The Relative Effects Motivation and Performance - Essay Example

Introduction Managing the workforce accounts for being one of the most crucial aspects in organizations today. Employers consider it particularly important to understand the needs and requirements of its manpower in order to ensure their satisfaction and contentment at the workplace. This is because the workforce accounts for the main competitive strength of the company in the market. It is seen that most large and successful organizations align their compensation systems with the performance of the employees. This is not only done to determine the performance standards of the employee but also to provide him with the right compensation and rewards. Performance bonuses are particularly paid to employees who achieve high ratings through satisfactory accomplishment of work activities during their yearly performance appraisals. It also helps to keep the employee motivated and provoked towards the achievement of performance goals and objectives. The present project seeks to bring forth the extent to which performances help to keep employees in the organization motivated and enhances their performance and productivity at the workplace. The research proposal provides an in-depth decryption of how the research would be conducted. The literature review provides the views and opinions of researchers on the subject and also empirical evidence reflecting organizational examples. Research methodology explains the rationale behind choosing a certain methodology and limitations of the same. The data sources, collection methods, analysis of data, resources used and Gantt charts are included in the research methodology of the proposal. Research Proposal Research Question The research question seeks to bring forth whether performance bonuses in organizations can bring about positive impact on the performance, productivity and motivation level of employees. The research question is as follows: Can performance bonuses in organizations bring about positive impact on the motivation level of employees and their performance and productivity in the organization, AMZ Limited? (Draper, 2004, p.4-5). Hypothesis A statistical testing of hypothesis would be conducted for the research. The null and alternative hypothesis that would be chosen for the study are provided below: H0- Implementing performance bonus in AMZ Limited enhances and improves performance, productivity and motivation level of employees. H1- Implementing performance bonus in AMZ Limited does not bring about any enhancement or improvement in the performance, productivity and motivation level of employees in the organization. Background Theory Performance bonus is defined as the form of additional compensation which is paid to an employee in the organization or a reward for the accomplishment of specific performance targets. It is an additional compensation to his regular salaries or wages and is awarded based on his performance ratings during his performance appraisals or analysis of the projects conducted by the employee. On the other hand performance of an employee can be measured both as per quantitative as well as qualitative aspects. Performance of his work can be measured in terms of the quantity of work he has delivered within a stipulated time and also the quality or standard of that work. The research seeks to bring about a relationship between the performance or productivity of the employee and the bonus paid to that employee. A positive relationship would reflect positive impacts of bonus payments on an employees’ performance and productivity at the workplace, and vice versa. Brief Summary of the Organization or Industry The project analyses the HR aspects of AMZ Limited, which is a manufacturing organization in UK. It is the producer of household appliances in the country. The company provides annual bonuses to its employees based on the performance ratings of employees declared through their systematic performance appraisal structure in the organization. Ratings are provided according to the accomplishment of monthly targets set by the employees. Bonuses are directly linked with the monthly targets of employees. The HRM aspects of the organization are objected towards meeting the needs and requirements of employees at the workplace such that they remain satisfied and content with their conditions in the organization. The firm seeks to harness a convenient and comfortable working environment in which employees are motivated to perform to the best of their abilities and for this they have all the support from the management and HR department. Context and Rational Problems faced by the Company Due to the dynamic external conditions and macro economic forces, the company has been witnessing a slowdown in its work processes in the recent years. This has reflected through the revenues and profitability of the company. Revenues have been witnessing consistent downfall over the last two years which has consequently reduced profitability of the company. The company’s competitive position in the market has also weakened. Due to the above reasons the company has decided to reduce its annual bonuses paid to employees keeping all the other HR aspects unchanged in order to retain its past revenue standards and profitability in the market. However, despite reducing bonuses, the firm continues to witness falling revenues and profitability. This is on account of the lower standards of performance and productivity of the workforce. This throws light on the fact that a direct relationship exists between the bonus payments and productivity level of employees. The project tries to trace the problems which have been causing low performance of employees in the organization. For this it tries to bring about a relationship between the bonus and the performance and productivity level of employees in the organization. Reasons for the research Aims The aim of the project is to identify the relationship between performance bonus in the organization and the productivity and performance of the employees. It tries to identify whether financial rewards in the form of bonuses have any positive impact in motivating employees and encourages them to provide additional efforts at work to achieve and heighten performance. Objectives The objectives of the research is, To identify whether performance bonuses in the organization encourages and motivates employees to perform better at the workplace; To identify whether performance bonuses in the organization impacts on the financial performance of the employees; and To identify whether performance bonuses reflect through performance and productivity of the organization on the whole. Literature Review The literature review seeks to bring forth whether bonuses or other performance related pays helps to enhance and increase employees’ efforts in the organization. Most managers and economists believes that this is true. However it is surprising to see that there is sparse literature on the subject despite the increasing confidence of employers and managers on merit pay in their organizations. In order to address this existing gap, literature review would try to employ data from international companies to investigate and identify whether workers are willing to put in additional efforts when they get paid for it. The exact analysis can be generated through the compilation of the performance of organizations and industries on various human resource perspectives and also the psychological studies investigating the work attitudes and job satisfaction at the workplace as against the objective measures of efforts and performances. The above two literatures come up with different conclusions. On one hand, studies related to the estimate the industry and company production functions show that bonus payments are directly correlated with higher productivity and output. On the other hand analysis done on employee surveys do not reveal very optimistic results regarding the same (Engellandt & Riphahn, 2004, p.2). According to the findings of Pierce and Taylor (1999), the appraisal or merit component has a deteriorating impact on the employees’ commitment towards work and attitude towards supervision. This is particularly seen among the high performing employees in the organization. They have reported that performance based bonus systems give them a perception of unfairness and inequity which hampers their devotion and commitment towards work. Richardson and Marsden (1994) have described a performance based pay system as having demoralizing and de-motivating effects on employees derived from favouritism and unfairness of supervisors in the organization. Prendegast (1999) has concluded in his survey that the available empirical evidences do not throw much light on the endorsement of the theory (Engellandt & Riphahn, 2004, p.2). Several weaknesses are visible and present arising of lack of reliable data, selection and identification problems, and the emphasis on employees with easily observable outputs. Empirical tests existing and grounded on the description of 6500 numbers of employees belonging to large and global organizations. These employees belong to research works, production works, managerial works and administrative activities. Objective outcomes were analysed with using the individual level data. In order to identify the effects of performance based pay on the behaviour of employees comparisons were done across different departments of the organizations and over different time. It was seen that departments differed from each other with regards to the incentive with which the performance based payments were applied. While in some of these departments performance evaluations completely used the available range of evaluation outcomes, other departments used them to a lesser degree. Research conducted by Kahn and Sherer (1990) proved that managers were considerably impacted by the bonuses on their output and productivity and they were also motivated to perform harder in their respective jobs. Besides the managers workers’ efforts in these organizations were also seen to respond with the bonus payments (Engellandt & Riphahn, 2004, p.4). Workers responded positively to the variability of the individual ratings over a period of time. Workers belonging to departments in which performance rating were varying over time which consequently triggered more competition within the internal labour market of the organization were seen to be providing greater efforts in comparison to those workers belonging to departments in which the individual ratings were hardly seen to be changing. Thus it is seen that workers’ performances are seen to be more greatly impacted by performance ratings which varied over time rather than those which remained permanent and were not subject to changes (Engellandt & Riphahn, 2004, p.4). Despite the existence of numerous types of pay for performance plans in organizations across the world, very few instances of research actually have tried to venture into the effects of these potentially different effects that the various forms of bonus payments might have on the workers. The extent to which workers performance, productivity and motivation level differs in the organization varies directly with the types and characteristics of the pay structures. Particularly drawing on the Expectancy Theory, it is seen that both the potency of the pay for performance relationship for a plan along with the nature and characteristics of the type of rewards proposed by the plan influences and impacts on the future job performance of the employees. The Expectancy theory also suggests that workers make rational decisions which are grounded on their subjective probability that their activities and performance will generate a certain reward or other associated outcomes. Valence, according to Vroom (1964), is the orientation towards the outcome, which is the attractiveness, desirability or anticipated satisfaction associated with the outcome. Because of the fact that the bonus plans or other pay for performance plans have different characteristics and features, the theory helps to bring forth how the characteristics of these plans bring about varied impacts on the performance level of employees (Park & Sturman, 2009, p.7). Methodologies Evaluation of Methodologies Three types of research methods can be discussed, namely quantitative research, qualitative research and applied research. The advantage of applied research is that it helps to find an immediate solution to a problem in the organization, society or business. However, the limitation of this research method is that it is not able to yield long term results. Quantitative research is grounded on the measurement of amount or quantity. It can be applicable in a condition which can be expressed in amount or quantity. On the other hand, qualitative research deals with a phenomena involving quality or quantity. For instance, while identifying the behaviour or manners of human beings in a particular context quantitative research can be employed. However, qualitative research application in real life is extremely difficult and calls for the guidance of experimental psychologists. Chosen Methodology This research would apply a combination of both qualitative as well as quantitative research. Quantitative research would be employed for finding the extent to which bonuses affect the people’s work efforts or motivational aspects in the organization. On the other hand qualitative research would be employed for bringing forth the extent to which behaviours of employees in the organization get affected by bonus structures. Behavioural aspects such as motivation level, satisfaction, frustrations, and other grievances would be analysed using qualitative analysis. Justification of Chosen Methodology By using both quantitative and qualitative analysis the benefits of both techniques can be used to the research’s advantage. Qualitative research would help to make an in-depth analysis of the research question. This can be done by making used of the questionnaire method. The questionnaire would comprise of both open and close ended questions. The close ended questions would be the actual reflection of quantitative analysis for the research. On the other hand the open ended questions would highlight on the behavioural aspects of employees. Aspects like body language, activities and expressions can be particularly studied and analysed through the open ended questions. Here the interviewer would have a prominent role to play in terms of studying the body language, expressions and other behavioural aspects of the respondents. The combined use of both methods would be integrated and studied to bring forth the impacts of bonuses on employee’s behaviours, performance and productivity. Limitations of Chosen Methodology The research would be conducted with utmost care and ensured to minimize errors as much as possible. However, some of the potential shortcomings can arise out of the fact that respondents might not always provide the right answers to the questions. They might be unwilling to reveal the right answers and could provide incorrect information. Moreover, the research would be conducted on employees in AMZ Limited only. Thus it would reflect the concerns of employees in general or represent the workforce of a larger geographical region. The results could vary from organization to organization. The research also does not consider the external aspects such as macroeconomic factors which causes changes in business decisions in organization. Thus results can vary with changes in business environment as well. Research Design Data Collection Primary data would be collected for the research. The data would be collected through the responses provided by employees in the organization. The questionnaires would be distributed among a sample of 150 employees belonging to various levels of the organizational hierarchy and their responses would be collected and compiled. The open ended questions would comprise of the qualitative data which would be analysed to bring forth the research results. On the other hand close ended questions would reflect the quantitative data which would be further put to statistical analysis in order to come at the conclusion. Sources of Data The source of data would comprise of the population targeted for the research. In this case, a sample sixe of 150 employees would chosen from among the entire workforce of the organization. However, it must be ensured that employees belong to various levels of the organizational hierarchy and that their compensation structures comprises of a bonus component. This would reflect the actual implications of bonuses in their work activities in the organization. The findings from this can be considered to hold true and would also have considerable validity because of the fact that the result findings would demonstrate first hand and true information analysis resulting from the views of the respondents. Data Analysis The data collected from the research questionnaire would be compiled and out to statistical analysis. Using the statistical tools results would be drawn and represented in the form of graphs and charts. This would be primarily applicable for the close ended questions. The percentage responses for each of the options for every question would reflect the views of respondents regarding that particular question. The compiled views of all respondents regarding the open ended questions would demonstrate their opinion regarding the behavioural aspects of employees in the organization. This would also be represented in the form of graphs and charts. The research findings would be represented in the form of both qualitative and quantitative findings. Gantt Chart The research would be conducted through a series of steps, in which each of steps would require a substantial amount of time. The time required to complete the entire research process is estimated to be 9 weeks. Each of the steps are broken down into sub steps. The division of the research process into steps against the required time for each of them can be plotted and represented in the form of a Gantt chart. This is provided as under.        WEEKS       1 2 3 4 5 6 7 8 9   Research Question                       Hypothesis Testing                       Background Theory                     Research Proposal Summary of Organization                         Problems                     Context and Rational Reasons for Research                     Aims                       Objectives                     Literature Review                         Evaluation of methodology                       Choice of methodology                       Justification of methodology                     Research Methodology Limitations of methodology                       Data Collection                     Research Design Sources of Data                       Data Analysis                     Conclusion                        Conclusion The essential and most crucial component or implication of the research is that it would help to answer the critical question of the impacts of bonuses on the work performances of employees. This would not only be advantageous for the organization, AMZ Limited which has a concrete bonus structure but also for other organization with similar compensation structures. It is important for the management to have the knowledge of HR aspects which work best to bring out the potential to contribute of employees. They must be also be aware of the reasons of grievances, frustrations and discontentment of the workforce. This would not help them to design strategies advantageous and favourable for employees but would help to harness a comfortable working environment in which each one are allowed to perform at their true potential. This research result would help the organization identify the extent to which bonuses are essential to be a part of the compensation structure of the company. It would also help to make the management the expectations of employees regarding their compensation structures and the way it affects their productivity. Reference Draper, J. (2004). The relationship between research question and research design. In: Crookes, Patrick A. and Davies, Sue eds. Research into Practice: Essential Skills for Reading and Applying Research in Nursing and Health Care. Edinburgh: Bailliere Tindall. [Pdf]. Available at: http://oro.open.ac.uk/12053/4/jan%27s_chapter_final_draft.pdf. [Accessed on June 21, 2012]. Engellandt, A. & Riphahn, R. (2004). Incentive Effects of Bonus Payments: Evidence from an International Company. [Pdf]. Available at: http://www.cee-recherche.fr/fr/remmi/sem_remmi_riphahn_21sept05.pdf. [Accessed on June 21, 2012]. Park, S. & Sturman, M. C. (2009). The Relative Effects of Merit Pay, Bonuses, and Long-Term Incentives on Future Job Performance (CRI 2009-009). [Pdf]. Available at: http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1008&context=cri. [Accessed on June 21, 2012]. Read More