The impact of motivation on Organizational Performance
-
Upload
randolph-ogbodu -
Category
Documents
-
view
218 -
download
0
Transcript of The impact of motivation on Organizational Performance
-
8/11/2019 The impact of motivation on Organizational Performance
1/96
11022260 Page viii
OGBODU RANDOLPH OGHENERUNO
THE IMPACT OF WORK MOTIVATION ON ORGANISATIONAL PERFORMANCE
A CASE OF SHELL WESTERN DIVISION NIGERIA
Keywords: Motivation, Performance, Reward, Oil and Gas industry, Shell
ABSTRACT
The importance of employee motivation in the workplace has been often downplayed in the
recent past. However, globalisation, and increasing pressure on cost, gave rise to the popularity
of soft human resource management practices where employees are seen as a source of
competitive advantage. Like other resources, human resources have to be properly managed to
get the best possible benefit from them. But unlike other resources human resources are living
beings, and have a choice to decide whether or not to put in effort towards organisational goals.
This emphasizes the role of motivation in the workplace. An employee who is motivated is
willing to put in full effort, and derives satisfaction in his/her job. Acknowledging the
importance of motivation on individual and organisational performance, organisations design
strategies to motivate its employees. Organisations use strategies such as rewards to satisfy, and
meet the needs of its employees in order to motivate them to put in desired effort. However,
people are different, and so are their needs. It is therefore, the duty of management to identify
these needs and sought ways to satisfy them.
This research focuses on Shell Western division Nigeria, with the aim of examining the impact
of motivated employees on its performance, identifying the factors affecting work motivation,
and analysing the relationship between motivation and performance. For this purpose, a primary
research, using semi structure telephone interviews was used to collect data from five employees
and three managers.
Findings point to a positive link between motivation and organisational performance, whereemployees who perform on or above average were found to be satisfied with their job and
willing to put in effort towards organisational goals, as opposed to low performers. The
researcher suggests that poor performers are coached, and closely supported in order to boost
their morale. Additional findings show that good work environment, pay, and training are the
major motivating factors, while job insecurity and perceived unfairness of the performance
-
8/11/2019 The impact of motivation on Organizational Performance
2/96
11022260 Page ix
ratings are the main demotivating factors. The researcher suggests that getting employees more
involved and engaged, and improving communication would help play down the negative effects
of downsizing.
The research investigates the impact of motivation on organisational performance, analysing the
various factors that lead to motivation and demotivation in the workplace. However, close and
continuous observation of motivational factors is recommended as employee needs, and factors
affecting employee motivation may change with time.
THE IMPACT OF WORK MOTIVATION ON ORGANISATIONAL PERFORMANCE
-
8/11/2019 The impact of motivation on Organizational Performance
3/96
11022260 Page x
A CASE OF SHELL WESTERN DIVISION NIGERIA
BY
OGBODU RANDOLPH OGHENERUNO
11022260
MSc DISSERTAION
2012
Dissertation submitted to the Bradford University School of Management in partial fulfilment of
the requirements for the degree of MSc in Human Resources Management.
-
8/11/2019 The impact of motivation on Organizational Performance
4/96
11022260 Page xi
PREFACE
Shell is the largest Oil and Gas Company in Nigeria since the colonial era till date. Growing competition
in the Nigerian Oil and Gas industry necessitates that Shell keeps its staff motivated, committed and
satisfied to prevent losing its employees to other competitors. This study investigates the reward and
performance management system at Shell, the factors affecting employee motivation, and the impact ofmotivation on organisational performance.
-
8/11/2019 The impact of motivation on Organizational Performance
5/96
11022260 Page xii
DEDICATION
I dedicated this project to God Almighty for his grace to enable me complete this project.
I dedicated this project to my dad and mum, Mr. & Mrs. Philip Ogbodu, for their continued love,
support, care and guidance. I am forever grateful.
To my one and only brother Ejiro Ogbodu thanks for your love and support. God richly bless
you.
-
8/11/2019 The impact of motivation on Organizational Performance
6/96
11022260 Page xiii
TABLE OF CONTENT PAGE
PREFACE ................................................................................................................................................ xi
CHAPTER ONE: INTRODUCTION ........................................................................................................... 1
1.1 Background of the study ..................................................................................................................... 1
1.3 Research questions .............................................................................................................................. 3
1.4 Objective of the Study ........................................................................................................................ 3
1.5 Significance of the study ..................................................................................................................... 4
1.6 Structure of Research .......................................................................................................................... 4
CHAPTER TWO: THEORITICAL FRAMEWORK................................................................................... 1
2.1 What is work motivation? ................................................................................................................... 1
2.2 Motivation as a Mechanism ................................................................................................................ 2
2.2.1 Intrinsic and Extrinsic Motivation ............................................................................................... 3
2.3 Theories related to Work Motivation.................................................................................................. 3
2.3.1 Content Theories .......................................................................................................................... 4
2.3.1.1 Maslow's Hierarchy of Needs ................................................................................................... 4
2.3.1. 2 Herzberg's Two-Factor Theory ................................................................................................ 7
2.3.1.3 Alderfer ERG Theory................................................................................................................ 8
2.3.1.4 McClelland's Achievement Motivation Theory.......................................................................... 10
2.3.2 Process Theories of Motivation ................................................................................................. 11
2.3.2.1 Goal Setting Theory ................................................................................................................ 12
2.3.2.2 Equity Theory ......................................................................................................................... 12
2.3.2.4 Expectancy Theory ............................................................................................................. 14
2.4 Organisational Performance.............................................................................................................. 15
2.4.1 Link between Work Motivation and Organizational Performance............................................ 15
2.4.2 The Performance Equation......................................................................................................... 16
2. 5 Factors Affecting Work Motivation................................................................................................. 18
2.5.1 Drivers of Employee Motivation ............................................................................................... 18
-
8/11/2019 The impact of motivation on Organizational Performance
7/96
11022260 Page xiv
2.5.2 Barriers of Employee Motivation........................................................................................ 19
2.6 Managing Employee Motivation: Human resource Strategies to Enhance Employee Motivation and
Performance ............................................................................................................................................ 20
2.7 The Role of Pay and Rewards on Employee Motivation.................................................................. 20
2.7.1 Performance Related Pay (PRP) ......................................................................................... 21
2.7.1.1 Measuring Performance .......................................................................................................... 22
2.7.1.2 Effectiveness of Performance-related Pay (PRP) ................................................................... 23
2.7.2 Employee Appreciation and Recognition .................................................................................. 24
2.7.3 Employee Engagement and Performance .................................................................................. 25
2.8 Conclusion ........................................................................................................................................ 26
CHAPTER THREE: METHODOLOGY ................................................................................................... 28
3.1 Introduction ....................................................................................................................................... 28
3.2 Research Philosophy ......................................................................................................................... 28
3.3 Research Approach ........................................................................................................................... 29
3.4 Research Design ................................................................................................................................ 30
3.4.1 Qualitative research.................................................................................................................... 30
3.4. 2 Research Strategy ...................................................................................................................... 31
3.5 Sampling ........................................................................................................................................... 31
3.6 Data Collection and Instruments....................................................................................................... 33
3.7 Data Analysis .................................................................................................................................... 36
3.8 Ethical Considerations ...................................................................................................................... 36
3.9 Summary ........................................................................................................................................... 37
CHAPTER FOUR: FINDINGS AND ANALYSIS.................................................................................... 38
4.1 Introduction ....................................................................................................................................... 38
4.2.1 Work life at Shell ....................................................................................................................... 38
4.2.2 Performance Management System at Shell................................................................................ 41
4.2.3 Motivation and Reward.............................................................................................................. 45
4.2.4 Work motivation ........................................................................................................................ 49
4.3 Conclusion ........................................................................................................................................ 54
CHAPTER FIVE: CONCLUSION AND RECOMMENDATION............................................................ 56
5.1 Conclusion ........................................................................................................................................ 56
5.2 Practical Applications/Recommendation.......................................................................................... 58
-
8/11/2019 The impact of motivation on Organizational Performance
8/96
11022260 Page xv
5.4 Limitations of the Study and Scope for Further Research................................................................ 61
CIPD REFLECTION ................................................................................................................................ 62
REFERENCES ................................................................................................................................... 64
1.3 Research questions ........................................................................................................................ 73
Theoretical framework ........................................................................................................................ 77
Definitions of work motivation ........................................................................................................... 77
Motivation as a mechanism................................................................................................................. 77
Intrinsic and Extrinsic motivation ....................................................................................................... 77
The role of pay and reward on employee motivation ......................................................................... 77
Chapter summary ................................................................................................................................ 77
2. Research Methodology ....................................................................................................................... 77
3. Findings and Analysis ......................................................................................................................... 78
4. Discussion/Conclusion ........................................................................................................................ 78
-
8/11/2019 The impact of motivation on Organizational Performance
9/96
11022260 Page xvi
APPENDIX
Appendix A: Dissertation Proposal...........................................................................................73
Appendix B: Research Onion....................................................................................................81
Appendix C: Details of Semi-Structured Interview Questions.................................................82
LIST OF FIGURES
Figure 2.1..................................................................................................................................10
Figure 2.2..................................................................................................................................12
Figure 2.3..................................................................................................................................14
Figure 2.4..................................................................................................................................18
Figure 2.5..................................................................................................................................22
LIST OF TABLES
Table 3.1..................................................................................................................................35
Table 5.1..................................................................................................................................61
-
8/11/2019 The impact of motivation on Organizational Performance
10/96
11022260 Page 1
CHAPTER ONE: INTRODUCTION
1.1 Background of the study
Motivation is a key predictor of employee performance (Saks and Hacoun, 2010). Over
the years, the term 'motivation' has attracted the attention of many scholars and
practitioners, leading to the formation of several motivational theories, which all attempt
to explain why employees behave in a certain way. This trend has been fuelled by the
assumption that; motivation generates the will to do work, reduces undesirable such as
absenteeism or indiscipline in the workplace, and impacts positively on organisation
performance (Datt, 2006). Faced with increasing pressure on cost, downsizing, and
globalization, many organisations have adopted soft human resources management
practices, which place emphasis on human resources as a tool for competitive advantage
(Stone, 2002: 396). Thus, many organisations today spend a lot of time and money
designing policies/strategies aimed at managing employee behaviour in the workplace
(Weightman, 2004). However, applying these strategies in an organisational setting, is
not as straightforward as waving a magic wand. People are different, and so are their
needs/desires (Lauby, 2005). It is therefore the duty of management to design strategies
that best meet the needs of each individual employee.
The study of motivation gives an insight into why an individual behaves in a certain way
(Armstrong, 2002). Similar to lots of significant terms in psychology, the term
'motivation' is difficult to define (Kalat, 2010). In simple terms, motivation refers to the
direction and persistence of action (Mullins, 2010: 253). Singh further explains that
motivation is the drive that causes employees to willingly contribute towards the
achievement of personal and organisational goals (Singh, 2010). In order to explain why
an employee decides to put in or withdraw his/her effort, the factors affecting the
behaviour of that individual have to be understood (Tannehill, 1970: 37). As Stone
argues, this is to help the organisation design appropriate strategies to motivate its staff
and prevent undesirable outcomes such absenteeism, labour turnover, unpunctuality etc.
(Stone, 2002). Many authors argue that there is a direct link between motivation and
-
8/11/2019 The impact of motivation on Organizational Performance
11/96
11022260 Page 2
performance. Pattanayak argues that motivation is necessary for performance, in the
sense that, if an individual is not motivated, that individual would not be able to put in the
required effort to perform (Pattanayak, 2005). In agreement with Pattanayak, Hiam
explains that highly motivated employees put in greater effort, carry out their task
cheerfully and effective, and derive satisfaction from their jobs (Hiam, 2003). However,
critics argue that motivated employees do not necessarily perform well. Critics like Green
argue that motivation is but one factor that influences performance. For performance to
be achieved, motivation and ability (effort) are required (Green, 1992). In addition,
employees need a supportive work to perform well. Green further argues that a skilled
and motivated employee without the necessary resources (budget, time, information,
tools) will not perform well. Drawing from the argument, there is thus a direct link
between motivation and performance. Though motivation has an impact on performance,
it does not on its own guarantee high performance (Stone, 2002: 400). In this paper, the
impact of work motivation on organisational performance, and the factors influencing
employee motivation in Shell Western division Nigeria will be reviewed.
Nigeria is the most populated country in Africa, and the tenth most populated nation in
the world (Mba et al., 2004). Not until the 1960s, the Nigerian economy was not
dependent on oil. It exported a number of commodities and agricultural products such as
palm oil, cocoa, tin, which then played a great role in the Nigerian economy. Starting
from the 1960s, crude oil became the major export commodity in Nigeria (Frynas, 2000).
Today, Nigeria is the largest oil producer in sub-Saharan Africa, and the sixth largest oil
producer in the world (Romanova, 2007). The Nigerian oil industry has proven to be the
most attractive to foreign investors. The industry has attracted billions of dollars in
investment capital mainly multinational corporations from the USA and Western
European corporations (Nde Fru, 2011) like Shell, Chevron, Mobil, and many others.
The Shell Petroleum Development Company of Nigeria Ltd (SPDC) has been operating
in Nigeria since 1937. Right from the colonial era till date, Shell has remained the largest
oil producer in Nigeria (Frynas, 2000), operating a joint venture with the Nigerian
National Petroleum Corporation (NNPC) (Shell.com.ng, 1937). The company contributes
-
8/11/2019 The impact of motivation on Organizational Performance
12/96
11022260 Page 3
hugely to the economy of the Niger Delta region and the entire nation, by paying taxes
and royalties to the government. However, the contributions of these multinational
corporations like Shell have led to laxity on the part of the Nigerian government in
enacting reforms for growth and development (Romanova, 2007).
Shell deals mainly on oil and gas production and export, production of hydrocarbon, and
the supply and distribution of lubricants to many firms and individuals in Nigeria and
abroad (Shell.com.ng, 1937). The company depends largely on its highly skilled
workforce to produce oil and gas in the safest and most efficient ways possible.
Considering the growing competition from other Oil and Gas companies in the Nigeria,
Shell needs to keep its employees satisfied, motivated and committed to avoid high
turnover. This study is significant in providing useful insight on issues surrounding
employee motivation, retention and performance.
1.3 Research questions
In collecting the needed data for this study, based on the purpose of the research and the
research objectives, the research questions are:
What is the link between motivation and performance?
What is the impact of work motivation on organizational performance?
How effective are the organization HR techniques in motivating its employees?
1.4 Objective of the Study
This research on the critical analysis of the impact of work motivation on organisational
performance indicates the significance of effective work motivation techniques on the
improvement of employee productivity and in turn overall organisational performance.
The principal objectives of this research are:
-
8/11/2019 The impact of motivation on Organizational Performance
13/96
11022260 Page 4
To explore the current motivation techniques of the organisation
To analyse the factors that affect employee motivation in the organisation
To analyse the impact of work motivation on overall employee performance
To provide suitable recommendations to improve organization's work motivation
techniques through determining the positive impact of employee motivation on
overall performance of the organisation.
1.5 Significance of the study
This study will expand the body of knowledge in the motivational literature
This study would help both managers and employees understand the impact ofwork motivation better in the workplace
It will provide researchers, academics and students with reliable data about
Work motivation
1.6 Structure of Research
This research comprises of five chapters. Chapter one provides a background of the study, and
introduces the research problem. Chapter two examines work motivation and its theories. The
chapter also, examined the link between motivation and performance, factors affecting
employee motivation, and the role of pay and rewards. The next chapter discusses the research
method, strategy, data collection technique, and the way data was analysed. Chapter four
presents the analysis of the interviews. This was analysed using themes which were linked to
existing literature in chapter two. Chapter five presents the conclusion, practical implications of
the research, and suggested recommendations. The limitation of the research was also reviewed
in this chapter.
-
8/11/2019 The impact of motivation on Organizational Performance
14/96
11022260 Page 1
CHAPTER TWO: THEORITICAL FRAMEWORK
Motivation theories are divided into two main types; content and process theories.
According to Singh, the content theory deals with content factors that motivate people.
However, they explain little of how motivation is expressed. The content and process
theory was selected for the reason that they attempt to explain why people act the way
they do, as individuals have different psychological and physiological needs which drives
their motivation and manner of conduct in the workplace. The content explains the ways
in which motivation is harnessed (Mullins, 2010). On the other hand, the process theory
explain ways in which individual needs can be met (Singh, 2010).
2.1 What is work motivation?
The term motivation is arguably a difficult term to define. One reason for the apparent
difficulty in defining motivation is that there are paradoxically no singular definitions of
motivation, because there are so many aspects of it. There are also many philosophical
orientations to the nature of human beings and the aspect of individuals that can be
discovered (Pinder, 1998: 10). While some view motivation from a strictly psychological
perspective, others stress the rationality of people, and consider human behaviour to be
the result of conscious choice processes (Pinder, 1998: 11). According to (Tannehill,
1970: 36) 'motivation is influence, a force that gives rise to behaviour'. The concept of
motivation describes the forces acting on or within an individual to initiate and direct
behaviour (Petri and Govern, 2004: 16). Singh (2010: 131) defines motivation as "the
willingness to exert high level of efforts towards organizational goals, conditioned by the
efforts and ability to satisfy some individual needs". Work motivation in simple terms is
"defined as the set of processes that determine a person's intentions to allocate personalresources across a range of possible actions" (Kanfer, Chen and Pritchard, 2008: 3). This
definition stresses the distributional aspect of motivation, and explains the critical process
by which an individual exerts control over his behaviour (Kanfer, Chen and Pritchard,
2008: 3). A more detailed definition, which draws on a number of other authors and
attempts to provide some balance in philosophical assumption, is the definition by Pinder
-
8/11/2019 The impact of motivation on Organizational Performance
15/96
11022260 Page 2
(1998). Pinder defines Work motivation as a set of energetic forces that originate both
within as well as beyond an individuals well-being, to initiate work-related behaviour
and to determine its form, direction, intensity, and duration (Pinder, 1998:11). This
indicates that individuals are motivated either by themselves or due to other
organisational factors to attain set goals and objectives. Armstrong (2009) regards
motivation as an objective directed behaviour, where individuals are motivated to attain
set objectives in order to achieve something, which they value, most i.e. rewards or
benefits. This definition states that work motivation is a set of energetic forces, implying
the multiplicity of needs, and instincts, and that motivation will manifest itself through
effort (Pinder, 1998: 12). This definition applies to 'work behaviours of all sorts while
avoiding many of the ontological and epistemological issues that have caused debate and
confusion in defining the term motivation' (Pinder, 1998: 14).
2.2 Motivation as a Mechanism
Motivation is about individual behaviours directed towards realizing goals. It is about
motives and needs. Based on the definition of motivation by Pinder (1998), motivation is
a psychological process resulting from the interaction between the individual and the
environment (Beardwell and Claydon, 2007: 491). Motivation is a vital and effective
factor in every organization, as the level of employee motivation influences productivity.
Organizations therefore need to understand what motivates employees to exert greater
effort in order to achieve peak performance (Beardwell and Claydon, 2007: 492). The
concept of human needs provide an explanation why employees desire certain outcomes
in preference to others. If certain needs are important to an individual for example, that
individual will act in such way to satisfy those needs (Berryman-Fink and Fink, 1996:
168). To understand the mechanism of motivation, and how to manage the expectation of
employees better, employers need to implement a broader and more influential employee
motivation mechanism that addresses the needs of its employees (Walton and Hill, 2002:
33). This involves the use of both extrinsic and intrinsic rewards to motivate employees
based on their individual preferences, which maybe promotion, pay bonuses, awards and
certificates, recognition, training etc.
-
8/11/2019 The impact of motivation on Organizational Performance
16/96
11022260 Page 3
2.2.1 Intrinsic and Extrinsic Motivation
"Motivation can be induced by the employer or reside within the employee" (Kamery,
2004: 139). People can motivate themselves by seeking, finding, and doing work, which
raises their expectations of achieving their goals. While management can motivate others
through methods such as pay, promotion and praise. Motivation can be divided into;
intrinsic and extrinsic motivation (Armstrong, 2002: 56)). According to Vallerand and
Ratelle (2002: 37), intrinsic motivation refers to actions done by will or out of interest by
the employee. On the other hand, extrinsic motivation refers to actions carried out to
achieve contingent outcomes. Intrinsic motivation refers to the self-generating factors
that influence people to behave in a particular manner or to move in a particular direction.
These factors include worker autonomy, responsibility, interesting and challenging work,
career advancement, training and development, etc. any external influence on someone in
order to motivate them, refers to extrinsic motivation. Extrinsic motivators include the
use of rewards such as pay, praise, or promotion, and punishments such as disciplinary
action, withholding pay, or criticism (Armstrong, 2002: 56). Extrinsic motivators can
have an instantaneous and controlling effect on individuals, but will not necessarily last
long. On the other hand, intrinsic motivators are more likely to have a deeper and longer-
term effect because they are inherent in the individual and not imposed or induced by
management (Armstrong, 2007: 121). Some ways in which management can encourage
intrinsic motivation includes job designing (i.e. creating more discrete and autonomous
jobs), providing constructive feedback and appraisals, providing training, and lastly,
through appreciation and recognition (Armstrong, 2007). Since management plays a vital
role in managing intrinsic motivation amongst staff, it is essential that the organisation
provide necessary training, so managers throughout the organisation understand the
basics of intrinsic motivation (Thomas, 2002: 110).
2.3 Theories related to Work Motivation
Various theories have attempted to explain the nature of motivation. 'These theories may
all be at least partially true and help to explain the behaviour of certain people at certain
times' (Mullins, 2010: 259). 'Essentially, there are two main approaches to motivation
-
8/11/2019 The impact of motivation on Organizational Performance
17/96
11022260 Page 4
theory: content and process theories' (Beardwell and Claydon, 2007: 492). The content
theory attempt to explain the factors that actually motivate an individual in the
workplace, while the process theory attempt to identify the relationship between the
dynamic variables that make up motivation (Mullins, 2010: 260). Collectively, both the
content and process theories provide a framework within which to direct attention to the
problem of how best to motivate staff to work willingly and effectively (Mullins, 2010:
259).
2.3.1 Content Theories
The content theories of motivation emphasize on dynamics or needs within an individual
that motivates, direct, sustain, and stop behaviour (Swansburg, 1996: 443). It focuses on
internal factors that energizes and direct the behaviour of an individual (Beardwell and
Claydon, 2007: 492). Content theories attempt to explain the motives that cause people to
behave in a certain way. The name Content theory arose for the reason that these theories
define the factors motivating an individual. Thus, Content theories give managers an
insight into what employees need, and how these needs affect employee behaviour and
attitudes at work (Stone, 2002: 402). Content theory includes Maslows hierarchy of
needs; Herzbergs hygiene theory, Alderfer's modified need hierarchy model,
McClelland's achievement motivation theory (Mullins, 2010: 260). Content theories
emphases the needs individuals strive to satisfy, and the needs that motivate workers in
an organization (Thompson, 1996).
2.3.1.1 Maslow's Hierarchy of Needs
Maslow's hierarchy of needs theory is one of the most popular motivation theories among
practicing managers. It argues that employees are motivated to satisfy five basic types of
needs (Physiological needs, security or safety needs, love or social needs, esteem needs,
need for self-actualization as shown in the figure below (Maslow, 1954).
-
8/11/2019 The impact of motivation on Organizational Performance
18/96
11022260 Page 5
Figure 2.1: Maslow's hierarchy of needs
Source: (Bauer and Edrogan, 2010)
As illustrated in the figure above, the hierarchy of needs is usually in the form of a step or
a pyramid. 'According to Maslow, these needs are arranged in a hierarchy of importance,
with lower order needs requiring adequate satisfaction before the next higher order need
can motivate behaviour' (Stone, 2002: 402). It therefore infers that only an unsatisfied
need can lead to motivating behaviour. 'A satisfied need is not a motivator. The most
powerful employee need is the one that has not been satisfied' (Bearwell and Claydon,
2007). The hierarchy of needs implies a thinning out of needs as people progress up the
hierarchy (Mullins, 2010: 261).
Starting from the lower end of the pyramid, physiological needs are the basic human
needs people need to fulfil in order to survive. These include food, water, and comfort
(Woods and West, 2010). Organizations use financial rewards such as pay to help satisfy
physiological needs (Bearwell and Claydon, 2007: 493). Safety needs 'include security,
freedom, from pain or threat of physical attack, protection from danger or deprivation, the
need for predictability and orderliness' (Mullins, 2010: 261). Love or social needs 'relate
-
8/11/2019 The impact of motivation on Organizational Performance
19/96
11022260 Page 6
to the need for affiliation and close relationship with others' (Woods and West, 2010:
147). These include social activities, affection, friendship, sense of belonging, and both
the giving and receiving of love (Mullins, 2010: 261). Esteem need refers to individual
cravings for self-respect and recognition from others (Bearwell and Claydon, 2007: 493).
Esteem needs are broken into two subsets. First, is the need for mastery of tasks, striving
for personal accomplishments and competence. The second esteem need, is the need for
reputation and prestige (Woods and West, 2010: 147). Self-actualization needs refer to
the aspiration for self-fulfilment and realization (Bearwell and Claydon, 2007: 493).
In relation to reward and performance management, Maslow's theory has a
straightforward approach because it presents a clear message. However, critics have
revealed a number of flaws that suggest that 'needs' do not always group together in the
ways predicted. Following this, a proposition arose that the theories are unable to predict
when a particular need will be manifest because there is no clear relationship between
needs and behaviour (Bearwell and Claydon, 2007: 493).
Though the theory appeals to managers because of the intuitive logic and ease of
understanding, the theory has been criticised for a number of reasons. First, there is little
evidence to support the claim that there are five distinct levels of needs. Second, there is
no obvious proof that the motivational power of a need diminishes once the need has
been satisfied. Lastly, variable factors such as age, personality, race, cultural background
and size of the firm, influence the relative strength of an individual's need (Stone, 2002:
402). In addition, the theory has received little research support, therefore is not very
useful in practice, despite its ease of application (Bearwell and Claydon, 2007: 494).
Though the theory has some drawbacks, the hierarchy of needs remains popular with
managers as a theory of motivation because factors such as recognition, enrichment, and
a safe working environment is argued to enhance employee satisfaction (Stone, 2002:
403). Many organizations apply Maslow's approach to employee motivation through job
design, award, and compensation, and benefit programs (Stone, 2002). Perhaps the reason
is many organisations today especially those in healthcare industries use the hierarchy of
needs theory to improve customer service and employee morale (Grenway, 2008). In
addition, the integration of the term 'self-actualisation' into everyday language in the
-
8/11/2019 The impact of motivation on Organizational Performance
20/96
11022260 Page 7
workplace is another reason the theory is popular among managers (Philips and Gully,
2011).
2.3.1. 2 Herzberg's Two-Factor Theory
Traditionally, managers viewed job satisfaction and dissatisfaction as opposite ends of
the same continuum (Stone, 2002: 405). The two-factor theory known as the motivation-
hygiene theory (Stone, 2002), was developed based on research on factors in the
workplace that led to satisfaction and dissatisfaction at work (Woods and West, 2010).
He termed these as hygiene factors and motivators respectively (Woods and West, 2010:
149).
Figure 2.2.: Herzberg's two-factor theory
Source: (Bauer and Edrogan, 2010)
Herzberg's' analysis of people's response revealed a distinction between factors that cause
dissatisfaction and those that promote satisfaction. Hygiene factors are lower order needs
that are met by pay, company policy, supervision, working conditions etc. (Stone, 2002:
405) while motivators are those factors that, if present, help to motivate the individual to
achieve peak performance (Mullins, 2010: 256). These include recognition, achievement,
responsibility, advancement etc. (Woods and West, 2010: 149). Motivators create
opportunities for, high satisfaction high motivation, and high performance (Swansburg,
1996). On the other hand, hygiene factors do not increase motivation but absence of
-
8/11/2019 The impact of motivation on Organizational Performance
21/96
11022260 Page 8
hygiene factors could lead to employee demotivation. It is therefore the duty of
management to maintain hygiene factors in quantity and quality, in order to prevent
dissatisfaction. When not equitably administered, they become dissatisfiers, which lead to
low performance and negative attitudes. Herzberg argued that meeting the lower-level
needs of individuals would not motivate them, but would only prevent them from being
dissatisfied. He added that individuals are only motivated when higher level needs are
met (Bearwell and Claydon, 2007: 494). The implication of the two-factor theory for
managers is that meeting employee lower needs through pay, benefits, and other
contexual factors will prevent job dissatisfaction but will probably not motivate
individuals to exert greater effort toward achieving peak performance (Bearwell and
Claydon, 2007: 495). The two-factor theory emphasizes the need for job design that
stimulates employees to work harder and be more satisfied (Stone, 2002: 405). However,
the theory has been criticised by several authors. There are two major criticisms of the
Herzberg's theory. First, the theory has limited applicability to manual workers, those
carrying out repetitive tasks, or those whose jobs are considered boring (Mullins, 2010),.
And these are the people management often have problems with, in terms of trying to
motivate them. Secondly, the methodology of the theory was criticised. People are more
likely to attribute satisfying incidents as a reflection of their own performance, and
dissatisfying events are more likely to be attributed to external influence or the effort of
other people. There is therefore difficulty in the interpreting the description of the
respondents, as it is difficult to clearly distinguish between the different dimensions and
the risk of possible interviewer bias (Mullins, 2010: 266). Regardless of the criticisms,
Herzberg's model provides hands-on recommendations on factors leading to satisfaction
and dissatisfaction in the workplace (Woods and West, 2010: 150), and has been widely
read, with only a few managers unaware of its recommendations (Robbins, 2009).
2.3.1.3 Alderfer ERG Theory
Alderfer (1969, 1972) presented a reclassification and reorganization of human needs
(Woods and West, 2010: 148). This theory argues that if individuals are frustrated at
satisfying higher order needs, the individual may regress to increase the satisfaction of a
-
8/11/2019 The impact of motivation on Organizational Performance
22/96
11022260 Page 9
lower-order need, which appears easier to satisfy (Business Management Articles, 2012).
Alderfer's ERG Theory, 'condenses five level of need into three levels based on the core
need of existence, relatedness and growth' (Mullins, 2010: 264). These needs are;
existence needs, relatedness needs, and growth needs.
Figure 2.3: Clayton Alderfer's ERG Theory
Source: (Business Management Articles, 2012)
Existence needs are concerned with sustaining human existence and survival and consist
of physiological and safety needs of a material nature (Mullins, 2010: 264). These are
similar to physiological needs in Maslow's hierarchy of needs (Woods and West, 2010).
Relatedness needs are concerned with relationships to the social environment and
encompasses love or belonging, esteem nature etc. (Mullins, 2010: 264). This is similar
to social or love needs in Maslow's hierarchy (Woods and West, 2010). Growth needs are
concerned with the development of potential and refers to self-esteem and self-
actualization (Mullins, 2010: 264).
Alderfer's ERG theory unlike Maslow's hierarchy of needs, presents a reduced distinction
between overlapping needs.it also improves on some of the limitations of Maslow's
Hierarchy of needs. First, Alderfer's ERG theory demonstrates that individuals operate
with the need to satisfy several motivators simultaneously. Secondly, since the order of
needs vary between individuals, the ERG theory better accounts for differences in need
preferences, between cultures better than Maslow's Hierarchy of Need. Lastly, The ERG
-
8/11/2019 The impact of motivation on Organizational Performance
23/96
11022260 Page 10
theory recognizes that if a higher-order need is frustrated, an individual may regress to
increase the satisfaction of a lower-order need, which appears easier to satisfy. This is
termed the frustration-regression principle (Business Management Articles, 2012).
The implication of this theory for management is that, 'the aspects of work fulfilling the
different needs must be provided in steady supply' (Woods and West, 2010: 149). Unlike
with Maslow's theory, managers need to understand that each employee operates with the
need to satisfy several motivators simultaneously (Business Management Articles, 2012).
Furthermore, the frustration-regression principle has additional impact on motivation in
the workplace, in the sense that, if employees are not provided opportunities to grow, an
employee might regress to fulfilling relatedness needs. If management recognizes these
conditions soon enough in the process, they can take steps to satisfy those needs that are
frustrated until such when the employee can again pursue growth (Business Management
Articles, 2012).
2.3.1.4 McClelland's Achievement Motivation Theory
McClelland's theory proposes that there are three primary needs, which are the need for
affiliation (nAff), the need for power (n Pow), and the need for achievement (n Ach)
(Bearwell and Claydon, 2007: 495). Mullins referred to these needs as motives, and
identified four main motives; the achievement motive, the power motive, the affiliative
motive, and the avoidance motive (Mullins, 2010: 267). The first three primary
needs/motives are similar to Maslow's self-actualization, esteem and love needs.
According to McClelland's theory, the individual learns these needs from their culture or
life experiences (Bearwell and Claydon, 2007). The achievement need (nAch) is
associated with the drive to take responsibility, and set challenging goals. The desire of
such an individual is to succeed in competitive situations, as well as prove superiority
over others. Such individuals set challenging but potentially achievable goals for
themselves (Akrani, 2010). McClelland sees the theory of achievement need as the most
critical for an organization's economic growth and success, as this theory relates to
entrepreneurial spirit and the development of available resources (Mullins, 2010: 267).
The second is the need for power, which reflects a desire to influence others and control
-
8/11/2019 The impact of motivation on Organizational Performance
24/96
11022260 Page 11
one's environment. A person with desire for power enjoys competing with others when
the situation is favourable for such domination. Such individuals prefer jobs that provide
them an opportunity to acquire leadership with power (Akrani, 2010). The third is the
need for affiliation, which reflects the desire to establish social relationships with others
(Bearwell and Claydon, 2007: 495). A person with high need for affiliation seeks to
establish and maintain friendships and emotional relationships with others. Such
individuals (managers) prefer tasks that require frequent interaction with subordinates/co-
workers (Akrani, 2010).
'The implication for managers is they should develop an understanding of whether and to
what degree their employees have one or more of these needs, and the extent to which
their jobs can be structured to satisfy them' (Bearwell and Claydon, 2007: 495). This
theory emphasizes that developing high achievement motivation, has to do with more
than just formal training, but with how jobs are designed and constructed, the
environment in which the job is carried out and the system of communication in that
organization (Tannehill, 1970: 48).
2.3.2 Process Theories of MotivationProcess theories contrasts with content theories, which focus on indenting factors, related
with motivation in a relatively unchanging environment. Process theories views work
motivation as a dynamic process, and attempts to explain the psychological bases of
human behaviour in the workplace (Wlodarczyk, 2011: 20). Process or cognitive theories
of motivation focus on conscious human decision making as a process, which helps,
explain motivation. Process theories argue that behaviour is the result of conscious
decision-making processes. (Bearwell and Claydon, 2007: 495). The process theory
"emphasizes how human behaviour is initiated, sustained, and extinguished" (Thompson,
1996: 17). According to this theory, for an individual to achieve a certain level of
performance, that individual has to put in some degree of effort (Thompson, 1996).
-
8/11/2019 The impact of motivation on Organizational Performance
25/96
11022260 Page 12
2.3.2.1 Goal Setting Theory
The Goal setting theory proposed by Edwin Locke (1960), analyses the processes by
which people lay out goals for themselves and introduce effort appropriately to
accomplish them (Singh, 2010: 145). The Goal setting theory is based on the premise that
performance is caused by an employee's intention to perform (Bearwell and Claydon,
2007: 497). Furthermore, 'the theory proposes that knowledge or results is essential if the
full performance benefits of setting more difficult goals are to be achieved. Hence,
feedback offered in an appropriate manner can have a motivating effect on the employee'
(Bearwell and Claydon, 2007: 497).
Goal theory has a number of practical implications for the manager. Firstly, employees
with low motivation often lack clear goals. In order to direct behaviour and maintain
motivation, specific performance goals need to be systematically recognized and
established (Mullins, 2010: 277). Secondly, performance goals must be challenging but
realistic, as unrealistic goals could stress employees and affect their motivation and
performance on a longer term. The importance of this is that, high performance is often
linked with, comprehensive, accurate, and timely feedback. Goals can be set either by a
superior or by the individual (Mullins, 2010: 277). When a good system of employee
participation and involvement is in place, employees are more likely to be compliant with
goals set by management (Mullins, 2010).
2.3.2.2 Equity Theory
Equity theory argues that since there are no absolute criteria for fairness, employees
generally assess fairness by making comparisons with others in similar situations
(Bearwell and Claydon, 2007: 496). This theory is concerned with people's perception
about fairness and the way rewards are distributed. Intrinsically, it is exclusively one of
numerous approaches to the issue of distributive justice (Makin, Cooper and Cox, 1996:
127). Distributive justice refers to employees' perception of how fairly rewards are
distributed and allocated within an organisation (Landy and Conte, 2009). The Equity
theory emphases on fair treatment, as inputs from employees will equal inputs from the
-
8/11/2019 The impact of motivation on Organizational Performance
26/96
11022260 Page 13
employer (Swansburg, 1996: 445). It proposes that if an employee sees an inconsistency
between the results/feedback they receive and their output, compared with those of other
employees, that employee will be motivated to do more (or less) work' (Stone, 2002:
409). If a feeling of inequity prevails, following subjective comparison with others, it
could give rise to tension and psychological discomfort (Bearwell and Claydon, 2007:
496). The presence of inequity then motivates the individual to eliminate or reduce the
level of tension and the perceived inequity (Mullins, 2010: 275). As consequence of
inequity, Adams categorizes six broad types of likely behaviour. The first behaviour is
changes to inputs, whereby the individual may increase or decrease their inputs. Changes
to outcomes occur when the individual may attempt to change outcomes such as
recognition, pay, status, working conditions, without any changes to input. Cognitive
distortion of inputs and outcomes occurs when the individual may distort cognitively,
their inputs or outcomes to achieve same results. The fourth type of behaviour called
'leaving the field', occurs when the individual attempts to find a new situation with a
more favorable balance, for example by ansenteeism, request for transfer, or by
resignation. Another typeis called action on others. In this case, the individual attempts to
bring about changes in others, for example to lower their inputs or accept greater
outcomes. Changing the object of comparison; this involves changing the reference group
with whom comparison is made.
An understanding of this theory may assist in the formulation of creative employee
motivation strategies, as employees expect a justifiable reward for their personal and
professional contributions for the organization's benefit (Shukla, 2011). According to
Bearwell and Claydon (2007:496), Equity theory has two major implications for
managers when designing performance management and reward schemes. First, it is
important to note that employees make comparisons. As comparisons are subjective in
nature, care must be taken to relate similar jobs in terms of the wage/effort bargain. It is
also important for managers to be open concerning the basis on which rewards are
awarded, to avoid inaccurate conclusions. Second, current compensation systems need to
be redesigned by human resource managers, in order to avoid the 'performance
-
8/11/2019 The impact of motivation on Organizational Performance
27/96
11022260 Page 14
destroying effects' of perceived inequalities. Also, these reward systems need to avoid
over-rewarding employee performance as this not necessarily lead to higher performance.
2.3.2.4
Expectancy Theory
Figure 2.4: Expentancy theory
Source: (Bauer and Edrogan, 2010)
Victor Vroom developed the Expectancy Theory of Motivation, in the year 1964.
Expectancy theory focuses on people's expectation that their efforts will result in good
performance and thence on valued outcomes (Swansburg, 1996: 445). In deciding how
much effort to put into work behaviour, individuals are likely to consider certain factors.
The first is valence, which is the extent to which the expected outcome is attractive, or
unattractive (Bearwell and Claydon, 2007: 496). Valence is the attractiveness of or
preference for a certain outcome or individual (Mullins, 2010: 270). It is the anticipated
satisfaction that will result from an outcome. The second is instrumentality or the degree
to which people believe that a given level of performance will result in desired rewards.
The valence of outcomes therefore derives from their instrumentality. Lastly, before
employees decide how much effort to put in their jobs, they consider the level of
expectancy, which refers to the degree to which the employee believes that putting in
effort will lead to a given level of performance (Bearwell and Claydon, 2007: 496).
-
8/11/2019 The impact of motivation on Organizational Performance
28/96
11022260 Page 15
Expectancy is that perception individuals develop that the choice of a particular action
will actually lead to desired outcomes (Mullins, 2010).
2.4 Organisational Performance
The word performance has become a buzzword in the world of business. Moreover,
various definitions capture the concept of performance only partially. The
multidimensionality of the concept of performance makes it difficult to define, as its
definition encompasses financial terms, operations, marketing and others (Verweire and
Van Den Berghe, 2004: 6). In simple terms performance can defined as focused
behaviour or purposeful work. Thus, performance is what organizations require from
their employees in order to achieve business objectives (Rudman, 2003: 7). While
organizational performance is about the values an organization creates by means of its
productive assets in comparison with the value that the owners of these assets expect to
obtain (Verweire and Van Den Berghe, 2004: 6). Performance management has a
significant role to play in enhancing organisational performance, by ensuring that all
individuals understand their expected contribution to business objectives and are
equipped with the skills and support to achieve this. The process drives engagement by
ensuring effective communication throughout the organisation and the linking of
objectives, as well as enhancing the individual/line manager relationship by encouraging
line managers to build positive relationships with individuals based on trust and
empowerment (CIPD, 2012). Performance management is a critical component for
individual and organizational effectiveness, but requires a good understanding of the
context in which the process occurs for it to be effective. In order to understand and
improve organizational performance, it is important for managers to understand the major
determinants of performance, and the link between motivation and performance (Cardy
and Leonard, 2011).
2.4.1 Link between Work Motivation and Organizational Performance
A highly motivated individual is willing to learn new things, improve future performance,
and help other colleagues at work. For the reason that employee motives affect their
-
8/11/2019 The impact of motivation on Organizational Performance
29/96
11022260 Page 16
productivity, it is the primary role of management to channel motivation effectively
toward achieving organizational goals (Hellriegel and SLocum, 2007: 121). However,
successful accomplishment of one's work goals is normally the result of a number of
factors, only some of which can be controlled by the employee (such as the amount of
effort invested in the task). Another critical factor is the level of ability the employee
possesses to do the particular job assigned. Other factors such as the amount of support
received from supervisors and from staff are external, of which the employee has little or
no control (Pinder, 1998: 17). In line with Pinder (1998), Green (1992) argues that,
motivation and effort are vital in achieving performance, though they do not necessarily
guarantee performance. A motivated but unskilled worker for example would not achieve
peak performance, if the needed skills were lacking (Green, 1992: 5). Green (1992)
argues that, though an employee maybe motivated and willing to put in effort, the
individual must possess the applicable skill in order to performance well. However,
ability alone cannot guarantee high performance, as the individual must be willingly to
put in effort in order to perform well. Thus, the emphasis on motivation is concerned with
what drives behaviour, what direction behaviour takes, and how to maintain desired
behaviour (Hellriegel and SLocum, 2007: 121). Performance therefore is a function of
effort, skill, and environment, where effort is a function of motivation and where
motivation is a function of three conditions, that is, of employee beliefs that effort will
lead to performance (B1), performance will lead to outcomes (B2), and outcomes will
lead to satisfaction (B3)" (Green, 1992: 5).
2.4.2 The Performance Equation
It is important that employers understand the people they rely on for performance, as theperformance of an individual, team, or organisation depends on their capacity to work,
willingness to work, and opportunity to work (French et al., 2011: 11). The performance
equation summarises the concept of the relationship between employee motivation and
ability and performance. The equation is as follows:
-
8/11/2019 The impact of motivation on Organizational Performance
30/96
11022260 Page 17
Performance equation = f (effort, skill, environment)
Effort = f (motivation)
Motivation = f (B1, B2, B3).
Where,
B1 = employee beliefs that effort will lead to performance
B2 = employee beliefs that performance will lead to outcomes
B3 = employee beliefs that outcomes will lead to satisfaction
The equation stresses that employee skill, and a supportive work environment, are not
only crucial to employee performance, they also influence employee motivation (Green,
1992: 5). The equation views performance as a blend of personal and group
characteristics, the effort individuals make and the organizational support they receive
(French et al., 2011: 11). Performance can also be expressed as;
P = M A E
Where,
P = Performance
M = Motivation
A = Ability
E = Environment
Figure 2.5: Performance Equation
-
8/11/2019 The impact of motivation on Organizational Performance
31/96
11022260 Page 18
Source: Adapted from (Bauer and Edrogan, 2010)
As illustrated in the figure 2.0 above, performance is a function of ability and motivation.
Given the multiplicative conceptualization, lack of motivation cannot be overcome by a
high level of ability and vice versa. (Cardy and Leonard, 2011: 208). Though motivation
contributes substantially to performance, its impact alone does not directly impact
performance, as performance is a function of both motivation and ability (Dubrin, 2011:
390). Also, it is argued that without an enabling environment, peformance will be low
despite high mpotivation and high ability. environmental factors such as availability of
resources, information, and managerial support are critical to determining performance
(Bauer and Edrogan, 2010). It is important to note that the assessment of performance is
judged by the one who sets the performance goals. it is also important to consider how
and when the performance is measured and by whom, in other to assess if the
performance was poor or commendable (Pinder, 1998: 17).
2. 5 Factors Affecting Work Motivation
In other to explain how and why people react in a particular way in different situations,
one needs to understand the complexity of human psyche and behaviour, as explained by
the behavioural theories of motivation. The content and process theories give us an
insight of how employees can be motivated to yield greater performance (Pahl, Hinze and
Richter, 2007: 5).
2.5.1 Drivers of Employee Motivation
The three main drivers of motivation as identified by researchers are behavioural
motivation, external motivation and intrinsic motivation. Behavioural motivation is inert
in the individual, generating from needs such as biological needs (need for food, shelter
etc.). External motivation on the other hand comes from external factors such as pay,
praise, promotion, and punishments. Intrinsic motivation influences an individual to do
something for personal satisfaction rather than for financial or external gain (Reed and
Stoltz, 2011). Research has proven intrinsic motivation to have a more influential and
-
8/11/2019 The impact of motivation on Organizational Performance
32/96
11022260 Page 19
lasting effect on employee motivation compared with external/extrinsic motivation. For
example, an intrinsically motivated person will perform a given task willingly, either
because they find the task challenging or interesting. As a result, intrinsic motivation
tends to be more effective in the long run as employees perform their tasks willingly
because it interests them, rather than doing the task out of compulsion (Silva, 2009). For
employees to unleash their full potential and achieve high performance, a motivating
work environment, and the provision of both financial and non-financial rewards is
essential. This because, "some people see k financial rewards; others seek power and
status; while others strive for personal development and career enhancement, self-
actualization, or social rewards (i.e. friendships)" (Morris, Kuratko and Covin, 2008:
175). To motivate employees, not only is money important, but also compensation that
reflects the specific needs (for example safety needs, love needs, esteem needs etc.), and
situation of an employee as well as current results and potential development (Pahl,
Hinze and Richter, 2007: 8). Employee motivation is affected by certain organizational
factors which includes the organization's personnel selection and placement procedures,
training and development systems, performance appraisal methods, supervisory styles
and practices, and the organization reward and compensation system (Berryman-Fink and
Fink, 1996: 167).
2.5.2 Barriers of Employee Motivation
"Barriers to motivation can often be uncovered by considering how individual
differences, task characteristics, groups structural variables, and other group and
individual processes may influence expectancy and instrumentality, as well as the value
that members attach to the various outcomes associated with collective tasks" (Karau and
Williams, 2001: 137). Based on various literatures on this study (Coil, 2001; Clark and
Estes, 2008), some of the major barriers to employee motivation are as follows: firstly,vague and constantly changing performance goals and feedback may be a barrier when
employees are not aware or have only a vague knowledge of their performance
expectations. Secondly, dishonesty and unfairness may hinder employee motivation.
Equity theory proposes that if an employee sees an inconsistency between the
results/feedback they receive and their output, compared with those of other employees,
-
8/11/2019 The impact of motivation on Organizational Performance
33/96
11022260 Page 20
that employee will be motivated to do more (or less) work (Stone, 2002: 409). Thirdly,
unnecessary rules and work barriers could hinder employee motivation when employees
perceive their task is getting too rigorous or uninteresting (Coil, 2001; Clark and Estes,
2008). From the research carried out in this study, the barriers to employee motivation
include job security, host community disturbance, poor recreational facilities, and
management insincerity.
2.6 Managing Employee Motivation: Human resource Strategies to Enhance
Employee Motivation and Performance
Employee skill, and a supportive work environment, is not only critical to employee
performance, they also influence employee motivation (Green, 1992: 5). Human
Resource (HR) strategies, such as employee training and development, are ways by
which management aim to develop employee skill, which indirectly influence
organization performance. The relationship between strategic human resource
management (HRM) and organization performance is therefore, of outmost importance,
recognizing HRM systems as a strategic asset in identifying the value of skilled,
motivated and adaptable workforce, which provides the organization with a form of
competitive advantage (Bearwell and Claydon, 2007: 63). Developing employee skill and
providing a supportive work environment is vital in maintain employee motivation and
improving performance. Some of the strategies managers could employ in enhancing
motivation and performance include goal setting, job design, flexible arrangements,
performance management, employee participation, rewards, and organizational behaviour
motivation to help translate this potential into actual enhanced performance.
2.7 The Role of Pay and Rewards on Employee Motivation
The culture operating within an organization, and the incentives it offers, determine the
level of motivation in that organization. Bearing this in mind, these factors give the
organization its personality and affect its performance and quality of work (Lusthaus et
al., 2002). Reward is an influential scheme in every organization, as employees work to
gain reward. Reward refers to the benefit an employee gets in return for his or her effort
-
8/11/2019 The impact of motivation on Organizational Performance
34/96
11022260 Page 21
(Morris, Kuratko and Covin, 2008: 194). 'An organizational reward system is the formal
and informal mechanisms by which employee performance is defined, evaluated, and
rewarded' (Griffin, 2012: 309). People are different, and so are their preferences for
rewards. While 'some seek financial rewards; others seek power and status; while others
strive for personal development and career enhancement, self-actualization, or social
rewards'(Morris, Kuratko and Covin, 2008: 175).
To design an effective Rewards linked with performance, have particularly greater impact
of enhancing motivation and actual performance (Griffin, 2012: 309). Obviously, rewards
symbolize an important and effective tool in influencing employee behaviour on the job,
particularly those rewards which management controls directly (Morris, Kuratko and
Covin, 2008). Pay and reward scheme, an organization need to consider the following
factors (Armstrong and Murlis, 2007: 41): First, organization goals need to be clearly
defined and well linked to business objectives. Secondly, the organization should have a
well-designed pay and reward program, tailored to the needs of the organization and its
people, and consistent and integrated with one another. Perhaps most importantly, which
is often taking for granted, the organization should have an effective and supportive HR
reward process.
2.7.1 Performance Related Pay (PRP)
Performance-related pay (PRP) is a system of remuneration that links pay progression to
an assessment of individual performance, usually measured against pre-agreed objectives
(classic PRP, also known as individual PRP or merit pay) (CIPD, 2012). "Performance
related pay (PRP) provides individuals with financial rewards in the form of increases to
basic pay or cash bonuses linked to an assessment of performance, usually in relation to
agreed objectives" (Armstrong, 2002: 261). Around two-thirds of employers nowmaintain performance-related pay schemes for all or part of their workforce, in order to
maintain and improve their individual and organizational performance. According to the
CIPD (2012), the objectives of PRP systems fall under three main headings, though
critics of PRP believe these do not necessarily occur in practice: First, encouraging high
performance levels by linking performance to pay; Whether or not PRP is a good
-
8/11/2019 The impact of motivation on Organizational Performance
35/96
11022260 Page 22
motivator is arguable. According to critics, often the underlying improvements in
performance management have the greatest impact on bringing about positive
developments, rather than the associated pay enhancement. Secondly, embedding an
entrepreneurial or high-performance culture across an organization, PRP can help to send
out a message in this respect, although there are other (non-monetary) ways of
communicating the need for high performance. Lastly, there is more widespread
acceptance of the effectiveness of PRP as regard the notion of equity or fairness, as it is
arguably fair and proper to reward employees who perform better at work. However,
though the intent may seem obvious and rational, PRP can be divisive, unfair, and open
to abuse, favouritism, and bias (Hitchins, 2008: 147). Hitchins argues that PRP is an
individual control mechanism that may demotivate, constrain, and fragment the team,
rather than achieve its intended goal.
The main aim of PRP is to motivate people and improve individual and organizational
performance, act as a level for change and encourage line mangers to see objective
setting as part of their managerial activities. However, PRP can lead to demotivation,
where an individual perceives allocation of rewards to be unfair or inappropriate. Other
drawbacks of PRP include the complications associated with appraisal, difficulties of
formulating objectives, risks of bias of or perceived bias by appraisers, its inevitable
inflationary tendency and potentially high administration costs (Farnham and Smith,
2005: 53). Furthermore, PRP depends on various forms of performance assessment.
Considering it may be difficult to produce realistic performance measures, performance
ratings maybe unfair, subjective, and inconsistent (Armstrong, 2003: 693). In addition,
PRP can lead to short-termism, whereby individuals strive to obtain speedy results rather
than paying attention to the achievement of longer-term strategic goals (Armstrong, 2003:
693).
2.7.1.1 Measuring Performance
Obviously, you cannot reward what you cannot measure. The concept of PRP requires
that before PRP is awarded to an employee, the performance of that employee have to be
measured. These measurements serve as the basis for an assessment, most often
-
8/11/2019 The impact of motivation on Organizational Performance
36/96
11022260 Page 23
expressed as a rating (Armstrong, 2002: 263). Methods such as weighted checklist,
behavioural anchored rating, graphic rating scale, forced ranking, forced distribution,
behavioural observation scale, and paired comparison are generally used in measuring
employee performance (Kandula, 2006). The use of each appraisal technique has its
advantages and disadvantages, all depending on the level of trust, sincerity, and honesty
involved in the way they are employed (Kandula, 2006). Forced ranking technique has
become increasingly popular with large organisations like Shell today (Mathias and
Jackson, 2010). Forced ranking is a comparative technique, where a manager judges the
performance of an employee by comparing their performance with the performance of
others, instead of against an absolute standard (Grobler et al., 2005). Forced ranking
requires that managers differentiate employees into predetermined ranks/grades (top 20
per cent, middle 70 per cent, bottom 10 per cent), or by using other ranking systems
(Grote, 2005: 7). Most large organisations employ this technique to tackle the issue of
managerial leniency and central tendency, which forces managers to rank employee
performance from best to worst. Employees with low ranking are usually pushed out or
encouraged to leave, and new qualified employees are employed (Taylor, Doherty and
McGraw, 2008). Another advantage of forced ranking is that it is a fast and easy
technique to use, where compensation changes or staffing considerations are linked with
the numeric evaluation given to the employee (Grobler et al., 2005). Forced ranking
technique has a number of disadvantages which includes; first, forced ranking systems
offset manager's judgement, making it more difficult to differentiate between good and
poor judgement (MacDonald, Burke and Stewart, 2006). Secondly, there are usually no
objective criteria for determining an employee's position in the rank order. Thirdly,
ranking may lead to the demotivation of employees who are ranked at the bottom. Lastly,
forced ranking does not provide the evaluator with useful information to coach
employees about their performance (Caruth, Caruth and Pane, 2008: 236).
2.7.1.2 Effectiveness of Performance-related Pay (PRP)
According to the CIPD (2012), performance-related pay is not a silver bullet for dealing
with motivation and performance issues. For this approach to succeed, effective
arrangements must be in place to define, measure, appraise and manage performance.
-
8/11/2019 The impact of motivation on Organizational Performance
37/96
11022260 Page 24
The focus should be on encouraging high performance first, underpinned by effective
performance management and appraisal systems, and only then on pay as an incentive to
help achieve that goal. To create a sustainable high-performing workplace, the whole
range of financial and non-financial rewards designed by the organization, has to align
with performance-related pay. The effectiveness of PRP is questionable, for reasons that
PRP is limited in providing incentive through financial means alone. That however, does
not mean that PRP is ineffective. It does work as a reward process in some
circumstances, and satisfies the basic principle that it is equitable to reward high
performers than under achievers and unproductive employees (Armstrong, 2002: 280).
All PRP schemes have their strengths and weaknesses, and the key issue for practicing
managers is not only to choose the most appropriate pay scheme but also to make
possible effort to maximize the potential advantages and minimize the disadvantages
(Armstrong, 2002: 280).
2.7.2 Employee Appreciation and Recognition
People are more likely to value appreciation that recognizes their individual progress
toward self-actualization. When an organization recognizes employees for putting in
effort beyond personal interest, by helping customers, or by putting the welfare of others
ahead of theirs, they are recognizing service above self, and in the process, are raising the
employee's accomplishments to a higher level (Bowen, 2000: 203). Recognition
programs in many organisations practice several forms of reward, including cash,
merchandise, plaques, certificates, and time off with pay (Stone, 2002: 487). Recognition
is important in the workplace. If properly applied, employees would be more willing to
solve problems independent of management supervision, employees would show more
concern about quality and reputation, most importantly, would boost morale and reduce
absenteeism (Ventrice, 2009: 11). Too often managers are impassive to goodperformance, which may occur most of the time, and appear to take this for granted, but
are quick to criticize on a few occasions where employees performs poorly. Positive
feedback on good performance is a strong motivator for employees, as employees
become more likely to accept and respond to constructive criticisms (Mullins, 2010: 471).
Recognition programs ensure recognition of employees is immediate and separate from
-
8/11/2019 The impact of motivation on Organizational Performance
38/96
11022260 Page 25
the normal reward system, and allows award to be highly individualized symbols of
accomplishment. However, recognition programs could have high administrative costs
and time, may be seen as favouritism if system allows for repeat winners, and may lead
top performers to lose interest if system does not allow for repeat winners, lastly, may
cause some employees who feel they can never win to lose motivation (Stone, 2002:
488).
2.7.3 Employee Engagement and Performance
Commitment simply refers to an employee's level of attachment to some aspects of work,
influenced by the level of employee involvement in joint decision-making, career
development opportunities, and the perceived reliability of an employee supervisor
(Dickson, 2011: 170). Employee engagement however, extends beyond mere compliance
or superficial comportment; it is an emotional attachment to the organization. (Price,
2011: 236). Engagement derives from intrinsic and satisfying motivation to work, which
makes employees feel their work is meaningful and important (Woods and West, 2010:
370). Employee Engagement in summary refers to how positively the employee is
proactive in relation to achieving organizational goals, thinks about the organization, and
feels about the organization (Cook, 2008: 3). Clearly, people are different in what
motivates them and what they seek from their organization or work. Nevertheless, unless
people feel fully engaged with the organization they will not be intentionally and
emotionally committed or motivated to give willingly their best effort (Mullins, 2010:
750). If managed effectively, employee engagement can rouse employees to contribute
effort towards organization goals and keep them on track in difficult times. However,
effective management does not happen by chance: it requires a structured, focused
approach to aligning people with organization goals. Every organization needs to ensure
that its people understand the strategy, see how they fit in, and know what the
organization expects of them. However, Employers need to be aware that gaining
employee trust and commitment is not a one sided issue, but also involves seeking
employee views and feedback, understanding the issues and seeking to address them
(Mullins, 2010: 800). Up to a certain extent, both organizational commitment and
-
8/11/2019 The impact of motivation on Organizational Performance
39/96
11022260 Page 26
engagement are necessary and potentially beneficial for both employees and employers.
In the extreme, however, too much commitment may make employees emotionally and
occupationally vulnerable, and too much engagement may result in sorts of human
consequences related with work addiction (Pinder, 1998: 283), and burnout (Woods and
West, 2010).
2.8 Conclusion
This chapter reviewed the literature on the relevant issues of this research. The different
definitions of motivation and work motivation, the theories of motivation, motivation and
performance, managing employee performance, factors affecting employee performance,
and the role of pay and reward on organizational performance was analysed.
Motivation is concerned with why people behave or act in certain ways. The content and
process theories discussed in this chapter demonstrate the numerous motives that
influence people's behaviour at work, and provide a framework on how best to motivate
and reward staff to work more willingly and effectively (Mullins, 2010: 290). Though
motivation is a key factor for achieving performance, Motivation on its own does not
necessarily guarantees performance, because performance is a function of both employee
motivation and ability. This emphasizes the importance of employee training and
development, as a highly motivated individual without the appropriate skill will not
perform well. Since motivation and skill are both required for high performance, it is the
function of HR to develop strategies to enhance employee motivation and skills, in other
to improve individual and organizational performance. The use of pay and rewards is one
of such strategies. The incentives and rewards an organization offers, determines the level
of motivation in that organization. Rewards are an essential part of every organization as
employees work to gain rewards. Some seek financial rewards while others seek non-financial rewards. It is the duty of management to know how best to reward its employees
in preference to their needs in other to motivate them towards achieving organization
goals. Building on the findings in this chapter, this study will be further analysed through
an organizational case study.
-
8/11/2019 The impact of motivation on Organizational Performance
40/96
11022260 Page 27
-
8/11/2019 The impact of motivation on Organizational Performance
41/96
11022260 Page 28
CHAPTER THREE: METHODOLOGY
3.1 Introduction
This chapter presents the research design, philosophy, approach, and methods used to
address the research problem as outlined in Chapter 1. This research sought to analyse the
impact of work motivation on organisational performance, through mainly qualitative
methods, using the inductive approach
This chapter contains six main sections. These are the research design (3.2), sampling
(3.3), Data collection and instrumentation (3.4), data analysis (3.5), limitations of the
research (3.6), and ethical consideration (3.7). Each section deals with the overall
research paradigm presented and the reason for the selection of the particular paradigm
for this research project. The researcher used the 'research onion' (see appendix A) to
clarify where and how and data would be collected (Saunders et al. 2000). The research
onion refers to the different stages a researcher must undergo when planning a research
strategy (Saunders et al., 2000). The research onion describes the research strategy in
more details, and shows a representation of the research philosophy, research approach,
research strategy, time horizon, and data collection methods.
3.2 Research Philosophy
In social sciences, there are two major philosophical traditions: positivism and
interpretivism. Positivist research usually begins with theories and models, defines
variables for study, and predicts their relationships through framing hypotheses that are
then tested, from which generalizations are eventually mad