Financial rewards are the best way to increase productivity
Organizational behavior focuses on motivation of employees to increase productivity. Throughout years, one of the basic problems in the system of organizational behavior studies was the need to define motivation in objective terms and to apply this definition in practice.
It would be fair to say that the definition of motivation changes based on what is going on in organizational behavior theory and under the influence of the emerging motivation theories. From time to time, motivation methods transform to reflect the most recent organizational and cultural changes (Collins 144). Modern managers try to find the best way to motivate employees. In order to find this way it is essential to define the ultimate needs of employees. Humanistic psychology can help here.
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It is rooted in existential phenomenology (Buckingham, 2005). The main goal of humanistic psychology is to study individual’s perceptions and interpretations, developing under the influence of social and cultural contexts and previous experiences. Thus, an individual can have different perception under conditions of different social and cultural settings. The scientists of humanistic psychology apply qualitative research methods based on phenomenology. They claim that it is impossible to deal with emotional problems in accordance with certain templates.
The main attention is paid to the self. In the center of humanistic psychology is Maslow’s hierarchy of needs. This scientist claims that once basic human needs are satisfied, higher order (or intellectual) needs may be satisfied. This theory implies a process of self-actualization, which develops principles of self-actualization. Thus an individual should treat others the way they are; he should have ability to deal with doubt; involve creative thinking and deal with problems focusing on them and not on the self. All these characteristics and actions should be performed with regard to high moral and ethical norms.
Many articles have been written on pay-for performance programs for motivating employees. It is important here to consider the means of applying PFP in hospitality sector, and deciding which one will serve as the most effective means of rewarding. First of all, it is necessary to point out, that the PFP system has been designed for resolving the issues of salary-performance correspondence. These are the use of any means of payroll and rewards, when it depends on the differences in how the employee performs; according to the data acquired through the Annual Hewitt Associates Salary Increase report, (Mumford, 2002) the amount of finances and other means directed at PFP programs ha six times increased among different enterprises. However, it should also be remembered, that in firms dealing with production, the level of employee performance is easier to trace and to control, through the amount of the production he (she) produces, his role in this production and the quality of products.
In hospitality management the level of employee’s performance is difficult to trace through the fact, that this level is usually judged through the number of clients served and attracted, the level of customer satisfaction, which also requires special additional research. For the application of PFP programs in hospitality industry, there should be designed special means of evaluating the level of employee performance, and in creating the performance plan for the period, a list of objectives set will certainly be different from the one in any manufacturing industry (Miner, 2005). Financial rewards are essential for the achievement of the set objectives as only they can satsfy ultimate human needs. Lepsinger (2010) notes, that this is one of the most widely-spread means of pay-for performance rewarding. He notes that about 61% of companies using PFP plans prefer this method.
These payments are usually performed when the employee conforms to certain criteria, which are set beforehand. Among these criteria there may be those of economic character, quality character, personal evaluation by other employees, etc. Each company sets its own criteria for this, and at times they may be rather unusual. In hospitality management these criteria may vary greatly, and may also be unusual at times (Vasu et al, 2001). For example, it is possible to define one of the criteria for rewarding the senior management through the level of their employee satisfaction with their services.
On the other hand, as the level of customer satisfaction is the crucial criterion for any hospitality business, this satisfaction may be measured either through the independent audit, or through the applications, which each customer would fill on visiting a hospitality entity with notification of the employee’s name that provided the customer with this or that service. This means may serve as very effective method of rewarding the employees in hospitality sector (Jaussi et al 2003). However, in this relation another question arises – as the characters, demands and requirements of customers vary greatly, and the level of their personal attitude displayed in the application suggested, is not always the true reflection of the service provided – should this method be used in combination with the independent monitoring, and will the expenses for this monitoring pay off? ‘Last year in Portland, Oregon, president and CEO Jane Shaw discontinued a bonus program for the 150 employees at Portland Marriott City Center. What are the guarantees that employees won’t let each other down in their personal striving for better performance? What are the guarantees that instead of using personal growth for acquiring better rewards the employee won’t use illegal methods of creating negative impression about other workers? This is one of the so-called ‘slippery slopes’ of the PFP in hospitality industry.
Hospitality management may look at PFP as the basis for creating a special system of motivating workers, and not use it blindly without any changes. The requirements for the level of service in hospitality management constantly changes, and thus the PFP requirements must follow these changes. This is essential for the success of this program of rewards. The word ‘hospitality’ speaks for itself, and the client’s demands towards hospitality grow every day (George, 2003).It is not argued that performance is one of the most important functions in human resource management for hospitality business. It is also understood, that incorrect application of PFP plans may result in absolutely opposite indices than expected as for the employee performance.
There are different opinions as for the role of PFP in management, and thus it is necessary to consider most important of them and make necessary conclusions. a. Is PFP a means of seducing employees through financial rewards? A question is dubious and can’t be answered unilaterally. On the one hand, as all of us strive for better financial state and stability, financial rewards may prove themselves to be effective in hospitality business, making employees provide their customers with higher quality services, as well as giving those grounds for improving their performance and implement novelties into their business field. On the other hand, it may also become a means of manipulating.
It is difficult to prove anything in hospitality management, as the services provided are mostly immaterial, and thus provving their quality for receiving rewards may be difficult at times. Thus, hospitality service becomes an easy means for the senior managers to manipulate the lower staff. It may come out of the above-said, that applying PFP plans is absolutely inappropriate in the sphere of hospitality management with the aims of avoiding such manipulations; but it is also wrong as PFP is a very important HR function in hospitality management, and it should only be applied in combination with the other means of monitoring and control of customers, employees and management. This system of monitoring and control is complex, but it only needs to be created once, – later it will only be modified depending on the PFP requirements and objectives set. b.
PFP rewards don’t open the reasons of the employee’s misconduct. What is means here is that when the employee does not meet the objective set for him by the senior management, the reasons for this may not lie in the worse performance or lower quality of servicing. The reasons may be in pricing, for example. Thus, with the employee performance being one of the crucial HR factors in hospitality business, PFP should not be overestimated as the best means of improving employee performance. (Lepsinger, 2010).
One of the leading CEO sates, that ‘longevity should not be underestimated’. One of the popular means of rewarding the employees is using the PFP reward for the value of this or that employee, displayed through the number of years he has worked for the hospitality entity. However, another question here becomes evident – in the hospitality management, where novelty of services often becomes the decisive factor of popularity and profitability of the enterprise, is it really worth rewarding the worker for having spent a number of years in the hospitality enterprise without providing it with any novelties or breakthroughs in performance? For the hospitality industry, this means is not to be used separately, but in combination with other important factors – longevity alone does not work and thus it is to be used with, for example, improvements brought by the employee into the customer service provision, etc. On the other hand, there also exists a psychological factor – customer often choose ‘their favorites’ among the personnel, and thus the level of their satisfaction depends on the presence or absence of this or that employee. The rewards designed for the employees, who are very much desired to stay, may become the means of attracting and supporting repeated customs and thus gaining higher profits through the higher level of their satisfaction.
These are the two sides of one issue, and it is difficult to make the exact measurement and borderline between them. This is another proof for the assumption, that PFP plans are not to be used separately in hospitality management – they are to be applied in combination with other means of rewards; depending on the exact way the enterprise works. If longevity is stated to be the measure of performance, it is possible to state that in hospitality business it works only partially. Longevity is only one of the sides of performance, and must be looked at through the prism of employee incentives, achievements and inventions. Thus, the conclusion can be made that financial rewards are the best motivation for workers.
According, to Maslow’s hierarchy of needs, the person performs better when the basic human needs are satisfied. Rewards allow the best satisfaction of basic human needs so they present the best motivation. The example of PFP plan in hospitality industry shows the essentiality of good rewards system that motivates employees and enhances the efficiency of organizational performance.