Table of Contents
1.0 Introduction 2
1.1 Research question 2
1.2 Background 2
2.0 Motivation 2
2.1 Definition of Motivation 2
2.2 Theories of Motivation 3
3.0 Reward System in Organizations 3
4.0 Types of pay Scheme’s 4
4.1 Payment by Result 4
4.2 Skills-based pay 4
4.3 Profit sharing 4
4.4 Performance-related pay 5
5.0 Discussion 5
6.0 Empirical Study 6
6.1 Volvo Current Reward System 6
6.2 Employee and Mangers View of Reward system in Volvo 7
7.0 Empirical Study 2 7
8.0 Conclusion 7
9.0 References 8
10.0 Appendix Page 9
1.1 Research question
Today an organizations result is highly dependent on the employees work motivation. ...view middle of the document...
According to “strategic Reward” by Michael Armstrong (2006), motivation can be either intrinsic or extrinsic. Intrinsic motivation comes from motivations that are inherent in the job itself and which the individual enjoys as a result of successfully completing the task or attaining his/her goals. On the other hand, extrinsic motivations are those that are external to the task of the job and are interpersonal, such as pay, working conditions, fringe benefits, security, promotion, contract of service and conditions of work. (Appendix 1.0)
An intrinsic motivated individual, according to “strategic Reward” by Michael Armstrong (2006) will be committed to his work to the extent to which the job inherently contains tasks that are rewarding to him or her. An extrinsically motivated person will be committed to the extent that he can gain or receive external rewards for his or her job. He further suggested that for an individual to be motivated in a work situation, there must be a need, which the individuals would have to perceive a possibility of satisfying through some reward.
2.2 Theories of Motivation
Motivational theories are based on the needs of individuals. These theories try to explain why the needs of individuals keep changing over time and therefor focus on the specific factors that motivate them. In general, these theories explain motivation as the product of internal drives that encourage an individual to move towards the satisfaction of individual needs. Major content theories of motivation are Maslow’s hierarchy of needs, Alderfer’s ERG theory and Herzberg’s motivation-hygiene theory.
Maslow’s hierarchy of Needs is a theory of personality that identifies five (5) basic needs. These needs are Physiological, Safety, Social, Esteem and self-actualization. (Appendix 2.0) The basic needs are arranged in a hierarchy where the most basic need emerges first and the most sophisticated need last. According to Beardwell & Claydon (2007) Maslow’s hierarchy of needs has little evidence that supports its strict hierarchy and the fact that people satisfy only one motivating need at a time.
3.0 Reward System in Organizations
Tangible rewards arise from transaction between the employer and employee and include rewards such as pay, personal bonuses and other benefits. Intangible rewards have to do with learning, development and work experience. An example of intangible rewards are opportunity to develop, recognition from the employer and colleagues, personal achievement and social life which is linked to Maslow’s hierarchy of needs; Self-actualization, Self-esteem and social needs. The aim of a total reward system is to maximize the positive impact that a wide range of rewards can have on motivation, job engagement and organizational commitments. The components of the total reward can be described in appendix 3.0
The benefits of a total reward system are described by Armstrong (2006), they have greater impact when different types of...