Motivational Theories and Their Impact on Employee Compensation

RUNNING HEADER: MOTIVATIONAL THEORIES AND COMPENSATION 1 Motivational Theories and Compensation Wilmington University

MOTIVATIONAL THEORIES AND COMPENSATION 2 Maslow, Herzberg, McGregor and McClelland are behaviorists that have developed motivational theories. This paper will review each of the behaviorist’s theories and then explain how each of the theories can be used with compensation practices. The first theory is Maslow’s, Hierarchy of Needs. Maslow Abraham Maslow’s theory is that people are motivated by needs that are not satisfied and that some lesser needs need to be met before higher needs can be satisfied. He believed that general needs like survival, safety, love, esteem and physiological needed to be met before a person could be motivated. Maslow created his hierarchy model (listed below) which shows the priority of each of the needs that are needed for self-fulfillment. ( Hansen, 2011) Maslow believed that only when people satisfied these basic needs on the bottom of the pyramid they became motivated to move towards growth and self-actualization which are the higher needs at the top of the pyramid. Herzberg

MOTIVATIONAL THEORIES AND COMPENSATION 3 Frederick Herzberg’s created the two-factor theory, also called the Herzberg motivation- hygiene theory or dual-factor theory. This theory states that there are certain things in the work environment that cause satisfaction, while others cause dissatisfaction. He believed that people are not happy with low order needs, like salary, benefits and job security (hygiene factors), at work they wouldn’t be satisfied. They would like higher psychological needs (motivator factors) met like recognition, responsibility and advancement to be satisfied. But according to Herzberg, this satisfaction doesn’t necessarily stop the dissatisfaction. McGregor Douglas McGregor created the X and Y theories. In Theory X it is the assumption that people do not want to work and will avoid it if possible. Because of this people need to be controlled and closely supervised before they will work hard enough. They will have no ambition to succeed or advanced without proper incentive. In Theory Y, it is the assumption that people are self-motivated and they enjoy mental and physical work duties. The people in this theory will accept responsibility and self-direction to accomplish the duties that need to be completed. McClelland David McClelland theorized that human motivation was led by three needs, affiliation, achievement and power. He believed that a person’s effectiveness would be great if provided with their ideal mix of each of the three needs. Each need has its own purpose or pull for each individual. The following describes what each need provides:  The need for affiliation – the need to be liked by others; a need for human interaction and friendships

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MOTIVATIONAL THEORIES AND COMPENSATION 4  The need for power – this is the need to lead and to make an impact  The need for achievement – this is the goal to succeed and/or excel Compensation All of these motivational theories would be beneficial to any organization if followed. With Maslow’s theory, providing benefits, wages, a safe work environment and job security would cover the basic needs that are covered on the bottom of the pyramid. Once those needs are met the employer could assist the employee meet some of the higher needs like recognizing achievements which would make the employee feel valued. Employers would have to meet the employee’s basic salary needs and then when they move on to higher achievements which in turn benefit the employer they could reconsider the employees compensation. If following Herzberg’s theory, lower needs at work like salary and work conditions would not satisfy the employee. The employee is motivated by recognition, achievement and advancement, which motivates them to provide higher performance. The employer has to continue providing salary, benefits and security because if not the employee would be dissatisfied but these provisions could be on the lower end of the scale if the employee didn’t put much emphasis on them. They are more motivated when they are in a position that is meaningful and requires more responsibility from them. For McGregor’s theory, employers would either follow the more authoritative theory X or theory Y which is more participative. Theory X assumes that employees have no ambitions and would rather follow the lead, so employees are closely supervised, coerced or threatened to perform. This would possibly make for a hostile environment. Under Theory Y the employer can align the employee’s goals with the organizations, they could reduce levels of management,

MOTIVATIONAL THEORIES AND COMPENSATION 5 so responsibility and decision make would be delegated to employees. The employer can broaden the scope of the employee’s job duties or assist with setting goals and objectives and weighing how well they met them. With this theory an organization can base compensation on responsibility and delegation as well as save by lowering levels of management. Employers who follow McClelland’s theory would have to first find which of the three needs is the motivator for the employee. Those who are motivated by achievement would need challenging projects. Those motivated by affiliation would work best in a group and do not like like to take risks. Those who prefer power work best when they are in charge. Following this theory would help the employer better understand where each of the employee’s stands and their needs would be met. Conclusion Each of the theories reviewed involve the same or similar types of compensation components like wages, salaries, benefits, responsibility, achievement, good working conditions, competent supervision. All of these components would help motivate employees, which in turn boosts the employee’s performance and increases productivity of the organization.

MOTIVATIONAL THEORIES AND COMPENSATION 6 References Accel-Team. (2014). Accel Team Development. Human Relations Contributors: Douglas McGregor. Retrieved 9/6/14. http://accel-team.com/human_relations/hrels_03_mcgregor.html Envision Software, Incorporated (1998-2012). Maslow's Theory of Motivation - Hierarchy of Needs. Retrieved 9/6/14. http://www.envisionsoftware.com/articles/Maslows_Needs_Hierarchy.html Hansen, Lea. (9/7/2011). Maslow’s Hierarchy of Needs (Visual). Retrieved 9/6/14. http://hansengeorge.blogspot.com/2011/09/maslows-hierarchy-of-needs.html Internet Center for Management and Business Administration, Inc. (2002-2012). NetNBA Business Knowledge Center. Herzbergs Motivational-Hygiene Theory (Two Factor Theory). Retrieved 9/6/14. http://www.netmba.com/mgmt/ob/motivation/herzberg/ Learn Management. Human Motivation Theory: David McClelland. Retrieved 9/6/14. http://www.learnmanagement2.com/DavidMcClelland2.htm

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