Thursday, July 11, 2013

Employee Motivation Theories

Employee Motivation Theories
As a manager, to promote the overall performance of your organization, you need to focus on the human factor of your business; in other words, to push your employees' performance to its highest level. 

But how can a smart manager achieve this???
Lots and lots of studies concerning human behavior in organizations tend to help managers understand and manage human behavior in the workplace. In the following lines, we will highlight some of the most influential early theories and research studies in this regard.
Frederic Taylor's scientific Management
Frederic W. Taylor, the mechanical engineer, he was called the father of scientific management, had his own approach to improve the firm's performance that is based on economic incentives and on the idea that there is no one best way to perform any job. He believed that we can improve a firm's productivity by studying the individual jobs in the mill, and by redesigning the equipment and methods of work used by workers.
By organizing each job using a stopwatch, we can break down every task into separate segments, then we prepare an instruction sheet to tell us the amount achieved of each job and how much time it should take, then we can figure out what are the tools we need to perform this, that was Taylor's plan to increase productivity which resulted in developing four basic principles of scientific management:
1-    Create a scientific approach for each segment of the job
2-   Select, train, teach and develop workers in a scientific manner
3-   Encourage cooperation between workers and managers
4-   Distribute the responsibility between managers and workers based on how much suitable they're to the job
Maslow's Hierarchy of Needs
Maslow handled the motivation theory based on human needs, he believed that each one of us has a hierarchy of needs, consisting of psychological, safety, social, esteem and self actualization needs; the following figure can represent the hierarchy in an organized manner:

Based on the above shown hierarchy, the most basic human needs are psychological needs, such as the need for nutrition, home, clothing…etc. These psychological needs have greater power in motivating individuals to look for a job, a job with sufficient income to cover the mentioned above needs. Once these needs are satisfied we turn to the next level of needs until we reach the highest level, the self actualization needs.
X and Y theory of McGregor
Influenced by Maslow's work, Douglas McGregor focused on two contrasted sets of assumptions relative to human nature in his study of motivation; he called it X and Y theory.
** The theory X is based on pessimistic view of human nature, it proposes certain pessimistic assumptions:
1-    The average person dislikes work and will avoid it if possible
2-   As people do not like work, we must put them under control, direction, and punishment to push them to perform greater effort
3-   The average person prefers to be oriented and reduce his exposure to responsibility
These three assumptions imply that managers must push workers to perform harder while controlling their on-the-job behavior.
** On the other hand, the theory Y of management is based on optimistic assumptions relevant to human behavior:
1-     Work is as natural as play or rest. People need to be self-directed and they will seek to achieve the organizational goals they believe in
2-   We can motivate workers by positive incentive to push them to achieve these goals
3-    Most workers have a high level of creativity and are willing to solve problems
There are other early theories focusing on employee motivation, such as theory Z of William Ouchi, Herzberg's Motivator-Hygiene theory, and the Hawthorne studies as well.
Other contemporary theories can be pointed out, such as Expectancy theory, Equity theory and Goal-Setting theory, that worth to be highlighted in other similar articles.


The Corporate form of Organizations

The Corporate form of Organizations

Three forms of organizations are commonly used: Sole Proprietorship, Partnership and Corporation.
In 1918, corporation was first defined by John Marshall as "an artificial being, invisible, intangible, and existing only in contemplation of law". By this definition, we figure out that corporation creation is emerged first by law. Speaking of law, corporation represents a legal entity having an existence separate from its owners; we call them stockholders, who are not personally responsible or liable for the debts of this entity. In its legal form, the corporation is subject to the state laws; we mean here by "state" the area in which it is formed.
The corporate form of organization tends to be relevant to large companies, such as Microsoft and IBM; its size ranges from large-scale multinational firms with large numbers of employees and higher rates of profit, to Startup Corporation with small budgets.
The main difference between corporations and other legal entities, such as sole proprietorship and partnership, is that corporations are double taxation entities with a life separate from its owners.
Corporation classifications
Commonly; we can classify corporations either by purpose or by ownership.
When we classify it based on the purpose of making profit, it can be either a for-profit or a not-for-profit organization.  Examples of for-profit corporations are numerous, such as Fujitsu, PepsiCo, Google, Motorola, and Apple ...etc.
Not-for-profit corporations are established for charitable, medical or educational purposes, such as national military projects.
When we classify corporations by ownership, we can distinguish between public or private companies. A publicly held firm may have thousands of stockholders, whose stock is traded on a national security exchange, such as New York Exchange. Most of large-scale companies, IBM or General Motors for instance, are publicly held.
On the other hand; privately held companies have only few stockholders, they do not offer their stocks for public sale. Most of privately held companies are usually smaller than publicly held companies.
The Incorporation Process
It is much more complex to set up a corporation than if you are starting up a sole proprietorship or partnership. To start up a corporation, you need to go through the following steps:
1)    Select the company name (it will be your business trade name)
2)  Write the articles of incorporation, and fill them; these articles include the following items:
a.     Name of corporation
b.    Firm's goals
c.     Type of stock (common or preferred) and number of shares of each type to issue
d.    Corporation's lie
e.     Minimum investments by owners
f.       Address of the corporate headquarter
g.     Address and names of the first board of directors
3)  Pay necessary fees and taxation
4)  Hold organizational meetings
5)   Adopt bylaws
Characteristics of Corporations
As a form of organization, corporations are distinguished from other forms of organizations by the following characteristics:
(1)            Possibility to transfer ownership of shares; stockholders can sell their stocks to dispose a part or all their interest in the corporation
(2)          Separate legal entity from its owners, as it acts under its own name rather than in the name of its stockholders
(3)          Ability to obtain capital through the issuance of stocks
(4)          Limited liability of stockholders, as the corporation is a separate entity from its owners
(5)           Corporation is subject to governmental regulations (state or federal)
(6)          Additional taxation; stockholders must pay additional taxes on cash dividends



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