The purpose of this research is to study the impact of rewards on employees' motivation in DJ Automotive Asia Pacific Trading Pte. Ltd. The core business of this firm is simply sourcing automotive parts for the aftermarket automotive industry. Repack these product into own house brand packaging and thereafter offer it to potential customers, available worldwide.
Profitability of the firm has been in healthy level and the annual budget set forth has always been met. However, in recent years, the profit level is on the decline trend and the management informed that the company would not achieve this year's budget for the first time if the declining in sales continues. The owner of the firm wants the management team to come up with solution to solve the declining sales performance.
Sales performance of the company has declined consecutively for the third month. The firm is at risk of not meeting its annual budget set for this fiscal year.
Rationale For Selection
This research is conducted on the following reasons:
In the recent management meeting, it was reported that consolidated sales to date has declined 30%, compared to same period in previous year.
Human Resource department reported that there is a spike in staff absenteeism compared to previous year. Furthermore through observation, employees are frequently arriving late for work and taking longer breaks during office hours.
After brainstorming session, MD has approved a special work group to be formed and look into increasing employee's motivation via rewards. Since the operation started in 2002, DJ Automotive has never adopted reward system to its workforce.
"How would implementation of Reward System impact on employees' motivation?"
Objectives of this Research
This research is carried out to achieve the following objectives:-
To determine the relationship between reward and motivation;
To determine the impact of rewards on motivation;
To determine which rewards i.e. monetary or non-monetary, cause more motivation among employees.
2. LITERATURE REVIEW
A motivated employee is more willing to offer better customer services, resulted in increased customer satisfaction. In return, there will be customers keep retuning back to them for goods and services. An organization which has a workforce that is highly motivated and morale helps the organization to stay competitively in the market which the organization exist in and realization of the organization goals.
Motivation is the drive or energy or internal desire that moves individual forward to achieve whether goals they want to get. The term 'motivation' is defined as the art of getting people to do what you want them to do because they want to do it. (Eisenhower). According to (Baron, 1983:123), motivation is an accumulation of different processes which influence and direct our behaviour to achieve some specific goal. It is such a dynamic in today's environment that explicitly creates and encompasses a positive impact on job. (Robins and Judge, 2012:96) defines motivation as the processes that account for an individual's intensity, direction, and persistence of effort toward attaining a goal. (Kreitner and Kinicki, 1992) postulate that motivation represents "those psychological processes that cause the arousal, direction and persistence of voluntary actions that are goal directed." These definitions give concrete explanations that in order to complete a given task or achieve any goals; individual must first be simulated and energetic, clear on the specific goals and be committed to contribute throughout the process, till their aims are realised.
Rewards, be it intrinsic or extrinsic type, can help boost the motivation level of the employees and in return, level up the productivity level of individual employee. The days of rewarding employees just for length of service are dwindling. Tying rewards to specific business goals helps motivate employees to better performance. (LAABS, J.J., 1998:88-93.) Rewards have a critical role in determining the organization's ability to attract high potential employees, to retain high performing employees to achieve greater levels of quality and performance (Fay and Thompson 2001: 213).
Sirota, Mischkinf and Meltzer (2005:226-227) suggest that the needs for both money and non-financial rewards are important. They moved on to emphasize that psychological rewards are not a substitute for money and managers and executives should not commit the opposite error, in which is believing that money can be replace psychological recognitions. According to Ajila (1997) suggested that an employee whom is motivated intrinsically will be committed to his work to such extend to which the job contains tasks that would bring rewards to individual.
On the other hand, Ajila (1997) suggests that for an extrinsically motivated person, the individual will be committed to the extent that he can benefit or receive external rewards for his or her job. He further suggested that for an individual to be motivated in a work situation there must be a need, which the individual would have to perceive a possibility of satisfying through some reward. If the reward is intrinsic to the job, such desire or motivation is intrinsic. But, if the reward is described as external to the job, the motivation is described as extrinsic.
Rewards are divided into two categories:-
Intrinsic rewards can be having an employee recognition program: Best Performance certificates, Employee of the Month and Long Year Service plagues. Intrinsic rewards are sometime refers to as non-monetary or psychological type award.
Extrinsic rewards such as pay increments, bonus, promotion, profit sharing and gain sharing. Extrinsic rewards are also referred to as monetary rewards.
Organization in today's environment has to find ways and methods to stay competitive in order to reap in profits and stay afloat. Whist it has to also strike a balance between employee's motivation and performance of the organization. As quoted by (Wriston, 2005:3), Human capital will go where it is wanted, and it will stay there it is well treated. It cannot be driven; it can only be attracted.
The author shall examine the four theories that had major influence upon the approaches to motivating people which have been adopted in whole or in part of an organization.
These theories appended focus on internal factors of the individual that strengthen and lead to the behavioral of individual and on the known human decision behavior for the explanation in motivation.
F.W. Taylor's 'Scientific Management'
In the scientific management done by Taylor, (Burns, 2009) cites that Taylor basic beliefs that human beings are predisposed to seek the maximum rewards for a minimum effort, which Taylor referred to as 'soldering'. To overcome this, managers must lay down in details what each employee should do, step by step; ensure through close supervision that the instructions are followed closely to; and, to give positive motivation, link pay to performance. Again quoted by (Taylor,1911a:63) It is absolutely necessary then, when employee are daily given a task which calls for high rate of speed on their part, which they should also insured the necessary high rate of pay whenever they are successful. This involves not only fixing for each employee's daily task, but also rewarding him a large bonus, or premium, each time that the employee succeeds in doing the given task in the given time. The remarkable and almost uniformly good results from correct application of the task and the bonus/ rewards must be seen to be appreciated. Together with views from Weber on bureaucracy and Fayol on principles of organization, the classical approach of basic assumption reflects an approach to an organization is realized. One of the basic assumptions stated that people are motivated to work solely by financial rewards.
However, Taylor and his adherents do also invite a lot of critics on his work thereafter. (Burns, 1989) and (Kelly, 1982a, 1982b) argues that the classical approach, lacks of scientific rigor and for their one-dimensional view of human motivation. Similarly, (Rose, 1988) criticized that Taylor on portraying human beings as 'greedy robots': indifferent to fatigue, boredom, loneliness and pain, driven solely by monetary incentives. He has also been attacked for over-emphasizing the merits of the division of labor. (Little, 1978) and (Locke, 1982), argues that the creation of jobs which have little intrinsic satisfaction leads to poor morale, low motivation and alienation. Indeed, such forces aligned against the scientific management that is tough to find a facet of it that has not been attacked. (Burns, 2009) states that one of the main criticisms of the classical approach as a whole is that its view of people is negative.
Lidstone (1992:4) suggested that there are limitations to Taylor's Scientific Management; Lidstone states that it satisfies basic needs but not higher ones like those identified by others such as Maslow and Herzberg, relies on objective methods of accessing performance, deemed it is ineffective where, although the job is being performed to all standards set, adverse market conditions inhibits sales success and disputes will arise where, although rewards and punishments are not under control of the individual.
Maslow's Hierarchy of needs
Lidstone (1992:5) suggest that this is one of the most widely accepted and most fruitful theories about human needs have been provided by Abraham Maslow. This theory mentioned that people's needs were satisfied progressively. There are five levels of needs, as stated in Maslow's theory:
The first need is basic: referring to items that are required for survival. For example: food, water, shelter and warmth. In a working environment, employees need enough money to buy these basic needs.
The second need is safety needs: This refers to job security and safe working environment for the employees.
The third need is love needs - belongingness: This refers to all those associated with working in groups and with peers. The working environment is a social environment, whereby through communications among employees, formed through work may represent the majority of the people contacted in their lives.
The fourth need is psychological: This means self- respect and success. In the context of a working environment, this means recognitions within the company and amongst the people in the working environment, and the ability to feel self- confidence, self- fulfillment and look positively to a better future, one is which we are closer to realizing our perceived potential and happier because of it. This is the last stage of needs which Marslow call it self-actualization.
Despite the popularity and Maslow's theory of motivation (Maslow, 1968, 1970) has frequently been applied within the industrial and organization context (cf Maslow, 1965). Yet empirical research conducted to assess its validity and utility in industry does not adequately support such an application, as quoted by (Wahba and Bridwell, 1976). Corning (2000) suggested that since this theory is non-testable and given the lack of empirical validation, is therefore pseudo scientific.
Herzberg's Satisfiers And Dissatisfiers
Drawing from the studies and findings from various professionals, which including those works from Abraham Maslow, Frederick Herzberg attempts to identify and analyses the factors that give rise to satisfying and dissatisfying experiences at work.
Kay, Guinness and Stevens (2005:97-101) states that this theory leads to view of the process that links much more directly to an action based approach to creating positive motivation. They moved on to mention that in this theory, Herzberg described two categories of factors:-
Dissatisfiers ( or hygiene factors)
These are factors that turn off the people if they cause difficulty. Factors as:
Company policy and administration processes
Relationship with peer
The Satisfiers (or motivators)
These are factors that create positive motivation. Factors as:
The work itself
There are vast majority of employees whom has different type of needs in the work place. Sirota, Mischkinf and Meltzer (2005:9) mentioned that there are three primary sets of goals of people at work: Equity, achievement and Camaraderie. They moved on to name these their Three Factors Human Motivation in the Workplace.
The equity factor covers factors as physiological, which means safe working environment; workloads do not have any impact on employees' health. Economic, such as certain degree of job security, competitive remuneration and benefits.
Psychological, refers to being respected at work and considerable accommodation for personal and family needs, there is creditability and consistency management and the management practices fair hearing of feedbacks.
Achievement as described refers to take pride in one's accomplishments by doing things that matters and doing them well; to receive recognition for one's accomplishments; and to be proud in the firm's accomplishments.
The Camaraderie factor covers the area of relationship between working colleagues.
Conceptual Frame work
Through the various reviews on the literatures that are related to the author's topic and careful analysis of it, the author sees there is a repetitive 3 similar factors that has been addressed by the various professionals in their field study on human motivation.
Wages or money or equity: All four theories which the author has chosen to discuss highlighted that this factor is essential to motivate individual.
Recognitions: In Maslow's Theory, this is identified as the fourth level of human needs. While Mr. Herzberg mentioned that this is one of the factors that create positive motivation.
Working environment: This was discussed in Maslow's Theory and The Three Factors by Sirota, Mischkinf and Meltzer (2005:9).
Following three factors that best motivates employees which the author has identified above, the conceptual frame work model as appended is formulated to realize the relationship between rewards and employees' motivation,