IMPACT OF FIRM SIZE ON MOTIVATING EMPLOYEES
A holistic motivational program for a company, big, medium or small, is vital to ensure the well-being of employees, the health of the organization and company’s profitability (Schmitt, n.d.). The smaller the company is the easier it is to motivate employees. The larger the company is, the harder it is to motivate employees. This is a common-sense answer to the question of firm size and its relationship to employee motivation.
Communication Styles and Bureaucracy. The chain of communication is an important consideration. Formal communication in smaller companies is easier to handle with only a few recipients. Likewise informal communication and gossip is also easier to track by the management because of the manageable size of the company. It is usually with informal communication and gossip where employee dissatisfaction and grievances are passed through word of mouth and this is a good thing for the management to make immediate and appropriate decisions for the well-being of both the employee and the company. If the company is medium-size the problem with communication may be addressed through an efficient communication management system. If the company is a large firm, an efficient communication system is necessary however, the informal mode of communication which employees use to communicate with each other and build relationship with co-workers is harder to manage. Large companies are usually hierarchical and bureaucratic where communication is passed from a department head to a division head and until it reaches the top. This is of course difficult to manage.
Participation in Goal Formulation. To achieve organizational goals it is imperative that the company makes the organizational goals understood by its employees. In fact, the organizational goals must also be in line with the goals of the employees. This is important for the employee to know where he is vis a vis the company and where he wants to go vis a vis the direction of the organization. This is to ensure clarity, one of the six core drivers of execution of a strategic plan (Resnick, n.d.). Smaller firms allow for a manageable number of individuals to discuss and formulate organizational goals. This is done with the employees and the management together. As organizational goals are formulated with all employees, employees feel that they are respected and a viable part of the organization and the employees are motivated intrinsically (D’Ausilio, 2008). The employees participation in the formulation of the organizational goals also make them feel as ‘part-owners’ of the organization. D’Ausilio (2008) confirms that intrinsic motivation (when people want to do something because they are inspired to do so not because they are prodded to) is more effective than extrinsic motivation. If the firm is large, this type of activity will be limited to representatives, and we all know representatives do not necessarily represent the concerns of their group. The formulation of organization goals is important because this is where the employee and management work out systems of performance goals and incentives, employee development, and salary increases, which are motivational factors for employees.
Pays, Rewards and Incentives. Large firms pay higher than their smaller firm counterparts (Agell, 2004). Salaries and pay is one of the main motivating factors of employees. If all large firms pay higher than the smaller firms then we can say that employees in large firms are more motivated than employees in smaller firms. Rewards and incentives are extrinsic motivators. If pay rewards are removed or are kept constant for a long period of time, it is likely that employees’ motivation drops off. (D’Ausilio, 2008).
An empirical study by Valtanen and Sihvonen (2008) revealed that business related motivators are the focus of large companies while comfortability of work are the motivational concerns of small companies. Their study confirms the abovementioned discussion on pay, rewards and incentives in large firms and informal communication styles in smaller firms. Large firms carry the pressure of a large number of employees and as we observed motivating large firms is harder that motivating smaller firms. This is the very reason why large firms spend a great deal of money to motivate employees sometimes to the point of hiring external agencies to do it for them (Urman and Bancod, n.d).
In conclusion, the size of a firm affects employee motivation, and that both intrinsic and extrinsic motivators should be used in combination with each other to get the best results.
REFERENCES:
Agell, J., 2004. Why are Small Firms Different? Manager’s Views. Abstract only. Published in Scandinavian Journal of Economics. Vol 106. No.3. September. [online] Available at: http://www.jstor.org/pss/3441118> [Accessed 7 May 2011].
D’Ausilio, R., 2008. What Motivates Your Employees? Intrinsic vs. Extrinsic Rewards. [online] Available at: <http://www.tmcnet.com/channels/performance-management/articles/39417-what-motivates-employees-intrinsic-vs-extrinsic-rewards.htm> [Accessed 7 May 2011].
Resnick, HS., n.d. Organizational Strategic Planning Processes. [online] Available at: <http://www.worksystems.com/services/strategic_planning.html> [Accessed 7 May 2011].
Schmitt, K., n.d. The Ups and Downs of an Employee Motivation Program. [online] Available at: < http://www.inspirational-sayings-in-action.com/employee-motivation-program.html> [Accessed 7 May 2011].
Urman J., and Bancod, RR., n.d. The How on Motivating Other People. [online] Available at: < http://www.sap-basis-abap.com/motivation/how-to-motivate-other-people.htm> [Accessed 7 May 2011].
Valtanen, A., and Sihvonen, H.M., (2008). Employees’ Motivation for SPI: Case Study in a Small Finnish Software Company. [online] Available at: < http://www.springerlink.com/content/w51225422g2521v3/> [Accessed 7 May 2011].
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