key topic

Motivation in the workplace

A motivated workforce is a valuable asset to any business; today’s businesses are striving for new ways to inspire their staff through the use of numerous incentives, ranging from office perks and social events to traditionally important opportunities for promotion.

  • Skill utilization at work: Opportunity and motivation

    Challenging jobs and work incentives induce workers to use their skills but make life difficult for managers

    Giovanni Russo, December 2017
    Organizational characteristics and management styles vary dramatically both across and within sectors, which leads to huge variation in job design and complexity. Complex jobs pose a challenge for management and workers; an incentive structure aimed at unlocking workers’ potential can effectively address this challenge. However, the heterogeneity of job complexity and the inherent difficulty in devising a correct set of incentives may result in misalignment between job demands and incentivized behaviors, and in complaints by employers about the lack of skilled workers.
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  • Internal hiring or external recruitment?

    The efficacy of internal or external hiring hinges on other policies that a firm uses simultaneously

    Jed DeVaro, February 2016
    Hiring is one of a firm’s most important decisions. When an employer fills a vacancy with one of its own workers (through promotion or lateral transfer), it forgoes the opportunity to fill the position with a new hire from outside the firm. Although both internal and external hiring methods are used, firms frequently have a bias favoring insiders. Internal and external hires differ in observable characteristics (such as skill levels), as do the employers making each type of hiring decision. Understanding those differences helps employers design and manage hiring policies that are appropriate for their organizations.
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  • Should firms allow workers to choose their own wage?

    Delegating the choice of wage setting to workers can lead to better outcomes for all involved parties

    Gary B. Charness, January 2016
    Economists typically predict that people are inherently selfish; however, experimental evidence suggests that this is often not the case. In particular, delegating a choice (such as a wage) to the performing party may imbue this party with a sense of responsibility, leading to improved outcomes for both the delegating entity and the performing party. This strategy can be risky, as some people will still choose to act in a selfish manner, causing adverse consequences for productivity and earnings. An important issue to consider is therefore how to encourage a sense of responsibility in the performing party.
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  • Goal setting and worker motivation

    Individual work goals can increase a worker’s performance, but they need to be chosen wisely

    Sebastian J. Goerg, August 2015
    Employers want motivated and productive employees. Are there ways to increase employee motivation without relying solely on monetary incentives, such as pay-for-performance schemes? One tool that has shown promise in recent decades for improving worker performance is setting goals, whether they are assigned by management or self-chosen. Goals are powerful motivators for workers, with the potential for boosting productivity in an organization. However, if not chosen carefully or if used in unsuitable situations, goals can have undesired and harmful consequences. Goals are a powerful tool that needs to be applied with caution.
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  • Are workers motivated by the greater good?

    Workers care about employers’ social causes, but the public sector does not attract particularly motivated employees

    Mirco Tonin, March 2015
    Employees show more commitment to an employer that promotes the greater good, and they work harder too. Moreover, many people are willing to give up some of their compensation to contribute to a social cause. Being able to attract a motivated workforce would be particularly important for the public sector, but this goal remains elusive. Indeed, there is evidence for the public sector that paying people more or underlining the career opportunities (as opposed to the social aspects) associated with public sector jobs is instrumental in attracting a more productive workforce, without having a negative impact on intrinsic motivation.
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  • Fairness and motivation

    Fair treatment creates incentives, and is beneficial for workers and the firm

    Armin Falk, September 2014
    How do firms motivate their employees to be productive? The conventional wisdom is that workers respond to monetary incentives—“Pay them more and they will work harder.” However, a large and growing body of empirical evidence from laboratory and field experiments, surveys, and observational data, as well as neuroeconomic research, suggests that workers’ perceptions of fairness and trust are also key drivers of their work effort. Treating employees with respect is not only ethically warranted, it can create positive economic outcomes for both the worker and the firm.
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