Successful Management by Motivation: Balancing Intrinsic and Extrinsic Incentives

Front Cover
Bruno S. Frey, Margit Osterloh
Springer Science & Business Media, Oct 2, 2001 - Business & Economics - 306 pages
Motivated people are crucial to create a sustainable competitive advantage for your company. Successful Management by Motivation shows that in a knowledge-based society, this goal cannot be achieved by extrinsic motivation alone. Pay for performance often even hurts because it crowds out intrinsic motivation like work morale. To succeed, companies have to find ways of fostering and sustaining intrinsic motivation. With the help of in-depth case studies, representative surveys, and analyses based on a large number of firms and employees, this joint work of business researchers and economists identifies the various aspects of motivation in companies and shows how the right combination of intrinsic and extrinsic motivation can be achieved.
 

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Contents

1 What Motivates People to Perform?
7
2 Extrinsic and Intrinsic Motivation
8
21 The CrowdingOut Effect
9
3 The Importance of Intrinsic Motivation
19
33 Fuzzy Tasking
20
35 Creativity and Innovation
21
5 The Art of Creating the Right Motivation
23
Motivation and Knowledge as Strategic Resources
27
1 Distributive and Procedural Justice
175
11 Distributive Justice
176
12 Procedural Justice
177
2 Fairness Attitudes and Behavior
180
21 Fairness Alters Employee Attitudes
181
22 Fairness Alters Employee Behavior
182
3 Concluding Remarks
187
4 Further Reading
188

From a MarketBased to a ResourceBased View
31
2 What Characterizes Corporate Resources That Are Relevant to Sustainable Competitive Advantage?
36
22 Why Are the Resources of Some Companies Superior to Those of Their Competitors?
41
3 Knowledge and Motivation as Sources of Sustainable Resources Crucial to Competitive Advantage
42
31 Explicit and Tacit Knowledge
44
32 Disseminating Tacit Knowledge
45
4 Summary
49
5 Further Reading
50
Motivation and Compensation
53
How Does Pay Influence Motivation?
55
1 Contrasting Views
59
2 When Do Wages Crowd Out Motivation and Reduce Performance?
68
3 Different Types of People
73
32 Intrinsically Motivated Employees
75
4 PerformanceRelated Pay Increases Performance
76
5 PerformanceRelated Pay Reduces Performance
79
6 Motivation Beyond Wages
81
7 Outlook
86
8 Further Reading
87
Stock Options for Top Managers The Possibilities and Limitations of a Motivational Tool
89
1 Extrinsic Incentives and Management Motivation
93
2 The Structure and Level of Managers Salaries
94
3 The Relationship Between Management Compensation and a Companys Success
97
4 Managers Interest in Stock Options
99
The Influence of the Management Environment
100
52 The Influence of Shareholder Concentration
102
53 Competitive Pressure in the Main Product Market
104
The SP 500 Top Managers
106
62 Statistical Analysis
112
63 Interpretation of the Results
114
7 Summary
116
8 Further Reading
117
Pay for Performance Motivation and Selection Effects
119
1 Introduction
123
2 PerformanceRelated Pay The Perfect Solution?
125
23 Incentives and Suggestion Systems
126
24 Consequences for the Company
129
31 The Data
131
4 More Effective Compensation Systems
134
5 The Effectiveness of Performance Incentives
136
6 Further Reading
137
7 Statistical Appendix
138
Motivation and Work Organization
141
Motivation and Organizational Forms
143
Taylorism
147
Likerts Group Organization
150
3 Can a Balance Be Achieved Between Extrinsic and Intrinsic Motivation Through the Profit Center Organization?
156
32 The Conflict Between Motivation and Coordination Via Transfer Prices
159
33 The Conflict Between Motivation and Knowledge Transfer
163
4 Concluding Remarks
168
5 Further Reading
170
Fairness as a Motivator
171
Management of the Unwritten How You Can Improve Employment Relationships Through Participation and Communication
191
Why Are Employment Contracts Incomplete?
195
12 The Importance of Implicit Employment Contracts
196
Participation and Communication as Motivators
197
22 Communication
199
Worker Representation and Participation Survey
201
31 Can the Quality of Implicit Employment Contracts Be Measured?
202
32 Operationalizing Participation and Communication
203
4 Conclusion
209
5 Further Reading
210
6 Appendix
211
62 Detailed Presentation of the Results
213
Case Studies
217
Managing Motivation in the Banking Industry The ING Barings Case Study
219
From Gold Digger to Grave Digger
223
Bankers and Brokers
224
12 What Banks Do
225
2 ING Barings
227
3 ING Barings Motivation Management Tools
230
The Compensation Structure
232
The SMART Objectives
234
Professional Development and Training
236
The Internal Communication System
237
Discussion Groups and Internal Suggestion Systems
238
The Synergy Award
240
The Spotlight Award
246
4 Motivation Management and the Battle for Talent
247
5 Further Reading
250
Managing Motivation in Software Development A Case Study at SAP AG
251
1 Motivation and Software Development
255
2 The Nature of Employee Motivation at SAP
257
22 Motivation Factors
259
23 Categorization of Motivation Factors
260
3 Improvements in Software Development at SAP AG
261
32 General Characteristics of the Improvement Projects Studied
263
33 Factors Contributing to the Success of Improvement Projects
265
4 Relationship Between Motivation Factors and Factors Contributing to the Success of Improvement Projects
268
5 Conclusion
271
6 Further Reading
272
Conclusion
275
Managing Motivation to Achieve a Sustainable Competitive Advantage
277
1 The Problems of PerformanceBased Compensation
279
12 Team Problem
280
14 Manipulation Problem
281
2 Basic Principles of Management by Motivation
282
23 Workflow
283
3 Managing Motivation to Achieve a Sustainable Competitive Advantage
284
Authors
285
References
289
Index
297
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