Apple is an American multinational company founded in 1976 by Steve Jobs and Steve Wozniak. It designs, manufactures and sells electronic devices ranging from personal computers to smartwatches. With up to $78.4 billion in sales revenue as of 2017, Apple is classified as one of the most successful brands of all time1.
The topic addressed in the research question is of high importance to Apple as it coincides with the objectives set by the current CEO of Apple, Tim Cook; “We believe that we are on the face of the earth to make great products and that’s not changing”2. Apple’s production is dependent on their motivational methods and the satisfaction of their employees. Therefore, in order for Apple to maintain their high level of productivity, they will need to effectively motivate their workforce.
Throughout the course of this essay, I will analyze Apple’s current methods of motivating their employees and the impact it has on labour productivity. This will aid me in answering the following research question: “To what extent is labour productivity and performance at Apple dependent on motivational methods?”
Motivation (either extrinsic or intrinsic) is defined as internal and external factors that stimulate desire and energy in people to be continually interested and committed to a job3.
I will be looking at Apple predominantly in the context of the human resources topic of the Business and Management syllabus, exploring the different motivational theories used by Apple and investigating the impact it has on the performance of their workforce. The essay will mainly focus on the motivational theories: Maslow’s Hierarchy of Needs and Herzberg’s two-Factor Theory. The theories have been specifically chosen as they represent the different ways of motivation and categorize them in level of importance.
Methodology: This information gathered will solely consist of secondary sources such as magazine articles, books and blogs. The main reason behind this is that Apple operates as a Public Limited Company; therefore, all necessary information is accessible. Despite the facts and values presented in this essay are correct, secondary sources tend to contain some elements of bias therefore this can be considered as limitation for this essay. Furthermore, in order to accurately analyze Apple’s motivational methods. External, individual and organizational factors must be taken into account as they have an effect on motivation which will in turn also affect labour productivity.
As of 2015, Apple employs approximately 98,000 workers worldwide. Yet Apple holds the highest labour productivity, with annual profits of up to $1.8million per employee.4
Apple’s leadership team have always recognized the importance of motivating their staff, as the Apple co-founder, Steve Wozniak expressed: “The most important ingredient to becoming successful is having motivation”5. Motivation plays a significant role in obtaining a high-performance rate from their workforce. All methods of motivation can be classified as either extrinsic or intrinsic. Intrinsic motivation involves engaging in a behavior because it is personally rewarding6. On the other hand, extrinsic motivation occurs when we are motivated to perform a behavior or engage in an activity to earn a reward or avoid punishment7.
Application to theory:
Maslow’s Hierarchy of Needs
First of all, Apple’s current motivational methods can be analyzed through an application of Maslow’s Hierarchy of Needs. This theory, first proposed by Abraham Maslow, suggests that employees are motivated by five essential needs, these include physiological needs, safety needs, social needs, esteem needs and self-actualization needs. The first 4 four needs are essential for employees, if they are not achieved, employees will suffer from anxiety and stress. Self-actualization involves fulfilling the employees’ full potential, allowing them to work to the best of their abilities. We must acknowledge that this theory is not flawless meaning that it has some limitations, one being that it does not take into account that employees have different personalities. Therefore, an employee may be motivated through fringe benefits and another employee may be driven by financial rewards.
Apple fulfills the employees’ physiological needs by providing salaries averaging at $170,000, ranging from $84,200 to $267,000 per employee including financial incentives such as bonuses8. The salaries provided by Apple are high enough to cover all basic needs such as food, warmth and shelter. Furthermore, the wide range of salaries gives employees an incentive for promotion, ultimately increasing productivity in the process. Alternatively, the wide range of salaries can lead to disputes between the employees as some might see themselves doing more work than others who are receiving a higher salary. This will severely damage the working environment as competition starts to arise between the employees. This will result in lower productivity. Another basic need satisfied by Apple is food. In 2014, Apple confirmed the opening of their brand new private cafeteria, catered to fulfill the needs of their workforce9. Not only does the café serve to achieve basic needs, but they also procure social needs by enabling employees to socialize, thus strengthening the relationship between employees. However, a possible negative outcome of providing such a facility is that employees may misuse what’s offered and spend too much time socializing rather than working, this will lead to inefficiencies and lower productivity.
In terms of safety needs, Apple addressed the extension of the paid maternal leave duration to four weeks before the due date, and 12-14 weeks after delivery10. This exemplifies how Apple continuously strives to improve their methods of motivating their female employees, despite the fact they are heavily outweighed by men. Infact, in 2014 Fortune magazine released an article, showing how tech companies compare in employee diversity. Apple had one of the lowest diversity rates with women representing only 30% of the organization.11 Therefore, by improving the benefits provided to the female employees, Apple will increase the job satisfaction of women and give them a sense of security and belonging. Job security for employees is an important factor, specially to those are working at large organizations such as Apple. Due to the large number of workers in Apple, employees tend to feel that their contribution to the company is very minimal meaning that they can easily be replaced. In order for Apple to resolve this issue, employees will need to constantly be praised by their managers.
Once Apple have successfully achieved basic needs, they divert their focus onto esteem and self-actualization needs which involve employees fulfilling their potential. To encourage employees to work to the best of their abilities, Apple leaders give their employees freedom when designing new products. As the Apple product manager Borchers recalled, Steve Jobs never gave his engineers specific tasks, instead he gave them a mission: “Create a phone that people would love so much that they would never leave the house without it”12. By giving employees freedom in their work, they understand that they have gained their manager’s trust, which will encourage them to work to the best of their abilities in order to live up to the high expectations set. However, with the lack of instructions given, the stress levels of employees increase and so does the likelihood of making a mistake. Following the months of hard work engineers spent producing different iPhone models, Steve jobs insisted that they start the production process all over again as the designs were not good enough in his eyes. “All this work you’ve done for the last year, we’re going to have to throw it away and start over”13. In this instance, Steve jobs can be seen as a very demeaning figure that only cares about Apple’s image. However, the honesty displayed in that statement portrays the close relationship he has with his employees, helping them learn from their mistakes and avoid it in the near future.
Apple’s motivational methods are more based on intrinsic rewards rather than extrinsic rewards. Challenging tasks are given to the employees as a form of job enrichment. This is reflected by the quote once said by the founder of Apple, Steve Jobs: “My job is to not be easy on people. My job is to make them better”14. Not only does this allow employees to develop new skills such as problem solving and critical thinking, but it also increases labour productivity benefitting Apple as well. On the other hand, some employees may feel like they’re being exploited, therefore they might refuse to carry out the task as it is beyond their capabilities or they would only complete the tasks if a financial incentive is offered.
Intrinsic motivation usually in the form of non-financial rewards, has led to the success of many Apple products. As the designer of both the IPhone and IPad Johnathan Ive stated” Our goal and what makes us excited is to make great products”. The success of Apple’s motivational methods can be represented by the success of the IPhone and IPad. As displayed in the pie chart below, these two products have accounted for over 75% of Apple’s sales revenue in the first quarter of 2017. This is indicative of how effective the motivational methods are because the amount of sales is dependent on the productivity of the workforce.
Job rotation is another method of non-financial rewards, used by Apple. It is essential to rotate employees the organization and allow them to carry out a variety of tasks as it increases job satisfaction and in turn labour flexibility. This is because carrying out the same duties daily can lead to boredom and a lack of interest, which can result in lower productivity as the employee works with very minimal effort. If an employee is moved to different positions, he will acquire new sets of skills that may benefit him personally and the organization. In the instance where an employee is absent due to an illness, another employee will be able to cover his duties which will help maintain the high level of productivity. Apple recognizes the importance of job rotation and apply it on a regular basis. As the former Apple engineer, Sachin Agarwal said: “The engineers on the Mac OS and iOS teams move back and forth between the two projects”15. Alternating between different tasks frequently can also have negative outcomes. Instead of doing one job and mastering it, employees learn a variety of skills but on a very basic level. Therefore, making it harder for employees to specialize in their area of expertise. This will negatively affect the production rate as specialized employees can carry out a specific task at a faster rate.
As of today, information regarding Apple’s use of financial incentives is very limited. Apple have offered their employees discounts after successfully releasing the IPhone in 2007 and the Apple watch in 201516. Additionally, they have offered some of their top tier employees bonuses amounting to 3-5% of their base salary17. Besides that, Apple have overlooked the importance of providing financial incentives and have focused more on non-financial incentives such as job enrichment. With Apple employees receiving an average salary of $170,000 per year, they are not very concerned about their income, instead they would rather learn new skills and enjoy their work by carrying out different a variety of duties. By implementing new financial incentives such as employee share-ownership schemes, both employee satisfaction and productivity will increase. This is because employees become partial owners so it provides them with an incentive to work harder. This will lead to higher output which will further lead to more sales.
Motivation Factors Model:
An inference can be drawn from the model which is that motivation is dependent on several individual, organizational and external factors.
Many theorists such as Maslow and Herzberg have been able to provide a valuable insight into the concept of motivation however they do have limitations as they do not essentially apply nowadays due to the rapid changing business environment. Therefore, it was necessary to develop a model that takes into consideration these factors.
PEST analysis is a simple and widely used tool which helps with the analysis of the political, economic, social and technological changes in the business environment18. Businesses such as Apple have very limited control over the external business environment. However, they can make plans for changes in the elements of the business environment. Between the years 2008 and 2013, the great recession occurred which severely damaged many companies including Apple19. The table below displays the plummeting of sales, showing how big of an impact the recession had on Apple. In hopes of counteracting this issue, Apple had to reduce its expenses. One method of doing so is the reduction of employee wages. According to Maslow’s hierarchy of needs, this will lead to the demotivation of employees as it will be more challenging for them to cover their basic needs. This means that employees will suffer from anxiety and stress while working which will increase the chances of making a mistake, therefore productivity will decrease as a result.
An organizational structure is a system used to define a hierarchy within an organization. It identifies each job, its function and where it reports to within the organization20. At Apple, employees are split up into small teams, each carrying out a particular function. This means that communication and collaboration between the employees is the key to success. Additionally, this can be motivational for employees as they can easily seek assistance from their highly-skilled colleagues. However, with an organization structure that is dependent on teamwork, the consequences of miscommunication due to culture clashes are more threatening. Despite the fact that over 50% of Apple’s workforce are white, Apple is seen as a very diverse company consisting of several ethnic groups. This can be beneficial for Apple as employees of different backgrounds may deliver new methods of production which may be more efficient, leading to higher production. However, some employees may feel isolated and find it very difficult to adapt to the business environment, meaning that they will be uncomfortable and not work with maximum effort. Furthermore, with differences in culture, the likelihood of a conflict between employees increases which may lead to a higher labour turnover.
These include the factors that make every person differ from the other due to their individuality and different preferences. For a manager to be able to effectively motivate his employees, a full understanding of the employees’ personalities is required. This is because every employee is unique and will have different ways of getting motivated. With reference to Apple’s organizational structure, each manager is accountable of a maximum of 4 employees. This gives each manager the chance to fully understand what motivates each of his employees and allows him to effectively encourage his employees to work to the best of their abilities.
Herzberg’s two factor theory:
In 1959, Fredrick Herzberg proposed a two-factor theory known as the motivator-hygiene theory. According to his theory, job factors either result in satisfaction or dissatisfaction21. Hygiene factors are those factors at the workplace which are essential for the existence of motivation. If they are not present, employees will be dissatisfied. A limitation of Herzberg’s theory is that it concentrates on satisfaction and overlooks its impact on productivity. Therefore, an assumption is made rather than evidence based on analysis.
Fringe benefits are an example of a hygiene factor. At Apple, a transportation program is offered which gives approximately 1600 of its employees free rides from and to work22. This gives employees a sense of belonging and helps them adapt to the business meaning that they will feel more comfortable, allowing them to work without stressing. Alternatively, providing such a service will ensure that employees get to work on time meaning that they will always complete the working hours expected. Therefore, Apple will be able to maintain its high level of productivity and increase customer satisfaction.
On the other hand, motivators are factors that motivate employees for a superior performance. If they’re not provided, employees will not be dissatisfied however they will not be given the opportunity to work to the best of their ability. An example of a motivator would be giving employees responsibility of their work. For example, Steve jobs would give his designers tasks to complete in a short time period. Meeting were held every two weeks to monitor the progress and the quality of the work completed by the employees23. By monitoring their work, employees are encouraged to work harder in attempt of impressing their leader. This will allow employees to work under time constraints which will help them develop critical thinking. This will in turn lead to higher labour performance.
“To what extent is labour productivity and performance at Apple dependent on motivational methods?”
Following the analysis and evaluation of Apple’s motivational methods through the application of motivational theories, it can be concluded that employee performance at Apple is highly dependent on the methods used. Both motivational theories used in this investigation have limitations, making them difficult to be applicable to Apple. Furthermore, Productivity is highly, however not fully dependent on motivation. This is due to the external factors, which will inevitably impact the employees’ motivation either negatively or positively.
Another deduction that can be made from the research gathered is that Apple adopt a more intrinsic style of motivation. This is seen through the application of job rotation and job enrichment in Apple’s working environment. Finally, Apple’s levels of productivity are increasing each year due to the continuous improvements made to their motivational methods.