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Motivation and Incentives at Work

Public Management Newsletter, Session 11, April 2014

Weekly Summary
by Paulyn May Duman
We spend, on average, eight hours per day at work as this
is the usual working hours (40 hours per week) in the
world. As we use the other eight hours (optimally) for
sleeping, this means that at least half of our waking hours
are spent working. When we consider this, we realize how
important it is to choose carefully where we want to work.
So what do we look for an employer? What makes a good

What is a good employer?

The Civil Service Department in the UK enumerates
characteristics that make a good employer. A good
employer ensures that it offers satisfactory rewards such
as pay, pensions and security, provides a worthwhile job
and the means to do so that in the short-term, the
individual can give of his or her best and in the long-term,

can have opportunities for advancement, provides a good

working environment, shows consideration towards staff
and respects their aspirations and needs, and provides
security and a sense of common purpose (Horton, 2009:
Civil Service Commission, 1975).
Traditionally, the government was considered a good
employer in the UK. Central government offered fair
wages and equal pay for women. It was the first to provide
occupational pension and gradually reduce working hours
(Horton, 2009). Government work was not only
considered stable and secure, it was also a noble job. It
also offered something that cannot be translated to money:
prestige and
status. In fact,
it gained so
that several
give to the
who cannot
be given a
these titles,
such as the
Secretkeeper, and other creative names were used to
compensate for the lack of budget for a higher salary.
However, these titles are not just mere names as the
employees use it to register for special events and such

Good Employer | Motivation and Incentives at Work | Page 1

Public Management Newsletter, Session 11, April 2014

Public Management Newsletter, Session 11, April 2014

titles got them discounts, better treatment, or simply

tickets with their titles printed on it (Lecture, 2014).
Changes in the world of work
As the government staff grew larger, the bureaucracy that
provides public services were condemned as being
overstaffed, inefficient, supplier-led and unresponsive to
public needs and demands. Public sector trade unions and
professional associations were seen as over-powerful and
were able to influence raises in wages that put pressure on
the public expenditure and drained resources away from
the private sector (Horton, 2009).
There were also changes that were driven by the
competitive environment such as end of the career for
life and an increase in job mobility and new career
patterns. There also emerged perceptions of job insecurity
as crisis after crisis took waves across the globe. Flexible
modes of employment, feminization of the labor market,
globalization and internationalization of goods, services,
finance, information, and workers were also witnessed.
With the rise of technology, the dynamics of work
changed and the ways things are done were significantly
transformed by computers, the internet, electronic devices,
and softwares adapted to different types of work. The
employers required new skills profile, more educated
labor force, and rising expectations from the labor market
(Horton, 2009). E-commerce, e-government, and egovernance became buzzwords in implementing policies.
With these changes came also changes in how employers
manage their employees.
The private sector also increasingly emerged as a viable
employer as global competition and new attitudes
penetrated the consciousness of employees. With the
reduction of the big government through reduction of
size and state expenditure, privatization of many public
utilities and entry of new players in the private sector,
there was a global competition for the best employees.
However, things that traditionally incentivized people
changed. This became a new challenge for personnel
management. How do we get, retain, and motivate people
at work?

managers had very few personnel responsibilities (Horton,

2009). In the civil service, the recruitment of staff was
done through centrally organized bodies run by the Civil
Service Commission and conditions of work were
standardize to ensure uniform treatment throughout the
countries and to avoid competition (Horton, 2009). This is
the traditional personnel management where recruitment
was centralized using prescribed examinations, tests, and
interviews. The contracts were standard across the
country, national pay structures had incremental scale of
automatic increases of salary each year and pay and
conditions were determined by collective bargaining and
join regulation (Horton, 2009).
However, with the changes in the world of work, there was
also a shift to how employees are managed and was called
human resource management (HRM). Although it is
loosely used as a synonym for personnel management,
HRM denotes some distinctive approaches such as putting
people as the most important resource of the organization
and the key to its success. They are the assets, and as such,
huge investments were put in human capital. Human
resources strategy must be integrated with business
strategy to ensure achievement of goals and values of the
organization which leads to success.
HRM is a very business-oriented approach to managing
people that permeated the private sector. Eventually, it
gained ground in the public sector as the need to get and
retain highly qualified people became important in the
achievement of efficiency, effectiveness, and public value
in the delivery
service. In the
posed to be a
great challenge:
motivate people in the public sector?

Evolution to human resource management (HRM)

What motivates people to perform?
Before the 1970s, there were no professional managers
dealing with the personnel. The administrators had very
limited discretion in the application of policies and the line

The unit of analysis in assessing motivation is the

individual person. Is it the case that the more motivated
people go to the private sector or that motivations of
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Public Management Newsletter, Session 11, April 2014

individuals are fundamentally different and they go to

where this type of motivation will be fulfilled?
Frey and Osterloh (2010) asserted in their book Successful
Management by Motivation: [e]mployees may work hard
for one of two reasons: because they are interested in the
work itself (intrinsic motivation) or because they are being
paid (extrinsic motivation). These two forms of motivation
are interlinked and, as such, companies cannot opt for one
of the other in isolation. But one important rule must be
considered about balancing these two types of motivation
the effect of crowding out. This means that intrinsic and
extrinsic motivation cancels each other out instead of
building on each other. According to Frey, this is when a
reward will undermine intrinsic motivation such as when
a child who performs well in his subjects is given money
for every good grade and without the money, he loses
interest in the subject which was the reason why he got
good grades in the first place. But it is not only extrinsic
motivation that crowds out intrinsic motivation. Extrinsic
motivation has the function of keeping the intrinsic
motivation in place.
This is better
explained in
hygiene and
those that keep people away from dissatisfaction.
However, they do not per se increase motivation but only
keeps people away from being demotivated. Examples are
salary, status, security, company policy and
administration, working conditions, relations with peers,
and relations with supervisor. Motivators are intrinsic
incentives which are the real source of motivation and
stimulation for employees such as achievement,
recognition, the work itself, responsibility, growth,
advancement, and fulfillment of higher-order needs
(Rainey, 2009).
Another important consideration in motivating employees
is the need for equity. This is exemplified in jobs where
several people of similar competence are doing relatively
the same tasks and one person is getting more bonuses and
recognition than others. This comparison of balance

maintained by others to ones own make people feel

illustrating Adams, 2009).
Motivating employees in the public and private sector
When an employee survey was made in Vienna asking
what characteristics of work they regard as important,
interesting activity and activity which allows
autonomy garnered more than 90% of the time as
important while job which allows to help others and job
which is beneficial to society were at the bottom of
importance. If we compare this to the results of 18
European countries, interesting work, doing something
that is useful to society and autonomy to make decisions
ranked in the top three results while status, flexible
working hours and high income came at the bottom
three. This shows that intrinsic motivation is the more
important factor in making people engage in their work
(Slides 8 and 9).

One group is not more difficult to

motivate but just differently
If we only look at the public sector motivation, public
managers motivation to work in the public sector are
public service and work that is helpful to others which
is not as strong as motivator in the private sector (the
difference is statistically significant) (Belle and Cantarelli,
2012). This underlines the difference in the motivation
driving the employees in both sectors. One group is not
more difficult to motivate but just differently motivated.
This is a challenge for public sector human resource
personnel because introduction of rewards might cause the
crowding out effect but they are necessary to remove
dissatisfaction and demotivation at work.
However, it is important to consider that motivation
depends on culture, economy, and traditions such as
illustrated by a survey whereby American students
demanded jobs with high self-actualization, altruism, and
affluence while the Chinese students demanded jobs with
high salary, good benefits, and opportunities for
promotion (Belle and Cantarelli, 2012). Motivating people
is always a balancing act based on context and individual

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