the impact of motivation on organizational performance

8/11/2019 The impact of motivation on Organizational Performance

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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


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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


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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.


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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.


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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.


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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


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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


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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


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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


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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


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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


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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:


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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.


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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


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(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.


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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


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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).


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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


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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


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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


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


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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


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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


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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


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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).


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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


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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


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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


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).


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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


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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:


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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


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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


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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,


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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


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(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


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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


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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.


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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


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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


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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.


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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

the impact of motivation on organizational performance

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