Motivation: Why is it important? Theory and Types

What’s it: Motivation is the drive-in us to act or behave in a certain way. The urge can come from persuasion or interest. Personal gain can also be a driver. Other driving factors are wants, needs, goals, preferences, perceptions, attitudes, recognition, and sense of accomplishment.

When we are motivated, it doesn’t just affect our actions or behavior. But, it also pushes us toward or away from certain activities, objects, or conditions.

Why is motivation important in business?

Motivation is important because companies depend on individuals to operate and succeed. So let’s look at it from two views: consumer motivation and employee motivation.

Consumer motivation

Understanding consumer behavior requires your company to understand its motivations when buying your product. And broadly speaking, the driving factors for them to buy are price and quality.

For example, let’s say your target customers are price-motivated. So then, your company offers low prices and discounts to encourage them to buy your product. You do that because, you know, they are price-conscious consumers.

When your competitors offer high prices, your target customers are dissatisfied. They don’t like having to spend more money to get the product. Finally, the too-high price encourages them to shift their shopping target to your product.

In other cases, some consumers may be quality conscious. They see price as not the main reason they buy. For example, if your competitors offer high prices with better quality than your products. They will buy it even if they pay more. On the other hand, your product doesn’t sell well if you target them.

Employee motivation

You also need to develop employee motivation to encourage them to be loyal and more productive. It can be financial motives or non-financial motives. For example, you offer competitive salaries and bonuses to encourage them to increase productivity. Or, you give them autonomy, encourage teamwork and develop job enrichment and empowerment programs to motivate them.

Such motivating factors can make your employees do their best for your company. And, finally, you can direct them to achieve your goals.

Motivation is a supporting factor for high performance and productivity. It encourages your employees to have a positive attitude towards work. They are also committed to your company. They believe your company values ​​them, making them proud to work for the company.

Motivated employees are important for the following reasons:

• Helping your companies achieve goals as efficiently as possible.
• Allowing maximum effort to use their full abilities
• More productive to do work and achieve company targets
• Minimizing intentional and unexplained employee absenteeism and tardiness
• Doing work with quality
• Encouraging to create a positive work environment
• Loyal to your company, reducing turnover
• Reducing employee complaints and ultimately reducing the potential for industrial disputes

What are the theories about motivation?

What motivates someone to do something? Experts propose several theories about it. Among others are:

• Taylor’s motivation theory
• Maslow’s hierarchy of needs
• McClelland’s theory of needs
• Herzberg’s motivation-hygiene theory
• McGregor’s Theory X and Theory Y
• Adam’s equity theory
• Pink’s motivation theory

Taylor’s motivation theory

Taylor states the only thing to motivate people is money. So, to increase output, you can offer wages or salaries according to the output produced.

Taylor’s theory is based on the division of labor, where you break down various aspects of work or tasks within the company. Then, you assign different employees to each specific job section. Finally, according to this theory, you pay them on a piece-rate basis, where you pay them based on the output level you have set for each job.

If your employees are not producing enough output, as you targeted, they are worried they will face lower salaries. But, on the other hand, if they surpass the target, they expect to get a bonus. So, to increase their productivity, you have to align output and efficiency targets with payment.

Maslow’s hierarchy of needs

Maslow’s theory proposes a hierarchy of needs to explain motivation. It has levels, from the most basic to the top.

Maslow divided needs into the following categories:

• Self-actualization has to do with morality, creativity, and spontaneity, as well as the need for your employees to introduce new ideas.
• Esteem needs are related to self-confidence, achievement, self-esteem, and respect from others. For example, your employees are happy if their good performance is recognized and appreciated by management.
• Love and belonging are related to intimacy and kinship. For example, your employees need a positive work environment where coworkers support and synergize.
• Safety needs, such as work security and safe working conditions.
• Psychological needs include receiving a high salary to meet food and housing expenses.

The latter is the most basic need because it relates to survival. To reach the top of the pyramid, the first point, you must make sure the four needs below must be met. And, in practice, it’s difficult.

McClelland’s theory of needs

McClelland proposed three factors to explain an employee’s motivation to work. They are:

Need for achievement: achieving high performance at work and promotions. They are motivated if they do tasks with a moderate level of difficulty and are realistic to do. They master the task and do it well. Thus, it increases the chances for achievement and ultimately promotion.

Need for power: wanting to have influence and power over others. Those motivated by this need usually prefer to work and uphold discipline because they seek status recognition, win over competition, and influence others.

Need for affiliation: the desire to feel close to each other. Your employees are social creatures, so strive to build better relationships and social environments.

Herzberg’s motivation-hygiene theory

Herzberg’s theory divides individual driving factors into two: hygiene factors and motivators.

Hygiene factors represent factors to eliminate your employee’s dissatisfaction, and they must exist. Examples are salary, company policies, working conditions, and fair treatment in the workplace. On the one hand, developing and improving these factors will eliminate dissatisfaction among your employees, although it does not always motivate them. On the other hand, if it is not fulfilled, your employees are not satisfied, decreasing productivity.

Motivators represent important factors to provide job satisfaction to your employees. Examples are promotion opportunities, recognition, and responsibility. They are important to motivate your employees. For example, you launch an empowerment and job enrichment program to encourage satisfaction among your employees. You expect the program to lead to higher productivity.

McGregor’s Theory X and Theory Y

Douglas McGregor explains his theory based on two aspects of human nature. He then introduced theory X and theory Y.

Theory X deals with ordinary workers. They have little ambition and are goal-oriented. They tend to avoid responsibility and are lazy. The reason they work is to maintain income. Supervision and reward and punishment mechanisms are ways to encourage them to perform better.

Theory Y deals with internally motivated employees. They are usually hard-working, creative, and enjoy their work. They love to improve themselves, even if without an immediate reward. They are a valuable asset to your company. Giving them autonomy and letting them perform tasks without direct supervision is one way to motivate them.

Adam’s equity theory

Adam’s equity theory underscores the importance of appropriate rewards to motivate employees. Your employees put their effort, time, skills, and experience into your company. In exchange, they want your company to pay you what they deserve. You can pay them through salaries, bonuses, and other non-financial rewards.

Then, any inequality can demotivate your employees. They would naturally compare what they received with their peers. If they are under-compensated, they lose motivation, reducing their effort or output.

Pink’s motivation theory

Pink’s theory suggests stimulating employees’ intrinsic drive to create their satisfaction at work without external threats or rewards. This theory underscores three important aspects to motivate employees: autonomy, mastery, and purpose.

Autonomy – the independence to actualize skills and abilities. Your employees love it when you give them flexibility about when to do work and how to do it.

Mastery – experts in their work and roles. They need learning opportunities to train and develop themselves. So, they can become more proficient. In addition, they want the right assignment, not too easy or too difficult.

Purpose – an understanding of why they do a job and what the benefits are. Your employees are more motivated if they can see the benefits of their work. So, they need you to explain the purpose for each job to be done. You also need to explain how they can contribute to your company.

What are the types of motivation?

Various factors motivate a person. They can come from themselves or from external factors. And therefore, we can distinguish motivation into two based on its source:

• Extrinsic motivation comes from external factors. Examples are salary, benefits, punishment, or promotion opportunities.
• Intrinsic motivation comes from within your employees. For example, they are motivated to do work because it aligns with their values​​, skills, and hobbies.

In other cases, we can classify based on the value dimensions of the driving factors, whether they are financial or non-financial.

• Financial motivation involves money and things related to money. They can be salaries, wages, commissions, pay-related benefits, employee shareholding schemes, and fringe benefits.
• Non-financial motivation does not involve money but is related to the work itself. They include job rotation, job enrichment, teamwork, autonomy, and empowerment.

Financial motivation examples

Wages – irregular payments to workers. It may be a time-based wage, where you pay according to the number of hours they work. Or, it might be piece-rate pay, which you calculate based on their production output.

Salary – a regular lump sum payment to your employees, usually paid monthly. Unlike wages, it doesn’t depend on how many hours they work or how much output they produce.

Commission – a certain percentage of each sale your employees make. That’s normal for salespeople. They make more money when they sell more products and vice versa, less money when they sell fewer products.

Employee stock ownership plan (ESOP) – allowing your employees to become shareholders. Your company offers them the opportunity to own your company stock and usually buy it at a discount. As a result, they are eager to improve your company’s performance because it will increase its stock price and, therefore, their wealth. Programs may also be assigned to management, called a management stock ownership plan (MSOP).

Performance-related payments – compensation based on performance achievement. For example, your employees get bonuses when their performance reaches or exceeds the target. In other cases, it may be based on team performance instead of the individual.

Profit-related payments – additional rewards based on your company’s performance achievements. For example, if your company’s profits exceed the target, you give bonuses to employees as appreciation. Bonus payments are in addition to the basic salary.

Fringe benefits – non-cash rewards to employees in addition to salary or wages. Examples include insurance, gym facilities, pension schemes, and educational assistance.

Non-financial motivation examples 

Job rotation – moving employees to different jobs and tasks from existing ones. It is aimed at reducing boredom in their current role. In addition, you encourage them to better understand the company’s operations and business as a whole

Job enrichment – giving employees greater responsibility and recognition. You expand their role by giving them more work to do of the same nature. You give them the opportunity to use their full abilities.

Teamwork – building a team and putting employees into it to complete a task or project. So, they can work collaboratively. This approach is important for reducing burnout and developing constructive interpersonal relationships.

Empowerment – involving employees more deeply than in the job at hand. For example, you give them more responsibility for a job they enjoy. Or, you can involve them in decision-making.

Autonomy – gives employees greater flexibility and responsibility for doing work. It may be related to when and how they complete the task.

What to read next

• Motivation: Why is it important? Theory and Types
• Why Are Well-Motivated Employees Important To Business?
• Intrinsic and Extrinsic Motivation: Examples and Differences
• Taylor’s Theory of Motivation: How it Works, Principles and Criticism
• Maslow’s Hierarchy of Needs: Importance, Order of Needs and Criticism
• McClelland’s Theory of Needs: Types and How to Satisfy
• Herzberg’s Theory of Motivation: Examples and Explanations
• McGregor’s Theory X and Theory Y: Categories, Characteristics, and Implications
• Adam’s Equity Theory: How It Works and A Brief Explanation
• Pink’s Theory of Motivation: Elements and A Brief Explanation