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Transcript of RMT PROJECT

  • 8/7/2019 RMT PROJECT





  • 8/7/2019 RMT PROJECT








  • 8/7/2019 RMT PROJECT



    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