Theories of Motivation: Impact of Pay and Happiness on Productivity

This essay investigates the factors that influence employee productivity, specifically examining whether better pay or employee happiness is a more significant motivator. It delves into various motivation theories, including Vroom’s expectancy theory, Urwick’s Theory Z, Skinner’s reinforcement theory, Maslow’s hierarchy of needs, McClelland's need theory, and Herzberg’s two-factor theory, to analyze the impact of both financial incentives and creating a positive work environment. The essay argues that while better pay can address basic needs and motivate employees for short-term tasks, fostering employee happiness through job satisfaction, autonomy, and a positive work-life balance leads to greater creativity, long-term engagement, and overall productivity. Ultimately, the essay concludes that a focus on employee happiness, encompassing both intrinsic and extrinsic factors, is more effective in driving sustainable productivity improvements within an organization.

Running head: Employee Productivity; Better pay or Employee Happiness
1
Employee Productivity; Better pay or Employee Happiness
Student’s Name
University

Employee Productivity; Better pay or Employee Happiness
2
Employee Productivity; Better Pay or Employee Happiness
Employee productivity is one of the issues that managers struggle with in a way to
increase business outputs. It is measured in terms of the level of output from individual
employees relative to what the average employee does. Productivity is seen as a factor that
comes from employee who enjoy their work and are satisfied working with the organization
(Nemeckova, 2017). Different Scholars have tried to explain factors that increase employee
productivity in the context of the organization. This is seen in the value that employees produce
as the reason for the pay that they received from the organization (Miner, 2015). This element of
work is influenced by different factors some which can be controlled by the organization while
some cannot. In an attempt to determine the factors that affect employee productivity and
developing strategies to address them, Scholars have worked on different theories of motivation
stating several factors that affect workforce productivity. Some of these factors are better pay
and making employees happy. According to Saks (2017) theories of motivation offer differing
and similar stand points on these two-factors. This essay uses motivation theories to explain the
two-factors of better and creating conditions for happiness in meeting the needs of employees.
Better pay is an approach that focuses on offering material incentives to employees to
meet their needs as a way of achieving productivity. From the social contract perspective,
employees give up their rights to the organization so that they can belong there and be part of the
team. This approach is built around extrinsic factor through the use of carrot and stick to
motivate employee (Pink, 2009).Such employees have traded part of their rights including their
skills and efforts to the organization for economic, social and psychological benefits. Jones &

Employee Productivity; Better pay or Employee Happiness
3
George (2008) suggests that economic benefits gained from such processes include the salary
that they received at the end of the month which they use to meet their personal needs. In the
society, money is a medium of exchange that one must have to survive and live a happy life.
Therefore, employees work in the organization because they are sure of being paid something at
the end of the month. This means that people are always looking to put themselves in better
positions financially. This marks the reason why some employees will go for a job that offers
better perks than others. This is seen where employees feel valued, thus making them better and
improving company morale. Theories of motivation have focused on meeting of physiological
needs of employees and use of rewards as a way of increasing employee productivity. According
to Pink (2009) this approach works well where there is a simple set of rules and a clear
destination to go to. These theories are Vroom’s expectancy theory, Urwick’s Theory Z. and
Skinner’s reinforcement theory.
Sridevi (2010) states that Urwick’s Theory Z offers two propositions that can be used to
explain the role of better pay in motivating employees. The first proposition is that each within
the organization should know the goals of the business and their contributions towards meeting
these goals. Then the second proposition is that the employee should understand the relation that
the goals have to satisfy their needs positively. This theory implies that employee needs and
organizational needs are related in a way that the organization uses the employee to meet its
business needs while the employee receives benefits that enable meeting of personal needs (Soo
Jung Jang, 2010). Since most needs are met by different resources and money can be used to buy
almost everything, employees expect a reasonable salary from the organization at the end of the
month or work period. This is the reason why some organizational offer different types of

Employee Productivity; Better pay or Employee Happiness
4
incentives to their employees on top of what they need to earn monthly. The role of this strategy
is to share the benefits that the organization has received with the employee. Such workers
engage with the activities of the organization since they understand the business benefits that are
tied to the process. Here the more they work, the more the organization benefits and the more the
trickledown effect that they received from the organization (Mirea, Naftanaila, & Mirea, 2012).
For example, organizations promote their employees from one job level to another, while other
review employee salaries after a certain period. The purpose of this process is to motivate
employees and make them more productive to the organization. Further, employees engage with
the organization not because they have skills for the job but rather because they require someone
to compensate them for what they can offer with their skills.
Vroom’s expectancy theory is founded on the notion that people are more productive
when they know that the relationship between the effort that they put in and the performance that
they achieve will lead to a reward or positive outcomes. Through valence employees put value
and strength in their work for a particular outcome. The expectancy perspective of the employee
forms the motivation element by pushing the effort to achieve the intended results. Azar &
Shafighi (2013) argues that when expectations are met, the employee stays motivated and works
harder to achieve the intended outcomes that will lead to better outcomes. The best example is
employees who are paid based on the level of output that they produce. Such employees work
harder to try and meet the set targets that will translate to a certain level of pay. In such situations
the employee is motivated by pay.
On the other hand, Skinner’s reinforcement theory utilizes the control of behavior
through stimuli to improve productivity. The theory works on changing employee behavior

Employee Productivity; Better pay or Employee Happiness
5
through reinforcing certain conditions that lead to achieving the intended results. This can be
achieved through linking employee effort to a stimuli like a reward that pushes the employee to
work harder (Azar & Shafighi, 2013). This process makes the employee attached to the reward
process and works harder to meet the intended targets as a way of getting the reward. The
process works on both results and behavior change as an effort to improve employee behavior.
However, Pink (2009) gives a TEDtalk analysis on how the use of rewards to motivate
employees cannot work. In this video, he argues that motivation is far from rewards and other
monetary incentives but rather should focus on other factors for employee motivation that are
beyond rewards. The talk is based on nine reward experiments where eight of them failed to
motivate employees and improve performance. He further argues that the use carrot and stick is
buod around twentieth century tasks ut for twenty-first century tasks, the reward-punishment
approach does not work and often does harm to the employee and organization. Landy & Conte
(2010) suggests that these factors are intrinsic are exist within the job itselff or the organization.
In the presentation, experiments were done of different employee groups to determine the effect
of rewards like better pay to employee motivation. The results were similar to those employes
who were not motivated at all. Scholars that have opposed the rewards and better pay approach
argue that this system narrows the focus and concentration of the mind and cannot work in real
candle problems. This means that happy employees are more productive that better-paid
employees since this approach focuses on the unseen intrinsic drive to do things because they
matter (Cole, 2011). Theories that focus on employee happiness seeks to create conditions that
make employee comfortable to easily do their work. These theories are Maslow’s hierarchy of

Employee Productivity; Better pay or Employee Happiness
6
needs, McClelland need for achievement , affiliation and power and lastly Herzberg’s two-factor
theory.
From Maslow’s hierarchy of needs, employees have a set of needs that make them
motivated to work in an organization. These needs range from the basic biological and
physiological need to the higher level need of self-actualization. In this hierarchy employees seek
to climb the ladder every time they accomplish one need. This means that better pay only works
for lower level needs of physiological needs and safety or security (Jirjahn, 2016). Most of these
needs are met within the first few years of an employees career and then they seek to move up
the ladder. The remaining factors relate to the conditions of work that make the employee
comfortable to stay longer in the organization. D'Souza & Gurin (2016) suggests that factors like
career growth and development, realization of potential abilities and the comfort that the jo itself
brings to the individual work better here. Employees will seek for jobs that offer autonomy and
create conditions that allow employees to do what they feel is right for the organization rather
than sticking on the carrot and stick approach. This theory indicates that employee motivation is
achieved through happinesss where conditions are created to make the employee happy.
Herzberg’s two-factor theory is based on the motivational factors that improve
productivity and hygiene factors through which lack of them leads to no satisfaction. Hygiene
factors include working conditions, work environment and security. On the other hand,
motivating factors increase job satisfaction and is based on personal need for growth, this
includes job autonomy and other conditions that make the employee satisfied (Jirjahn, 2016).
Hyiene factors are used to reduce dissatisfaction while employee factors ensure employee
satisfaction to create higher performance. Oswald, Proto, & Sgroi (2015) adds that job

Employee Productivity; Better pay or Employee Happiness
7
satisfaction achievement, recognition, work itself, responsibility and advancement are used to
create conditions that satisfy and motivate employees. These factors create what is called
motivating factors that allow employees to be motivated thus increasing productivity (Boehm &
Lyubomirsky, 2008). For employees to be motivated, the factors that contribute to productivity
are related to motivation and are beyond the salary that the employee receiveds. Such factors lie
life the job itselff rather than the rewards that come with the job.
From the arguments above, employee motivation relates to several factors that create
conditions for the employee to work better. Better pay motivates employees to perform well but
does not create conditions that make the employee motivated to be more creative. Employees
require to be motivated to be able to work well and increase productivity within the organization.
Better pay motivates employees but leaves other factors hanging that are required to make the
employee happy and more productive (Bockerman & Ilmakunnas, 2012). Organizations that rely
more on use of better pay and rewards utilise this approach for working on direct tasks that
require straight approaches towards achieving the intended. The rewards approach therefore can
be used better in situations where the tasks needed are short-lived rather than long-lived.
Therefore, happy employees are more productive that better employees since happinesss
includes many factors that are both intrinsic and extrinsic. Sharifzadeh & Almaraz (2014)
sugests that intrinsic factors like creation of good working conditions, work life balance and
autonomy are better than use of rewards. Purcell, Kinnie, & Hutchinson (2013) adds that when
work conditions are made better, the employee becomes satisfied with their work thus creating
conditions that make the emplpyee more productive. Content motivation theories have focused
on the work environment that the employee works in can be used to improve work and create

Employee Productivity; Better pay or Employee Happiness
8
conditions that make them more productive. By meeting these needs, employee are happier and
more productive. Work conditions are better in improving work productivity rather than process
theories.
This essay closes the argument y suggesting that employee motivation stems from
focusing on employee happinesss which is beyond use pay and rewards. The role that rewards
play in the organization is to make employees more productive but lacks sustainability
mechanisms. Approaches that increase employee productivity should focus on sustainable
mechanisms that create conditions rather than situations of work. Better pay is a situational
approach to employee productivity and motivation since it focuses on the needs of the individual.
In an organizational context, it becomes difficult to satisfy the pay needs of every employee
which makes the approach less effective. In this case, the strategy cannot be used to motivate
employees and improve productivity. On the other hand, through working on work conditions,
management ensurees that employees work in an environment that address all-round needs of
employees. Therefore, happy employees are more productive than better-paid employees since
they work in conditions that meet their personal and career needs. Since motivation is an intrinsic
element, then intrinsic strategies should be used to create the conditions that make the employee
motivated to improve productivity.

Employee Productivity; Better pay or Employee Happiness
9
References
BIBLIOGRAPHY Azar, M., & Shafighi, A. (2013). The Effect of Work Motivation on Employees’ Job
Performance. International Journal of Academic Research in Business and Social Science, 3(9),
22-69.
Bockerman, P., & Ilmakunnas, P. (2012). The job satisfaction-productivity nexus: A study using
matched survey and register data.”. Industrial and Labor Relations Review, 652, 244-262.
Boehm, J. K., & Lyubomirsky, L. (2008). Does happiness promote career success?”. Journal of
Career Assessment, 16(1), 101-116.
Cole, G. (2011). Personnel and human resource management. London: York Publishers.
D'Souza, J., & Gurin, M. (2016). The universal significance of Maslow's concept of self-
actualization. The Humanistic Psychologist., 44(2), 1-14.
Jirjahn, U. (2016). Performance Pay and Productivity: A Note on the Moderating Role of a High‐
wage Policy. Managerial and Decision Economics, 8(11).
Jones, G. R., & George, J. M. (2008). Contemporary Management. London: Routeledge.
Landy, F. J., & Conte, J. M. (2010). Work in the 21st Century: An introduction to industrial and
organizational psychology. Hoboken, New Jersey: Malden: Blackwell Publishing.
Miner, J. B. (2015). Organizational Behavior 1: Essential Theories of Motivation and
Leadership. London: Routledge.
Mirea, V., Naftanaila, C., & Mirea, G. (2012). Employee benefits – Definition, role, recognition
and evaluation. International Journal of Academic Research in Economics and
Management Sciences, 1, 147-157.

Employee Productivity; Better pay or Employee Happiness
10
Nemecková, I. (2017). he role of benefits in employee motivation and retention in the financial
sector of the Czech Republic. Economic Research, 30(1), 694-704.
Oswald, A., Proto, E., & Sgroi, D. (2015). Happiness and productivity. ournal of Labor
Economics, 33(4), 789-822.
Pink, D. (Producer), & Pink, D. (Director). (2009). The puzzle of motivation [Motion Picture].
Retrieved from https://www.ted.com/talks/dan_pink_on_motivation/transcript?
language=en#t-1035535
Purcell, J., Kinnie, N., & Hutchinson, S. (2013). Understanding the People and Performance
Link: Unlocking the Black. London: CIPD.
Saks, A. M. (2017). Translating Employee Engagement Research into Practice. Organizational
Dynamics., 46(2), 76-86.
Sharifzadeh, M., & Almaraz, J. (2014). Happiness and Productivity in the Workplace. American,
1(4), 19-27.
Soo Jung Jang. (2010). The interaction effects of scheduling control and work-life balance
programs on job satisfaction and mental health. International Journal of Social Welfare,
135-143.
Sridevi, S. (2010). Employee Engagement: The Key to Improving Performance. International
Journal of Business and Management, 5(2), 1-10.