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

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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