Experiences of a Dual Motivation System

Free market, which is prevalent in today’s capitalistic world, is characterized by a cutthroat competition in all spheres of the economy. Therefore, every company that aims to earn considerable profit makes every effort to exceed its competitors. It is also notable that in today’s advanced economy, few organizations have the luxury of building a monopoly, which allows them to operate on their own terms and stay profitable (Zhou, Chuanming, & Minghong, 2014). It follows that for most of the companies nowadays the definition of success exceeds the goal of merely making profit and encompasses the need to outperform the competition (Prince, 2015). This calls for optimal utilization of all resources at the firms’ disposal. An indispensable resource of any company is the personnel that work therein. In essence, the quality of human resources that company has can identify whether the company will make profit or loss. Therefore, firms must find appropriate ways to get the best performance from their employees (Prince, 2015).

Following the increased competition, a risk of talent poaching occurred. In response, companies turned their attention and resources to finding the best ways both to stimulate the performance of and to retain their best employees. First, they turned to research to establish the reason an employee could leave a firm for its rival (Prince, 2015). Various studies investigated this question and their universal conclusion was that the chosen corporate incentives were the primary motivation behind the outflow of talent (Sanduo, Chuanming & Minghong, 2014). This finding created yet another dilemma for the companies, which was to establish the most effective ways of incentivizing their employees to give not only their best performance, but also to stay with their employers (Prince, 2015). Naturally, researchers continued investigate this issue in efforts to fill the knowledge gap, offering different theories on which incentives were most effective. However, they have not identified a universally accepted tool, which would be a single best way to motivate workforce.

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One of the most commonly used incentives is the distribution of monetary rewards to employees for good performance (Sanduo, Chuanming & Minghong, 2014). However, some scholars argue that it is neither an efficient nor a sustainable strategy that all firms use. In response to this contention, Kunz and Linder (2012) designed and conducted an experiment in which they used exclusively monetary reward system. Their main objective was to establish its effectiveness in improving the output and efficiency of the workforce in a company. They found that employees were more motivated when paid a large amount of money than workers who received smaller salaries for the same job. Notably, however, employees who received small payments were more motivated than those who did not get any monetary reward (Kunz & Linder, 2012). The result of the experiment underlined the widely held belief that monetary reward system was positively correlated with motivation of employees. However, in spite of these authoritative findings, not all people believe that money improve performance of the workforce and efficiently motivate them to dedicate their time and effort to achieve organizational goals.

Gneezi and Rustichini (2000) are among the researchers who oppose the theory developed by Kunz and Linder. In search of evidence, they conducted a separate study to examine the limitations of the monetary reward system. They studied the use of hourly wage distribution system as an employee incentive. The researchers found that paying hourly wage was not sustainable, since it was subject to the law of diminishing returns (Gneezi & Rustichini, 2000). This simply meant that monetary rewards were effective to a certain degree; they motivated workers to deliver their best quality work only for as long as they needed the extra income, which they could get by taking extra hours. Once they had enough income, it was not possible to motivate them effectively by offering extra money. This conclusion is in line with Maslow’s Hierarchy of Needs theory, which postulates that humans seek to fulfill their needs one by one, as presented in the pyramid. The basic needs have to be fulfilled first. They are found at the bottom of the pyramid and represent the foundation of the hierarchy (Healy, 2016). This theory contains the key to finding the ideal method of encouraging employees to be most effective. Since money gradually loses its value when moving up the hierarchy of needs, the management has to find a way to motive their employees. Thus, once people get enough money to fulfil their basic needs, they will move up the hierarchy and aim to fulfill their psychological and self-fulfillment needs. Therefore, employers must find new incentives, which will encourage meeting their personal needs by achieving organizational goals. That way, they will constantly be motivated to perform their highest level, as it serves their best interests. This leads to the focus of this paper; after the evaluation of various motivation approaches, which is the best method to keep employees motivated in the long term.

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Type of Research Used

This paper uses one primary type of research to investigate the subject matter. This qualitative research paper with detailed study of the available literature on the issue aims to evaluate the theories and offer a comprehensive answer to the research question. Qualitative analysis is ideal for this paper as it allows the researcher to use an unlimited number of sources with relevant information. In fact, this research will be as credible as the quantity and quality of the reviewed studies (Taylor, Bogdan, & DeVault, 2015). The conclusion will be more valid if it is supported by the comparison and evaluation of numerous researches.

Paper Structure

This article begins with an exploration of the literature, which defines negative motivation system and provides an evaluation of the incentives to reveal their advantages and disadvantages. Further, it focuses on positive motivation system, identifying its strengths and weaknesses. Subsequently, it synthesizes the two systems and develops a theory that dual motivation system works better than the two mentioned above systems separately. It supports this argument by presenting a real life scenario, which shows the superiority of a dual motivation system at work. In fact, the gap in the two systems is exposed, suggesting that the dual motivation system is the actual solution to the issue and possible universal motivational tool. Finally, the paper concludes by reflecting the main arguments and points made in the paper, and depicting the dual motivation system as the answer to the research question.

Positive and Negative Motivation Systems

As the name suggests, a positive motivation system takes a positive approach to increase productivity among employees. Essentially, such system presupposes the encouragement and reward of employees’ performance and behavior when it is in line with and advantageous to the needs of a company (Sanduo, Chuanming & Minghong, 2014). The logic behind this system suggests that if a firm rewards such behavior by offering an extra bonus to its employee, it will motivate the entire workforce to enhance their behavior to meet the desired standards and maintain the quality of work to receive continued rewards (Sanduo, Chuanming & Minghong, 2014). Therefore, the monetary reward system is an ideal example of the positive motivation system. Most companies use this incentive since it focuses on and encourages positive energy, which psychologists argue leads to higher productivity and performance (Kunz & Linder, 2012). However, as noted earlier, sometimes employees do not respond to this type of motivation if getting monetary reward is not their goal.

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One the contrary, a negative motivation system uses the approach of restraint to direct and control the behavior of employees when it collides with organizational objectives (Sanduo, Chuanming & Minghong, 2014). Some actions used to enforce this system include criticism and punishment in such forms as financial penalties and litigation. This system is dependent on Theory X and Maslow’s Hierarchy of Needs theory. It recognizes that workers must be coerced and controlled in order to perform their tasks (Prince, 2015). In addition, it appreciates that employees are best positioned to respond positively if high-level performance is one of their top priorities. Instead of reacting to an alignment of employee’s performance with organizational objectives, the negative motivation system proactively and forcibly does it for the two (Kunz & Linder, 2012). The main reasoning behind this approach is that if there are unpleasant consequences to subpar performance, employees will do their best to avoid any possible penalties.

There are several principal differences between the two systems of incentivizing employees. A positive motivation system uses different rewards to stimulate employees, appealing to their sense of need and ambition. In fact, such system offers a desirable reward and provides both psychological and material satisfaction upon the successful completion of one’s duties and meeting organizational goals (Sanduo, Chuanming & Minghong, 2014). Conversely, a negative motivation system preys on personal negative emotions and behavior. It relies on the theory that if there is a threat to the status of an employee, he/she will be perpetually motivated to keep progressing to avoid possible negative consequences and penalties (Prince, 2015). It also requires a higher degree of enforcement, thus establishing a stronger managerial role in the organization.

Nonetheless, the negative motivation system, as well as positive one, triggers an improvement in performance of employees. According to the research conducted by Tversky and Kahneman (1992), a decision made by people in uncertain conditions did not depend on the possible results, but rather on the discrepancy between the outcome and the expectation. It also showed that people were more sensitive to punishment rather than reward. Therefore, the negative system is advantageous, since employees additionally to indicating higher performance levels, provide the expected results to avoid punishment (Tversky & Kahneman, 1992). Thus, from a psychological perspective, a negative motivation system is more efficient than positive rewards.

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Frederick Herzberg developed the Dual-Structure Approach to Motivation also known as the Two-Factor Motivation Theory in a bid to overcome fundamental limitations of the two systems described above (Vijayakumar & Saxena, 2015). The theory posits that there are two factors necessary to motivate employees at their work place. The first set of extrinsic factors is also called hygiene factors. They do not result in long-term positive motivation, but when they are absent, employees are dissatisfied (Vijayakumar & Saxena, 2015). Essentially, these are all the methods that fall under the positive motivation system, such as payments, fringe benefits, and recognition. The second set of variables includes motivational or intrinsic factors (Vijayakumar & Saxena, 2015). They transcend material needs and, thus, appeal to employees on a psychological level. In fact, they include such emotions as a sense of achievement or fear of retribution, to which employees respond in order to achieve a given goal. The combination of these factors helps overcome the limitations of the positive system in its lack sustainability, and the negative system in its lack of satisfaction (Vijayakumar & Saxena, 2015). It is, therefore, a hybrid system incorporating the benefits of both the positive and negative systems of motivation while eliminating their shortcomings.

Evaluation Criteria

The performance of the firm is the first criterion of the efficiency and effectiveness of approach to motivation. This is determined by the overall financial and competitive positioning of enterprises (Sanduo, Chuanming & Minghong, 2014, p.137). Making profit is the essential function of all businesses (Ximei, 2013). Therefore, if a motivation system leads to an increase in the profitability of a business, then it is an effective method.

The second criterion is the level of job enthusiasm and efficiency of the workforce (Sanduo, Chuanming & Minghong, 2014). The metric for such indicators is employees’ work output and their inclination to put in extra work, all other factors held constant (Prince, 2015). Therefore, a motivation system is effective if it increases the efficiency and passion of the employees.

Finally, an ideal work environment is just as beneficial to employees as it is useful to the employer (Sanduo, Chuanming & Minghong, 2014). Therefore, to evaluate the merits of a motivation system, one must consider the degree of employee satisfaction in a specific company (Vijayakumar & Saxena, 2015). It follows, then, that a motivation system is effective if it increases the level of employee satisfaction.

According to the above stated criteria, an effective motivation system must lead to the optimal outcome for both employers and employees. An employee will be considered motivated if his/her performance increases the profitability of the firm, he/she works enthusiastically and efficiently, and derives maximum satisfaction from performing his/her tasks. This is important since such system will make employees passionate about meeting the employer’s goals and avoiding the idea of leaving their workplace. In fact, if the chosen system gets the employees to work hard and improve the firm’s performance but increases resentment towards the employer, it is inefficient. Similarly, if it endears the firm to workers but does not lead to their improved performance, it is ineffective.

Evaluation

Morse and Lorsch (1970) designed an experiment to test the theory X in Stockton laboratory and Akron plant, where they used strict supervision to manage employees, placing mental and physical pressure on them. As a result, the factory yield increased but laboratory efficiency decreased. In an opposite experiment, they stimulated employees by satisfying their needs. This approach resulted in an opposite outcome, whereby the efficiency of laboratory workers increased but factory productivity decreased (Morse & Lorsch, 1970). This experiment proves that a single motivation system does not maximize the potential of the company. The negative system (intense pressure) meets only criterion one but not two and three. Similarly, a positive system meets criteria two and three but fails to meet criterion one. Under these circumstances, a balanced combination of the two systems is necessary.


In the case of driving workers’ passion and enthusiasm, the dual system shows better results comparing to the other two. North China Branch of Sinopec used a positive motivation system exclusively at the beginning, but as a result, they attracted numerous employees who were happy to work there but did not perform effectively (Cunzhu, Dezhi, Huifang, & Nan, 2010). Clearly, the system compromised on criteria one and two, satisfying only criterion three. Subsequently, enterprise decided to build a dual motivation system, whereby they rewarded top performers financially but transferred the worst 3% of performers annually to less desirable locations (Cunzhu et al., 2010). Consequently, the performance of the most poorly ranked employees, the financial results, and the number of overtime hours improved significantly (Cunzhu et al., 2010). This evidence suggests that the two-factor system meets all three criteria satisfactorily.

Haier also implements the dual motivation system, promoting excellent employees and eliminating those who underperform. Ruimin Zhang, the president of Haier, explained that motivation policy takes into account the needs of employees, including the feeling of self-worth (Ximei, 2013). So far, the employees showed more willingness to work hard as well as a deep sense of belonging and self-worth (Ximei, 2013). These are the metrics of criteria two and three, respectively. The firm’s performance also reflects the hypothesis of human nature as described in the Y theory (Morse & Lorsch). It improved innovativeness of employees, who showed a stronger propensity to creation and willingness to develop their potential. The Haier case adds to the finding that the two-factor theory meets all three criteria of an effective motivation system, as it has been observed in Sinopec.

In conclusion, the central goal of this paper is to identify the most effective employee motivation system. This paper has shown that a positive motivation system, in the form of monetary rewards is not effective in the long term due to the law of diminishing returns on rewards and lack of satisfaction. Consequently, it compromised on the performance of employees. Similarly, the negative motivation system positively affects only the performance quality of employees. However, it does not inspire employee enthusiasm or satisfaction. Research shows that the primary benefit of the dual motivation system is its ability to take advantage of both negative and positive systems while eliminating their limitations. This system considers both material and psychological needs of employees. The bright real life examples of the companies that embraced the Two-Factor motivation model are Haier and Sinopec. Therefore, based on these findings, the most effective motivation system is the Dual Motivation System.

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