Manulife vs. Toyota: A Case Study of Reward Systems in Multinational Companies

Background of Manulife

It can be argued that the unique reward systems implemented by companies can be an essential factor in either attracting potential employees, motivating employees, or even at retaining their current workforce. However, different employers tend to have different rewards systems depending on the industry they operate in or the country they may originate from due to the different cultural norms and beliefs. Hence, we have chosen Manulife, a multinational Canadian company operating within the financial industry and Toyota, a world-renowned Japanese car manufacturer, to compare their reward system, due to the contrasting nature of their services and their organisational culture.

Founded in 1887, Manulife is a Canadian multinational company that provides financial services, insurance, and wealth management solutions (Manulife, n.d.). With multiple offices established worldwide, their focus lies within the Asian market with over 120+ years of experience and 10 offices all around Asia (Manulife, n.d.), whilst managing assets worth over $365 Billion (Manulife, n.d.). Their products and services include life insurances, savings, and investment plans (Manulife, n.d.). The current CEO of Manulife is Roy Gori and by the end of 2019, they currently have over 35,000 employees and 98,000 agents within their workforce (Manulife, n.d.). Manulife’s culture tries to emphasise on people, as they believe that their employees are a key factor to move the business forward. Manulife operates with a divisional structure, as it is a parent company with many subsidiaries which enables them to manage the operational flow of each independent subsidiary smoothly. Manulife’s mission is “Decisions made easier. Lives made better” (Manulife, n.d.).

Toyota Motor Corporation was founded in 1937 and is a Japanese motor vehicle manufacturer based in Japan (Toyota, n.d.). Their reputation extends worldwide, most notably for their reliable cars and introducing the concept Toyota Production System (Lean manufacturing). With over 10.7 million units sold worldwide in 2019, Toyota is the biggest car manufacturer in the world (Statista, 2019), offering customers a variety of cars from hatchbacks, sedans, sports cars, and SUV’s. In addition, they are also the parent company of the luxury car manufacturer, Lexus. As of 2019, their capital stands at around 635 billion Yen or USD $5.8 Billion (Toyota, n.d.). The current president of Toyota is Akio Toyoda, with an employee count of around 370,000 as of 2019 (Toyota, n.d.). Toyota’s culture emphasises on the importance of continuous learning and growth by providing their employees with training to shape employees with the “Toyota Mindset”.

Background of Toyota

Motivation can be defined as “psychological forces that determine the direction of a person’s level of effort and a person’s level of persistence in the face of obstacles.” (Kanfer, 1990). Similarly, Darmon (1990) agreed that motivation starts within the psychology of an individual and gradually promotes a specific behaviour. Motivation was and remains a popular research topic among educational psychology researchers and plenty of research has been conducted in regards to the motivation for learning in the last 150 years (King, McInerney & Pitliya, 2018). Later, Bartol and Martin (1998) went further to describe motivation as a tool that determines and strengthens behaviours to propel forward while Robbins (1993) explained motivational as the willingness to strive in hope to attain organizational goals in order to satisfy certain individual needs.

Gradually, the scope of motivation has moved towards the study of culture and human variability in the past 40 years (King, McInerney & Pitliya, 2018). With the extensive level of knowledge gained from past studies, leaders in the business world have been applying the knowledge to create an environment where employees feel empowered and trusted which ultimately aims to enhance organizational performance (Kress et al., 2004). In short, the most distal motivation theories have succeeded in predicting humans’ constructs like decision processes, intentions, behaviour and performance.

There are two types of motivation, one of them is intrinsic motivation (George &  Sabapathy, 2011). Intrinsic motivation means the motivation obtained through the enjoyment and indulgent in the particular action or job itself (George & Sabapathy, 2011). In other words, performing a task so for its inherent satisfactions and not for some separable consequence such as rewards and pressures. The phenomenon of intrinsic motivation was first discovered when conducting studies with the animals where it was found that even without the reinforcement of rewards, numerous organisms were engaged in playful and curiosity-driven behaviors (White, 1959). Similarly, it is human nature to be present in a state of curiosity, inquisitiveness and activeness where they tend to learn and explore anything without extraneous incentives (Kesari, Verma & Atulkar, 2015).

Such motivational tendencies develop the knowledge and skills of humankind and form naturally in the cognitive and physical processes via acting on one’s inherent interest. Kesari, Verma and Atulkar (2015) explains that the proclivity to take interest and innovatively applies the skills in daily lives does not only apply to childhood, but appears as a significant feature of human nature that affects performance, satisfaction and well-being. Clearly, intrinsic motivation is the feelings of satisfaction, accomplishment and competence-derived from engaging in an activity that is of interest to a person.

Literature Review

Inversely, extrinsic motivation refers to the motivation coming from the external factors which includes tangible rewards like money, award and recognition, unlike intrinsic motivation (George and Sabapathy, 2011). Despite recognising the importance of intrinsic motivation, many of the activities people do nowadays are leaning towards extrinsic motivation (Bard, 2006). This is especially true for cases after early childhood and towards the working world as people are shaped in a way that is conforming to the society's expectations.

For instance, a student who does his homeworks is extrinsically motivated (prevents from getting scolded) and not because he is intrinsically motivated (enjoys doing it). Perry, Hondeghem and Wise (2010) pointed out that extrinsic motivators like money can generate extrinsic motivation as they are able to produce desire for the consequence of the activity. Zooming into the workforce, Bard (2006) found that lower management of a company tends to be more attracted to extrinsic motivators as compared to higher management.

Since they have lower wages, they are more likely to be motivated by monetary components. As one is approaching a high level in an organization, one tends to have a more balanced view of utilising intrinsic and extrinsic motivators (Bard, 2006). Realising results from studies that employees at different position levels tend to emphasize differently on either intrinsic or extrinsic motivators, such knowledge is vital and gives organizations a better idea to motivate employees in order to enhance job performance and satisfaction.

Equity theory was first introduced in 1963 by John Stacey Adams and was regarded as the theory of justice which attempts to understand and evaluate the level of fair distribution of resources against interpersonal relationships (Adams, 1965). Gradually, this theory extends the traditional view and is explored further to its utility in the corporate world as a method to motivate employees (Werner & Ones, 2000). The theory proposes that people perceive fair treatment in the workplace by weighing on the ratio of inputs (performance) to outputs (reward) in two ways: self input-output ratio comparison and social comparison (Taylor, Kluemper, & Sauley, 2009).

Inputs refer to the employees’ contribution to the job scope which include level of effort, time spent and abilities while outputs mainly revolve around monetary form (Adams, 1965). The first approach, self input-output comparison suggests that when inputs and outputs do not match, the perceptions of inequity tend to result in distress where employees will be motivated to reduce the unfairness (Homburg, Hoyer & Stock, 2007). On the one hand, when employees feel under-rewarded, they are motivated to address the difference of their ratio of input and output against their coworkers by reducing inputs (slacking off and being less productive) (Homburg, Hoyer & Stock, 2007). One the other hand, when they feel over-rewarded, they are motivated to restore the perceived equity by increasing inputs (increasing productivity) (Homburg, Hoyer & Stock, 2007).

The second comparison, social comparison takes into consideration other employees’ input-output ratios (Homburg, Hoyer & Stock, 2007). Even if the employee receives equitable input-output ratio, his/her motivation can be affected if they perceive others’ input-output ratios as more favourable. Despite the clear elucidation of the concept, equity theory is subject to critique as well. The theory is not always replicable in the field due to complex individual variation for equity (Ryan, 2014). Furthermore, Fadil, Williams, Limpaphayom and Smatt (2005) propose that culture orientation such as individualism and collectivism have implications on equity preferences. Despite the limitations, equity theory remains to be one of the most ubiquitous motivation theories applied in the workforce and constantly inspires ongoing research on organizational issues of equality. - distributive & procedural.