A Study of Employee Motivation in a Retail Company in Hong Kong - Literature review Example

CHAPTER TWO LITERATURE REVIEW Quality manpower is very important for services industry sector, in particular for the retail industry. A highly motivated workforce can change the business scenario for any company in a positive direction. In case of sales people, motivation is a factor of their anticipation that a particular behaviour will lead to outcomes that he or she values. The most commonly used definitions of salespersons’ motivation refers to three dimensions: (1) intensity, refers to the amount of mental and physical effort put forth by salespeople, (2) persistence, implies how much the sales person is willing to expend his efforts over a period of time, and (3) direction, implies the choice of the activity by the salesperson on which he or she would spend their effort. (Ford, Walker, and Churchill, 2003) There are two levels of understanding the motivation. The first one is - “What” motivates salespeople (the reasons behind the intensity and persistence of mental and the physical effort expended by the sales person) and second one is- “How” the salespeople choose their action (the direction to engage in specific actions in specific circumstances). The literature review looks into several theories of motivation and management. These reviews are based on relevant books, journals, research papers and websites. The information and theories can be used as a platform for later analysis. Two-Factor Theory According to Frederick Herzberg’s Two-Factor Theory of motivation (1959), there are two sets of items that he has termed motivation (or intrinsic) factors and Hygiene (or extrinsic) factors. As per Herzberg’s theory, the opposite of dissatisfaction is not satisfaction. In fact satisfaction and dissatisfaction are two dimensions rather than opposite ends of a single dimensions. He labeled the factors that prevent dissatisfaction as “Hygiene” factors and those that bring about satisfaction as “Motivators” (Hodgetts, 1986). The Hygiene factors present in the company serve to prevent the dissatisfaction of the staff. Company policy, supervision, salary, working conditions, relationship with supervisor and peer are the Hygiene factors that Herzberg has referred to in motivation. These factors prevent loss in performance caused by work restriction, retaining employees and for limited periods, increasing effort and minimizing dissatisfaction. When the motivation factors are introduced in the organization, they serve to motivate the individual to superior effort and performance. For the motivation of salespeople, managers must first understand their individual needs. The motivation factors include Achievement, Recognition, Responsibility, Work itself, Advancement and Growth. These factors are related to the job and result in increased output or positive effect in job satisfaction, and may have a long-term deeper impact on the motivation. Hygiene factors cannot be turned into satisfying or motivating factors, while the above stated motivation factors are the primary causes of satisfaction and motivation. The two-factors theory received wide acceptance and few people have doubted the emphasis on the importance of Motivators and Hygiene factors as contributing to job satisfaction (Locke, 1976). The Hertzberg’s two-factor theory helps the managers in understanding the different kind of needs of salespeople, and helps in identifying factors or needs related to motivation. Equity Theory Equity theory explains effects of people’s perception of how fairly they are treated in comparison with the treatments received by others. It examines how a person might respond to perceived discrepancies between input/outcome ratios. The process of balancing sales potentials and workloads suggests the equity aspect to realignments. (Kirk, Eli and Edward 2000) According to Equity theory, a person compares his or her inputs in a situation and outcomes from the situation (Outcomes A/Inputs A) with a similar ratio of another referent (Outcomes B/Inputs B). Inequity exists when the perceived ratios of outputs to inputs for a person and his or her referent are unequal (Adams). Perceived inequity is the source of motivation to act to restore equity or fairness in the exchange. The “inputs” in the theory includes the working experience, education, personality and personal characteristic; while the “outputs” included the pay, benefit, working condition, co-worker relationships, and work opportunities. A salesperson’s choice of effort to be expended is a result of a comparison between his output-input ratio and the output-input ratios of others. If he perceives to be inequitably treated, then he can change his input, output, alter the perceptions of self and/or others, and change comparisons or leave the situation. Goal Setting theory A goal is an outcome that a person, team or group is attempting to accomplish through behavior and actions. Locke (1968) proposed that goal setting is a cognitive process with some practical utility. Locke and Latham’s (1990) goal setting theory says that not only the individuals are motivated to satisfy their needs, but also they are motivated to strive for and reach their goals. Salespersons compare their current ability to perform with what is required for meeting the goal. Sales targets are quantitative goals assigned to individual sales persons for a specified period of time. These targets are usually based on past sales, forecasted sales, sales potential and salesperson territory adjustments. The sales volume targets are widely used in retail industry. Specific volume targets are established for each territory to be achieved within a specified period. Salespeople will make these objectives as their own personal goal and will be committed to it. Achieving these goals will make them feel successful and competent. In many retail companies, the management sets up the individual sales targets and team sales targets for each shop. After the salespeople achieve these targets, incentives are offered to the staff. It is a very common and effective method of motivating the salespeople to reach their goals. Expectancy theory The Expectancy theory is the most popular theory of motivation (Campbell and Pritchard 1976) and is the most common basis for sales forces motivation studies (cf. Johnson and Kim1994). Victor Vroom (1964) was the first person to propose an expectancy theory, specifically aimed at work motivation. Vroom’s (1964) expectancy theory is particularly important in terms of process theories because it exemplifies its usefulness in determining employee motivation versus motivation in general. This is a very useful theory to analyze the way salespeople account for what they can achieve through their commitment to the competitive intelligence activities. This theory is based on three key variables: Valence, Instrumentality and Expectancy. The theory states that a salesperson will accept to allocate a certain amount of effort on a particular task of his job, if he estimates that his effort will lead to a specific performance (Expectancy), which will lead to a real reward (Instrumentality), which he really desires (Valence for reward). Vroom’s theory models motivation as a function of the salesperson’s expectation that a given action would result in certain performance, along with the perceived instrumentality of that performance for achieving various outcomes and the valence of those outcome (cf. Vroom 1964). For example, the highly instrumental salesperson is likely to maintain a focus on the details of task performance, recognize the relationship between effort and sales performance, and engage and persevere in the activities instrumental to his successful performance. A salesperson will be motivated when he values the expected rewards, believes that his effort will lead to performance and the performance will result in the desired rewards. Summary Many studies have suggested that salespeople form the expectations about uncertain future events and become concerned about whether the organization will treat them fairly or not. The Equity and Expectancy theories appear to be suitable to use in the retail industry, which fit for the job nature of salesperson than the process theories. However, after going through these theories, it is found that no theory is applicable in all circumstance. Sales force motivation is caused, shaped and maintained by the needs, values and goals of the individuals, their relations with the situation and the consequences of their actions. Human nature is far too complicated for the exclusive use of any one theory. Further, most of the theories are developed in United State.These theories may not reflect the results with same exactness in case of other cultures. “A culture has the power and authority not only lifestyle, but also to form individual personality traits, behaviors and attitudes.” (Cartwrigh1999). It is difficult to find a theory that fits in all the cultures and preferences of the workers. Therefore, finding an effective combination of rewards to motivate a sales force may be easier if the sales manager understands some of the behavioral and psychological factors involved, but not just looking into any one theory alone. Read More