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    1. INTRODUCTION

    Large percent of worlds economy isnowadays under transitional processes:People's Republic of China (PRC), republics

    of former Soviet Union, Czech Republic,Slovakia, Hungaru, Romania, Bulgaria,former Yugoslav republics (Slovenia,Croatia, Bosnia and Herzegovina, FYRMacedonia, Montenegro and Serbia) and

    others. Transitional processes, among all,include transformation of public to privateproperty; introduction to worlds tradingprocedures and foreign investments indomestic firms. All of those, demands radical

    changes concerning human resourcestreatment and deployment. To enable thosechanges, besides positive attitude towardtransition, adequate knowledge is necessaryto sustain the process of further growth and

    DEVELOPING MOTIVATION MODEL AS A STRATEGY FOR HRMIN SMALL ENTERPRISES UNDER TRANSITIONAL ECONOMY

    . ivkovi, I. Mihajlovi*and Slavica PrvuloviUniversity of Belgrade, Technical Faculty in Bor, Management Department,

    Vojske Jugoslavije 12, 19210 Bor, Serbia

    (Received 12 january 2009; accepted 17 March 2009)

    Abstract

    Business conditions under transitional economy are specific since business operations should beperformed under significant uncertainty and with limited resources (human, financial, technologicalresources, etc.). Key factor, needed for overcoming those obstacles, improving companiesperformances, and introducing company to the global market are human resources (HR). Motivationof employees is usually one of the major problems occurring while developing human resources.Investigation presented in this paper, which was conducted in small enterprises (less then 100employees) situated in Southeast Europe, revealed that there are two strongest motivation factors foroverall employees satisfaction with their company. Those motivation factors, which have potential

    for securing and improving employees position in the firm, are education and performanceevaluation system within the company.

    Keywords: motivation, human resources, transition, economy, strategy

    * Corresponding author: [email protected]

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    development (Hutner et al., 2006).Experiences of successful companiesworldwide usually couldnt be copied. Thoseexperiences should be used as starting pointfor creating HR models and as base for fastand effective further development. Firms

    should think globally and act locally(Parnell, 2006).Entrepreneurship and development of

    small and medium sized enterprises (SME)are, without doubt, future of transitionaleconomy countries. This is evident, havingin mind that two thirds of employees in EUare from SMEs and that 99.8 of allenterprises are SMEs. At the same time, inthe USA, 97 percent of all employees areworking in companies with 20 to 500

    employees (Jacks et al., 2006).It is not often that entrepreneur can

    operate his business alone. Sooner or later,small entrepreneurial investment willdemand engagement of additional workforce (Barrett and Mayson, 2006). Workforce should be managed in such a mannerleading to achievement of companies goals.

    For the companies which plans furthergrowth and development, HRM (HumanResource Management) is becoming moreand more important and, accordingly, criticalfor success (Birch et al., 1995). Rapiddevelopment is leading to greater demandsof resources, and system itself, which isfurther translated to managers andemployees which are obligated to reactquickly under turbulent environment.

    Though HRM practice is mainly related tolarge and well equipped companies, muchcan be told about HRM in SMEs especially

    in those faced with challenges of rapiddevelopment in concurrent marketconditions. HRM starts with understandingthe way in which human resources canimprove companies performances and

    system sustainability through achievingcomparative advantages. Newer the less,small business has its particularities, mostlybecause of limited resources (material,human, organizational, etc.), leading todifficulties while establishing HRM

    function. HRM function, on the other hand,should enable human resource managementand its activities toward achieving ofpredefined goals (Wright and McMahan,1992).

    There is large number of cases worldwidewhich confirms that HRM in SMEs isestablished as ad hoc activity and havinginformal shape (Cardon and Stevens, 2006).Organized forms of HRM are usually presentin companies having above 100 employees.

    Still, even in those companies, it is often thatHRM function is of formal type. It is obviousthat SMEs are suffering from poorness ofresources which is one of the majorproblems which follows their HRM practice.Practically, establishing formal HRMfunction produce large costs in smallenterprises, concerning time and money(Cardon and Stevens, 2006), which are nottreated as a vital investments for the firmswellbeing.

    In the modern operational conditions,with open market and globalization, morethen 50% of gross social product is based onknowledge, e.g. intellectual property andexpertise of the people (The Economist,1996). In the knowledge based economy(Hunter et al., 2006), comfort is furtherincreasing with engagement of effectivemanagement and employees knowledge ofusing and effective controlling physical and

    financial goods. Increasing importance of theknowledge is connected with labourfluctuation on the market and it can be statedthat investment in the company is usuallypurchasing the talents, abilities, arts and

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    ideas which presents intellectual capital ofthe company, rather then physical orfinancial resources (Stewart, 1997).

    Concerning that human capital is base ofintellectual capital; it should be createdthrough institutionalizing of HRM functionin the company. This is beginning withattraction, recruitment and employing thebest candidates, which is first and mostcritical phase in the process of intellectualcapital creation.

    Bill Gates once said: Matter whichrestricts Microsoft depend simply on howdifficult it is for us to recruit people whichwe want in our research team (Dutton,1997). However, employing is only the firstof three vital processes on which every

    prosperous organization must base itsactivities while creating and strengthening itshuman capital. Company has to develop itsemployees at all levels and in all specialtiesto enable them to enunciate their potentialsduring the process of creating optimalcollective contribution. Elemental rule ofStrategic HRM (SHRM) state that properlyassorted HRM practice have strong influenceon improving financial performance of thecompany. SHRM process is very muchpresent in modern literature (Chadwik et al.,2004; Delery and Shaw, 2001; Wright andMcMahan, 1992; Wright and Snell, 1998).Wright, Dunford and Snell (2001) havesummarized SHRM topic in literature, whichdeals with it, from the resource orientedperspective and proposed a model. Basics ofhis model were organizational learning andinnovations toward human resourcesdevelopment. After all, first two processes

    have no meaning, if the company isnt ableto develop adequate department environmentand performance evaluation system to retainits best and brightest people (Dess et al.,2007). HRM starts from the fact that

    employees are the greatest value of theorganization and that their development canlargely contribute to sustainabledevelopment of the organization. Theapproach with established practice andstrategy of HRM can influence employeesjob performance, as well as interrelationsamong them. This is the reason why it can bestated, doubtless, that HRM has strategicimportance for companies operations(Mayson and Barret, 2006).

    To enclose process of human resourcecapital development and, accordingly, toincrease firms intellectual capital, motivationof the employees is needful link in the chainhaving direct impact on their jobperformances (Ivancevich et al., 2006).

    Through process of human capitaldevelopment, companies can create valuable,special, irreplaceable and well organizedresources. One of the strategies forincreasing intellectual capital of the firm isorganizational learning. Since individuallearning is the base of organizationallearning (Crossen et al., 1999; Kim, 1993),importance of the employees motivationraises. Total success in motivation of theemployees, especially in the transitionaleconomy, largely depends on employeesacceptance of changes. Accordingly,companies have to develop sustainable HRMpractice to motivate employees to learn andto improve their competitive advantages.

    Abilities of the employees to fulfill jobrequirements could be improved aftereducation and training in their company.Organizational structure of the companygives the frame for the employees to achieve

    required job performance. However,competence of the employees, together withorganizational enabling, doesnt mean muchif they arent motivated to achieve requiredperformances. Motivation can be viewed as

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    the process of agitation, orientating andmaintaining of the human behavior towardspecific goals, based on three elements:need, action and compensation. For themanagement of the company it is of greatimportance to be able to recognizemotivational profile of their employees.Work productivity is directly related onemployees degree of motivation. Managersmust realize the needs and the motives oftheir employees and learn how to fulfill themand consequently achieve maximal level ofemployees motivation. Employeessatisfaction is the only way for facilitatinghigh level of productivity and employeescreativity at long range (Ivancevich et al.,2006).

    At the beginning of the 20th century,strong social and technological discrepancieswere arising. At the same time first scientificpapers from the field of work organizationand learning, related to the Taylors name,were published. Downsizing andsegmentation of the universe of socialproblems, aiming to determine pattern ofrelations among work performance andrewards, with personality transformed tohomo economicus creates capitalisticsocial awareness of those days (Taylor,1911).

    Later investigations conducted by Mayo,Douglas Mc Gregor , Maslow, Herzberg,Aldeerfer, McClleland, Wroom, Porter, andothers (.ivkovi et al., 2005) indicatedcomplexity of the motivation problemshaving in mind that people representscomplex systems with different individualmeasures of value. This means that satisfying

    of needs in hierarchical sequence is not thesame individually. What is the same for allthe people is that first motive is adequatefulfilling of material needs and safety, andthat other needs are lined depending on

    numerous factors arising from structure ofpersons character which is the object ofmotivation ( Hogan and Holland, 2003).

    Concerning that people in theorganization are behaving differently, whichis partially resulting from differences in theirpersonalities, tasks of human resourcesrepresents complex activities of adjustingtheir differences and attaining commoncorporate goals. Complicated humanpersonality, which is complex system on itsown and specially when interacting withenvironment, further increase complexity ofcompanies operations. This makes HRMactivities more difficult. Investigationsconducted with aim to classifycharacteristically types of personalities

    resulted with two, now well known, models:MBTI (Myers Briggs Type Indicator)(Ivanchevich, 2006) and BFM (Big FiveModel) (Luthans, 2005). According todescriptions and dimensions of thepersonality it is obvious that people are quitedifferent, even so it wouldnt be appropriateto state that person is better or worstcompared to others. People are just different.However, what is important is the type ofpersonal characteristics associated to peopleof the company. Nevertheless, even if all thecharacteristics of the people are legitimate;there is necessity to harmonize them with thetype of the job delegated to them as theemployees. Correlation of personalcharacteristics with job requirements is notonly increasing productivity but also theirsatisfaction with the job they perform. If youforce someone to do the job, which demandspersonality completely different then he/she

    posses, he/she would feel dissatisfaction andfrustration even if some job looks attractiveto another person (Robbins, 2003).

    Maslow (1943) discovered that people ofthe organization could be agitated with five

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    types of motives (needs), organizedhierarchically. Those five groups of needsare: physiological, safety, love/belonging,esteem and self-actualization. Numerousresearches revealed that first two groups ofneeds (physiological and safety) are in mostcases at the beginning of the hierarchicalscale, and that sequencing of the other threecould be altered depending on the structureof the personality and influence of theenvironment (Lathman and Ernst, 2006).

    In the countries with transitional economy(Abrudan, 2006; Roceska and Kostoska,2006), where most of the business is on themargin of the profit, owners of the SMEsonly wishes to obtain larger incomes asquickly as possible with little thought given

    toward human resources wellbeing, benefitsand development. While HRM functiondevelopment in most cases is omitted (Raki,2007). In such environment, according to theMaslows theory of hierarchical needs,employees place more emphasis on lowersociological needs, which are closely relatedto them. The reason for such behavior is thatthey feel depression and frustration causedwith the fact that in their professional historyand even in their near future there arent anysigns that their higher hierarchical needs willbe fulfilled. Then, employees abandon theirhigher level needs because they dont expectthem to be fulfilled. This means they quittheir own self-actualization.

    The main reason for such behavior couldbe found in the fact that employees have losttheir trust in the firm long time ago.Alderfers ERG theory (Existance,Relatedness and Growth, 1972) also supports

    those findings. After changing in theenvironment, individual must abandonhigher level needs and turn toward lowerones.

    2. LITERATURE REVIEW ANDDEVELOPING OF THE MOTIVATIONMODEL

    Numerous investigations revealed thatmotivation factors, resulting form the needsof the employees, are changing with time andhave some particularities at the beginning ofnew millennium (Lathman and Ernst, 2006).Socio-analytical investigations, (Hogan,2003; Hogan and Holland, 2003) showedthat people have genuine needs for: (1)acceptance and approval, (2) status, powerand control and (3) predictability and order.Speculations resulting from Maslows andHogans theories suggest that peoples needsare universal. Individual differences among

    people are issued form the characteristics oftheir personality. Workers in the transitionaleconomies, of post-communistic countries,have larger sensitivity of their needsresulting with better acceptance of the fivepoint scale, developed by Maslow (1943),when developing a motivation model (Tsai,2007; Haiyang and Zhang, 2007). This scalewas further modified by Locke and Henne(1968) and Lathman and Pinder (2005) toaccommodate revealing of motivationprinciples that are acceptable at thebeginning of new millennium (Latham andErnst, 2006).

    HRM represents the modus of managingworkforce and their activities with the aim toenable achieving of the companies goals(Wright and McMahan, 1992). This impliesthe activities of the human resources whichwill upgrade firms performances, achievingof companies goals and sustainability of the

    system, through obtaining comparativeadvantages (Barney and Wright, 1998;Wright et al, 2001; Wright et al., 2005).Employees have interest in achievingcompetitive advantages of their companies,

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    especially in transitional economy, (Haiyangand Zhang, 2007) mostly because theirmemories and previous experiences from, socalled deliberative economy areunpleasant. Literature suggests that, in theconditions of transitional economy, topmanagers must play important role inachieving risky goals (Keeley and Roure,1990; McGree et al., 1995). Generally,managers can use two types of resources:human capital in the form of peoplesexperience (Mc Gree et al.,1995) and thesocial capital as their external connections(Shane and Cable, 2002). Those resourcescould be used as the link to other resources,aiming to develop competitive advantagesand obtaining better performances (Barney,

    1991). During the process of HRM systemcreation, key role lies on employeesmotivation without which it wouldnt bepossible to obtain their effort and loyalty(Lathman and Ernst, 2006).

    2.1. Developing hypothesis andsuggestion of the model

    Five-point motivation scale (Maslow,1943) is based of fulfillment of the needs intheir hierarchical sequence: (1) physiological(material); (2) safety; (3) belonging; (4)esteem and (5) self-actualization.Investigations conducted during beginningof the 21st century (Lathman and Ernst,2006; Hogan, 2003; Hogan and Holland,2003; Lathman and Pinder, 2005) revealedthat motivation factors are changing withtime and that they have certainparticularities, at the beginning of the new

    millennium Postulates resulting fromMaslows (1943) and Hogans (2003)theories could be applied for investigatingand developing of the motivation models inpost-communist countries with the

    transitional economy (Tsai et al., 2007).

    2.1.1. Physiological (material)conditions

    Material compensation of the employeesfor their efforts, in the environment oftransitional economy, is often inadequate tofulfill their basic human needs. This resultswith workers dissatisfaction with their jobs.Increasing job organization, workerssatisfaction increase resulting with positiveimpact on productivity and accordingly,better performances of the company (Wrightet al., 2001). As the result of betterproduction, employees are rewarded whichis especially noticeable in post-recession

    companies after 1980 (Brouckner, 1988;Brouckner et al. 1993; Mone, 1997; Shah,2000) and in transitional economy firmsduring post-communistic era. In thetransitional economy, the process ofprivatization is usually followed withintroduction of new technologies.Management, under those conditions, ismostly relaying on previous experiences(Haiyang and Zhang, 2007) which can bedangerous without motivating people toadapt to new technological procedures(obtaining new knowledge for the newtechnologies). Difficulties to compete withlarger firms, concerning salaries, force smallenterprises to pay much attention onemployees compensation system (Burrettand Khan, 2004). This assume creation ofnew organizational forms in the company.Resistance to new organizational forms islower if they contribute to increased

    financial performances of the company, andconsequently, material compensation of theemployees for their effort. Those facts revealthat following hypothesis can be suggested:

    H. 1 a. Increasing employees rewards

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    (salary) is positively correlated with jobs

    organizational changes.

    Employees standard of living, intransitional economies, is on much lowerlevel compared to workers in developedeconomies (Japan, USA, EU, etc.) resultingwith possibility of fulfillment only the lowerhierarchical needs (Ajila, 1997). This is thereason why benefits are often concerned astool for promoting care and attention ofsuperiors toward employees and to improvetheir loyalty toward their firm. Socio-analytical theory (Hogan, 2003) indicatesthat there are individual differences amongpeople. Even so, all forms of rewards aregenerally well accepted especially in smallfirms. This is the reason why this form of

    stimulation shouldnt be neglected in theHRM strategies. Business philosophy isconceptually changed at the beginning of the21st century. Many work tasks could beperformed at home during 24 hours, whichoffers numerous possibilities for motivatingof the employees, through different forms ofbenefits based on savings made this way(Lathman and McCauley, 2005). Employeesaccept all forms of benefits as the sign ofsignificant care from their superiors, whichcan be additional motivation factor for futurebetter performing. Stimulating employeesthrough different forms of benefits leads tofollowing hypothesis:

    H.1 b. Introducing different forms of

    benefits for employees is well accepted

    employers care.

    Numerous motivation theories, whichdefines motivation elements of the jobs inthe future, (Lathman and Ernst, 2006) points

    out that worker is an complex human beinghaving its home, family and friends, besideshis engagement in the firm. Worker hasneeds to be fulfilled outside the firm becausemeaning of his life is not only in his work

    engagement. Management of the firm mustunderstand those needs and consider them inthe HRM strategy (holistic employee care).Only this kind of approach can ascertaincomplete loyalty and dedication of theemployees. During last 20 years, in manycompanies, this problem was not consideredas much as it should, especially in smallenterprises. This resulted with demotivationof the employees (Dalton et al., 2002).Reestablishing motivation values such is fearmaterial compensation is of specialimportance in transitional economy.Adequate compensation system in the firmenables achieving satisfactory standard ofliving (Baker et al., 2005), which upgradebalance among employees family life and his

    work. Compensation system upholdsmaterial satisfying of the employees. This isone of the employees lower hierarchicalneeds, which leads to following hypothesis:

    H. 1 c. adequate compensation system is

    positively influencing balance among

    employees personal life and work (work/life

    balance).

    Superiors care toward employees is,among all, manifested in creating adequateworkplace conditions. Herzberg et al., (1959)during developing of his theory ofmotivation, points out that workplaceconditions are one of the importantpsychological motivation factors, which wasproven in later investigations (Parker andWall, 1998). In large companies, operatingin developed economical systems, muchattention is paid on work safety andergonomics of the workplace, mostlyaccording to the legal regulations. Recently,

    with introducing of quality systems ISO14000 and OHSAS 18002, those demandsare particularly in the focus (Occupationhealth and safety management system,2007).

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    In small firms, HRM practice togetherwith taking care of workplace conditions isoften established only formally (ad hoc).Cardon and Stivens (2004) pointed out ondifferences related to HRM practice in smallcompanies from different geographicregions. In the USA firms with less then 500employees are considered as small ones, inEurope this number is below 250 (Bacon andHoque, 2005) and in Australia, according tothe official national classification, thisnumber should be less then 20 employees(ABS, 2002). A company declared as smallusually doesnt grow (Mayson and Barrett,2006). In counties with transitional economy,this kind of small companies classificationisnt established yet. Usually it is considered

    that company is small if it employees lessthen 100 people. In those companies, workconditions are often neglected mostlybecause statutory demands do not exist, atthe national level, or, if present, rarelyapplied.

    When concerning increase of theemployees job satisfaction, managementmust pay due attention to workplaceconditions during creation of adequate HRMsystem (Maierhofer et al., 2002; Tsai et al.,2007). This is of special importance in smallfirms (Mayson and Barrett, 2007). In theframe of creating better workplaceconditions, following hypotheses could beproposed:

    H. 1 d. Workplace conditions are

    positively influencing job satisfaction.

    2.1.2. Safety and social security

    Care and attention are strong motivationfactors, creating sense of safety amongemployees which enables them to focus theirfull attention on their job tasks. This can beconsidered as the form of psychological

    contract among workers and executives ofthe company (Millward and Brewerton,2002). Care for employees, as the part ofHRM practice, reflects job organization. Itresults from common effort for achievingcompanies goals, respecting social,psychological and other problems employeesare facing after changing the joborganization (Naumann, 1998; Mckee Ryanand Kinicki, 2002). Employees satisfactionwith attitude and care of their superiorscreates psychological safety among them andloyalty toward firm. This has crucialimportance for future strategy of HRMdevelopment. Workers safety and socialcomponent are important elements of theirsocial security (Cascio, 2002) and

    adaptability to ongoing changes of the joborganization, which is the result oftechnological progress. Some investigationsreveals creation of positive organizationalclimate, after certain restrictive measures,with employees continuing their careers insame firm owing to positive relations,attention and care of their superiors (McMaster, 2002; Beam, 1997). Bad experienceswhich transitional economy employees carryfrom the period in their life, when theyworked under communist regime (especiallyfrom the period of its collapse), can be strongmotivation factor under altered conditions.This is possible with the condition that newemployees take adequate care of thirfeelings, related to the new organizationalenvironment. This gives opportunities toHRM strategy, of those companies, to creategain employees loyalty and trust (Naumann,1998). Following hypothesis can be

    propounded according to the aboveconsiderations:H. 2 a. Job organization changes have

    positive influence on employees, if superiors

    take care of their feelings.

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    People having great personal values alsohave high goals which they try to accomplishin their business and private life (Stajkovicand Luthans, 1998). Employees haveaspiration to accomplish their personalambitions through their career developmentand often set themselves higher goals(Bandura 2001). Peoples behavior duringcreation of balance among their work andlife, depends primarily on their personalcharacteristics (Gall, et al., 2005). Having inmind that the desire for career improvementis common attribute of most people(Lathman and Ernst, 2006), followinghypothesis could be suggested:

    H. 2 b. Balance of work and life is

    positively influencing aspiration for

    employees career development.Under the modern conditions many

    companies, especially production ones, haveproblems with accomplishing safe workingenvironment and decrease in number ofinjuries during work, as well as upgradedenvironment protection. In developedeconomies, those topics are strictly regulatedby law, resulting with lower number ofproblems and improved work satisfactionrelated to this part of HRM practice. In thecountries having transitional economy,juristical procedure is also transitional, andmuch of regulations are not applied. Conceptof job satisfaction was initially proposed byHoppock in 1935. He considered that jobsatisfaction was based on employeessatisfaction with the work environment andfactors that influence employees satisfactionphysically and psychologically. Thesefactors mostly were related to employees

    subjective reactions on their workenvironment conditions. With jobhumanization and development ofbehaviorist theories, workplace conditionsgain importance in modern organizations

    (Vroom 1964, Bandura 2001). Under thesystem of organizational learning, within thecompany, many aspects of human and socialjob organization are created (Hislop, 2001)which, at the final, enables creating betterworkplace environment. Continualimprovement of training system leads toupgraded work conditions. Above discussionallow us to suggest following hypothesis:

    H. 2 c. Work conditions are positively

    influenced with adequate educational and

    training system in the firm.

    2.1.3. Acceptance

    Natural desire of satisfied worker is to bepromoted in his company. Also, satisfied

    employee identifies himself with companysgoals (Maslow, 1943). This paradigm isevident in almost all behaviorist theoriesdefined in the second half of 20th century(Robbins and Coulter, 2005). Personalcharacteristics of the people, initiate theiraspiration for promotion, (Gal et al. 2005)which can be recognized in most of thepeople (Lathman and Ernst, 2006). If thosepossibilities are enabled through companiesHRM then following hypothesis is proven:

    H. 3 a. Creating possibilities for career

    development (promotion) in the firm is

    positively correlated with superior care of

    employees.

    Under the conditions of market andeconomy globalization, knowledge isbecoming key resource for companies betterperformances (Barnney, 1991). Under thetransitional economy, transformation of themarket is promoted by its own mechanisms,

    while planned government driven marketorientation doesnt exist (Zhou, 2000). Thisis forcing managers to use different types ofresources obligated with market conditions(Haiyang L. and Zhang Y., 2007). In the

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    modern world, human knowledge isdominant resource which progressiveincrease output performances of thecompany, governed by its HRM system(Jeffrey and Boyles, 2007). To be able foradequate respond to modern demands undernew economy conditions, and to contributefurther increase of companies performancesduring post communist era (transitionaleconomy), employees are forced topermanently increase their own knowledge.Investigations indicate that employees areoften motivated for individual education.Nevertheless, under the conditions resultingfrom organizational changes, educationorganized within the company(organizational learning), as the part of HRM

    strategy, provide much better practicalresults (Tsai et al., 2007). Forming theorganizational learning systems is strategicprocess for future competitive advantages(Vera and Crossan, 2004). Individuallearning can not be avoided, nevertheless itshould result from organizational learning asthe main strategy of the companies HRMsystem (Senge, 2003). The HRM practice oforganizational learning gives excellentresults in the firm (Chadwick et al., 2004;Delery and Shaw, 2001). Through the systemof organizational learning, as the way ofcompanys care of the employees, sense ofbelonging to the company is created. Thoseprocedures form such atmosphere amongemployees, with their general opinion, thatcareer development within the firm is onlypossible with new knowledge obtainedduring the trainings (Vera and Crossan,2004). Numerous investigations indicate that

    there is positive correlation amongorganizational learning, realized throughHRM system, and financial results of thecompany (Wright et al.2001). When firmachieve positive financial results due to the

    knowledge of the employees, possibilitiesfor their promotion and obtaining betterpositions are higher, which leads tofollowing hypothesis:

    H. 3 b. Ambition for the promotion is

    positively influencing development of the

    system for employees training and

    education.

    2.1.4. Self-actualization

    Overall employee satisfaction is muchdepended on care and attention of theirsuperiors, since ongoing organizationalchanges always include emotions (Liu andPerrewe, 2005; Huy, 2002). To increaseemployees satisfaction with their company,

    management should continuouslydemonstrate care and attention towardemployees together with understanding oftheir needs (Mitchell and Daniels, 2003).Those needs are especially significantconcerning employees who set themselveshigh personal goals and have ambition forself-actualization within the firm (Van Dijkand Kluger, 2004), which leads to followinghypothesis:

    H. 4 a. Superiors care of employees is

    positively influencing their overall

    satisfaction with the firm and with their

    feeling of belonging to it.

    Overall satisfaction of the employee withthe firm is one of the elements of the jobmotivation. People having high individualvalues usually are setting higher personalgoals. This makes personal satisfaction withthe company, which results from individualmotivation, a very complex psychological

    category (Bandura, 2001).Under modern conditions of technical andtechnological development, followed byglobalization of economy and market,continuous learning of the employees is

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    imperative of modern time. Creatingconditions for employees continuouslearning is organizational problem which isone of the most important element of thestrategy of creating comparative advantages(Vera and Crossan, 2004). System for

    training and education of the employees is ofstrategic importance for the companiestending to increase their competitiveadvantages in the market (Cascio, 2002).Creating the organization structure whichenables continuous learning within thecompany resulting with achieving so-called:learning company, is of crucial importancefor obtaining concurrent advantages (Veraand Crossan, 2004) in the modern businessenvironment. SMEs operating in the

    transitional economy tend to obtainadvantageous market position. This can berealized only with employees effort, if theyare motivated to receive new knowledge and,this way, ascertain their position in thecompany. HRM practice indicates (Tsai etal., 2007) that employees will be motivatedto receive new arts and knowledge, and toincrease their performance, only if issatisfied with organization in which they

    work (Delery and Shaw, 2001). It is obviousthat there is correlation among education andtraining system and employees satisfactionwith their firm. This leads to followinghypothesis:

    H. 4 b. System for employees education

    and training is positively influencing theiroverall satisfaction with the firm and creates

    their feeling of belonging.

    According to the cumulativeconsideration of all proposed hypothesis, inthe hierarchical range of needs as mainmotivation forces for the employees in smalltransitional economy enterprises, basicstructural motivational model can beconstructed, Figure 1. This figure presentscommon influence of technical and social

    aspects on employees motivation, aiming tofurther increase performances of thecompany. During establishing HRM system,in small firms in transitional economy, suchmodel will promote development of HRMfunction, mostly from the aspect ofemployees motivation.

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    Figure 1. Basic structural motivation model for small enterprises in the transitional economy

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    3. METHODOLOGY

    Investigation process described in thispaper was conducted applying quantitativemethods. We used questionnaire surveys toperform the quantitative study. The wholeprocess of data collection, analyzing andprocessing lasted almost one year.

    3.1. Sample

    Further testing of offered hypotheses wasperformed with empirical investigations,conducted in small enterprises in Serbia,Montenegro, Bosnia and Herzegovina andBulgaria all in the same region of SoutheastEurope. Choosing the firms to be included in

    investigations was based on databases fromthe National Registers of the EconomicSubjects in those countries. Criterions forthe firms selection were: number of theemployees, which was set to 20 100, andpositive financial results in previous periodof their operation. At the beginning of theinvestigations sample of 147 firms wasselected (75 from Serbia, 25 fromMontenegro, 32 from Bosnia andHerzegovina and 15 from Bulgaria).Questionnaire (appendix A) was mailed torepresentatives of all those companies, withrequest to be filled by all structures of theemployees and to involve not less then 30%of total numbers of the employees. Onemonth after initial contact, another contactwas made. Non-respondents were called onemonth after initial contact to ask if they hadreceived the questionnaire and to remindthem of the importance of their cooperation.

    One month letter the process ofquestionnaires return was completed. Duringthis period, completed questionnaires werereturned from 23 companies for an effectiveresponse rate of 15.64%. As an incentive,

    respondents could indicate whether theywanted to receive summary of the researchfindings. Over 81% answered yes, indicatingthe relevance of this study to therespondents. In total, 573 completedquestionnaires were returned from 12Serbian companies, 5 Bosnian andHerzegovinian, 3 Montenegrin and 3Bulgarian firms. There were 523 validquestionnaires. The invalid returns includedthose with too many questions missed out orthose without thoughtful answers, forexample, those with the same answersthroughout the questionnaire. Structure ofthose companies was: 17 production(73.91%), 4 trading (17.39) and twoinstitutes (8.69).

    Demographic structure of investigatedsample indicate female/mail ratio to be equalto 1.24; 78% of the employees are youngerthan 40 years; 84% of the employees areemployed in the same firm during past 5 to15 years; 84% of the employees havegraduated high school; 80% of theemployees are the part of firmsmanufacturing and maintenance staff and85% of the employees doesnt haveadditional incomes besides salary their earnin the firm.

    Results obtained, clearly revealed thatinvestigated firms from this part of the world(West Balkan Southeast Europe), arerelatively young concerning both the timesince their foundation (10 to 15 years) andtheir employees age. If we suppose that thisrandom sample could be regarded asrepresentative, than we could assume that thesituation is similar in all other small firms

    from this part of the world. Firms where 78%of the employees are younger then 40 yearshave good potential for their further trainingand education, and for creation of partneringrelationship with both their customers and

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    the suppliers (.ivkovi et al., 2003). At thesame time, educational level of theemployees is appropriate (high school andacademy) for their further development,through regular education system, anddifferent forms of internal and externaltraining within the company.

    Development of HRM function inconsidered companies obviously should bedirected toward creating adequate models foremployees motivation and establishingconditions for their promotion and self-actualization tending to keep them incompany and identifying their goals with thefirms strategic goals.

    3.2. Results of measurements

    The research used questionnaire survey asthe main tool to collect mass data. Likertsfive-point scale was employed to measurethe variables. The possible answers were inthe range: very satisfied (5), satisfied (4), nodifference (3), dissatisfied (2) and verydissatisfied (1). Employees were asked to fillthe questionnaires by checking anappropriate alternative. This type of scalewas used considering that this survey

    included employees having lower educationlevel, who should easily understand themeaning of the five point scale. Seven pointLikerts scale is used much often (Molina etal., 2007; Tari et al., 2007), however, authorsof this text considered that five point scale isappropriate in this case. Questions in thequestionnaire resulted from the hypothesesdefined above (chapters 2.1.1 through 2.1.4).

    4. RESULTS

    Results of descriptive statistics for all 11questions considered in the Appendix 1(VAR0001 to VAR00011) are presented inTable 1.

    Before further consideration of thecorrelations among variables and multipleregressions analysis, goodness-of-fitmeasurements, of questionnaire results, wereperformed. Further factor analysis wasperformed on population comprising set ofall the answers to all 11 questions. As mainparameters for goodness-of-fit rating, Chi-square test and Cronbachs alpha parameterwere used.

    Chi-square test consists of determining

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    Table 1. Descriptive statistics for considered motivation parameters

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    Chi- square coefficients (X2) and their ratioon degrees of freedom (d.f.). For populationinvestigated in this work, this ratio was:X2/d.f. = 1.62 (with X2= 34.1018932 andd.f. = 21). As suggested by severalresearchers (Brooke et al., 1988; Cerminesand McIver, 1981; Hoetler, 1983), a ratiolesser then 2.0 indicates an excellent modelfit, meaning that data from entire populationcan be described with unique model. In theresults of Hear and Molina (Hair et al., 1998;L.M. Molina et al., 2007), this ratio was setto optimal value in the range 1 to 3, or even5. Values of specified ratios, for resultspresented in this paper, are satisfactory,according to both groups of authors.

    Value of Cronbachs alpha coefficient, for

    whole population, is 0.987. Value ofCronbachs alpha, above 0.7, confirms goodmodeling possibility of investigated

    population. Besides Chi-square andCronbachs alpha, as goodness-of-fit (GFI)measure we considered coefficients definedby Cox and Snell (k1), Negelkerke (k2) andMcFadden (k3). Values of those coefficientswere: k1 = 0.938, k2 = 0.990 and k3 = 0.942,which further confirmed good modelingpossibilities of investigated population.

    4.1. Correlations among variables

    Aiming to test established hypothesis,correlation coefficients among pairedvariables, representing each hypothesis, werecalculated. Results of calculating Pearsonscorrelation coefficients for paired variablesare presented in table 2.

    According to the results presented inTable 2, several interesting findings shouldbe noted. Almost all hypotheses have high

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    Table 2. Pearson correlation coefficients of investigated population

    ** Correlation is significant at the 0.01 level (2-tailed).

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    positive correlations. The most positivecorrelation among the variables was obtainedfor the hypotheses H.4b: Overall employeesatisfaction is strongly correlated witheducation and training (r=0.969, p

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    in the hypothesis (t = -0.575, p>0.05). Figure2 is schematically representing obtainedresults of structural motivation model withvalues of correlation coefficients amongconsidered variables. Correlationcoefficients are all with high values whichindicates that hypothesis were nominatedcorrectly and motivation model (Fig. 1) wasstructured properly.

    Basic model presented in Figure 1, wascreated according to the Maslows five pointmotivation scale (Maslow, 1943), anddiscussed in previous text. Analysis ofcorrelation coefficients for paired variables,constituting the hypothesis, proves that allhypothesis were constructed logically, whichis obvious if observing Figure 2. To define

    final model and perform detailedconsideration of the questionnaire results,multiple regression analyses was performed.

    4.2. Multiple regression analysis

    As the basis for multiple regressionanalysis starting model, presented in Figure1, was used. Analysis of this type wasperformed to determine relative influence ofevery variable on overall employeesatisfaction. To control the effect ofsuggested variables on the regressionanalysis, four stage hierarchical regressionswere performed. In the first stage,employees overall satisfaction wasconsidered as dependent variable while:

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    Figure 2. Structural motivation model with values of interrelation correlations

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    salary, benefits, compensation system andjob satisfaction presented a fixed block ofindependent variables for the model. Thisway, influence of lowest hierarchical stage,of Maslows motivation factors (Materialconditions-physiological needs), on overallemployees satisfaction was analyzed. Insubsequent models, variables representinghigher hierarchical levels were added to the

    model, in sequences, and resulting changeswere observed. This way, in the secondstage, job organization, work/life balanceand workplace conditions were added asindependent variables representing safety. Inthe third stage, opportunity for careerdevelopment was added as characteristic ofbelonging. In the final - fourth stage,superiors care of the employees and training

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    Table 4. Hierarchical multiple regression analysis

    *significant at the 0.01 level** significant at the 0.005 level

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    a)

    b)

    c)

    d)

    Figure 3. Final model representing influence of singular motivation factors on overall employees

    satisfaction ( X2/d.f. = 1.62; Cronbechs alpha 0.98)

    a) Influence of material conditions on overall satisfaction

    b) Adding safety motivators

    c) Adding belonging motivation factors

    d) Adding esteem motivation factors

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    system were added, representing esteem.Results of multiple regression analysis arepresented in Table 4.

    According to the results obtained, usingmultiple regression analysis, final motivationmodel was constructed and presented inFigure 3. If observing model presented infigure 3, it is obvious that importance ofsingular motivational factor changes whenincreasing complexity of the model. This,once again, proves the complexity of humanbeings and systems which they consist,making nature of their motivation hard toexplain as discussed by Dessler (Dessler,2006) and Lethman and Ernst (Lathman andErnst, 2006).

    5. DISCUSSION OF THE RESULTS

    If analyzing results presented in Table 4,following could be concluded. If the overallemployees satisfaction is influenced only bylowest hierarchical level of motivationalfactors (material conditions), mostinfluencing variable is benefits ( = 0.433,p

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    with large influence ( = 0.215, p

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    employees, mostly toward USA and EUcountries, is permanent (Barauch et al.,2007). Those facts demand to think globallyand act locally (Parnell, 2006) to sustainfurther growth and development of thetransitional economy.

    According to the results presented inFigure 3.d., it is obvious that highestinfluence on employees overall satisfactionlie on: training system ( = 0.516, p

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