Introduction
This is a synopsis of a talk aimed at addressing the development and use of reward strategies for knowledge workers. It is supported by 21 slides (not attached). The talk outlines research-based findings on the motivation of knowledge workers and suggests that current reward strategies fail to excite the intrinsic motivational drives of this category of staff; furthermore, it suggests that in certain circumstances current reward strategies are counter-productive. It then goes on to offer a motivation and performance model which links reward strategies, organisational climates and individual competencies and to suggest actions which organisations can take to realise the promise of this model.
Knowledge workers – who are they?
Knowledge workers are those who apply their theoretical and practical understanding of an area of knowledge to produce outcomes that have commercial, social or personal value. They are likely to be drawn from a wide variety of professionally qualified and scientifically trained staff. Among them would be: doctors, scientists, computer specialists, personnel professionals, qualified accountants, managers, project managers and supervisors of knowledge workers who themselves have been promoted from being technologists to managers.
Characteristics of knowledge workers
Certain characteristics of knowledge workers differentiate them from other process dominant worker. Whilst some of these are to do with their education and training others are to do with the standards and expectations of their profession. Their work can also be distinguished in different ways, namely their work is:
Motivators for knowledge workers
Based on research carried out by the author, the work of other researchers and from personal experience of managing IT professionals over many years, the rewards and expectations of these knowledge workers can be summarised as a mixture of the following.
Financial rewards played a very small part in this as most of those who supported the research study were in well paid jobs and were seeking self-actualisation rewards.
The strength of preference shown for these different motivators and the findings of other researchers in this field over the last 50 years suggests that the law of diminishing returns applies very definitely to financial incentives. However, when it comes to intrinsic incentives such as personal growth, creative achievement and autonomy the law of escalating returns seems to apply. This is most pronounced in the area of creative achievement where the more they get the more they wish to get. The expectancy theory of motivation (Vroom, Porter and Lawler among others) suggests that reward strategies should be designed to optimise these inherent and intrinsic motivational drivers whilst allowing for Herzberg’s theory of dissatisfiers and satisfiers.
Theoretical fit
Motivational researchers and theorists who have studied the motivation of knowledge workers agree that the Expectancy Theory of motivation is the most appropriate for this category of employee. The application of expectancy theory in reward strategies does suggest a very close and intricate link between rewards, the likelihood of earning those rewards and the realisation of those rewards if performance is delivered. Based on my research and developing on others, it is possible to hypothesise a motivation and performance model. The model suggests that the creative energy of people needs to be applied to task achievement through the application of their personal capability and the organisation’s strengths usually made up of resources, peer support, management support and finances.
Adverse effects of current reward strategies
This conflicts with current reward strategies in organisations that seem to support and reinforce hierarchies rather than lateral co-operation. In addition, they tend to reward the job rather than the individual. Usually, career progression and bonus payments (for those whose results are NOT measurable using hard data) depend on patronage rather than merit and there is a tendency to reward those who sustain the status quo rather than those who are innovative and entrepreneurial. Finally, most reward strategies have unfairness built into them. For example, it is easier to reward sales staff on their personal performance than scientists in research laboratories. The sense of unfairness creeps in if staff who help sales people design and develop the ‘winning’ solution do not share in the bonus that accompanies a successful sale. Managers often sympathise with the scientists but do nothing to change the system on the grounds that it is ‘too difficult’, and has historical precedence. The more hard-nosed managers usually suggest that those scientist who want bonuses should join the salesforce or stop bellyaching about their lot. This approach just does not make sense in a world hungry for innovation and the rewards that it brings.
Reward options
Staff and managers should realise that rewards are multi-faceted and usually come in bundles that combine money, achievement, personal and professional growth and self-esteem. This means that the reward options open to management is very varied as the examples in the table below show.
Financial rewards |
Non-financial rewards |
|---|---|
Salary + bonus based on gain sharing |
Personal growth |
Salary + profit sharing |
Knowledge or professional growth |
Employee ownership |
Status and public or private recognition |
High salary + benefits |
Career growth |
Salary and bonus on individual or team effort |
Job security |
What managers should do is create reward bundles (fruit bowls of choice) that more closely fit the needs of a group of employees rather than impose a blanket system on them all. For example, an individual or group could be offered a bundle which comprises salary + profit sharing, status, personal growth. Another group or individual could be offered a different bundle comprising salary + bonus on personal effort, career growth and professional growth. The reward bundles, drawn from a reward portfolio, are probably the fairest way to reward individual effort and contribution.
Performance measures
Inappropriate performance measures do more harm than good. In knowledge based organisations performance must be judged primarily by how the individual or group contributes to the knowledge added value of the organisation. This may take the form of specific creative outcomes, new knowledge generated or knowledge disseminated. Meeting targets and deadlines and solving critical problems, which contribute to customer added value, should also feature as measures.
Climate for optimising reward strategies proposed
Whatever scheme is used it is imperative that those subject to these schemes can earn the promised rewards if they fulfil their part of the bargain. This means first of all that they can achieve the task they have been set. Among the necessary ingredients for this are:
However, where these conditions do not prevail and where there is strong hierarchical governance reward strategies are wasted because the individual’s skills and talents are not being tapped.
What should organisations do?
(Author’s note: This article together with the motivation model in the article in Long Range Planning have been included in the Text book Management and Organisational Behaviour by Laurie Mullins. Financial Times Pitman Publishing 1999. Comments on this paper should be addressed to Mtampoe)