Impact of the compensation on employee performance †Free Samples

Question: Discuss about the Impact of the compensation on employee performance. Answer: Introduction The concept of motivation has been discussed extensively. In the previous century, various motivational theories came into existence, out of which my paper will be explaining the Maslow`s hierarchy of needs and the Herzberg`s Two factor theory (Alfes et al. 2013). With the help of these scholars, the concept of motivation especially of the employees became well defined. Each of these given scholars has given a totally different perception about Motivation and the related theories. Herzberg had often defined Motivation as performance of an action because the employee wanted to (Awadh and Alyahya 2013). Various employees get their motivation in different manners. Some get it intrinsically and some get it from extrinsic sources. The study of the relationship between the employee motivation and employee performance has been attempted in the past and it was found that there exists a proper correlation between the employee motivation and performance of job. The primary aim of the given study is to find out the relationship between the performances of an employee. This will be done by evaluation of different motivation theories and analyzing their impact on the performance of the employee. When the performance of the employee increases, the organizational productivity automatically increases. Problem statement The problem statement of the research paper is as follows: To find the relationship between motivation and performance of the employee through review of literature and analysis of various motivational theories. Objectives of the study: To find the relationship between motivation by the employers on the performance of the employees on the organization. To analyze the various motivational theories for the purpose and analyze its influence on different components of employee performance. Research Question The primary research question which has been adopted is: How different motivational methods impact the various aspects of employee performance with evidence from the literature available. Methodology In the given paper, the relationship and link between motivation and employee performance will be analyzed in detail. This will be done by critically examining the relationship between the various components of each other through a critical examination of motivational theories and literature available on the topic. I have taken data from various articles, peer Reviewed journals and web articles. Structure In the next section, the review of Literature will be done whereby the concept of motivation will be explained using the basic concepts from various journals and defining two important motivational theories of Maslows and Herzbergs respectively. The next part of the literature will throw light on the performance of employees in a company and it will also be discussing the importance of their performance. A brief description of how to measure the performance will also be provided. The various components f these two primary factors will be reviewed critically and their impact on one another will be explained. The given section will form the basis of the next sub part which will explain the relationship between motivation and performance of the employees. The reason behind their relationship will be explained in detail. The last section provides a practical example of an organization that applied motivation aspects for their employees and achieved success. A brief conclusion will wrap the research paper. Relevance to the Organization The aim of the profit making organization is to improve the organization`s productivity and increase the revenue of the company considerably. The organization has several other aims as well like to gain a good name for their organization, to satisfy employees and other such aims. However, we shall talk about the motivation and performance concept here. Employees are often considered to be the backbone of the organization as they are the primary performers. It is because of the effort of the workers, the organization can succeed in its goals. Motivation can be referred to as providing positive feedback and efforts to the organization in order to see to it that they feel good about their performance and that they are able to convert that positivity into actions. Hence, the knowledge about the relationship between the motivation and employee performance is extremely important to understand how the employees can be motivated in order to bring about good results for the organization (Awad h and Alyahya 2013). If an organization knows that if an employee is motivated, he will work harder, then the organization can use it as a tool to increase the performance and can make the employee focused. Reason behind choosing the topic Many scholars have stated over the past many years that motivation is an important tool of the organization which tends to improve the performance of the employees with respect to the productivity of the employee. On the other hand, there are some authors, that state that this is not the case and that that certain employees have their own reasons because of which they tend to perform in a poor manner such as personal problems. Hence, according to me the topic is one of the most controversial and interesting topics in the domain of International Human Resource Management. This is the reason why I have chosen this topic and decided to elaborate deeper into the theoretical concepts along with throwing light on to practical examples referring to the case of Toyota. Literature Review Employee Motivation Motivation can be defined as a system whereby the motivator gives a sense of support to the other employee and encourage them to work harder (Fransen et al. 2017). Motivation can be described as an entity that compelled a person to action (Cerasoli and Ford 2014). According to Bedarkar and Pandita (2014), motivation is a psychological process which guides one`s behaviour by providing them purpose and direction. Employee motivation is referred to as the encouragement which is generally provided to the employees in order to see to it that they remain happy inside an organization (Fransen et al. 2017). It is extremely important to motivate the employees in order to see to it that their work life balance is maintained and they want to retain themselves in the organization for a long period of time. According to Brewster and Hegewisch (2017), motivation of employees is extremely important in order to make the organization successful in the future. Motivation can be described as a phenomenon which is actually intentional and multifaceted. Cascio (2018), states that a motivational theory is often used to predict the behaviour of a person. Motivation is also often said to be associated with action and various forces from the external as well as internal environment that tend to have an impact on the behaviour of a person. Herzberg and Maslow were one of the first scholars to research on the topic of motivation and how they tend to apply this in business context. Motivational Theories There are various motivational theories which tend to have an influence on the different factors affecting the employee performance. Two primary theories of Herzberg`s and Maslow`s theory has been discussed below: Herzberg Motivation Hygiene Theory The theory on motivation which was developed by Herzbergs is known as the Two-factor Theory. The Two factor theory states the difference between motivators and factors relating to hygiene. He has stated that a single factor can never be both but a combination of both the factors. The motivators are primarily known as the intrinsic factors whereas the external factors are the hygiene actors (Cerasoli and Ford 2014). The motivators are the challenging work, responsibility and recognition. On the other hand the hygienic factors are the salary, status of the job, the security and other factors. Each of these factors can lead to a different set of objectives. The motivators if satisfied lead to satisfaction of the employee and if the hygiene factors are not present it causes dissatisfaction. The motivators are the factors that yield positive satisfaction among the employees and this helps the employees in performing better in their work place. They help in symbolizing the psychological needs that includes Recognition, growth, responsibility along with sense of achievement. The hygiene factors are the job factors which are responsible for existence of motivation in the workplace. These factors help in pacifying the employees to follow the company`s administrative policies. They include Interpersonal relationships, job security and fringe benefits (Gerhart and Fang 2015). 2.2.2 Maslow`s Hierarchy of Needs Maslow in his theory states that there are five different sets of goals which are as follows: Physiological Needs Safety Needs Love Needs Esteem Needs and self-actualization needs Biological and physiological needs Need for sex, sleep, food, drink and warmth. Safety needs This refers to the need of protection from various external elements such as security, law order and freedom from fear (Hameed, Ramzan and Zubair 2014) Love and belongingness needs An individual are a social being and needs feelings like intimacy, trust, acceptance and affection from others. When a person feels that he is a part of a group, he feels secure. Esteem needs- These needs are of two categories namely, esteem for one own self and the desire for respect from others (Gerhart and Fang 2015). A person wants to feel extremely good about him or herself. Hence, factors such as dignity and independence boost one`s being whereas respect and reputation from others like a sense of prestige and social status tends to make them feel good. Self-actualization needs this refers to the realization of a sense of self-fulfillment, seeking out personal growth, peak experiences and a need or a desire to succeed as per one`s own capabilities. The theory states that people need to be motivated in order to achieve all these needs. The employees in an organization work hard towards achieving their goals, once the employees come to know that they will be able to achieve these specific goals, it is only then that they are able to perform well towards their work. Intrinsic and extrinsic motivation As per Gerhart and Fang (2015), motivation can be promptly divided into intrinsic as well as extrinsic motivation. This can be explained in the following manner; People generally become motivated intrinsically when they have to do a task which shall provide them with enjoyment, curiosity satisfaction, interest and a personal challenge which is important to them for their own good. On the other hand, individuals tend to get motivated extrinsically when they are engaged in some task which provides them with satisfaction of achievement that is different from the goal of achieving the work. Hameed, Ramzan and Zubair (2014), also state that the extrinsic motivation which generally points to some kind of a verbal encouragement of monetary benefit. This tends to make this kind of motivation outside of the person whereas the intrinsic motivation comes from within the person`s person goals. In case of intrinsic motivation, there is no monetary or social reward associated with it but only a sense of achievement. Hanus and Fox (2015), suggest that there are various ways by which an employee at work can get motivated both intrinsically and extrinsically. Hill et al. (2016), Suggests that different indicators or factors tend to act in a different manner for different people. When a person is intrinsically motivated it is a proven fact as stated by Howard et al. (2016), that they tend to apply more hard work and perform in a better manner. It is suggested by Joseph et al. (2015), that if an employee in general is motivated by self intrinsically they get more motivated as compared to extrinsic benefits. Elements of Employee Motivation The elements of the employee motivation are given as follows: Employee engagement Gerhart and Fang (2015), described employee engagement as a component whereby the employers apply the workplace approach and the employees are involved in the various decision makings of the firm. This gives rise to the existence of an appropriate condition for the employees to prosper in. This kind of a motivational initiative by the different employees feel encouraged to perform better and give in their best shot to the different goals aspirations of the organization. If the employees are considered before taking the different decisions, a sense of motivation is developed. Kusurkar et al. (2013), states that all the organizations who engage in employee motivation will be able to achieve higher rates of success and witness better performance. Compensation According to Karatepe (2013), compensation refers to the way the employees are paid in the organization. The compensation plays a huge role in deciding whether the employee would continue to work in the organization or not. Whenever an organization tends to offer a high compensation to the employee along with incentives and bonus, the employee tends to perform in a better manner. In a similar manner, if an employee is offered lower compensations then its a proven fact that it reflects negatively on their performance. It is a proven fact that compensation is an important factor influencing on the organizational performance, but proper execution of the compensation process is also essential. According to Hameed, Ramzan and Zubair (2014), it should be seen to it that they are not left in a vacuum as this tends to have an impact on their job content. Performance management Performance Management is also an aspect from where Motivation can arise says Hill et al. (2014). Every organization is required to conduct activities which are able to manage the performance of the employees. Performance Management helps the employees in the achievement of the goals. The performance management is conducted in order to motivate the employee and provide him the proper guideline. It is also done for a department as a whole in order to decide the performance of the organization. Through Performance Management, an employee becomes aware of his shortfalls and tries to become better. Employee performance Performance can be of two types: Employee performance Organizational Performance Employee performance is often referred to as job performance. The following section explains the difference between job performances and organizational performances. The section after that will be based on the concept of job performance and its implications. Job performance An organization cannot survive if employees do not perform adequately. The success of an organization greatly depends on the ability of the people to bring in creativity in the organization and give rise to an environment where innovation and commitment prosper. If employees tend to perform well then the general economy of the country also flourishes because of improvement of the wages, standard of living and greater good available for the consumption of the general population. Very often, according to Lepper and Greene (2015), it is in the hands of the employees to see to it that the organization tends to perform well. If the company helps the employees by providing them an environment which is encouraging and select a particular set of employees, who perform well, then they will be able to improve the overall outcome. Although individual selection is considered to be rather time consuming, it has proved to have better results. However, according to Mallin and Ragland (2015), the performance depends on the management as well. The manner in which an organization tends to distribute the tasks in the organization plays a major role in deciding the outcome. This aspect is critical for the overall welfare of the organization. Saying that, it is extremely important to state that the performance of the employee also depends on skills, personality and the experience of the employee. Relating to this Lazaroiu (2015), says that proper training should be provided to the employees in order to see to it that they gain effective skills. There exists a certain problem in the field of hob performance which is the measurement of it. Performance in organizations Organizational performance is a different concept than that of an employee performance. According to Zameer et al. (2014), the performance in different organizations is largely dependent on the sum total of all the employees and other external factors having an impact on the organization. The primary difference between these two concepts is quite evident in the sense that if the employees perform well then it will automatically have a good impact on the organization by increasing the performance of the organization on a whole (Lachowycz and Jones 2013). As the primary goal of the research paper, is to provide the link between motivation and employee performance, the concept of employee performance will be explained in more detail Factors affecting Employee Performance Work environment and Culture The work environment of the organization is a huge factor affecting the performance of the employee. Purce (2014) suggests that the positive work environment of a place has the power to boost the morale of the employee. When the employee`s morale is increased it tends to boost the productivity at the workplace. The work environment of the organization tends to determine the ethics of the workplace. Ethics has proven to have a great impact on the mindset of the employees. Skills, knowledge and Clarity about the role According to Miner (2015), Skills refer to the capability and knowledge which is necessary to perform the job. It is believed that if an employee has sufficient amount of skills available, the person is able to cope up with the job requirements and hence perform well. If a person does not have the required skills it is very obvious that the performance will suffer. Clarity about the job role is also important to perform well. An understanding about the role goes a long way in making a person want to perform his job well and accomplish personal as well as organizational goals. Employee attitude The attitude of the employee is the primary source if the performance of the employee. The enthusiasm to perform well can directly relate to the work performance. Very often some people have a bad attitude which reflects on the performance at work. The attitude of the employee is mainly affected by personal reasons also. Employee motivation and performance As it has already been stated that it is extremely important for the managers of the organization to motivate their employees well to perform in the firm. A later study by Mekler et al. (2017), established a positive and strong correlation between motivating the employees and performance of their job. This section will primarily be discussing the relationship between employee motivation and performance. It will also throw light on how the employees can be motivated both intrinsically and extrinsically in order to get better results. The relationship between employee motivation and job performance Human relations theory states that motivation leads to better performance of the employees. According to Marchington et al. (2016), the relationship between motivating the employees and job performance has been a great topic for studying for a very long period of time. Earlier research by various scholars was unable to prove any relationship between the two factors yet it was always a thought that these two had a huge influence on one another. It is only in the recent studies that it has been proven that these two influence each other to a very large extent. These studies which are being mentioned show that the influence of motivation relating to a job on the performance of the job is much larger than the previous searches. According to Mekler et al. (2017), when the component of employee satisfaction is added it tends to make the relationship circular. Herzberg in his studies had also used the term satisfaction and suggested that when there is a presence of intrinsic factors in a job, the levels of satisfaction as well as the motivation to perform better also increases. Job characteristics also play a huge rule in establishing the relationship between the performance and employee motivation. These job characteristics are skilled variety, identify of the task, its significance and feedback. As reflected in a study that the employees who work and score high in these characteristics tend to get highly motivated and satisfied. It is even easier to motivate the employees in a manner which relates to the design of the work which is their primary task. If the given employees are provided with intrinsic motivation s well as external factors then they will be able to perform well. According to Miner (2015), the engagement of the employee goes a long way in determining the work environment of the place. When the employees are involved in the decision making relating to different aspects of the firm, they feel motivated and united with the organization which contributes in making the organization a better place. Compensation is believed to be one of the biggest motivators for work; it is believed that about 80% of the employees are in a given job because of the pay offered to them. If the pay is high it influences the attitude of the employees. When an employee believes that the pay is good, they tend to put in more effort at work with a positive attitude. Performance management also is considered to be an important tool to improve the skills of the employee. Through the management of the performance, an employee gets face to face with reality and understands their weak points. When the employees understand better what is required out of them, they tend to apply better knowledge and get motivated to work harder. Hence, it can be clearly stated that the relationship between performance and motivation is circular. This has been said because if an employee performs well it causes high level of satisfaction and this shall motivate the employee to work harder (Sparrow, Brewster and Chung 2016). At times this circular relationship can be a cause of the extrinsic actors that take place however employee will is also very important and plays a critical role that has an impact on the performance of the employee. There are various factors affecting motivational theories which tend to have an impact on the performance of the employees. This tends to form a circular relation between them. Corporate Examples of motivation and employees performance For this purpose, the example of Toyota will be taken. The human resource department of Toyota takes the Maslow`s Theory of Motivation for its guidelines. It is also based on Herzberg`s job enrichment theory (Renwick et al. 2013). The company believes that motivation of the employees tends to form a vital part of the organization and that a business cannot succeed if its employees are unhappy. According to Maslow's theory, an employee needs the following. Job Security- Removal of fear of being sacked by the employers Good Pay- A good remuneration. Satisfy lower level needs- Like basic needs of food and water Culture of continuous improvement support growth toward self Actualization Safe working conditions Toyota keeps these requirements in mind before making its motivational policies. After that it uses the following to motivate its employees: HR Policies Addresses- which are present for the benefit of the organization. Continuous Improvement- In processes and procedures (Sen et al. 2017). Feedback in support motivator- From the managers Hygiene Factor- Such as proper facilities Visual Management- in form of presentations. Job Rotation and Build- to make them gain experience. Managerial implications For managers, it is extremely important to understand that when intrinsic motivations have a presence in the organization, it tends to have positive impact on the employees but the absence of extrinsic factors have a negative impact and de-motivate the employees. Therefore, the managers should make a point to address both factors (Richter, Raban and Rafaeli 2015). Different employees react differently to the differently to different motivators and hence, the capabilities of employees should be kept in mind before forming any program to motivate them. Measurement of job performances is also extremely important and needs to be considered. While designing policies and other relevant procedures for the employees, the managers can make use of the concepts stated. Integrated Analysis of research findings The research reflected that motivation has an impact on the performance of the employee. Motivation consists of various components like Compensation Performance Management and Employee engagement which are clearly linked to the various factors affecting employee performance which are work environment, skills and capabilities and employee attitude. Hence, if an organization wants to succeed, it has to motivate the employees at every level Conclusion The conclusion will be linked to the objectives of the study: Objective 1: To find the relationship between motivation and employee performance The primary research question of the given paper was to find out the relationship between performance and motivation and find out the extent to which motivation of the employees tend to enhance the performance at the workplace. From the study it was witnessed that the performance of the employees actually are influenced by the motivation that is provided to the employee by using either intrinsic or extrinsic factors. This often becomes a critical task for the managers. Research from journals and books also highlighted the fact that while intrinsic motivation is long term and tends to stay with the employee for a longer period of time, extrinsic motivators provide short term objectives for the organization. If the organizations make use of proper methods in order to motivate the different employees, it will be able to survive all resistance and changes that take place in the external environment of the business. Objective 2: To analyze various motivational theories and see their impact on various factors affecting the performance of the employee. Maslow`s and Herzberg`s Theory was analyzed and it was witnessed that the various hygiene factors of the Herzberg`s theory have a clear impact on the performance factors of the employee. As stated earlier presence of the factors tens to satisfy the employees which instigate them to perform well and the absence of the factors like proper compensation and engagement tends to dissatisfy them which leads to decreased performance at work. However, there is a gap in the literature stating that all the studies do not come to the same conclusion with respect to the impact of motivation on performance. References Alfes, K., Shantz, A.D., Truss, C. and Soane, E.C., 2013. The link between perceived human resource management practices, engagement and employee behaviour: a moderated mediation model.The international journal of human resource management,24(2), pp.330-351. Awadh, A.M. and Alyahya, M.S., 2013. Impact of organizational culture on employee performance.International Review of Management and Business Research,2(1), p.168. Bedarkar, M. and Pandita, D., 2014. A study on the drivers of employee engagement impacting employee performance.Procedia-Social and Behavioral Sciences,133, pp.106-115. Brewster, C. and Hegewisch, A. eds., 2017.Policy and practice in European human resource management: The Price Waterhouse Cranfield survey. Taylor and Francis. Cascio, W., 2018.Managing human resources. McGraw-Hill Education. Cerasoli, C. P. and Ford, M. T. ,2014. Intrinsic motivation, performance, and the mediating role of mastery goal orientation: A test of self-determination theory.The Journal of psychology,148(3), 267-286. Chelladurai, P. and Kerwin, S., 2017.Human resource management in sport and recreation. Human Kinetics. Fransen, K., Boen, F., Vansteenkiste, M., Mertens, N. and Vande Broek, G. ,2017. The Power of Competence Support: The Impact of Coaches and Athlete Leaders on Intrinsic Motivation and Performance.Scandinavian journal of medicine and science in sports. Gerhart, B. and Fang, M. ,2015. Pay, intrinsic motivation, extrinsic motivation, performance, and creativity in the workplace: Revisiting long-held beliefs.Annu. Rev. Organ. Psychol. Organ. Behav.,2(1), 489-521. Hameed, A., Ramzan, M. and Zubair, H.M.K., 2014. Impact of compensation on employee performance (empirical evidence from banking sector of Pakistan).International Journal of Business and Social Science,5(2). Hanus, M. D. and Fox, J. ,2015. Assessing the effects of gamification in the classroom: A longitudinal study on intrinsic motivation, social comparison, satisfaction, effort, and academic performance.Computers and Education,80, 152-161. Hill, B. D., Foster, J. D., Sofko, C., Elliott, E. M. and Shelton, J. T. ,2016. The interaction of ability and motivation: Average working memory is required for Need for Cognition to positively benefit intelligence and the effect increases with ability.Personality and Individual Differences,98, 225-228. Howard, J., Gagn, M., Morin, A. J. and Van den Broeck, A. ,2016. Motivation profiles at work: A self-determination theory approach.Journal of Vocational Behavior,95, 74-89. Joseph, D. L., Jin, J., Newman, D. A., and O'boyle, E. H. ,2015. Why does self-reported emotional intelligence predict job performance? A meta-analytic investigation of mixed EI.Journal of Applied Psychology,100(2), 298. Karatepe, O.M., 2013. High-performance work practices and hotel employee performance: The mediation of work engagement.International Journal of Hospitality Management,32, pp.132-140. Kusurkar, R.A., Ten Cate, T.J., Vos, C.M.P., Westers, P. and Croiset, G., 2013. How motivation affects academic performance: a structural equation modelling analysis.Advances in Health Sciences Education,18(1), pp.57-69. Lachowycz, K. and Jones, A. P. ,2013. Towards a better understanding of the relationship between greenspace and health: development of a theoretical framework.Landscape and Urban Planning,118, 62-69. Lazaroiu, G. ,2015. Employee motivation and job performance.Linguistic and Philosophical Investigations,14, 97. Lepper, M. R. and Greene, D. (Eds.). ,2015.The hidden costs of reward: New perspectives on the psychology of human motivation. Psychology Press. Mallin, M. L. and Ragland, C. B. ,2015. Managerial Power-Base Effects on Sales Person Intrinsic Motivation and Performance: A Conservation of Resources View. InIdeas in Marketing: Finding the New and Polishing the Old(pp. 699-699). Springer, Cham. Marchington, M., Wilkinson, A., Donnelly, R. and Kynighou, A., 2016.Human resource management at work. Kogan Page Publishers. Mekler, E. D., Brhlmann, F., Tuch, A. N. and Opwis, K. ,2017. Towards understanding the effects of individual gamification elements on intrinsic motivation and performance.Computers in Human Behavior,71, 525-534. Miner, J. B. ,2015.Organizational behavior 1: Essential theories of motivation and leadership. Routledge. Purce, J., 2014. The impact of corporate strategy on human resource management.New Perspectives on Human Resource Management (Routledge Revivals),67. Renwick, D.W., Redman, T. and Maguire, S., 2013. Green human resource management: A review and research agenda.International Journal of Management Reviews,15(1), pp.1-14. Richter, G., Raban, D. R. and Rafaeli, S. ,2015. Studying gamification: the effect of rewards and incentives on motivation. InGamification in education and business(pp. 21-46). Springer, Cham. Sen, A. P., Huffman, D., Loewenstein, G., Asch, D. A., Kullgren, J. T. and Volpp, K. G. ,2017. Do financial incentives reduce intrinsic motivation for weight loss? Evidence from two tests of crowding out. Shields, J., Brown, M., Kaine, S., Dolle-Samuel, C., North-Samardzic, A., McLean, P., Johns, R., O'Leary, P., Robinson, J. and Plimmer, G., 2015.Managing Employee Performance and Reward: Concepts, Practices, Strategies. Cambridge University Press. Sparrow, P., Brewster, C. and Chung, C., 2016.Globalizing human resource management. Routledge. Zameer, H., Ali, S., Nisar, W. and Amir, M., 2014. The impact of the motivation on the employees performance in beverage industry of Pakistan.International Journal of Academic Research in Accounting, Finance and Management Sciences,4(1), 293-298