Griffiths University | Literature Review and Report | IBA111 Management Concepts | | | Geoffrey Lee (S2832807) |

05-Feb-12 |

Lecturer: Alistair Hodgson

According to Schermerhorn (2011, p. 364), Google Australia is one of the best places to work in Australia matching the performance of its US parent company. It uses a well-balanced strategy of extrinsic and intrinsic rewards and these have kept its employees highly motivated and continue to exert their best efforts for the company. Extrinsic rewards at Google Australia include unlimited sick leave, generous health insurance, flexible working hours, and reimbursement of up to $6000 per year for educational expenses. In addition, staff can also receive small bonus rewards on a day-to-day basis. Intrinsic rewards mostly depend on the individual, but such things as getting to work with creators of Google products such as Google Earth, Gmail, and Google News can bring a sense of satisfaction to the job. Google’s intention to create a sense of fun at work and to create a culture of information sharing and collaboration can be identified by its office environment such as an informal dress code, abundant leisure activities and free food at the staff cafeterias. With these small rewards, Google employees feel a sense of belonging to the company and feel that they are creating and contributing to something bigger than themselves. Gone are the days where companies rely solely on the loyalty and lifelong devotion of the employee.
This paper will argue that modern day companies need to redesign on how a balanced strategy of extrinsic and intrinsic rewards for each individual employee will better enhance employee motivation, as individuals have their own specific needs, and not be applied as a whole as their focuses may be different. A balance of extrinsic and intrinsic rewards must be applied in order to get the employee to contribute his/her best to the company, feel a sense of belonging to the company and job satisfaction.
Traditionally, if you promise employees additional income, productivity should theoretically increase. Is this true in today’s modern reality society? Motivation must first be external before it can be internal. Extrinsic rewards must be applied at first so employees are attracted to the position and company. Only then should intrinsic rewards be applied and employees will find self satisfaction. Today’s companies must move beyond the “one size fits all” approach, as individual employees have their own individual needs, and embrace the “I” approach (Schermerhorn 2011, pg 342). However, not all employees may prefer extra income. Depending on the employee, some might opt for job security, flexible working hours, personal problem support or loyalty to employees to name a few. It may be safe to argue that managers place a greater emphasis on good wages, job security, promotions and growth in the company. It seems that managers place a greater importance on career issues whereas average employees place a greater importance on personal issues such as full appreciation of work done, feeling of being in on things, sympathetic help on personal problems, then followed by, job security, good wages, interesting work and promotions and growth within the company (Kline 2001).
Employee’s perspective of intrinsic and extrinsic rewards can be classified into two categories: Lower Order needs and Higher Order needs. Lower Order needs are wages, job security, shelter and effective management of tasks. Higher Order needs of sense of belonging, esteem and self-actualisation are necessary for employees to be creative. If employees gain only extrinsic rewards (financial), they will only contribute enough effort to get the task done, lacking creativity, as they will tend to feel alienated from each other and the company, and will seek opportunities elsewhere if a better workplace environment or equal or better pay offers arise. Therefore, only large sums of money will keep motivating the employee and he/she may still seek other opportunities to satisfy his/her higher order needs. This may also place unwanted strain on the company’s resources. A fair base wage and a benefits package should suffice an employee’s Lower Order needs. If an employee is devoted to his/her work, assumes responsibility, undertakes authority and is generally involved in his/her surroundings, his/her Higher Order needs are on their way to fulfilment as the employee is committed to the task at hand. If the employee is fully committed, he/she will see that the task is an enjoyable one and will not feel burdened by it. (Kranzusch 1997, p. 3-5).

End of year bonuses can be a pitfall for any rewards system. If bonuses are distributed at the end of the year, employees may feel it is an entitlement, expect it regardless of the financial capability of the company to absorb the expense and most importantly, is not based on the performance of the employee. Generally, the management pays because it does not want the employees to be disappointed. At Google Australia, small incentives are handed out to employees on a day-to-day basis to employees as recognition of a particular achievement (Schermerhorn 2011, p. 366). In this way, employees are aware that they may not be entitled to a bonus if their targets have not been reached. If an employee receives a bonus after the job is completed, they feel proud and motivated as they know that their achievement has been recognised and will not go unnoticed.
Working environments can have a severe impact affecting motivation. Factors such as “hot desking”, where multiple workers are using a single physical work station or surface at different time periods, “too many meetings” and “poor meeting management”, can have a negative effect on employee motivation. Google Australia has totally revolutionised the structure of the meeting room. Getting rid of hard office chairs, meeting rooms are filled with beanbags instead. It has created an environment where everybody feels relaxed and feels a sense of fun at work. Hence everyone feels motivated; they find intrinsic rewards such as self satisfaction and feel refreshed to work on other projects. Of course, managers also have a significant impact on intrinsic rewards through general encouragement, feedback and appreciating each of his/her colleagues so they feel valued and motivated (Dent et al, 2009).
Google has organised the insight that top talent like to work around other top talents. It creates a healthy competitive workplace and employees are highly motivated and creative. Google has implemented the “20 percent time” policy, which is reserving one day per week to work on projects of your own choice. This policy has become a huge success with its employees and has seen the creations of new products such as Google News, Gmail, Google Earth, etc. Google’s founders have intentionally placed PhDs throughout the company and encourage them all to act as researchers. Where companies tend to shied away from PhDs with the view that doctorates can be viewed as the sign of a character defect, Google tends to embrace PhDs, listing PhDs a plus on its job advertisements, which places further emphasis that intelligent, creative people like to work with others with similar characteristics. Instead of feeling threatened, employees are on a competitive edge to create new products, regularly sharing ideas and knowledge to collaborate with each other striving to be successful (Stross 2004).
There are two main types of jobs: Algorithmic and Heuristic. Algorithmic jobs are jobs where employees follow a set of instructions to achieve a target or goal. An example is a hotel front desk clerk. A hotel front desk clerk’s main job description is to take bookings, check patrons into their hotel rooms and check them out at the end of their stay. Every day, there is a set of procedures that they must abide by. Algorithmic jobs are more of a “carrots and sticks” approach. The employee is burdened with deadlines and schedules, in the end for a monetary value (salary and bonuses). Hence it is more of an extrinsic reward than an intrinsic reward. However, you may have case where the employee may relish that kind of challenge in a rush to beat deadlines. Heuristic jobs are entirely the opposite of Algorithmic jobs. There are no specific sets of instructions and employees must think creatively and experiment with a host of possibilities to reach a target or goal. An example of a heuristic job could be marketing. Marketers must think creatively to sell products or services. They may create an ad campaign to boost sales or catch people’s attention. Their creativity may be boundless. Heuristic jobs are more intrinsic based. There is a link of autonomy, mastery and purpose that comes with the jobs. It may be an exchange of an intangible for a product or service. Intangibles like love, trust, gratitude and community are difficult to put a price on. Of course, it also must have a baseline reward as everyone has to make a living. A fair baseline reward of salary or wage coupled with perks and benefits are different for every job, career, position and location. By saying location, it defines the standard of living locally. It also must be in the near vicinity of what other companies are paying for a similar position (Curran 2010).

In conclusion, I believe that in today’s modern society, every company should have a balanced Extrinsic and intrinsic rewards system similar to that of Google Australia. Employees must be rewarded with a fair baseline wage or salary coupled with benefits and perks. Also not to be left out, is motivation towards intrinsic rewards. As individual employees each have individual needs, a “one size fits all” no longer needs to exist. Employees should not be overly rewarded, but awarded accordingly on their performance. Not only has Google Australia has a fair extrinsic rewards system; it also promotes intrinsic motivation through its design and management of the workplace environment. It has created a friendly atmosphere where colleagues share information and collaborate with each other. There are abundant leisure activities and employees are embracing the “20 percent time” policy. The well balanced rewards have the employees feel a sense of belonging to the company, and when valued, productivity and efficiency increases creating a harmonious workplace feel.

Reference List
Schermerhorn, John R 2011, Management Foundations and Applications, John Wiley and Sons Australia Ltd, Queensland.
Kline, S 2001, ‘Employee Motivation’, Gardner Publications Inc, vol.65, no. 5, pp. 6, viewed 25 January 2012, via Proquest Central.

Kranzusch, Michael James 1997, The Effect of Extrinsic and Intrinsic Reward Systems on Employee Motivation, ProQuest Dissertations and Theses, pp. 3-5, viewed 27 January 2012, via Proquest Central.

Dent, Fiona, Holton, Viki 2009, Employee Engagement and Motivation, Fenman Limited, pp. 37-40, viewed 28 January 2012, via Proquest Central.

Stross, Randall 2004, What’s Google’s Secret Weapon? An Army of PhDs, The New York Times published June 06, 2004, viewed 31 January 2012, via Montana Associated Technology Roundtables.

Curran, Ruby 2010, Employee Motivation – New Secrets, The Accidental-HR Manager, viewed 01 February 2012, The Accidental-HR Manager.