THE EFFECT OF MOTIVATION ON ORGANIZATIONAL PERFORMANCE

ZORAIZ FAZAL MUDASSAR AHMED HASSAM ZIA RIZWAN SHOUKAT

16th, June, 2011

CHAPTER 1

TITLE INTRODUCTION BACKGROUND OBJECTIVES SIGNIFICANCE

PAGE 2 2 3 3 4 6 8 8 11 13 16 17 17 20

2 3 4

REVIEW OF LITERATURE THEORETICAL FRAMEWORK HYPOTHESES OPERATIONALIZATION

5 6 7 8

RESEARCH DESIGN ANALYSIS OF DATA CONCLUSION APPENDIX QUESTIONNAIRE REFRENCES

CHAPTER: 1
BACKGROUNG:

INTRODUCTION

Organizational performance comprises the actual output or results of an organization as measured against its intended outputs (or goals and objectives).According to Richard (2009) organizational performance encompasses three specific areas of firm outcomes: (a) financial performance (profits, return on assets, return on investment, etc.); (b) product market performance (sales, market share, etc.); and (c) shareholder return (total shareholder return, economic value added, etc.). Motivation is the driving force by which we achieve our goals. Motivation is said to be intrinsic or extrinsic. The term is generally used for humans but it can also be used to describe the causes for animal behavior as well. This article refers to human motivation. According to various theories, motivation may be rooted in a basic need to minimize physical pain and maximize pleasure, or it may include specific needs such as eating and resting, or a desired object, goal etc. Organizations motivate employees by investing in them. Motivating people is not just about a financial investment though, but also an emotional one. A motivated workforce has more productive employees and this translates into bottom line cost savings. On the other hand, motivated employees positively impact corporate culture, resulting in many intangible but equally important returns. Motivated employees are indeed better workers and will help to generate a positive work environment that both customers and employees will better appreciate. Gregory P. Smith comments on the results of one organization's efforts to satisfy employees in the article Happy Employees Make Productive Employees, "When employee attitudes improved by 5%, customer satisfaction jumped 1.3%, consequently increasing revenue by .5%. Seeking ways to motivate and build worker morale pays dividends to any business or organization. The motivated worker is more committed to the job and to the customer." The end result when an organization invests in employees both emotionally and financially is plain to see-happy customers and increased revenues. A motivated workforce can truly have bottom line impact and make the workplace somewhere employees look forward to interacting with instead of just a place to pick up a paycheck. 2

OBJECTIVES:
The objective of this research was to measure the level of motivation, how it affects organizational performance and we also measured the organizational performance. We also wanted to observe the impact of motivation on individual employee performance.

SIGNIFICANCE:
There is tough competition in the market and organizations are facing new challenges these days. Customer demands are changing very quickly and as a result organizations have to change themselves in order to achieve customer satisfaction that will lead to organizational performance. Employees are one of the important factor on which performance of an organization based. When an organization implements some changes employees are directly affected by that change. Moreover, employees have to give their hundred and ten percent to make that change successful. They work all the day and night in achieving the goals and objectives of their organization On the other hand, when employees are giving their hundred and ten percent to enhance organizational performance they also deserve motivation (either extrinsic or intrinsic) to minimize their pains and maximize their pleasure. When an organization motivates their employees they perform up to the expectations of the organization that help to achieve organizational objectives and goals. Employees should be given bonuses, empowerment, appreciations and sufficient compensations to give them relief. When employees are given incentives, rewards and appreciations they take more interest in their work and always perform in the betterment of an organization. This research will determine organizations that higher they give incentives and compensation to their employees, higher the performance of their organization will be.

CHAPTER: 2
Organizational performance:

LITERATURE REVIEW

Organization performance refers to what extent an organization succeeded in achieving its objectives. (Beal et al., 2003). Other researchers defined as a business firms is compared in terms of sales, profit, stock prices, market share, debt ratio and productivity. (James & Rebert, 1997). is defined as the flexible organizational culture. (Ouchi & Wilkins, 1983). One researcher defined as is based on the extent of control on the processes, operations and environment of the organizations. (Arnold, 1962). An organizational performance based on following factors such as continuous improvement, reducing their operating costs, introducing innovative products time to time, improving quality of their products and responding quickly to the market. (Becker, 1996). Organizational performance is recognized on the basis of their competitive advantage. (Charles & Lawrance, 1980).

Motivation:
Motivation provides direction, energy and sustains action by bringing an inner desire in a person to make efforts. (Latham & Pinder, 2005). The power that rejuvenates directs and sustains the behavior towards the goal. (Baron, Pintrich & Schunk, 1996). The set of external and internal forces that initiate work-related behavior and determine its forms, direction, intensity and duration. (Ambrose & Kulik, 1999). Other Researchers defined as the direction, intensity, and persistence of learning-directed behavior. (Colquitetal, 2000). Motivation has been defined as a persons tendency to find learning activities meaningful and benefit from them. (Wlodkowski, 1999). The collection of accounts of choices, intensities, and feelings of acts. (Edwards, 1999). The central idea of economics is that intrinsic and extrinsic motivation always enhances efforts, interest, performance and response. (Tirole, 2003). Involvements in decision making process bring devotion, enthusiasm and responsibility in performance of their duty.

(Ford, 2005). Aspiration, efforts and persistence are important determinants of motivation. (Atkinson, 1968). Mens are significantly higher in achievement motivation than women. (Srivastava, 1948).

Organizational performance and motivation:

Organizational performance is influenced by a variety of macro level organizational characteristics such as structure, policy and reward system. (Schneider, Guzzo & Brief, 1996). Organizations show high level of performance when they experience prosocial and intrinsic motivation in tandem. (Grant, 2008). Incentives bring healthy competition among employees at every level that increases the peace of work and performance. (Fyfe, 1994). Some researchers say it as the factor that creates opportunity, growth and worthwhile work. (Grote, 2000). Others said that creates aspiration, persistence and efforts in employee to do well. (Hoque & Ali, 1998).

CHAPTER: 3 THEORETICAL FRAMEWORKS

Theoretical framework helps us to determine the relationship among the variables. It also specifies the direction of the relationship. Here, in this theoretical frame work, dependent variable is organizational performance and independent variable is motivation. Motivation can be extrinsic or intrinsic. The set of external (extrinsic) and internal (intrinsic) forces that initiate work-related behavior and determine its forms, direction, intensity and duration. (Ambrose & Kulik, 1999). If we motivate employees either through extrinsic or intrinsic or both then employee will be stroked internally and will get committed to perform his or her duty. As a result, employee will make more efforts to perform his or her duty. The central idea of economics is that intrinsic and extrinsic motivation always enhances efforts, interest, performance and response. (Tirole, 2003). Motivation brings an internal desire in an employee to make efforts. (Latham & Pinder, 205). When an employee get committed and make more efforts to perform his or her duty then individual employee performance will also go up. Consequently, organization will be able to achieve its objectives. Like an organization achieve its objectives, like the performance of an organization would be. Organizational performance refers to what extent an organization successive in achieving its objectives (Beal et al., 2003). So, the relationship of our variable is positive as higher you motivate your employee, higher the commitment, interest, efforts he will show that will enhance his or her performance. Higher the employee performance, higher the organization will be able to achieve its objectives which ultimately will lead to higher organizational performance.

(Figure: 1)

MOTIVATION

COMMITMENT

EFFORTS

EMPLOYEE PERFORMANCE

ORGANIZATIONAL PERFORMANCE

CHAPTER4: HYPOTHESIS AND ITS OPERATIONALIZATION

Higher the level of motivation of employees, higher the organizational performance would be
In our theoretical framework, we have displayed that if we increase the level of motivation of employees, the performance of an organization also increases. Moreover, if we motivate our employee either through intrinsic (empowerment, appreciation, recognition etc) or extrinsic (compensation, commission, bonuses etc) or both it will create commitment in them due to which they will make more efforts to perform their job. When they make more efforts, it will increase their performance. Since employee performance will increase, organization performance will also increase. So, there is positive relationship between motivation and organizational performance.

OPERATIONALIZATION
Organizational performance: Organizational performance is the comparison between the actual performance and the projected performance. Organizational performance is compared in terms of change customer satisfaction, employee satisfaction, stakeholder performance Dimensions: Customer satisfaction. Employee satisfaction. Stakeholder performance. We are measuring organizational performance on the basis of following dimensions which are customer satisfaction, employee performance and stakeholder performance. We are choosing these dimensions to gather primary data to measure organizational performance.

DIMENSIONS AND ELEMENTS

Dimensions Elements Statements

Customer satisfaction

Retention Feedback policies

(see questions from 10 to 12 in questionnaire)

Employee satisfaction

Commitment Behavior performance

(see questions from 7 to 9 in questionnaire)

Stakeholder performance

Employees Competitors Government

(see question13, 14 and 9 in questionnaire)

Motivation: Motivation is used to call a driving force by which we accomplish our goals. Aspiration, effort and persistence are important determinants of motivation Dimensions: Efforts Punctuality Responsibility We are going to use efforts, punctuality and responsibility as dimensions to measure the level of motivation of employees. We are measuring that how much effort they make, how punctual they are and how responsible they are to examine their level of motivation. DIMENSIONS AND ELEMENTS Dimensions Elements Statements

Efforts

Performance of duty Achieving objectives Helping others

(see questions from 1 to 3 in questionnaire)

Punctuality

Work completion Arrival Meetings

(see questions from 4 to 6 in questionnaire)

Consistency

Performance Behavior commitment

(see questions from 5 to 9 in questionnaire)

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CHAPTER5:

RESEARCH DESIGN

In our research project our target population is basically middle level employees of banks of Gujranwala more specifically we can say that our focus is only on the employees of UNITED BANK LIMITED (UBL) and HABIB BANK LIMITED (HBL). The population is homogeneous because we have only taken the middle level employees. The logic to choose only UBL and HBL in Gujranwala is just that we are comfortable to find the data of employees of UBL and HBL and also there was shortage of time, we were unable to visit various banks just because of shortage of time. We have chosen middle level employees for our target population because employees themselves can more easily give perfect answers by understanding the questions from questionnaire about their motivation and their satisfactions. We used the probability sampling in our research project. We have chosen the simple random sampling because it assures that element in the population have an equal chance of being included in the sample. In it we assigned each member of the sampling frame a number, and then selected sample units by a random method. The sampling frame being used is the list of the employees of UBL and HBL. These banks maintain a computerized database for the records of their employees and we have taken some help from them to confirm the data which we have collected from our survey. The sampling frames which we are using are the UBL and HBL of Gujranwala and from that list we have taken sample size 300 for our research. In our survey we have used this sample size to collect data to approve our hypothesis. The sample size can be of any gender (male or female). For observing the overall situation we have used the employees as a unit of observation and to analyze all the data which we have collected by doing survey we again used the employees as the unit of analysis. The success of a researcher depends on the data one has collected. In order to measure level of motivation of employees and level of organizational performance we have used the survey technique. For this purpose, we have used Questionnaire. We have given the questionnaire to employees to collect the relevant data for our research report.

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We have used the questionnaire because our target population was educated. We did not need to take interviews since our population was educated and can answer our questions sensibly because interviews take lots of time and no one has a time to give us interview.

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CHAPTER6:
SCORING:

ANALYSIS OF DATA

As we have shown above the elements on each dimension we also have number of statements on each element (see on pg no. for questionnaire). We have used 3 point scale in our questionnaire. There are positive as well as negative statements in our questionnaire. Employee Adequately completes assigned duties? 3 2 1 agree neutral disagree

Score Index: 1. Score index for level of motivation: There were 9 statements related to the above variable; on each statement a person could get a score of 1 to 3. Total score for a person could range from a minimum of (9*1) =9 to a maximum of (9*3) =27. Lower score will show low motivation and high sores will show high motivation level of employee. Minimum score 9 To make categories 9-15 15-21 21-27 class interval lowest level Medium level highest level maximum score 27 27-9 Low motivation Medium motivation highest motivation

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2. Score index for level of organizational performance: There were 9 statements related to the above variable; on each statement a person could get a score of 1 to 3. Total score for a person could range from a minimum of (9*1) =9 to a maximum of (9*3) =27. Lower score will show low performance and high scores will show high performance of banks. Minimum score 9 To make categories 9-15 15-21 21-27 class interval low level medium level high level 27-9 low performance medium performance high performance maximum score 27

Bivariate table:
There is a positive relationship between level of motivation of employees and organizational performance. As stated in the table that organizations whose employees are highly motivated, they are performing high but on the other hand those organizations are performing low where the motivation level of their employees are low.

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(Table 1)

level of motivation
f high 15 low % 25.00% f 40 medium % 44.44% f 125 high % 83% f 180 total % 60%

level of organizational performance

medium

20

33%

45

50.00%

15

10.00%

80

27%

low

25

41.66%

5.55%

10

6.67%

40

13%

60

90

150

300

100%

(Figure 2) linear positive relationship

HIGH

MEDIUM

LOW LOW MEDIUM HIGH

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CHAPTER: 7

CONCLUSIONS

Organization performance can be raised by motivating employees of the organization. We reviewed the literature and found that motivation positively influenced an employee to perform well which ultimately leads to higher organizational performance. We have also studied the effect of motivation on organization performance and on individual employee performance in this research. We found that there is positive relationship between the organization performance and motivation. If an organization increases the motivation level of the employees, consequently commitment level of employees increases, they put more efforts in performing their jobs as a result individual employee performance increases that further leads to higher organization performance. If an organization want higher organizational performance than they should motivate their employees regularly so employee will get committed and perform their duties better which will increase organizational performance.

ABSTRACT
We studied in our research that motivation positively influenced level of organizational performance. We studied how motivation impacts on the performance of an organization. For this, we took sample size of 300. We used questionnaire to find the level of motivation of an employee and its impact on performance of an organization. We found that higher the motivation of an employee, higher the performance of an organization would be. In other words, it can say like that like motivation like organizational performance. We show result in our bivariate table, when level of motivation was low organizational performance was also low but on the other hand when motivation level was high the organizational performance was also high.

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CHAPTER: 7 APPENDIX
Questionnaire Do employees

Q#1: Adequately completes assigned duties? Agree Neutral Disagree Q#2: appropriate efforts to achieve desired objectives? Agree Neutral Disagree Q#3: help others in performance of their duties? Agree Neutral Disagree Q#4: completion of work in given time? Agree Neutral Disagree Q#5: attend all meetings? Agree Neutral Disagree

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Q#6: Comes office in time? Agree Neutral Disagree Q#7: show same performance level every day? Agree Neutral Disagree Q#8: behave badly when responsibility is given? Agree Neutral Disagree Q#9: lack of commitment at times? Agree Neutral Disagree Q#10: customers are loyal with the bank? Agree Neutral Disagree Q#11: customers do not provide feedback? Agree Neutral Disagree Q#12: customers are satisfied with the policies of bank? Agree Neutral Disagree
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Q#13: government positively influence bank? Agree Neutral Disagree Q#14: competitors are giving more and better services? Agree Neutral Disagree Q#15: show consistent performance every day? Agree Neutral Disagree

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