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Curriculum Center Browse Bibliography Build EPacket Pricing Structure Distribution Process Management Control in Nonprofit Organizations
Note on Motivation
Young, David W.
Functional Area(s):
   General Management
   Management Control Systems
   Organizational Behavior
   For Profit
Difficulty Level: Intermediate
Pages: 10
Teaching Note: Not Available. 
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First Page and the Assignment Questions:
It is quite true that man lives by bread alone—when there is no bread. But what happens to man’s desires when there is plenty of bread and when his belly is chronically filled?
—Abraham Maslow

    The motivation process in medium and large organizations is, by all accounts, controversial. What motivates people to perform well, how senior management designs appropriate motivation (as distinct from compensation) packages, and what role monetary compensation plays in this effort are all quite controversial. Despite the varying perspectives, however, one fact seems to stand out above all the rest: financial compensation is not everything. Bob Nelson, in 1001 Ways to Energize Employees, illustrates this point with the following examples:

•    Management at the Polo Ralph Lauren distribution center in Greensboro, North Carolina, decided to let employees determine for themselves when to take their breaks and lunch hours. Productivity increased by 20 percent.

•    Management of Dana Corporation, an automotive parts maker, allows employees to spend $500 per project without authorization to improve efficiencies. More than 80 percent of the improvements are made without the plant manager’s knowledge.

•    Bar-Nunn Transportation of Granger, Iowa, provides employees with two monthly publications: a newsletter and a cassette tape with industry and company news, music, information on company benefits, and personalized messages such a birthday greetings. Since starting this program, employee turnover has decreased by 35 percent.

•    The manager of a Holiday Inn with a low (67 percent) occupancy rate began to communicate the rate to the hotel’s employees every day. Within 18 months, the rate had gone up to 85 percent.

•    McCormick and Co. opens its plants one Saturday each year for Charity Day. Employees voluntarily work their shifts for no pay, and McCormick donates twice the employee’s daily wage to the charity of his or her choice. During a recent year, the company raised over $700,000 for charities in this way.

    Or consider the experience of Medical Health Outsourcing, a company that holds the 87th spot on Inc.’s 500 list. The company emphasizes freedom and flexibility for its employees. Its CEO “. . . doesn’t really care how or when her employees get their work done, but if they don’t meet their goals and their deadlines, they’ve got some explaining to do.” On the other hand, “ . . . if they get their work done by Thursday, they can take Friday off and go to the beach.”

    Clearly, in these and many other companies, the motivation process includes more than financial compensation. Indeed, Stanford’s Jeffrey Pfeffer, who has studied the impact of compensation on performance, concludes, in The Human Equation, that a firm’s compensation system is a relatively unimportant factor in its success. While he does not disagree with the importance of compensation, he cites employee surveys showing that a pleasant, challenging, and empowered work place often has a greater impact on employee behavior than monetary incentives.”