Modern approaches to staff motivation
The post-crisis Russian reality is forcing enterprises to develop new approaches to personnel motivation, based more on psychological rather than financial incentives to increase labor productivity. This is due to a general drop in sales, a reduction in the number of jobs, and frequent production downtime. In these conditions, in order to preserve the continuity of the work process and encourage the staff not only to fulfill their duties, but also to do it at a high level, the employer needs new tools. It is designed to transform the existing wage systems and not only retain staff, but also encourage them to actively and efficiently work in conditions of limited financial resources.
The crisis is not the only factor influencing the development of personnel management and motivational practices. Economic reality and the labor market are changing rapidly, new industries, professions, projects and technologies are emerging. The staff is required to be constantly ready for changes and perception of new, to acquire new skills. At the same time, qualified personnel are not tied to the workplace, they often change it or switch to new projects. These features must be taken into account in the formation of motivation and incentive policies; the retention and growth of qualified employees should be made priorities.
Approaches and concepts
Motivation as a direction of psychology is based on a certain psychological and scientific apparatus. The science of personnel management considers two groups of theories of motivation, substantive and procedural . Meaningful theories involve relying on human needs, ranking them in various ways. The supporters of this theory include A. Maslow with his concept of the pyramid of needs, D. McClelland and F. Herzberg, and some other American psychologists and researchers.
Procedural theories prefer to take into account not only the needs of the individual as the basis for the formation of a reward system. They suggest that a person's work and organizational behavior is largely based on his internal attitudes and expectations. These theories try to analyze the ways in which a person chooses a certain type of behavior, and influence the factors that determine his choice. Proponents of procedural theories of motivation believe that an employee of an enterprise, having evaluated tasks and the amount of remuneration for their implementation, proportions the challenge with his own intentions, motivations and expectations and chooses a certain type of behavior. He sets goals based on the tasks offered to him, but reducing and modifying them in accordance with his value orientations. Among the modifications of the procedural method are Vroom's theory of expectations and S. Adams's theory of justice.
Substantial theories are most often based on the hierarchy of needs developed by A. Maslow. It looks like this:
- basic are the needs necessary for survival - food, shelter and similar physiological needs;
- the next level is the need for security and confidence in the future;
- at the third level of the hierarchy, one can find social needs - dependence on the opinion of the collective, the desire to recognize one's merits, communication;
- at the fourth level there are hierarchical needs - for respect, for authority, for leadership;
- at the top of the hierarchy are the needs for self-realization.
Maslow's theory assumes that as basic needs are met, a person moves to the next level, which is characterized by an increase in labor productivity. The task of the organization's management, therefore, becomes to monitor the degree of satisfaction of needs and change according to their hierarchy of the scope of work and proposals for motivating personnel. The concept is idealistic in nature, since, first of all, a manager motivated to improve the professional level of employees is needed. Nevertheless, some working systems rely on it as a base, for example, the grading system.
Close to Maslow's pyramid is K. Alderfer's theory of SVR. This abbreviation combines three groups of needs: "C" - the needs of existence, including physiological and safety, "B" - the needs of relationships, which contain in their structure the need for support and approval of other people, "P" - the needs of growth, they refer to self-development moving up the career ladder. The difference between the concepts is that Maslow's pyramid assumes only movement along it from the bottom up and the gradual satisfaction of needs, and the theory of SVR offers the possibility of horizontal movement and parallel work with their various groups, according to this theory, financial incentives are replaced by non-financial ones, for example, training or expansion of the terms of reference ...
The theory developed by David McClelland is often used to develop a system of motivation for management personnel, which assumes that employees at this level have only three significant needs of the highest category: power, success and involvement. The management of personnel, guided by these values, and their motivation for behavior useful for the company, are carried out by expanding the range of job responsibilities, the staff of departments, certification, and the use of various ways of improving qualifications.
On the basis of meaningful theories, the practice has developed three main areas of staff motivation at enterprises and top management. It:
- participation in the management of the organization, often declarative, but creating a feeling of involvement in the process and benefit for the common cause, while the emphasis is on meeting social needs;
- receiving a share of profit from the activities of the organization, both in the form of wages and in the form of various remuneration;
- obtaining a certain share of participation in the capital of the organization, for example, preferred shares, which is the highest form of combining the first and second directions.
In most cases, personnel management achieves the greatest success with a combination of approaches, but there are situations when only one of them is possible. The first direction, social and managerial, becomes practically the only one in a situation when the level of profitability of an enterprise decreases, which is typical of crisis periods. In this case, HR departments of the organization develop methods of increasing the consciousness of personnel and their responsibility for the fate of the company.
The second direction of personnel motivation is the most common, but for its effectiveness it is often combined with elements borrowed from the first or second directions, and includes some elements of procedural theories. The most effective motivation for participation in profits becomes in the model of key performance indicators. In Russia, this system has become generally accepted, it is widely used to assess the performance of regional leaders and employees of state corporations, where it has shown its effectiveness in practice. The essence of this system is the establishment of certain measurable indicators in the activities of the organization, the achievement of which is the basis for the application of incentive measures, both financial and hierarchical. KPI (Key Performance Indication), or key performance indicators, are developed for the company as a whole, for its individual divisions and for a part of employees. As a rule, the motivation of an individual employee under this system depends on the achievement of key indicators by his unit.
The motivation system based on key performance indicators makes it possible to:
- monitor the achievement of the organization as a whole and its divisions of the set goals in various directions;
- to achieve maximum efficiency in the performance of the labor function by the employee and the unit;
- direct the organization's personnel to achieve the results set for the whole company;
- minimize the time spent on budgeting and calculating remuneration;
- to ensure responsibility for the effectiveness of work, not only personal, but also collective.
Key performance indicators are convenient because they can be standardized. Among such indicators:
- achievement of target sales volumes;
- achieving a given profit margin;
- performance of works / services with a given quality;
- decrease in the volume of receivables;
- the success of litigation;
- introduction of rationalization proposals.
Almost all of these indicators can be set in numerical format, and the reward is calculated as a certain percentage of the achieved values. This system meets all the required criteria of objectivity and fairness, which determined the frequency of its application.
To organize an effective motivation system through participation in the management of world practice, several mechanisms have been formed. One of them was the concept of participatory management, based on the partial involvement of an employee in the management of individual production processes. This increases his interest in the overall performance of the enterprise. It is assumed that if an employee can influence the process of organizing his own work process, this increases his interest and motivation. Enterprises adopting a participatory approach find several ways to involve an employee in production management:
- the employee independently determines the main parameters and conditions for completing the task;
- the employee is involved in the process of making managerial decisions by his manager;
- the employee participates in product quality control and gets the opportunity to independently assess the quality of his work;
- the employee gets the opportunity to put forward and implement implementation and innovative ideas.
The concept was created by American scientists in the 60s of the twentieth century, at a time when an understanding of the value of intellectual capital began to take shape in society. The concept does not negate the second approach, namely the employee's participation in the enterprise's profits by materially stimulating his activity. At the same time, the method of calculating material remuneration as one of the performance indicators uses precisely the employee's involvement in management, his activity, the amount of his creative contribution.
The third concept, participation in the capital of an enterprise, has found its embodiment at the global level, while in Russia it is still being implemented only at the level of top management. People's enterprises, created at the dawn of privatization, practically ceased to exist, since all shares passed into the ownership of entrepreneurs. At the same time, in some enterprises there is a motivation in the form of options or the opportunity to purchase a block of shares in the company when either certain performance indicators are achieved, or work at the enterprise for a certain period of time. The manager has the right to exercise the option by purchasing shares at a predetermined low price, or to refuse them, having received their market value as a reward. As practice shows, top managers who have become shareholders pay much more attention to the growth of the share price, the company's capitalization and its profitability. The mechanism is realizable only for large corporations whose shares are traded on an organized market, have their own value and are fairly liquid, and are easily sold on the open market. For private companies, the option motivation system becomes only the basis for conflicts.
The choice of a motivation system should be based on the understanding of the unit responsible for stimulating personnel, its basic principles, the violation of which reduces the effectiveness of any scientifically built system. Among these principles:
- objectivity. Any remuneration should be based on an objective assessment of the employee's contribution to the success of the enterprise as a whole. Violation of the principle of objectivity will serve as a serious demotivating factor for other employees;
- predictability and controllability. Any employee should understand what kind of reward he will receive as a result of his own efforts. There should be no subjective and unaccountable factors, there should be no unclear and voluntaristic decisions, the dependence of the assessment of personnel or a unit on the relationship with the services that carry out the assessment activities;
- adequacy. The remuneration should correspond to the real labor contribution of the employee, his qualifications and the effort expended. Disproportionately high or low levels of remuneration are excluded;
- timeliness. Remuneration should logically follow work effort, long breaks have a cooling effect on workers, while the long wait for remuneration, practiced by some companies from one to three years, will not always be a sufficient means to retain valuable staff;
- significance. The amount of remuneration must provide real value to the employee;
- fairness and transparency. All criteria for remuneration of employees must be clear to other employees, acceptable and fair from their point of view.
Only a combination of all these principles will make the modern system of motivation effective both in a large corporation and in a private, family company. The principles of remuneration should be set out in internal policies and made available to personnel.
Personnel motivation in the context of crisis management
The crisis does not make it possible to implement most of the incentive systems; many large enterprises, even in order to maintain their personnel potential, are forced to ask for state support, such as AvtoVAZ. Even when the level of costs is reduced, the use of financial approaches to incentivizing staff becomes almost impossible. The participatory method or method of involvement in management is becoming practically the only way to motivate personnel in a crisis period associated with a drop in sales.
As an example, we can cite the current state of the automotive industry, in which, due to a drop in sales, capacity is loaded by less than 40% and factories are working 2-3 days a week. At the same time, the automotive industry enterprises are often city-forming, except for them, thousands of workers have nowhere to find a job. In these conditions, it is necessary to involve workers in making meaningful management decisions. On the one hand, this allows them to transfer part of the responsibility for managing the plant to them, on the other, to raise awareness and emphasize the importance of the worker's opinion for the management. In these conditions, the collective agreement and sectoral agreements become the main mechanism for implementing participatory management.
At the same time, a significant task for the company's management is to retain key employees responsible for the main production processes. Often, management takes the position that in the modern labor market it will be easy to find a replacement for any employee. This is not the case, there are very few qualified personnel, especially among blue-collar workers. Changing the priorities in teaching young people has led to a real shortage of skilled workers, so the main task of the motivational policy in a crisis should be to preserve the qualified working core of the team. At the same time, the system of financial incentives should be built on the principle of preserving the motivational component: with a decrease in the fixed part of the salary, its bonus component, which depends on the personal efficiency of the employee, remains. The staff must clearly understand what share of the profit of the organization is occupied by his remuneration, this gives him an explanation why it does not exceed certain limits. Any change in the incentive system should be discussed with employees. Methods of non-material stimulation should be widely used, such as honor boards, pennants, awarding the title of the best in the profession, and the like. Despite associations with the Soviet past, such measures of personal and collective encouragement affect the level of labor enthusiasm and the atmosphere in the team.
Staff motivation in the information society
Staff turnover in the face of many options for applying their forces, rapid change of projects or qualifications can be prevented only by directing increased attention to assessing the personal and business qualities of an employee, stimulating his professional growth in a particular company and marking each stage of growth with incentives. Understanding of his constant progress forces the specialist not only to appreciate the work, but also to try to grow as fast as possible, while growth is associated with income and other types of preferences that the company receives from his activities. Some large Russian holdings are trying to build their motivational policy on the system of real assessment of the business qualities of personnel.
Automated profiling is a unique method for assessing the personality of employees based on the analysis of their correspondence in social networks and e-mail.
Based on this theoretical principle, a motivation system was also created in the USA in the 50s by Edward Hay and was called the "Hay Chart Profile Method". The approach is also based on the Aristotelian concept of the cost of labor, it involves an assessment of the cost of work for each position, while offering a certain system of grades or ranks.
Based on this theory, the cost of the position is estimated according to the following criteria:
- body of knowledge and competence;
- initiative, ability to solve non-standard tasks;
- the level of responsibility for the activity and its consequences.
In practice, in Russian companies, the grading system turns into an absolute analogue of the Russian wage scale, the cost of a position or an employee does not change from any of his actions, while it does not provide an opportunity to motivate an employee for his actual performance. Haye's system must be accompanied by certification, which is almost never carried out due to the complexity of developing criteria: not only objective, but also those that would not create a sense of injustice in other employees. Based on this principle, a system of KPIs based on measurable data is more objective.
Among Russian enterprises, the grading system was introduced at some subsidiaries of the Rusal holding (aluminum production and some other assets). Since the group included enterprises that were heterogeneous in terms of their staff and corporate culture, the grading system was supposed to help establish uniform rules of motivation for all companies in the group. Separate grades were developed for workers and administrative specialties, and their own grading system appeared for managers. An interesting solution was that the grades of working specialties were assessed according to the following characteristics:
- professional skills, experience and work experience;
- independence in the performance of their functions, the need to use horizontal and vertical ties;
- the level of intellectual activity, in this case expressed in the assessment of qualifications;
- the level of danger of working conditions in the position.
Despite the seeming complexity of the criteria, the system practically did not differ from the Soviet categories, but its implementation helped the administration to reduce the level of additional payments to those workers who performed work below their qualifications. More fortunate were specialists and middle managers, when evaluating their positions, the level of their initiative and the number of rationalization proposals were taken into account. For top managers, the quality of management has become the main criterion.
The ability to adjust the salary bracket for each grade by 20% made it possible to give this system a relative level of efficiency, while creating a significant factor of bias and the dependence of the employee's motivation on the current situation, and not on his personal contribution.
Development of incentive systems
Regardless of the current economic situation of the enterprise, the motivation system should be designed for a long period of time and further changes in conditions in any direction. Changes in the motivation system, as well as changes in the rules of the game, prevent the staff from focusing on the development of the enterprise and setting tasks for themselves related to the prospects for personal growth. Thus, the motivation system should be developed for the future and relying on the existing staff, with no intention to replace part of the staff in the future.
The first stage in the implementation of a modern motivation system is its development and design. The system should rely not so much on one of the theories as on the real economic situation of the enterprise and its personnel, prospects and threats. The motivation system should be developed together with the labor collective, if there is a trade union at the enterprise, then together with its representatives. The resulting wage and incentive policies should be able to become part of the collective agreement.
The second step will be planning and budgeting. All motivational payments must have their own budget source, which coincides in the region, division, industry with the direction of costs, or a cross-financing mechanism must be provided. If a budget change requires approval by the Board of Directors, an appropriate justification must be prepared at the planning stage. Despite the possibilities of the budget, it is necessary to take into account that the motivation system must be adequate to the existing proposals on the labor market of the region.
The introduction of the motivation system is carried out either throughout the enterprise at one time, or in single, experienced units, where you can check the effectiveness of new mechanisms. The implementation of the system is associated with the introduction of changes into existing methods and employment contracts, bringing it to the attention of each of the employees. Any system of motivation does not work, remaining a static phenomenon, it is necessary to assume changes in its individual parameters along with changes in the labor market, therefore, the mechanism for approving fundamental documents and making changes to them should be flexible.
Performance monitoring is a necessary element of the system. When creating a motivation system, mechanisms must be incorporated into it to determine its effectiveness, the actual impact on the change in key performance indicators of the enterprise. Performance assessment should be carried out by a department other than management and human resources, preferably by the enterprise's internal audit function.
Modern approaches to motivation involve constant monitoring of the current state of the labor market and staff growth. Each person becomes an independent value, in the growth of which the company is interested. The use of systems of key performance indicators, grades in combination with a participatory approach increases the company's competitiveness in the market as a whole.