International Conference on Emerging Trends in Hospitality & Tourism Sector

(Subharti University Meerut)

A STUDY ON EFFECTS OF FINANCIAL BENEFITS ON

HOTEL EMPLOYEES MOTIVATION
*NITIN GUPTA (Associate Professor)
IIMT Hotel Management College, Meerut
Email: lovelynitinkansal@gmail.com
Contact: 9045504439

PIYUSH KUMAR (Asst. Professor)

IIMT Hotel Management College, Meerut
Email: chkg12@gmail.com
contact: 9760218918

Abstract

The basic aim of this paper is to identify the affect of financial benefits on the motivation of
employees in organizations. Though there are many reasons why people work for a living, it is
undeniable that money, or other financial rewards, play a key role in motivating people in the
workplace. Employees and employers view money as the basic factor for job satisfaction. It is
widely accepted that poor or low pay acts as a de-motivator. Someone who feels undervalued or
under-paid may soon leave to find better-paid employment. For most people, motivation (the will
to work) comes from within. More money can help us feel better about out work, but it is
unlikely to encourage us to work harder or to a higher standard. In case of hotel employees they
need financial rewards rather than only certificate recognition. Money serves as a highly tangible
means of recognition.
A semi structured interview was conducted for getting an insight about their motivation. The
researchers have found from the survey that financial benefits are important for employee
motivation but the importance of non financial rewards cannot even be discriminated.
It is a good contributor to the knowledge world of human resource management which explores
the factors that affect motivation of employees and provide a solution to the problems faced by
employees at their jobs.
Keywords: Financial benefits, Hotel, Motivation, job satisfaction Remuneration.

International Conference on Emerging Trends in Hospitality & Tourism Sector

(Subharti University Meerut)

Introduction
Motivation is a general term, which describes the drives, needs, desires and other similar factors.
The employees were motivated when organization gave them different benefits in shape of
financial and non- financial benefits.

The Hotel Industry has steadily recorded positive

expansion in the last decade with the establishment of new facilities as a result of increased
investment from both local and international investors. With this expansion in the hotel industry,
Managements of most facilities are increasingly facing the challenge of increased staff turnover
with new entrants in the industry constantly poaching employees from other already existing
hotel facilities. In a research conducted by Kuria, et al in 2011, labour turnover rates of 68% and
13% in three star and five star rated hotels respectively were observed in Nairobi.
Some scholars argue that money is the key motivational factor for the employees in hospitality
industry (Jerris, 1999). Contrary to that, some scholars argue that money alone cannot motivate
employees in the hospitality industry and any other motivational factors also have an impact
(Jerris, 1999).
Importance of motivation:
Motivation is required for the organizations, because,
1. Motivated employees are always looking for better ways to do a job.
2. A motivated employee generally is more quality oriented. This is true whether we are
talking about a manager spending extra time in handling a restaurant or hotel or an
associate taking extra care when arranging a function.
3. Highly motivated worker are more productive than apathetic worker.

International Conference on Emerging Trends in Hospitality & Tourism Sector

(Subharti University Meerut)

4. Main purpose of motivation is to attract employees not only to join the organizations but
also to remain in it.
5. Motivated employees perform the tasks in a dependable manner.
Motivation theories
Five major approaches of motivation are Maslow's need-hierarchy theory, Herzberg's twofactor theory, Vroom's expectancy theory, Adams' equity theory, and Skinner's reinforcement
theory.
According to Maslow, employees have five levels of needs (Maslow, 1943): physiological,
safety, social, ego, and self- actualizing. Maslow argued that lower level needs had to be satisfied
before the next higher level need would motivate employees.
Herzberg's categorized motivation into two factors: motivators and hygiene (Herzberg, Mausner,
& Snyderman, 1959). Motivator or intrinsic factors, such as achievement and recognition,
produce job satisfaction. Hygiene or extrinsic factors, such as pay and job security, produce job
dissatisfaction.
Vroom's theory is based on the belief that employees efforts will lead to performance and
performance will lead to rewards (Vroom, 1964). Rewards may be either positive or negative.
The more positive the reward the more likely the employee will be highly motivated. Conversely,
the more negative the reward the less likely the employee will be motivated.
Adams' theory states that employees struggle for equity between themselves and other
employees. Equity is achieved when the ratio of employee outcomes over inputs is equal to other
employee outcomes over inputs (Adams, 1965).

International Conference on Emerging Trends in Hospitality & Tourism Sector

(Subharti University Meerut)

Skinner's theory simply states those employees' behaviors that lead to positive outcomes will be
repeated and behaviors that lead to negative outcomes will not be repeated (Skinner, 1953).
Management should positively reinforce employee behaviors that lead to positive outcomes.
Management should negatively reinforce employee behavior that leads to negative outcomes.
Effect of financial benefits on hotel employees:
Financial benefits acquire significant motivating power because it comes to symbolize so many
intangible goals. It acts as a symbol in different ways for different people and for the same
persons at different times. Financial benefits can provide positive motivation in the right
circumstance, not only because people need and want money but also because it serves as a
highly tangible means of recognition. Money can be considered as "scorecard" through which
employees can evaluate how much an organization values them. Kochan (2002) argued that
money works as a short-term motivation factor and it does not transform employee attitude and
behavior in the long term. He pointed out that money only motivates employees to seek further
rewards.
Another researcher in this area was Jaques (1961), who emphasized the need for reward systems
to be fair and equitable. As per him, the reward should be clearly related to effort or level of
responsibility and people should not receive less money than they deserve compared with their
fellow workers. Jaques called this the Felt-Fair principle. It is necessary to examine the
motivational power of money in order to be able to assess the value and importance of other
motivators. Money is the means by which employees are directly rewarded for their
contributions towards the achievements of organizational goals.
As per the Maslow's hierarchy of needs theory, money is associated with the lower level needs,
such as physical and security needs. Maslow (1954) stated that once the lower-order needs are

International Conference on Emerging Trends in Hospitality & Tourism Sector

(Subharti University Meerut)

met, higher-order needs will become most important. Thus, additional salary increases do not
motivate employees any further.

To improve job satisfaction and performance level of

employees, management must work on motivational factors by providing opportunities for career
advancement and development, as employees value motivators more than hygiene factors
(Ramlall, 2004).
According to Chester Barnard, money is the weakest motivator an organization could offer its
members. Herzberg totally rejects money as a motivator. Money however can be measured while
other motivational factors cannot.
Some people, in select industries such as commission-based sales, might be highly motivated by
money. And in some tip dependent occupations (wait staff, door men, etc.), where the connection
to behavior and reward is almost immediate, pay can also be a motivator. However, these are the
exceptions and not the norm.
Opsah and Dunnettee (1966) list five theories of explanations of the role of money in employee
motivation and performance.
1. It is generally believed that money acts a generalized conditioned reinforcer since it is
repeatedly paired with primary reinforces.
2. Some suggest that money is conditioned incentive, that is, the repeated pairing of money
with primary incentives helps to establish a new learned drive for money.
3. It is suggested that people learn to become anxious in the presence of a variety of cues
that signify an absence of money. Such cues include being told, That costs too much
money or We cant afford that Such cues lead to feeling of anxiety (and perhaps
feeling of insecurity) which money can satisfy.

International Conference on Emerging Trends in Hospitality & Tourism Sector

(Subharti University Meerut)

4. Money is seen as hygiene factor as in Herzbergs two-factor theory. In this model, it is

suggested that the absence of money causes dissatisfaction, although the presence of
money does not satisfy. It merely eliminates the source of dissatisfaction and brings
someone to a neutral state of satisfaction.
5. Money can serve, as an instrument for gaining other desired outcomes such as building or
buying a new house, car or vacation. These accords with the expectancy/valence theory.
Here money acquires value for an individual to the extent that it can help to fulfill these
other desires and needs.
Money, for example, could therefore be an instrumental reward for someone wanting a new car
but may not be either an instrumental reward or a motivator for someone seeking escape from the
pressures of a routine, dead-end job. For such a person only job enrichment can motivate.
Money could be a motivating factor but within some limited situation. However, we argue that
employees take money for granted as a reward for their labour and it is not seen as a motivator as
such. Its absence breeds dissatisfaction, its presence however does not add to performance over
and above the normal.
Research suggests that, as employees income increases, money becomes less of a motivator
(Kovach, 1987). Also, as employees get older, interesting work becomes more of a motivator.
Salaries are the most obvious motivational factor when it comes to our jobs. Employees
constantly compete for positions that offer the quickest, most easily accessible reward.
Sometimes, many other motivational factors may sacrificed by employees to attain job
satisfaction. That is why whenever any associate got good pay in another hotel or another service
sector he moves.

International Conference on Emerging Trends in Hospitality & Tourism Sector

(Subharti University Meerut)

Pay, is a major consideration in human resource management because it

provides employees with a tangible reward for their services (Bohlander,
Snell, and Sherman, 2001).

Stone (1982) indicated that people are

motivated by money for many different reasons. The need to fulfill the basic
necessities of life motivates most people. Some people think of money as
instrumental motivational factor, to satisfying non economic needs such as
power, status and affiliations with desired groups. Money is often viewed as a
symbol of personal success and achievement.
The Impact of Financial benefits on Employee Motivation is Larger
Salary, Bonuses and Allowances Are the Significant Elements of Financial benefits:
Financial benefits like salary, bonuses and fringe benefits are instrumental in fulfilling the basic
necessities of life and needs of belongings and authority. It is a symbol of triumph and
accomplishment. Employees expect a salary accordance to their skills, abilities and qualification.
An inequitable pay is a source of appreciating the employees for their services and efforts.
Nobody likes to be unappreciated; all the employees expect a salary that is up to their
qualification and experience. One of the employees said, I am more than satisfied with my
salary because my Company is offering me a competitive package as compared to other
organizations. It has been almost one year since I have joined this company. I am motivated by
the salary package being offered here. It is in accordance with the skills, abilities, experience and
my qualification

Recommendations
The financial benefits play a pivotal role in boosting the morale of the employees. Salary is the
most motivating financial reward because money enables the employees to live their lives with

International Conference on Emerging Trends in Hospitality & Tourism Sector

(Subharti University Meerut)

dignity and stability. It is also considered as a symbol of status and is required to create the
belongingness.
The first recommendation is for the employers to work towards harmonizing
the pay. They offer their employees to ensure that they dont lose staff to
other competing hotels and firms since they feel they can get better pay
there.

Conclusion
From the study it can be concluded that financial benefits has an important value in motivation.
As indicated in most of the literature, salary plays an important role in motivating hotel
employees. However, the strength of the relationship between salary and job satisfaction may be
influenced by another factors. Someone who values money highly will be satisfied with his
salary and ultimately his job when he receives a desired raise.
According to Lawler (1973), employees' pay satisfaction usually influences their job satisfaction.
Tang et al. (2004) found that pay satisfaction is a part of job satisfaction, which could lead to
higher worker productivity. Workers are inspired to achieve more and to give full effort only if
they are satisfied with their pay. It is no surprise that money is an important factor, but there are
many other reasons for an employees decision to leave. Lawler (1973) reported that absenteeism
can result when pay dissatisfaction is present. According to Mani (2002), workers who were
absent from their works frequently were not satisfied with their pay, whereas 69% who were
absent once or more in six months were not satisfied with their pay.
References

International Conference on Emerging Trends in Hospitality & Tourism Sector

(Subharti University Meerut)

Books, Journals and Articles

(1) Abbasi, S.M., &Hollman, K.W. (2000).Turnover: The real bottom line, Journal of Public
Personnel Management, 29, 332-345
(2)

Cheng, H., Assessing The Importance of Employee Motivation

in the Hotel Industry in Taipei, Taiwan. Unpublished masters thesis,
University of Wisconsin-Stout, Menomonie, Wisconsin, United States
(1995).

(3)

Daan van Knippenberg, "Applied Psychology;'" Work Motivation and Performance: A

Social Identity Perspective; July 2000

(4)

Heneman, R. L. Merit pay: linking pay increases to performance Ratings. New York:
Addison-Wesley. (1992).

(5)

Industry. East Lansing, MI: Educational Institute American Hotel & Motel Association

(6)

James L. Perry, Debra Mesch, and Laurie Paarlberg; "Public Administration Review;"
Motivating Employees in a New Governance Era: The Performance Paradigm Revisited; July
2006

(7)

Jerald, G. and Robert, A. B., Behavior in Organizations: Understanding and Managing

the Human Side of Work, Upper Saddle River, NJ: Prentice-Hall, Inc. (1997).

(8)

Jerris, A. L. Human Resource Management for Hospitality. Upper Saddle River, NJ:
Prentice-Hall, Inc. (1999).

(9)

Jerris, A.L., 1999. Human Resource Management for Hospitality. New Jersy,
USA,Upper Saddle River: Prentice-Hall, Inc.

International Conference on Emerging Trends in Hospitality & Tourism Sector

(Subharti University Meerut)

(10)

Milkovich, G. T., & Wigdor, A. K. (Eds), Pay for performance: evaluating performance
appraisal and merit pay. Washington, DC: National Academy Press. (1991).

(11)

Perry, J. L., Mesch, D., & Paarlberg, L. (2006). Motivating employees in a new
governance era: The performance paradigm revisited. Public Administration Review, 66, 505514.

(12)

Pooja Garg and Renu Rastogi, "Journal of Management Development;" New Model of
Job Design: Motivating Employees' Performance; September 2005

(13) Rezghi Ros tami and Alireza., 2000. Performance Evaluation System, Tadbir Publication, pp:
114.
(14)

Simons, T. and Enz, C., Motivating Hotel Employees. Cornell Hotel and Restaurant
administration Quarterly, 36 (1), 20-27 (1995).

(15)

Tony Simons (Cornell's School of Hotel Administration), Cathy A. Enz Motivating

Hotel Employees Beyond the Carrot and the Stick

(16) Wheelhouse, D. (1989). Managing Human Resources in the Hospitality

e- References:
(1)

http://www.2020skills.com/asts/Money%20and%20Employee%20Motivation.pdf

(2)

http://www.aspanet.org/scriptcontent/custom/staticcontent/t2pdownloads/Perry
Article.pdf)

(3)

http://www.ehow.com, How Does Motivation Influence Employee Performance?

(4)

http://www.ehow.com/info_8229456_motivational-factors-jobs. Motivational Factors in

Our Jobs

International Conference on Emerging Trends in Hospitality & Tourism Sector

(Subharti University Meerut)

(5)

http://www.PeopleBuilders.com

(6)

http://www.scribd.com/doc/21300913/Employee-Motivation-Project-Report

(7)

http://www.utor2u.net/business/gcse/people_motivation_financial_rewards.htm