HR assignment Help Case study: Employee performance & Motivation on Google Case studies
Google Case Study
- 1. Introduction and Problem Identification
The argument of this paper is: One of the main reasons behind the stellar success of Google is its highly motivated employees. Financial and operational performance of a company is directly linked to its effectiveness in motivating employees. Many companies consider shareholder wealth maximization as raison d’être for their existence. But this goal cannot be achieved on a sustainable basis until companies regard stakeholder value maximization as high a priority as shareholder wealth maximization. Employees are probably the most important stakeholder of any corporation; the other stakeholders of the organization are: shareholders, suppliers, customers, state and the community (Steel, Piers, 2012).
Employees are the most important of all the stakeholders because they implement the strategies of the organization; the employees manage the operations of the company; they act as the interface of the company with the customers and last but not the least, employees innovate and create new products and services for a company like Google. If the employees of a company are not sufficiently motivated, the company will not be able to deliver good performance (Steel, Piers, 2012). It will eventually lose its competitive advantage and end in destroying shareholder value instead of creating it. Companies in their quest for maximizing their profits tend to overlook the interests of the employees. This results in lowering of morale of the employees. Such employees become less productive. This ends in lowering the overall productivity of the organization. Highly motivated employees are not only more content but are also more productive. They create more value for the company. Google has effectively applied theories of motivation for enhancing the morale of its employees. Other company can take a lesson from it.
- 2. Literature Review
Motivation can be defined as the processes that account for an individual’s intensity, direction and persistence of effort toward attaining a goal. Many theories of motivation have been propounded in the past and present (Stephen P. Robbins, Timothy A Judge, 2012). Victor Vroom’s expectancy theory is one such motivational theory. This theory focuses on three relationships which are:
i) The relationship between effort and performance. Employees are motivated to put more effort when they see a direct correlation between effort and performance.
ii) The relationship between performance and reward. Employees are motivated when they feel that they will be rewarded for good performance and the rewards will be commensurate with their achievements.
iii) The relationship between rewards and personal goals. Employees are motivated to perform better when they see that the rewards that they get for good performance are compatible with their personal goals and needs (Stephen P. Robbins, Timothy A Judge, 2012).
Abraham Maslow’s theory of hierarchy of needs is another important motivational theory. This theory classifies human needs as: physical needs, security needs, social needs, self-esteem needs and self-actualization needs. The physical needs are at the bottom of the hierarchy of needs pyramid of Abraham Maslow while self-actualization needs are at the top of this pyramid. Employees are motivated by the rewards that a company gives if the rewards fulfill their needs. Lower level employees are motivated by fulfillment of physical, security and social needs while higher level employees are motivated more by fulfillment of higher level needs like self-esteem and self-actualization needs (Stephen P. Robbins, Timothy A Judge, 2012).
Another popular theory of motivation is Frederick Herzberg’s two factor theory which is also known as motivation-hygiene theory. According to this theory some factors are such whose absence will cause dissatisfaction among employees ; however their presence will not motivate employees. Herzberg called them hygiene factors. Hygiene factors include such factors as the quality of supervision, salary, company policies and working conditions. Herzberg classified factors such as promotional opportunities, opportunities for personal growth, recognition, responsibility and achievement as motivational factors. The presence of these factors actually motivate the employees while the presence of hygiene factors, while not motivating the employees, prevents them from getting dissatisfied (Stephen P. Robbins, Timothy A Judge, 2012).
McClelland’s theory of motivation propounds that the need for achievement, power and affiliation motivate employees to perform well. Management by objectives (MBO) is a very popular theory of motivation which was originally propounded by Peter Ducker, the doyen of management. Ducker’s management by objectives relies on setting achievable objectives for the employees in order to motivate them. The management helps the employees in achieving the objectives set for them (Stephen P. Robbins, Timothy A Judge, 2012). These objectives are set through participatory decision making where employees give their suggestions on the objectives that are to be set for them. The performance of the employees is adjudged on the degree to which they have succeeded in achieving their objectives. The ERG theory of needs has three aspects: existence needs, relatedness needs, and growth needs. The existence needs correspond to the physiological and safety needs; relatedness needs correspond to social status needs and growth needs correspond to self-esteem and self-actualization needs (Stephen P. Robbins, Timothy A Judge, 2012).
Theory X and Theory Y are two other important theories of motivation. The Theory X says that employees inherently dislike and shirk work and therefore they should be directed or even coerced into performing their job tasks. Theory Y says that employees naturally seek work and responsibility and therefore they should be given freedom in accomplishing their job tasks (Stephen P. Robbins, Timothy A Judge, 2012). McGregor who propounded Theory X and Theory Y believed more in Theory Y than in Theory X.
Employee motivation at Google
In what ways Google motivate and reward its employees:
Google’s success is underpinned on its effective motivational policy. For the past few years Google has been repeatedly ranked as one of the best employers in the world. Employees are allowed to come to office dressed informally. Unlike many other companies, there are no restrictions whatsoever on what the employees choose to wear. Employees feel liberated from getting this freedom and feel at home and ease inside the company.
The meeting rooms in Google’s office in Australia and elsewhere are filled with beanbags in place of hard office chairs. Food to the employees is given free in the company cafeteria and the office space is interspersed with table-tennis tables and play stations for their recreation. Employees of Google can spend 20 per cent of their time on the project of their choice. The Google office in Australia provides unlimited number of sick leaves to its employees; it gives them very generous health insurance. Employees are provided with flexible working hours facility. Not only this, Google gives annual reimbursement of up to $ 6000 to employees on their educational expenses.
Google motivates its employees by generously disbursing bonuses. In 2007 it distributed three and a half thousand bonuses. Every aspect of the culture of Google is designed so as to create a culture on information sharing and collaboration. Employees feel motivated and empowered by the company’s mission statement: “To organize the world’s information and make it universally accessible and useful .”
Theories of motivation that best describe motivation and rewards management at Google
Frederick Herzberg’s two factor theory best describes rewards management and motivation technique at Google. Google provides its employees with hygiene factors like very good salary and perks, very good work environment and freedom to employees. Besides the hygiene factors, Google provides its employees with adequate motivational factors. These factors include bonuses for good performance and opportunities for the development and growth of the employees. Employees take pride in being part of Google and in creating products and services which are changing the world.
Google’s human resources management process intrinsically believes in Theory Y. As has been described in literature review, Theory Y says that employees naturally look forward to work and responsibilities and therefore they should be given freedom in performing their job tasks. Theory X on the other hand says that employees naturally dislike work and responsibility and therefore should be coerced into performing their job tasks. Google gives full freedom to employees in performing their job tasks. Employees are given freedom to use 20 per cent of their project time on projects that they like most. And employees are given unlimited number of sick leaves.
Google’s motivational and rewards system takes care of all the five needs that are listed in Abraham Maslow’s hierarchy of needs. Through excellent pay and monetary rewards Google takes care of the physical, security and social needs. Through measures like bearing $ 6000 of employees’ annual education costs , Google motivates its employees to strive for fulfillment of their higher level self-actualization and self-esteem needs. Because Google is a knowledge based company the fulfillment of higher level needs, like self-esteem and self-actualization, is of high importance for the company. Employees strive for innovation only when they try to fulfill their higher level needs.
Is it possible that the novelty of Google’s rewards system and office environment could wear off thereby reducing their motivational potential? What could Google do to avoid this outcome?
No I don’t think that novelty of Google’s rewards system and office environment will wear off. Google is not using rewards management as a technique for motivating employees so as to maximize its profits. The welfare of employees is really one of the core values of Google; it is part of its vision and mission. The company has stakeholder value maximization, and not shareholder wealth maximization solely, as its core value. Google’s rewards management and motivational techniques are very complete. They cater to all the needs of the employees, from the lowest physical needs to the ultimate self-actualization needs.
Google may reinvent its rewards management from time to time so that the rewards management system does not wear off on employees, especially the senior ones. Google’s motivational technique without making a conscious effort succeeds in motivating the employees so much because Google seems believe in really having the interests of the employees at the heart of its operations.
Recommendations & Conclusion
A company can succeed in motivating its employees only if it really has stakeholder value maximization at the core of its operations. Employees are the most important of all the stakeholders of the organization (Carlson, N.R. & Heth, C.D.,2009). An effective motivational and rewards management system should have both hygiene factors as well as motivational factors. The hygiene factors keep the employees satisfied and the motivational factors motivate them. Rewards management and motivation are the most crucial elements of human resources management in a corporation. It is a strategic exercise which has long term impact on the performance of the company. It drives innovation as motivated employees tend to be more creative. An effective rewards management system has two aspects: it takes care of the lower level physical, security, social needs and it also takes care of the higher level needs like self-esteem and self-actualization.
Google’s success has been largely due to its motivated and highly satisfied employees. It won’t be an exaggeration to say this that employees of Google are not only satisfied but are delighted i.e. the company is giving them more than what they expect from the company. These delighted employees were behind product innovations like Google Earth, Google News and G Mail. The same products went on to create immense value for the customers and shareholders of the company. No wonder then that Google trades at a stellar price-to-earnings (P/E) ratio of 18.76. Its 12 months trailing Earnings per share (EPS) is $ 33.73 (http://in.finance.yahoo.com/q?s=GOOG). All these figures bear testimony to the way Google succeeded in delivering excellent financial performance. And this financial performance has a direct positive correlation to its motivated employees. Actually motivated employees are one of the main causes of the stellar financial and operational performance of Google. And Google’s customers are delighted because its employees are delighted: Only delighted employees can create delighted customers.
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