Literature Review Importance Of Motivation Commerce Essay


Motivation has so many definitions, and it has been discussed, assimilated and referred to in many aspects, as people have come to understand the importance of Motivation, Motivation itself refers to in one study as "the reasons underlying behaviour" (Guay et al., 2010, p. 712). This is a major phrase as it refers to a simple but major fact. That behaviour is promoted and supported by motivation. This means that what we do and how we do it is based on motivation. In the same context Gredler, Broussard and Garrison (2004) generally defines the motivation concept as "attributes that propels us to do or even not to do something" (p. 106) This means in the right hands and in the right management motivation can ensure that people behave and act the way factors dictate them to behave. A powerful tool that is worth all the man hours spent in researching this element.

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In the past few decades Human motivation has become a diversified and extremely researched field with good reasons as it plays a major role in today's organisational front. Motivation has comprehensive roots in a varied collection of educational disciplines that has come to play a big part in today's culture some of which is psychology, sociology, education, political science, and economics. In simplified terms, motivation can be defined as, "what makes someone do what they are doing" (Denhardt et al., 2008, p. 146). The part motivation plays in all these fields has come to be so immense that everyone today respects and tries to understand the depth of motivation.

The general view as to the definition of motivation which shows us in a broad way that: (1) motivation is an a goal directed process (Lawler, 1994), (2) motivation outlines the attainment and search of goals (Denhardt et al., 2008) and (3) motivation is environmentally dependent (Pettinger, 1996). Campbell and Pritchard (1976)has explained motivation as being the set of psychological processes that cause the initiation, direction, strength, and persistence of behavior. All these factors have a direct impact on productivity and the positive human influence in the environment.

Motivation has been identified as "an internal drive towards ones self and not to other people, its is an internal occurrence within one's heart and mind. Sometimes managers have the influencing power to motivate the process, but the said managers cannot control it or wield it" (Denhardt et al., 2008, p. 147).Which makes it harder to wield, however if management can make the conditions such it can promote motivation. Its has become important to know and understand as much as possible when it comes to motivation so that management can do everything that is possible to make the environment a "motivation zone"

Also Young (2000, p1) in his studies makes a valued and simple statement, what motivation is depends on who you ask he states. He further suggests that motivation has the depth to be conveyed in many ways and means, and it depends of a persons view point .If you ask a general bystanader the response would be in the lines of,"its what drives a person to do what they do" or "it's the force that make us make the small decisions that change the things we do." Hence motivation is the energy within an person that accounts for the level, course, and tenacity of effort spent at work." Again before management decisions that may or may not involve cost is taken it is important that an assessment on which relevant motivators for the relevant situation is assessed and assimilated prior.

Again a statement and study that will help managers get the best out of the people states that according to a study by Antomioni (1999, p29), "the quantity of energy individuals are ready to put in their work is dependent on the degree to which they feel their motivational needs will be fulfilled. From another view point, people become de-motivated if they feel something in the company or workplace plays a role in preventing them from achieving positive and lucrative outcomes.

In another study by Bartol and Martin (1998) they go on to define motivation as a control that reinforces and fortifies behaviour, again stating the fact that motivation drives behaviour, as such drives performance or in most instances the lack of it.

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Also it is said that the process of motivation is an evolution of moving and supporting goal-directed behavior (Chowdhury.M.S, 2007). It is an internal strength that drives individuals to pull off personal and organizational goals (Reena et al, 2009).

Motivation is such a factor that exerts a driving force on our actions and work. According to Baron (1983, p. 123),

The main Motivational theories can be divided to two content theories, centred around the hypothesis that all persons share a almost identical set of human needs, and as a whole we are all motivated to satisfy and achieve those needs (Maslow, 1946; McGregor, 1957; Herzberg, 1968; Alderfer, 1969; McClelland, 1988) however other theories have clarified that while the majority of the human beings might have very related needs the standing and the engagement of those needs are different to each other and motivation needs to be adjust accordingly ( Skinner, 1935; Festinger, 1957; Adams, 1963; Vroom, 1967; Porter & Lawler, 1968; Kahler, 1975; Locke et al., 1990)this study will look in to most motivation theories that are applicable in this context and review them accordingly.

Employee motivation

Motivation and Employees go hand in hand in today's context. And there are theories born every day on motivation, how to motivate etc….Most concepts are centred around the hypothesis that persons all share a similar set of human needs and as humans we will always tend to satisfy those needs any way we know how, and at all times. The afore mentioned needs as per the fundamental motivational guru's (e.g., Maslow, 1946; McGregor, 1957; Herzberg, 1968; Alderfer, 1969; McClelland, 1988) Which has started an immediate creation of new theories both proving and disproving these fundamentals. Most theories are centred around the coherent reasoning process and explain that while most human beings share similar needs, the value that is placed in the lives of people for those needs and how those needs are placed is different for everyone, which is a very genaralized way of reasoning; this though process leads in the direction that motivation within individuals is something that is highly subjective in nature(e.g., Skinner, 1935; Festinger, 1957; Adams, 1963; Vroom, 1967; Porter & Lawler, 1968; Kahler, 1975; Locke et al., 1990).

In a early study in this regards Bassett-Jones &Lloyd (2005, p931) has presented the community with two views of human nature and a look towards early research into employee motivation. The primary view emphases on Taylorism, which regarded individuals as fundamentally idle lazy and and work -shy", which has been disproved in the later years from motivators and hygiene factors theories that were formulated. This thought process explained that the said individuals or in the work context employees can only be motivated by external stimuli. The secondary thought process was based on the popular Hawthorn experimental studies, which identified the opinion that workers are motivated to work well for work and nothing else but work, also and not only for the social and financial paybacks, later this motivation was described as internal motivation.

It has been said that if you took into account monetary, financial and human capital, the later are more essential and have the capability to ensure an organisation has a competitive edge as compared to the competition (Rizwan et al, 2010). As the human capital is gaining its repute as the most important factor an organisation has in its position, all these studies become paramount in today's context.

Employee motivation has become a main item in the "to do list" for most managers to ensure the increase job satisfaction amongst employees within organizations (Shadare et al, 2009). Motivated employees are said to be responsive of the predefined goals and objectives that he or she must achieve, thus they direct their complete efforts in that direction. Rutherford in 1990 explained that motivation formulates a company more successful because it triggers employees to constantly look and improve practices to do their work, this is vital and extremely important to ensure that the staff are motivated and in a motivated environment (Kalimullah et al, 2010).

As motivation and job satisfaction go hand in hand it has been said that, an individulas feeling of being satisfied at work is directly associated with the level of internal motivation of employees that in a chain reaction increases the satisfaction levels of the workers. (Salman et al, 2010)

Motivation and performance

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Motivation and Performance has been linked together for a long time, and manager's everywhere are now digging deeper to understand the roots of these theories. As motivation is considered an internal drive, it is important that managers understand what moves their staff to perform. In Beyond the Fringe, Simms is seen to analyse how different companies use tailor made versions of "cashless rewards" as employee incentives. In today's research it has now been determined that cash is but a quick fix solution to a problem. Simms goes on to say that as Herzberg's described monetary incentives as non-motivators is on the money. Motivation leads to greater employee satisfaction and performance (Simms, 2007).All the more reason why managers should focus on this element in a human resource point of view.

When looking at real life examples we consider the study by Whiteling who looks at the cases of Reuters and Salisbury's the super store chain to explain the importance it is creating a culture where workers become directly involved in the changes within the organisation.Motivation since it goes hand in hand with empowerment this study becomes a important one. By making a value chain that pays importance to an workers views and used in implementing change, the outlook of the organisation is better understood and accepted and brought in by the employees. This process has positive effects that is it motivates the individuals to support and ensure that the goals and vision of the organisation is met (Whiteling, 2007). Today managers have understood that the silo system of yesterday that had managers in one segment and employees in another made the working environment a de motivated one.

A good communication chain and even the grape wine has provided the employee to discuss problems etc, if this fails and communication is halted de-motivation has a way of creeping in. A common thread of communication between employers and employees emerges as a requirement for employee motivation (Simms, 2007; Jakobson, 2007; Whiteling, 2007; Silverman, 2006; & Sharbrough, 2006). And studies have shown that motivated staff are more energised and more geared to perform. The majority of studies into this stream show a definite connection with better motivated employees that ture into better performers within the organisation.(Simms, 2007; Jakobson, 2007; Whiteling, 2007; Silverman, 2006; & Sharbrough, 2006).

In their studies it is suggested that motivation is the process that exerts that a person will be willing to give it their best and their total dedication the ensure that the organisational objectives will be met at every turn. This process can be self driven as well. Robbins and Coulter (2005, 392.) and managers have but one way to ensre that the organisational goals are achieved and that is by ensuring the process of motivation is implemented successfully.

Also research dictates that any form of reward will ensure that employees are motivated and thus better perform. (Kalimullah et al, 2010).

All organisations use the basic monetary and development pospects and other rewards to motivate employees to work harder and perform better.(Reena et al, 2009). So the age old debate of what motivates employees is being studied and researched to identify what motivates employees.

"Leadership is the art of getting people to do their allocation of work the way you want them to, as leaders trust among the workers towards you is paramount. And trust comes as well as hard work through motivation and motivated individuals.(Baldoni.J, 2005). Studies show that together both leaders and followers motivate and boost each others moral in successful environments of motivation.(Rukhmani.K, 2010).Motivation is purely and simply a leadership behaviour. It stems from wanting to do what is right for people as well as for the organization. Leadership and motivation are active processes (Baldoni.J, 2005)."

As per La Motta (1995) it is stated that performance at the work place is directly correlated to motivation and motivation based environment.

The above theories all point at the direction that motivation and performance shares strong links, and that if management can identify what motivates their employees, performance can be enhanced, and through which the all-important bottom line can be enriched.

Theories of Motivation

Motivation due to its importance had spawned many theories and those theories can be broadly categorized as Content theories and Process theories.

Content theory

Observing the Content theories they rotate in the basic principal that what drives any person to strive to achieve anything or work towards anything is based on the understating people act in a certain manner because all human beings have needs to satisfy, these are the most renowned and spoken of theories in motivation. Nevertheless, there are serious failings in these approaches that can contribute in practice due to the complexity of human nature. Because of this it is imperative that organizational managers know what the workers needs and also have an undersating that employee needs will change and evolve over a time period and also will change from one employee to another. Afterwards the development of a evolving reward system (McShane, Von Glinow 2000, 74.) that will take into account the needs of the employees. In this instance, the ever changing wants of workforces will determine the efficiency of motivations used to motivate them.

Needs theory

The foundation to motivation and the theory that almost started everything is easily noted kmown and taught in almost every motivational study. This theory was propounded by American psychologist Abraham Maslow; He theorized the famous five stage model of human needs that influence human motivation as this pyramid of Maslow illustrated below:

FIGURE1: Maslow Hierarchy of Needs (Griffin2008,438.)

The most basic needs are named as Physiological needs such food and shelter that outlines the basis for motivation and are necessary to ensure the continuation of life in its most basic form. The second tier are the needs that are named as Safety needs that are required by persons to feel protected from emotional and physical peril. Companies can establish these needs by providing a secure working environment, by providing job security and added benefits that may include a complete benefit package. The third layer is Belongingness needs are with reference to the need for a connection and group identification persons attain from members of family, friends or colleagues. This includes, to friendship, interactions both social and work environment and belongingness, or acceptance by one's peers. The fourth is the Esteem needs can be described as feeling good about the individual. Self- esteem and personal accomplishment through challenging assignments are part of internal esteem needs while nice job titles, recognition, rewards and reputation are external esteem needs. And lastly Maslow speaks of the highest level of the evolution of needs which are Self-actualization is the higest tier of achievement in the Maslow's need hierarchy. It suggests that the maximum potential of an individual has been reached. This is a complex need, however, is almost impossible for managers to address as it is completely up to the employee's desire to achieve. Griffin (2008, 439.) this suggests that leaders can help foster an environment where attaining self-actualization is possible for instance empower employees to make decisions about work and providing opportunities for self-development. As perceived by Maslow,

Maslow resolved that persons are mainly motivated by needs that are unfulfilled in an rising scale. This concept is termed 'satisfaction-progression process' or pre potency whereby individuals will proceed to fulfil a next higher level need only after a lower level need of the hierarchy is fully satisfied. In other words, an individual whose physiological needs are unmet will not escalate to fulfil the next layer i.e. safety needs; instead will motivate oneself to persevere until the currently recognized need is satisfied. (McShane et al. 2000, 67.) What is important when looking at Maslow's theory is to note that Maslow informs that you have to satisfy a step by step needs hierarchy. However many state this is not the case.

ERG Theory

Taking the needs theory into consideration "Alderfer reviewed the theory of hierarchical needs by reclassifying the pyramid into three level categories of human needs:

The Existence needs combines the first two of Maslow's basic needs that are physiological and safety needs. It refers to the essential needs for survival such as the basic food and air and safety, and in a working context safe working environment as well.

Relatedness needs is similar to the Maslow aspect of social needs; a need for persons to withstand interpersonal relationships and to feel a string connection to others. The widely spoken Extrinsic motivation falls within this areas as well.

The growth needs covers esteem needs and self-actualization of the needs theory. This is a need consisting of the improvement of one's self; develop intrinsic motivation for task through accomplishments; complete meaningful task and be creative.

Almost disproving Maslow, Alderfer sates that persons may be motivated by more than one category of needs at the same time where one need appears more central than the other need. This is known to be the 'frustration-regression process' whereby if an individual who is unable to satisfy the growth need will regress to relatedness need which continues to be a strong motivator. (McShane et al. 2000, 68.)"

Opposing to the theory that states that persons have identical innate needs, David McClelland (1988) contends that some needs differ from person to person and that they are often needs that are learned over time; with some people having higher levels of one need than others. McClelland proposes that individuals are motivated based on three needs: achievement, power, and affiliation. Each person has a certain level of each need and in combination they describe what types of motivation influences would suite them best.

Two factor theory

Another important theory that will assist this study greatly is "Herzberg's theory of motivation affects directly to organisational culture and practices, This theory was formed from an practical research that was conducted on workers to understand and comprehend the amount of job satisfaction.

Herzberg stated that factors resulting in satisfaction are shown and understood as motivators, and on the other hand hygiene factors leads to a certain amount of dissatisfaction. He noted that Persons will do their best to fulfil the hygiene factors just to ensure that they are not dissatisfied. However they do not essentially persuade long-term satisfaction. However low or inadequate or the absence of good hygiene factors will cause dissatisfaction in almost all cases. However, dissatisfaction will not result from unsatisfied intrinsic needs nor reduce dissatisfaction when these needs are met. (Herzberg, Mausner, Snyderman 1959, 113-114.) Motivation factors are related to work content while hygiene factors are related to work environment (Griffin 2008, 440.) as summarized below:

Motivation factors


Hygiene factors





Work itself


Personal growth

Company policies and administration

Interpersonal relations

Working conditions


Job security



According to Herzberg et al. (1959, 131-132.), Managers should not relay solely on giving the employees that hygiene factors as this will only motivate them so far, and employees depending too much on extrinsic rewards will only motivate employees for a short time at best. And this will also result in the organisations growth minimisation and profit loss in the long run. The winning solution is for managers to focus on developping more intrinsically challenging tasks and programs, provide recognition and empowerment to employees when motivated behaviour is demonstarted, which are the true motivators, when fulfilled, contribute to long-term positive effect on employees' job performance.

Process theories

The process theories are all about how a person is motivated, this theory revolves around the component of the need, and how that pushes someone to to behave in the way that they do. The secondary and more strong component is people striving towards performance through rewards. Taking an example into consideration individual will see a reward and will display a different set of behaviours. Like working hard and going the extra this reward turns into a motive for that behaviour. So the employee focus turns towards the reward which is a hygiene motivator.

Expectancy theory

Victor Vroom's expectancy theory proposes that individual motivation levels depend on factors and he states three predominant factors that are mentioned below,

Expectancy (EP) is the theory that informs putting amounts of pressure will ensure that the individual will perform to the best of his or her ability. For this to be a success the individual must have the skills and also the educational background and also the necessary work experience.

Instrumentality (PO) this shows that the individuals hard work that leads to performance will lead to a positive outcome. Simply for this to work the individual must understand and belive that his work will be repayed by increase in his wages or promotions etc…And the said rewards can vary from intrinsic to extrinsic.

Vroom deducted that by using a formula that is seen below an individual's motivation levels can be understood and calculated:

Motivation = Expectancy X Instrumentality X Valence

This theory believes that motivation exists only when workers see a positive a relationship between the effort that is spent to work and the performance and the awarded reward. (Griffin 2008, 444.) In a nutshell, if the power of any of there factors are zero or insignificant, there will be little or no motivation. If an employee who has the ability to perform well does not expect a reward or does not find the reward attractive, then he/she will not be so motivated to do the job. For motivation levels to be high, all three factors must be high too. It is clear, from the expectancy theory, that incentives play a crucial role in motivating employees.

Goal theory

"In 1968, Edwin Lock concluded that by having a goal present for an individual can be in some instances a motivational factor,(Wofford et al., 1992) and verified Atkinson's (1958) idea that performance and task difficulty were related in a curvilinear, inverse function (Locke & Latham, 2002). Lock's idea, a seemingly natural outgrowth of Aristotle's telos (Barker, 1958), have been supported in a number of studies (Latham &Baldes, 1975; Rothkopf&Billington, 1979; Locke et al., 1990).

The main element for this theory was that setting a goal that is not un attainable and specific it can to a certain extent drive and individual to performance, thus creating a motivation factor. Also a goal is a great indicator for an individual to determine the level of achievement as well. Another factor that is a good contributor for the advantages of goal setting is that it gives a sense of team sprit as well as achievement as a team. Specific and measurable performance goals in teams can solidify cohesion, increase performance, and reaffirm purpose (Katzenbach& Smith, 2003).

Equity theory

"Social equity theory was introduced by John S. Adams (1963) a simple but brilliant theory that states that most people are happy in relationships in any form only if they get what they give, another way is give and take in equal amounts. (Mowday, 1991),this can mean that a person judges equity by measuring their input to outcome ratio against that of other workers. Adams suggested that we gain our sense of equity through the process of socialization.

Therefore according to this theory, someone's perception of inequity creates strain which is proportionate to the inequity, and this tension is what serves to motivate individuals to change.

Adams outlines six methods to reduce the tension of inequity: (1) altering effort, (2) altering outcomes, (3) changing how people think about effort or outcomes, (4) "leave the field" (p. 428), (5) try to change the outcomes for others, and (6) change the comparison standards. However, Adams cautions that, "Not all means of reducing inequities that have been listed will be equally satisfactory, and the adoption of some may result in very unsteady states" (p. 429).

Intrinsic and extrinsic motivation

What motivates people, Money or something else, this question has been asked by many for the better part of this century. It was identified that there are two main types of motivation, these are called intrinsic motivation and extrinsic motivation. "By looking deeper into the multiple theories of motivation, one will find that there are two basic types of motivation: this suggests that and individual can be motivated both internally and externally. Intrinsically motivated individuals show symptoms that they work for nothing else but work itself. (Deci, 1975). Malone and Lepper (1987) have defined it as "what people will do without external inducement." Examples for this type of motivation can be taken as serving the country and also the need to be loved. Extrinsic motivation on the other hand is the external factors that make people do something and can be easily identified in many instances (Deci, 1975). Examples of extrinsic motivation are cash, guidelines and laws, and the physical environment.

Deci and Ryan (1985) explain that if an individual is intrinsically motivated they can show sighs of creativity and flexibility. And on the flip side extrinsically motivated individuals are more rigid and their behaviour usually is a result of pressure, and low sllf esteem (Scott, 1975; Guzzo, 1979). However both motivator elements are extremely important for managers and can assist in the success of any organisation.

From the research into the benefits and other aspects of intrinsic and extrinsic motivation have upon each other, when taking the educational areas in to consideration. It has been found that many students do not find studying to be intrinsically rewarding (Csikszentmihalyi & Larson, 1984) and that extrinsic motivation has the exact opposite effect on student achievement than is desired (Lepper & Hodell, 1989). In fact, Cameron and Pierce (1994) in their studies have indetified that when an indivudal is praised when they achieve something the motivation in the form of intrinsic goes up And more drastically extrincis motivators not only not motivate people after sometime but can also harm the motivation porcess in the long run. However, Cameron and Pierce also found that reinforcement, unlike reward, does not harm intrinsic motivation (Cameron & Pierce, 1994).

Factors of motivation

There are many factors that motivate individuals, and as the study shows there is no one rule of thumb to motivate someone but a well observed and specific process that is motivation.

When looking at research on motivator we see from a sample study with regards to a labour force taking into account seven different countries that was conducted by Harpaz (1991 p.75displays results stating that the best working environments and personal objectives are better pay and the work that one does to be of an interesting nature and this study is a comprehensive one that took into consideration gender and levels across the organisation in review.

Quinn (1997) also cited in Harpaz (1991 p.311) concluded, "When the ratings of twenty three job related factors (including the need factors) were carried out, the conclusion reached was that no single factor was pre-eminently important". He further pointed out that, "The most aspect of the worker job was that of sufficient resources to perform a task.

Regardless of the automation of an organisation productivity is a factor that will only be dependant of the motivation levels of its staff. And training and development plays an important part of the strategy to give the staff that motivation that is a major need. One way managers can instigate motivation is to give appropriate information on the sentences of their actions on others (Adeyinka et al, 2007).

Cash rewards is considered a incentive; no other incentive or motivational technique comes even close to it with respect to its influential value (Sara et al, 2004).


Empowerment is and has become as strong a buzz word as motivation. This tool is a carefully planned and processed one that promotes motivation to great lengths. Staffs perform to their best with the sense of belonging, eagerness, and happiness, in empowered organizations. Adding up, they work with a sense of responsibility and prefer benefits of the organization to theirs (Yazdani,B.O. et al, 2011)

If the vision of an organisation is success, the trust factor in imperative, and this trust should be kept alive and well to ensure that the organisation is home to a set of motivated individuals, and the trust factor will be a strong motivation tool of enchasing the levels of any organisation (Annamalai.T, 2010).

It can make intrapersonal and interpersonal effects and influence on the relations inside and out the organization (Hassan et al, 2010).

Empowerment will always be a defining factor in the process to motivation.

Empowering makes employees feel that they are appreciated and for making it possible continuous and positive feedback on their performance is essential (Smith, B, 1997)

Another positive consequence of empowerment is that will lead any organisation to grow and expand to the maximum. (Smith, B, 1997).

Empowerment guides quicker decision of customer issues as employees do not waste time looking for approvals and asking questions but offers solutions. (Mani, V, 2010)

Bhatti and Qureshi (2007) informs that employees taking part of the decision making process only makes the organisation stronger (Reena et al, 2009).

Sanderson (2003) explains that empowerment is the sole creator of motivation and also is responsible in the creation of positive energy within the organisation (Amin. et al, 2010).

"Employee participation and empowerment not only direct to efficiency, effectiveness and innovation but they also boost employee gratification, work motivation and trust in the organization (Constant.D, 2001)."


Another way of motivating individuals that has an age old history is recognising people for their achievements no matter how big or small they are. In the studies by Maurer (2001) all types of payments and recognition ate vital factors in improving employee satisfaction levels. And when dealing with work motivation this has a direct corealition to the success of the organisation as a whole. (Jun et al., 2006). In Kalimullah Khan's research, where the the connection between rewards and motivation was looked into in the banking sector of Pakistanits main focus was four types of rewards of which one was recognition which he tested through Pearson correlation. The results showed that recognition correlates significantly (0.65) with employee work motivation (Kalimullah et al, 2010).

Stajkovic and Luthans's (2003) an analysis of some studies confirms that monetory incetives will ensure that staff perform better upto 23%. while an interference with social recognition did only to an extent of 17% and feedback by only 10 percent. Also, by combining all three types of motivational reinforces, performance improved by 45 percent. This is a stronger effect on performance than when each approach was applied separately. Feedback combined with money and social recognition produced the strongest effect on performance.

Managers of organizations should fortify rewards and recognition schemes to improve staffs job satisfaction and motivational level (Reena et al, 2009).

Deeprose (1994) informed also that motivation and productivity can be a sure fire result by providing the recognition that staff need within an organisation.

Freedman (1978) also explained that rewards and recognitions make extreamly successful motivators within organisations. A conducive working environment springs to life when employees are recognized and motives employees in the process. Staff connect value with recognition and feel that all their efforts are results of that value that is generated and there is a feel good factor that comes out from this.

Flynn (1998) argued that rewards and recognition programs keep high spirits among employees, boosts up their morale and create a linkage between performance and motivation of the employees.

Baron (1983) argued that when we recognize and acknowledge the employees in terms of their identification, their working capacity and performance is very high.

Also in othe research it states that employees are motivated when an organisation is capable of meeting their needs no matter how innate they can feel. The level of motivation of employees increases when employees get an unexpected increase in recognition, praise and pay (La Motta, 1995).

Lawler (2003) argued that there are two factors which determine how much a reward is attractive, first is the amount of reward which is given and the second is the weightage an individual gives to a certain reward.

Bull (2005) come up with a statement that success is experienced by employees in an challenging occupations that in turn allows them to exercise their skills and abilities, they experience greater levels of job satisfaction. Incentives, rewards and recognition are the key parameters of today's motivation programs according to most of the organizations as these bind the success factor with the employees' performance

"Ali and Ahmed (2009) confirmed that there is a statistically significant relationship between reward and recognition respectively, also motivation and satisfaction. The study revealed that if rewards or recognition offered to employees were to be altered, then there would be a corresponding change in work motivation and satisfaction."


Incentives have been in the use from the beginning of twentieth century. This is the era of rising scientific management where manufacturing process were looked in to with the mind of optimizing efficiency. By work specialisation and introducing pay-for-performance approach workers were encouraged to perform (Taylor, 1964 ).

McGregor (1960) came up with Theory X and Theory Y representing two different type of people X being the workers who lazy, need of being controlled and does not prefer to take responsibilities known as Classic view . And Y workers represent the new view the opposite of X workers. Generally Y was the more common of the two companies would benefit more from them and so incentive systems should be aimed at them (McGregor, 1960).

Meyer (1975) shows that a majority of workers at organizations with cash-bonus incentive systems were unhappy with the money they received as well as being unhappy with the systems themselves.

Team incentive is criticised by lot of employees since it can be unfair and tent to create free-riders. However when it's organized correctly, group incentive systems could produce the same results as individual incentive systems (London & Oldham, 1977).

Rewards should based on goal-setting and the achievements of those goals. That way, people could work towards a long term goal without too much influence from factors out of their control (Sarin& Winkler, 1980). However Healy (1984) found out managers that are rewarded based on profit are more likely to change accounting procedures in order to maximize profit displayed. Also rewards based on short term measures cause a drop in executive spending (Larcker, 1987).

In the beginning of nineteen eighties we could see that the not only for workers incentives are given for managers as well. In Kim (1990) has found that organizations that use long term incentives for their managers show an increase in earnings-per-share and market return beyond their competitors.

In late nineties when companies became more globalized implementing incentive across borders and cultures received some attention. Gomez-Mejia and Welbourne, using Hofstede's different measurements of culture implemented a incentive system, the low scoring countries, incentives should refrain from rewarding behaviour linked to either of the genders, focusing instead on gender-neutral behaviour (Gomez-Mejia &Welbourne, 1991).

Nelson (1995) points out those non-monetary rewards make economic sense and if used properly they can have the same influence as monetary-rewards. He also claims that with salaries becoming more and more fixed, organizations need to come up with other ways than money to reward their employees (Nelson, 1995). Adding to this economic view Frey (1997) claims that since people use more than money to value their existence they are motivated by more than just money.

If an incentive system encourages behaviour that goes against employees' values then either they will revolt against the system or the system will turn out to be very expensive. However, if an incentive system encourages behaviour that does not go against employee values then it can be highly successful (Bento & White, 1998).