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CHAPTER II - REVIEW OF RELATED LITERATURE

2.1. Motivation Defined


Motivation, generally, was derived from the Latin word movere, which means to
move. However, this definition is not sufficient for purposes of discussion in this study.
Different articles and researches about motivation in relation to employment mean
more than to move. The term has been used in the early years and given definition by
different personalities. According to Atkinson (1964), motivation is the contemporary
influence on the direction, vigor and persistence of action. Vroom (1964), on the other
hand, defines it as a process governing choice made by persons or lower organisms
among alternative forms of voluntary activity. It was also said that motivation is related
to a set of dependent and independent variable relationships providing explanations as
to the direction, amplitude and persistence of an individuals behavior, holding constant
the effects of aptitude, skill and understanding of the task and the constraints operating
in the environment (Campbell & Pritchard, 1976).
Three common denominators appear in the definitions mentioned. Talking about
motivation has primary concerns with: first, what energizes human behavior. Second is
what directs or channels such behavior and third, how behavior is sustained or
maintained. This signifies a significant factor to understand human behavior at work.
The concept of motivation has received vital attention over the course of this century
and this has become increasingly prominent in the efforts of people in the organization
and practicing companies to understand and influence organizational behavior.
Nilay Yavuzs, in her thesis entitled The Use of Non-monetary Incentives as a
Motivational Tool: A Survey Study in a Public Organization in Kenya, the term
motivation was further elucidated. The strength of the research is that it focuses not
only on one meaning to give a better relation of the word to the purpose of the study.
This same research does the same. It was stated that employee motivation is a focus of
attention since it may be a way to control the gap between the actual desired state of
commitment of an employee to the organization. Because of this, the challenge for the
organization is to find out the values and goals of its employees and where they go
beyond in the organization (Yavuz, 2004). The said study aimed to demonstrate the
extent of non-monetary incentives in utilizing the public sector of Turkey and whether
they can motivate the employees enough as much as monetary incentives do.
Motivation was also studied in a research done by Patrick Lumumba in relation to
non-monetary incentives. It was entitled An Assessment of the Effectiveness of Non-
Monetary Incentives in Motivating Sacco Society Staff: A Case Study of Front Office
Savings Accounts Workers in Nairobi County. The research includes the same scope of
this present study that determines how non-monetary compensation is viewed by
employees. However, the related literature also tackles about the performance of the
employees to result in the success of the organization. The study found that the non-
monetary incentives such as job promotion and career development had the most effect
while teamwork had the least (Lumumba, 2012).
2.2. Kinds of Motivation
Intrinsic motivation refers to practice that is directed by internal rewards. In
other words, the motivation to act in a certain way arises from within the individual
because it is innately pleasing. This is different from extrinsic motivation which includes
engaging in a behavior because of getting external rewards or averting penalty (Cherry,
2016). When one pursues a thing solely because of enjoyment, that is doing so because
of intrinsic motivation. This is the kind of motivation that engages in an act or behavior
arising from within and not for external rewards such as prizes or money. This, however,
does not necessarily mean that being intrinsically motivated is devoid of its own
rewards. These rewards associate developing positive emotions within the individual.
These feelings take place when individual is given a sense of value, a sense of
breakthrough or competence.

Another definition is that intrinsic motivation happens when we do things


without any obvious external rewards. We simply enjoy an activity or see it as an
opportunity to explore, learn, and actualize our potentials (Coon & Mitterer, 2010). It
also refers to the reason we carry out certain exercises for deep-seated fulfillment. It
may be said that it is performing an activity in and of itself (Brown, 2007). Experts
propose that people who are intrinsically motivated are more creative. In the
workplace, productivity can be increased by using extrinsic rewards such as monetary
compensation, but the truly existing quality of the work done is activated by intrinsic
factors (Griggs, 2010).

Extrinsic motivation, too, can be advantageous in some instances. This is because


extrinsic rewards can be applied to motivate people to obtain new skills or knowledge.
In the process, when these new skills have been mastered, people may then become
intrinsically motivated to continue the activity. Extrinsic motivation is also beneficial
when external rewards become a source of feedback. This permits a person to know
that his performance has achieved a quality that deserves recognition (Cherry, 2016).

2.3. Motivational Incentives


In every business, the motivation of employees is a must. Because without this,
there will be no progress. With this, the management critically finds ways of how to
motivate said employees. In order for them to function, they must be given something
in return. This may be in the form of monetary and non-monetary incentives. Monetary
rewards are enough to get the most out of employees in some businesses. However,
other types of compensation may be more effective in some. By definition, the two
kinds of compensation are easy to distinguish but their impacts on an employees
performance can be more difficult to measure (Lewis, 2001).
A study that discusses the concept of both monetary and non-monetary rewards
is The Impact of Monetary and Non-Monetary Rewards on Motivation among Lower
Level Employees in Selected Retail Shops by Martha Harunavamwe and Herbert
Kanengoni (2013). Motivation management is important to improve competitiveness,
profit and sales that is why many retail industries in South Africa are engaging in a
strategic approach (Bateman and Snell, 2007). In Maslows Hierarchy of needs, money is
really important in a sense that it can satisfy various needs like food which is a
physiological need. This is why management depends upon rewards like monetary
compensation as a significant factor of motivation (Wallace & Zeffane, 2001). Money is
also important in McClellands Acquired-Needs Theory because it indicates feedback of
performance for high need achievers. In contrast, non-monetary compensation gets the
better of persons who wants to satisfy their need for affiliation by recognizing them
verbally and by challenging jobs to high achievers.
Monetary and non-monetary are two the groups of rewards. This was divided by
Armstrong (2007). The former includes but is not limited to base pay, merit pay,
incentives, commission and bonus like the Christmas bonus and 13 th month pay. On the
other hand, non-monetary rewards include recognition, promotion, flexible working
hours and company uniforms. In this research, training development is an addition to
the examples of non-monetary compensation given to the linemen of Meralco. Money
as a motivator has been downplayed by most behavioral scientists like Herzberg who
discussed the significance of non-monetary factors as motivators. But still, money is a
great factor since it is the means by which employees can buy or get a lot of the things
they need (Robbins, 2003).
It is said that it cannot be denied that regular pay is needed to meet the basic
physiological and safety needs which are the first two levels of Maslows Hierarchy of
Needs. Hence, employees who are on a lower level easily get attracted to this. Likewise,
money is treated by employees as an indication of feedback to their services that makes
it having a positive impact in motivation (Langton & Robbins, 2007). However, rewards
are not simply given to employees without having planned it well because in order for
these rewards to motivate, the type of reward must have a value to the employee and it
must be looked forward to as a consequence of performance. The study done by
Harunavamwe and Kanengoni (2013) focuses mainly on whether or not monetary and
non-monetary compensation has significant effects and which reward best motivate the
lower level of employees. It is to say that the basic objective of the study is to compare.
However, its weakness would probably be that all their listed objectives are broad. To
compare with this present study, the researches focus only on one kind of
compensation and list down the standard effects of such compensation.
Another literature studied both monetary and non-monetary compensation. Like
the other researches, both kinds of rewards were taken into consideration that differs it
from the present study. But it is similar in a manner as to measuring the motivation of
employees derived from it. Comparing the Impact of Monetary and Non-monetary
Reward Programmes Towards Employee and Organisational Motivation by Neelkamal
Narsee (2012) mentions that to be motivated by the organization or company, human
capital is necessary. Another similarity with this present research is that retention is also
given emphasis. By the way employees are treated, the organizational growth and
survival are determined (Lawler, 2003). Financial rewards are undeniably important
factors to be given to employees in order that they perform exemplarily. However,
forms of recognition are not limited to money as part of an organizations reward
system (Luthans, 2002). Organizations sometimes forget that appreciation and
recognition are important elements of a reward system and these are actually
inexpensive and factors of high return to a reward program (Sarvadi, 2005). The study of
Narsee, being focused on both rewards, is also concerned about the preferences of
employees. In other words, if they will be asked to choose which from which, what
would they prefer? Therefore, there must be an understanding about the employees
preference too (2012). In the present research, it is not exactly that employees
preferences are to be answered. Only if they are motivated enough with what is given is
of primary issue.

Motivational policies and strategies are adopted by organizations to enhance


profitability and efficiency by increasing motivation and productivity, reducing tendency
for workers to be absent and unintended turnovers, and to retain talented and skilled
employees. Commonly, techniques such as incentives, rewards, and recognition are
often used interdependently to motivate the employed and patterned to the evolving
needs of the workers.
An incentive offered to meet a specific goal is intended for the employee to
expend further energy and effort into the work, hence, the incentive will be given to the
employee as a reward when the goal but it all originates from an incentive. Recognition,
on the other hand, is to exhibit appreciation for the effort and contributions the worker
has exerted. Recognition occurs after the positive behaviour, and may be offered in
connection with the reward. (Lai, 2009)
On a broader picture, both incentives and recognition go hand-in-hand to induce
positive attitude and most importantly, to motivate the employees. The classification of
incentives is presented by the table xxx which has three categories: monetary, tangible
non-monetary, and intangible non-monetary incentives. (Pattanayak, 2005)
Developed by David McClelland, his model of intrinsic motivation states that what
motivates people to do a certain task falls into three simple categories:
Achievement: People who are motivated by achievement desire to do a
certain act to create something of value. They aspire to be valued for what
they do.
Affiliation: People motivated by affiliation have a desire for belongingness.
They want to be part of something greater than of themselves. They want to
be valued for who they are and the company they keep.
Power/Control: People motivated by power and control desire to have an
impact on their surroundings and the people around them. They have the
desire to be valued for how they change the world.
Monetary incentives includes but not limited to financial rewards handed to the
employed in terms of: bonuses, insurances, paid leave, etc., while tangible non-
monetary incentives refer to the indirect payment of money in the form of tangible
rewards such as gift cards, watches, garments, vacation trips and the likes. Intangible
rewards, on the other hand, makes reference to the use of social rewards and task-
related rewards. Social-related rewards speak of the organizations social practices such
as employees being courteous and respectful to one another, and supervisors
acknowledging positive work of employees, while task-related rewards refer to the
workers career advancement, job design, skills training, and autonomy at work.

Monetary Incentives Tangible Non-Monetary Intangible Non-Monetary


Incentives Incentives
Direct Compensation: Meal Treats: Social Rewards:
Base Salary Free food/beverage Informal
Commission Festival bashes recognition
Bonus Coffee breaks Verbal praise
Picnics Formal recognition
Indirect Compensation: Birthday treats at office gatherings
Insurance Feedback
Profit sharing plans Awards: Friendly greetings
Retirement plans Plaques/trophies Pat on the back
Employee Stock Certificates Solicitations of
Ownership Plan Letters of appreciation suggestions
(ESOP) Club privileges
Educational Knick-knacks: Use of company
Reimbursement Decorative facilities,
Overtime Policy Tie pins equipment,
Paid leave Calendars supplies for
Unpaid leave Watch personal projects
Subsidized utilities Electronic devices
Subsidized housing (cameras, mp3, phones, Task-Related Rewards:
Travel expenses etc.) More responsibility
Childcare Meaningful work
Tokens: Job rotation
Tickets to Special
movies/concerts assignments
Gift certificates Training
Accessories/ garments Representing the
bearing company logo Company at public
Paid up vacation trips for a
Anniversary/birthday Participation in
presents decision making
Growth
opportunities
Autonomy over
work
Promotion
Flexible Hours
TABLE XXX: Classification of Incentives (Pattanayak, 2005)
Incentive programs adopted by organizations have the potential to improve
performance by as much as 44 percent if it is managed appropriately. It also increases
the level of engagement from the employed. Workers are motivated by
Incentives are seen to have a performance surge by 27 percent when asked to
persevere towards a goal. Programs are also associated with an organizations attraction
for retention. Said programs also assists to boost morale and build employee loyalty.
(Condly et al., 2003)
Non-monetary incentive, being an important element of reward systems, has
been applied by many organizations in motivating their employees. Different researches
have already been conducted in order to attest on its impact. However, the findings in
one research are not always the same with the others.
Effects of Non-monetary Benefits on Employee Delight by Ahmed et al. (2011)
found that non-monetary benefits do not significantly affect the delight at the
workplace of the employees. The Employee Delight Model that it conducted contained
eight non-monetary variables. To mention, these were workstation ambience,
appreciation and recognition, recreational activities, career growth opportunities,
improved workplace relationships, advanced technology, flexible working hours and
autonomy. These were all proved to be unsuccessful since these did not bring
satisfaction in the lives of the employees. However, the researchs weakness is the fact
that the respondents were very limited (Ahmed et al., 2011). It could not have been
known whether the respondents were sufficient samples for its population.
A research in Kenya done by Lumumba (2012) entitled An Assessment of the
Effectiveness of Non-monetary Incentives in Motivating SACCO Society Staff: A Case
Study of Front Office Savings Accounts Workers in Nairobi County, the findings were:
promotion has a large effect on the employee motivation at the Saccos as promotion
results in the experience of countless distinct emotional states and performance is a
major factor considered for promotion. It also showed that Saccos working condition
affects the employee motive as there is certainty of an individuals role in relation to the
aim of the organization. This is more likely one of the presumed conclusions of the
present study.
Nilay Yavuz (2004) concluded in her research The Use of Non-monetary
Incentives as a Motivational Tool: A Survey Study in a Public Organization in Turkey that
the non-monetary incentives in the organization is lowly applied. Feedback is given
about the employees performance. However, the kind of feedback they receive is of a
negative one. With this, the organization does not necessarily benefit from non-
monetary incentives as a motivational tool. The survey results display that the
employees contributions in the organization are not given adequate recognition.
Another related literature, Impact of Reward and Recognition on Job Satisfaction
and Motivation: An Empirical Study from Pakistan found that there was a close
relationship between several aspects of work motivation and satisfaction but
acknowledgement along with work itself and operating procedures have shown low
mean values and minimal relationship. In Pakistani context, the employees do not
expect so much of an appreciation from the boss on doing a good job. These
weaknesses can be worked out if the persons higher in rank motivate their subordinates
with proper recognition and appreciation even through small things like their personal
concerns. Likewise, when employees are allowed to participate in making decisions,
they will be more enthusiastic working in the organization (Danish & Usman, 2010).
In conclusion, incentives do have great benefits and a good potential to motivate
employees. Succeeding chapters would have a detailed explanation and will further
support said studies in relevance to the impact of non-monetary incentives.
2.4. Tangible Non-Monetary Incentives
The utilization of tangible non-monetary incentives to motivate the worker and
improve efficiency is continually increasing. Tangible non-monetary incentives are as
important as monetary incentives, if not, even better. (Jeffrey et al., 2007)Recipients of
tangible non-monetary incentives relive the special recognition and will have the
tendency to appreciate the organization that honoured them. Cash rewards on the
other hand, usually have a fleeting impact which usually leaves the recipients mind as
soon as they are spent. Cash, unfortunately, is the least lasting type of reward, since it is
typically confused with other compensation.
According to the 2005 Incentive Federation Study, the top 5 most frequently
utilized tangible non-monetary incentives are gift certificates, plaques/trophies,
apparels, cameras, and watches, which if appropriated properly, would be an effective
tool for motivation and efficiency increase.
The paper on the Motivational Properties of Tangible Incentives written by
Jeffrey and Shaffer listed four psychological processes that impacts the employee and
how it influences and perceives tangible non-monetary incentives. The processes may
be categorized into two sub-categories: The first one would be the perceived value of
the reward that incorporates evaluability and separability, while the second one, would
be the value of earning the reward that includes the social reinforcement and its
justifiability.
Expectancy Theory of Motivation states that the decision of a worker to exert
effort on a task is directly proportionate to the value of how the incentive is earned. If
the tangible non-monetary incentives offered to the employees are regarded highly,
then they will be motivated to achieve the results.
It would be difficult to put a direct monetary value to tangible non-monetary
incentives such as award plaques or paid vacation trips, hence, the emotional
sentimentality attached becomes a substitute for the consumption utility of the
incentive. (Jeffrey et al., 2007)
Generally, tangible non-monetary incentives are typically perceived upon as an
opulence item, especially if said incentive is not justified by the employee who received
it. For example, a worker in a lower income class may not have the expendable income
to enjoy the paid vacation trip he received. Therefore, offering a tangible non-monetary
incentive such as a night out at a movie theatre or family dinner paid by an organization
to a worker would be very valuable and would be appreciated by the latter.
To conclude, social acknowledgement for the good exerted by the employee is a
necessity. Tangible non-monetary incentives exactly fulfil this purpose essentially better
than monetary incentives since the latter is a socially unacceptable manner of
bestowing upon recognition from peers and people are improbably to flaunt their
monetary rewards with others. Oppositely, the corporeality of a tangible non-monetary
incentive is noticeable to everyone and that an employee will have no reason to feel
embarrassed raving about it. In addition, its physicality provides an enduring reminder
of achievement, and most importantly, how the incentive was achieved. (Incentive
Federation, 2005)

2.5. Intangible Non-Monetary Incentives


The third group that will perfect an organizations total rewards structure would
be the intangible non-monetary incentives. Rewards falling under this category may
either be social-related or job-related. (Pattanayak, 2005) Employee recognition is
defined as the medium through which employers use to convey gratitude to their
workers for their exemplary work, attitude, efforts, contributions, and/or outstanding
performance.
Various combinations and arrangements to recognize employees exist, it may be
formally or informally, publicly or privately, and written or verbal or nonverbal. In
addition, motivation through recognition demands little to no cost at all for the
organization and at times, offered along with a tangible non-monetary incentive.
Acknowledgement for a job well done is essential, whether it is from ones
superior, peers, family or friends. Efforts unappreciated and unnoticed will lead a
worker to develop a feeling of resentment against the organization. A basic and simple
gesture of appreciation would go a long way for the employee, the manager, and the
organization itself. Moreover, if the recognizer is a respectable or one with a superior
status, it would have a positive and significant impact towards the employee. (Lai, 2009)
A result of a poll conducted indicated that 79 percent of the respondent
employees who quit their jobs is directly proportionate with the lack of appreciation
(Fisher 2007) The statistics further supports the essentiality of social rewards in the
place of business and can be compared to other tangible non-monetary incentives
because social rewards serve the purpose to satisfy the necessity for affiliation, esteem,
and self-actualization.
Valuing the employee for their good exertion of effort usually goes beyond
friendly social gestures. Workers want to feel valued and appreciated by their employer.
Recognized efforts of the workers will lead them to feel good about themselves and will
result to a stronger mental link between their actions and the positive intrinsic reward
will be established.
Recognition and acknowledge will boost the employees morale since it will allow
them to believe and think highly of themselves. Workers with high self-esteem are more
motivated, optimistic, and willing to work harder and efficiently. In return, people who
feel valued will perform at a much higher level, resulting also in a significant better work
output. (Ventrice, 2009)
A guideline established by McConnell (2006) sets a guideline on how to recognize
employees:
Equality, and consistency Employees should be qualified in order to
receive recognition. Standards for said recognition must be consistent,
explicitly defined and lucidly understood by all.
Timely and personalized approaches to recognition Praises must be
given as adjacent as possible to the occurrence of the act to further
enhance the positive impact on the worker.
Communication between the employer and employee should be sincere
and specific as this is the exemplary time to reinforce the positive
behaviour for the future.
Handing positive feedback when things are done correctly will encourage
better improvement.
Never exaggerate and give unwarranted recognition.
Another kind of intangible non-monetary incentive which is equally important is
the task-related kind which includes job rotation, enlargement, enrichment,
empowerment, promotion, opportunities and flexibility of working hours. (Pattanayak,
2005)
One of the best ways to increase motivation onto the worker is through the
concept of job redesign. It involves tailoring job responsibilities with the rotation and
enrichment that will best suit the employee. This motivational strategy will lessen the
risk of repetitive strain injury, most specifically on employees performing a monotonous
work. This tool will give the employee the chance to acquire a wide variety of skills,
knowledge, and a better understanding the organization itself.
Another job related intangible non-monetary motivational tool would be job
empowerment. This motivational strategy states that giving employees more
responsibility and decision-making authority increases their control over the tasks for
which they are to be responsible, resulting to having a greater self-esteem. (Gupta et al.,
2014) On the other hand, job enlargement is defined as the process of increasing the
employees scope of responsibilities by adding more tasks without the added strain to
the existing job. Through this, employees are enable to use their skills to a variety of
tasks. It is beneficial both to the employer and employed in the sense that,
organizations will use lower manpower costs as a single employee can do multiple task
and to the employee, a greater self-respect of himself is obtained. (Lai, 2009) Although,
research shows that tasks later on become mundane and dissatisfaction sets in.
In contrast, the primary aim of job enrichment is to the workers greater
autonomy of their work. Empowering employees includes giving them the task to
decide, plan, and coordinate and control how they will manage their tasks. Job
characteristic model created by Hackman and Oldham states that jobs must be tailored
to include the five core characteristics: skill variety, identity, importance, autonomy, and
feedback. (McShane et al., 2000)
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