Motivation is defined as a procedure which history for a person’s strength. way. and continuity of attempt toward achieving a end. ( S Robins. 2004 ) As an extrinsic wagess and one of the well known motivational techniques. money is proved to be a well-accepted incentive for a long history. It is usually reflected in wage rise. fillip or portion option. It is an effectual incentive but non in all instances. Pulling from some of the celebrated motive theories. this article discusses from the single employee’s position on different occasions and effectivity of money as a incentive.

The survey will concentrate on hierarchy of demands theory. outlook theory and equity theory to research the interaction between a individual and the environment with money incentive in topographic point. The survey is to cast a visible radiation on how to utilize money as a incentive better by analysing employee’s degree of demands. specifying a healthy performance-reward system and paying attending to equity so as to pull a motive program consequently in the existent concern environment in order to accomplish greater public presentation from the employees.

1. Money motivations employees with different degree of demands otherwise.

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In the Hierarchy of Needs Theory. Maslow defined that there are five degrees of demands in human being grouped into two orders. Lower-order demands include desire to carry through physiological. safety and societal demands. Higher-order demands include desire to carry through esteem and self-actualization demands. ( Maslow. 1954 )

Money normally plays an of import function in run intoing low-order demands for most people. So when placing the employees as people wanting to run into their low-end demands. the directors can do good use of pecuniary motives by offering fine-looking wage bundle to maintain prod their better public presentation with higher strength. uninterrupted continuity and aligned ends with the organisational aim. A latest study shows that the resign rate for workers in Dongguan country. Guang Dong topped 108 % in the twelvemonth 2004. ( Xu Chao Ping and Ni Chao. 2005 ) Job-hopping rate for fresh university alumnuss within the first three old ages after graduation topped 70 % . ( Jia Jing Feng. 2005 ) .

Behind these figures there is an of import consequence that the workers or the fresh pupils are non motivated plenty in footings of their received final payment. This is peculiarly the instance with the monolithic provincial workers get awaying from the Pearl River Delta country. Their lower-order demands can’t be met given the low wage and high life disbursal in the country. What HR directors in those companies can make is either to better their salary degree to maintain up with the workers’ low-order demands or to travel farther to western countries in China to happen workers with lower-order demands.

When low-order demands are met. the desire to fulfill the high-order demands will come into being. At this phase. the demands are preponderantly satisfied internally like by position acknowledgment. self-realization. accomplishing one’s possible and so on.

A noticeable point here is that both orders of demands are present at the same clip in most instances. as per ERG theory. ( S Robins. 2004 ) Here money incentive belongs to existence group to allow an single be comfortable materially. At the same clip Relatedness and Growth demands are besides valid for an single to keep a good interpersonal relationship with co-workers and accomplish self-realization.

Supposing if money is losing. decorations and praise would be decidedly in the shadiness though they are so indispensable. as Jack Welch said. Both Nobel and Pulitzer prizes come with immense sum of hard currency motive. ( Jack Welch and Susan. 2005 ) . If money is non an of import incentive at this phase. we can anticipate CEOs from companies of different degrees holding same degree of final payment. But that is ne’er the instance. The payment has been tied together to their part to the companies’ development. Peoples can acquire promoted as a cogent evidence of acknowledgment. but if he receives same wage as his staff. we can anticipate him to be frustrated as if he was non paid attending to and may take to vacate. because at this clip wage has been taken as a symbol of worth. ( Ruth Bender. 2004 )

2. Money is of import but should be tightly related to public presentation to maintain up with employee’s outlook.

There are two points which every individual can easy understand. One is that there is a positive relationship between the attempt one inputs and the single public presentation one can anticipate out of the attempt. The other one is that everybody joins an organisation with a personal end. The commonest manner to run into the end is to acquire wagess in the signifier of salary payment which is ever attached to a specific place in the company.

On how to specify a salary bundle for an employee. different companies take different attacks. For e. g. some foremans correlate the payment with length of service in the company. while some others prefer to correlate the payment with the employees’ ability in snoging up to the foreman. ( Steven Robins. 2004 ) Seems everyone knows that money is an of import incentive here. but it is ever neglected that the attack of utilizing money incentive does matter in footings of how much the employee is motivated.

Harmonizing to Victor Vroom in his expectance theory. the reward-performance relationship must be carefully set up. The performance-reward relationship must be strong. ( Steven Robins. 2004 ) so that single wages attempt for better public presentation which later leads to wagess and accomplishing his or her ends. If there is a weak performance-reward relationship. as spelled in the old paragraph. we will see people to the full motivated to snog up foreman farther. remain in the company for longer period but without doing any favourable part or merely go forth for another company with strong performance-reward relationship.

There are many good illustrations for effects of strong performance-reward relationship. Gross saless individual usually receive their wage with a part of the payment relation to their gross revenues public presentation. CEOs receive their wagess with a part relation to stock monetary value up and downs in the market.

In HTL Furniture where I am working for. the Upholstery workers antecedently received their wage by working clip. The productiveness kept vibrating at a low degree. Soldiering can be seen everyplace on the store floor. After the inducement strategy which relates the worker’s wage with their production public presentation was implemented. a important leap by more than 50 % in output was seen in merely one month. The incentive strategy includes a new public presentation measuring method utilizing following computation expression and publication individual’s public presentation on bulletin board on a monthly footing.


Second: Mark. Phosphorus: Points of a sofa theoretical account. Q: Measure produced for a sofa theoretical account.

Roentgen: Wagess. Uracils: Unit of measurement wagess per mark.

By the expression. a worker will pay equal attempt during production and acquire a good public presentation reflected in the value of Q. as he knows how the public presentation will be recognized based on the computation above. After accomplishing a good public presentation he will be entitled to obtain a good wage harmonizing to the inducement strategy. Eventually it will function run intoing his ends in populating a more comfy life.

So we can see that money is a positive incentive when the reward-performance relationship is strong but demotivating incentive when the relationship is weak or obscure.

3. Money is still an of import incentive but weakens as perceptual experience of comparative wage plays a bigger function when there is referent to compare.

In a society where information flow becomes more unfastened and effectual. single employee is easier than of all time to acquire a referent to compare the ratio of input and results. even though there is ever a policy in most of the companies forbiding the revelation of salary information among co-workers.

Harmonizing to the equity theory. employee will acquire a decision after comparing the comparative wages. which equals to O/I ( Outcome/Job input ) ratio. of his ain against that of the referent. Outcome here can be referred to as money incentive such as salary. The referent comparing can be made with his ain experience in or out the current organisation or another person’s experience in or out the current organisation. When the decision obtained is unfairness. either over rewarded or under rewarded. the employee will be otherwise motivated and set his behaviour. ( Steven Robins. 2004 )

There is one point to notice is that perceptual experience. non world. is cardinal in equity theory. A individual will non go less motivated unless he believes he was treated below the belt or underrewarded. ( Carl F. Fey. 2002 ) A individual will go more motivated when he belives he was overrewarded.

Establishing on above statement. direction can decide the unfairness concluded by an employee by assisting the employee to understand that he may be comparing with a incorrect referent. In a survey reflecting interview with 35 persons from 12 UK listed companies. the executives do associate their wage to that of their equals within the company and in other company. They considered the wage as just. Peoples agree that better-performing managers who possibly have greater input merit more wage. “It is the relativity that is of import. instead than the absolute sum of pay” . ( Ruth Bender. 2004 )

It besides helps to explicate the high bend over rate of more than 20 % and low motive and satisfaction degree in Chinese companies in mainland China as the employees at that place have perceptual experience of low comparative wages. Chinese companies have been named as good preparation school but bad employer. ( Liu Shan Shan. 2004 )

In computation expression ? in the old instances with HTL upholstery workers. P ( points of a sofa theoretical account ) stands for the trouble of upholstering the sofa furniture. It is adjusted on a regular basis. When a new couch theoretical account is introduced for production. the P is ever high because it is more hard to bring forth in the beginning. When workers got familiar with the upholstery of the theoretical account after two month’s mass production. the Q ( measure produced ) will leap up. To reflect the existent trouble degree and to maintain S ( concluding mark ) stalls. the P is supposed to be adjusted to a lower degree. The higher P. the higher wagess can be received by the employee.

When the P is unbroken same without altering after two months. the employee feels overrewarded as he can bring forth more in same given clip therefore accomplishing higher mark and having higher wage. The employee is extremely motivated and chooses to better the quality therefore better the result.

When the P is reduced to a lower degree without anterior communication to the employee. the employee felt underrewarded. The shopfloor is turned into pandemonium. The employee is demotivated.

When the P is reduced but the determination to cut down is transparently made together with employees. though S will be driven down and ulteriorly affect the concluding wages. the employee chooses to increase the input so as to hike results to maintain O/I ratio consistent. Here there is procedural justness operation. This will stress the equity of procedure and promote OCB ( organisational citizenship behaviour ) .

When the employee happen there is another adjacent furniture company offering same sort of calculating but higher unit wagess per mark. the employee chooses other-outside to compare. He will experience they are underrewarded after comparing with other-outside. there is a inclination for him to experience undervalued. Management demand to hold an keen sense of the alteration in the employee’s public presentation which might come later after the unfairness is found. To avoid human resource turn overing out. the direction will necessitate to equilibrate whether to merely wait for the employee to discontinue and employee new staff. or increase money incentive. or increase other incentive to better the result proactively to finally increase the employee’s perceptual experience of increased comparative wages.


Money is ever an of import incentive for people at all degree of demands. Lower-end demands can be best met by money incentive. Higher-end demands will be met by intrinsic incentives like self-achievement but better satisfied when it is accompanied by Money incentive. Money is besides an of import incentive in the sense of performance-related payment when pulling from expectance theory. Money is still one of the of import incentive to better a person’s perceived feeling of equity. but may non needfully be valid and should be manipulated together with other intrinsic incentives such as edifice better company civilization. liberty and accomplishment. The three theories are complementary to each other. In existent concern environment. directors should take all those state of affairss into consideration taking to accomplish higher public presentation from the employee.


1. Steven Robins ( 2004 ) . Organizations Behavior ( Ninth Edition ) . Pearson Prentice Hall.

2. Xu Chao Ping and Ni Chao ( 2005 ) . High Worker Resign Rate in Dongguan: 108 % . hypertext transfer protocol: //news. hour. com. cn/detail. php? id=57284

3. Jia Jing Feng ( 2005 ) . 70 % of Fresh Graduates Job-hopping in First Three Years. China News Network. hypertext transfer protocol: //www. chinanews. com. cn/news/2005/2005-06-24/26/590803. shtml

4. Jack Welch and Susan ( 2005 ) . Wining ( Chinese Version ) Citic Publishing House.

5. Ruth Bender ( 2004 ) . Why Do Companies Use Performance-Related Pay for Their Executive Directors? Corporate Governance. Volume 12. Number 4. Oct 2004. Blackwell Publishing Limited.

6. Carl F. Fey ( 2002 ) . Opening the Black Box of Motivation: A Cross-culture Comparison of Sweden and Russia. April. 2002.

7. Liu Shan Shan ( 2004 ) . Chinese Companies at the Bottom of Employer Popularity List. China Youth Online. May 12. 2004. hypertext transfer protocol: //education. 163. com/edu2004/editor_2004/job/040512/040512_137229. hypertext markup language

8. A. Maslow ( 1954 ) . Motivation and Personality ( New York: Harper & A ; Row )


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