HR managers are expected to contribute to productivity, quality

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Has a pluralistic frame of reference where conflicts of interest are inevitable and management seeks ways to resolve, negotiate and balance demands of various groups

improvement and stimulate creative thinking among employees

Seeks to encourage flexible work attitudes and the acceptance of new techniques

Establishes an organizational culture conducive to employee commitment, trust and cooperation

HRM has long-term perspectives- it seeks to integrate all human aspects with the organization goals

HRM has a unitaristic approach where direct communication with individuals is preferred over the collective

Enhancement of teamwork and participation in decision making

Encouragement of employees to acquire long term capabilities rather than only competence at current duties

1.5 HRM AND MANAGEMENT THEORYObjective:

Explain the contribution of management theory to HRM

The development of management thought can be classified into: Scientific management movement Human relations movement

The practice of management can be traced to the beginning of man. Egyptian, Greek, Roman and Chinese civilizations all have records indicating the importance of management. (The writings of Sun Tzu on the ‘Art of War’, written 2500 years ago are a lesson on strategic management)

In Greece, Socrates the famous philosopher observed that the management of private affairs such as households is not different from the conduct of public affairs except in magnitude.

The biblical Moses used the Principle of delegation and hierarchy of command to manage the Israelites during the exodus. (Exodus 18: 1-27).

The Roman Catholic Church over the centuries has effectively used the principles of division of labor and hierarchy of authority. The Roman empire colonized many parts of the world for many

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centuries by effectively using basic management ideas such as scalar principle and delegation of authority.

Niccolo Machiavelli in ‘The Prince’ gives relevant ideas on how to develop and use management skills. He suggests to ‘The Prince’ ideas on – consent of the majority, inspiration of people to greater achievement, offer of rewards and incentives as well as manipulation and taking advantage of all opportunities.

The above early practices of management, however, do not give much insightinto the principles of management as they are not organized and the relationships among various variables are not explained. The knowledge is based on trial and error and on experience rather than organized scientific knowledge.

Scientific Management

Changes in economic and production patterns during the industrial revolution led to a few practicing managers to examine the causes of inefficiency in production. It is these basic studies that led to a system of management known as scientific management.

The Thoughts of Frederick Taylor (1856-1917)Taylor, an engineer in an American steel firm was concerned about the best methods of doing jobs. He saw the main problem as efficiency of workers in production. He believed there is one best way of doing a job.

His findings were: Workers deliberately restricted production in their daily work due to fear of

unemployment and lack of piece rate system. Lack of work rationalization, hence overlapping of jobs. The method of working was also

too complicated. Due to poor remuneration, workers formed themselves into groups and labour unions to

press for better wages. Management left the initiative of working methods to the ingenuity of workers (rule of

thumb).

To solve the above problems, Taylor suggested the following principles to guide management. Each worker should have a clearly defined daily task.

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Establish standard conditions to ensure the task is more easily accomplished e.g. work-study and motion studies

High payment for successful completion of tasks and none or lower payment when standards are down. He believed money was a major motivator. (Incentives)

For management, he suggested: - The scientific selection, education and development of workers. Friendly, close cooperation between management and workers. Managers should take more supervisory responsibility, arguing that workers preferred

to be given a definite task with clear-cut standards.

Summary He emphasized planning and greater control by managers (management

prerogative?) He believed adoption of scientific approach to managing would lead to

prosperity for both managers and workers (performance management?) He believed conflict about how to divide profits was retrogressive and

unproductive (unitarism?) Wages should be scientifically determined and should not be left to the whims

of managers or power of trade unions (job analysis and job evaluation ?)

The concepts/ideas advanced by Taylor are not far from the fundamental beliefs of the modern manager. A number of post Taylor studies are found in the literature e.g. The Hilbreths, Gault, Emerson, and Filene. They all attempted to improve on Taylor’s ideas.

Contribution of Scientific Management to HRM What are the benefits and weaknesses of scientific management? To what extent has scientific management contributed to our understanding of HRM

Benefits of scientific management Its rational approach to organization of work enabled tasks to be measured with accuracy

(structures, systems and procedures) Task measurement and processes provided useful information on which to base

improvement on working methods (job analysis and job evaluation) Enabled employees to be paid by results and to take advantage of incentive schemes

(performance management) Stimulated management into adopting a more positive role in leadership at the factory

level (management control)Also…. Contributed to major improvements in physical working conditions. It provided the foundations on which modern work study and other quantitative

techniques are based.

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Improvement of working methods brought enormous increases in productivity.

Weaknesses of Scientific Management Reduced the role of workers to that of rigid adherence to methods and procedures over

which they have no discretion. Led to fragmentation of work because of emphasis on analysis and organization of

individual operations, hence boring and repetitive jobs. Generated a ‘carrot and stick’ approach to the motivation of employees enabling pay to

be geared tightly to output. It put the planning and control of workplace activities exclusively in the hands of

management, alienating workers. Ruled out any realistic bargaining about wage rates since every job was measured, timed

and rated scientifically.

Human relations school of thought Objectives:

Explain the contribution of Elton Mayo to the development of HRM Discuss the application of McGregor’s theory Y and theory X to the management of

people Discuss the role of motivation theories to HRM

While the scientific management theorists were more concerned with the mechanics and structure of organization, the human relations school of thought was more concerned with the human factor i.e. people and their relationship with the organization, fellow workers and the job.

The emergence of industrial psychology in 1913 provided the impetus in the studies on human problems in organizations.

The works of Elton Mayo (1880 – 1949)Elton was an Australian practicing psychologist at Harvard University. He carried out experiments at the Hawthorne Plant of Western Electric over a period of time and his findings can be summarized as follows:-

Individual workers cannot be treated in isolation but must be seen as members of a group. The need to belong to a group and have status within it is more important than monetary

incentives or good working conditions. Informal groups at work exercise a strong influence over the behaviour of workers. Supervisors need to be aware of these social needs and cater for them if workers are to

collaborate with the official/formal organization rather than work against it.

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The studies proved that interpersonal and group values are superior to managerial and individual values. Managers who do not have the enthusiastic support of the groups they supervise will be unable to motivate individual members to a significant degree.

Assumptions about peopleTo understand the human factor in organizations, assumptions made about people need to be understood especially in the superior-subordinate relationship.

Douglas McGregor (1967)McGregor’s theory X and theory Y are a set of assumptions about people. After observing the actual practice of managers, he proposed that they were operating on two levels.

Theory X The average person has an inherent dislike for work and will avoid it if possible. Because of dislike for work, people must be coerced, controlled, directed and

threatened with punishment to get them to work. The average human being prefers to be directed, wishes to avoid responsibility, has

limited ambition and wants security above all else.

Theory Y The use of physical and mental effort in work is as natural as play or rest. People will exercise self-direction and self control in the service of objectives to

which they are committed. Commitment to objectives is a function of the rewards associated with

achievement. The average human being learns under proper conditions not only to accept but to

seek responsibility. The capacity to exercise a relatively high degree of imagination, ingenuity and

creativity in the solution of organizational problems is widely and not narrowly distributed.

Under conditions of modern industrial life, the intellectual potentialities of the average human being are only partially utilized.

THEORIES OF MOTIVATION

The theories of motivation can be classified into content and process theories.Content or needs theories: These are the theories that focus explicitly on the content of motivation in the form of fundamental human needs. They are more concerned with the quantitative aspects of motivation i.e. what motivates people and what people seek in their work. Examples:

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Maslow’s Hierarchy of needs theory Herzberg’s two-factor theory McClellands three basic needs

Process or contemporary theories of motivation: These are the theories which attempt to develop understanding of the psychological processes involved in motivation. They are more concerned with the qualitative aspects and the dynamics of motivation i.e. how people are motivated and how rewards influence behaviour. They focus on the why and how of motivation. Examples:

o Latham and Locke’s goal-directed theoryo Porter and Lewler’s expectancy theoryo Adams equity theoryo Bandura’s self-efficacy theory

Maslow’s Hierarchy of Needs (1943)

Maslow was a psychologist and his theory has found wide application in many fields including management. He proposed that: Behaviours of human beings are motivated by needs. Individual needs can be classified into 5 broad categories. These 5 categories operate in a hierarchical manner, flowing from low order to high order

needs as shown below:

High order needs

Low order needs

Physiological, safety and social needs are referred to as lower order or deficiency needs, because the absence of them make individuals deficient and existence as a human being is threatened. On the other hand, esteem and self-actualization are referred to as high order needs or growth needs as these make an individual become better at doing what they are expected to do: gain control and mastery over their environment in terms of technology, services etc.

Maslow’s theory of motivation therefore states that: “when a lower order need is satisfied, the next highest becomes dominant and the individuals attention is turned to satisfying this higher need.” The most difficult need to satisfy is that of self-fulfillment. Psychological development

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Social status

Safety needs

Physiological needs

takes place as people move up the hierarchy of needs, but not necessarily in a straightforward progression. The lower needs still exist even if temporarily dormant as motivators, and individuals constantly return to previously satisfied needs.

The lowest unsatisfied need in the hierarchy is the one that motivates behaviour e.g. a deprived individual without basic needs will be directed towards finding food. The need for safety is dormant at that time. A satisfied need does not motivate behaviour. Once satisfied, it ceases to be a motivator, instead the next higher level need becomes active and motivates behaviour.

Application of Maslow’s Hierarchy of Needs Theory.

Physiological needs : Involves mainly payment of wages and salaries to enable people pay for their basic needs of food shelter and clothing.

Safety needs: Provision of protective clothing, insurance and medical cover, pension schemes, housing and transport (in relation to safety), and job security.

Social needs: Promoting family feeling, intimacy and closeness, use of first names, to break formality and reduce social distance, sharing facilities e.g. cafeterias, sports club etc, casual dressing to identify with each other and recognition of trade unions.

Esteem needs: Supporting education, delegation of responsibility, titles and other status symbols, fringe benefits e.g. Cars; bonus; shares; office size and equipment.

Self fulfillment needs: This is the apex of human needs and involves the need for realizing ones potentialities, continued self-development, feelings of accomplishment and attainment and being creative in the broadest sense possible. Organizations can facilitate and create an environment in which individuals can realize their potentialities e.g. writing, inventions, occupying important positions etc.

There are limits to how much organizations can provide to meet these needs as they are limited by resources

Esteem needs are mainly applicable to managers as they sometimes make important business deals informally through informal networks such as clubs. As such, status symbols become important. It is also notable that as one moves up the ladder, fewer people benefit.

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Research findings have shown that: Managers generally have high order needs compared to those at lower

levels. Employees in developed countries generally have higher order needs than

those in poor countries.

It appears however, that Maslow never considered the above dimensions as he was concerned with individual employees.

HERZBERG’S TWO-FACTOR THEORY OF MOTIVATION

Herzberg (1959) conducted a study, which focused on job satisfaction primarily to find out the factors associated with job satisfaction. He collected data from a sample of 203 accountants and engineers based in Pittsburg, USA.

From these findings he proposed that human beings have two basic needs; The need to avoid pain and survive. The need to grow, develop and learn.

He also found that factors associated with feelings of happiness or satisfaction were concerned with the job itself while those associated with dissatisfaction were related to the environment in which the job was done.

He came up with two sets of factors from which the theory was coined. Different terminologies have been used to refer to this theory.

Satisfaction-related factors

Satisfiers Motivators Motivators Job content factors Intrinsic factors

Dissatisfaction related factors

Dissatisfiers Hygiene factors Hygiene or maintenance Job Context factors Maintenance Extrinsic factors

Herzberg’s findings showed that motivation can be explained by two factors:

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A group of needs which he called hygiene or maintenance needs as they serve to remove dissatisfaction. They are related to the job context e.g.

Supervision, company policy and administration, peer relations, working, conditions, status, job security, pay, status, job title and job security. He explained that if these factors exist, then there is no dissatisfaction, if they do not then dissatisfaction results, but they are not motivators as such.

A second group of needs he called satisfiers or motivators and these are related to the job content. They tend to increase job satisfaction e.g. achievement, recognition, work itself, responsibility, advancement and possibility of growth.

Application of Herzberg’s two-factor theory- Job enrichment and job enlargement

Herzberg suggested that jobs should be made more interesting and challenging so as to motivate employees. A great deal of interest has been directed at job satisfaction over the last decades as a popular technique for increasing employee’s motivation. The concept of job enrichment has been found to provide employees with an opportunity to:

Perform more challenging and meaningful work. Utilize knowledge and skills more fully. Assume more authority and responsibility for planning, organizing, directing

and controlling of work. Receive feedback on performance. Grow and develop

Principles of Job Enrichment. Removing controls while retaining accountability Giving a complete unit of work Giving more authority Giving regular feedback to employees Giving new, difficult and challenging tasks

A

This theory assumes that employees are only motivated by enriched jobs and that every employee desires an enriched job.

In your view are these assumptions true? What are the limitations of job enrichment as a motivator?

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Limitations of Job Enrichment

Research findings have shown that not all employees are motivated by job enrichment as some: Are unable to tolerate responsibility. Dislike complex duties. Uncomfortable with group work. Dislike relearning new skills. Prefer security and stability. Uncomfortable with supervisory authority Skills are not adaptable. Prefer to quit their jobs.

For organizations, enriched jobs may result in the following problems Supervisor’s roles may be reduced because of shared responsibility hence causing

dissatisfaction. Enriched jobs may increase pay dissatisfaction because of increased responsibility. Costs in terms of training and development, new technology and more equipment e.g.

computers may increase. Unions may oppose some job enrichment efforts for fear of loss of employment or

decreased membership due to reduced desire to join unions by satisfied employees.

PROCESS THEORIES OF MOTIVATION

Process theories of motivation were proposed as alternatives and to fill the gaps not explained by the content theories. Process theories are more concerned with the cognitive antecedents that go into the motivation process. This include: expectancy theory by Victor Vroom (1964) and the Porter-Lawler Model (1968); Equity theory by Stacy Adams and Attribution theories and others. In this section we shall only discuss a few of these.

Expectancy Theory of Motivation

Victor Vroom developed this theory in 1964 as an alternative to the content theories of motivation. It refers to any situation or context where people have expectations from whatever they do. It states that “motivated behaviour is increased if a person perceives a positive relationship between effort and performance – i.e. the outcome.

Based on this theory, extrinsic financial motivation works only when if the link between effort and reward is clear and the value of the reward is worth the effort.

Managerial Implications of Expectancy Theory. Strengthen employees effort and performance expectations by providing resources

such as training, that enable employees to perform.

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Strengthen performance–outcome–rewards by linking performance with reward e.g. pay. Managers should be consistent and transparent about criteria used for promotion.

Match rewards with employee’s performances. Recognize employee’s ability and ensure that it is used optimally. Provide employees with opportunity to perform e.g. enabling environment,

resources, etc. Develop appropriate procedures for evaluating employee performance by

measuring actual performance, aptitude and criteria for promotion.

Equity Theory of MotivationThis is a process theory advanced by Stacy Adams (1968). Equity refers to perception of fairness and justice in the treatment of people. If people feel that they are not being treated equitably, they feel aggrieved and this grief will affect their levels of motivation in different ways.

In the workplace, employees compare themselves with their peers in terms of their contribution to the organization and in relation to what they get from the organization. They compare their ratio of inputs and outcomes with that of another person.

Inputs: refer to the contributions made by an individual e.g. effort – both physical and mental, time, education, training, experience, loyalty, useful contacts age, gender etc..Outcome: refers to what is received in return for effort e.g. salary, fringe benefits, travel allowances, medical insurance cover, status symbols, autonomy, recognition, friendly environment etc.

Examples of ratios of outcomes to inputs

(i) Outcomes of ‘A’ = Outcomes of ‘B SatisfactionInputs of ‘A’ Inputs of ‘B’ = (Equity)

(ii) Outcomes of ‘A’ < Outcomes of ‘B’ = UnderpaymentInputs of ‘A’ Inputs of ‘B’ (Inequity)

(iii) Outcomes of ‘A’ > Outcomes of ‘B’ = OverpaymentInputs of ‘A’ Outcomes of ‘B’ (Inequity)

Reactions of ‘A’

In situation (ii), ‘A’ will act on outcomes to restore equity i.e. where there is perception of underpayment by stealing from the organization, taking kickbacks, undermining ‘B’, joining trade unions or reducing effort.

In (iii) ‘A’ will attempt to restore balance by decreasing or increasing effort, e.g. working longer hours, producing quality work, being loyal and committed to organization etc, or

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by rationalizing or justifying the higher outcomes on the basis of experience, educational levels etc. (resorting to subjective distortation of ‘A’s or ‘B’s inputs).

In situation (i), there is perception of equity, hence no problems.

Equity is taken seriously by employees and management decisions and actions must be seen to be fair

The striving to restore the outcome/input ratio to equity is used as the explanation of work motivation.

Workers prefer equitable payment to over-payment. Research has shown workers on a piece rate system who felt overpaid reduced their productivity to restore equity.

Goal Theory (Latham and Locke, 1979)It states that motivation and performance are higher when:

Individuals are set specific goals Goals are difficult but accepted There is feedback on performance

Goal theory is aligned to the concept of management by objectives (MBO) and it forms the foundation for performance management process.

MOTIVATIONAL STRATEGIES AND CHALLENGES(Further reading- Armstrong, 2001, page 168-169)

Strategies

Money: It is an important motivator as it reflects on other motivators e.g. status, esteem, achievement etc. Hence it is complicated as it is entangled with other needs.

Money has symbolic power – its value comes from what it can buy. To increase the motivational value of money, an incentive plan/system

should be introduced, as the extra money is usually spent on high-value ‘extra’ items.

Equitable salary structures in organizations lessens the importance of money as a motivator, hence Herzberg’s contention that money is a hygiene, not a motivator.

Positive reinforcement: This idea was advocated by B.F. Skinner. He suggests that individuals can be motivated by designing their jobs well, praising good performance so that it can be repeated and removing barriers to performance and good communication.

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Participation: Having knowledge of what is happening and being asked to participate in solving problems is motivating to employees as it appeals to the need for recognition, affiliation and acceptance and it gives people a sense of accomplishment.Job Enrichment: Involves making a job more challenging and important by increasing scope of authority and responsibility. These can be achieved by:

giving workers more say in deciding about work methods, task sequencing etc.

encouraging subordinate participation and interaction among workers. Giving workers a feeling of personal responsibility for their tasks. Ensuring that people see the contribution of their tasks in the overall

result. Giving feedback on performance.

Job enrichment appeals mainly to higher level needs such as status, esteem and self-fulfillment.

Other strategies of motivation may include; promotion to higher responsibility, personal interest by manager, status symbols, training and development, monitoring, leadership style etc. Negative reinforcement or punishment: These should be avoided as it has the tendency of stimulating anger, hostility, aggression, and rebellion in workers. The motivational effects are only short term.

In your view to what extent do you think money can be used as a motivation

ChallengesMotivation is a psychological and a social process. Although the theoretical concepts appear simple and straightforward, they are difficult to implement in real life because of the following:-

Differences among people: People differ in their expectations, hence require different types of incentives. For example, while scientists, engineers and other professionals may have a stronger need for achievement, managers and politicians have a stronger need for power. Needs also differ because of demographic characteristics of employees such as gender, age, race, education, personal ambition, cultural background, occupation etc.Social and economic change: Changes that impact on peoples lifestyles, such as increased education, tastes and preferences, cross-cultural interactions mean that motivating techniques which worked a decade ago may not work today.Employees personal problems: Motivation can be effective only to a limited extent as people may have problems that are beyond management and cannot be solved by motivation.Lack of resources: Organizations may be willing to motivate its employees, but may lack the resources to do so. This is especially so for financial motivators.Motivation is an internal instinct: motivation by nature is an internalized process that comes from within the individual. Reinforcements are only needed to activate it. Thus a manager can

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give only encourage it, but the actual and effective motivation will depend upon the internal will of the employee.Motivation is situation oriented: Variables in motivation situation are, the motivator, the motivated, the motivational technique and the motivational circumstances all of which affect the motivational outcome. To achieve a positive outcome, all four must be in congruence- which almost impossible.

Given the complexity of motivation in the light of varying personalities and situations it is clear that risks of failure exist when any group of motivators are applied without taking into account all the variables.

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mba 820 evolution of hrm

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