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Kruh kwabena Isaac (BSc, MSc, LLB – Ghana)

Impact of Motivation on Employees Performance and Organizational Effectiveness: A


Case Study of Christian Community Microfinance, Accra

CHAPTER ONE
INTRODUCTION

1.1 Background of the Study

One of the major concerns of the organization is its profitability, hence the need for efficiency. In
this era, organizations are in a continuous state of competition and this has intensified the need to
improve employee’s performances and invariably that of the organization (Barney, 1995). The
current era is highly competitive and organizations regardless of size, technology and market
focus are facing employee retention challenges. To overcome these restraints a strong and
positive relationship and bonding should be created and maintained between employees and their
organizations. Even with the best strategy in place and appropriate organizational architecture, an
organization will be effective only if it members are motivated to perform at a high level. The
types of motivation are intrinsic and extrinsic. “Intrinsic motivation is a psychological force that
determines the direction of a person’s behavior as a result of challenging or interesting work,
giving autonomy to work, designed scope to develop skills, abilities, opportunity to develop and
grow, etc. Extrinsic is also psychological force that determines behavioral change as a result of
tangible and intangible benefit such as salary, fringe benefit and special awards” (Gareth, 2003).

Human Resource Management (HRM) is the strategic approach to the management of an


organization’s most valued assets the employees who work together individually and collectively
to achieve the aims and objectives of the business (Mead et al, 2009). It also involves recruiting
and selecting people, training and developing their capabilities, motivating and compensating
their services vis-à-vis the job and organisational requirement (Ruysseveldt, 2009). The assertion
that employee’s performance is directly related to employees’ motivation has been corroborated
by different management theories (Nohria et al, 2008). People work with an organisation and
stay there when there are effective HR practices that give them a supportive work environment,
thus, it is imperative that organisations develop effective policies that enable them to recruit,
select, and retain competent employees (Locke and Latham, 1990). One of the key questions in
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all organisations is how to get employees to perform well. Most writers have established that the
basic foundation for retaining high performing employees is to have them motivated (Steer et al.,
2004). This is because a motivated employee is likely to perform better. Many researchers in the
area of organisational performance have argued that employee motivation is an important
element in individual and organisational performance and is also a significant factor in people’s
decision to quit working in an organisation (Steer et al., 2004; Tzeng, 2002). Based on this,
Frederick Herzberg famously said: “If you want people to do a good job, give them a good job to
do.” it is vital for any organisation to constantly discover different ways to motivate employees
so as to improve performance, productivity and quality, which will also reflects on the overall
performance of the company and help maintain competitive advantage in the market. This is due,
in part to the fact that what motivates employees’ changes continuously (Buford et al, 1995).

With a well-motivated workforce, an employee’s performance can be manifested on the


organizational effectiveness, which allows the individuals to focus on the development of their
work, in terms of behaviour, skills and knowledge, ethics and effectiveness. It has been noted
that motivation tends to energize the workforce which can result in their expected job
performance (Byham and Moyer, 2005). Again, the motivational process increases or influence
the job performance and other work outcomes of an individual that can reach to the employees’
outmost performance and even their jobs satisfaction (Strain, 1995 and Chughtai, 2008). A well-
motivated staff will deliver satisfactorily to exceed the expectation of customers and this will
intend attract and retain customers so as to meet the ultimate objective
The focus of this study is to ascertain how an organization through its employees can achieve
success and effectiveness. The purpose of the study is to analyze the impact of employees’
motivation on organizational effectiveness.

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1.2 STATEMENT OF PROBLEM

In today’s chaotic business environment, success depends on employees utilising their talents.
Despite the myriad of available theories and practices, there has always been a misconception
around motivation because individuals are motivated by different things or needs and in different
ways (Ghebregiorgis and Karsten, 2007). There exist some contradiction between employee’s
identification of his/her need and the company’s identification of the employee’s needs. This is
due to the fact that employees are different and are motivated by different factors. Also, not all
employees’ needs would correspond to the organisation’s needs; hence some needs may related
entirely to the individual’s private life and be neutral to company’s goals (Meads et al, 2009).

Motivation of workers in any organization is important to drive workers to achieve


organizational goals. The performance of any organization and employee motivation has been
the focus of intensive research effort in recent times. How well an organization motivates its
workers in order to achieve their mission and vision is a paramount concern. Employees in both
private and public sector organizations are becoming increasingly aware that motivation
increases productivity. Looking at today’s economic trend, it’s evident that the pace of change in
our business environment presents fresh challenges daily. According to Robins & Mary (1996),
lack of motivational factors has been a major hindrance on employees performance, lack of
motivational factors like job security, training, enough salary, compressed work which have
favorable effects on employees job satisfaction and productivity and lack of flexible time which
provides employees with time for pursuing their hobbies or taking care of family all have effect
on performance. Despite these, no research work has targeted to investigate the impact of
motivation on workers performance in Christian Community Microfinance (CCM), Accra.

Some employers try to give high salaries or wages to their employees just to motivate them to
give up their best so as to increase productivity. Others also give rent and transportation
allowances to their employees so that the employees can put up their best to enhance their
performance, yet the whole thing seem to be a mirage. This tells us that motivation is subjective,
that is to say that what motivate someone to put up his best will also de-motivate the other
person. Human needs are insatiable for this reason they always struggle for new things in life so
that we can live a comfortable life. If someone receives huge salaries, allowances in terms of

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rent, transportation and yet does not get motivated, it means motivation does not base on
extrinsic reward but also on intrinsic reward as well. According to Maslow, individuals attain the
next hierarchy of needs after the first one has been achieved. Senior managers are not much
motivated extrinsically by money and other physiological needs but are well motivated
intrinsically through self-esteem and actualization needs and by so doing if their ideas are well
transformed into performance , they feel well motivated.

1.3 OBJECTIVES OF THE STUDY

The main objective of the study is to ascertain the impact of motivation on employee’s
performance and organizational effectiveness at CCM.
Specific Objectives

To determine the factors that increase employee’s motivation


To examine the relationship between employees motivation and organizational effectiveness[
To determine the extent to which motivation affect productivity
To make appropriate recommendations for motivating staff to improve productivity at
Christian Community Microfinance, Accra

1.4 RESEARCH QUESTIONS

What factors motivate and de-motivate the employees at CCM?


What is the relationship between employee’s motivation and organizational effectiveness?
Does motivation affect productivity at CCM?
What are the sources of factors of motivation for employees at CCM?

1.5 Hypotheses

Based on the literature and model the study is designed to test the following hypothesis:
H1: There is an effect of recognizing employees’ work on their motivation to work
H2: There is an effect of empowering employees in tasks on their motivation to work
H3: There is a relationship between employees’ motivation and organizational Effectiveness

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1.6 SIGNIFICANCE OF THE STUDY

Motivated employees are needed in our rapidly changing workplaces. As we are still a
developing country, for our continuous growth, it is important that our economy is well governed
and we can provide our maximum effort in workplaces, so we need to know where we are
standing right now in case of employee motivation and what else we need to do to ensure more
efficient performance from our employees. We also need to compare with others to find out
where they are for individual benefits. CCM cannot do without having well motivated employees
who can help the organization to achieve its aims and objectives. The company gaining more
knowledge about motivation and its effect on the performance will device concrete strategies to
keep their employees and also make them happy both at home and at work. This research is
going to help the employees to render good and quality service to their valued customers. The
customers will remain loyal to the company since they render good and quality service to them.
This is also going to help management by way of getting a good image and increasing
productivity at CCM. It is also anticipated that the findings of the study will pave way for the
authorities of CCM, Accra to accept the factors that influence managerial behaviour and its
impact on employees towards organizational performance. Finally, the results of the study will
throw more light on factors that serve as satisfiers or dissatisfies to employees. It will serve as a
blue print for determining what actually motivates and boosts morale of workers and managerial
behaviors required to yield optimum performance.
1.7 Organisation of the Study
This study is made up of five chapters and is grouped as follows: Chapter one covers the
introduction which includes the background to the study, statement of the problem, objectives of
the study, research questions, significance of the study, scope and the organization of the study
,Chapter two deals with the review of existing literature which covers the concepts of motivation
and the conceptual framework of existing theories of motivation, management of the motivation
system, staff morale, motivation, staff morale and performance and the theoretical framework,
Chapter three deals with the methodology adopted for the study. The issues to be covered
includes the research design, population and sample size, sample techniques, instrumentation,
mode of data collection, method of data analysis, Chapter four focused on the analysis of data
and discussion of findings and Chapter five provides a summary of the findings, conclusions and
recommendations of the study.

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CHAPTER TWO
LITERATURE REVIEW

If a manager can grasp what will motivate his/her employees, that manager will have more
productive force (Mullins, 1996). In order to motivate workers to work for the organisational
goals, managers must determine the needs of employees, factors that motivate them and provide
an avenue in which appropriate incentives are available for their satisfaction. If the management
is successful in doing so, there will be a positive impact on the willingness of the workers to
work and hence the efficiency and effectiveness of the organisation will be increased (Draftke
and Kossem, 2002).

2.1 The Concept of Motivation

According to Webster’s New Collegiate Dictionary, a motive is “something a need or desire that
causes a person to act”. “Motivate, in turn, means “to provide with a motive,” and motivation is
defined as “the act or process of motivating”. Consequently, motivation is the performance or
procedure of presenting an intention that origin a person to capture some accomplishment
(Shanks.N. H.). According to Butkus & Green (1999), motivation is derived from the word
“motivate”, means to move, push or influence to proceed for fulfilling a want (Kalimullah et al,
2010). According to Antomioni (1999), motivation can be described as “the amount of effort
people are willing to put in their work depending on the degree to which they feel their needs
will be satisfied.” Consequently, individuals become de-motivated if they feel something in the
organisation hinders them from attaining positive outcomes.

Bartol and Martin (1998) describe motivation as a power that strengthens behavior, gives route
to behavior, and triggers the tendency to continue (Farhad et al, 2011). This explanation
identifies that in order to attain assured targets; individuals must be satisfactorily energetic and
be clear about their destinations. Also motivation is a progression of moving and supporting
Goal-directed behavior (Chowdhury, 2007). It is an internal strength that drives individuals to
pull off personal and organizational goals (Reena et al, 2009).

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2.2 Types of Motivation

According to Crabbe, researchers identified two sources of motivation; these are internal and
external sources which have also been labeled as the intrinsic and extrinsic motivation.
Intrinsic motivation: This arises between the relationship between the worker and the task
and is usually self-applied. Feelings of accomplishment, achievement challenge and
competence derived from performing ones work are examples of intrinsic motivation.
Extrinsic Motivation: This stems from work environment external to the task itself and is
usually applied by someone other than the person being motivated. Pay, fringe benefits,
favored company policies and various forms of supervision are examples of extrinsic
motivation.

2.3 Employee Motivation


Among financial, economic and human resources, the latest are more essential and have the
capability to endow a company with competitive edge as compared to others (Rizwan et al,
2010). Employee Performance fundamentally depend on many factors like performance
appraisals, employee motivation, Employee satisfaction, compensation, Training and
development, job security, Organizational structure and other, but the area of study is focused
only on employee motivation as this factor highly influence the performance of employees.
Employee motivation is one of the policies of managers to increase effectual job management
amongst employees in organizations (Shadare et al, 2009). A motivated employee is responsive
of the definite goals and objectives he/she must achieve, therefore he/she directs its efforts in that
direction. Rutherford (1990) reported that motivation formulates an organization more successful
because provoked employees are constantly looking for improved practices to do a work, so it is
essential for organizations to persuade motivation of their employees (Kalimullah et al, 2010).
Getting employees to do their best work even in strenuous circumstances, is one of the
employees most stable and greasy challenges and this can be made possible through motivating
them.

2.4 Factors affecting Employees’ Motivation


No one works for free, nor should they. Employees want to earn reasonable salary and payment,
and employees desire their workers to feel that is what they are getting (Houran. J). Money is the

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fundamental inducement, no other incentive or motivational technique comes even close to it
with respect to its influential value (Sara et al, 2004). It has the supremacy to magnetize,
maintain and motivate individuals towards higher performance. Frederick Taylor and his
scientific management associate described money as the most fundamental factor in motivating
the industrial workers to attain greater productivity (Adeyinka et al, 2007). Research has
suggested that reward now cause satisfaction of the employee which directly influences
performance of the employee (Kalimullah et al, 2010). Rewards are management tools that
hopefully contribute to firm’s effectiveness by influencing individual or group behavior. All
businesses use pay, promotion, bonuses or other types of rewards to motivate and encourage high
level performances of employees (Reena et al, 2009). To use salaries as a motivator effectively,
managers must consider salary structures which should include importance organization attach to
each job, payment according to performance, personal or special allowances, fringe benefits,
pensions and so on (Adeyinka et al, 2007).

2.5 MOTIVATIONAL THEORIES

Early Theories of Motivation: Maslow, McClelland, and Herzberg


Maslow’s Needs Hierarchy Maslow (1954) published his ‘hierarchy of motives’ theory that
introduced the notion of individual choice and preference within Murray’s essentially
deterministic framework. Murray had identified twenty distinctive needs that he thought
compelled people to act so as to reduce the tension caused by the unsatisfied need. Murray also
distinguished between physiological needs (which he called viscerogenic needs) and affective or
cognitive needs (which he called psychogenic needs).

In building on Murray’s framework, Maslow also extended Murray’s viscerogenic-psychogenic


dichotomy into a five-step model that he argued reflects different levels and types of
psychological needs. Maslow’s Theory claims that human needs are ordered in a hierarchy or
pyramid: physiological needs, safety needs, belongingness and love needs, esteem needs, and
self-actualisation needs (Maslow, 1954). This five-step model has been extensively used in the
business and management literature. Maslow saw these different types of needs as being
arranged in an ascendant succession, with lower-level stages always being dominant and needing

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satisfaction before the next level becomes a strong motivator. Therefore, lower order need have
to at least partly satisfied before a higher order need become important. Additionally, he argues
that the only motivating need is one that is unfulfilled. Overall, Maslow describes a process in
which individuals move from having to satisfy their primary needs onto increasingly complex
secondary needs until they reach a stage of having to address issues of self-awareness or self-
actualization. In terms of motivating factors, at the lower end, the company can use extrinsic
motivation, as evidenced by their great reward power. With extrinsic motivation, it means that
workers are motivated by tangible rewards such as high pay. Even though there is not a lot of
evidence from empirical studies proving that people actually pass sequentially from one level to
another, the idea that there are different levels or broad types of motives and needs appears to be
a reasonable one.
Figure 1: Maslow Hierarchy of Needs

2.6 Herzberg’s Motivation-Hygiene Theory: Herzberg’s motivation-hygiene theory is also


called the two-factor theory because of the dual nature of its approach to identifying the sources
of job satisfaction, and eventually job motivation (Miner, 2007). From his research Herzberg
created a list of factors that contribute to satisfaction at work, which he called motivation factors,
as well as an entirely separate list of factors that contribute to dissatisfaction, which he called
hygiene factors. In this theory, Herzberg et al. (1959) argued that a set of intrinsic factors
motivate behaviour, including responsibility, advancement, achievement, the work itself, and

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recognition. On the other hand, he argued that extrinsic factors de-motivate workers, including
salaries, company policies, relations with co-worker, and quality of supervision. Overall, the
main thrust of his argument is that the factors that cause satisfaction are not the same things that
cause dissatisfaction. For example, the terms of assessment and promotion, the perceived
fairness of the decision making process is crucial for commitment and therefore managers should
clearly communicate clearly how decisions are made and why some people and not others did
get promotions (Herzberg, 1987). Herzberg’s extrinsic (hygiene) factors are similar to Maslow’s
physiological and safety needs and include factors such as supervision, working conditions, and
salary. On the other hand, Herzberg’s intrinsic factors are similar to Maslow’s higher order needs
and include factors such as recognition, achievement, and the work itself.

Overall, Herzberg argued that there are a set of features that should be built into jobs to make
them satisfying and motivating. This is because an organisation that removes the causes of
dissatisfaction (hygiene factors, which are not intrinsic to the content of the work itself) would
not lead to job satisfaction, it would only reduce job dissatisfaction (Herzberg, 1987). On the
other hand, individuals can only be satisfied and motivated if motivation factors are used. Thus,
based on this he argues that staff motivation can be increased by introducing basic changes in the
nature of an employee’s job. This ‘job enrichment’ can be achieved by redesigning jobs to allow
for increased challenge and responsibility, opportunities for advancement, and personal growth,
and recognition.

It is important to note that Herzberg et al. (1959) argue that if the basic factors are missing
(hygiene factors), such as appropriate levels of financial compensation, workers will be
dissatisfied irrespective of whether other factors are present. For this reason, some people have
put emphasis on financial incentives. Hicks and Adams (2003) argue that one way to motivate
staff within an organisation is through the use of incentives. Incentives, they argue are a means to
favour certain behaviours in order to reach defined objectives and are important because they can
influence key determinants of performance and can encourage people to stay on a job. Whilst
this argument may be true, incentives are in various forms and different people prefer different
forms of incentives. Therefore, though an organisation may offer good incentive schemes such as
payment of tuition fees for external courses, those staff who are no longer interested in further
education may not find these as good incentives and may not be motivated to work.

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2.7 Integrated Model of Work Motivation

The integrated model of work motivation formulated by Locke and Latham (2004) is a good way
of discussing motivation theory in a comprehensive way. The first item in this integrated model
is ‘needs’ and Maslow’s hierarchy of needs is important here and includes growth needs (self-
actualization and esteem needs) and deficiency needs (psychological, safety, social needs)
(Lindner, 1998) that drive employees. However, it is possible for an employee to be satisfied
with his need, but not be adequately motivated (Shiply & Kiely, 1998) and so a study of
motivation needed to go further than needs.

Apart from the integrated model of work motivation explained earlier, newer scholars have come
up with new ideas of motivational factors that could influence the performance of employees.
This section discusses high performance work systems and Lindner’s System of Employee.

2.8 High Performance Work Systems

In more recent times, researchers have put all these ideas about making work more motivating
together and theorized what a ‘high performance work system’ would look like. It is argued that
high performance work systems would involve recruitment practices which aim to attract and
select highly committed and flexible people, internal labour markets which reward commitment
and training with promotion and job security, and methods of direct communication and team-
working (Wood and de Menezes, 1998, p. 488).

2.9 Chapter Summary

This chapter discussed the concept of motivation, the Integrated Model of Work Motivation and
recent theories of motivation. The theoretical foundation of this research was the integrated
model of work motivation formulated by Locke and Latham (2004) in the 1950s and 1960s,
psychologists started[ focusing on the role of motivation at the workplace, particularly in the
context of job performance and job satisfaction. Such efforts resulted in an array of goal-setting,
instrumentality-based (cf. Porter and Lawler, 1968; Vroom, 1964), and equity-based orientations
(Swezey, 1994). Various theories were used to explain in details. It is important for managers to
recall that motivational factors are all linked and affect one another. Also they should understand
that employees are different and are motivated by different things.

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