What Really Motivates Employees?        LESS 2011               StockholmPaul Gooderham NHH – The Norwegian School of Econ...
What Really Motivates Employees?•Findings from two research projects: – „GOLD‟-project - what motivates employees in  mult...
„GOLD‟-project - what motivates employees inmultinational companies (MNCs) to share knowledge?•Theoretical background (1):...
HIGHAssumed knowledgecontribution to the MNC                                       Servers           LOW                  ...
The new driving force•Increasingly firms are investing abroad to enhance and augment their knowledge•MNCs are trying to bu...
HIGH                                                               Centres of excellenceAssumed knowledgecontribution to t...
Theoretical background (2): RBV• Resource-based view (RBV) of the firm (Jay Barney; 1991)• Competitive advantage is explai...
The ”Firm Advantage” – The KnowledgeBased View (KBV) of the Firm•Kogut and Zander (1993): MNCs as “social communities”  –Q...
Typical ”early” research questions• Given that each business unit across the MNC has particular  knowledge strengths:• Typ...
Knowledge as a ”thing” that is transferred from oneperson (the sender) to another (the receiver) through”pipelines”       ...
Knowledge that confers competitive advantage is”Collective” and therefore locally “Embedded”                          Indi...
Collective knowledge can only be shared through thedynamic interaction of groups of people                                ...
Three dimensions of social capital(Nahapiet & Ghoshal, 1998)•Structural: linkages; networks•Cognitive: shared understandin...
Enhanced     Enhanced                                           Enhanced                        Knowledge Sharing acrossSo...
Social CapitalWhere are we now?•       “We still don‟t know nearly enough about what processes        & practices are impo...
Our contribution• We look into the black box of how social capital emerges  and is developed• We propose knowledge governa...
Governance Mechanisms• Three governance mechanisms are available to managers (cf. Adler  & Kwon, 2002).• These will impact...
The hypothesized model     Hierarchical     mechanisms                            -                    +           Social ...
Data• Two Danish MNCs operating in the same industry - food  ingredients• (Internet-based) survey distributed via the resp...
Knowledge sharing and social capital –examples of items•Knowledge sharing:  –To what extent have:    • You used knowledge ...
Governance mechanisms – examples of items• Hierarchical mechanisms  – In my company, people are expected to stick to rules...
Results      (LISREL)      Hierarchical      mechanisms                              -0.16**   -0.23***                   ...
Conclusions• Social governance mechanisms - involving  acknowledgement practices - clearly promote social capital• Excessi...
Cultural values• In the 1970s Geert Hofstede identified 4 value dimensions along  which national cultures can be grouped. ...
Masculinity-femininity•Masculine societies value assertiveness, competitiveness and materialism.  –Organizations are task ...
Use of ‘calculative’ HRM   source: Cranet: 2009 survey of firms                                     USA   NorwayFormal app...
Research strategy• Matched samples for Norway and the USA.• Preferably individuals  –that have not been socialized into an...
Business Students in Norway and the US:Job-related Values and PreferencesPaul Gooderham, Odd Nordhaug, Olav Kvitastein    ...
The US and Norway samples: Schools                       Degree program        School   Bachelor Master Missing Total     ...
The US and Norway samples: Gender               Country Gender      US Norway Female       33.0    31.3 Male         67.0 ...
Job-related Values and Preferences•On a scale from 1 (not important) to 10 (very important)  –The importance of 25 job-rel...
Rotated factor matrix                                                                         Component                   ...
Factors expressed as summates, i.e., as means over itemsinvolved, and sorted by magnitude: Factor      Label              ...
Ranking of factors by country                                            USA                      Norway• Social orientati...
Conclusions• Implications for management of employees who “ought” to  engage in knowledge-sharing• Social governance mecha...
Rotated factor matrix                                                                         Component                   ...
Factors expressed as summates, i.e., as means over itemsinvolved, and sorted by magnitude:   Factor     Label             ...
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Beyond Budgeting: What Really Motivates Employees

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In this presentation Professor Paul Gooderham presents findings from two recent research projects that both address the issue of employee
motivation. The first project investigates the work-related values of graduating students at elite business schools in Scandinavia and North America. It addresses the issue of whether they are materialists or post-materialists. It also examines whether Americans are more materialistic than Scandinavians. The second paper asks the question, what governance mechanisms promote knowledge sharing in multinational companies? In particular it addresses the issue of whether bonuses are more motivating than collegial acknowledgment.

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  • Cognitive and motivational barriers. Ability & Willingness
  • 2 dimensions: Explicit – can be articulated and codifiedImplicit – more difficult to articulate and codifyIndividualSocial – does not matter if you lose an employee or manager, b/c the knowledge is in ”the system”. Not so depende on each individual. Also, cannot simply replace aluminum in Rieber, because knowledge has been developed over years in collaboration between supplier and Rieber.
  • Beyond Budgeting: What Really Motivates Employees

    1. 1. What Really Motivates Employees? LESS 2011 StockholmPaul Gooderham NHH – The Norwegian School of EconomicsNovember 1 2011 www.nhh.no
    2. 2. What Really Motivates Employees?•Findings from two research projects: – „GOLD‟-project - what motivates employees in multinational companies (MNCs) to share knowledge? • Gooderham, P.N., Minbaeva, D, Pedersen, T. (2011) Journal of Management Studies –„ELITE-student‟ project – what are elite business students seeking to obtain from their employment? • Work-in-progress 09.11.2011 Fornavn Etternavn, navn@nhh.no 2
    3. 3. „GOLD‟-project - what motivates employees inmultinational companies (MNCs) to share knowledge?•Theoretical background (1): Changes to driving forces behind MNCs.•The traditional driving forces behind MNEs•Access to cheap labor – –subsidiaries are ”off-shores”•Access to markets – –subsidiaries are ”servers” 09.11.2011 Fornavn Etternavn, navn@nhh.no 3
    4. 4. HIGHAssumed knowledgecontribution to the MNC Servers LOW Off-shores LOW Degree of knowledge in subsidiary HIGH
    5. 5. The new driving force•Increasingly firms are investing abroad to enhance and augment their knowledge•MNCs are trying to buy into foreign created knowledge assets•MNCs aim to increase their core competencies by incorporating the knowledge of their subsidiaries.•Subsidiaries are knowledge sources: –“enhancers” & “centers of excellence”
    6. 6. HIGH Centres of excellenceAssumed knowledgecontribution to the MNC Enhancers Servers LOW Off-shores LOW Degree of knowledge in subsidiary HIGH
    7. 7. Theoretical background (2): RBV• Resource-based view (RBV) of the firm (Jay Barney; 1991)• Competitive advantage is explained by resources that are –V - Valuable, –R - Rare, –I - Imperfectly imitable, –N - Non-Substitutable – Externally available resources do not confer competitive advantage (i.e. the “market”). – Most RBV scholars argue that it is intangible resources - such as firm-specific knowledge - that confer competitive advantage (i.e. the “firm advantage”) 09.11.2011 Fornavn Etternavn, navn@nhh.no 7
    8. 8. The ”Firm Advantage” – The KnowledgeBased View (KBV) of the Firm•Kogut and Zander (1993): MNCs as “social communities” –Qualitatively different to markets • “Shared identities” and “established routines of cooperation” • Through transfer and sharing - new & unique knowledge can be created –BUT! declined to explore the finer details of the organizational capabilities peculiar to the efficient transfer and sharing of knowledge. 8
    9. 9. Typical ”early” research questions• Given that each business unit across the MNC has particular knowledge strengths:• Typical early research questions: – Why is knowledge so difficult to transfer between units? –Why are knowledge synergies - via “sharing” - that could generate product innovation so difficult to create? 09.11.2011 Fornavn Etternavn, navn@nhh.no 9
    10. 10. Knowledge as a ”thing” that is transferred from oneperson (the sender) to another (the receiver) through”pipelines” Potential barriers Knowledge flow Sender Receiver
    11. 11. Knowledge that confers competitive advantage is”Collective” and therefore locally “Embedded” Individual Social Explicit Conscious Objectified Implicit or Tacit Automatic Collective Spender, 1996 11
    12. 12. Collective knowledge can only be shared through thedynamic interaction of groups of people Valuable knowledge? No sender or receiver Knowledge is shared between groups of people – through interaction Barriers: lack of networks; lack of trust, lack of shared mindset.
    13. 13. Three dimensions of social capital(Nahapiet & Ghoshal, 1998)•Structural: linkages; networks•Cognitive: shared understanding and shared norms•Relational: trust, identification, relationships
    14. 14. Enhanced Enhanced Enhanced Knowledge Sharing acrossSocial Capital across Performance for the the MNC through the MNC MNC interaction
    15. 15. Social CapitalWhere are we now?• “We still don‟t know nearly enough about what processes & practices are important for building & sustaining social capital & in what contexts” – Janine Nahapiet, GOLD Workshop, NHH, November 2008• But what we do know is that because of: –cultural, institutional and physical distance• MNCs are particularly demanding contexts in which to develop social capital - and facilitate knowledge transfer.
    16. 16. Our contribution• We look into the black box of how social capital emerges and is developed• We propose knowledge governance mechanisms that can be deployed to promote social capital and ultimately intra-MNE knowledge transfer• We conduct empirical testing of the developed model
    17. 17. Governance Mechanisms• Three governance mechanisms are available to managers (cf. Adler & Kwon, 2002).• These will impact on social capital.• Based on different exchange mechanisms: – Market-based relations: • The pecuniary exchange of products or services: mechanism e.g. bonuses – Hierarchical relations: • The exchange of Hierarchical obedience to authority mechanisms for security: mechanism e.g. rules – Social relations: Social Social mechanisms • Free exchange of favors: mechanism capital e.g. acknowlegement Market-based mechanisms
    18. 18. The hypothesized model Hierarchical mechanisms - + Social + Social capital Knowledge mechanisms sharing Market- - based mechanisms
    19. 19. Data• Two Danish MNCs operating in the same industry - food ingredients• (Internet-based) survey distributed via the respective firm‟s internal email system• Individual respondents – Danisco: 77.94%; 219 respondents – Chr. Hansen: 72.75%; 251 respondents – Multiple respondents within the same unit• I.e. we are measuring individuals‟ perceptions.
    20. 20. Knowledge sharing and social capital –examples of items•Knowledge sharing: –To what extent have: • You used knowledge from colleagues in other departments? • Colleagues in other departments used knowledge from you•Social capital: –In my company: • People cooperate across departments • Sharing of knowledge is valued 09.11.2011 Fornavn Etternavn, navn@nhh.no 20
    21. 21. Governance mechanisms – examples of items• Hierarchical mechanisms – In my company, people are expected to stick to rules and procedures even when there are better solutions.• Social mechanisms – To what extent are you currently rewarded for transferring knowledge in your company… • by acknowledgement of your contribution?• Market mechanisms – To what extent are you currently rewarded for transferring knowledge in your company… • by increments/bonuses? 09.11.2011 Fornavn Etternavn, navn@nhh.no 21
    22. 22. Results (LISREL) Hierarchical mechanisms -0.16** -0.23*** 0.56*** Social 0.47*** Social capital Knowledge mechanisms sharing 0.53*** Market- -0.12* based mechanisms
    23. 23. Conclusions• Social governance mechanisms - involving acknowledgement practices - clearly promote social capital• Excessive use of hierarchical control – “perfunctionary compliance” - has the opposite effect• The effect of market-based mechanisms – e.g. bonuses - is more mixed• Implications for management of knowledge-intensive organizations• Weakness: Cross-sectional data; Scandinavian MNCs
    24. 24. Cultural values• In the 1970s Geert Hofstede identified 4 value dimensions along which national cultures can be grouped. – Power Distance – Uncertainty avoidance – Individualism-collectivism – Masculinity-femininity
    25. 25. Masculinity-femininity•Masculine societies value assertiveness, competitiveness and materialism. –Organizations are task oriented.•Feminine societies: harmonious relations with a strong emphasis on social partnership. –Organizations are process-oriented.
    26. 26. Use of ‘calculative’ HRM source: Cranet: 2009 survey of firms USA NorwayFormal appraisal system for:Management 92% 54%Professional 96% 44%Clerical 94% 44%Manual 72% 42%Performance related pay for:Management 77% 32%Professional 74% 20%Clerical 67% 15%Manual 52% 10%
    27. 27. Research strategy• Matched samples for Norway and the USA.• Preferably individuals –that have not been socialized into any particular company culture –who can choose either to maximize materialistic-oriented outcomes or socially oriented outcomes –who will potentially engage in knowledge sharing• ”Elite” business-school students – NHH-The Norwegian School of Economics – Equivalents in USA 09.11.2011 Fornavn Etternavn, navn@nhh.no 27
    28. 28. Business Students in Norway and the US:Job-related Values and PreferencesPaul Gooderham, Odd Nordhaug, Olav Kvitastein 28 www.nhh.no
    29. 29. The US and Norway samples: Schools Degree program School Bachelor Master Missing Total Duquesne 59 3 4 66 Indiana 0 16 0 16 Michigan 39 3 3 45 NHH 264 13 3 280 TCU 30 23 3 56 Total 392 58 13 463At NHH data was collected from 360 students in their final year of the bachelor degree program January 2009. In theUS, data was collected from approx. 290 students in either the final year of their BA program or year on or two of theirMasters programs. Thus, resp. rates of approx. 77% and 63% for NHH and the US schools respectively 29 www.nhh.no
    30. 30. The US and Norway samples: Gender Country Gender US Norway Female 33.0 31.3 Male 67.0 68.7 Total % 100.0 100.0 N= 182 278 30 www.nhh.no
    31. 31. Job-related Values and Preferences•On a scale from 1 (not important) to 10 (very important) –The importance of 25 job-related factors when choosing one‟s first job after graduation 09.11.2011 Fornavn Etternavn, navn@nhh.no 31
    32. 32. Rotated factor matrix Component Cronbachs 1 2 3 4 5 6 Alpha Individual, performance-based bonuses 0.788 Stock options for managers 0.780 Employee stock ownership 0.769 Instrumental work orientation 0.873 Cost-sharing schemes 0.709 Performance-based team bonuses 0.687 Pay based on individual performance 0.629 There is a friendly culture 0.798 Employer cares about employees as individuals 0.735 Social orientation 0.784 Good personnel policy 0.630 Good social relations among colleagues 0.627 A lot of variety in work tasks 0.746 Interesting work 0.722 Expressive A lot of freedom to work on your own initiative 0.598 work orientation 0.744 Scope for creativity in the job 0.558 Good opportunities to develop competence 0.545 Clearly defined annual targets to work towards 0.858 Clearly defined annual targets to be evaluated on Well-defined task 0.849 0.770 Frequent feedback on work performance 0.431 Opportunities to move around in the organization 0.707 Opportunities for long-term career progression 0.667 0.715 Systematic career planning Career opportunities 0.559 Opportunities for personal development 0.516 High annual earnings/salary 0.704 The position has a high status Fast-track orientation 0.685 0.744 Opportunities for getting fast promotion 0.630 32
    33. 33. Factors expressed as summates, i.e., as means over itemsinvolved, and sorted by magnitude: Factor Label Mean Std. Dev. f2 Social orientation 8.14 1.205 f3 Expressive work orientation 7.82 1.106 f5 Career opportunities 7.47 1.238 f4 Well-defined tasks 7.03 1.384 f6 Fast-track orientation 6.90 1.422 f1 Instrumental work orientation 5.96 1.620 N = 463 Note:10 = Very important, 1 = Not important 33
    34. 34. Ranking of factors by country USA Norway• Social orientation 1 1• Expressive work orientation 2 2• Career opportunities 3 3*• Well-defined tasks 5 4• Fast track orientation 4 5*• Instrumental work orientation 6 6* 09.11.2011 Fornavn Etternavn, navn@nhh.no 34
    35. 35. Conclusions• Implications for management of employees who “ought” to engage in knowledge-sharing• Social governance mechanisms promote social capital and knowledge sharing –Socially oriented values are ranked highest• Hierarchical control has the opposite effect –Well-defined tasks are ranked low• Market-based mechanisms also has a negative direct impact on social capital and knowledge sharing –Instrumental work orientation is ranked lowest.
    36. 36. Rotated factor matrix Component Cronbachs 1 2 3 4 5 6 Alpha Individual, performance-based bonuses 0.788 Stock options for managers 0.780 Employee stock ownership 0.769 Instrumental work orientation 0.873 Cost-sharing schemes 0.709 Performance-based team bonuses 0.687 Pay based on individual performance 0.629 There is a friendly culture 0.798 Employer cares about employees as individuals 0.735 Good personnel policy 0.630 Social orientation 0.792 Good social relations among colleagues 0.627 High job security 0.491 Employer has a dynamic approach to business 0.419 A lot of variety in work tasks 0.746 Interesting work 0.722 Expressive A lot of freedom to work on your own initiative 0.598 work orientation 0.744 Scope for creativity in the job 0.558 Good opportunities to develop competence 0.545 Clearly defined annual targets to work towards 0.858 Clearly defined annual targets to be evaluated on Well-defined task 0.849 0.770 Frequent feedback on work performance 0.431 Opportunities to move around in the organization 0.707 Opportunities for long-term career progression 0.667 0.715 Systematic career planning Career opportunities 0.559 Opportunities for personal development 0.516 High annual earnings/salary 0.704 The position has a high status Fast-track orientation 0.685 0.744 Opportunities for getting fast promotion 0.630 36
    37. 37. Factors expressed as summates, i.e., as means over itemsinvolved, and sorted by magnitude: Factor Label Mean Std. Dev. f2 Social orientation 7.96 1.121 f3 Expressive work orientation 7.82 1.106 f5 Career opportunities 7.47 1.238 f4 Well-defined tasks 7.03 1.384 f6 Fast-track orientation 6.90 1.422 f1 Instrumental work orientation 5.96 1.620 N = 463 Note:10 = Very important, 1 = Not important 37

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