Lesson - 16 : Motivation

Objectives

After studying this lesson, you should be able to:

ӹӹ Understand The Meaning Of Motivation And Its Importance In ;

ӹӹ Acquaint With The Various Theories On Motivation; And
ӹӹ Learn And Practice The Techniques In Your Own Operational
Area.

Lesson Outline

ӹӹ Needs, Incentives And Motives

ӹӹ Mcgregor’s Participation Model
ӹӹ Maslow’s Need Hierarchy Model
ӹӹ Herzber’g Motivation – Hygiene Model
ӹӹ Mcclelland’s Three Need Model
ӹӹ Alderfer’s Erg Model
ӹӹ Reinforcement Theory
ӹӹ Job Enrichment
ӹӹ Job Enlargement
ӹӹ Review Questions

Motivation is an effective instrument in the hands of a manager

for inspiring the workforce and creating a confidence in doing things
effectively. By motivating the workforce, management creates ‘will to work’
which is necessary for the achievement of organisational goals. Motivation
involves getting the members of the group to perform effectively, to give
their loyalty to the group and to carry out properly the purpose of the
organisation. The following results may be expected if the employees are
properly motivated:

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 -- The employees will cooperate voluntarily with the management and
will contribute their maximum towards the goals of the enterprise.
-- They will improve the skills and knowledge so that they are able to
contribute to the growth of the organisation. This will also result in
increased productivity.
-- The rates of labour turnover and absenteeism among the workers
will be low.
-- There will be good human relations in the organisation as friction
among the workers and the management will decrease.
-- The number of complaints and grievances will come down. Accident
rate will also be low.
-- Contributes for the improvements in quality of products. Better
quality of products will increase the public image of the business.

Motivation - Meaning

The word ‘motivation’ has been derived from the word ‘motive’
which means any idea, need or emotion that prompts a man into action.
Whatever may be the behaviour of a man, there is some stimulus behind it.
Stimulus is dependent upon the motive of the person concerned. Motive
can be known by studying his needs and desires. Generally, different
motives operate at different times among different people and influence
their behaviour. The management should try to understand the motives of
individuals which cause different types of behaviour.

Dubin has defined motivation as “the complex of forces starting

and keeping a person at work in an organisation. Motivation is
something that moves the person to action, and continues him in the
course of action already initiated”. Motivation refers to the way a person
in enthused at work to intensify his desire and willingness to use his energy
for the achievement of organisational objectives.

According to Dalton [Link], “Motivation refers to the way

in which urges, drives, aspirations, striving or needs direct, control
or explain the behaviour of human beings”. Motivation has close
relationship with the behaviour of human beings. It explains how and why
human behaviour is caused. Thus, motivation is a term which applies to
the entire class of urges, derives, desires, needs and similar forces.

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Needs, Incentives and Motives

Need is the starting point of motivation. An unsatisfied need

creates tension that stimulates drives within the individual. These derives
generate a search behaviour to achieve particular goals that will satisfy the
need and lead to reduction of tension. The action taken by the individual
will lead to reward which satisfies the need and reduces tension.

Need Tension Search Performance Reward

Behaviour

Need Satisfaction

Figure 16.1: Drivers of Motivation

Management can do its job effectively only through motivating people

to work for the accomplishment of organisational objectives. But, it is
difficult to understand motivation without considering what people want
and expect from their work.

Human needs may be classified as: (1) basic physiological or primary

needs, and (2) social and psychological or secondary needs. Some of the
physiological needs are food, water, sleep, air to breathe, sex, clothing
and shelter. These needs arise out of the basic physiology of life and are
important for the survival of a man. They are virtually universal among
people, but they exist in different intensity. Needs are also influenced by
the social environment. One man may require wheat to satisfy his hunger,
other may require rice for the same purpose.

Secondary needs are related to mind and spirit rather than to the
physiology of life. Many of these needs develop as one matures. Instances
are belongingness, recognition, self-esteem, sense of duty, self-assertion
and so on. Actually, these are the needs which complicate the efforts of
managers because the secondary needs vary among people much more
than primary physiological or basic needs.

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Motivational Sources

Having understood the concept of motivation, now let us understand

the various sources of motivation. You may note that motivation may
sometimes come from external environment in the form of rewards or
punishments and sometimes it is generated from within an employee in
the form of intrinsic motivation. It may be recognized that under the same
set of external factors, all employees are not equally motivated. It depends
upon various factors which you can understand when you go through the
different motivational theories. The motivational sources are explained
below.

Positive vs. Negative Motivation

Motivation may be either positive or negative. Positive motivation

takes place when management recognizes the employee’s efforts towards
the achievement of organizational goals. It is positive because, this kind
of motivation increases the level of performance, promotes team spirit,
a sense of cooperation and generates a feeling of belongingness and
happiness. The positive motivational factors are:

-- Praise and reward for good performance.

-- Concern for the well being of an employee.
-- Confidence reposed in the employee.
-- Delegation of authority
-- Scope of participation given in the decision making.

Negative motivation, on the other hand, results from the use of force,
pressure, fear or threat. You may note that fear of punishment also affects
motivation and thereby the behaviour of a person. In the organizations,
negative motivation may come from the fear of being transferred, demoted
or removed. This fear of punishment prompts the person to work hard and
achieve the goals. It may, however, be realized that negative motivation is
not desirable because employees do not like to be punished. Hence, it is
desirable to motivate the employees by positive means.

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Extrinsic Vs. Intrinsic Motivation

Motivation may be either extrinsic or intrinsic. Extrinsic motivation

is induced by external factors primarily financial rewards. It is expected
that the behaviour caused by positive rewards is likely to be repeated.
But the reward should be sufficiently powerful for desirable behaviour to
be repeated. Money acts as a significant incentive for positive behaviour
of employees. Realizing the value of financial incentives as motivators,
managements now-a-days make use of wage increments, bonus payment,
fringe benefits, stock options, profit sharing schemes, paid holidays,
medical benefits, etc. for motivating the employees.

Intrinsic motivation is something that is generated within an individual.

It is an inner feeling. It may be a sense of achievement or recognition
leading to satisfaction that motivates the employee further. Since this kind
of motivation comes from within, it is called intrinsic motivation. There
are many retired doctors who work free in the hospitals because it gives
them a sense of accomplishment and satisfaction. Some of the intrinsic
motivators include praise, status, recognition, esteem, challenge, risk and
responsibility in job.

Mc GREGOR’S PARTICIPATION MODEL

It was McGregor who set forth – at opposite extremes – two pairs

of assumptions about human beings which he thought were implied by the
actions of autocratic and permissive managers. First set of assumptions
are known as “Theory X” and the second set of assumption are known
as “Theory Y”. It is important to note that these sets of assumptions are
not based on any empirical research. They, according to McGregor, are
intuitive deductions.

Theory X

Managers with Theory X orientation make the following

assumptions about people:

-- Average human being has an inherent dislike for work and will avoid
it, if he can.
-- The average human being is lazy and avoids responsibility.

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 -- The average human being is indifferent to organisational goals.
-- The average human being prefers to be directed, wishes to avoid
responsibility, has relatively little ambition and wants security above
all.

According to McGregor, this is a traditional theory where workers

have to be persuaded and pushed into performance. Management can
offer rewards to a worker who shows higher productivity and can punish
him if performance is below standard. This is also called ‘carrot and stick’
approach to motivation. It suggests that threats of punishments and strict
control are ways to control the people.

Theory Y

Managers with Theory Y orientation make the following

assumptions about people:

-- The average human being does not inherently dislike work.

Depending upon controllable conditions, work may be a source of
satisfaction or a source of punishment.
-- The average human being will exercise self direction and self-control
in the service of objectives to which he is committed.
-- Commitment to objectives is a function of the rewards associated
with their achievement.
-- The average human being learns under proper conditions, not only
to accept, but also to seek responsibility.
-- The capacity to exercise a relatively high degree of imagination,
ingenuity and creativity in the solution of organisational problems is
widely, not narrowly, distributed in the population.

Theory Y assumes that goals of the organisation and those of the

individuals are not necessarily incongruent. Worker’s commitment is
directly related to the satisfaction to their needs. Thus, this theory places
great emphasis on satisfaction of the needs, particularly the higher ones
of the employees. It does not rely heavily on the use of authority as an
instrument of command and control. It assumes that employees exercise
self-direction and self-control in the direction of the goals to which they
feel themselves committed.

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Application of Theory X and Theory Y

Theory X and Theory Y are important tools in understanding

the behaviour of human beings and in designing the incentive schemes
to motivate the employees. Neither of the two sets of assumptions is
applicable fully in all situations and to all types of people. It appears
that Theory X is more applicable to unskilled and uneducated lower
level workers who work for the satisfaction of their basic needs of food,
clothing and shelter. Theory Y appears to be more applicable to educated,
skilled and professional employees who understand their responsibility
and are self-controlled. However, there can be exceptions. A lower-level
employee may be more responsible and mature than a well-qualified higher
level employee. The examples of employees at higher levels in modern
organisations shirking responsibility are not uncommon. Therefore,
management should use an amalgamation of both the theories to motivate
different types of employees.

Theories of Motivation

There are two types of motivational theories - content theories

and process theories (cognitive theories). While content theories explain
what motivates and what does not motivate, the process theories examine
the variables that go into the motivational process taking place within an
individual. Some of these theories are explained below.

Maslow’s Need Hierarchy Theory

Abraham Maslow has propounded this need hierarchy theory as

early as in 1943. Maslow points out that human beings have divergent
needs and they strive to fulfill those needs. The behaviour of an individual
is determined by such needs. These needs range from biological needs at
lower level to psychological needs at the highest level. Further, these needs
arise in an order of hierarchy or priority such that lower level needs must
be satisfied before higher level needs become important for motivation.
Maslow postulates five basic needs arranged in an hierarchical fashion as
follows:

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 Self-actualization 5
Needs
Esteem Needs 4

Social Needs 3

Safety and Security Needs 2

Physiological Needs 1

Figure 16.2: Maslow’s Hierarchy Needs

The first three levels of needs at the bottom are known as lower
order needs as they are related to one’s existence and security. The top two
levels of needs are called higher order needs as they are concerned with
personal development and realization of one’s potential. The needs are
explained below.

Physiological Needs

The physiological needs are the basic needs having the highest
strength in terms of motivation. These are the needs arising out of
biological tensions created as a result of deprivation of food, water, shelter,
rest, etc. If these basic needs are gratified, then the next level needs become
important and act as motivators.

Safety and Security Needs

Once the physiological needs are fulfilled, safety and security

needs become predominant. These are the needs for self-preservation
while physiological needs are for survival. These needs include security,
stability, freedom from anxiety and a structured and ordered environment.
Safety and security needs arise out of the concern for the fulfillment of
physiological needs in the future. An individual seeks economic or social
protection against future threats and dangers that he is exposed to. If once
these needs are gratified, they fail to serve as motivators any more. The
individual, then, moves on to the next level needs and strives for their
fulfillment.

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Social Needs

At the third level, social needs or love needs become important.

An individual cannot live an isolated life. A sense of affiliation becomes
important for a meaningful life. These needs include the need for love,
affection, companionship and social interaction. We know very well that
at home the child needs the love of parents and at school he needs the
friendship of his classmates.
This is to attain recognition from others which would induce a
feeling of self-worth and self-confidence in the individual. It is an urge for
status, prestige and power. Self-respect is the internal recognition while
respect from others is the external recognition. People who are able to
fulfill this need feel that they are useful and have some positive influence
on their surrounding environment.

Self-actualization Needs

At the highest level is the need to develop and realize one’s capacities
and potentialities to the fullest extent possible. This need gets activated as
motivator when all other needs have been reasonably fulfilled. At this level,
the person wants to excel in the skills and abilities that he is endowed with.
As a result, he seeks challenging work assignments that require creativity
and talent. This need is inner-oriented and the motivation is intrinsic in
nature. A self-actualizing person is creative, independent, content, and
spontaneous and has a good perception of reality. He constantly endeavors
to realize his full potential.

In conclusion, it may be said that Maslow’s model explains human

behaviour in general. It has nothing to do with the employee motivation
at the work place. Further, human needs may not necessarily have the
hierarchy as shown by him. The relative dominance of not able to satisfy
the social needs may prompt a person to set the physiological needs and
safety needs aside and motivate him for earning the love and affection of
the family members and the friendship of his colleagues.

Maslow felt that the human needs have a definite sequence of

domination. Second need does not dominate until first need is reasonably
satisfied and third does not dominate until first two needs have been
reasonably satisfied and so on. The other side of the need hierarchy is that

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man is a wanting animal, he continues to want something or the other. He
is never fully satisfied, the other need arises. As said above (according to
Maslow), needs arise in a certain order of preference and not randomly.
Thus, if one’s lower level needs (physiological and security needs) are
unsatisfied, he can be motivated only by satisfying his lower level needs
and not satisfying his higher level needs. Another point to note is that once
a need or a certain order of needs is satisfied, it cases to be a motivating
factor. Man lives for bread alone as long as it is not available. In the
absence of air one can’t live, but there is it is plenty of air which ceases to
be motivating.

The physiological and security needs are finite, but the needs of
higher order are sufficiently infinite and are likely to be dominant in
persons at higher levels in the organisation. This has been proved by
various studies. A study by Boris Blai supported this by showing that
managers and professionals in U.S.A. highly value self-realisation, while
service and manual workers in India reported that they give to priority to
job security, earnings and personal benefits all lower order needs.

Appraisal of Need Hierarchy Model

The need priority model may not apply at all times in all places. Surveys in
European countries and Japan have shown that the model does not apply
very well to their managers. Their degree of satisfaction of needs does
not vary according to the need priority model. For example, workers in
Spain and Belgium felt that their esteem needs are better satisfied than
their security and social needs. Apparently, cultural differences are an
important cause of these differences. Thus, need hierarchy may not follow
the sequence postulated by Maslow.

Another important proposition that one need is satisfied at one

time is also a doubtful validity. Man’s behaviour at any time mostly guided
by multiplicity of motives. However, one or two motives in any situation
may be more dominant, while others may be of secondary importance.

There are always some people in whom, for instance, need for
self-esteem seems to be more prominent than that of love. There are
also creative people in whom the drive for creativeness seems to be more
important. In certain people, the level of operation may be permanently
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lower. For instance, a person who has experienced chronic unemployment
may continue to be satisfied for the rest of his life if only he can get enough
food.

HERZBERG’S Two Factor theory of MOTIVATION

A significant development in motivation theory was distinction

between motivational and maintenance factors in job situation. A research
was conducted by Herzberg and his associates based on the interview of
200 engineers and accountants who worked for eleven different firms
in Pittsburgh area. These men were asked to recall specific incidents in
their experience which made them feel particularly bad about jobs. The
findings of the research led to draw a distinction between what are called
as ‘motivators’ and ‘hygiene factors’. To this group of engineers and
accountants, the real motivators were opportunities to gain expertise and
to handle more demanding assignments. Hygiene factors served to prevent
loss of money and efficiency. Thus, hygiene factors provide no motivation
to the employees, but the absence of these factors serves as dissatisfies.

Some job conditions operate primarily to dissatisfy employees.

Their presence does not motivate employees in a strong way. Many of these
factors are traditionally perceived by management as motivators, but the
factors are really more potent as dissatisfiers. They are called maintenance
factors in job because they are necessary to maintain a reasonable level
of satisfaction among the employees. Their absence proves to be strong
dissatisfiers. They are also known as ‘dissatisfiers’ or ‘hygienic factors’
because they support employees’ mental health. Another set of job
conditions operates primarily to build strong motivation and high job
satisfaction among the employees. These conditions are ‘Motivational
Factors’. Herzberg’s maintenance and motivational factors have been
shown in the table given below.

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Herzberg’s Maintenance and Motivational Factors

Maintenance or Hygienic Factors Motivational Factors

1. Company Policy. 1. Achievement,

2. Technical Supervision. Administration.
3. Inter-personal relations with 2. Recognition.
Supervisor. 3. Advancement.
4. Inter-personal relations with 4. Possibility of growth
Peers. 5. Responsibility.
5. Inter-personal relations with
Subordinates.
6. Salary.
7. Job Security.
8. Personal life.
9. Working conditions.
10. Status.

Hygienic factors include such things as wages, fringe benefits,

Physical conditions and overall company policy and administration. The
presence of these factors at a satisfactory level prevents job dissatisfaction,
but they do not provide motivation to the employees. So they are not
considered as motivational factors, on the other hand, are essential for
increasing the productivity of the employees. They are also known as
satisfiers and include such factors as recognition, feeling of accomplishment
and achievement, opportunity of advancement and potential for personal
growth, responsibility and sense of job and individual importance, new
experience and challenging work etc.

Comparison of Herzberg and Maslow Models

In fact, there is a great similarity between Herzberg’s and Maslow’s

models. A close examination of Herzberg’s model indicates that some
employees may have achieved a level of social and economic progress in
the society and for them higher level needs of Maslow (esteem and self-
actualization) are the primary motivators. However, they still must satisfy
the lower level needs for the maintenance of their current state. Thus, we
can say that money might still be a motivator for operative employees and
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for some managerial employees. Herzberg’s model adds to the Maslow’s
need hierarchy model because it draws a distinction between the two
groups of factors, namely, motivational and maintenance, and points out
that the motivational factors are often derived from the job itself. Most of
the maintenance factors come under comparatively lower order needs. In
economically advanced countries, such needs of the employees are fulfilled
and hence cease to be motivators.
As shown in the following diagram Maslow’s Physiological, security
and social needs come under Herzberg’s maintenance factors whereas self-
fulfillment comes under motivating factors. It may further be noted that a
part of esteem need comes under maintenance factor and another under
motivational factors. The esteem needs are divided because there are some
distinct differences between status per se and recognition. Status tends
to be a function of position one occupies. This position may be gained
through family ties or social pressures and so this may not be a reflection
of personal achievement or recognition. Recognition is gained through
competence and achievement. It is earned and granted by others. That
is why status is classified with physiological, safety and social needs as a
hygiene factor, while recognition is classified with esteem as a motivator.
Motivational factors

Self- fulfillment

Esteem

Social

Safety

Physiological

Maintenance factors
Figure 16.3: Relationship between Maslow’s and Herzberg

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David Mc Clelland’s Three Need Model

David McClelland gave a model of motivation which is based on

three types of needs achievement, power and affiliation. They are stated
below:

(i) Need for achievement (n Ach): a drive to excel, advance and grow
(ii) Need for power (n Pow): a drive to influence others and situations
(iii) Need for affiliation (n Aff): a drive for friendly and close
interpersonal relationships.

Achievement Motivation

Some people have a compelling drive to succeed and they strive

for personal achievement rather than the rewards of success. This
drive is called the need for achievement (n ach). Based on his extensive
research into the achievement need, McClelland found that high achievers
differentiate themselves from others by their desire to do things better.
They seek situations where they can attain personal responsibility for
finding solutions to problems, where they can receive rapid feedback on
their performance so they can set moderately challenging goals. High
achievers are not gamblers; they dislike succeeding by chance. They
prefer the challenge of working at a problem and accepting the personal
responsibility for success or failure, rather than leaving the outcome to
chance or the actions of others.

Power Motivation

The need for power (n pow) is a drive to have impact, to be influential

and to control others. Individuals high in n pow enjoy being “in charge”,
strive for influence over others, prefer to be placed into competitive and
status oriented situations, and tend to be more concerned with gaining
influence over others than with effective performance. Power-motivated
people wish to create an impact on their organisations and are willing to
take risks to do so.

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Affiliation Motivation

This need has received the least attention of the researchers.

Affiliation need (nAff) can be viewed as the desire to be liked and accepted
by others. It is the drive to relate to people on a social basis. Individuals
with a high affiliation motive strive for friendship, prefer cooperative
situations rather than competitive ones, and desire relationship involving
a high degree of mutual understanding.

People possess the above needs in varying degrees. However, one

of the three needs will tend to be more characteristic of the individual.
Individuals with a high need for achievement thrive on jobs and projects
that tax their skills and abilities. Such individuals are goal-oriented in their
activities, seek challenge and want task relevant feedback. Individuals
with high power seek to dominate, influence or have control over others.
McClelland’s research revealed that managers generally score high on the
need for achievement. In other words, motivating forces for managers lie
in the challenge and potential of the job.

Alderfer’s Existence-Relatedness – Growth (Erg) Model

Serious doubts have been expressed about the existence of the five
distinct need categories which Maslow hypothesized. There seems to be
some over-lapping between the security, social and physiological need.
Also, the lines between esteem, social and self-actualization needs are
not entirely clear. With these points in mind, Clayton Alderfer condensed
Maslow’s need categories into three sets:

-- Existence needs. These include all forms of materials and

Physiological and safety needs, i.e., Maslow’s first two levels of needs.
-- Relatedness needs. These include all needs that involve relationships
with other people we care about. The examples include anger and
hostility as well as friendship. Thus, the opposite of satisfaction
of relatedness needs is emotional distance rather than hatred.
Relatedness needs cover Maslow’s social needs and that of esteem
needs which are derived from other people. – Growth needs – These
needs involve persons making creative efforts to achieve full potential
in the existing environment. It is like Maslow’s highest level need of
self-actualization.

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Alderfer also revised Maslow’s theory in three other ways:

1. He argued that the three need categories form a hierarchy only in

the sense of decreasing concretions. That is, as we move from a focus
on the existence to relatedness to growth needs, the ways can satisfy
those needs become increasingly abstract.
2. He recognized that rise in the level of satisfaction of our existence
and relatedness needs may result in decrease in their importance to
us. Growth needs become more important as we successfully satisfy
them. That is, as we are able to be productive and creative, we look
to higher goals and, in so doing, are again dissatisfied.
3. He reasoned that we are likely to try to first satisfy the most concrete
needs and then to move on to more abstract needs. In this sense,
Alderfer sounds somewhat like Maslow, suggesting a pattern of
satisfaction progression- that is, as one need is satisfied, we progress
to next higher need.

Alderfer conceived ERG needs along a continuum which avoids the

implication that the higher up an individual is in the hierarchy the better
it is. Different types of needs can operate simultaneously. If a particular
path towards the satisfaction is blocked, the individual will both persist
along that path and at the same time regress towards more easily satisfied
needs. In this way, Alderfer distinguishes between chronic needs which
persist over a period of time and the episode needs which are situational
and can change according to the environment.

Reinforcement Theory

Reinforcement theory is based on the concepts of operant

conditioning developed initially by the well-known psychologist B.F.
Skinner. Reinforcement theory argues that the behavior of people is largely
determined by its consequences. In other words, those actions that tend
to have positive or pleasant consequences tend to be repeated more often
in the future, while those actions that tend to have negative or unpleasant
consequences are less likely to be repeated again. The reinforcement
theory suggests that managers should try to structure the contingencies of
rewards and punishments on the job in such a way that the consequences
of effective job behaviour are positive while the consequences of ineffective
work behaviour are negative or unpleasant. The focus of this approach is
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upon changing or modifying the behaviour of people on the job. That is
why it is also labeled as organizational behaviour modification.
The basic nation underlying reinforcement theory is concept
of reinforcement itself. An event is said to be reinforcing if the event
following some behaviour makes the behaviour more likely to occur
again in the future. It involves the use of four strategies to systematically
reinforce and are discussed as under:

(i) Positive Reinforcement: It entails the use of rewards (or

other positive consequences) that stimulates desired behaviour and
strengthens the probability of repeating such behaviour in the future.
Positive reinforcers can be money, praise, promotion, recognition,
etc.

(ii) Negative Reinforcement: This strategy also called

“avoidance learning”. It implies the use of unpleasant consequences
to condition individuals to avoid behaving in undesirable ways.
By making unpleasant consequences contingent on undesirable
behaviour, individuals learn to systematically change patterns
of behaviour. In work environments, training, safety warnings,
orientation sessions and counseling help alert employees against
negative consequences of undesirable behaviour.

(iii) Extinction: There is withdrawal of all forms of reinforcement

to remove undesirable behaviour. For instance, a disruptive employee
who is punished by his supervisor for his undesirable behaviour may
continue the disruptions because of the attention they bring. By
ignoring or isolating the disruptive employee, attention is withheld
and possibly also the motivation for fighting.

(iv) Punishment: This tool is used when an unpleasant or

undesirable behaviour needs to be reduced or eliminated. For
example, a worker’s wages may be deducted if the quality of goods
produced is of substandard quality.

Financial and Non-Financial Incentives

The term ‘incentives’ means an inducement which arouses

or stimulates one to action in a desired direction. An incentive has a

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motivational power; it influences the decisions of individuals on putting
in necessary effort towards task performance. In modern organizations, a
large variety of incentives are used to motivate the people. These incentives
may be broadly grouped into: (i) financial or pecuniary incentives, and
(ii) non-financial incentives.

The financial incentives may be distinguished from the non-

financial incentives on the following grounds:

1. Financial or monetary incentives are meant to satisfy those which

money can buy. The needs for food, clothing, and shelter can be
fully satisfied by money, but the needs for security, social affiliation
and status can be partially satisfied by money. But non-pecuniary
incentives are meant for satisfaction of those needs which can’t be
satisfied by money. The examples are higher level needs such as
status, ego, sense of responsibility, career advancement, autonomy.

2. Financial incentives are tangible, i.e. visible and measureable; they

have a direct effect on the organization and the members. But non-
financial incentives are intangible and they have an indirect influence
on the organization and the members.

3. Financial incentives are determined by reference to several factors

such as job evaluation, cost of living trends, fringe benefits offered by
competitors, agreement between the employers and employees, etc.
Non-financial incentives are based on the nature of jobs, strength of
aspirations and urges of employees and behavioural orientation of
management.

4. Financial incentives are generally used to motivate workers and

other non-managerial employees. But non-financial incentives are
used to motivate managerial and other higher level personnel. They
are also used to supplement and support the pecuniary incentives in
the organization.

Role of Non-Financial Incentives

Financial incentives do not work for ever to motivate the people

at work. As a matter of fact, when the physiological and security needs
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are fulfilled with the help of money, money ceases to be the motivating
force; it becomes the maintenance factor as said by Herzberg. Therefore,
employees do not always run after money. They have other needs also. The
want status and recognition in the society, they want to satisfy egoistic
needs and they want to achieve something in their lives. In order to
motivate the employees having these needs, management can take the help
of following non-financial incentives:

1. Praise: Praise satisfies one’s ego needs. Sometimes, praise is more

effective than another incentive. We have seen that in industry,
at home or elsewhere, people respond better to praise. However,
this incentive should be used with greater degree of care because
praising an incompetent employee would create resentment among
competent employees. Or course, occasionally, a pat on the back of an
incompetent employee may act as incentive to him for improvement.

2. Competition: Competition is a kind of non-financial incentive. If

there is a healthy competition among the individual employees or
groups of employees, it will lead them to achieve their personal or
group goals in a better way.

3. Opportunity for Growth: Opportunity for growth is another kind

of incentive. If the employees are provided opportunities for their
advancement and growth and to develop their personality, they feel
very much satisfied and become more committed to the organizationa
and become more committed to the organizational goals.

4. Feedback: Knowledge of the results/performance leads to employee

satisfaction. A worker likes to know the result of his performance.
He gets satisfaction when his superior appreciates the work he has
done.

5. Worker’s participation in Management: Employees participation

in management provides an important incentive to the employees. It
gives them psychological satisfaction that their voice is being heard.

6. Suggestion System: Suggestion system in an incentive which satisfies

many needs of the employees. Many organizations which use the
suggestion system make use of cash awards for useful suggestions.

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 They, sometimes, publish the worker’s name with his photograph in
the company’s inhouse magazines/reports/brochures. This motivates
the employees to be in search for something which may be of greater
use to the organization.

Review Questions

1. ‘Motivation is the core of management’. Comment. What practical

suggestions would you offer to management to motivate its staff in
an industrial organization?
2. Explain Maslow’s need hierarchy. Is this hierarchy rigid? Discuss
with suitable examples.
3. Explain Herzberg’s Two Factor Theory and differentiate it from
Maslow’s Theory of Need Hierarchy?
4. List out the assumptions of McGregor’s Theory X and Theory Y.
Which one is applicable in India?
5. “Motivation is based on rewards”. Explain the statement and discuss
various types of motivators.
6. “Money holds the key to work motivation in modern business
organizations.” Discuss and give also the role of non-financial
incentives in motivation.
7. “Non-financial incentives are as strong motivators as the financial
ones”. Critically examine this statement in the light of Maslow’s and
Herzberg’s theories of motivation.

which they welcome and accept the managerial philosophy is very crucial to
the development of sound and favorable organizational climate. The climate
is said to be highly favorable when the existing management techniques are
such that employees goals are perfectly matched to the ideas of organizations.

Structure: Structure is the framework that establishes formal relationship

and delineates authority and functional responsibility. It is generally believed
that decentralized structure results in sound climate. In sharp contrast, if the
management feels the necessity of maintaining greater degree of consistency
in operations regarding decision-making, it will be wedded to centralized
structure.

Process: In every organization certain processes are vital so that it functions.

Communication, decision making, motivation and leadership are some
of the important processes through which management achieves the tasks.
For instance, if we consider leader-follower relationship, leadership process,
it is leader’s choice whether to allow subordinates in decision-making,
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