Motivation in Practice

by Business Case Studies on Tuesday 17th April, 2007

In the news … Motivation in Practice

In and out of the news this year have been the large bonuses that are being paid out to executives and company staff. In February, banking firm HBOS was reported as paying each employee £7500 in bonuses (a total of £550m) after the achieving an 18% increase in sales over the year (BBC, 28th February 2007). In March, Wal-Mart, often criticised for the poor pay conditions provided to staff, was reported as paying out $529m (£270m) in bonuses to 800,000 of its US workers (BBC, 22nd March 2007).  The clothing retailer, Next, was also reported as offering large bonuses to top staff. They were asked to match the £2 million they were collectively paid in bonuses with their own money. The Times reports the bonus system:

If the shares are below £20 in August next year against the £15 when it was put in place they lose everything. But if the stock tops £24.50 by August 2009, the scheme pays out fivefold, or ten times their personal (The Times, March 23rd 2007).

The incentives available to some staff are often complex to calculate. Search engine giant Google only paid its three executives salaries of 50p in 2006, accounts show (BBC, 4th April 2007). However these executives saw the value of the shares they own significantly increase to a massive $31.5bn by the end of the year, whilst they also saw benefits, such as the use of their own corporate jet.

However motivation isn't always about financial rewards. Nick Read, chief executive of Vodafone, recently spoke at a conference for talent-management professionals. He was reported as criticising the approach taken by many leaders in their management of people.

He said:

They should remember that these talented people are not necessarily looking for material rewards. What they want is different types of experience. They want to be tested. (The Sunday Times, 1st April 2007).

In the Times 100 case study focusing on people management at Egg, the online bank, it describes how employees are given control over the planning of their career and the decisions made. Egg describes their approach to motivating their workforce as 'unleashing the power of people'.

Watch out for a case study on Motivation at The Royal Bank of Scotland Group in Edition 12 of The Times 100 coming soon!


Wal-Mart staff to get $530m bonus – BBC News 22 March 2007Staff benefit from HBOS profits – BBC News 28 February 2007 Fresh ideas and the prospect of bonuses will push Next higher – Times Online 23 March 2007 Google reveals exec salary deal – BBC News 4 April 2007 Focus on developing your staff – TIMES ONLINE 1 April 2007–motivation—how-egg-unleashes-power-people–81-222-3.php

Study Questions:

With reference to relevant motivational theory, explain how: financial rewards might be able to motivate workers non-financial rewards might be as useful in a firm's approach to motivate workers.

What types of non-financial reward might a firm use to motivate workers?

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