Akah Ndang William EMPLOYEE MOTIVATION AND PERFORMANCE Ultimate Companion Limited Douala-Cameroon Bachelor’s Thesis Business Management December 2010 DESCRIPTION Date of the bachelor's thesis 7 December 2010 Author(s) Degree programme and option Akah Ndang William Business Management Name of the bachelor's thesis Employee Motivation and Performance Abstract The subject matter of this research; employee motivation and performance seeks to look at how best employees can be motivated in order to achieve high performance within a company or organization. Managers and entrepreneurs must ensure that companies or organizations have a competent personnel that is capable to handle this task. This takes us to the problem question of this research “why is not a sufficient motivation for high performance?” This therefore estab- lishes the fact that money is for high performance but there is need to look at other aspects of motivation which is not necessarily money. Four theories were taken into consideration to give an explanation to the question raised in the problem formulation. These theories include: Maslow’s hierarchy of needs, Herzberg two factor theory, John Adair fifty-fifty theory and Vroom’s expectancy theory. Furthermore, the perform- ance management process as a tool to measure employee performance and company perform- ance. This research equally looked at the various reward systems which could be used by a com- pany. In addition to the above, culture and organizational culture and it influence on employee behaviour within a company was also examined. An empirical study was done at Ultimate Companion Limited which represents the case study of this research work. Interviews and questionnaires were conducted to sample employee and management view on motivation and how it can increase performance at the company. Finally, a comparison of findings with theories, a discussion which raises critical issues on motiva- tion/performance and conclusion constitute the last part of the research. Subject headings, (keywords) Motivation, Performance, Intrinsic, Extrinsic, Incentive, Tangible and Intangible, Reward Pages Language URN English 72p. + app. 5p Remarks, notes on appendices Tutor Employer of the bachelor's thesis Ultimate Companion Limited Douala-Cameroon Marja-Liisa Kakkonen i CONTENTS 1 INTRODUCTION ....................................................................................................... 1 2 NATURE OF HUMAN RESOURCE MANAGEMENT ........................................... 4 2.1. Role of human resource management ................................................................. 4 2.2 Theories on Work Motivation .............................................................................. 6 2.2.1 Maslow’s Hierarchy of Needs ..................................................................... 7 2.2.2 Herzberg’s two factor theory....................................................................... 9 2.2.3 Fifty-Fifty Theory ...................................................................................... 10 2.2.4 Vroom’s Expectancy Theory .................................................................... 10 2.3 Performance management .................................................................................. 12 2.3.1 Performance Parameters ........................................................................... 12 2.4 Reward System for Employees .......................................................................... 16 2.4.1 Purpose of Reward .................................................................................... 17 2.4.2 Financial Reward ...................................................................................... 18 2.4.3 Nonfinancial Reward ................................................................................ 20 3 CULTURE IN HUMAN RESOURCE MANAGEMENT ........................................ 21 3.1 The Concept of Culture ...................................................................................... 22 3.2 Understanding Cultural Dimensions .................................................................. 24 3.2.1 Geert Hofstede Dimensions ...................................................................... 24 3.2.2 Trompenaars Dimensions ......................................................................... 27 3.2.3 Hall’s Cultural Dimensions ....................................................................... 28 3.3 Managing Cultural Differences .......................................................................... 29 4 RESEARCH PROCESS ............................................................................................ 31 4.1 Target Organization (Ultimate companion limited) ........................................... 31 4.2 Choice of Method ............................................................................................... 33 4.3 Research Methods and Procedure ...................................................................... 34 5 FINDINGS OF THE STUDIES ................................................................................ 38 5.1 Findings from Interviews ................................................................................... 38 5.1.1 Background Information ........................................................................... 38 5.1.2 Work Motivation ....................................................................................... 39 5.1.3 Rewards ..................................................................................................... 42 ii 5.2 Findings from Survey ......................................................................................... 45 5.2.1 Background Information of the employees ............................................... 45 5.2.2 Employee’s Work Motivation ................................................................... 49 5.2.3 Employee’s Rewards ................................................................................. 53 6 DISCUSSION AND CONCLUSIONS ..................................................................... 57 6.1 Comparison of the main Findings with Previous Studies .................................. 57 6.2 Reliability and Validity of the Study .................................................................. 60 6.3 Analyses ............................................................................................................. 60 6.3 Development and further studies ....................................................................... 64 6.5 Conclusions ........................................................................................................ 64 7 CONCLUDING REMARKS .................................................................................... 65 BIBLIOGRAPHY......................................................................................................... 67 APPENDICES LIST OF FIGURES Figure 1 Abraham Maslow's ........................................................................................... 8 Figure 2 Frequency distribution against employee’s gender ........................................ 45 Figure 3 Frequency distribution against age of employees .......................................... 46 Figure 4 Frequency distribution against work experience of employees ..................... 47 Figure 5 Frequency distribution against positions of employees ................................. 48 Figure 6 Frequency distribution against contract terms of employees ......................... 48 Figure 7 Frequency distribution against employee's work environment ...................... 50 LIST OF TALES Table 1 summary of interviews .................................................................................... 44 Table 2 Employee's satisfaction ................................................................................... 53 Table 3 survey summary on employee rewards and work motivations ........................ 56 1 1 INTRODUCTION Managers within companies or organizations are primarily responsible to ensure the tasks or job is done through employees in the right way. To achieve this, these manag- ers must ensure that they have a competent personnel department for the recruitment of the best employees that are capable to do the job. For the company to optimize em- ployee’s performance there is need for the employees to be sufficiently motivated. Therefore, motivation in theory and practice becomes a difficult subject touching on several disciplines. Although a lot of scholarly research has been written on motiva- tion, this subject is not clearly understood and more often than not poorly practiced. On this score, to best understand how motivation can impact on employee´s perform- ance one must understand human nature. In as much as motivation impacts on em- ployee performance, there is need to blend the appropriate motivational tools with effective management and leadership to achieve this goal. Not withstanding the fact that motivation is very important to determine employee’s ability so do other factors such as the resources given to an employee to do his or her job. Therefore, successful work performance can arise from a variety of motives. For instance, two people doing similar jobs may both be successful for different reasons, one salesperson may be motivated by the commission earned on sales, while the other may be more concerned about meeting sales targets. This creates a nuance in the sub- ject matter because motivation to enhance performance varies from person to person and from company to company. These are the challenges managers are confronted with in designing appropriate motivation tools that will be able to meet with the ex- pected performance within the company. This therefore arouses more critical academic thinking within the subject area. In this light a lot of academic literatures from scholars and practicing managers have ensured to resolve this intriguing academic domain on how motivation can enhance performance. 2 Relevance of studies Contemporary research and observations show that well motivated employees are more productive and creative towards achieving company or organizational goals. On the other hand less motivated employees are less performant and tend to divert from attaining organizational goals. Motivation as incentive systems are fundamental to developing capacities and to translating developed capacities into better performance Purpose and Objectives This study will help Ultimate Companion Limited to realize more appropriate ways of motivating its workforce to induce high performance, as well as forming policies or decision schemes to motivate employees in order to have increased performance within the company. Company’s profit, growth and high performance are the main goals for Ultimate Companion limited which could achieve through appropriate moti- vation. Therefore employee motivation will be a condition necessary to achieve these goals. This work will equally assist in facilitating further studies by other researchers who are interested to know much on the link between motivation and performance. Furthermore, it will also assist practicing managers at Ultimate Companion Limited as well as students to obtain a broader knowledge on motivation at work. This research intends to break new grounds on the link between motivation and performance within Ultimate companion and how this knowledge can be useful within other companies or organizations. The main objective of this research is to analyze how well some motivation can help enhance employee performance and to know the factors which actually trigger high performance at Ultimate companion Ltd. Also, to understand the different ways in which Ultimate Companion can motivate its workers. Furthermore, to establish the various aspects that could be further developed and improved in order to increase em- ployee’s performance. In understanding that the dream of most managers today is to 3 have a greater market share when they are in business, better performance within their company would be very necessary to achieve this goal. Research question The diversity of today work force presents managers with problems of substantial magnitude. Huge differences among employees in every organization and work group means that there is no one best way to deal with them. An approach that motivates some employee to perform well misses the mark with other employees. This therefore, posses a major challenge to today’s managers. As such it triggers the problem question “why is money not a sufficient motivator for performance in a company?” Structure This report has seven chapters. The first chapter is the introduction which familiarizes the reader with the research topic. This chapter also pinpoints the purpose and objec- tives of the study. It presents how the development of the study area is and the relev- ance of the study. Theoretical framework consist of two chapters: chapter two Presents’ four theories on motivation as well as the role of human resource managers, performance management and reward systems and chapter three presents culture in human resource management: which includes the concept of culture, understanding of cultural dimensions and managing cultural difference. Chapter four describes the tar- get organization, choice of method, research methods and procedure. And Chapter five introduces the findings from interviews and findings from survey. Furthermore, chap- ter six presents a comparison between the findings and existing theories, discussion of the results, the reliability and validity of the study. Finally, chapter seven presents’ challenges face in the writing process. 4 2 NATURE OF HUMAN RESOURCE MANAGEMENT Within current dispensation organizations are now realizing that their accomplish- ments are dependent on their capabilities to create a centre of attention, develop and hold on to talented employees. The future of the organization’s capabilities to create a centre of attention, develop, and hold on to a talented work force will be a significant factor in developing a high-performance organization. Therefore, it is interesting to know that the essential elements of any organizational success in the days, weeks, months and years to come is a strategy where every employee is treated as a valuable resource. The key to sustained survival and organizational success lies not only in the rational, quantitative approaches, but more to the commitment of employee’s in- volvement and motivation to work. (Sims 2007, 4) Human resource management as a consequence is more fundamental today for the success of any organization than ever before. The query that arises at this point is what measures should organization take to power the human resource output? Workers must no longer be considered as liabili- ties, rather as a vital resource which needs to be attributed greater attention and con- stantly developed. As organizations are becoming more cognizant of the potentials of new technologies, they must also realize the vital role that personnel play in managing the technology. (Pattanayak 2005, 13) 2.1. Role of human resource management The main objective of HRM is to recruit employees, which are done essentially through; interviewing, screening and selecting the most qualified candidates for the organization. This is a far more complex activity than in previous times when HRM staff could rely on recommendations from current employees (Sims 2007, 9) Organi- zation must decide who to select and who to reject amongst the many applicants for a job opening. Therefore, organizations use their HRM departments to select and recruit individuals who are likely to succeed on the job and this should be non-discriminatory (Thornton & Rupp 2006, 10). The HRM management carries out training programs, 5 as well as creating management programs, and contracting with outside training organ- izations. (Pell 2001, 8) The HRM is also responsible to develop visions and missions, determining goals, short and long term plans as well as preparing tactics to implement the plans in order to achieve the overall goals of the company. (Milligan et al. 1996, 5) Furthermore, the HRM also directs and guide the workers or individuals within the organization. This requires the HRM to have variety of skills which ensures that em- ployees complete assigned task within the required time. (Milligan et al. 1996, 6) In most organizations supervisors make available a performance appraisal on an annual basis to assess the job proficiency of employees. Consequently HRM is involved in instigating changes as well as acting as a steady force in situations where change would be damaging. The human resources function can help the organization develop the potential to weather the changes that will keep on to be part of organizational land- scape. (Armstrong 2006, 55) HRM makes adequate provisions for compensation packages that is wages and salaries for the workers and employees serving the organi- zation. It includes job evaluation, wages and salary survey, determination of wage rate, determination of mode wage payment, incentive payment plans, and bonuses. (Kubr & International Labor Office 2002, 390 - 391) Employees are generally rewarded on the basis of the value of the job, their personal contributions and their performance. Al- though making available rewards based on the level of performance can augment em- ployee’s motivation to perform; many rewards are more generally given on the basis of the value of the job the employee is doing. However, rewards based exclusively on employee’s personal contributions as a result for being a member of the organization is rapidly increasing. The appraiser for performance is not all that easy in order for the organization to compensate their employees. Therefore, the company must ensure the effective use of human resource tools to achieve these goals. Appraiser for perfor- mance must be done not only to get employees to join the organization, to participate and to perform but also to determine possible training and development needs. (Krish- namurthi 2006, 9 - 10) Giving an employee a new and higher level of responsibility is a major decision for the company and for other personnel who will be under his or her supervision. Most com- panies currently use the human resource management department to identify em- ployees’ potentials for success in managerial positions in what is called advanced 6 management potential assessment programs. Accordingly, promoting as well as layoff is not all that easy within an organizational setting. When a company wants to reduce its workforce for economic reasons or because of changes in its structure, it is faced with the difficulties to decide who to retain and who to relieve from the company. For such strategic reasons most companies use the human resource management depart- ment to simulate their job requirements. (Thornton and Rupp 2006, 12) 2.2 Theories on Work Motivation Contrary to Maslow’s views, the short answer appears to be the fact that for the major- ity of people, money is clearly significant and a motivator at work. But to what extent is money a significant motivator and how important depends upon their individual circumstances and the other happiness they derive from work. The bottom line is defi- nitely the extent to which money motivates people to work to the top of their abilities. Even though pay may still compose people tick, there are now a number of other sig- nificant influences on motivation. For a lot of people, the feeling of being recognized and valued appears more important than money in motivating them to keep on in a particular job. (Laurie 2007, 255) Therefore, motivation has been an issue of concern in the past and has established it- self as an integral part in current organizational settings. Motivation is quite complex to comprehend thus placing awareness to the fact that several factors influence em- ployees performance in a particular organization. Reason being that, what motivates one worker will not definitely motivate the other employee within the same company. McShane et al defines motivation as “...a factor that exist in an individual which has the potential to affect the way, strength and eagerness of behaving towards work”. (McShane & Von Glinow 2003, 132) The above definition of motivation has been supported by Petri & Govern, “motivation is the thought that explains the propelling force in an individual that explains differences in intensity of behavior”. (Petri & Go- vern 2004, 16).