Intrinsic Motivation - V3

MMM7520

Contemporary Leadership

Individual Assignment

Title Name: The Importance of Intrinsic Motivation in

Leadership: A Case Study of British American Tobacco

Mustakkima Afrin

Date: 13 April 2015

Word Count: 3238

Abstract:

This assignment will focus on the motivational tools & transformational leadership in

British American Tobacco. The motivational tools are used intrinsically to satisfy

employee needs with enabling employee empowerment in key leadership roles for

strategic decisions, and streamlined reward operations enabling the organization to deal

with growing requirements.

A detail analysis in motivational tools applied to keep employee satisfaction high and

comparison with Japan Tobacco International is done in the assignment. Results from the

comparison study suggest that effective implementation of intrinsic motivational tools

with transformational leadership helped BAT to create a better working environment for

employees compare to JTI.

Key words: British American Tobacco, Japan Tobacco International, Transformational

Leadership, Motivation, Intrinsic Motivation & Extrinsic Motivation.

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Contents

Topic Page No.

1.0 Introduction 4

2.0 Literature Review on different kinds of Motivation 5

2.1 Intrinsic Motivation 5

2.2 Extrinsic Motivation 6

3.0 Case Study: Intrinsic vs. Extrinsic: The importance of Intrinsic

Motivational Tools in British American Tobacco

7

3.1 Intrinsic Motivational Techniques used at BAT 10

3.2 Reward and Recognition Techniques used in BAT 13

4.0 BAT vs. JTI (Japan Tobacco International): The opposite approach of JTI

in Motivational Tools utilization

15

5.0 Conclusion 17

Reference 18

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1.0 Introduction:

“Transforming leadership occurs when one or more persons engage with others in such

a way that leaders and followers raise one another to higher levels of motivation and

morality by transforming leadership which ultimately becomes moral in that it raises the

level of human conduct and ethical aspirations of both the leader and led and, thus, has a

transforming effect on both.” (Gregor Burns 1978)

Transformational Leadership is about innovation which means new thoughts are derived

and put into practice. These leaders welcome changes and continuously bring about

changes in themselves and those nearby them. Motivation is the key factor in the

behaviour and attitude of the employees. In order to extract the best performance,

transformational leaders need to motivate employees in different way to a certain level.

"The term motivation refers to factors that activate, direct, and sustain goal-directed

behaviour... Motives are the "whys" of behaviour - the needs or wants that drive

behaviour and explain what we do. We don't actually observe a motive; rather, we infer

that one exists based on the behaviour we observe." (Nevid, 2013)

Employee motivation has always been a key problem for managers of all organisations.

Demotivated employees do not really participate in building either the profits or the

reputation of an organisation; they tend to produce low quality work and leave the

organisation if given an opportunity. On the other hand, employees who are highly

motivated can contribute significantly by producing high quality work (Amabile, M. T,

1993).

The goal of this assignment is to ascertain the importance of intrinsic motivation in

leadership. In order to do that a case study has been conducted by the using British

American Tobacco (Section 3.0) and a comparison has been made with Japan Tobacco

International for a holistic view (Section 4.0). Before moving to the case study a literature

review has been conducted on different kind of motivation in order to understand the

concept more fully (Section 2.0). The assignment closes with its concluding remarks.

(Section 5.0)

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2.0 Literature Review on different kinds of Motivation:

Motivation plays a major role in increasing the motivational level of employees in the eye

of transformational leaders. Numerous researches show that motivation can be a better

retention tool and performance motivator in comparison with money or a compensation

plan ‘The man who does not work for the love of work but only for money is not likely to

make money nor find much fun in life’ (Charles Schwab (1862-1939) was quoted in The

Best Damn Book about the Profession of Selling. Period! (Howard B, Rutstein, 2006). As

a result there always been a debate on this issue. It is worthwhile to mention here that

motivation can mainly be divided into two parts -

2.1 Intrinsic Motivation:

When an employee does an activity for its innate satisfactions rather than for an extensive

outcome it is essentially intrinsic motivation. Amabile, M. T, (1993) argues that

employees are intrinsically motivated when they enjoy, an interest, the satisfaction of

curiosity, self-expression or personal challenge within the organisation. According to

learning theories (eg Hull, 1943 which is typical) all behaviours are motivated by

physiological drives (and their derivatives) and people become satisfied completely if

they are intrinsically motivated through satisfaction of their innate psychological needs.

Deci (1980) saw intrinsic motivation as the “need for capability and self-determination”

and Bandura and Schunk (1981) explained that “a sense of personal efficiency in

understanding challenges is pertinent to breed greater interest in the activity than is self-

perceived inefficiency in making capable performances” Deci (1972) also stated that

intrinsic motivation tends to decline when extrinsic tools are offered depending on

performance, as these rewards may lessen an individual's intellect of personal connection

and feelings of capability.

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ExtrinsicIntrinsic

2.2 Extrinsic Motivation:

It is a concept that pertains whenever an activity is done by an employee in order to attain

some separable outcome, preferably tangible. This might take the form of a reward: a pay

raise, a cash bonus, a gift or some other good or benefit than can be easily be called

tangible reward for performance. Amabile, M. T, (1993) argues that employees are

intrinsically motivated when they engage in the work to obtain some target that is apart

from the work itself. According to Deci (1972), extrinsic motivation is a concept that

relates whenever an action is done in order to get some distinguishable result; and Ryan

(1982) suggested that extrinsic motivation operates when a person performs an act in

order to enhance or maintain self-esteem;, or when companies seek to get the best out of

their employees by offering tangible resources like monetary benefits or promotion.

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3.0 Case Study: Intrinsic vs. Extrinsic: The importance of Intrinsic Motivational

Tools in British American Tobacco

British American Tobacco (BAT) is one of the leading companies in tobacco industry

and has operated successfully since 1873. BAT is a pioneer in blending innovation with

experience in every aspect of operations, especially in employee satisfaction.

BAT operates in more than 180 countries in the world with 55,000+ employees. Across

all the functions, BAT is highly appreciated for outstanding employee benefits. In

particular there are high standards of employee benefits .These added benefits include

flexi work time, informal group meetings in both indoor & outdoor locations, recognition

through global notice board for high performers, yearly employee satisfaction survey and

proactive actions based on that

Intrinsic Motivation is vital for the British American Tobacco leadership teams &

managers in many ways. Reward & recognition policies are based on attracting, retaining

& motivating top talent in the organization and letting them drive great performance.

BAT believes in rewarding employees competitively and fairly for their contribution

towards delivering business results. Reward & recognition is based on four pillars. They

are – Growth, Productivity, Winning Organization and Sustainability.

Thus BAT employees drive growth through giving their best efforts; in turn, BAT

ensures maximum productivity by providing the best working environment for them.

Winning Organization means placing the organization before any individual: team work

instead of individual brilliance. The collective effort of the team is more productive and

growth centric than one individual performing outstandingly. And the final part of

sustainability means continuity in every sphere of the organization.

BAT leaders are therefore exemplary in that they seek to leverage intrinsic motivational

tools to grow their team’s performance and utilise their maximum potentials. Some of

classic results of their approach are:

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Figure: Benefits of Intrinsic Motivation

Higher Morale

Successful use of intrinsic motivational principles raises morale for employees and teams

in BAT. These principles are related to an employee’s recognition, self-esteem,

ownership etc. They intrinsically reward the performing employee so that it boosts

his/her morale.

Maximum Productivity

Employees who feel good about their jobs and their performance tend to perform at an

even higher level which results in maximum productivity in time, cost & quality. HR &

Line Managers in BAT makes sure that the employees feel good in their job so that they

have the best drive for result attitude in them. These certainly enable employees to

deliver their maximum output/productivity in their particular job. As a result of this, the

company always has the capacity to bring out the best in each employee.

Lower Absenteeism

Employees who feel they’re important to the organisation look forward to coming to

work; and this results in lower absenteeism. As employees are highly motivated and their

drive for results is high, they always want to give more. This further leads them to

maximise their impact at every opportunity.

Higher Retention

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Line Managers generally strive for better employee/supervisor relationships, for

increased engagement, and for interaction with employees that makes them feel valuable

to the organisation. A motivated and happy employee will always look to build his/her

career around the job s/he is doing right now. Whenever employees are happy, they tend

to stick with the current job. And these factors lead the company to have higher retention

rate than companies that do not foster intrinsic motivation.

Best Bottom Line Results

Managers able to get the best from each employee ultimately affect the bottom line. In

BAT managers are trained to become charismatic or transformational leaders so that they

can inspire their teams in what they say and do. These managers usually go for intrinsic

motivational tools to encourage their teams. Furthermore, there is competition between

teams, and a mutually beneficial and symbiotic relationship develops between manager,

team and the work in hand.

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3.1 Intrinsic Motivational Techniques used at British American Tobacco

There are many ways to motivate employees intrinsically. Managers at British American

Tobacco leverage seven factors to promote intrinsic motivation. These are –

Figure: Intrinsic Motivational Tools used by BAT

Interest:

It is an activity that stimulates an employee’s attention to achieve or get the job done.

Leaders should always focus on an employee’s needs fulfilment tools. They always mix

and match different techniques like a global employee recognition board (where the best

employees of the quarter are announced), taking the team on an informal tour to energise

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Co-Operation

Recognition

Competition Task

Control

Imagination

Interest

Intrinsic Motivation Techniques

them, giving unannounced leave etc., all to create a buzz or excitement among

employees. This increases the interest of the employees in their job.

Task:

BAT provides each employee with a goal which involves a certain amount of difficulty

for the employee. An employee is not allocated the most difficult task from the

beginning. Rather they are given a certain task with deadline that can be finished with

some ease. When employees continue to meet deadlines successfully, their confidence

increases.

Control:

BAT allows employees to have a choice in what happens in their activities. Each

employee gets some sort of control in their job. This element of control increases their

ownership in the task, and develops the decision-making skill of the employee. By

continuously doing this, the employee becomes more confident and motivated and they

become an asset for the company.

Imagination:

BAT uses creative games to promote learning in the workplace. The company arranges

informal sessions, a tour or a task. It gives the employee the capacity to organise feeds

into leadership training and development as well.

Competition:

BAT compares the performance of one employee to another to show their current

progress during a task. It is always better to show the same level employees their

performance relative to others. A healthy competition among employees will only result

in the betterment of the organisation.

Co-operation:

BAT habitually encourages employees to help each other to achieve goals and to think

about the broader picture. Team spirit is fundamental to the success of the organisation.

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Line managers always encourage employees to work for the betterment of the team, not

for the individual themselves.

Recognition:

BAT appreciates employees’ accomplishments through different means of recognition;

this in turn can intensify their motivation. Line managers are trained to appreciate and

recognise their employees in the right channel or in the appropriate forum. Recognition of

this kind helps employees to increase their morale as they feel, they are an inseparable

part of the team.

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3.2 Reward and Recognition Techniques used in British American Tobacco

British American Tobacco believes that employee recognition is vital in keeping

employees happy. They usually follow the below techniques:

Figure: Reward & Recognition Techniques in BAT

Praise:

Line managers recognise their employees for a job well done & thank them at the end of

the day. They praise their employees for doing a great job, particularly if they catch them

doing something well – and tell them how well they did, praise them in public, gather

their team together for a moment and celebrate an accomplishment.

Development:

They consistently train their employees, increase their skill base, and prepare them to fill

in at the next level, or make temporary assignments to different departments. The new

joiners go through a three day intensive induction module to accustom themselves with

the company. Along with that they provide functional trainings to employees who are

ready for promotion. In addition to that, they send employees to expatriate assignment to

gain experience and exposure from the assignments.

Promote from Within:

BAT managers tend to prefer an internal promotion, which not only recognises the

employees involved but also ensures that others know that advancement is possible.

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Communicate Track & Post KPIs

Informal Leadership Roles

Promotes from Within

DevelopmentPraise

Managers make sure employees know what skills are required to take that next step, and

make sure they provide the resources to gain those skills.

Create Informal Leadership Roles:

Line managers find ways to create informal leadership roles for their employees, like

allowing them to lead a small project, to train new employees, to give facility tours to

visitors, or simply to share experiences from a training seminar or inter-departmental

assignment with the rest of the team. Transformational leadership is presumed as a task

involving development through delegation and the best approaches of delegating work

are learnt by a manger through exercise and on the job experience. The manager should

identify that learning is a result of the chances faced during a task. This is why employees

with more exposure and opportunities and employees who have worked with a number of

tasks during their career have the extra edge of developing and growing in a professional

manner to grow later into successful managers of their own. (Bass & Avolio, 1993)

Communicate:

BAT managers communicate with employees in formal, informal, written and spoken

ways to share their ideas, their suggestions and their concerns.

Track and Post KPIs:

BAT managers make sure that their employees know how they & their department are

performing. They post results, discuss improvement needs and, most importantly,

celebrate accomplishments (measured in line with the company’s goals). As activities are

followed up continuously, the employees feels important as they are able to see that their

work is evaluated and recognised in the right channel though the right forum. Because of

this, they take their every opportunity or work seriously no matter how important it is and

try to deliver their maximum effort on the job.

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4.0 BAT vs. JTI (Japan Tobacco International): The opposite approach of JTI in

Motivational Tools utilization

BAT seeks to change and adapt reward and recognition techniques to keep employees

highly motivated. It is a difficult task as there is a large and diversified employee pool.

But this can be achieved through tailoring the reward and recognition schemes and

matching them to employee needs and demands. This requires research inside & outside

the company to find the best motivational tools for line managers.

On the contrary, a core competitor of BAT is JTI. They are always famous for providing

extrinsic benefits towards their employees. They provide good compensation to the

employees with profit sharing, yearly performance bonus and other monetary incentives.

Although they are not focused on individual performance management which is why they

have lower retention rate than BAT. Their managers believe transactional leadership as

they are more focused on compliance through monetary reward or punishment. Their

approach is keep the same structure for infinity and they pay attention to find employees

faults and deviations.

If we compare the extrinsic and intrinsic factors of both companies, then we will be able

to get a clearer picture –

BAT Salary Job Title JTI Salary

£ 55,000/Year Finance Manager £ 61,000/Year

£ 35,000/Year Key Accounts Manager £ 38,000/Year

£ 38,000/Year Regional Sales Manager £ 42,000/Year

Table: Pay Comparison of BAT & JTI

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BAT Recognition Recognition Head JTI Recognition

Yes Expatriate Assignments No

Yes Benefit Car No

Yes Individual Development

Scheme

No

Table: Recognition comparison of BAT & JTI

The above tables are a clear guideline about the two companies’ approaches regarding

employee benefits. BAT is more inclined towards intrinsic factors as they focuses on

providing individual recognition and JTI is towards extrinsic factors as they focuses on

monetary factors.

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5.0 Conclusion

Intrinsic and extrinsic motivation tools are both necessary for any organisation in order to

motivate employees, especially in large and diverse organisations like BAT & JTI. Which

motivational principles should be used, and how & when they should be used are matters

of fine psychological and organizational judgement. Intrinsic motivational tools are

highly appreciated by those employees who are in the upper or mid-level of the

organisation because these employees are more likely to respond to incentives that

address their self-esteem or self-actualisation needs (which are unlikely to be physical

motivational tools like monetary reward or gifts at this level). However for employees at

lower levels within the organisational structure (who may have greater economic need)

extrinsic tools are more appropriate than intrinsic.

So finally, it can be concluded that BAT successfully balances intrinsic and extrinsic

motivation better than JTI. However, the most important tools of motivation they use are

the intrinsic motivational tools.

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Reference:

Amabile, M. T, (1993) Motivational Synergy: Toward New Conceptualisation of

Intrinsic and Extrinsic Motivation in Work Place. Human Resource Management Review,

Vol3, No. 3,185-201

Anderson C., Hellriegel D. & Slocum J (1977) Managerial response to environmentally

induced stress. Academy of Management Journal, 20, 260–272.

Bandura A., Adams N. E., Beyer J. (1977) Cognitive processes mediating behavioural

change. Journal of Personality and Social Psychology, 35, 124–139.

Bandura A., Schunk D. H. (1981) Cultivating competence, self-efficacy, and intrinsic

interest through proximal self-motivation. Journal of Personality and Social Psychology,

41, 586–598.

Bass, B. M., & Avolio, B. J. (1993) “Improving Organizational Effectiveness

throughTransformational Leadership” London: Sage.

Brief A. P., Aldag R. J. (1981) The “self” in work organisations: A conceptual review.

Academy of Management Review. 6, 75–58.

Burns, M. J. (1978). Leadership. Harper & Row.

Deci E. L.(1972) The effects of contingent and non-contingent rewards and controls on

intrinsic motivation. Organisational Behaviour and Human Performance. 8, 217–229.

Deci E. L. (1980). The psychology of self-determination. Lexington, MA: Lexington

Books.

Deci E. L. (1975). Intrinsic motivation. New York: Plenum.

Deci E. L., Ryan R. M.(1985) Intrinsic motivation and self-determination in human

behaviour. New York: Plenum.

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Howard B, Rutstein, (2006), The Best Damn Book about the Profession of Selling.

Period!

Nevid, J. (2013). Psychology: Concepts and applications. Belmont, CA: Wadworth.

www.glassdoor.com/Reviews/British-American-Tobacco-Reviews-E8378.htm

www.glassdoor.com/Salary/JT-International-Salaries-E8764.htm

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