Introduction
Cost-benefit analysis for a motivation program is a complicated process to calculate, since the advantage that a particular motivation factor will bring is hard to predict. The effectiveness of different motivational factors depends on the working environment, employees, and the leader’s skills, and it can only be determined in practice. However, the purpose of this assignment to assume the cost of implementing each of the methods and the estimated effect to understand the need for their applying.
Main text
I previously determined that factors such as extended benefits package, monthly bonuses, an annual prize, the praise of leader, and a flexible schedule can motivate employees. The main reason for this analysis is to determine the most profitable and simplest of this factors to motivate employees. The praising and honoring of workers by a leader is the easiest of them to use, since this method does not require additional costs, but gives employees confidence in their actions and a desire to develop. I should also determine the costs of monthly bonuses that are paid in the case of the implementation of the plan or the initiative of the employee. I suppose that the employee’s salary in the company for the month is $3,000, and the profit from this employee is $15,000. Also, a monthly bonus of 10% raises employee productivity by 10%. Thus, the average gain from one employee is $1,200 per month, or $13,200 per year (minus one month of vacation).
Providing a flexible schedule is also beneficial for the company and me as it increases the productivity of employees, with the same pay. I can say that an employee’s rate depends on the number of shifts or working days, while he or she has clearly set tasks to fulfill. As an alternative, there is an established eight-hour workday with hourly pay. In the first case, the employee is interested in completing tasks quickly and efficiently and spending the rest of the time either to relax or to work on other projects that can bring him or her income. In the second case, the employee “spreads” the performance of the duties throughout the whole working day, since he or she has no motivation to finish everything faster. Thus, an employee with a flexible schedule can be involved in a higher number of projects, and even if 10-20% of bonuses for top results are received, the costs are low. If an employee prefers to spend saved hours for rest, I do not lose profit, but I have a happy and satisfied employee.
Another motivation factor is the annual award to the best employee. This prize should be worthy of competing for it, so I suppose it can be a two-person vacation worth $ 10,000. In this case, employees receive a triple motivation to work more efficiently, precisely the competition factor, the desire to be the best, and the opportunity to spend a week at the resort “all-inclusive”. Further, I can say that the company has 200 employees, and 100 of them are interested in winning, and there is not one prize but five for the best employee in each department. Competitors work on average, 10% more efficiently than disinterested employees. This fact means that the company will receive approximately $1,32 million while spending $40,000 on prizes.
However, it is also possible that the annual prize of any value will not be successful, since the employees need better management, clear task setting, or their involvement in decision-making processes. Then, this option of motivation has a present value of the costs that exceed the present value of the benefits; therefore, it is unprofitable (Brent, 2017). In this case, I can use motivational prizes with lower costs as an alternative to check this factor, for example, a more comfortable or status office. Thus, motives such as competition and the desire to be the best remain unchanged, but the cost of a prize is minimal or zero.
Conducting a cost-benefit analysis for a factor such as an extended benefits package is currently pointless for several reasons. Firstly, the basic benefits package is essentially mandatory for any company that is interested in loyal employees and low staff turnover, since people want to have social and medical guarantees. Secondly, it is impossible to assess what additional conditions have to be included in the benefits package without conducting surveys among employees and assessing the company’s capabilities. If I add the entire range of possible services, then the cost of it may be too high, and some options unclaimed. Therefore, it is necessary to determine the best option benefits package and its impact on employee loyalty and related profits.
Conclusion
There, the most beneficial motivation factors are the praise of employees by a leader, a flexible schedule, and monthly bonuses. The first two factors do not require additional costs, both in the case of their effectiveness and uselessness. Monthly bonuses bring costs only if the productivity of employees increases, which brings a profit to the company. At the same time, the annual prize has high risks and costs in case of failure, although its cheaper alternative may partially reflect the effectiveness of this idea. The combination of these factors with an adequately selected package of benefits will ensure a constant increase in employee productivity by increasing employee loyalty, professional experience, and skills. Therefore, this improvement guarantees the growth of the company and its successful functioning in the long-term perspective. However, despite the obvious financial benefits of some motivating factors, it is impossible to assess their actual effectiveness without putting them into practice.
Reference
Brent, R. J. (2017). Advanced introduction to cost-benefit analysis. Cheltenham, United Kingdom: Edward Elgar Publishing.