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Extrinsic Employee Motivation: Training, Salary, Promotion and Employee Performance

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Extrinsic and employee performance were specifically analyzed in this dissertation that studied the impact of extrinsic motivation through training, salary, and promotion on employee performance. You can read the web article version or get the free to download Extrinsic Employee Motivation through Salary, Promotion and Training and Employee Performance PDF Dissertation.

The sample dissertation utilized a systematic literature review method of collecting secondary data from relevant, previous studies on the topic. The data obtained in the study was analyzed quantitatively and qualitatively and presented using descriptive and inferential statistics.

The study concluded that extrinsic employee motivation factors like salary increment, training, and promotion are effective in enhancing employee performance. However, the study noted that the efficacy of these extrinsic employee motivation factors in enhancing employee motivation and performance is affected by several factors, both at the individual and organizational level, as outlined in the results section.

Employee Motivation and Employee Performance

Employees are the key drivers of organizational performance and growth. In the modern business environment, organizations are faced with rising challenges in respect to employee engagement, commitment, employee performance, and retention (Nabi, et al., 2017). For instance, majority of the world’s employees are not passionate about their organizations and the jobs they do (p. 1).

This challenge can be addressed through extrinsic employee motivation interventions for improving motivation and job performance (Ryan & Deci, 2000). This observation is based on the idea that an employee’s personal effort and capability only play a partial role in determining productivity and that extrinsic employee motivation plays the important complimentary role of enhancing personal attributes to ensure optimum performance.

Extrinsic motivation refers to the rewards and incentives provided by a given role or job that make it desirable (Gyamfi, 2015). Salary, promotion, and training are some of the most commonly used methods of improving employee motivation and performance around the world. However, despite the common acceptance that these methods of motivation exert an external influence on how employees perform their duties, there are no common guidelines on their administration.

The modalities for determining the nature, amount, and criteria for awarding promotion, salary, and training are largely determined by employers. This creates disparities in the nature, value, and effectiveness of extrinsic motivation in enhancing employee performance across organizations.

Moreover, despite the common acceptance by current research that extrinsic motivation has a direct impact on employee performance, it is worth noting that the value and effectiveness of specific forms of extrinsic motivation in enhancing employee performance is dependent on factors existing within the employee level and, thus, cannot be generalized.

This argument is based on the Maslow and Alderfer theories of motivation which pose that the value of extrinsic rewards is heavily dependent on the individual needs of employees and their perceptions on the ease of attaining these incentives (Maslow, 1943; George & Jones, 2012; Purvis et al., 2015).

In conclusion, the researcher postulates that, despite the common acceptance that extrinsic motivation enhances employee performance, the value and effectiveness of specific forms of extrinsic motivation in enhancing employee performance is influenced by factors like employee needs and perceptions. Therefore, different forms of extrinsic motivation are bound to have varying degrees of influence on employee performance.

This study utilizes quantitative and qualitative methods to analyze extrinsic motivation and its impact on employee performance by specifically analyzing the value of training, work environment, salary, and promotion, which are some of the commonly used approaches of extrinsic motivation, in enhancing employee performance.

Employee Motivation

George and Jones (2012) defined motivation as the psychological drivers that direct an individual’s behaviour, such that they work towards the accomplishment of individual or organizational goals. Employee motivation involves the provision of proper guidance, resources, direction and rewards in order to inspire performance and a desire to meet established goals. Motivation is normally perceived as a wholesome phenomenon that only deviates in terms of level and amount.

However, besides level and amount, employee motivation exists in different forms (Ryan &Deci, 2000). In that regard, motivation can either be intrinsic or extrinsic. Intrinsic motivation is influenced by forces within the employee and is mainly determined by an employee’s self-assessment of their suitability to a particular role or the satisfaction they are likely to gain from performing the task (Giancola, 2014).

Extrinsic Employee Motivation

Extrinsic employee motivation, on the other hand, is determined by forces that are external to an employee and that make a given job or work environment attractive to the employee. These external factors include incentives or rewards that are achieved as a result of doing a given task (Giancola, 2014, p.26).

Employees attain extrinsic motivation as a result of positive reinforcement or appraisal from other people or from motivational factors like monthly salaries, increments, bonuses, or promotions. Extrinsic employee motivation is therefore realized where employees work towards the realization of other work-related goals. Extrinsic motivation may also be realized where employees are bound to avoid punishment by performing their duties in a given manner. In that case, the fear of punishment serves as motivation as employees strive to avoid punishment.

Impact of Extrinsic Employee Motivation on Employee Performance

Employee performance refers to how an employee rates in terms of quantity and quality of work, helpfulness, timeliness, and being accommodative (Shahzadi, et al., 2014). The positive relationship between extrinsic employee motivation and performance has been vindicated in the past, with studies showing that the quality of employee performance can be improved by offering performance-related rewards.

According to George and Jones (2012), performance refers to the evaluation of the outcome of employee behaviour by analyzing the degree of success or failure through which a task is performed (p. 158). The level of employee performance rises where they are extrinsically motivated to meet desirable work outcomes like promotion and salary increments through high performance.

On the contrary, the motivation of employees to improve their performance remains low where such performance goes unrecognized or where achievement does not lead to acquiring extrinsic rewards. However, it is worth noting that extrinsic employee motivation alone does not guarantee high performance among employees since other factors like skill and ability influence performance levels.

Extrinsic Employee Motivation through Salary, Promotion, and Training

Most of the studies on extrinsic employee motivation have identified salary, promotion, and training as the most significant, fundamental forms of extrinsic employee motivation (Nabi et al., 2017; Cheboi, 2013).

Extrinsic Employee Motivation through Salary

Salary refers to the payment awarded to an employee by an employer, periodically, as outlined in the employment contract. Normally, fixed amounts of money are paid to employees in fixed intervals. In the case of the employer, salary is viewed as the cost of retaining the services of an employee. Fox, (2007) and Robbins (2009) noted that salaries are crucial in enhancing employee performance, job satisfaction, and retention.

Extrinsic Employee Motivation through Promotion

Promotion, on the other hand, refers to the advancement from one rank to another in an organization’s hierarchy. Promotion is normally awarded in recognition of an employee’s quality or length of service. Additionally, it may lead to changes in designation, role, and salary or compensation. Promotion may also be accompanied by training in order to prepare employees for their new roles.

Extrinsic Employee Motivation through Training

Training is an educational preparation that is given to employees to enhance their skills and capacity to perform their roles. According to Robbins (2009), training improves employee performance by enhancing the skills, attitudes, and knowledge of employees. It is mostly significant for new employees or those taking up new roles within an organization.

These forms of extrinsic employee motivation are common to all business organizations around the world since, by engaging with particular organizations, employees acquire some forms of compensation, growth opportunities, and training.

The manner in which salaries, promotion, and training are awarded, however, has a significant impact on employee performance since they are powerful determinants of employee satisfaction, motivation and commitment to work (Fox, 2007; Robbins, 2009).

Causes and Impacts of Poor Employee Motivation

Poor employee motivation leads to poor employee performance and, hence, poor organizational performance due to high employee turnover rates, absenteeism, and industrial action, etc. Employee turnover is a significant human resource problem that is common to business organizations internationally and poor motivation is one of its key causes.

In recent times, there has been a rising appreciation of the need to employ effective incentive measures in order to boost employee motivation extrinsically and, hence, productivity (Cole & Kelly, 2011; George & Jones, 2013). This is necessitated by business competition which drives organizations to devise ways of optimizing on their financial and human capital utilization.

Additionally, employees are becoming increasingly sensitive to their needs and the ability of organizations to meet their expectations (Shahzadi, et al., 2014). Considering that the performance of an organization’s workforce determines its ability to meet goals, there is an intense pressure for organizations to devise and roll out effective extrinsic motivation programs in order to boost employee performance.

Extrinsic employee motivation entails more than using simple approaches like increasing salaries or awarding bonuses as there are many other complexities involved. Shahzadi, et al. (2014) acknowledges that the concept of extrinsic motivation is yet to be fully understood and is, in most instances, poorly practiced.

Besides, the fact that human nature and human needs are complex phenomena. This reality further complicates the idea of extrinsic motivation and makes it impossible to develop common rewards systems for influencing employee motivation and performance.

For this reason, there exist various models and forms of extrinsic motivation, with salary, promotion, and training incentives being among being among the most commonly used approaches.

Worth noting is the fact that different forms and approaches to extrinsic employee motivation have varying effects on employee performance, and the outcomes of these in improving employee performance may vary due to the complex nature of human needs. This highlights the need to research on the common methods of extrinsic motivation, notably salary, training, and promotion, and their efficacy in improving employee performance.

Research Aim

The aim of this study is to explore the relationship between extrinsic employee motivation and employee performance. The specific objective of the study is to analyze salary, promotion, and training as factors of extrinsic motivation and their value in enhancing employee performance.

Research Objectives

  • To establish the relationship between extrinsic employee motivation and employee performance
  • To analyze the value and effectiveness of salary, promotion, and training in enhancing employee performance
  • To determine the factors that affect the effectiveness of salary, promotion, and training in enhancing employee performance

Research Justification

Extrinsic employee motivation is a complex phenomenon and variations exist in the nature and the approaches used to achieve it. The fact that the concept of extrinsic motivation is neither fully understood nor well practiced necessitates the need for continued research on the forms and approaches used to achieve it and their value in enhancing employee performance.

This study focused on extrinsic employee motivation in which organizations link employee expectations on work outcomes or rewards to their business objectives and, thus, provide incentives to motivate employees to work towards the achievement of those objectives.

The study is informed by the observation by Williamson (1985) that unlike intrinsic motivation, extrinsic motivation, as an approach to enhancing employee performance, is only influenced by external factors. This makes it a better option for studies that seek to analyze the modalities of employee motivation since it is easier to establish and control research variables for analyzing the direct relationships between motivation and performance as opposed to studies on intrinsic motivation.

Employee Motivation Literature Review

The concept of extrinsic employee motivation is a key feature of the organizational behaviour construct in which several relevant models and theories are outlined. These models and theories focus heavily on the growth and development of employees and portray these as the most significant drivers of employee motivation.

A strong link has been established between extrinsic motivation and employee commitment, satisfaction, and organizational performance. Shahzadi, et al. (2014) noted that extrinsic employee motivation is basically used to alter behaviour by encouraging actions that are directed towards the achievement of particular objectives.

Such behavioral alteration leads to improved performance, productivity, and persistence. Grant (2008) also noted that motivation increases employee autonomy and self-drive. Moreover, motivated employees are more committed to their work compared to those who are less motivated (Vansteenkiste et al., 2007).

Extrinsic Employee Motivation and Employee Performance

Chintallo and Mahadeo (2013) noted that extrinsic employee motivation is a key factor in determining performance and achievement. Similar observations are also made in studies by Sirota et al. (2005) and Asim (2013) on the impact of extrinsic motivation on employee and organizational performance. Sirota et al observed that organizations that had elaborate motivation programs were more effective than those which did not.

Asim (2013), on the other hand found, out that increasing the motivation levels of employees through extrinsic motivation interventions improved their overall performance. A correlational analysis of extrinsic motivation and performance by Bashir et al. (2014) showed that employee performance is strongly and positively related to extrinsic motivation.

Azar and Shafighi (2013) further explained that extrinsic employee motivation influences performance because motivated employees put more effort in their work, hence their performance, and that of the organization, improves. However, Ahmad (2012) noted that most organizations put more focus on satisfying customers as opposed to employees and fail to realize that improving customer satisfaction is a difficult task if employees are not satisfied.

Employee Task Performance

Task performance is defined as the effectiveness with which employees perform their roles in terms of work quality, quantity, and cooperation to meet organizational objectives and their own goals (Pradhan & Jena, 2017). Task performance relates to the work behaviours that influence the manner in which the responsibilities assigned to employees are performed.

The ability to perform tasks is primarily influenced by technical knowledge and ability to tackle multiple tasks, task-specific skills that allow individuals to accomplish tasks with minimum supervision, and task habits that either promote or hinder performance (Pradhan & Jena, 2017).

Employers have a task performance responsibility to motivate and uphold employee performance through goal setting, setting performance standards, and offering motivational incentives, encouragement, and recognition (Tripathy, 2014). Similar observations are made by Makki & Abid (2017) which stated that constantly sustained, positive, extrinsic motivation influences individual behaviour, experience, and performance in a positive manner.

Makki and Abid also noted that, in the organizational set up, employers and managers offer incentives and rewards like promotions basing on their valuation of task importance and the performance behaviours exhibited by employees in completing specified tasks. However, such employer-based valuation of task importance and employee performance may have negative impacts on employee motivation and performance.

Extrinsic Motivation

Extrinsic motivation refers to the forces that influence individuals to take actions that enable them to achieve desirable outcomes in the long run (Makki & Abid, 2017). In doing so, they pursue gains like monetary or material compensation, promotion, recognition, and achieving status or reputation. In the case of employees, these long-term gains are achieved by improving performance to meet or surpass organizational expectations.

In a study on the relationship between extrinsic motivation and performance, Qureshi et al. (2009) established a positive relationship between extrinsic rewards like salaries and bonuses and employee performance. Similarly, Filipkowski and Johnson (2008) observed that negative extrinsic factors like job insecurity and poor remuneration had negative implications on employee performance.

Analysis of current literature reveals that the most studied factors of extrinsic motivation are salary and its related forms, training, and promotion. Additionally, there exists a common agreement that salaries, promotion, and training are effective in motivating employees and improving their performance (Cheboi, 2013; Fransson & Frendberg, 2008; Makki & Abid, 2017; Nabi et al., 2017; Waiyaki, 2017).

It has also been established that, salary, promotion, and training motivate performance improvement in varied ways, and that they cause varied degrees of motivation. Notably, despite being recognized as a powerful technique of improving employee performance, Makki and Abid (2017) noted that the field of extrinsic motivation is less studied when compared to intrinsic motivation.

Motivation Theory: Theories of Employee Motivation

Over the years, motivation has become a topic of immense significance. As such, several theories have been developed in the attempt to define and clarify the phenomena and the forces behind organizational behaviour (George & Jones, 2012).

Arnolds & Boshoff (2002) noted that most of the studies on motivation are founded on the constructs of the needs theories, as these provide a simple understanding of motivation and human behaviour. The hierarchy of needs theory by Abraham Maslow and the ERG theory by Clayton Aldefer are some of the popular, fundamental motivation theories (Arnolds & Boshoff, 2002; Shahzadi, et al., 2014). Basically, needs theories argue that people harbour desires that they seek to satisfy and that the need to fulfil these desires motivates them to work.

Studying employee needs and the manner in which they can be satisfied helps managers to understand the relationship between motivation and performance. According to George & Jones (2012), the needs theory consists of three components; inputs, task performance, and outcomes.

Inputs like education, skills, experience, and time lead to performance, which is analyzed in terms of work quality and quantity, and, subsequently, outcomes like salary, job satisfaction, and job security. In order to influence performance, employers must identify employee needs and then control outcomes, which serve as motivators, accordingly.

Maslow’s Hierarchy of Needs Theory on Motivation

Parashar (2016) noted that Maslow’s theory portrays human beings as ‘wanting animals’ (p.9). Maslow placed human needs into a hierarchical order of five categories as shown in figure 1 below. These include physiological needs which, at the bottom, are the most basic human needs; security needs, which come in second, social needs at level three, esteem needs which are fourth in the order, and self-actualization needs, which exist at the top most apex (Maslow, 1943).

maslow's hierarchy of needs theory of Employee Motivation

Figure 1: The Hierarchy of Human Needs as Theorised by Maslow (1943)

According to Maslow, physiological needs are the most basic and consist of the biological requisites for survival and adaptation. These include needs like food, air, water, and shelter. Security needs refer to the need to rid oneself from psychological and physical harm. Social needs include the need to be loved, form healthy relationships, and acquire social support.

Esteem needs reflect the desire for success, status, respect, and prestige. Finally, self-actualization refers to the desire to realize one’s full potential by acquiring knowledge, wisdom, and understanding, gaining independence, and being capable of individual determination and creativity.

In the organizational set-up, Kaufman (2005) and Shahzadi, et al. (2014) explained that psychological needs may be viewed in terms of the wage or salary offered for a particular job and its ability to meet an employee’s basic needs. Security needs refer to both the physical safety of an employee in a given work environment, organizational stability, and job security.

In that regard, a safe environment, equipment safety, and medical benefits increase employee motivation (Shahzadi et al., 2014). Social needs, on the other hand, refer to the need for good relations with fellow employees, friendship, acceptance, and support. Employee participation in group assignments, organization gatherings, and organization recreational activities satisfy social needs. Esteem needs are represented by the need for respect, recognition, encouragement, and appreciation by workmates.

In that case, factors like promotions, compliments, and being acknowledged for achievements and work contribution satisfy esteem needs. Kressler (2003) stated that self-actualization can be achieved by allowing employees independence in exploring their creativity in performing tasks.

Additionally, Mikander (2010) observed that training employees and giving them challenging tasks can help employees attain self-actualization. This enables to gain satisfaction from utilizing their skills and talents to their fullest and realizing their potential.

Worth noting is the fact that in this hierarchy, human needs are ranked on the basis of their importance, where the most basic needs must be met first, and that the needs at each level must be satisfied completely before higher ranking needs are pursued (Shahzadi et al., 2014).

This hierarchy implies that, in the organizational set up, employees are motivated to achieve a particular set of needs at a time before moving on to the next level and that needs are pursued in an hierarchical order without any level getting skipped.  Furthermore, once a need is met, it loses its motivational value and the need in the next rank become the priority. Employees continually strive to satisfy these needs until they achieve self-actualization.

Alderfer’s ERG Theory

Aldefer’s existence, relatedness, and growth (ERG) theory is an improvement of Maslow’s hierarchy of needs theory. Alderfer’s ERG theory relates to motivation by focusing on the factors that influence individual behaviour. The theory can be used to predict and explain the behaviour and performance of employees, their relationships, and the choices made by employees in terms of personal development (Caulton, 2012).

According to the Alderfer ERG theory, human beings are motivated by three major categories of needs; existence, relatedness, and growth, with existence needs being the lowest in rank, and growth needs forming the highest level (Shahzadi et al., 2014). Existence needs consist of physiological and safety needs as outlined in Maslow’s hierarchy of needs theory.

Relatedness needs refer to the needs for developing and sustaining beneficial interpersonal relationships and compare to the needs for social acceptance, belonging, and status outlined in Maslow’s theory. Growth needs, on the other hand, refer to the desire for self-fulfillment, personal development, and self-actualization.

The Alderfer ERG theory varies from Maslow’s theory in that it has a specific focus on job motivation and specifically touches on work benefits, employee relations, and job satisfaction (Shahzadi et al., 2014). Additionally, it recognizes that employees can be motivating by higher ranking needs even when lower-ranking motivators have not been fully achieved.

In that regard, needs of varying ranks can motivate employees simultaneously (George & Jones, 2012). George and Jones stated that where employees do this but fail to satisfy the higher-ranking needs, their motivation to achieve the lower needs increases. For this reason, Caulton (2012) argued that the value of a given need is determined by the manner in which it is attained.

Vroom’s Expectancy Theory

Expectancy theory, developed by Vroom, is different from needs theory in that it focuses on the thoughts and perceptions held by employees and how they influence behaviour and performance (George & Jones, 2012; Purvis et al., 2015).

George and Jones noted that Vroom’s expectancy theory fronts two key arguments on employee motivation (p.163). To start with, it argues that employees are only motivated to improve their performance if such improvement will translate to desired outcomes. Secondly, employees engage in actions that improve their performance levels if only they believe that they are capable of doing so, regardless of the possible outcomes. Where the outcomes of a given action are likely to yield positive outcomes, the motivation to perform the action increases (Lin, 2007).

According to Vroom’s expectancy theory, the motivation of an employee to work is determined by valence, expectancy, and instrumentality (Shahzadi et al., 2014). Valence refers to the employee valuation of a performance outcome and the desire to achieve that outcome. In other words, it refers to the attractiveness of the gains and rewards that are achievable upon meeting organizational objectives.

The valence of employee motivation is measured in terms of the goals, needs, motivators and values of an employee. Employees pursue positively valent outcomes and avoid negatively valent outcomes (Estes & Polnick, 2012). Just like the needs theory, Vroom’s expectancy theory argues that employees are motivated by the expectations of future outcomes of their performance in the form of rewards.

Additionally, Vroom’s expectancy theory notes that outcomes are linked to job performance, which translates to instrumentality (George & Jones, 2012). Instrumentality refers to the belief by employees that meeting first level outcomes paves way for the pursuit of second level outcomes.

Therefore, employees believe that it is instrumental to continually improve their performance through extra effort, creativity, innovation, and development in order to achieve higher level outcomes (Estes & Polnick, 2012). This happens where the higher level outcomes are considered to be of higher positive valence e.g. salary increments, or where performance is instrumental to avoiding negative valence outcomes like demotion.

Finally, the Vroom expectancy theory notes that the ability of outcomes to motivate employee performance or the will to perform as an instrument for attaining valent outcomes is influenced by expectancy (George & Jones, 2012). Expectancy refers to the probability of performance to result in the desired outcome.

Estes and Polnick (2012) observed that expectancy is shaped by previous experiences, the perceived difficulty of attaining an outcome, and self-efficacy or individual ability. Employee will only be motivated to improve their performance if they are in a position to do so, if they are certain that the desired outcomes are achievable, and if they believe that hard work will improve performance.

In summary, the perceptions of valence, expectancy, and instrumentality have the potential to individually affect employee motivation and performance. However, Estes and Polnick (2012) noted that the psychological interaction of these factors directs employee beliefs and creates motivational forces that impact on employee behaviour and performance.

For high performance levels to be realized, George and Jones (2012) noted that work outcomes must be desirable to employees (high valence), the need to perform at high levels as a means to achieving outcomes must be identified (high instrumentality), and the believe that increased effort will improve performance and secure outcomes must exist (expectancy).

Theoretical Gaps: Limitations of Motivation Theories

Motivational theories have a common limitation in that no single theory or model captures the complexities of motivational behaviour in a concrete, summative manner (Bong, 1996).

For instance, Maslow’s hierarchy of needs theory has attracted significant criticism for its strict and rigid description of human needs as a hierarchical function where specific needs must be met at a particular time in order of significance (Mikander, 2010).

Claydon (2007) also adds that Maslow’s hierarchy of needs theory does not show definite relationships between needs and human behaviour, making it impossible to predict when particular needs may be manifested. Finally, Maslow’s hierachy of needs theory generally focuses on human development and lacks specifity for work motivation (Shahzadi et al., 2014).

Similarly, the Aldefer’s ERG theory does not shed light on the relationship that links employee satisfaction to performance (Armstrong, 2001). Additionally, it does not give sufficient evidence on the ability of satisfiers to enhance employee performance.

Alderfer’s ERG theory, just like Maslow’s hierarchy of needs theory, is also rigid in stating the factors that influence employee motivation and failing to acknowledge the complexity of human behaviour, which makes motivational factors to vary over time depending on work and life situations.

Finally, the Vroom expectancy theory is criticized for its failure to recognize that motivational factors vary with time and that human preferences change over time (Raulf, 2014). Additionally, high valence outcomes are difficult to attain in real life, a factor that, contrary to the theory, would create significant motivational challenges.

Summary of Employee Motivation Literature Review

Upon reviewing the literature on extrinsic motivation and its ability to enhance employee performance, a positive correlation between the two variables is identified. Previous studies show extrinsic motivation, in particular, leads to improved performance among employees.

Maslow’s needs theory and the expectancy theories of motivation also highlight the ability of extrinsic needs like wages, job security, rewards like promotion, and social acceptance to cause employee motivation and influence employee job performance. These motivation theories acknowledge that, naturally, humans, and employees in extension, have needs that they seek to satisfy.

Generally, these needs are founded on the desire and expectations for individual growth and development. In the organizational set up where job performance is the means through which these needs are satisfied, the possibility of satisfying higher needs and realizing continued growth motivates employees to pursue their accomplishment by putting more effort at work.

Additionally, the literature review on employee motivation revealed that employees are only motivated to improve their performance if such improvement translate to desired outcomes. In that regard, the value and effectiveness of extrinsic rewards in enhancing employee performance is dependent on the employees’ appreciation of the rewards.

Moreover, negative extrinsic factors like job insecurity and poor remuneration have negative implications on employee performance. Therefore, in order to influence performance, employers must identify employee needs and then control outcomes/ alter the rewards accordingly.

Finally, despite the existing acceptance that extrinsic rewards are key in improving employee performance, the literature review revealed that research on extrinsic motivation was much less compared to the research on intrinsic motivation. This observation was based on the volume of scholarly publications on employee motivation and their topics of study with regard to extrinsic employee motivation and intrinsic employee motivation.

Research Questions

  • What is the relationship between extrinsic employee motivation and employee performance?
  • What is the value and effectiveness of salary, promotion, and training in enhancing employee motivation and performance?
  • What are the factors that affect the effectiveness of salary, promotion, and training in enhancing employee performance?

Research Methodology

In order to meet the research objectives stated in Chapter II, this study employed a research methodology that was based on the onion model by Saunders et al. (2009). The onion model serves as a guideline on the approaches that may be used to conduct credible research. The model outlines the steps to be followed in the research process, from identifying an appropriate philosophy, to analyzing data as shown in figure 2 below.

The onion research model

Figure 2: The Onion Model of scientific research. Adapted from Saunders et al. (2009)

Research Philosophy

A positivist philosophy was adopted in the study of employee motivation in which the researcher hypothesized that there exists a positive relationship between extrinsic motivation and employee performance. A positivist approach ensures objectivity and minimizes the risk of making biased deductions since it encourages the use of a clearly-defined and replicable methodology (Gill & Johnson, 2002). In that case, the researcher focused on making objective conclusions based on facts.

Research Approach

This study was founded on the deductive approach of conducting scientific research. The deductive approach is useful where sufficient literature on the topic of employee motivation exists and where analyzing such literature for research gaps can lead to the development of new theories, ideas, or deductions (Easterby-Smith et al., 2008).

The  deductive research approach, therefore, proved ideal for the study since the topic on employee motivation and employee performance has received significant research interest over the years. Previous studies have reported a positive relationship between the two variables of employee motivation and employee performance, in addition to underlining the significance of the relationship and its applicability to organizations. The deductive approach was employed in this study to test and analyze this relationship.

Moreover, the deductive approach was favoured because it is less time consuming and allows the use of structured methods of collecting and analyzing quantitative data (Cresswell, 2002).

Research Design

This study was analytical in nature and adopted an explanatory research design. According to Robson (2002) the purpose of explanatory research studies is to establish the relationships that link variables.

In this study, the researcher studied the relationship between extrinsic motivation and employee performance by analyzing the variables of extrinsic motivation- salary, promotion, and training, and their value in influencing employee performance. Based on the findings of the literature review, the researcher inferred that extrinsic motivation is effective in improving the performance of employees.

Conceptual Approach

reward systems variables

Research Strategy: Survey

This study employed the survey strategy to collect qualitative and quantitative data. Surveys provide an economical way of collecting large volumes of data from sizeable populations (Saunders et al. 2008). Additionally, the data obtained from surveys is easy to analyze and useful in the determination of the relationships that exist between variables. By using the survey strategy, the researcher was able to set research controls and to obtain representative data that was useful for the intended analysis.

Target Population

A target population refers to a group of persons, items, or objects from which samples are obtained for measurements and results generalization (Kombo & Tromp, 2006). This study was based on secondary research where both qualitative and quantitative data was obtained from previous related studies.

The study targeted findings from research on the relationship between extrinsic motivation and employee performance or the impact of extrinsic motivation on employee performance. This was done through the systematic literature review method of data collection described in section 3.6 below.

Data Collection Methods

The study employed a mono methods approach to data collection where quantitative and qualitative secondary data was collected. A systematic literature survey was made to obtain secondary data from previous related studies. The use of multiple sources of secondary data provided room for the comparison of the findings made by previous studies.

Systematic Literature Review

Kitchenham (2009) observed that systematic literature reviews are crucial for the development of research hypothesis and the comparison of empirical evidence to theoretical hypothesis. A systematic literature analysis was conducted to obtain relevant qualitative and quantitative data from previous studies on the relationship between motivation and performance; extrinsic motivation and employee motivation.

The data collected from the systematic literature review helped the researcher to lay ground for the study upon the identification of current theories, ideas, and gaps. Secondly, it acted as a foundation for the study since, on identifying gaps in the current research, the researcher was able to devise a research framework, approach, and focus for the study. Thirdly, it contributed to the accomplishment of the research objectives, notably: ‘establishing the relationship between employee performance and motivation’ and ‘identifying the features and methods of extrinsic motivation’.

Finally, it allowed the researcher to compare the findings of previous studies to those derived from this study’s primary research. The systematic literature review protocol applied in this study was adopted from Khan, et al. (2003) and is outlined in Appendix I.

Data Collection, Sampling, and Analysis

Research Data Sampling and Selection

The purposeful sampling technique was used to select appropriate data from the secondary sources obtained through the systematic literature review. The following criteria was also used to select appropriate secondary data sources;

  • Publication language: English
  • Subject: Motivation and employee performance
  • Topic: Impact of extrinsic motivation on employee performance
  • Date of publication: 10 years or less
  • Nature: Research reports, Journal articles

Data Analysis and Presentation

The data collected from the systematic literature analysis was analyzed quantitatively. Inferential and descriptive statistics were used to highlight relationships between the study variables: extrinsic factors of motivation (salary, promotion, and training) and employee performance.

The numerical and graphical representations of statistical data and findings, as presented in Chapter IV of this study, were obtained after data collected from previous studies was analyzed qualitatively and quantitatively and the results presented in descriptive and inferential form.

Data Validity and Reliability

Validity refers to the degree of accuracy with which the instruments used in research generate reliable data (Cheboi, 2013). In extension, it also refers to the reliability of the inferences made from study outcomes. Reliability on the other hand refers to the ability of research methods to produce consistent results in repeat studies.

In this study, the researcher developed an elaborate research methodology and conducted a systematic literature review to ensure the reliability of the collected data and the study’s findings. Validity was ensured through the use of an elaborate literature survey protocol.

Moreover, the researcher made use of purposeful sampling for which a selection and exclusion criterion were used to select credible, relevant secondary data sources.

Ethical Considerations

The failure to include human participants in the study eliminated the risk of ethical violations. However, it is important to note that the researcher adhered to expectations and guidelines on originality and acknowledgement of sources by citing the sources of data used in the study, appropriately.

 

Results and Discussion

Impact of Salary on Employee Motivation and Performance

A review of previous studies on extrinsic employee motivation showed that salary related factors are the most significant incentive in influencing employee motivation and performance. For example, a study by Cheboi (2013) revealed that 75.43% of the respondents strongly agreed with the idea that good salaries keep employees focused on their work. The findings of this study are illustrated in fig. 3 below.

Effect of Salary on Employee Motivation and employee performance

Figure 3: Impact of salary in enhancing employee motivation and performance. Adapted from Cheboi (2013)

Adam’s Equity Theory shows that employee motivation and improved performance can occur drastically when employees are given a salary increment (Armstrong, 2008). Employees always expect a return for the additional effort they contribute at work. This is referred to as the equity norm. According to the research carried out by Korn Ferry Hay Group, salaries have a 2.3% impact on employee performance (Campion, 2011). A similar study on employees in the University of Northern Iowa showed that 8% of the workers were pleased and motivated after a salary increase.

The skill-based salary system by which employees get a salary increase based on their skills and competencies encourages flexibility or rather multi-tasking amongst employees, which makes them to be more industrious in their duties. In such a system, employees strive to show their skills and to be calculative in order to get the salary rise.

The profit-sharing salary increment incentive, on the other hand, is a compensation program whereby the employees gain a salary rise depending on the company’s profit (Wilson, 2012). In this case, employees are motivated to work harder each year in order to improve an organization’s profit and to improve their salary increments. The scheme is very effective in enhancing performance and commitment to work amongst employees.

Effect of Promotion on Employee Motivation and Performance

Figure 4 below represents the findings of a study by Nabi et al. (2017) on the impact of promotion on employee motivation in which 65% of the participants agreed that promotion is a significant factor in enhancing employee motivation and performance.

Effect of Promotion on Employee Motivation and Employee Performance

Figure 4: Impact of promotion on employee motivation and performance. Adapted from Nabi et al. (2017)

Incentives, employee benefits or salary increments are widely appreciated by employees, but the most significant factor of motivation that most employees anticipate is promotion (Nelson, 2011). Promotion to managerial positions enhances employee motivation and performance since it helps individuals to relate to an organization much better and to be involved in decision making Bemthal & Wellins (2001).

The lack of employee promotion opportunities is viewed as managerial ignorance and failure to recognize the efforts made by employees, which may lead to poor employee motivation and performance. Employees who feel that their efforts are not recognized tend to quit in search of companies that will offer them opportunities for promotion and growth (Ali & Ahmed, 2002). Specific criteria are used to qualify employees for promotions, in which individuals’ hard work or performance is a major basis of evaluation.

Ways in which Promotion Enhances Employee Motivation

1. Employee Compensation

One way through which promotions motivate workers is by offering them an opportunity to get better compensation. This contribution is a major factor that appeals the employee’s career anchor. Promotions not only contributes to an increased salary but also other elements such as health insurance, company cars and paid holidays.

2. Improved Job Experience

Another means that employees gain motivation is by having the opportunity to improve their job experience (Glen, 2006). Having a promotion as an employee ultimately increases responsibility. Employees love having new experiences and responsibilities at work and the desire to meet such needs motivates them to produce quality work and prove that they have capability to change a firm if given a chance.

3. Promotion Meets Employee Ambition Needs

Promotion has the ability to meet an employee’s ambition needs. Workers affected in this sense have a constant desire for managerial competence, autonomy and independence (William, 2008). Employees who gain these goals feel motivated to improve their performance at work in order to demonstrate leadership skills. They also emulate positive traits that are reflected through their positions such as accountability or cooperation with their work colleagues.

Effect of Employee Training on Motivation and Performance

According to a study carried out by Get Lighthouse in 2011, millennials consider training and development to be the most appreciable benefit from employers (Nelson, 2012). This is illustrated in figure 5 below.

enhancing employee performance through extrinsic employee motivation

Figure 5: An illustration of benefits that millennials appreciate at work. Adapted from Nelson (2012).

Employers who understand the value of their workers will always try to foster loyalty through employee training (Nelson, 2012). The latter helps workers to comprehend their roles and how they fit within the company’s objectives.

Employee training especially in specific departments aids in improving the quality of performance amongst employees. The development program helps in improving outcomes by providing the missing skill sets in employees.

Training has been proved to be a sure means of getting workers more excited about their work and the possibility of attaining their career objectives (Bambeger, 2009). A great training mechanism that can aid in motivating employees to work better is creating a platform through which ongoing education and training is provided. With such an environment, employees develop a connection with the firm’s policies and with other members of staff.

In this type of training, employees are also offered the opportunity to learn from each other and to discuss matters that affect their performance within the firm (William, 2008). This platform aids in career development and this contributes to a positive experience amongst workers.

The knowledge gained from employee training forums aids employees to handle situations better by relating to the experiences of other members of staff. An employee training needs assessment should be done before training programs are implemented in order for managers to highlight the particular skill needs of their employees.

Limitations and Barriers to Extrinsic Employee Motivation

Extrinsic employee motivation is an effective way of enhancing employee performance. However, the effects of extrinsic factors of motivation is limited by a number of factors. The most significant of this is that once initiated, extrinsic employee motivation must be continually sustained in order to maintain the expected level of performance.

Kelsey (2010) noted that employees may exert minimal effort in their work where extrinsic motivational factors are provided and cease to perform if the reinforcement of motivation is discontinued. Salaries, for instance, create a short term happiness at the time in which they are given and their impact on performance is short term.

The use of salaries and increments in enhancing employee motivation and employee performance is limited by legislation, labour market forces, collective bargaining, and an organization’s philosophy on salary benefits (Fransson & Frendberg, 2008).

The value of training as a factor of extrinsic employee motivation and performance incentive, on the other hand, is dependent on the level of skills possessed by employees at a particular time, the existing skill gaps, and the ability of an organization to invest in training programs. Similarly, promotions are dependent on employee competencies, organizational structure and managerial gaps, and future expansion plans and capacity.

1. The Over-justification Effect

Maslow’s hierarchy of needs theory argues that once a need has been satisfied, it loses its motivational value and employees strive to attain higher level needs. The over justification effect is related to this argument and refers to the situation where, once employees achieve what they were aiming for in doing a particular task, their interest in continuing with the task fades over time because the motivation to perform ceases (Cherry 2016). This, eventually, leads to declines in performance and overall work quality.

2. Culture and Gender  Barriers of Employee Motivation

has a significant bearing on employee motivation and performance. Culture becomes a limitation to motivational incentives where ideas and work practices become institutionalized to a point where employees find it difficult to adapt to changes within the work environment (Daft 2009, p. 387).

In such scenarios, the value of extrinsic employee motivation in enhancing motivation is limited by the fact that, even where incentives like salaries, promotion, or training are provided, employees stick to their norms of doing work and find it difficult to adapt to new performance demands from management.

Culture also defines the achievements that are valuable for male and female employees. This is based on the cultural constructs of gender roles and what is considered acceptable behaviour for males and females. Johnson and Turner (2003) note that masculine environments and cultures encourage work competition and conflict while those that foster feminine, passive traits encourage compromise and negotiation at work.

For example, in cultures existing in countries like UK, South Africa, Italy, and Japan, material possessions, money and are ambition are held in high regard and are more significant motivational for males (Fransson & Frendberg, 2008). In such a case, salary and promotion may be more effective in enhancing the performance of male employees compared to that of males. Equally, training may have a less significant motivational effect compared to better salaries and promotion.

This culture contradicts the one prevalent in Scandinavian nations and Netherland where individual decision making and the competitive advancement of females are encouraged. Moreover, incentives like salaries are more appealing in cultures that value material gain as opposed to those that place emphasis on quality of life, healthy work environments, and job security.

3. Poor Reward Systems as Barriers to Motivation

Rewarding employees with salary increments, training, and promotion basing on their individual performance or skill needs may have a negative bearing on employee cooperation as employees focus on enhancing their individual productivity (Fransson & Frendberg, 2008, p.35). This occurs where employees perceive bias in the award of rewards or where some employees are favoured by management.

Figure 6 below represents the results of a study by Waiyaki (2017) on the effect of motivation on employee performance, which showed that majority of the participants did not think that the reward system used by their employer was fair. The study established that these employees portrayed apathy to their work and the reward system.

employee performance reward systems for extrinsic employee motivation

Figure 6: Employee perceptions on rewards fairness. Adapted from Waiyaki (2017)

In addition, individual rewards may encourage competition and incidents of employee conflicts as members of staff seek for the attention of the management (Fransson & Frendberg, 2008).

Such incentive systems may, therefore, face limitations in organizations that encourage team work. Additionally, they may lead to negative motivation and poor performance for employees that thrive on cooperation and support from coworkers.

Conclusion and Recommendations

This study establishes that extrinsic factors of employee motivation like salary, training, and promotion have a positive impact on employee performance. Different levels of extrinsic employee motivation and enhanced performance are achieved with the use of various forms of motivation.

Therefore, this study concludes that using a combination of extrinsic employee motivational factors is the best approach to motivating employees and enhancing their performance. The study also concludes that the motivational value of extrinsic factors may become irrelevant at some point, hence the need for management to keep reviewing their incentive systems and aligning them to the current needs of their employees.

Training as a Factor of Extrinsic Employee Motivation and Enhanced Employee Performance

Most workers join firms, not only to attain financial rewards, but also to develop their career. The opportunity for training helps workers to advance their abilities and skills within their duties. Training sessions also aid in making employees realize the specific performance goals that they should attain in the long run. They also help them to attain knowledge on the vast aspects a firm’s business and objectives.

With such engagement, workers develop stronger attachements to their organizations, which further improves their job performance. Workers also look forward to gaining management skills through training. With such skills, they gain the ability to manage personal and work issues appropriately. Training is an indicator that employers are appreciative of the employees’ contributions to an organization’s performance.

Upon this realization, employees are likely to work harder and strive more in order to have their efforts recognized by their employers. In summary, training is an ideal method for enhancing employee attachment and enthusiasm to both work and the organization.

Salary Incentives as Factors of Extrinsic Employee Motivation

Salary is considered as a core factor of extrinsic employee motivation. Most organizations utilize this measure and have acknowledged its results towards enhancing employee performance. As an extrinsic variable, salary increments are used to reward better performance in hardworking employees. This gives them the motivation to continue improving their performance in order to get more salary rewards.

However, salary incentives have a short term effect on employee motivation and performance and should not be used as the sole employee motivational factor. Salary incentives should be used in combination with other extrinsic factors for them to yield better results.

Promotion Incentives for Motivating Employees

The opportunity for promotion is a critical issue especially when it comes to professional development. In rewarding employees with promotions, organizations should be committed to ensuring equal opportunity for growth. This creates a sense of fairness amongst the staff. Promotion mainly results in a rise in an employee’s rank. This creates a sense of leadership amongst subordinate employees.

However, before promotion, employees should be accorded task-relevant training in order to prepare them for the new responsibilities that come with the promotion. Incorporating promotion and training is a great way of motivating employees. The two act as complementary methods of extrinsic of motivating and developing the confidence of employees.

In order to boost employee motivation, future expansion plans of organizations should be communicated to staff so that employees can gain an insight of promotion in the future. This also aids in ensuring that employees improve their performance and do not become disengaged due to the lack of vision in regard to future opportunities.

Recommendations for Extrinsic Employee Motivation Incentives

The use of extrinsic employee motivation is a valuable means of enhancing employee performance. In most companies, extrinsic factors of motivation are utilized in making sure that exemplary performance is maintained.

However, it is also important to note that the ability of factors like salary, motivation, and promotion in enhancing performance is limited by a range of issues existing at both the employee and institutional levels, some of these being culture and gender constructs, biased employee reward practices, employee needs and preferences, etc.

Based on these findings, this study makes the following recommendations:

  • Companies should create a comprehensive incentive systems where extrinsic rewards are given to motivate members of staff to perform better. These systems should be based on the fair rewarding of both team and individual efforts.
  • Leaders should focus on developing close links with workers in order to identify their needs. Employees’ needs should always be considered and catered for. By understanding their needs, managers are able to identify the best incentives for motivating employees in order to enhance their performance.
  • Competitive remuneration and reward systems should be created in companies in order to reward workers with better salary incentives. Benefits such as salary increments are a great way of keeping members of staff highly motivated to improve their performance.
  • Organization managers should put in place systems for ensuring the continued professional growth of employees. This can be achieved through training and promotion.
  • Clear communication of current and future promotion opportunities should also be ensured in order to keep employees focused on bettering their performance in order to attain such rewards.
  • At the same time, training programs should be established in order to improve the capacity of employees to perform in their current and future roles, and to help them understand and conform their work behaviour towards achieving organizational objectives.

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