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EMPLOYEES MOTIVATION

AND ORGANIZATIONAL

SUCCESS

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RESEARCH METHODS &

TECHNIQUES

FINAL PROJECT

GROUP CHALLENGERS

(BBA-4-A)

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INTRODUCTION:

The category of micro, small and medium-sized enterprises (SMEs) is made up ofenterprises which employ fewer than 250 persons and which have an annual turnover not

exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million

euro. (Extract of Article 2 of the Annex of Recommendation 2003/361/EC). Micro, small

and medium-sized enterprises (SMEs) are the engine of the European economy. They are an

essential source of jobs, create entrepreneurial spirit and innovation in the EU and are thus

crucial for fostering competitiveness and employment. The new SME definition, which

entered into force on 1 January 2005, represents a major step towards an improved business

environment for SMEs and aims at promoting entrepreneurship, investments and growth.

This definition has been elaborated after broad consultations with the stakeholders involved

which proves that listening to SMEs is a key towards the successful implementation of theLisbon goals. (Gnter Verheugen, Member of the European Commission)

Motivation is a process of an individual's experience of feeling enabled (Corsun and Enz

1999). Motivation can be operationally defined with the help of resembling variables such as

motives, needs, values, and replacement (Hogan and Hogan, 1990). Motivating employees

and training them is an essential source of firms' sustainable competitive advantage.

Employees should be motivated to believe that they have organization support; it is the

degree to which practices and norms make employees believe that their organization valuestheir contributions and cares about their well-being (Eisenberger et al. 1986). Employees are

extrinsically motivated if they are able to satisfy their needs indirectly, especially through

monetary compensation. Money is a goal which provides satisfaction independent of the

actual activity itself (Calder and Staw 1975, p. 599).4

Motivating employees is necessary to enhance their autonomy (Kanter 1983), leadership

skills (Burke 1986), team-building experiences (Neilsen 1986), intrinsic motivation or self

determination (Deci 1980), internal locus of control (Rotter 1966), effectance motivation or

competency (White 1959), sense of control (Lawler 1992), need for power (McClelland1975), and self-efficacy (Bandura 1986). Organizations can gain beneficial outcomes by

employees' motivation and thus enhancing their self-efficacy. Self-efficacy refers to belief in

one's own ability to perform a specific task (Bandura 1982; Gecas 1989; Schwalbe 1985).

According to Bandura (1986), it has nothing to do with opportunities and constraints, as

such; it concerns judgments about what one can do with the existing opportunities and

constraints. Studies have reported motivation as a significant predictor of high performance

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in a variety of organizational domains. (Bandura 1982, 1986). People with high levels of

motivation consider themselves competent and able to influence their jobs and work

environments in meaningful ways. They are more proactive than others in that they

anticipate problems and act independently. They tend to engage actively in the creation of

whatever is new and challenging (Spreitzer 1995). Also, they are less constrained by

technical or rule-bound aspects of work. (Thomas and Velthouse 1990).

Organizations can boost employees motivation by supporting them with adequate

resources, recognizing the significance of their work, and showing interest and respect for

their efforts (Yoon, Han, and Seo 1996). In this challenging environment, empowerment has

been proposed as a critical intervention program to boost motivation, proactively, and

mental/physical health (Conger and Kanungo 1988) The results have showed that both

promotion and wages positively effects the relation with employees work motivation. A

comparison of the relative strengths of the effects reveals that a reasonable promotion was a

more powerful motivator than wage level and wage increase. (Yoon and Lim 1999).

The idea of pay-for performance has been adapted by many public agencies as a new means

of enhancing motivation and improving organizational performance in the public sector

under the performance management and recognition system. (Brudney & Condrey, 1993).

employees are provided with three types of opportunities: Promotion, Pay, Challenges at

work in SMEs that also motivate the employee (Ospina, 1996). These three benefits, i.e. fast

improvement in gaining higher positions, a high level of payment, and meeting interesting

and challenging work, they all contribute to the improvement of workers motivation, job

satisfaction and hence leading to organizational success. Practices of delay in promotions

and low wage may be less beneficial to maximize employee interests; thus, they may de-

motivate employees and reduce their commitment to the organization (Rosenbaum, 1984).

A number of researchers indicated that employment practices show signs of characteristics

of the internal labor market (Jacoby, 1985 and promotion opportunities increase the level of

motivation among workers in the internal market (Lincoln and Kalleberg, 1990). Therefore,

it is very clear that career advancement influences the workers behaviors and viewpoint,

such as motivation and organizational commitment, particularly in the case where

employment is constant. Tournament theory (Lazear and Rosen, 1981) states that when an

organization is unable to monitor its employees in a well organized manner such that itpossesses information which is unsatisfactory, related to employees skills and abilities. If

tournament participants recognize that esteemed positions and significant wage premiums

are very attractive, they will have an incentive to work very hard in order to gain those

prizes. (Velthouse 1990)

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In the internal labor markets, employees are motivated by higher positions rather than higher

wages to win the competition. An if the employees value higher positions then Promotion

acts as an incentive mechanism, (Takeuchi 1995), the speed of advancement is lagged

because slow promotion causes employees to stay in the competition of promotion for a long

period, hence sustaining a high level of motivation. It also avoids de-motivating those who

were dropping from the fast track. Incentives are related to promotion. (Hackman and

Oldham 1976) theory of job characteristics suggested that the nature of the job itself is an

important source of motivation. This theory advocated that the nature of the job, rather than

the pay and promotion, has mechanisms to motivate employees.

Incentives that are given along with promotions are relatively larger than wage increases.

The competition which is observed between employees lasts all throughout their company

career from entry to retirement. Employees work hard not only because they want higher

wages but also because they do not want to lose to their rivals (Ishida, 1985).

Employees can be highly motivated and contribute significantly to organizations success

(Leavitt et al., 1995). Motivation focuses on judgments to commence the effort for reaching

the goals, exert a definite level of effort, and continue in that effort until the goal is reached.

In deciding what the level of effort should be, employees consider the value of the goal to be

achieved, the probability of reaching that goal, and the attractiveness of the means to the

goal (Farrell et al., 1994; Harrison, 1995).

Managers are challenged to become leaders who transform the performance of the

organization (Bass, 1990; Kouzes and Posner, 1995).

Employees feel rewarded and productive through effective interaction with their managers,

their work relationship is strengthened, and their allegiance to the organization is built

(Becker, 1992). The probability of goal attainment is increased through this interaction by

helping employees gain insight into how to reach their goals and overcoming obstacles in

reaching them and by exchanging resources (Johnson et al., 1981). On more complex tasks,

experiments have found that co-operation is more motivating (Johnson et al., 1981).

Consistent with this evidence, competitive work has been found to undercut the completion

of important organizational tasks such as implementing technology (Tjosvold, 1990). co-

operative goals can be built when managers and employees can together develop sharedgoals, integrated roles, common tasks, and shared reward distributions (Hanlon et al., 1994).

Then they feel that they are on the same side so that as one succeeds, others succeed; as one

fails, others too are threatened.

In co-operation, the manager and employee have a vested interest in each others success;

they want each other to perform effectively because that helps them both succeed. With this

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orientation, they discuss issues and opposing ideas fully, communicate information

accurately, and exchange resources and assistance (Deutsch, 1973, 1980; Johnso