Mr.Khay

How to Design Your Motivation System Fair, Transparent and Equitable?

Many organizations have spent a lot of money for staff engagement through designing motivation strategies to effectively improve staff performance results. In fact, staff performance is driven by staff motivation and being engaged in their work. Job satisfaction is a primary indicator for staff motivation and it is measured by subjectivity rather than objectivity. By observing and probing, leaders can subjectively conclude their staff’s satisfaction. Since staff satisfaction is the lead indicator for staff engagement and motivation, it is argued to be the first address method to measure staff’s job satisfaction. So far, there is lots of research on how to measure staff’s job satisfaction and how to improve it for high performance. Motivation and job satisfaction are mutually influenced and motivation arouses job satisfaction. Moreover, job satisfaction is the reflection of effective motivation deployed. If staff are motivated, they are engaged and their satisfaction is high. If they are less engaged, they will respond with low satisfaction, where motivation strategy is less effective. What Motivation strategy to increase staff engagement and high job satisfaction?

Motivation is a combination of extrinsic and intrinsic attributes which financial incentive is the main driver of extrinsic motivation and autonomy is the key arousing intrinsic motivation. There are many other types of extrinsic motivation being used in the organization, namely policy compliance, structure, system, process and so forth. Career growth, L&D of staff, promotion, praise, appreciation are all types of intrinsic motivation being applied in the organization. While financial incentives seem to shine, staff engagement is argued to go beyond the extrinsic to improve intrinsic aspects for a long-term strategy. Monetary motivation has been proven true to drive performance since the Maslow’s Hierarchy of Need theory together with the rise of industrial revolution, where scientific management proved the effects of financial incentives to fulfil the basic needs. In the contemporary socio-economy where the monetary system is valued and applied, financial incentive is still the main driver for staff motivation. However, the dark side of extrinsic motivation is the demotivation when ineffectively applied in the organization. Financial incentives, namely salary, bonus, fringe benefits, scholarship, cash-based commission, allowances and so forth must be objectively designed, structured and applied for transparency, fairness and equity in the organization. Many findings by Deci & Ryan (1985, 1993, 2005) confirmed the negative effect of extrinsic motivation, the so-called external regulation, on performance discontinuity. The financial incentive takes effect on the short-term or temporary basis which performance will be discontinued after the incentives are withdrawn or absent. Therefore, it is risky for the extrinsic motivation system to be subjectively applied which incurs unfairness, misconception and lack of transparency and credibility of performance based incentive. 

How to structure the incentive / motivation system for fairness, equity and transparency? My argument is that the incentive strategy must be defined at the policy level. HR policy or a separate compensation and benefit policy is argued to be an effective instrument for staff motivation. However, the most challenging part of structuring the incentive system is performance-based increment and salary scale development, needlessly the career ladder program. All of the compensation and benefits are weighted on the company's financial performance. Staff’s motivation, the extrinsic one, must be proceeded with caution where the evidence-based performance is strongly encouraged to benchmark against the effectiveness of the incentive system being deployed. While ensuring the fair, transparent and equitable benefits to engage staff in high performance, company or HR department must communicate the HR policy( compensation and benefit section, career ladder program, learning and growth opportunity and scholarship program) with the relevant managers and their teams to explicitly understand the goals and expectation from motivation system deployed in the company. From my experiences, the HR department plans their HR policy orientation for only twice a year. They rely on the induction program to initially guide the new incumbents with relevant policies. However, the performance-based incentives and other related compensation and benefits are normally absent at the initial induction program. This approach will create a gap where staff must understand the goal or objective of the company's motivation system and the performance expectation to link their productivities with financial performance for the motivation system to sustain. Moreover, there is a lack of explicit link between staff’s performance and motivation system to compensate their productivity with incentives. Therefore, the motivation system needs to be structured in the policy and how to deploy the motivation strategy is needed in the policy guideline for implementing the HR policy.