Page 1: Introduction
Individuals work for many different reasons. Financial rewards are frequently a key factor in influencing why individuals undertake certain jobs. However, money is not everything. Employees want to enjoy their work, be challenged by it and achieve personal fulfilment.
For many people, their careers are on-going learning experiences. This is known as intrinsic motivation. When individuals are intrinsically motivated, they are interested in their work. Put simply, it creates enjoyment whilst enabling them to achieve and contribute to desired goals. However, individuals also need extrinsic motivation. This is motivation arising from factors outside the immediate work that an individual undertakes. For example, this might include pay, conditions, grades and promotional opportunities.
This case study will analyse motivational theory in the context of the employees of ARM Holdings PLC . It illustrates that, although extrinsic motivation is a very important element in motivating employees, it is really intrinsic motivation that engages individuals and contributes to company performance.
ARM is the world’s leading semiconductor intellectual property supplier. The ARM business model involves the design and licensing of intellectual property in the field of semiconductor chips. ARM was founded in 1990 and now has offices around the world.
ARM’s main technology is its microprocessor which is at the ‘brain’ of most modern gadgets. More than 8 billion ARM processors will be shipped in 2011 by its partners. Technology from ARM is used in 95% of the world’s mobile phone handsets and in over a quarter of all electronic devices which include virtually all tablet computers, all smart phones, digital cameras, set top boxes and digital televisions.
Increasingly ARM processors are becoming the standard in virtually all areas from healthcare to cars to hi-fi. ARM does not manufacture or sell the actual finished products. More than 600 licences are sold to more than 200 companies. ARM then receive royalties for each of these licences. With more than 15 billion chips manufactured, this has enabled ARM to grow dramatically and become a global player in the semiconductor industry.
Technology and innovation
ARM has a diverse global workforce. Its 2,050 employees work across 30 sites in 15 countries. Employees come from a wide range of backgrounds from over 50 nationalities. ARM is a knowledge intensive business focused on innovation. This innovation comes from the whole business and not just its research and development team.
ARM therefore relies on its people to achieve this innovation. Its HR strategy is focused on global learning and development, talent management and appropriate reward systems in order to develop and retain the skills and expertise its people need to create innovative solutions. This will enable the business to achieve its business strategy of providing sustained returns for shareholders and employees.
Due to the technical nature of the business, the organisation is constantly changing as technologies advance. Managing change effectively requires employee engagement. ARM describes engagement as ‘commitment to the job, manager, team and organisation which drives effort and intent to stay, resulting in improved performance and retention’.
Connecting and collaborating with others enables them to develop practical solutions to problems. Research has shown that a 10% increase in employee commitment can lead to a 6% increase in employee effort. This has enabled ARM to take leadership in its field in world markets. Ensuring high levels of motivation amongst its employees is integral to ARM’s HR strategy. Teamwork is of vital importance within this innovative environment.