14 Motivation

Learning Outcomes
Afterstudying this chapter, the learners will be able to .
Explain the concept and nature of motivation
Differentiatebetween the terms 'needs', 'incentives' and 'motives'
Describe the significance of motivation
Examine the applicability of Maslow's hierarchy of needs
Elaborate Herzberg's motivationaland hygiene factors
Analyse Adam's Equity Theory and its implications
Explain McGregor's Theory X and Theory Y

The term 'motivation' has been derived from the word 'motive'. Motive is anything that
initiatesor sustains activity. It is an inner state that energises, activates or movers and
thatdirects or channels behaviour towards certain goals. Motive is a psychological
force within an individual that sets him in motion for the achievement of certain goals
or satisfaction of certain needs.
According to Likert, "Motivationis the core of management". It is an important function
whichevery manager performs for enthusing people to work for the accomplishment
of organisational objectives. Issuance of well conceived instructions and orders
does
not mean that they will be followed. A manager has to make appropriate use
motivationto enthuse the employees to follow them. Effective motivation
of
not only in having an order accepted but also in gaining a determinationsucceeds
to see that it
isexecutedefficientlyand effectively. In this chapter, we shall study the
theories and techniques of motivation. concept,

14.1CONCEPT AND NATURE OF MOTIVATION

Accordingto Robert Dubin, "Motivation is the complex of
a person at work in an organisation. Motivation is forces starting and keeping
action, and continues him in the course of action something that moves the person to
already initiated". Motivation refers to
14.1
14.2 ROSINESS ANDMANAGEMENT
the way a pet-sonis enthused at work to intensify his desire and willingness to
for the achievetnentof organisational objectives.It is something that moves
person into action and continues hiln in the course of action enthusiastically. The role a
of motivationis to developand intensify the desire in every member of the Organisation
to effectivelyand efficientlyin his position.
In the words of Dalton E. McFarland, "Motivationrefers to the way in which urges,
dnt•cs. desires.aspirations, strivings or needs direct, control or explain the behaviourof
human beings".Motivationhas close relationship with the behaviour of human beings.
It explainshow and why the human behaviour is caused. McFarland considers the terms
used in his definition in a general sense "as forms of tension occurring within individuals
with resulting behaviour aimed at reducing, eliminating or diverting the tension.
Understandingthe needs and drives and their resulting tensions helps to explain and
predict human behaviour, ultimately providing a sound basis for managerial decision
and action". Thus, motivation is a term which applies to the entire class of urges,
desires, needs and similar forces. drives,
As shown in Fig. 14.1, the unsatisfied needs of a person are the starting
motivationprocess.The unsatisfied need results in tension within the point in the
motivateshim to search for the ways to relieve this tension. He develops individual and
for himself. If he is successfulin achievinghis goals, certain other certain goals
which will lead to setting a new goal. But if the goal is not achieved, needs will emerge
engage himself in either constructive or destructive behaviour. This the individual will
It keeps on working within an individual. process never stops.
Needs Tension
(Motives) Goals Behaviour

Reduction of Tension Goals Goals not

Achieved Achieved

Frustration
Fig. 14.1 A Simple Model of Motivation

Nature of Motivation
The features of motivation are as under
1. Internal Feeling. Motivationis an internal feelingof an individual,
observed directly; we can observe an individual's actions and then interpret It can't be
in terms of underlying motives. This leaves a wide margin of error, Our his behaviour
may not reveal the individual'strue motivation, interpretation
2. Complex Process. Motivationis a complexprocess.Individualsmay
their motivation even though they are performingthe same type ofjob. For differ in
example,
two men are engaged in cutting stones for constructing a temple, one may be motivated if
by the amount of wages he gets and the other by the satisfactionhe gets by performing
his job.
 Needs, Incentives and Motives
A distinctionmay be made among three things : need, incentive and motive. This is
to emphasise that any need present in the individual does not necessarily lead to
action.The need has to be activated which is the functionof incentive. Incentive is
something which incites or tends to incite towards some determination. Thus, incentive
is an external stimulus that activates needs, and motive refers to an activised need,
an active desire or wish. But a better definitionis to regard incentive an outward
stimulus for the motive to work. When a motive is present in a person, it becomes
active when there is some incentive.Thus, any incentivehas referenceto : (i) the
individualand his needs which is trying to satisfy or fulfil; and (ii) the organisation
which is providing the individual with opportunity to satisfy his needs in return for his
services. Thus, conceptual difference between motivation and incentive is that
incentiveis the means to motivation.
It has been demonstratedthat incentive has a direct bearing on the degree of
motivation.Increase in incentive leads to better performance and decrease in incentive
has adverse effect on performance. It should be noted that motivationdoes not
change the individual's capacity to work. It simply determines the level of the effort
of individual, raises it or lowers it, as the case may be. Keith Davis feels that motives
are expression of a person's need; hence, they are personal and internal.Incentives,
on the other hand, are external to the person. They are something he perceives in
his environment as helpful towards accomplishing his goal. For instancey management
offers salesmen a bonus as an incentive to channel in a productiveway their drives
for recognition and status.
Needs create tensions which are modified by one's culture to cause certain wants.
These wants are interpretedin terms of positive and negative incentives to produce
a certain response or action. To illustrate, need for food produces a tension of hunger.
Since culture affects hunger, a man will require wheat or rice accordingly. For a
man, perhaps incentive is provided by his wife's promise to prepare food in his
favourite way.
3. Continuous Process. Motivationis a continuousprocess that produces goal
directedbehaviour.The individualtries to find alternatives to satisfy his needs.
4. Dynamic Processe Needs and motives of an individual change from time to
time,even though he may continue to behave in the same way. For example, a temporary
worker may produce more in the beginning to become permanent. When made
permanent,he may continueto producemore, this time to get a promotion,
5. Different from Satisfaction. Motivation is different from satisfaction.
Motivationimplies a drive towards an outcome while satisfaction involves outcomes
already experienced. Satisfaction is the contentment experienced when a want has been
satisfied.

14.2SIGNIFICANCE OF MOTIVATION
RensisLikert has called motivationas the 'core of management'. Motivationis an
important function which every manager performs for actuating the people to work for
the accomplishmentof objectivesof the organisation. Issuance of well-conceived
 ORGAN'SATION AND MANAGEMENT
14.4
followed.A manager hag to
instructionsand orders does not nwnn that, they will be to enthuse the employees to
make appropriate use of various techniques of tnot,ivation
having an order accepted but
followthem. Effective tnotivntion succeeds not only in efficiently and effectively.
in gaining a determinationto see that it is executed
AMotivation is an effectiveinstrunwnt in the hands of manager for inspiring the
•workforce and creating a confidencein it. By motivating the workforce, management
of organisational goals.
creates 'will to work' which is necessary for the achievement to
Motivationinvolvesgetting the nwmbers of the group to pull weight effectively, give
their loyaltyto the group, to carry out properly the purpose of the organisation. The
followingresults may be expected if the employees are properly motivated
(i) The workforcewill be better satisfied if management provides them with
opportunitiesto fulfil their physiologicaland psychologicalneeds. The workers
will cooperatevoluntarily with the management and will contribute their
maximumtowards the goals of the enterprise.
(ii) Workers will tend to be as efficient as possible by improving upon their skills and
knowledgeso that they are able to contribute to the progress of the organisatiom
This will also result in increased productivity.
(iii) The rates of labour turnover and absenteeism among the workers will be low.
(it') There will be good human relations in the organisation as friction among the
workers themselves and between the workers and the management will decrease.
(v) The number of complaints and grievances will come down. Accident rate will also
be low.
(ci) There will be increase in the quantity and quality of products. Wastage and scrap
will be less. Better quality of products will also increase the public image of the
business.

14.3 MASLOW'S NEED HIERARCHY MODEL

A.H. Maslow developed a conceptual framework for understanding human motivation
which has been widely acclaimed.He defined a person's effectivenessas a function Of
matching man's opportunity with the appropriate position of hierarchy of needs. Process
of motivationbeginswith an assumptionthat behaviour,atleast in part, is directed
towards the achievement of satisfaction of needs. Maslow proposed that human needs
can be arranged in a particular order from the lower to the higher as shown in
Fig. 14.2. The need hierarchy is as follows:
1. Basic Physiological Needs. The needs that are taken as the starting point for
motivation theory are the so-calledphysiologicalneeds. These needs relate to the survival
and maintenance of human life. They include such things as food,clothing, shelter, air'
water and other necessatiesof life.
2. Safety and Security Needs. After satisfyingthe physiologicalneeds, people
want the assurance of maintaining a given economiclevel. They want job security,
personal bodily security, security of source of income' provision for Oldage, insurance
against risks, etc.
3. Social Needs. Man is social being. He is, therefore, interested in conversation,
sociability, exchange of feelings and grievances, companionship,recognition'
belongingness, etc.
 MOTIVATION14.5
6
Solffilfi(rnent

Ego
needs
Social
needs
2
Safety
needs
1

Physiological
needs

Fig. 14.2 Maslow's Need Hierarchy

4. Esteem and Status Needs. These needs embracesuch things as self-confidence,
independence,achievement, competence,knowledge, and success. They are also known
as egoisticneeds. They are concernedwith prestige and status of the individual.
5. Self-fulfilment Needs. The final step under the need priority modelis the need
for self-fulfilmentor the need to fulfil what a person considers to be his mission in life.
It involvesrealising one's potentialities for continued self-developmentand for being
creativein the broadest sense of the word. After his other needs are fulfilled, a man has
the desire for personal achievement. He wants to do something which is challenging
and since this challenge gives him enough dash and initiative to work, it is beneficial
to him in particular and to the societyin general. The sense of achievementgives him
psychologicalsatisfaction.
Maslowproposed that the needs have a definite sequenceof domination. Second need
doesnot dominateuntil first need is reasonablysatisfied and third need does not
dominateuntil first two needs have been reasonably satisfied and so on. The other side
of the need hierarchy is that man is wanting animal, he continues to want something
or the other. He is never fully satisfied. If one need is satisfied, the other need arises.
As said above (according to Maslow),needs arise in a certain order of preference and
not randomly. Thus, if one's lower level needs (physiologicaland security needs) are
unsatisfied,he can be motivated only by satisfying his lower level needs and not
satisfyinghis higher level needs. Another point to note is that once a need or a certain
orderof needs is satisfied, it ceases to be a motivating factor. Man lives for bread alone
as longas it is not available. In the absence of air one can't live, it is plenty of air which
ceasesto be motivating.
14.3.1Criticisim of Maslow's Need Hierarchy
Maslow'sneed hierarchy has application to the lower level workers in countries
where the basic needs of the workers are not satisfied. It pointsout that people
are motivated by unfulfilled needs. It also postulates that as lower-level needs are
fulfilled, upper-levelneeds replace them. Thus, Maslow'stheory seems to be a very
simple description of the complex process of motivation of human beings. The limitations
of the Maslow'stheory are as under
14.6 BUSINESS ORGANISATtON ANO MANAGEMENT

Every individual mav have n different need hierarchy which may rnay not followthe
have social or
sequence suggested by Mnslow.For instance, nn individual yet.
egoistic needs even though his safety need is not satisfied as
Man's behaviour
Aii) It is wrong to presume that only one need is satisfied at one time. one or two
at any time is mostly guided by multiplicityof motives. flowever, be of secondary
motives in amvsituation may be prepotent, while others may will be different.
importance. Moreover,at different levels of needs, the motivation
(iii) Moneycan act as a motivator only for physiologicaland social needs, not for
satisfying higher level needs. Employeesare enthusiastically motivated by what
cautiously
they are seeking, more than by what they already have. They may reactenthusiasm
in order to keep what they already have, but they moveforward with
when they are seeking something else. In other words, man works for bread alone
as long as it is not available.
(it') There are always some peoplein whom the need for self-esteem seems to be more
prominent than that of love. There are also creative people in whom the drive for
creativeness seems to be more important. In certain people, the level of operation
may be permanently lower.
It is doubtful that once a need is satisfied it loses its motivating force. It is also
that satisfaction of one need automatically activates the next level need
in the hierarchy.
(ci) Needs are not the only determinant of human behaviour. People may engage in
behaviours that are in no way concernedwith the satisfaction of their needs. In
practice, behaviour is influenced by needs, expectations,perception, etc. It is also
influenced by the cultural background of people.
14.4 HERZBERG'S TWO FACTOR THEORY
A significant developmentin motivation was distinction between motivational and
hypene factors in job situation. A research was conductedby Herzberg and his associates
based on the interview of 200 engineers and accountants who worked for eleven different
firms in Pittsburgh area. Based on the findingsof the research, hygiene factors and
motivators are defined as follows.
Hygiene Factors. They are related to the conditions/ environmentunder which
employees perform their jobs. They are not an intrinsic part of a job as, for example,
company policy, technical supervision, inter-personal relations and working conditions.
Hygiene factors, i.e., job conditionsoperate primarily to dissatisfy the employees,when
they are absent. Their presencedoes not motivate the employeesin any way, but their
absence causes dissatisfaction among the employees.Hygiene factors are also known as
maintenance factors becausethey are necessary to maintain necessary working
conditions,to avoid dissatisfactionamong the employees.If they are absent, they will
act as dissatisfiers; but their presenceleads to 'no satisfaction' as they are maintenance
factors.
Motivators. They are the factors inherent in the job that operate to build Strong
motivation and high job satisfaction among the employees. These factors are also known
as satisfiers. Factors such as achievement, recognition, advancement, etc. provide
instrinsic motivationto the employeesand make them work for superior performance.
They fulfil the higher level needs of the employees.
 14.7
TABLE14.1 : Ilerzberg's Maintenance and Motivational Factors
Maintenance or Hygiene Factors Motivational Factorg
Company Policy and Administration • Achievement
Technical Supervision • Recognition
• Inter-personal relations with Supervisor • Work itself
Work Conditions • Responsibility
• Salary Advancement
• Inter-personal relations with Peers • Growth opportunities
• Personal Life
Inter-personal relations with Subordinates
• Status
Job Security
•Hygienefactors include such things as salary and fringe benefits, supervision, physical
conditionsand overall company policy and administration. The presence of these factors
at a satisfactorylevel prevents dissatisfaction,but they do not provide motivation to the
employees.That is why, they are known as maintenance factors. Motivationalfactors,
on the other hand, are essential for increasing the productivityof the employees.They
are also known as satisfiers and include such factors as achievement recognition,
challengingwork, responsibility, opportunity of advancement and potential for personal
growth.
Herzbergnoted that the two sets of factors are unidimensional as their effect can be
seenin one direction only. If hygiene factors are present, they act as maintenance factors
and they are absent, they act as dissatisfiers. But if motivators are present, they provide
satisfactionor motivation to the individual. And if motivators are absent, the individual
willget no satisfaction. Thus, satisfaction and dissatisfactionare independent rather
than oppositeends of the same continum as shown in Fig. 14.3.
Hygiene Factors

Dissatisfaction No Satisfaction
(if absent) (if present)

MotivatingFactors

No Satisfaction or No Satisfaction or
Motivation (if absent) Motivation (if present)

Fig. 14.3 Role of hygiene and motivational factors

The basic conclusionof Herzberg's model is that a manager cannot achieve higher
Performanceof workers simply by improvinghygiene factors. He stressed upon job as
an intrinsic motivating factor. The key to job satisfaction and high performance lies in
j ob enrichment. Hygiene factors are important to prevent dissatisfactionamong the
employees. Thus, Herzberg's two-factor theory has made a significant contribution
towards improving manager's basic understanding of human behaviour. In order to
14.8 BUSINESS ORGANISATION AND MANAGEMENT
attention to the satisfiers or
increase the motivation of einployees,it is necessary to pay
motivationalfactors.
are quite obvious. Providing
The implications of the two factor theory for managers will not motivate employees
hygiene factors will eliminate employeedissatisfactionbut motivators like recognition,
to high achievementlevels. On the other hand, strengthening motivators that will promote
challengingwork and growth opportunities are powerful
role is to eliminate dissatisfies, that
high satisfactionand performance.The manager's and then use motivators to
is, to providehygienefactors sufficientto meet basic needs,
greater achievement and
meet higher-order needs and propel employees toward
satisfaction.
14.4.1Criticism of Herzberg's Theory
Herzberg'stheory has been criticised on the followinggrounds
(i) Herzbergconsideredwhite collar workers, i.e., engineers and accountants in his
study, but ignored blue workers, who are in practice motivated by the factors
labelled hygienes by Herzberg.
(ii) The two factor theory is not free from bias as it is based on the natural reaction
of employeeswhen they were enquired the sources of satisfaction and
dissatisfactionat work. They blamed dissatisfaction on the external factors such
as salary structure, companypolicies and peer relationship, but gave credit to
themselvesfor satisfaction at work.
(iii) The two factor theory does not take an individual's perception into consideratiom
In many cases, performancedepends upon perceived rewards.
(iv) The two factor theory focuses too much attention on satisfaction/dissatisfaction
rather than on performancelevel of an individual. Attention has not been given
to factors like status, pay, interpersonal relations which are generally held as
important determinants of satisfaction.
(v) The distinction between maintenance factors and motivating factors is not definite.
What is a maintenance factor (e.g.,pay) for a worker in the United States may be
a motivator for a worker in a developingcountry. Thus, Herzberg ignored the
dominating influence of situational variables.
14.4.2 Comparison of Herzberg and Maslow Models
As shown in Fig. 14.4, Maslow's physiological,security and social needs come un-
der Herzbervs maintenance factors whereas self-fulfilmentunder motivating factors. It
may further be noted that a part of esteem need comesunder maintenance factors and
another under motivationalfactors. The esteem needs are divided because there are
some distinctdifferencesbetweenstatus per se and recognition.Status tends to be a
function of the position one occupies.This position may be gained through family ties or
social pressures and so this may not be a reflectionof personal achievement or earned
recognition.Recognitionis gained through competenceand achievement.It is earned
and granted by others. That is why, status is classified with physiological, safety
and social needs as a hygiene factor, while recognitionis classifiedwith esteem as a
motivator.
 14.9

Motivationgl

Esteem

1
Social
1

Safety

Physiological 1
1

Maintenance
+
factors

Fig. 14.4 Comparison of Maslow's and Herzberss Models

TABLE 14.2 : Maslow Model vs. Herzberg Model
Basis Maslow Model Herzberg Model
1. Hierarchy of Needs Sequential arrangement of No hierachical arrangement
needs. of needs.
2. Nature Descriptive theory. Prescriptive theory.
3. Central Theme Unsatisfied needs energize Gratified needs cause
behaviour; which causes performance.
performance,
4. Motivational Factor Any need can be a moti- Only higher order needs serv
vator if it is relatively as motivators.
unsatisfied.
5. Applicability Takes a general view of the Takes a microviewand deals
motivational problems of all Work-oriented motivational
workers. probelms of higher-level pro-
fessional employees.
6. Empirical Study Need hierarchy theory is Motivation-hygienetheory
based on intuition and not is based on study of empirical
on any empirical study. data collected from professio-
nal accountants and engineers.
 14.10 BUSINESS ORGANISATION AND MANAGEMENT

14.5 EQUITY THEORY

J.S. Adams. It is based on the assumption
Equity theory of motivation was formulated bystrong expectations of justice, balance and
that membersof an organisationexperience When a person feel that he is being treated
fairness in treatnwnt by the organisation.
have a variety of adverse effects on the
unfairly by the organisation, these feelings can
job. The equity theory of motivation helps
person's motivationand performanceon the consequences of feelings of inequitable
in understanding both the causes and the likely
treatment among organisation members.
i.e., inputs and OUtcomes.
Accordingto equity theory, two variables are important, relationship between the
Inputs and outcomesare important elements in the exchange
organisationand its members.When the individualfinds equity inand
the situation or
compensation
feels that what he receives from the organisation in terms of treatment
is fair in terms of the effort and skills he contributes to the organisation, he is satisfied
with the arrangement, and is normally committed to the organisation and its goals.
TABLE14.3:Examples of inputs and outcomes
Inputs Outcomes
Time worked e Salary and bonus
Education e Perquisites/benefits
• Training o Stock option
Experience Job security
• New ideas offered Promotion
• Enthusiasm shown o Recognition
• Commitmentand loyalty • Personal development
• Duties performed • Flexibility
• Sense of achievement
The individual will also compare his input-outcome ratios with the ratios of inputs
and outcomesof some of his colleagues. This comparison is subjective since it is based
on his perceptions and feelings. Such a comparison enables him to arrive at a
whether the ratios are in balence or not. If the ratios are in balance, the conclusion
experiencespositivefeelingsof equity, fairness and justice. If they individual
feelingsof inequity are generated in the individual. are not in balance,
Person's outcomes Other's outcomes
Person's in uts Other's inputs
Schematically,equity occurswhen an
is more or less equal to that of others ofindividual
his
feels that his ratio of input-outcome
feels motivated.The problem arises when these rank and status, there is equity and he
imbalancedwhen a person's ratio of outcomes ratios are not in balance. The ratios
significantlymore than the ratios of others to inputs is significantly lessget or
is significantlyless in comparisonwith with whom he compares himself. If the ratio
feels underpaid. He will feel that he those of others, it means that the individual
inputs of efforts. In such a case, he does not get outcomes commensurate
is likely to feel angry, hostile and with his
ratio is significantlyhigher, the frustrated. If the
generate a feeling of guilt in theindividual feels over-rewarded. Such a situation may
individual. In either case, the
individual expriences
 MOTIVATION 14.1 1

tension or anxiety and is motivated to reduce the perceived inequity or imbalance.

example,if the individual feels underpaid, he may try to reduce his input of effort
or fight for higher emlouments.
Accordingto equity theory, a feeling of inequity by an individual is uncomfortable
andcreates tension in his mind. Perceived equity can be reestablished by the following
mechanisms.
(i) Changing Inputs. The person may chooseto increase or decrease his inputs to
the organisation for example,by working harder or, alternatively, working less
hard.
(ii) Changing Outcomes. A person may attempt to change his outcomesby
requesting a salary increase or asking for a bigger officeor a personal secretary.
Anything perceivedto be an outcomeimportant to the individual can shift his
ratio of input to outcomes.
(iii)Changing Perceptions of Inputs and Outcomes. Rather than actually
changing inputs or outcomes, a person may change his perceptions of these factors.
For example, person who at first was feeling overpaid in return for his inputs to
the companycould reestablish equity by distorting upward his perceptionof his
own inputs (e.g.,"I now feel that I really do work a lot harder than anyone else
does").
(iv) Changing the Inputs or Outcomes of Others. A personcouldtry to restore
equity by attempting to convincea comparisonperson to reduce his inputs, for
example,by not workingas hard in the future. Equity can also be restored by
changing one's perceptions of the inputs and outcomes of other.
Equity theory has some important implicationsfor the managers. It makes them
realise that equity motive tends to be one of the important motives with the employees.
Second,feelings or perceptions in work settings are as important as facts in motivating
people.Third, equity considerationsshould form a part in the determination of the
wageand salary structure in organisations.
14.6McGREGOR'S THEORY X AND THEORY Y
Theory X
TheoryX indicates the traditional approach to managerial motivationand control. It
represents old stereotyped and authoritarian management style of motivation. The
underlyingassumptionsof this theory are as follows.
(i) The average human being is basically lazy and has an inherent dislike to work.
He will avoid work, if he can.
(ii) Most peoplelack ambition.They are not interested in achievement.They like to
be directed.
(iii) Most people have little capacity for creativity in solvingorganisational problems.
(iv) Most people are indifferent to the organisational goals.
(v) Most people must be closely controlled and often threatened to achieve
organisational goals.
(vi) Motivation of average human beings occurs at the physiological(food, clothing,
shelter, etc.) and safety levels.
14.12
These negative assumptions of human behaviour underlie the traditional
management of people and proceggos.The world ig guppoged to be full of unskilled
workers. peons and messengersand to manage them ig largely a matter of Vigilance
and strict supervision.Managementmerely thinks of catering to their physical and
safety needs with some fringe benefits, keeping the implied threat of punishment handy
in case of need. Thus, carrot and stick approach Comotivation is followed.TheoryX
suggests that threats of punishment and strict control are the ways to manage people.
It treated human beings like machines.
Theory Y
After challengingthe validity of Theory X, McGregor developed an alternative theory of
human behaviour which is known as Theory Y. This theory assumes that people are
not unreliable and lazy by nature. If they are properly motivated, they could really be
creative. The main task of the management is to unleash the potential in the employees.
An employeewho is properly motivated can achieve his goals by directing his own efforts
and, thus, he can help in accomplishingthe organisational goals. The underlying
assumptions of McGregor's Theory Y are as follows .
(i) Work is as natural as play, if the conditions are favourable. The average person
does not inherently dislike work.
(ii) External control and threat of punishment are not the only means for bringing
about efforts towards organisational objectives.The average human being will
exercise self-directionand self-controlin the service of objectivesto which he is
committed.
(iii) Commitmentto objectivesis a function of the rewards associated with their
achievement.The most significant of such rewards, e.g., the satisfaction of ego
and self-actualisation needs can be direct products of efforts towards organisation
objectives.
(iv) The average human being learns under proper conditions,not only to accept but
also to seek responsibility. Avoidance of responsibility, lack of ambition and
emphasis on security are generally the consequencesof experience,not inherent
in human characteristics.
(v) The capacity to exercise a relatively high degree of imagination, ingenuity and
creativity in the solution of organisational problemsis widely, not narrowly,
distributedin the population.
(vi) The intellectual potentialities of the average human being are only partially
utilised under the conditionsof modern industrial life,
Theory Y assumes that goals of the organisation and those of the individuals are
not necessarilyincongruent. The basic problemin most of the organisations is that Of
securing commitment of workers to organisational goals. Workers' commitment is directly
related to the satisfaction of their needs. Thus, this theory places emphasis on satisfaction
of the needs of the workers.It does not rely heavilyon the use of authority as an
instrument of command and control. It assumes that workers exercise self-direction
and self-controlin the direction of the goals to which they feel themselves committed.
Because of these reasons, 'Theory Y' is realistic and frequentlyused at different levels
in most of the organisations.
In support of the assumptions embodied in 'Theory Y', McGregor cited a few practices
wherein the subordinates are given a freedom to direct their activities, to assume
responsibilityand, importantly, to satisfy their egoisticneeds. These practices include
decentralisntion and delegation, job enlargement, participation and
consultativemanagement, and management by objectives.
TABLE : Comparison of Theory X and Theory Y
Theory X Y
Theory
1. Basedon the assumption that people 1. Based on the assumption that people like
are basically lazy and so shirk work. work as children like play.
2. peopledo not take initiative. They like to 2. People like to take initiative. They geek gelf-
be directed. direction and self-control.
3. People avoid responsibility, whenever 3. People assume responsibility gladly if
possible. conditions are favourable.
4. People do not required close and strict
4. For getting things done, people must be supvision for properly performing their jobs.
supervised strictly. 5. Democratic or participative style of
5. Autocratic style of leadership is likely to be leadership is likely to be more effective.
more effective. 6. Applicableto educated and skilled employees
6. Applicable to illiterate, unskilled and lower- who occupy higher positions in the
level workers. organisation.
7. People lack self-motivation. 7. People are self-motivated.
S. Believesin mental sickness and so negative 8. Believesin mental health and so positive and
motivation of employees. intrinsic motivation of employees.

Appraisal of McGregor's Contribution

DouglasMcGregor's Theory X and Theory Y represent extremes to draw the fencing
withinwhich the organisational man is seen to behave. No man would belong completely
to either Theory X or Theory Y. He possessesthe traits of both in varying degrees
underdifferent situations. Thus, these theories are important tools in understanding
the behaviourof human beings and in designingthe incentive schemes to motivate the
employees.Neither of the two theories is fully applicable to all the situations and to all
types of human beings. However, TheoryX is more applicable to unskilled and uneducated
employees,whereas, Theory Y is more applicable to skilled and well educated employees
whoare mature enough and understand the responsibility.Therefore,the management
should use an amalgamation of both the theories to motivate the different kinds of
employeesat different levels in the organisation.
14.6.1TYPES OF FINANCIAL INCENTIVES
Monetaryor financial incentives provide a reward to the workers for their efforts in
terms of monetary units. Moneyhas been recognisedas the chief source of satisfying
the needs of the people. Monetary benefits not only fulfill the physiologicalneeds but
also the need for social status and power. Moneyis regarded as a basic incentive for
individualsand a great motivation. Economicconditionnecessarily determines the
importance of monetary incentives.
The financial incentives generally used in organisations are listed below
(i) Pay and Allowances. For every employee,salary is the basic monetary incentive.
It includes basic pay, dearness allowance and other allowances.Salary system
consists of regular increments in the pay every year and enhancement of
allowances from time to time. In some business organisations, pay hike and
increments may be linked to performance.
 AND MANAGEMENT
14.14 BUSINESS ORGANISATION
Incentives. Several wage incentive plans aim at
Productivity linked Wageincrease
of wages to productivity at individual or group level,
linkingpayment
over and above the wages/salary to the
Bonus. Bonus is an incentive offered
employees.
and fringe benefits are offeredsuch
(it') Perquisites. In many companiesperquisites
aid, and education to the children, etc., over
as car allowance,housing,medical help to provide motivation to the employees/
and abovethe salary. These measures
managers.
to provide a share to employees in the
(t') Profit Sharing. Profit sharing is meantmotivate
profits of the organisation. This serves to the employees to improve their
performanceand contribute to increase in profits.
(vi) Copartnership/Stock Option. Under these incentive schemes, employees are
offeredcompanyshares at a set price which is lower than market price. Sometimes,
managementmay allot shares in line of various incentives payable in cash. The
allotmentof shares creates a feeling of owenership to the employees and makes
them to contributefor the growth of the organisation. In Infosys, the scheme of
stockoptionhas been implemented as a part of managerial compensation.
(vii)Retirement Benefits. Several retirement benefits such as provident fund,
pension,and gratuity providefinancial security to employees after their retirement.
This acts as an incentivewhen they are in service in the organisation.
Financial Vs Non-Financial Incentives
• Financialor monetaryincentives are meant to satisfy those needs which money
can
buy. The needs for food, clothing, and shelter can be fully satisfied by
the needs for security, social affiliation and status can be partially
money, but
But non-pecuniaryincentives are meant for the satisfaction satisfied by money.
can'tbe satisfiedby money.The examples are higher of those needs which
ego, sense of responsibility,career advancement, level needs such as status,
autonomy, self-actualisation, etc.
• Financial incentivesare tangible, i.e., visible
effecton the organisationand the members. and measurable. They have a direct
and they have an indirect influence on the But non-financial incentives are intangible
organisation and the members.
e Financial incentivesare generally
used to motivate workers and
employees. But non-financial incentives other non-managerial
higher level personnel. They are also are used to motivate managerial and other
used to supplement and
support and pecuniary
14.6.2 Types of Non-Financial
Incentives
Such incentivescannot be
measured in terms of money.
satisfactionof socialand psychological They
satisfiedby moneyalone.They needs to the employees.are concerned with the
can be satisfied by These needs cannot be
non-monetary incentives which
(i) Status. Status refers may
to
related to job. By offeringrank, authority, responsibility,
motivateemployeeshaving higher status or rank in the recognition the prestige
(ii) Organisational organisation
esteem and self-actualisation managers can
Climate. It
These are the characteristics refers to relations between need active in them.
which describe an organisation.
These characteristics
 MOTIVA"ON
14,15
have direct influence over the behnviour of a mornber. A pogitive approach adopted
by manager creates betner orgnnigationalclimate, whereag nogative approach may
spoil the climate. Employees are always motivatod in the healthy organigational
climate.
Job Enrichment. Job enrichment means increasingthe contentgof a job leading
to upgradation of responsibility scope and challenge in its performance. Executiveg
preferjob enrichment because the job becomesmore challenging.It increases the
level of their motivation.
opportunity for Promotion or Career Advancement.Opportunityfor
promotionis another kind of incentive. If the employeesare provided opportunities
for their advancement and growth, they feel very much satisfied and becomemore
committedto organisation goals.
(v) Employee Recognition Programme. Most people have a need for due
recognitionof their performance. They feel that what they do should be recognised
by others concerned. Recognitionmeans acknowledgementwith a show of
appreciation.When such appreciation is given to the work performed by employees,
they feel motivated to perform work at higher level. Some examples of employee
recognition are .
(a) Congratulating the employeefor good performance.
(b) Displayingon the notice board or in the companynewsletter about the
achievement of employee.
(c) Givingaward or certificate for best performance.
(vi) Security of Service. Security of service is a great motivation for the employees.
If his job is secured, he can put maximum efforts to achieve the objectives of the
enterprise. He will be free from all mental tensions and he will take greater interest
in his work.
(vii) Employees' Participation. It means involvingemployeesin decidingof the issues
related to them. In may companies,these programmesare in practice in the form
of Joint Management Committees, work committees, canteen committees, etc.
(viii)Suggestion Scheme. Suggestionsystem is used by many organisations, some
even offer cash awards for useful suggestions.They, sometimes, publish the
worker's name with photographin the company'smagazine.This motivates the
employeesto be in search for somethingwhich may be of greater use to the
organisation.

Review Questions
Explain the concept, nature and significance of motivation in modern organisations.
"Motivation is the core management". Discuss. What can management do to motivate the
workers in an industrial organisation?
What is motivation? What does Maslow's hierarchy of needs tell us about people's needs?
What is meant by hierarchical nature of the needs? Is this hierarchy rigid? Discuss with
suitable examples.
Critically examine Abraham H. Maslow's "Need Hierarchy?' theory of motivation.
(Delhi, 2016)
 | 4.16 'ON AND MANAGEMENT

6. Explain Herzberg's Two Factor Theory and differentiate it from Maglow'gTheory

(Dolhi, 2020)
Discuss Herzberg's Two-Factor Theory of Motivation, On what grounds is it criticized?
8. Distinguish between Maslow9stheory of need hierarchy and Jlerzberg'g two-factor theory
of motivation (Delhi, 2017)
9. is motivation?Explain Ilerzberg's Two Factor Theory and differentiate it from
Maslow's Theory of Need Hierarchy. (Delhi, 2015 and
2018)
10. How do McGregor'sTheory X and Theory Y of human behaviour help motivationof
employees ? Doyou think an amalgamation of these theories may be more effectivein our
country ?
11. State the assumptions of McGregor's Theory X and Theory Y. Which one is applicable in
India ?
12. Distinguish between McGragor Theory X and Theory Y of Human Behaviour.
13. Explain McGregor's Theory X and Theory Y. How is Theory Y an improvement over the
traditional view that you can motivate employees by paying them more money?
14. Distinguish between
(a) Maslow's Theory of Need Hierarchy and Herzberg's Two Factor Theory.
(b) Intrinsic and extrinsic rewards.
15. "Financial incentives hold the key to work motivation in modern business organisations".
Comment.
16. "Non-financial incentives are as strong motivators as the financial ones". Critically examine
this statement in the light of need-priority model and two-factor theory of motivation.
17. Write short notes on the following :
(a) Motivation as the Core of Management
(b) Maslow's Theory of Motivation
(c)McGregor's Theory Y
18. Mr. Rahul, an accountant, is a loyal and reliable employee of Paragon Plastics Ltd. He
can always be counted on to get his work done accurately and on time. He is punctual,
works steadily and gets along well with other people. He has been in his current position
for the last seven years, but the fact that he has not been promoted recently is not ofgreat
concern to him. The pay is good,his boss is fair and not over demanding, his work area is
well-equipped, he likes the people the works with, and the company treats its employees
well. Nevertheless, he looks forward to 5 p.m. !
He is active outside the officeespecially with hobbies and recreational pursuits. He is a
member of the company hockey and basket ball teams, is a boy scout leader and dabbles
in oil-painting. During the income-tax season, he enjoys helping friends to complete their
personal tax returns.
Which of the n,eeds in Maslow's hierarchy seem to be most important to
Rahul ?

References
Chhabra, T.N., Organisational Behaviour (2019 ), Sun India Publications, New
Delhi.
Davis, Keith, Human Behaviour at work (1977),Tata McGrawHill, New Delhi.
Dubin, Robert, Human Relations in Administration (1970),Prentice-Hall of
India Pvt. Ltd., New Delhi•
Maslow, A.H., Motivation and Personality (1954),Harper and Bros., New York.
McFarland, Dalton E., Management Principles and Practices (1974), McMillan,
New York.
Vroom, Victor H., Work and Motivation (1964),John Wiley and Sons Inc., New York.
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