Individual Organizational Motivation Plan
In the age of globalization, competition and information technology, the organizations are in a serious dilemma; on one hand the management is considering human capital development and on the other hand they are discussing downsizing and outsourcing. However, more and more companies are realizing that outsourcing and downsizing is not the solution; it destroys organizational culture and demotivates the existing workforce. They are recognizing that the key is to develop motivation plan for the existing workforce and turn them into valuable asset for the organization.
Motivation is an internal force of human being that manifests itself through people's performance in the organization. Motivational theories work as measuring tools for those manifestations. For example, an important motivational theory is known as motives and needs. One major area of this theory talks about protestant work ethic (PWE), which represents the degree to which individuals place work at or near the center of their lives (Ambrose & Kulik, 1999, p. 3). Research have shown that an individual who scores high in PWE would more likely to visit the company's fitness center (Mudrack, 1992). In this case PWE is the factor that is used to determine the likelihood of someone going to the fitness center.
However, it is important to understand that as organizations change, motivational theories also evolve. For example, a popular concept based on the theories developed in 1930s and 1940s that say, "Happy workers are productive workers" has proven false in later research (Robbins, 201, p. 97).
Ambrose and Kulik (1999) have done extensive reviews of all the motivational theories that were published in the 1990s. Although discussion of these theories is outside the scope of this paper, they provide sufficient reasoning for the implementation of an effective motivation plan for an organization. This paper attempts to develop an organizational motivation plan for a start-up midsize actuarial consulting firm called D&P Consulting Actuaries named after two founding partners, David Filleger and Pam Sarkissian.
Organizational Motivation Plan for D&P Consulting Actuaries
When David and Pam decided to merge their individual consulting practices and start D&P Consulting Actuaries, the need for an organizational motivation plan was the last thing on their mind. They both started careers as actuaries in large consulting firms and moved to start their own consulting practices from home-offices. The idea of running their own company, hiring the right people, and developing a compensation and incentive program was new for them. Being pension actuaries themselves, they already had a good understanding of how to develop appropriate pension plans based on employee and employer needs. But, they have very little knowledge of how to design the best incentive program, one that will produce optimum employee performance and make their new company competitive and profitable.
David and Pam heard the term total quality management (TQM) which is "driven by the constant attainment of customer satisfaction through the continuous improvement of all organizational process" (Robbins, 201, p. 17) and they want to implement TQM in their organization. They understand that to make a profit they have to make the customers happy and to make the customers happy they need to cut costs, improve the quality of the service, and be innovative. They also understand that they do not have the resource to hire the best people in the industry. As a compromise, they have decided to hire one experienced actuary as a supervisor and three talented recent college graduates with math and finance background to work with the trained actuary. They believe that today's competitive, knowledge based workplaces require innovative minds that are not afraid of challenges. They want to hire people who will work for them, not just for financial gains, but also for challenges and self-fulfillment. Therefore, their next challenge is to develop a great and dynamic incentive program that will attract such talented people.
They have decided to do some research to find out what kind of information is available on employee compensation programs. David came across an article written by Outram and Gilbert (2003), human capital consultants of Watson Wyatt LLP. After reading the article, David decided to incorporate some of the strategies into D&P's motivation plan.
Connecting Rewards and Business Strategies
The Watson Wyatt study has shown that more than 70% of high-performing companies incorporate a reward strategy with a business strategy. The management of D&P wants to link their business strategy (total client satisfaction), with their compensation strategy. They would like to get feedback from their clients regarding the timeliness and quality of the service they have received from the employees. At the end of the year, they will evaluate the feedback and determine the bonuses and raises based on those feedbacks.
Connecting Employee needs and Reward Design
It is important for the employers to understand the employees needs and expectations. In order to do that the employers need to develop and analyze individual employee's profiles. It has been observed that some employees are not motivated by monetary factors and they need other stimulation to perform well (Luthans & Stajkovic, 1999). David and Pam decide to create employee profiles by implementing different observation and communication techniques. They want to keep the questions casual, but they would like to know what makes the employees happy or upset, what are their expectations and concerns. They want to create a friendly atmosphere that induces open communications.
Customized Rewards Program for Top Performers
One study (Outram & Gilbert, 2003) shows that 27 % of low performing firms in US reported increased turnover among top performers, compared to 16 % of high performing firms. This indicates that company reward program should be designed to engage and motivate top performers. A Watson Wyatt study has shown that companies that customize their reward program to motivate high performers achieved 20% higher shareholder return than companies that do not customize reward program for the best performers. Finally, the study also identified the top five factors affecting top performing US employee's decision making processes. They are: above market pay, opportunities to learn new skills in current job, opportunity for promotion, flexible work schedules and group benefits.
The management of D&P has decided to design the company bonus program, and salary & perks structure to reflect these concerns. The bonus program should not only include client feedback, but also take into account employee performance. Employee performance could be measured by billable hours and the level of difficulty of the task they are performing. David and Pam also decided that if one or two employees suddenly start performing significantly better than others, they should offer them a percentage of the company share on top of the usual bonus. The management believes this will eliminate most of the turnover among the top performers.
They have also decided that salaries should be higher than the average market rate and raises should be at least two percent higher than annual cost-of-living increase. The management felt that this salary structure is designed at improving employee retention.
Other perks should include medical, dental/vision, long-term and short-term insurance as well as the industry standards of paid sick leave, vacation and holidays. The management has also decided to offer a defined benefit pension plan, with five years of vesting requirements, in order to reward the employees who showed long term commitment to the company.
The management has decided to give the employees the opportunity to telecommute one day a week if appropriate to their current assignment. This would help the employees to keep balance between work and life manageable.
Since the management believes in the TQM philosophy and wants to be competitive in the industry, they would also like to pay for work related employee education. They would give each employee a week with pay off before his/her actuarial exam.
Furthermore, the management has decided to constantly monitor the current compensation packages offered by the competitors and also make improvement to their own package to maintain the current social and economic needs.
A Watson Wyatt survey concerning corporate communications found that communication is an area that is most of the times neglected by the management. The survey shows that, about 50 % of the employees agreed with the statement, "The company takes the time to educate employees about the business and issues affecting it." 40% agreed with the statement, "The company's management does a good job of explaining the reasons behind major decisions." And less than 30% agreed with the statement, "The company clearly communicates the rationale behind promotion and career development."
The management of D&P has realized the importance of communication and has decided to open up all the channels of communication. They have decided to hold weekly meetings to discuss the day to day matters as well as future goals and the direction the company is heading. They would also like to make it a two-way communication process, so the employees give an input on various issues.
The management would like to provide a comprehensive employee review after each pay raise, bonus, and promotion, to validate the rational behind those rewards. They would also like to give the employees the opportunity to express their expectations and concerns.
Today's dynamic and uncertain business environment requires workers at every level to work together to achieve a common goal. An organization cannot survive without a highly motivated and progressive workforce, which also includes top management. If management takes laissez-faire approach, then even the most motivated workers would not be able to make much difference. The management needed to be highly adaptive and innovative with their motivational plan to survive the intensity of modern competition. In this paper, the management of D&P Consulting Actuaries have shown the willingness and attitude to develop an effective organizational motivation plan, which they believe will be beneficial for their employees as well as the long-term success of the company.
Ambrose, M. L., & Kulik, C. T. (1999). Old Friends, New Faces: Motivation Research in the 1990s. Journal of Management, 25(3), 231-292.
Luthans, F., & Stajkovic, A. D. (1999). Reinforce for performance: The need to go beyond pay and even rewards. Academy of Management Executive, 13(2), 79-57.
Mudrack, P.E. 1992. 'Work' or 'leisure'? The protestant work ethic and participation in an employee fitness program. Journal of Organizational Behavior, 13, 81-88.
Outram, J., & Gilbert, T. (2003). Six key practices to link rewards to long-term financial success. Workspan, 46(1), 32-36.
Robbins, S. P. (2001). Organizational Behavior [University of Phoenix Custom Edition]. New Jersey: Pearson Custom Publishing.
Copyright (c) 2003, Mahmud Zaman
All rights reserved