RUNNING HEAD: UNDERSTANDING EMPLOYEES MOTIVATION (CAREFULLY

DESIGNED REWARD SYSTEM IS A KEY TO SUCCESS)

Understanding Employees Motivation (Carefully Designed Reward System is a Key To
Success)

B.Com (Hons). Hailey College Of Commerce.

UNDERSTANDING EMPLOYEES MOTIVATION (CAREFULLY DESIGNED

REWARD SYSTEM IS A KEY TO SUCCESS)
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Abstract
This study aims to focus on the effects of incentives in Pakistani organizations, where job
security is valued. In particular, the study seeks to investigate the relative strengths of the effects
financial incentives like wages and salaries and other non financial incentives like recognition,
advancement, relation with peers on employees' motivation. A survey was conducted involving
100 Pakistani employees, working in different organizations. Results showed that hygiene theory
was held good in Pakistani organizations.The results showed that both financial and non
financial incentives positively influence employees' work motivation. A comparison of the
relative strengths of the effects reveals that non financial incentives were a more powerful
motivator than financial.
Key words : Incentives, Hygiene Theory, Employees Work Motivation.

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REWARD SYSTEM IS A KEY TO SUCCESS)
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Introduction
Chief executives of most organizations rarely miss an opportunity to remind their
audience and themselves that their employees are their most precious asset. The trouble is,
organizations by no means necessarily put this thinking into practice by taking every step to
ensure that every member of staff wants to perform to the very highest levels of which they are
personally capable .This is not only tragic for the people involved, it is also commercially
nonsensical for the organization employing them. An organization whose staff are not fully
committed and giving their all cannot possibly be doing justice to itself at any level. (Robert J.
Barcelona, and John T. Meldrum)
Fortunately, more and more organizations especially those in the ever more important
service sector have become attuned to the idea that there is not much point in employing
people at all if you are not going to take steps to make them want to give their very best to you.
All the same, it is by no means the case that every organization thinks in this way, and even if the
organization does think in this way, it still needs to put this thinking into practice. There are still
some chief executives and managing directors who think their employees will be motivated to
give a great performance simply because the company has hired them.
Effective reward systems help an organization be more competitive, retain key
employees, and enhance employee motivation and reinforce the image of an organization among
key stakeholders or future employees. To meet its obligations to shareholders, employees and
society, top management of an organization must develop a relationship between the
organization and employees that will fulfill the continually changing needs of both parties. An
organization at minimum expects employees to perform reliably the tasks assigned to them and

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according to the standards set for them, and to follow the rules that have been established to run
the organizations where as at a minimum, employees expect their organization to provide fair
wages and salaries, safe working conditions, and fair treatment. (Beer, Spector, Lawrence, Mills,
& Walton, 1984).
Motivating employees is a necessary step that every business owner should take to
succeed. This is because motivation encourages better performance and productivity on the part
of employees. And when this happens, the company has nothing to enjoy but benefits and profit.
Hence, it is natural for owners, managers, and team leaders to look for ways to improve the
morale of their workers.
According to Herzberg's theory motivation is categorize into two factors: motivators and
hygiene. Motivator or intrinsic factors, such as achievement and recognition, produce job
satisfaction. Hygiene or extrinsic factors, such as pay and job security, produce job
dissatisfaction.(it is not produce dissatisfaction it is only dissatisfied when extrensic factor are
negtive otherwise it prevent demotivation.)
Research Problem
The research was conducted in order to find that which factors either financial or non
financial effects the motivation level of employees more.
Objective
The objective of the research is to understand the effect and relative strength of different
factors that influence the employees motivation towards the higher performance in Pakistani
organization.
Significance of the Study
As the employees motivation plays a vital role in their performance, this study can be

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REWARD SYSTEM IS A KEY TO SUCCESS)
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helpful for management of an organization to motivate their employees by understanding

different factors that effect their motivational level.
Literature Review
Kiyoshi Takahash s,(2006) research is based on the survey data collected from 1,823
workers of the Japanese automotive industry, showed that both promotion and wages influence
employees' work motivation. Comparing the relative strengths of effects, his research founded
that fair promotion was a more powerful motivator than wage level and wage increase. his study
scrutinizes the effects of wage and promotion incentives on motivation. The reason of fairness in
promotion was more effective than wage to motivate employees was discussed by him in light of
the unique career system existing in Japanese companies and the agency problems between
companies and their supervisors.
Stephen Flynn,(2011)he conducted this research to guide managers on managing the
organizational environment of their employees and to return motivation to the employee.He
found that the psychological contract is falsely offered as a management tool. Motivation is a
function of the maturity level of the organization. The range of motivations available to
employees is limited by this maturity level. Employee motivation is not a tool directly available
to management. The environment within which employees operate is the maturity level of the
organization. He found that management should focus less on attempts to motivate employees
directly and concentrate on developing the maturity level of the organization. It is argued that
management should attend to managing the environment within which employees work.
Carolyn Wiley, (1997)he held a research to measure that "What motivates employees
according to over 40 years of motivation survey. His research explores past and present

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REWARD SYSTEM IS A KEY TO SUCCESS)
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attitudes of employees concerning work-related motivational factors. He compares the results of

four motivation surveys conducted in 1946, 1980, 1986 and 1992. The comparisons reveal that
employees motivational preferences vary over time. In addition, the results of the 1992 survey
indicate that the factors that motivate todays workers are more extrinsic than they used to be.
Although employees differ on how they rank these factors, they overwhelmingly selected good
wages as the top motivator. A good wage is an extrinsic reward with intrinsic potency. On the
surface good wages seem to be purely extrinsic. Yet, at a deeper level, monetary rewards
communicate what the company values and affect employees emotional and familial wellbeing.
Charles Woodruffs,(2006) he conduct a research to explain that a fully-engaged
employee is an extremely important commercial asset. In the absence of detailed research, the
author draws on his extensive experience of working with numerous large organizations on
maximizing the extent to which their employees are engaged. His experience is practical and has
involved working with employees who themselves toil at the Coal-face of organizational
success. The research presents an informed anecdotal approach to the subject and is made
Systematic through a range of practical guidelines. the most important observation of all given
by the author is that engaged employees provide a discretionary input, that is, they give a level of
energy and commitment to the job which the job does not require from a contractual perspective.
Severin Hornung, Jrgen Glaser,(2010)the purpose of their research was Investigating
employee responses to relational fulfillment of the psychological contract and work-life
benefits of a telecommuting program, this study aims to contribute to the literature on social
exchange in employment. The setting of the study was the German public administration.
their findings showed that trust and affective commitment consecutively mediated between r
relational fulfillment of the psychological contract and organizational citizenship behavior.(what)

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REWARD SYSTEM IS A KEY TO SUCCESS)
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Members of the telecommuting program had more positive representations of social exchange,
reporting higher levels of fulfillment, trust, and commitment than their peers. The study adds to a
more integrated understanding of the psychological processes that reinforce and strengthen
employee trust and commitment, thus forming the basis of the motivation to go above and
beyond specified duties and reward-contingent behavior.
Lyons W. Quality World (UK), (January 2010) his study describes a practical approach
to the problem of motivating employees in the workplace and ensuring that employers get the
best out of their staff. He discussed the basic needs of employees in terms of an engagement
triangle comprising three categories of employee needs: the package, in terms of pay, bonuses
and options, and benefits; job satisfaction, in terms of achievement, respect and recognition,
autonomy, work-life balance, congruence, and sense of fun in the workplace; and employability,
in terms of being developed, involvement with prestige projects, career advancement, and
working for a respected organization. His research concludes that people are motivated to get
what they consider to be a fair return for their efforts, and they want to see what is known as
distributive and procedural justice, the former being about whether people feel that they will be
rewarded fairly compared to those in relative jobs, while the latter involves whether people feel
that the organization has procedures in place to ensure that rewards are allocated fairly.

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Pooja Garg, Renu Rastogi,(2006) they conducted a research to identify the key issues of
job design research and practice to motivate employees' performance. They adopted the
Conceptual model of Hackman and Oldham's job characteristics , to motivate employees'
performance. Researchers found that a dynamic managerial learning framework is required in
order to enhance employees' performance to meet global challenges. They concluded that one of
the major purposes of job design is to be able to discuss what is needed from the job and the
employees. It is of current interest in establishing a link between human resource management
(HRM) or high involvement practices and organizational performance with an increase in
intrinsic motivation.

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.
W.L. Gore & Nocur Associates ( 2006) reviews the latest management developments
across the globe and pinpoints practical implications from cutting-edge research and case
studies.
Their findings were about what makes people happy with their jobs? Is it high salaries or
bonuses or opportunities for promotion? They suggested that innovative business strategies
which value a company's human resources are the most important factors in keeping
employees
enthusiastic and motivated about their jobs.
Jeroen P.J. de Jong, Deanne N. Den Hartog,(2007)made their research to provide an
inventory of leader behaviors likely to enhance employees' innovative behavior, including idea
generation and application behavior. their research was based on a combination of literature
research and in-depth interviews, the paper explores leadership behaviors that stimulate
employees' idea generation and application behavior. They found that there were 13 relevant
leadership behaviors. Although innovative behavior is crucial in such firms, it has received

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REWARD SYSTEM IS A KEY TO SUCCESS)
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very little attention from researchers. Leaders influence employees' innovative behavior both
through their deliberate actions aiming to stimulate idea generation and application as well
as by their more general, daily behavior.
Wei-Tao Tai,(2006) The purpose of their research was to examine the effects of
training framing from supervisors on trainee self-efficacy and training motivation, and further
test how these variables subsequently influence overall training motivation. The design of the
study includes longitudinal, self-report and objective measures. Data were collected from 126
employees who entered a training program aiming at introduction of computer software
operation and design. Confirms the importance of supervisors training framing which
predicts the self-efficacy and training motivation of trainee, subsequently affects their
reactions, learning and transfer motivation. Mainly, organizations should increase trainees'
self-efficacy and training motivation prior to the actual training program. Specifically, to
increase trainees' self-efficacy and training motivation, managers can provide training-related
information.
Data Collection And Analysis
The primary data for this research was gathered through questionnaires, from 100
eployees of different Pakistani organizations. This study was mainly aimed to investigate the
effects of different factors on motivational level of employees. In particular, it was an attempt
to understand that which type of incentives motivates employees at a greater level to work
hard. The questionnaire includes two sets of independent variables that are financial and non
financial incentives. Based on this, the strength of effects of incentives the motivational level
of employees was analyzed.
Table 01:

Elements of financial and non financial incentives

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Financial incentives

Non financial incentives

Salaries and wages

Recognition

Allowances

Promotion

Bonuses

Decision making power

Additional monetary rewards

Appreciation of
work done

Pensions

Good working conditions

Company policy

First, the effect of financial incentives including salaries and wages, allowances, bonuses,
additional monetary rewards and pensions on motivation levels was analyzed. Secondly the
effect of non financial incentives including recognition, promotion, decision making power,
appreciation of work done, good working conditions and company policy on motivation levels
of employees was analyzed. likened scale was used for measuring the response of employees.
The scale assigns a value of 1 to 5, starting from lowest to highest.
After collection of data through questionnaires, the degree to which employees gave
importance to each factor was calculated in percentages. According to table given below the
overall percentages of non financial incentives was greater than financial incentives. However,
salaries and wages were considered as most important factor in motivating employees. On the
contrary, in non financial incentives, promotion was considered as more important by
employees.

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REWARD SYSTEM IS A KEY TO SUCCESS)
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Table 02:

percentages assigned by employees to elements

Financial incentives

Non financial incentives

Salaries and wages

23

Recognition

Allowances

Promotion

18

Bonuses

Decision making power

Appreciation of work done

Additional monetary
rewards

Pensions

10

Total

9
Good working conditions

Company policy

46%

54%

Conclusion
Based upon the above figures, the researcher has come to the conclusion that increase in
Salaries and wages is most important in motivating the Pakistani employees but overall rating
given to non financial incentives is greater than financial incentives because non financial
incentives play an important role in internal satisfaction of employees. The study revealed that if
non financial rewards are offered to employees, along with suitable wages and salaries, then
there would be a positive change in work motivation and satisfaction of employees.

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REWARD SYSTEM IS A KEY TO SUCCESS)
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REWARD SYSTEM IS A KEY TO SUCCESS)
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