Theories on Employee Satisfaction and Motivation

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01/08/18 Management Reference this

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This chapter first reviews the HR practices followed in the manufacturing firms in India. Secondly it has a closer examination on the employee satisfaction, motivation, theories on motivation and finally on the factors influencing employee satisfaction. Employees are the important assets of an organization. Many organizations fail to succeed due to employees. Employee motivation is one of the major aspects responsible for organization’s prosperity. The motivated employees have the better performance than the unmotivated employees do. Employee’s performance varies depending upon the motivational level of the employees.

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Human management practices

Human resource management plays a vital role in an organization to achieve the organizational objectives. Each individual possess different skills, abilities and background. Therefore, the organization has to employ the appropriate programs to develop the employees effectively. HRM systems responsible in the successful implementation of employee participation will likely enhance the value of the organization (Arthur, 1994). The authors (Huselid, 1995; Wright, Dunford, &Snell, 2001) of strategic human resource management have said that employee’s behaviors and motivation can effectively be improved through HR practices.

The activities of Human resource management are achieved through organization goals. The human resource management (HRM) practices influence the satisfaction of employees in meeting the expectations of the employees. The HRM practices such as involvement programs, performance based compensation , career management practices, performance management , open job -listing and job transfer practices plays a critical role in enhancing the level of motivation. However the response in the Indian manufacturing firms to these critical factors are insufficient towards employee motivation (The Indian express Ltd, 2009). The activities of human resource are human resource policies and human resource planning which involves the recruitment and selection, job design, training and development, wage and welfare management, employee health care benefits, labour relation assistance(photanan,2004).

Guest (2002) examined that effect of HRM on Employee performance depends upon the attitude of the Employee towards HRM Practices; hence, the HRM Practices in an organization will be followed depending on the Employees Perception. Wood (1999) and Guest (2002) has focused that the employee commitment and competence is responsible for the successful implementation of Business Strategy. Cooke (2000) has argued that individual’s efficiency and effectiveness are more significant than the competitiveness and productivity hence the HR practices such training plays a vital role to increase the individual performance through increased knowledge and skills. The improved productivity of an organization is due to the increased commitment of an employee. The Incentives scheme apart from the associated cost benefits the organization (summers & Hyman, 2005). The use of HR practices shows the stronger relationship with the firm’s productivity in the High growth industry (Datta Et al, 2003). The employee will show an adaptable effort if proper performance management is linked with the compensation system. Qureshi M Tahir and Ramay (2006) have defined Job as a combination of set of activities such as duties, responsibilities, working conditions and expected skills of individual performing the job. Many researchers have proved that employee outcomes have direct relationship with the HR Practices (Sels, et al 2006). These researchers (Collins, Ericksen, Allen, 2005) have examined that the small business units have found that the HR practices has significant relationship with the outcomes of an Employee.

In this study, the motivation is found to be the most important activity of HR activities. The HR manager must overlook on the motivational program to different levels of employees in an organization.


  • Employee Satisfaction
  • Organization and structure
  • Mission and Values
  • Company Leadership
  • Opportunity
  • Job satisfaction
  • Pay and benefits
  • Rewards and Recognition

Relation between HRM practices and Organization performance

O’Toole and Meier (2008) have examined the relationship between the organization performance and the employee’s attraction and development of their abilities. However, the previous research has focused the relationship between the HRM outcomes like job satisfaction and the performance of the public organizations. Ostroff (1992), Kim (2005) and Meier & Hicklin (2007) have given the relationship between the factors such as job satisfaction, employee turnover and organizational performance. Since the early 1980’s, the studies on the HRM in the firms which are privately owned have stressed on the HRM principles. Research has proved that studies have an increased focus in the HRM. (Boselie, 2002). Several authors (Paauwe, 2004 ; Bowen & Ostroff , 2004 ; Pfeffer 1995 ; Wall & Wood, 2005 ; Boselie et al ., 2005) have supported the assumption that the higher quality of HRM principles that are followed in an organization would lead to the better performance of the employees in the organization. Although many results have found the relationship between the HRM and the performance, there is no clear existence of such relation discovered (Bowen & ostroff, 2004). Several authors (Beer, Lawrence, Mill and Walton, 1984) have examined the relation between the HRM practices. For example, the relation between HRM practices such as selection, rewards, training and performance of both individual and organization

Relation between the Employee satisfaction and HRM practices

Bowen and ostroff (2004) has proposed that employee perceptions play an important role in translating HR practices into desired outcomes in an organization. Furthermore they put on theory by arguing that the employee perceptions of HRM practice are significantly important in an organization .However they have focused not only on the HR practices with respect to the employees behavior that are supported and rewarded by management but rather than HR practices of employees attributions. Thus, the climates for safety-focused behaviors’ are expected and rewarded. (Zohar, 1980).Schuler & Jackson ( 1987) have examined that several authors in the research studies have proposed that every organization establishes the HR strategy in which employees are considered as the assets to exert high quality products and services. The firm likely to have made investments for the continuous development of employee skills, the management also motivates the employees to work hard to achieve the goals moreover the management focuses on the benefits of the employees in terms of compensation, performance pay above revenues and profits of the organization. In contrast, some firms also adopts the strategy towards the low cost ion theories such as considering employees as cost to control, focused more on the rules and regulations of the organization, quantifies the employee output.(Bamberger & Meshoulam ,2000). Schuler & Jackson (1987) have proposed that employees are seen as the replaceable workers based on low costs, In contrast Osterman (1994) argued that the firm should possess the responsibility to adopt the innovative work practices such as enhancing skills, commitment and motivation rather than reducing costs. According to the underlying managerial philosophy of employee welfare if employees perceive that the HR practices are motivated towards well-being then employees feel satisfied rather than the management cares less about the well-being of the employees.

Importance of motivation

Motivation is generally driven for the unmet needs of the employees that help to satisfy the employees through their efforts. The needs of the employees could be the emotional and economic expectations that are influenced by both external and internal environment of the firm. The economic expectations have risen significantly in the last decades. However, the firms in the manufacturing sector face difficulty to meet the rising expectations whereas the emotional expectations have proved to be reasonably fair (The Indian express Ltd, 2009).

Every individual has motives that are influenced certain factors to achieve better performance (Kressler 2003). The word motivation is derived from the Latin word “Movere” which means to “move” (Kressler 1998).

These Researchers (Higgins 1994, as cited by Linder, 1998) has defined Motivation as the internal drive of every individual to satisfy the unmet needs. To achieve the specific unmet needs the individual behave in a purposeful manner (Linder 1998). Jones and George (2004) has stated that the motivation drives the psychological forces of the individual that determines the person’s level of effort, the direction of person’s behaviour in an organization and person’s level of determination in face of the obstacles. The concept of motivation is directly linked to the concept of morale, which states that employee feels positive or negative about the work in the organization.

Thus from the above definitions of motivation it is understood that motivated work force or the creating an environment for maintaining high levels of motivation remains a challenge for today’s management.

Motivation theories

Motivation theories help managers with the methods to increase the productivity of the organizations. The Motivation theories, industry and society are linked by the motivation factors and the relationship between is diagrammatically represented as follows

Motivation Factors

Motivation theories



Source: Bhatti et al (2008)

Many researchers have proposed theories based on the concept of employee motivation and its role in enhancing employee’s performance in every organization. In this research discussion on some of the motivational theories will include Maslow (Need theory), Hertzberg ( two factor theory) , Mc Gregor ( theory X and Y), Vroom’s( Expectancy theory ) are as follows.

Maslow’s hierarchy of needs

Maslow conducted an investigation into the human behavior between 1939, and 1943. After his investigation, he suggested that the human needs were classified into five categories that are arranged in a hierarchy of importance. These include

Physiological needs

Safety needs

Belongings needs

Esteem needs.

Self-actualization needs.

According to him, a person is motivated primarily to satisfy his physiological needs. As long as the employees remain unsatisfied, they turn to be motivated only to fulfill them. When the physiological needs are satisfied, they cease to act as primary motivational factors and the individual moves up the hierarchy and seek to satisfy the security needs. This process continues until finally self-actualization needs are satisfied.

Source: Chapman (2004)

Physiological needs

Physiological needs are the most basic needs in the Maslow’s hierarchy and these needs are required to satisfy the minimum survival of the person, which includes food, water, oxygen, sleep, sex and sensory satisfaction. Some of the organizational factors are required to satisfy the needs include the minimum pay necessary for survival and working conditions.

Flexible work schedule allowing opportunities for leisure time, vacation, medical leave etc.

Good working conditions are provided to all employees of the organization they must not feel any physical strain.

Providing a sufficient salary to fulfill their necessities such as shelter, medicine, clothing and food.

Once the satisfactory salary is made available to the employee, then he will in a position to fulfill his needs, salary becomes less important and security needs comes in front such as savings plan.

In Maslow’s hierarchy of needs, the money is directly related to physiological needs since money ensures a safety and comfortable environment. Moreover, pay should prove motivational especially to the employees who have strong low level needs. Suppose if the employees receive a healthy pay raise, doubtless, the raise will not only give them prestige among family and friends but also sign their competence as a worker. Thus pay can also function to satisfy the social, esteem and self -actualization needs. If pay has this ability to fulfill a variety of needs, then it should have especially good potential as a motivator (John, 1996).

Safety and security needs

Once the physiological needs of the employee are satisfied, safety and security needs would come forth. Needs for safety and security includes financial security, stability, dependency and freedom from fear and anxiety. Under organizational conditions the needs include are safe working conditions, fair and sensible rules and regulations, job security, pension and pension plans and freedom to unionize. According to Maslow, these needs must be minimally satisfied before an employee is concerned with social and belonging needs at work.

Social needs

According to Maslow, this need is also known as belongingness and love. Social needs include love, affection and friendship with people, especially with spouse, children and friends. Organizational factors that might meet the needs include the opportunity to interact with others on the job, friendly and supportive supervision, teamwork and finally to develop new relationship. According to Maslow’s theory employees in the organization gain to attain things such as salary, benefit and safe working conditions naturally prior to accepting a job.

Esteem needs

Once the employees feel satisfied with their pay and benefits at work, they are likely feel to distinguish and be recognized. The need for esteem includes self-respect, self -esteem and esteem for others, which are focused internally and externally. Internally the esteem needs includes a desire for strength, achievement, mastery, confidence, independence and freedom. Externally the esteem needs include desire for reputation or prestige, status, fame, dominance, attention etc. organizational factors that might satisfy these needs include the opportunity to master task leading to feelings of achievement, responsibility, awards, promotions, prestigious job titles and professional recognition. Although all employees does not get the opportunity to get responsibility and status , but generally every employee like to be praised and appreciated for doing a good job.


The self-actualization is the highest need in Maslow’s hierarchy includes the need for self-actualization, continuous self-development and finally becoming the best one among all. Organizational conditions that might meet these needs include

Providing challenging and rewarding work.

Opportunities to be innovative and creative.

Certain degree of autonomy is provided in the challenging environment.

Steers (1991) has proposed that higher level of needs are not so important until the low level of needs are satisfied. Thus, it is likely to achieve a higher-level need to attain before a lower level need is completely satisfied.

Thus, Maslow examined that working adults are satisfied about 85 percent of physiological needs, 70 percent of safety needs, 50 percent of their social needs, and 10 percent of their self -actualization needs.

Herzberg’s motivation-hygiene theory

According to Herzberg, the theory is also known as two-factor theory. He stated that their will certain satisfiers and dissatisfiers for employees at work. Intrinsic factors are related to Job satisfaction and extrinsic factors are associated with dissatisfaction. Herzberg, Mausner and snyderman (1959) referred to factors that influence job satisfaction as motivators because these factors motivate the employees to performance the work better. Conversely, the factors that cause dissatisfaction are referred to as hygiene factors. According to them, the motivational factors include Sense of achievement, Recognition by others, and Responsibility within the job, Advancement and personal growth, Work itself. The Hygiene factors include Pay, Job security, working conditions, Company policy and administration, Level and quality of supervision ,Interpersonal relationship (Naylor, 1999).

Those factors that are related to dissatisfaction are called hygiene or nonsatisfiers, maintenance factors, or events. These factors are related to the work environment of the job, which is also referred to as Extrinsic factors (Peretomode, 1991; Ukeje Okorie & Nwagbara, 1992; Whawo, 1993).

Herzberg’s has been faced several important criticisms. King (1970) has proposed that the model has five different theoretical interpretations. Second, a number of scholars believe that that the model that the model does not give sufficient attention to individual differences are , in fact, important moderators of the effect of job enrichment.

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People commonly argue that money is a primary motivator, but surveys show that other factors motivate more. For example, a survey by development dimensions international published in the UK times newspaper in 2004 interviewed 1,000 staff from companies employing more than 500 workers, and found more than 500 workers, and found many to be bored, lacking commitment and looking for a new job. Pay actually came fifth in the reasons people gave for leaving their jobs. The main reasons were lack of stimulus jobs. Moreover, no opportunity for advancement-classic Herzberg motivators-43 percent left for better promotion chances, 28 percent for more challenging work, 23 percent for a more exciting place to work, 21 percent and more varied work (Chapman, 2004). It is interesting that, despite the number of criticisms against Herzberg model, Herzberg’s motivation -hygiene theory is still popular among corporate managers.


Source: From Management (p. 545), by J. Naylor, 1999, Harlow, England: Prentice Hall.

McGregor’s theory

This theory was proposed by Douglas Mc Gregor in 1960. He has underpinned assumptions about the approaches taken by managers towards the Employees.

Theory X assumptions

Individuals especially dislike work.

Individuals should be committed to do work to achieve the objectives.

Individuals expect the supervisors to direct the work.

Theory Y assumptions

Individuals view the work to be natural.

Individuals learn to accept and seek responsibility.

The abilities such as imagination, creativity, ingenuity can be used to solve work problems in the organization.

In modern organizations, the intellectual potential of the employees are only partially utilized.

McClelland’s theory of needs

This theory was proposed by David C McClelland in 1985. This theory focuses on the following three needs: Achievement, Power and Affiliation which are as follows:

Need for Achievement

An individual feels the need to outrival to achieve and to succeed.

Thus the employees who are in need of achievement do not contribute any challenging work to the organization, and then the motivation will not be seen in them.

Need for Power

An individual with the high need for power are interested in monitoring other’s activities rather than self-performance. Thus the employees who are in the need of power will take personal responsibility, provide feedback and they take high risks.

Need for Affiliation

An individual with the need for affiliation will like to perform the tasks individually rather than work with others. Thus the employees who are in high need to affiliation prefer to spend more in maintain social responsibilities.

Vroom’s Expectancy (VIE) Theory

Vroom has developed the Valence, Instrumentality and Expectancy (VIE) in 1964. The expectancy theory is one of the accepted theories of motivation. It tells about the relationship between expectation and outcome and then motivating individuals come down into three important variables that include effort, performance and outcome (The Certified Accountant, 2008) and the relationship is illustrated below


Vroom has proposed the mathematical function for motivation, which involves three cognitions. The equation is as follows.

Motivation = expectancy X ∑ (valences X Instrumentalities)

Motivation = expectancy X ∑ (valences X Instrumentalities)

Gregoriou (2008) has suggested that the employee is motivated to show a maximum level of effort when he /she believe that their effort leads to good performance appraisal. The personal goals of the employee will be satisfied when he/she is rewarded by the organization. In other words the theory focuses on the following three relationships such as Effort-performance relationship, Performance-reward relationship and rewards- personal goals relationship. The above relationships are shown in the figure

  • Ability
  • Environment
  • Personal Goals
  • Individual Performance
  • Individual Effort
  • Organization Rewards

Source: Gregoriou (2008)

The above figure explains that the majority of employees offer minimum outcome are not motivated towards their jobs. The workers do not show much commitment towards the production when their effort are not recognized by their employers, when they are not rewarded by the organization and when the expected reward is not attractive personally.

In simple words, the expectancy theory concentrates on the understanding of the target of the individual and the relationship that exists between his/her effort, performance, reward and satisfaction.

Theories of job satisfaction

Three theories of job satisfaction will be briefly discussed below: Affect Theory, Dispositional Theory, and Job Characteristics Theory:

Affect Theory

Edwin A. Locke developed the Affect Theory in 1976. According to this theory, the differentially weighted work is closely related to the expected pay. The decision has a greater positive effect on his or her overall assessment of job satisfaction. Satisfaction is determined by a disagreement between what one wishes in a job and what one has to do in a job. Employees become satisfied or unsatisfied depending on the expectations faced by him at the work place. When the expectations are met, the person feels satisfied and values the work he carries out and finally shows a higher positive impact on his performance. When expectations are not met , the impact on job satisfaction is negative.

Dispositional Theory

Timothy A. Judge proposed the Dispositional theory in 1998, a well-known job -satisfaction theory. This theory states that employees at the work place have intrinsic dispositions that cause them to have tendencies towards a certain level of satisfaction. This theory explains that job satisfaction tends to be steady overtime across careers and jobs. The basic idea is that satisfaction is directly related with the need and that implies something to be satisfied. He has proposed four core self- evaluations such as self-efficacy, general self- efficacy, locus of control and neuroticism that determine one’s disposition towards job satisfaction. In this model, Higher levels of self-esteem and general self -efficacy lead to higher job satisfaction. Focus on Internal locus of control leads to higher job satisfaction. Finally, lower levels of neuroticism leads to higher job satisfaction

Job Characteristics Theory

Richard Hackman and Greg Oldham have proposed the Job characteristics theory in 1976. This theory is based on five core job characteristics such as skill variety, Task significance, autonomy and feedback. These five job characteristics are further related to these critical psychological states such as experienced meaningfulness, experienced responsibility for outcomes and knowledge of the actual results. These, in turn, influence work outcomes such as job satisfaction, absenteeism and work motivation. Therefore, if employees are allowed to complete the task by fully utilizing a variety of skills, it is likely that they perceive their job as meaningful that leads to high job performance and high intrinsic motivation. Therefore, if employees are able to accomplished the work completely then they fell satisfied with what they have accomplished which in turn leads to low absenteeism and high turnover.

Core Job Dimensions

  • Critical psychological states
  • Personal and work outcomes
  • Skill variety
  • Task identity
  • Task significance
  • Experienced Meaningfulness of the work
  • Experienced responsibility for outcomes of the work
  • Knowledge of the actual results of work activities
  • Feedback
  • Autonomy
  • High satisfaction with the work
  • High quality work
  • High internal work motivation
  • Low Absenteeism and Turnover
  • Employee Growth and strength

Source: Celik (1999)

Employee Satisfaction

Armstrong (2000) has proposed that the HRM is the strategic management where the members of the organization are responsible for the achievement of organizational objectives. According to SHRM, employees are considered as important assets in the organization. These Researchers (Wallale, Eagleson & Waldersee 2000) have argued that the HR strategy of an organization should be focused more on developing skills and ensuring motivation and commitment. According to Hunter (1997), Employees are loyal and productive when they are satisfied, and these satisfied employees influence the customer satisfaction as well as organizational productivity (Porterfield 1999).These Researchers (Cranny , Smith & Stone 1992) has defined Employee satisfaction as the combination of affective reactions to the discrepancy perceptions of what he/ she wants to receive. The satisfied employees will work more willingly and contribute to the effectiveness of the organization. Good working conditions, Training and Education, Good Relationships with the colleagues, High salary, opportunities, career developments and other benefits may be related with the employee satisfaction. These researchers (Moyes, Shao & Newsome 2008) has investigated that employee satisfaction differs from one employee to other employee, that is, an employee may be more satisfied by a satisfying item whereas the other employee may be less satisfied with the same item . This shows that Employee satisfaction should be analyzed from a larger perspective. To investigate the factors responsible for employee satisfaction and measuring the employee satisfaction at the work place is important for the success and profitability of the organization is gaining the competitive advantage in the market scenario (Kelley 2005). Therefore, various factors responsible for employee satisfaction on different areas (such as manufacturing industry, service industry etc) will enrich the literature.

Factors affecting Employee satisfaction

Several factors determine an individual motivation level. There are two forms of motivation namely intrinsic motivations and extrinsic motivations. Intrinsic motivation results from satisfying an individual belief and values whereas, extrinsic motivation are based on tangible good or service to the individual (Kreps 1990). Deci and Ryan (1985) have proposed that every organization should determine intrinsic and extrinsic factors that motivate employees. In addition, an individual shows his or her satisfaction of an activity depending upon the reward value of the organization. Deci (1971) found a relationship between the external rewards and internal motivation. The intrinsic motivation decreases when the employee receives an extrinsic reward and intrinsic motivation increases when the individual receives the positive verbal reininforcement and positive nonverbal feedback. Therefore, Immediacy is viewed as a reward that enhances intrinsic motivation.

Among several factors Communication, Learning and Growth, Working conditions and Employee Engagement are considered as the most significant factors influencing Employee satisfaction from company point of view.

Learning and Development

These researchers (Delaney &Huselid 1996, Huselid 1995, Koch & Mc Grath 1996, Mac Duffie 1995) have examined Employee development as the most important determinant of Company performance. Most of the HRM practices related to the development of the human resources of the firm. The development of knowledge or skills of the employee depend upon the technical and non- technical training offered by the company. This shows that the company investments for training have a greater positive effect towards achieving the performance of the employee in the firm. Francesco and Gold (2005) argue that the training and development focus on planning, individual learning, career development and organization development. Molander (1996) has defined Training and Development as the systematic process focused on acquisition of skills, knowledge and attitudes that lead to organizational performance. In addition, the low training in organizations may tend to lose their attractive to the present and potential labour. Harzing and Van Ruysseveld (1995) have stated that there are certain areas to be focused in the training which, are developing the knowledge of the person towards organizational objectives, specific job and task skills, knowledge about understanding the local situation such as social, legal and cultural issues of the environment .Therefore developing the specific personal skills of the employees to perform well in that environment. Training is the most important factor for the employee retention. Employees who receive extensive training will realize about the company investment and show their commitment towards achieving the goals of the organization (Butler 1999). Clark (2001) has pointed out that the care and concern for employees and opportunities for growth are the most significant drivers in establishing the employee loyalty. Moreover, he argued that care and concern for employees could be delivered through employee training. When the employees are trained, specialized and educated, opportunities for growth on the personnel level as well as within the organization will come into existence.

The need for Employee training and development is determined by the Employee performance deficiency, which is given as follows

Training and Development Needs =

Standard Performance – Actual Performance

Arondhekar et al (n.d) has proposed that any training and development contain certain inputs that enable the employee to gain skills, learn the theoretical inputs that help them to look into the distant vision. The inputs of training and development are as follows

  • Skills
  • Education
  • Development
  • Ethics
  • Attitudinal changes
  • Decision-making and Problem solving skills.

Importance of Training and Development in the organization

Arondhekar et al (n.d) has stated there are many benefits of Training and Development to the organization as well as to the employee which are categorized as under

Benefits for the organization.

Benefits for the Employee.

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