Analysis of Retention Schemes and Workplace Motivation

1. Background

Within the realm of economics, the notion that employer incentives or rewards based on employee performance and effort are a major means of obtaining and ensuring staff motivation and output, is widespread and unbridled. Some empirical research provides evidence in support of such an assumption (Jenkins, Mitra, Gupta & Shaw, 1998; Brown and Heywood, 2002), others however, within the realms of psychology indicate that incentives can in fact have adverse effects on performance (Deci & Ryan, 1985; Deci, Koestner & Ryan, 1999; Ryan & Deci, 2000; Deci & Ryan 2003). A growing and more substantial body of research and studies provide evidence of conflict between intrinsic motivation (a person’s own motivation for undertaking a task) and extrinsic motivation (external and conditionally imposed motivation for undertaking a task) (Benabou & Tirole, 2003; Holmström & Milgrom, 1991; Kreps 1997).

Motivational theorists consider that for each and every thing we do (behavior and actions) there is a fundamental reason or cause; in other words it influences our behaviour’, our choice of behaviour and its permanence, and the amount of effort put into it (Delmar & Wiklund, 2008). They also believe that appreciation of the causes will enable prediction and thus allow for influence on those behaviors or actions (Franken, 2002). Current research and theories have evolved and advanced since those of Skinner (1938) who considered performance based on motivations from a behavioral viewpoint, while Maslow (1943; 1954) extended his needs hierarchy to accommodate motivation in terms of people seeking to satisfy needs within a systematic order that progresses from physiological, to safety, to social, to esteem and finally self-actualization. His needs hierarchy accounted for the significance of satisfying the needs of employees if motivation was to be induced and fostered (Nelson, 2009).

Motivational research today focuses mainly on the determination of what spurs motivation – what stimulus is required to increase motivation – and takes both intrinsic and extrinsic motivation into consideration. Intrinsic motivation according to Oudeyer & Kaplon (2007) is best understood when contrasted with extrinsic motivation, which relates to any activity that is undertaken because of some of kind of reward or discrete outcome. Intrinsic motivation by contrastive definition refers to activities that are undertaken solely for pleasure with no price or value imposed on it (Ryan & Deci, 2000). An important distinction however, is that intrinsic and extrinsic do not mean the same as internal and external and are not synonymous. Internal motivations receive internal rewards, whereas external motivation receives external rewards; intrinsic motivation and extrinsic motivation however is not determined by where the reward comes from but on the type of reward that is given (Oudeyer & Kaplon, 2007).

The theory of incentives has traditionally assumed that concrete or intangible -money, power or investments- (Hoy & Miskel, 1991) rewards given for specific activities with the intent of their re-occurrence will manifest motivation and in turn output; to some, this translates as the more money given by the employer the more effort there will be from the employee (Festre & Garrouste, n.d.).

Researchers such as Benabou & Tirole (2003) have shown that monetary or tangible rewards are not always the best means for obtaining employee effort; they claim that intrinsic incentives can be ‘crowded out’ by extrinsic incentives (p.490). They further explain how incentives based on performance can have adverse effects on the perceptions of the activity or of a person’s own abilities, and are thus in the short term no more than feeble boosts and in the long term become negative forces. Boje & Rosile (2004), in agreement with Benabou & Tirole (2003) take the argument a step further by claiming that incentive theories are ‘a doomed quest’ because managers are in effect manipulating their employees’ productivity and fail to take individual personalities, needs, or behaviors into account. They are in pursuit of ‘perfection, self-sacrifice and corporeal control, achieved through performativity’ (conclusion). Such studies fail to address the individual needs and preferences of employees and the fact that different people can place different meanings on the same information or activity.

Research also implies that the soundness and legitimacy of motivational theories are fused with societal beliefs and values – culture (Gagne & Deci, 2005). One prevalent motivational theory that considers a person’s values and beliefs as being important to motivation is McClelland’s (1962) Learned Needs Theory, wherein the supposition is that a person’s needs are obtained and learnt throughout life from culture in which they live. The acquired cultured needs become the focal point of their motivation and include needs pertaining to membership, accomplishment and influence; if such needs are not met by the employer for the employee then work effectiveness will decline (McClelland, 1972).

Another theory that considers motivation is based on a person’s beliefs, values and acuity is the Expectancy Theory of motivation, (first coined by Vroom in 1964) that claims that individuals have differing objectives and goals and if they have particular expectations then they are able to be motivated. Unlike Maslow’s hierarchical theory based on internal needs and the effort required to meet them, Vroom’s theory is based on outcomes and the effort required from performance and motivation. He ascertained that a person’s skills, experience, knowledge and personality impacts on their performance whereupon he devised his (VIE model) ‘valence (anticipated satisfaction),– instrumentality (the belief that performance will lead to rewards) – expectancy (the belief that effort will lead to the performance needed to attain the rewards)’ (van Eerde & Thierry, 1996, p.575; Locke & Latham, 2002, p.706 ), which has provided the foundation for a plethora of empirical studies. Researchers however, have not agreed on the denotations of Vroom’s (1964) concepts, nor have they been able to agree on the best means of measuring them; such difficulties have resulted in many researchers claiming that the expectancy theory should be merged with other methods (van Eerde & Thierry, 1996). In terms of practice, if a manager intended to sway the motivation of an employee in accordance with the Expectancy theory, he/she would need to understand the employee’s valences, expectancies, and instrumentalities in relation to each activity undertaken (Emery & Oertel, 2006).

Another theory based on expectancy is Bandura’s (1997) Self-Efficacy Theory, wherein he recommends a motivational model based on social cognition, one that is concerned with a person’s acuity of efficacy and society. He considers self-efficacy as a multifaceted understanding of confidence by which a person undertakes a task or activity, and that it differs in accordance with the task (Eccles & Wigfield, 2002). His theory therefore, as in Vroom’s theory, centres on expectancies focused on success, but he did make distinction between expectancy beliefs – those based on outcomes and those based on efficacy. This distinction means that people can understand that a particular performance will lead to a particular result, but they may not consider they are capable of such a performance (Eccles & Wigfield, 2002).

Much research today is now focusing on the development of tools and means of explaining how individuals respond when confronted with different and specific types of incentives. Theories pertaining to such research include the Cognitive Evaluation Theory (CET) and the Self Determination Theory (SDT) that focus on the analysis of the ways on which incentives impact on intrinsic motivation (Festre & Garrouste, n.d.).

The CET focuses on how a person assesses a task in relation to whether or not it makes them feel empowered and capable, and claims that if a person believes they can accomplish a task they will not require any external motivation because they are intrinsically motivated (Festre & Garrouste, n.d.). In other words, if people are intrinsically motivated other external rewards may impact negatively on their feelings of proficiency and autonomy and thus reduce intrinsic motivation. If however, incentives do not correspond with specific tasks they may not have adverse effects on intrinsic motivation (Deci, Koestner & Ryan, 1999).

The SDT on the other hand, focuses on how the environment – external motivation – effects a person’s autonomy and competence, both negatively and positively, and claims that a person’s extrinsic motivation can be regulated to work with their intrinsic motivation (Festre & Garrouste, n.d.); such regulations however, are far more complex than those proposed within the realm of economic motivational theories because SDT further suggests that the links between motivation and incentives are not lineal but occur on a continuum. Deci & Ryan (1985) presents the SDT and argue that people are intrinsically motivated to maintain the most favourable level of incentive appropriate for them, and that they also have an intrinsic need for self determination. They further argues that people strive to find the challenging and testing activities that keep them motivated because of their profound need for proficiency, that if self determination and capability is not evident then intrinsic motivation will flail, and that such necessary needs also impact on behaviour motivated by extrinsic rewards.

Goal theories are founded on the premise that mindful goals impact on behaviour (Locke & Latham, 2002), and that the goal is the objective of the action. Nicholls et al (1990) presents two directions from which motivational goals come, those to do with ego and those to do with tasks. They claim that people intrinsically motivated by ego need a great deal of positive feedback and very little negative on their capabilities; whereas those motivated by tasks are more concerned with how well they do the task and improve their capabilities. The distinction between goals based on ego versus goals based on tasks as defined by Nicholls et al (1990) were later discussed under different terms by other researchers; Ames (1992) for instance, refers to goals based on association and those based on mastery, and Dweck (1999) talks about goals based on performance and those based on learning.

Locke & Latham (2002) claim that goal theories seem to oppose Vroom’s (1964) VIE Theory in that for Vroom the expectancy is related to performance, but because complex goals are more difficult to obtain than simple goals, then a person’s expectancy of achieving their goals would impact negatively on their performance. They further assert that this conflict between the theories can be settled by differentiating between ‘expectancy within versus expectancy between goal conditions’ (p.706). Vroom’s (1964) VIE Theory assumes that more effective levels of accomplishment are founded on higher expectancies and where the goal level is stable, whereas lower levels of expectancy, related to goal levels that are higher, are then related to better performance (Locke & Latham, 2002, p.706).

Locke & Latham (2002) also argue that the distinction between within and between is not a problem with Bandura’s (1997) Self-Efficacy theory that is concerned with numerous outcomes rather than one, and that the idea of self-efficacy is significant in Goal theories. They claim that when people set their own goals, those with low self-efficacy will set easier goals than those with high self-efficacy, and those with higher self-efficacy are more committed and responsive to both positive and negative feedback.

In summary of this literature review, it is evident that in response to the diverse range of motivational studies a number of motivational theories have emerged that endeavor to account for the various findings. Such theories include those that focus either on incentives, expectancies, tasks or goals, and those that seek explanation of how employees respond to different types of incentives provided. Further literature research within the full study for which this paper proposes, will determine the types of motivational systems adopted by employers and which are considered as most successful and where.

2. Industry Background

Competition is continually increasing and employers are in dire need of determining the best way in which to increase their productivity and profits and to meet the needs of their customers. In order to do this they need employees that are motivated and committed to the company; the primary means of achieving this is by implementing appropriate motivational and incentive schemes that work. Before any motivational systems can be put in place, employers should first determine what motivation is and how it is processed, how it is best achieved, and how it is best maintained. All too often however, it seems that employers are embarking on incentive schemes without prior research or knowledge into whether such a system will be effective.

The purpose of this study is to investigate the relationship between one company’s incentive scheme and the perceptions of its employees in terms of whether it meets their motivational needs.

The study will take a qualitative approach to research including literature research and a phenomenological study. It is hope that findings will add to the existing body of knowledge on staff motivation and on completion be an effective tool of reference for employers looking for insight into what motivates their staff.

The company selected for this study is Habitat, which is a UK based international home furnishing company with 38 stores throughout the UK and others in France, Spain and Germany; the company also has a large distribution network of retail partners.

2.1 Research aim

The literature suggests that a person’s beliefs and values impact on motivation, and unless their specific needs are provided for, motivation will not transpire and work effectiveness will decline. The aim of this study is to determine what motivates the staff employed by Habitat and does the company’s incentive scheme meet their needs.

2.2 Research question

Two specific research questions will be asked:

  1. What do individual employees of Habitat perceive as motivational enforcers for them personally?
  2. How does the company meet their motivational needs?

2.3 Hypotheses

As indicated in the literature, some people place focus on intrinsic motivation to meet their needs, while others prefer to be stimulated by external motivation; at the same time their cultural and social values and beliefs play a significant role in that motivation. With this in mind the following hypotheses are proposed:

  • The majority of employees will place more emphasis on intrinsic motivation
  • External rewards will negatively impact on their intrinsic motivation

2.4 Objectives

The main objectives of the study is to determine what motivates people and whether intrinsic motivation outweighs extrinsic motivation; do individual values and beliefs play a role in their motivation; do company incentives (Habitat) meet the needs of specific employees and if not why not.

3. Research Methodology

As noted earlier, the approach to this study is qualitative. Qualitative research tries present life as it really is and places emphasis on process and meanings (Sale Lohfeld & Brazil, 2002); wherein the researchers make claims from their perspective using strategies of investigation such as ethnographies, grounded theory, case studies or phenomenologies and collect data from which ideas, trends, themes or premises are developed (Walker, 2004; Johnson & Christensen, 2007).

Ethnographical studies are concerned with describing the values, customs, attitudes, linguistics and substance of a particular group of people; in other words ethnographic researchers are focused on understanding and describing the culture of a specific group whose shared parameters are either geographical, religious, experiential or tribal (Johnson & Christensen, 2007). Ethnographic researchers need to spend much time in the field collecting their data by means of observation and interviews (Hancock, 2002). Data is analyzed based on the researcher’s interpretation from the group’s perspective that is being studied, so the researcher must be familiar with the local language, customs and shared views if the data is to be free of distortion and presented without confusion (Hancock, 2002). Ethnological findings are presented in the same way as the phenomenological findings.

Qualitative researchers focused on grounded theory create and enlarge on a theory (how and why something occurs) based on the data they collect (Hancock 2002); they can also use grounded theory to test or extend on prior grounded theories. Essential traits of grounded theory studies include the fact that it should mirror what is evident in reality and that the theory is unambiguous and transparent and can replicate results that are evident in reality (Johnson & Christensen, 2007). Data collection is continuous and includes a variety of methods such as observation and interviews, as well as literature reviews and document analyses (Hancock 2002). An important element of grounded theory research is the fact that analysis of data occurs simultaneously with its collection; data analysis usually includes open, axial and selective coding (Johnson & Christensen, 2007) and is finished when new perceptions stop materializing from the data and the theory is clearly validated (Johnson & Christensen, 2007); so as the researcher realises new concepts or premises materializing the data is examined and evaluated and hypotheses are generated and tested and theories are developed; thus the “theory is grounded in the data” (Hancock, 2002, p.6).

Case study research varies in simplicity from a description of a solitary experience or incidence to an investigation that map out occurrences that occur with the same subject over a prolonged period of time and making findings illustrate modifications and amendments (Hancock, 2002).

Phenomenological studies, which is the method chosen for this particular study, are concerned with the study of phenomena such as specific experiences or events and their existence; in other words I will be able to describe, explain and ascertain the impact of a company’s motivational incentive scheme on the motivation of its employees,, by means of in-depth interviews. As a researcher using phenomenological methods I am not only interested in the experiences of one person but am more concerned with shared or similar experiences among individuals. Findings will be presented by way of a very descriptive report intended to provide an inside accounting of the phenomena for its reader (Johnson & Christensen, 2007).

3.1 Data Collection

One-to one semi-structured and in-depth interviews and focus groups will be the avenue for data collection. Interviews have been selected because they allow the interviewer more flexibility in terms of changing direction within the interview, allowing the interviewee to steer the focus, whereby emerging themes may appear (Bryman & Bell, 2007). Such method selection will allow the interviewee the opportunity to talk freely without pressure and in a non-directive manner (Saunders, Lewis & Thornhill, 2007) on their feelings, beliefs and experiences within the company’s incentives system. It is proposed that a sample group be selected from various stores for one-to-one interviews. All interviews will be audio taped for later transcription and analysis.

The focus group method of attaining data has been selected because it allows employees to come together and share their points of view and perceptions of incentive/motivational systems. This group interviewing (groups of 4 are anticipated) provides a less stressful process for those who may feel intimidated in a one-to one interview. A group interview also provides opportunity for more diverse perceptions to which others can respond (Bryman & Bell, 2007), and is also a more efficient means of interviewing such a large number of participants. All focus group proceedings will also be audio taped and transcribed for further analysis.

The aim is to firstly interview each participant individually then bring them together in small groups for a further interview to see whether any new themes or ideas emerge.

The research will begin with an exploratory pilot study that will be interview based in order to determine any problems that may arise on the part of the interviewer or the question format. The pilot study will be undertaken with one participant in a one-to one interview which, as in the actual study, will be recorded and later transcribed for analysis.

The location and best means of logistically organising the interviews have not yet been determined and will depend on the availability of the participants.

3.2 Sampling

It is difficult to determine the sampling number at this point in time but it is anticipated that around 20 participants will take part in this research and will be selected from volunteers equally distributed among different Habitat stores. Employees from Habitat have been selected solely because of inside communication with a couple of people employed within the company which provides an in-road to other employees.

3.3 Practical Issues and resources

In terms of resources there are no foreseeable problems, and in terms of practical issues the only problems that and be identified at present include my ability in undertaking interviews appropriately, necessary logistics of undertaking such a large number of interviews and ethical concerns.

In order to eliminate any interview problems a pilot study will be undertaken first and the logistics of undertaking interviews will need to be determined in terms of where the interviews will best be held in order to maintain participant anonymity. In terms of ethics, this research will be guided by the four ethical considerations purported by Diener & Crandell (1978) as discussed by Bryman & Bell (2007, p.132). Other ethical considerations as proposed by Bryman & Bell (2007) will also be taken into account and completion of their checklist (p.148) will help in this process.

3.4 Reliability and validity

Evaluation of this research in terms of reliability and validity is paramount; reliable measures within quantitative research are those that are consistent when used repeatedly with the same input; whereas valid measures are those that are measuring what they are supposed to measure. In terms of this qualitative research reliability and validity, terms such as trustworthiness, quality and thoroughness will be used, as too will the assurance that the research will not be affected by any bias on the part of the researcher and that the researcher will be truthful in all accountings. Validity will be attained through triangulation wherein themes will be formed from both the literature and individual participants.

The strengths of qualitative research for this study include its appropriateness to describe complex concepts such as motivation and incentives; it will be particularly suitable for me to determine how subjects perceive various concepts in relation to motivation and will allow me to explore how and why they feel this way. The major weaknesses of qualitative methods for my research is that the information or findings may be specific to a particular group, in this case employees of Habitat, and not carry across to others, and it would not be easy to make quantitative forecasts; I would also need to ensure my own ideas or bias do not impinge on my data results.

4. Anticipated timeline for research

Phase 1: Late May – Late June

  • Extensive literature review on motivational theories and their implementation within business
  • Interview questions and guide prepared
  • Pilot study
  • Reflection on pilot study and changes made for later interviews
  • Letters of introduction and consent forms distributed
  • Participants selected

Phase 2: July

  • Interviews undertaken and transcribed

Phase 5: August

  • Tapescripts analysed

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