The Effect of Motivated Employees on Profitability

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Hawthorne Effect > Best Practices > The Effect of Motivated Employees on Profitability

The Effect of Motivated Employees on Profitability
Fuad Ahmed Mahamud, Student (University), Somalia, Member
There are straightforward and direct relationships between employee motivation and the performance of an organization.
The chain of these relationships is the following
1. Motivated employees work well
2. The quality of their work becomes better
3. The customers are attracted to the products / services of the organization
4. Sales and revenue increase
5. The organization makes more profit and its goodwill increases
I welcome any reactions to this topic, thank you.

The Effects of Employee Motivation
Falah , economic expert, United Arab Emirates, Member
I see this subject from the strategic perspective. A motivated employee will increase the capability of the organization to achieve its mission, goals, objectives.
It will also engage all to build a strong organizational culture. Motivated employees will feel as having a strategic partnership with this organization, and their commitments and loyalty will increase from day to day.
Both of these factors will improve the performance and have a positive impact on the market share. This means an increase of profitability.

DESIRE is the Basis of Motivation and Performance
ANTONIO BARRANCO RUIZ, Manager, Spain, Premium Member
Every person needs a reason to work. Normally, this reason comes from inside, and it has to do with a personal plan, desire, even a fantasy or dream. This is the basis of motivation.
When people have´t any cause to work for, they feel empty and their brain feels dry, useless.
It will be enormously difficult to improve their performances without a motif. Many theories analyse the objectives, the focus, the development, the engine of the motivation. But the first origin lies, takes root or is situated in human´s desire.

A Little RESPECT Goes a Long Way and Returns Even More
Bob Kohn, Student (University), United States, Member
I have been in the business world for 30 years and have seen how businesses treat their employees. I am also graduating with my sustainability degree and here is the common thread that keeps coming up.
It is called Corporate Social Responsibility and in a nut shell it is how a business treats its employees, environment, and its profits and is often said to be the 3 P's, People, Profit, & Planet which are also called the Triple Bottom Line.
I have seen that when a company treats its employees with respect and does not treat them as a number, but rather a human being or even better as a part of the family, how much more production they get from them and less sick time they use, because they feel like a part of the business and not a number.

When Employees Breathe the Business...
Siddharth Prabhu, Manager, India, Member
I agree fully but with a small twist. For me motivation comes from an urge to do something either for yourself or for the product/concept/service which resounds potential.
All efforts put in a product / service actually reflects the people and passion behind those efforts, and customers feel this warmth. It reflects in your interaction with your customers. It reflects in every improvement you make on the offering.
Employees start to consider the product's success or failure as their triumph or fall and when that happens.... You know, you rarely fail.. You wouldn't allow failure to touch you...

Service Profit Chain and Human Needs
Rene Herlaar, Management Consultant, Belgium, Member
In 1994 the Harvard Service Profit Chain was developed. To me this is the archetype of business models. Based on research the direct link has been proven between employee satisfaction and revenue growth and profitability.
Very powerful.
One the main drivers of employee satisfaction is found in how the employer addresses basic human needs in its workplace and job design. This is very much dependent on the geographical culture the company operates in and the corporate culture the company wants to live. A genuine interest in people drives the success and makes employees score high in yearly employee surveys.
Both employers and employees have the responsibility to create this environment. It's not either or. Both have to be in the listening mode to genuinely address corporate and human needs to drive a even greater result. There is always a choice: whether as an employee or an employer. Take a look at Appreciative Inquiry, a successful method which may help.

Employees are Greatest Assets
abiola ajayi
Motivation is an integral part of Human Resource Management, therefore it should be taken seriously by the management of an organisation. Organisations should see their employees as their greatest assets and their backbone.
If they are well-motivated to perform well, in so doing profitability will increase.
Well-motivated employees tend to:
- Put in all their best in the work.
- They come out with improvement ideas for the organisation.
- Above all, a well-motivated employees will be happy doing the job, and will not leave the organisation for a less motivating firm.

Happy Employees and Productivity
Marcel Wiedenbrugge, Consultant, Netherlands, Member
Employee happiness and productivity most of all depend on the company culture. Happiness or satisfaction is not a guarantee for profitability, but just like customer loyalty, in the long run it may lead to sustained profitability, growth and continuity. A positive and stimulating working environment contains elements of:
- Shared values
- A major common goal, that applies to everyone and can be accepted / adopted by everyone
- Everyone is included (from the janitor to the CEO)
- Long term (customer) value is more important than short term profitability
- Transparency
- Consistency across the full supply chain
By the way, I don't know many (big) companies who fit in this profile :-).

Motivation and Productivity
R Sreenivasan, Teacher, India, Member
There can be no doubt a motivated employee can contribute significantly to accelerate productivity.
Remember this motivation is the consequential effect of a healthy work-life balance and a peaceful family environment.

Motivation of Employees in Asia
Sharon Chua, Manager, Singapore, Member
A motivated employee will go the extra mile in helping the company achieve its goals. However in Asia there are companies who still think that it is the employees responsibility to ensure they are motivated; this is not a corporate responsibility.

I Am the Enterprise!
Thobile Mkhize, South Africa, Member
... I am the enterprise ... could be the highest form of motivation and employee can feel about their work and employer. It is the responsibility of both the employee and employer (but more the employer) to create a climate for staff to take "personal ownership" of their participation in the company.
Company values are a good start for guiding the formation of this environment.

Motivation and Organization Performance
Kemoli A Teddy, Student (MBA), Member
Employees are socio-technical beings and require amicable relationship with their supervisor. Motivation can significantly improve a firm's performance, since a motivated employee will not only be focused but will also have a sense of ownership and dedication which will reduce employee turnover and enhance their commitment to the firms values and vision.
However, the real effect of the motivation on the performance will depend on the level of the individual employee's level of maturity or what he considers important at that time.
For example, a young employee can be motivated by such variables as upward social mobility, esops and salary. This tends to change as he moves from immaturity to maturity. I also contend that in order for us to underscore the impact of motivation as a variable to a firm's performance, other theories of motivation like the 2 Factor Theory have to be factored in.

Motivation not per se Positive. Other Traits of Employees Effect Profitability
Laurent Trudel, Student (University), Canada, Member
I respectfully suggest that motivated employees do not necessarily work well: a motivated employee who lacks judgment can do more harm to a business than a less motivated employee who has more judgment.
Knowledge of the business' procedures and levers can also affect performance, more than motivation. A motivated employee with poor skills can want to do more than is expected (and make more costly mistakes) while a less motivated employee can do what is expected and be more of an an asset to the business.
I would revise the direct correlation between motivation and quality of performance and add other parameters that come into play in this association of concepts.

Converting Employees from Engaged to Motivated
Gary Stead, Director, United Kingdom, Member
@Laurent Trudel: I do think you are right to point to other components of performance, of which motivation is just one. From a leadership and management perspective, I find it fascinating to understand what drives employees to be motivated. Organisations currently strive for the "engaged" employee - which seems to me to be a word which simply describes those paying attention. In my working experience, I have found that something powerful happens when employees strive to fulfil their own goals - and this coincides in time and place with the organisation's purpose.
Surely it is how leaders convert engaged employees to motivated ones that can make the desired difference. As a component of performance motivation appears a more powerful contributor than knowledge or skills and one worth trying to understand and foster.

The Effect of Motivated Employees on Profitability
Madhukar Sakorkar, HR Consultant, India, Member
I agree with you FA Mahamud. I remember having seen research that clearly establishes the link you indicate between employee engagement and organizational result.
I also look at it at a more deeper level:
- What motivated me as a professional practicing manager - when I was doing what I wanted to do - in addition to what I was expected to do - in my role. Stated differently - I felt motivated when my goals were aligned to the organizational goal. The moment this balance tipped heavily and consistently in favour of only what organizations wanted me to do, my motivation impacted adversely!
- Secondly, when I am confident of my efforts leading to performance and my performance leading to the outcome I want, my motivation level is high. Hence, it's critical for managers to get to know the outcomes that his employees expect (Editor: indeed, see Expectancy Theory) - which is rather tricky - because not many of them have this clarity. This means having a good quality relationship anbd a continuous dialogue as a mentor and a coach - which requires attitude & bandwidth!

Motivation May Have Positive But Low Correlation with Profit
Jagdish B Acharya, Consultant, India, Premium Member
At a microscopic level motivation improves output. This is clear and was observed by Mayo experiments. On a macro, organizational level it may not have a significant correlation with profit.
There are many factors responsible for profit and absence or reversal of any of them can have severe negative impact on profit.
Demotivated employees may affect profit badly but motivated employees may not inflate it equally. Furthermore it is very difficult to find universally acceptable motivating factors.
Organizations should strive to have policies that try not to demotivate large sections of productive and managerial manpower. Motivating the few key performers and not caring for the majority of others may obtain short term results, but may hurt organization in long term.

Employee Motivation Must Include an Aesthetic Component
KATHRYN STEINER, MBA, Entrepreneur, United States, Member
Hawthorne's experiments included both a psychological and environmental component, the latter which should not be underestimated.
Contemporary work conditions reflect the shift from an industrial society to a technologically driven one. Employees can and should impact their physical work environment. In addition, employees should have a say in the creation of their teams, and what type of management style works best for them, not having them chosen without their input.
There is a thin line between closely attending an employee and micro managing. Words need to be chosen carefully to reduce the negative effects of perceived or actual criticism, when an employees performance is being evaluated.
Cost needs to be examined when the focus is too much on productivity, possibly burning employees out, even with all the incentives, versus creating new procedural requirements that retains employees? Allowing for the addition of even a minute to Average Call Handle Time (AHT) can prove cost effective to an organization.

Motivation and Productivity: Any Direct Relationship?
JOSEPH SOLA ONIFADE, Manager, Nigeria, Member
To some extent Hawthorne effect is an academic way of looking at the relationship between motivation and productivity of an employee. In my own opinion things have significantly changed from the position postulated by this 'theory' when it was propounded and what situation is today. A lot of variables come to play when we look at productivity!
It appears that it is becoming increasingly difficult to determine what really contributes to productivity of an employee in an organisation. There is the need to research further into this subject.

Effect of Motivated Employees on Profitability
Adedayo Adebesin, Student (Other), United Kingdom, Member
One must also consider the capability and competences the employee has or should he be supported in order to perform as required.
Here I recommend the expectancy theory. This model indicates that even if the employee is motivated, either by the reward offered or expected, he/she may be hindered by the belief (expectancy) of not being capable of carrying out the expected performance.

A Non-quantifiable Impact of Motivation is Worthless
Peter Jetter, Coach, Germany, Member
In my experience, managers must justify their decisions, especially when spending money. So far I experienced mainly a (pseudo) fact based reasoning. "Facts" seem only acceptable, when they're measured in monetary units. Everything which cannot be transponded into monetary units, is effectively meaningless in management decisions.
As long as we cannot quantify (with scientific methods) soft factors, they will be ignored. How would a manager justify spending 50.000 on competence or motiviation, if he can not proof - with acceptable certainty - that this will improve profit?
Personally I strongly doubt that we will ever reach such a level a certainty that is acceptable to controllers.
Even when lessons learned repeatedly indicate lack of competence (or motivation) as a factor for increasing costs, this is not sufficient. Because it doesn´t tell you how much money was lost and therefore doesn´t give you a guideline how much you should invest.

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