Money Is Not The Only Motivator Management Essay

Money Is Not The Only Motivator Management Essay We are presenting our term project which was chosen from one of the topics provided by the course instructor. We are pleased to present our report on topic Money is not the Only motivator This research gave us an excellent chance to understand the concept of motivation and its applications in practical world. We chose Pakistan State Oil as our organization for our research. We would also like to thank all our respondents, who were kind enough to answer our questionnaires and gave their valuable time in guiding and informing us about their perception on our topic. We acknowledge all of your help and support for this research. We sincerely thank our instructor Ms Unzela Hasni for her support and trust in our capabilities. Yours Sincerely, Syed Ahmed Asad (12131) Bilal Jawaid (12093) Riaz Ramzan Ali ((10712) Abdul Moiz Mughal (11540) Maryam Abbasi (11869) Acknowledgement We begin by expressing our gratitude to our Lord, the Almighty Allah without Whose Guidance and Will, all is impossible. We are also highly thankful to our teacher and instructor, Mr Unzela Hansni, whose teaching has given us great knowledge and a peek into the professional world of Human Resource Management and its various aspects. This report has sharpened our ability to interpret the concepts and methods with greater sensibility. Executive Summary Pakistan State Oil is the leading oil company in Pakistans energy sector with largest retail outlets to serve all industries and consumers of Pakistan. PSO takes pleasure to continue tradition of excellence and it is fully committed to meet energy needs of future. PSO is one of local organization that holds an award for attracting employees because of their strategic human resource practices.PSO takes it human resource management as the most important department of their company because they treat their employees as their most significant asset.PSO along its effective compensation plan (monetary) holds many other techniques and methods of modern era to keep employees engaged and make sure that they are striving for the attainment of companys goal. In this report we surveyed PSO to collect valuable information on different motivational aspects and methods used by management to make sure employees feel interested at work and have a sense of belonging to the organization. We learned var ious techniques such as performance management, motivational surveys, employee awards, recreational facilities , training and development and others. Hypothesis H0: PSO is successful in motivating its employees H1: PSO is not successful in motivating its employees In our research we assumed that PSO is one of the most successful domestic organizations to keep a motivated workforce in Pakistan, so to test our hypothesis we went to the organization and interviewed 2 top managers and got questionnaires filled from 12 employees linked to senior , middle and lower level management positions. Our hypothesis is to prove whether a motivated group of employees help individuals and business to achieve job satisfaction, productive employees, more profit, self development and an effective work environment (culture). Methodology We used research based methodology to work on this report. Our research was conducted in several steps that include: Planning which topic to choose Choosing the Organisation Collecting secondary information from different sources such as Human Resource Books Internet Articles from Harvard Business Review Next we designed a questionnaire Site visit (PSO) Get our questionnaires filled Interviewed two managers Assembled primary and secondary data 1st draft report to check plagiarism Final report INTRODUCTION PSO: Overview Just like any other competitive business, PSO is a challenging petroleum products marketer, supporting foresight, quick judgment and hard work and acumen. At PSO, we have been making new grounds since our situation in the market. By introducing a competitive product portfolio, aligning our corporate social responsibility, putting up up storage depots at far-flung areas, presenting relative marketing techniques, energizing industrial institutions, supporting the countrys defense forces, ensuring customers satisfaction and provision of new business challenges, PSO has been setting the benchmark for other oil marketing companies during the 25 years of its excellent existence. Under the strategy, State Oil Company Limited a private company owned by the Federal government in which undertaking were vested on 15th September 1976 took over the entire undertakings of Pakistans Oil limited companies and National Oil limited companies as disclosed in their respective financial statements declared on June 30th. The company then later converted in to Public limited company. In consideration for the transfer, the reconciliation program provided all shareholders of the two former companies, PNOL and POCL, be issued fully paid-up ordinary shares of PSO against their holdings in PNOL and POCL along with fully paid-up premium shares. This was done at the rate of 1,185 PSO shares for every 1,000 shares of PNOL and 1,136 PSO shares for every 1,000 shares of POCL. The inception period of any company is always comparatively difficult but for an organization emerging out of the merger of three separate units, the problems can be more complex. PSO, during its first year of operation, was no amazing. However, most of the problems were properly solved and taken care by the company. PSO sold a total of 2,514,000 tons of petroleum products till June 30th 1977. This made a turnover of Rs 404.53 crores. Such meager return was partially due to the unrealistic gross margins, which were available to the oil marketing companies in all main products and were fixed by the government as far back as 1963. At the end of the first year, the extent of the PSO operations was that it had four ocean terminals, 34 inland depots, four blending plants and 950 retail outlets. Of the retail outlets, 715 were gasoline and HSD stations, 126 service stations, 44 LDO farm stations and 65 kerosene stations. In its first year of operations, the upcountry storage capacity of the company was augmented by 33,000 tons. The storage capacity was established at Gilgit, Chitral and Skardu, enabling the residents of the Northern Areas to obtain their requirements of petroleum products throughout the year and at reasonable prices. By the second year of operations i.e. 1977, the company had successfully overcome the initial problems of the merger, establishing itself as a homogeneous commercial force capable of playing its rightful role in the economic progress of the country. It sold 1,826,000 metric tons of petroleum products during the year as against 1,746,000 tons in the first year. This indicated an increase of 4.56 per cent. Since then, PSOs success story has continued with the company making a strong impact on the countrys overall development over the years with excellent prospects for further growth. A cursory look at PSO at a Glance in the annual report reveals remarkable financial strength accumulated since inception. Statistics, though somewhat restricted, nevertheless, give a picture of all-round improvement despite temporary setbacks. The companys shareholders have reposed unwavering confidence in the astute financial policies followed by the company that have not only given extremely attractive cash dividends year-after-year but also a consistent increase in the shareholders equity from Rs 116.2 million in 1977 to Rs 9,808 million in 2001. Where do we stand today? PSOs sales revenue during FY-2001 rose to Rs. 170 billion, showing a growth of 25.7% over the previous year. The company earned an all-time record gross profit of Rs. 6.4 billion, which was up by 12.4% over the preceding year. The profit after tax was Rs. 2.25 billion. This was marginally higher than the previous years profit of Rs. 2.23 billion. If PSO had not made these provisions, the company would have reflected an additional profit of the same amount, which would have resulted in significantly higher profit than the preceding year. Not only that, the company has emerged as one of the countrys few largest taxpayers in the corporate sector. PSOs business operations have helped collect over the years Rs 338 billion in duties and taxes on behalf of the government. Integral to our success are our efforts to provide our customers an unmatched service based on innovation, deep care and our vision for the future. Accordingly, we have launched an aggressive plan to build New Vision outlets in order to provide better quality service to its customers. Some 330 New Vision retail outlets have been established all over the country in a short period of two and a half years, which is a record. At the same time, to set high standards of customer service, the number of Company-owned and Company-operated (CoCo) sites has increased to 20. Yet another ambitious program that PSO has launched will see the promotion of Internet, especially in inaccessible areas of Pakistan. A total of 500 retail outlets are to be provided with Internet facility, which is now available at 150 outlets. The philosophy of HR in PSO 1. Consider human asset as the only asset which gets appreciated by passage of time. 2. Always the right person at the right place for the right job. 3. Continuously re-align organization in line with contemporary business practices. 4. Make Organization responsive by making it lean and flexible. 5. All HR issues to be handled with transparency and keenness. Work environment in PSO Employee Recognition To boost the morale of employees a reward and recognition scheme is in place for the last few years and has been a great source of creating a spirit of healthy competition amongst employees. Each year employees are nominated for two company-wide ceremonies viz Shaukat Raza Mirza Management Excellence Award and PSO Managing Directors Performance Award Motivation Survey Special efforts for continuously enriching our business systems and implementing relative strategies have always been fruitful which are aimed at augmenting a work culture that enhances employee motivation as well as gaining a better understanding of forces that shapes motivation, attitude, behavior patterns and expectations. Employee Motivation surveys are conducted that recognize the needs, opinions, concerns and perceptions of our human capital about the organization and what they value in terms of professional and personal interests and incentives. Keeping a human element is mind these surveys help identify a meaningful employee relationship with the organizational objectives and understand their job responsibilities and work expectations. Communication: Open-book direct approach environment An assortment of forums/meetings at hand (Executive Committee, Management Committee, Employee Leadership Team) inspire discipline and accelerate establishment of processes systems. Encourage team work group dynamics while inculcating a sense of ownership through empowered Cross Functional Teams (CFTs) Employ Business Process Reengineering (BPR) to maintain an international working environment by streamlining processes and removing unnecessary layers Interactive sessions are regularly held by the Managing Director at all levels because clear, coherent and consistent messages ensure that employees are able to integrate the inputs into their thinking All organizational changes are announced Tolerance We have high ethical standards and a Business Principles and Ethics Policy in place. We value, encourage and inculcate corporate reforms, good governance, best business practices and an environment of continued adherence to Zero Tolerance, resulting in the development of our human capital and meeting all business challenges. Facilities and Recreational activities PSO encourages recreational activities of workforce at all levels. Formation and functioning of PSO Club provides assistance to employees for their mental and physical health as well as for their social activities. Sports and recreational activities are organized through this forum, where employees and their families are encouraged to participate. It is our top priority to ensure the employees are in good shape and health. To physically show that we care, we have in-house food service with subsidized meals in a cafeteria that can cater all the employees stationed at PSO House. Employees can enjoy gymnasium facility right in PSOs corporate vicinity, a convenience of walking from your workstation to a private gym for a revitalizing workout. Performance Management System of effective performance and feed back is worked out at PSO and is a significant figure of our appraisal management Individual performance is sorted with the business goals and objectives of the company Performance-based rewards are offered on early basis All management employees annual appraisal through a population spread Human Resource Awards In September 2007 Engage Human Resources (consultancy, solutions and services) in partnership with the Pakistan Society of Human Resources Management (PSHRM) conducted a preference study interviewing 550 graduating MBA students from 8 universities, chosen from the latest Higher Education Commission ranking survey. December 18, 2007, Karachi (PSHRM) and Engage Human Resources, announced the results of the first Most Preferred Graduate Employer 2007 study at the ceremony held for PSHRM Graduate Employer Awards 2007. As we create an aspiring internal credibility along with leading HR practices delivering that promise, we standout for graduating MBA students as the most preferred place to work. Pakistan State Oil won the Most Preferred Local Company Award as the highest ranked Pakistani company with their perceived attractive compensation package as the main reason for their ability to attract talent. Literature Review Motivation Motivation is the process that is a mixture of individuals intensity, direction persistence of effort toward attaining a goal. We would like to describe each element separately. Intensity- states how hard a person tries , or how much effort he will apply in his job Direction- A person should know the areas where he has to put more or less effort. Persistence-states how long a person could maintain his effort Effort that is directed toward and consistent with organizational goals is the kind of effort that we must be seeking. Managers are the nervous system of any organization, so they play the main role to make sure of motivational practices that are necessary for an organization. Major steps which managers should take to motivate employees are: Recognize individual differences Use goals and take feedback on these goals Link reward to performance Check the reward system Make sure that employees are present in decision making which directly affect them There are two basic ways to motivate employees. These are monetary and non-monetary approaches that are used by management. Moreover before using rewards to motivate employees we have to take some strategic decisions. These are what should be the pay structure? How to pay employees? Whether there should be flexible benefits or not? How the company should build its recognition programs? First major decision is what to pay, that is to establish a pay structure. It is a rather complex decision and entails balancing internal and external equity. However the best pay system pays the job what it is worth while also paying competitively relative to the labor market. Second decision is how to pay, whether there should be variable programs or skill based programs. Variable Pay Programs A portion of an employees pay is based on some individual and/or organization measure of performance Piece Rate: Workers are paid a fixed sum for each unit of production completed Merit-Based: Based on performance appraisal ratings. This merit based pay is motivating for employees because if they are designed properly, individuals can see their performance and reward they are getting. Bonuses: Reward recent performance rather than historical. SKILLED BASED PAY: It is also known as knowledge based pay, it sets pay based on jobs or skills an employee can perform. Profit Sharing plan: These are organization wide programs that distribute compensation based on some established formula designed around a companys profitability. These can be cash outlays or stock options. Gain sharing: It is a formula based group incentive plan. Rewards are tied to production gains not to profits. Employee Stock Ownership Plans: In this program employee acquire stocks mainly below market price as part of their benefits, it increases employee satisfaction but its impact on performance is still not clear. Third decision is what benefits to offer, another component is known as flexible benefits. Flexible Benefits: It allows each employee to put together a benefits package individually tailored to his needs and situation. Three most popular benefits plans are: Modular plans- a predesigned package of benefits put together to meet needs of specific group of employees Core-plus plans- consists a core of benefits and a menu like selection of other benefits. Flexible spending plans- allow employees to set aside up to the dollar amount offered in the plan to pay for particular services. Employee Recognition: Fourth is to build a comprehensive employee recognition program. It ranges from a THANKYOU to widely publicize formal programs in which specific types of behavior are encouraged and procedures for attaining recognition are clearly identified. Two of the most popular methods are giving gifts certificates and cash rewards. It also includes giving personal attention to employees. But all factors described above holds some pros and cons. Benefits of it are Fulfill employees desire for recognition Inexpensive to implement Encourage repetition of desired behaviors Non Monetary Approaches to Motivation: There are some non monetary approaches to motivate employees. To proceed further we need to understand job design first i.e. way the elements in a job are organized. First way to redesign a job to motivate an employee is job rotation that is periodic shifting of employee from one job to another. When an activity becomes unchallenging employee is shifted to another job usually at the same level of skills requirements. Another way is job enlargement in which variety and number of tasks of an employee are increased; it is a horizontal expansion in an employees job design. Similarly, we expand vertically to which is known as job enrichment. It increases the degree to which worker controls planning, execution and evaluation at the work. Furthermore there are some alternative work arrangements. These are: Flexitime: Employees work during a common core time work each day but can arrange their total hours a day by themselves from the set of hours outside the core. Job sharing It is a practice in which a 40 hour a week job is split between two to three employees. It allows management to draw on talents of more than one individual in a given job and is mostly suitable for female workers. Telecommuting It refers to employees who do their work at home atleast 2 days a week on a computer that is linked to their office. Three types of jobs suits this method Routine information handling task Mobile activities Knowledge related jobs Employee Involvement: It is a process that supports participative management by using employees input to increase their commitment to the organizations success. By increasing worker autonomy and control over work lives (involvement), organizations: Increase employee motivation Gain greater organizational commitment Experience greater worker productivity Observe higher levels of job satisfaction Three major forms of employee motivation are: Participative Management Subordinates share a significant degree of decision-making power with their immediate superiors Representative Participation Works Councils: Groups of nominated or elected employees who must be consulted for any personnel decisions Board Representative: An employee sits on a companys board of directors and represents the interests of the firms employees. Quality Circle A work group of employees, who meet regularly to discuss their quality problems, investigate causes, recommend solutions, and take corrective actions. Articles on Motivation from HARVARD BUSINESS REVIEW: To make our research more interesting we decided to summarize some very interesting article from Harvard Business Review which we were told to read regularly by our instructor. References to these articles are given at the end. Article 1: Say, Tom, Let Me Whitewash a Little: The Power of Intrinsic Motivation: Article Link: http://blogs.hbr.org/erickson/2007/07/say_tom_let_me_whitewash_a_lit.html Summary or the Article: This article develops clear sense of what intrinsic motivation is. Intrinsic motivation is the willingness to engage in an activity without some external rewards (i.e. French benefits) or in other words we can say that it is the motivation that comes from inside of an individual rather than from any external reward. It is the pleasure one gets from the task itself or from the sense of satisfaction in completing or even working on the task. The computer games are the best example as its suckled on the principle of intrinsic motivation. The growing skill level and the increasing degree of difficulties led to effective online learning with the motivation for players to move towards the next level. Similarly within this type of cultural norms, smaller steps are far better than the big infrequent increment. If workplace adopt same culture than the workers will work harder to compete with colleague and move towards the next level in order to attain the desired goal. Nowadays the workforce are adopting this culture i.e. using games (whether addictive or not) in which there is a use of intrinsic principles to encourage self-motivated work activities that can led to enormous effective production. This is a successful strategy because people want to move to next level as fast as they can and in workforce competition among workers motivate them to work hard and to move towards the next level in order to attain goal after which they get self satisfaction and pleasure which is known as Intrinsic Motivation. Article 2: Four Motivation Mistakes Most Leaders Make: Article Link: http://blogs.hbr.org/cs/2011/10/four_motivation_mistakes_most.html Summary This articles talks about the motivational mistakes the leaders make while leading their employees. The first mistakes they make are by always thinking rational and create frustrating unintended consequences. The leaders should rather focus on five sources of meaning for humans at work: the impact of the work on society, the customer, the company, the team, and me. Another blunder that is made by the leaders is focusing on offering monetary incentives only. Experience and numerous studies, however, show that big bonuses are less effective than smaller, unexpected gestures, because gifts create a relationship while bonuses are purely transactional also leaders are habitual of giving orders rather listening to the employees perspective. Lastly the leaders need to be optimistic and dont search for problems. Focusing on problems tends to create fatigue and resistance,  instead focus on how your organizations or individuals, strengths can be used to overcome your challenges. Questionnaire For how long have you been a part of this organization? Less than 5 years 5-10 years 10-15 years More than 15 years What is your level of satisfaction with the working culture of the company? Highly Satisfied Satisfied Moderate Dissatisfied Highly Dissatisfied Rate the following statement Executives are interested in motivating the employees? Strongly Agree Agree Neutral Disagree Strongly Disagree What is your satisfaction level with the incentives provided by the company? Highly Satisfied Satisfied Moderate Dissatisfied Highly Dissatisfied Please rate the statements given underneath according to the following ratings. 1 for Strongly Agree 2 for Agree 3 for Neutral 4 for Disagree 5 for strongly disagree Reasonable periodical increase in salary Job Security Good Relationship with other staff members Effective performance appraisal system Effective promotional opportunities Performance appraisal activities are helpful to get motivated Support from the other staff members is helpful to get motivated Organization recognizes and acknowledges your work. Organizational Policies motivates for achieving its aims and objective Do you think that incentives and other benefits will influence your performance? Yes No Opinion No Does the Top Management involve you in decision making which are connected to your department? Always Usually Often Sometimes Rarely Never Do you think Internal Competition plays an important role in employee motivation? Strongly Agree Agree Neutral Disagree Strongly Disagree Does ethical principles of the organization influence employee motivation? Strongly Agree Agree Neutral Disagree Strongly Disagree Do you agree that employees are placed on their jobs according to their field of interest? Strongly Agree Agree Neutral Disagree Strongly Disagree Does your job provide you the opportunity to continually advance to more senior positions. Strongly Agree Agree Neutral Disagree Strongly Disagree How does pressure motivate you? Handling Competing Priorities Facing Tight Deadlines Managing Setbacks Being in a team motivates you? Strongly Agree Agree Neutral Disagree Strongly Disagree Results For how long have you been a part of this organization? Less than 5 years 5-10 years 10-15 years More than 15 years Out of 12 people we interviewed 4 were working for less than five years , 6 were working for more than five years and 2 employees were PSOs part for about 12 years. What is your level of satisfaction with the working culture of the company? Highly Satisfied Satisfied Moderate Dissatisfied Highly Dissatisfied A very positive reply was noticed as 59% of the sample was satisfied with the corporate culture of PSO as it has a policy of orienting employees according to their need , which then leads employees to understand the culture more easily. Secondly, open door policy and corporation of colleagues is encouraged in PSO which allows high satisfaction levels. PSO is recognized as an EMPLOYER OF CHOICE for which it received an award in 2007. 25% of the sample was satisfied moderately while remaining 16% were employees who were working for more than 10 years and showed their extra satisfaction because of the growth, status and respect which they received in their career at PSO. Rate the following statement Executives are interested in motivating the employees? Strongly Agree Agree Neutral Disagree Strongly Disagree Open door policy, performance management, career development, training sessions, authority and being a part of departmental decision making are some factors that aroused 67% of the sample to rank this statement with the second option, however some employees who are still new to the organization rated it as neutral that executives are not biased towards other employees but they are also not directly involved in decision making. Top management provides guidance on particular issues, they encourage Cross functional teams, Employee Business Process Reengineering, meeting with employees, different informational and interactive sessions and make sure that all organizational changes are well announced. When the response of these 33% employees was shown to a top executive Rashad Usama brand manager lubricants, he provided us with the answers that it is our policy of first assessing fresh employees and let them show their potential then with their respective supervisors a complete training and development plan is made for them. What is your satisfaction level with the incentives provided by the company? Highly Satisfied Satisfied Moderate Dissatisfied Highly Dissatisfied 16 % employees were highly satisfied with their benefits that include medical insurance , petrol , children education , pension fund, paid holidays, vacations and etc , 67 % employees were just satisfied as they think even in difficult times PSO assumed them as their assets and rest showed moderate responses. Moreover employee recognition awards, ethical standards, tolerance policies and facilities such as gym, cafeteria and PSO club plays a great role in keeping employees proactive. Please rate the statements given underneath according to the following ratings. 1 for Strongly Agree 2 for Agree 3 for Neutral 4 for Disagree 5 for strongly disagree Reasonable periodical increase in salary Job Security Good Relationship with other staff members Effective performance appraisal system Effective promotional opportunities Performance appraisal activities are helpful to get motivated Support from the other staff members is helpful to get motivated Organization recognizes and acknowledges your work. Organizational Policies motivates for achieving its aims and objectives 84 % employees strongly agreed with 2nd, 3rd and 7th