Module Managing Performance

Topic Models of Individual Motivation

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Table of Contents
1. Introduction
2. Three Models of Motivation
3. Behavioural Considerations for Designing Management Control Systems
4. Self-Assessment
5. Summary

1. Introduction

Ideas about what motivates people and what motivates them to work within their
organisations to achieve organisational goals have changed considerably with
developments in the industrial and commercial world. Employees who are not
engaged with their organisations, who experience disagreement with the directions
and values of their organisation, and at the extreme, who are alienated, are unlikely
to work in ways that will assist the organisation to achieve its strategic or operational
objectives. Modern organisations recognise that well-motivated employees, who
share goal congruence with their organisation, are an asset that is well worth the
trouble of encouraging.
Objectives: Models of Individual Motivation
Upon completion of this topic, you should be able to
 identify the three models of motivation
 explain the Human Resources Model of Motivation (HRMM)
 describe the behavioural considerations characterising the design of
management control systems
In this topic, we will first look at the three approaches for employee motivation. We
will then review the behavioural considerations that govern the design of
management control systems. Finally, you will have an opportunity to apply your
understanding of these concepts to the case of HealthyMania Inc., a company that
suffers from issues that can be rectified only through proper implementation of a
relevant motivational programme.

2. Three Models of Motivation

Employee motivation is an effective way of mobilising the knowledge and skills of
employees in any organisation. It is, for sure, a key ingredient of any organisation's
policy today. However, were things always the same?
Click the following link to review a short scenario of a father and son duo and their
brush with motivation in their respective organisations.

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Module Managing Performance
Topic Models of Individual Motivation

Motivating Employees – Past and Present

Motivating Employees - Past and Present

Motivating Employees – Past and Present
Let us review a short scenario of a father and son duo and their brush with
motivation in their respective organisations.
It was a quiet evening that the father and son duo planned to enjoy. Musing over the
old days, Henry smiled and studied the lined but serene face of his father. Charles
Remington had worked as a worker with a company that made electrical switches,
plugs and other fixtures. After Henry started with his first job, he convinced his
father to give up his job and settle down with farming, which he knew was his
father's dream.
Charles asks his son, So, what's on at your new job?
Henry replies, I am trying to figure out what motivates the employees in my
organisation.
Charles says, Oh, yes! I have heard about it. Things have changed. Haven't they?
Henry asks, How were things in your time, Dad?
Charles replies, Well, we were told what we had to do, we did it and were paid for
that. We worked for our families; fed them, clothed them. It went on and on…for 27
years, until I resigned. I had many good ideas that could’ve helped the company, but
nobody asked!
Henry asks his father, Didn't you love your work?
Charles replies, What was there to love? Do workers in your company love their
work?
Henry knew the answer; it was contained in the movement called Human Relations
Movement, which brought into light the concept of Motivation. Telling his father
about it would not make much of a difference; Charles had already lost his time.
Summary
This short scenario sets stage for the motivational approaches that organisations use
to mobilise the knowledge and skills of their employees. The simple story traces the
evolution of employee motivation over time. We can gather from the father-son
conversation that the father was not motivated at his workplace and did not have
any opportunities for empowerment. On the other hand, the son is highly motivated.
This has been through a high level of employee responsibility for and participation in
decisions in the work environment.

A century ago, the scientific management school observed and catalogued the work
of employees, working under the belief that most people found work unpleasant and
wanted to do as little of it as possible. They reasoned that employees needed to be
told what to do, how and when to do it, that they did not want to be actively

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Module Managing Performance
Topic Models of Individual Motivation

engaged in work or decision making. In short, employees had little or no motivation

and were, in a very real sense, a factor of production, like a machine, that is paid for
performance, and that no other obligations around the work contract existed.
A welcome shift from this rather extreme view came with the human relations
movement, which incorporates notions of motivation within the work environment.
Now, there is recognition that people have needs beyond the work task, and that
financial compensation meets one need, but that there were other important needs
as well. Some of the other things that employees want from their work include job
satisfaction, respect and a sense that they are involved in doing something
worthwhile.
Modern management theorists now recognise that employees have valuable
knowledge and skills that can be mobilised through appropriate motivational
approaches. Furthermore, most employees actually do want to work and be
recognised for the parts that they play within the organisation. Central to this
approach is an assumption that organisations can be attributed a system of beliefs
and values, and that they have an independent purpose and direction to which
people want to subscribe. This process of identification brings with it the potential to
motivate employees to become part of the organisation rather than just an input
factor to the productive process. The proponents of this view have named it the
Human Resources Model of Motivation (HRMM). Click the following link to learn more
about HRMM.

HRMM in Action

HRMM in Action
HRMM in Action
Let us review the Human Resources Model of Motivation, or HRMM, in detail.
An organisation is a collection of people with diverse skills and a willingness to
contribute, if they are motivated to do so. The motivation can be built through an
organisational system of beliefs and values, which can provide such direction to
people to which they would want to subscribe. This system has the potential to
motivate employees so that they become part of the organisation and begin to
contribute positively not just to their jobs but the growth of the organisation. This
view is called the Human Resources Model of Motivation, or HRMM
Summary
The Human Resources Model of Motivation states that people do not find work
objectionable. Instead, they want to participate in decision making and have specific
goals that they are trying to achieve. Moreover, they are creative, responsible and
wish to improve the organisation. The task for management is to create a working
environment that will allow creativity to blossom.

This model taps the strengths and the willingness to contribute that individuals such
as Charles Remington have. Let us recapitulate the three models of motivation.

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Module Managing Performance
Topic Models of Individual Motivation

Click each tab to recapitulate the three approaches.

Three Models of Motivation

Let us refresh our understanding of the three models.
Scientific Management Approach
This model assumed that people do not like to work and wish to reduce work if
possible
Human Relations Approach
This model propounded that humans have needs beyond those of financial nature
Human Resource Model of Motivation
This model states that organisations can be given a set of values and beliefs the
employees would like to follow.

Let us now review some behavioural considerations that help design management
control systems.

3. Behavioural Considerations for Designing Management

Control Systems
The management control system of an organisation can be designed in ways that
make it possible to motivate employees with both financial and non-financial rewards
to take part in its development and successes. The following are the four behavioural
considerations that characterise this approach:
 The organisational ethical code of conduct
 The mix of performance measures
 Empowering employees
 Appropriate incentive systems
Let us review these in detail. Click each behavioural consideration to learn more
about it.

Measurement Control Systems and Behavioural Considerations

Let us review the four types of behavioural considerations in detail.
The organisational ethical code of conduct
Modern organisations often have an ethical code, and make it clear that certain
standards are expected from all employees, regardless of how senior or junior they
may be. The ethical framework needs to be continually monitored and reinforced,
and in particular, the tone of the organisation is set at the top, and observed and
copied by all.
Many good businesses have an organisational code of conduct that is explicit and
tailored for their own situation. A code of conduct could include statements about
 respect for fellow workers
 honest and complete dealing with customers
 safeguarding the company's assets

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Module Managing Performance
Topic Models of Individual Motivation

 awareness of any safety issues

 how to comply with health and safety laws
 how to work within environmental regulations community social
responsibilities and so on
The mix of performance measures
There is general agreement that what is measured is what is done. It follows from
this that any performance measurement aspect of the management control system
should be designed carefully to be certain that what is being measured is indeed
desired. Dysfunctional responses to poorly designed performance measures are a
familiar story in management literature.
The mix of performance measures encompasses
 financial and non-financial measures
 hard and soft measures
 implicit and explicit measures
 long and short term measures
The choice of measure signals what performance is important and will be monitored,
and hence send a strong message to employees about what outcomes they should
try to achieve.
Empowering employees
We have already touched on participation in both the budgetary environment, and
again in terms of implementation of the Balanced Scorecard. Many employees feel
they have knowledge and skills that are valuable to the organisation, and respond
positively to being encouraged to exercise those skills.
Appropriate incentive systems
Rewards can be intrinsic, such as feeling good about what you are doing, and
extrinsic, such as a financial reward.

Click the following link to review the case of HealthyMania Inc. a big health and
fitness chain, and apply your understanding of behavioural considerations to it.

Rewarding Employees at HealthyMania Inc.

Rewarding Employees at HealthyMania Inc.

Rewarding Employees at HealthyMania Incorporated

Let us analyse the case of HealthyMania Incorporated, a huge fitness chain, which is
experiencing severe morale problems among its staff, and apply our understanding
of the concepts learned in this topic to it.
The companies, individuals and events referred to herein are fictional. Any similarity
to actual companies, individuals and events is purely coincidental.
HealthyMania Incorporated is a national chain of fitness centres headquartered in

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Module Managing Performance
Topic Models of Individual Motivation

Atlanta, Georgia. They run 1,240 gyms around the country, and are now in the
process of revising their rewards and incentives policy, which according to Helen
Gibraltar, the CEO, was not aligned to the corporate strategy.
In the 1990s, HealthyMania was smaller, more compact and had an organisational
culture that echoed in all of its 34 gyms. Helen and her management team ensured
that they visited the gyms every quarter and that all their employees understood
their corporate philosophy. With growth, the recruitment became highly localised.
Before the top management realised it, the organisation was brimming with
greenhorns. There was a strong wave of dissatisfaction in the organisation, and the
grapevine was saturated with conversations about the callous top management.
Nevertheless, HealthyMania continued to grow and expand. The dissatisfaction grew
along. Although they implemented some incentives in 2003, they failed to contain
the attrition. The following figures indicate the current state of HealthyMania:
 The customer complaints about service per day per centre were 0.5 in 2000,
1 in 2004 and rose to 2.5 in 2004.
 The employee attrition per centre per year was 3 in 2000, 6 in 2002 and rose
to 11 in 2004.
 The employee complaints to head office per centre per year were 4 in 2000, 6
in 2002 and rose to 10 in 2004.
 The employee suggestions to head office per centre per year were 5 in 2000,
3 in 2002 and rose to 8 in 2004.
Analysing the figures, we can conclude that the situation is alarming. This situation
prompted Helen to call a meeting of her top management team. She was in a foul
mood when she sent the following email to her team.
Hi All,
It seems to me that everyone is trying hard to sink the ship of HealthyMania. Make
yourself free to meet me in 45 minutes. With the way things are going, I am sure
you have a lot of time to spare. I need you to drop everything and meet me here in
my office.
Helen
The meeting began in Helen's office at 11:00 AM with only the marketing manager.
The Logistics Manager, the Regional Managers and the Country Head-Housekeeping,
who detested his designation, walked in a good 15 minutes late.
Q 1. Based on your analysis of the HealthyMania story until now, can you identify
one change that HealthyMania needs to implement even before it begins considering
the incentive schemes?
1. They need to determine which employees and managers need to be rewarded
and felicitated.
2. They need to empower their front-line executives to take on the responsibility
of setting performance measures for themselves.
3. They need to review and fix their ethical code of conduct starting from the top
management.
4. They need to increase the financial incentives given to their top management
in order to motivate them.
If you identified option 3, They need to review and fix their ethical code of conduct
starting from the top management, as the correct change, you identified correctly.
As it is clear from the email that Helen sent to her top management team and the
reaction of the team to her email, the first thing that HealthyMania should do is fix
their ethical code of conduct, starting from the top management.

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Module Managing Performance
Topic Models of Individual Motivation

Q 2. As the meeting begins, Helen wants someone to summarise the problems that
the company faced. Which one of the following is a correct deduction about
HealthyMania's health?
1. The employee attrition has been accelerating, which means that competition
is increasing.
2. The employees are leaving not for better prospects but due to dissatisfaction
with current policies.
3. Employee involvement with the company has been reducing.
4. The quality of employee behaviour has been improving at a steady pace.
If you identified option 2, The employees are leaving not for better prospects but due
to dissatisfaction with current policies, as the correct deduction, you identified
correctly. If we consider the increase in the number of complaints received from the
employees, they are almost synchronised with employee attrition.
Q 3. Identify the path that HealthyMania should tread if it wishes to retain its
employees, its customers and its business? Choose Yes to select and No to reject the
path.
Path 1: It should define a fresh ethical code of conduct, which should be
demonstrated by everyone, including Helen at the top.
1. Yes
2. No
If you selected this path, you identified correctly. HealthyMania should define a fresh
code of conduct, as it can be deduced from the case that the company needs to build
in some respect in it.
Path 2: HealthyMania should also start a drive to determine the correct performance
measures for each job profile.
1. Yes
2. No
If you selected this path, you identified correctly. It is also a good idea to determine
the correct performance measures for each job profile, as it will help in reducing the
dissatisfaction being experienced by its employees.
Path 3: They should begin by introducing financial rewards to stop the exodus of
employees.
1. Yes
2. No
If you rejected this path, you identified correctly. Giving financial rewards to stop
exodus is also not a good idea as it may keep those employees from resigning who
anyway do not feel involved with the company.
Path 4: They should connect the different centres through intranet and educate
employees about the company policies through Web-based tutorials.
1. Yes
2. No
If you rejected this path, you identified correctly. Educating employees about
company policies through web-based tutorials, however, is not a great idea, as it will
break the already tenuous connection between the employees and the top
management. Policies and balanced scorecard should be introduced to the employees
directly by the top management.
Path 5: They should begin by introducing intrinsic reward systems so that the
employees begin to feel good about their jobs, and then determine appropriate

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Module Managing Performance
Topic Models of Individual Motivation

financial rewards that can be administered after performance is monitored and

measured.
1. Yes
2. No
If you selected this path, you identified correctly. Beginning with intrinsic rewards
will help the company filter out the employees who are not coordinated with the
company policy and those who begin to love their jobs and perform well can later be
rewarded.
Path 6: They should also empower employees in for participating in budget creation
and implementing the balanced scorecard.
1. Yes
2. No
If you selected this path, you identified correctly. It is also good to empower
employees to some extent, as it will help the company get their buy-in. Since there
are many employees who are dissatisfied with the company's policies yet feel loyal
towards it, it is a good idea to concentrate efforts on retaining those employees.
Summary
You reviewed your understanding of the four considerations that are taken into
account while determining the HR policy of an organisation. The following main
points were reiterated:
 The ethical framework of an organisation needs to be continually monitored
and reinforced. The management should ensure that the tone of the
organisation is set at the top, and observed and copied by all.
 It is also a good idea to determine the correct performance measures for each
job profile, as it will help in reducing the dissatisfaction being experienced by
its employees.
 Giving financial rewards to stop exodus is also not a good idea as it may keep
those employees from resigning who anyway do not feel involved with the
company.
 Policies and Balanced Scorecard should be introduced to the employees
directly by the top management instead of using methods such as online
training, etc.
 Beginning with intrinsic rewards will help the company filter out the
employees who are not coordinated with the company policy and those who
begin to love their jobs and perform well can later be rewarded.
 It is also good to empower employees to some extent, as it will help the
company get their buy-in. Since there are many employees who are
dissatisfied with the company's policies yet feel loyal towards it, it is a good
idea to concentrate efforts on retaining those employees.

4. Self-Assessment
Now, try the self-assessment questions to test your understanding of the topic. Click
the following link to open the Self-Assessment in a new window.
Self-Assessment
Q1. WorthADeal Inc., a retail chain, has implemented a management system where
employees participate in decision making and have specific goals that they are trying

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Module Managing Performance
Topic Models of Individual Motivation

to achieve. The organisation realises that employees have information and

knowledge, which they can contribute to the organisation. The management has,
thus, created a working environment that allows creativity to blossom, encourages
employees to follow the organisation's values and promotes rewards for good
performance. Which one of the following does this example represent?
1. Balanced Scorecard approach
2. Human resources model of motivation
3. Scientific management view of motivation
4. Human relations movement view of motivation
5. Intrinsic rewards
Q2. William Teller is the Vice President – Finance at Townsend Oil and Gas Plc., a
UK-based Energy and Utilities company. In the wake of the recent accounting
scandals and probes, William plans to institute a code of ethical conduct in his
organisation. Which one of the following reasons should William focus on in his
presentation to the board of directors?
1. The code specifies punishment of those who do not comply.
2. It helps reduce ethical conflict by avoiding ambiguity and misunderstanding.
3. It helps employees focus on several dimensions of their jobs.
4. It is required by law.
Q3. Which two of the following are characteristics of a good management control
system?
1. The ethical framework is continually monitored and reinforced.
2. It ensures that all that is undesirable is measured and corresponding
penalties are imposed.
3. It motivates employees who possess valuable skills to exercise their skills.
4. It implements extrinsic reward systems and reduces the need for intrinsic
rewards.

5. Summary
This topic covered the following main points:
 The following three theories about the motivation of employees have been
used over the last hundred years:
o Scientific management movement – characterised by the assumption
that people dislike work and wish to minimise it.
o Human relations movement – that acknowledged that people have
needs other than financial.
o Human resources model of motivation – that propounded that
organisations can have systems of beliefs and values to which
individuals may wish to subscribe.
 Employees are motivated through the following four behavioural aspects of
the management control system:
o The organisational code of ethics
o The mix of performance measures
o Empowerment of employees
o The choice of reward system (including intrinsic and extrinsic rewards)

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