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 … Motivation Commitment Engagement Citizenship

What does motivation deliver? Higher productivity Improved customer service Inputs Outputs Lower staff turnover Better attendance Improved safety Beneficial 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 Management Company Culture Employee Commitment Customer spending intention Change in sales Customer satisfaction with service Employee Absence IES service-profit-chain model

Service satisfaction chain in government Confidence in government Canadian Government Services perceived to be beneficial Service quality Services perceived to meet needs

Employee input to service Canadian Government Employee satisfaction / commitment Work environment Fair pay Perception of management Career development Client service satisfaction Timeliness competenc e Courtesy Fairness Outcome Citizen trust / confidence in government Social/cultural factors Government performance Service satisfaction Service benefit Service adequacy

the institute for employment studies 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 PRPs 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 reward CIPD 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 Pay amount Pay process Pay knowledge Pay satisfaction Work engagement

To sum up In some circumstances financial rewards can increase motivation when its a proxy for value? its a symbol of competence? pay is low and vital to survival? its 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 Director Westminster 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 Armstrongs definition of total reward

attract motivate retain employee satisfaction & engagement business performance & results organisational culture business strategy HR strategy compensation benefits work/life performance & recognition development & career opportunities Total rewards strategy WorldatWorks total reward & employee engagement model

Components of total reward Adapted from Schuster and Zingheim, 2000 Compelling future Vision/values Growth/success Positive brand Individual growth Development/training Career enhancement Positive workplace People focus Leadership Collegiality Trust/recognition Involvement/openness Total remuneration Base Variable Benefits

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 Valence Instrumentality Performance evaluation Goal setting Pay satisfaction Motivation

Some tools Total reward Flexible benefits Profit sharing or similar Well designed incentives Non financial recognition … Demonstration of caring, concern and fairness

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