The Impact of Employee Motivation on Job Performance

Employee motivation and engagement is a pertinent issue in the workplace, with most organisations understanding the need to keep a well-motivated team in place. Employees need career development and a salary to meet the basic needs of life. These two aspects are the main reasons why people seek jobs in the white-collar sector. As such, employers ought to meet the needs of the employees, if they are to maintain them in their firms. However, most organisations fail to motivate employees continuously, resulting in cases of dissatisfaction, poor job performance, and high staff turnover. Theories on job satisfaction and motivation recommend that employers adopt ways that create a favourable working environment as a means to motivate employees both intrinsically and extrinsically. As such, the paper is based on the application of Herzberg- Two factor theory on a case study to understand the issue at hand and provide the necessary recommendations that the company can utilize to avoid inhibiting the level of motivation among the employees; particularly for those in the sales team.

            Key words: Motivation, Herzberg Two Factor Theory, job performance, job satisfaction

Employee Motivation and Engagement

            All organisations, regardless of being for-profit or not for-profit, require a workforce that is meant to oversee the business operations. The employees are guaranteed a salary as a form of compensation for the time spent and skills possessed. However, organisations need to take an initiative to formulate a reward system for employees who record exemplary performance. This system also influences the employees to perform better for the sole need of seeking recognition; hence, rewards. The rewards offered by organisations may be monetary or non-monetary, but both serve to motivate the staff. Employees are either motivated intrinsically or extrinsically. A reward system is a form of extrinsic motivation; whereby the employees strive to perform better for an external reason of obtaining recognition and rewards. On the other hand, intrinsic motivation comes from within an employee such as the need to become better, attain more skills; hence, be more valuable in the job market. All in all, motivation is what breeds job satisfaction, which in turn influence job performance positively. Managers need to realise this pattern of job performance, and should strive to motivate employees if they have a going concern objective for the company. This paper seeks to analyse a case study involving employee motivation and engagement. In addition, Herzberg-Two factor theory will be utilised in the analysis to bring the topic to perspective and provide recommendations regarding how motivation works to boost job performance.

Case Summary

            A financial services company is in dire need of a HR Consultant owing to the wake of a system shift in relation to individual bonuses, travel costs, and funding for development and education programmes. The issue at hand is that the company faced a recession owing to difficult economic conditions. This resulted in a loss of key clients, and a significant reduction in revenues. As such, the company’s management thought that the revenues are not sufficient to cater for the costs. The management decided to introduce cost-cutting measures, and a decision was arrived at reducing individual bonuses payable in the current financial year. Other cost-cutting measures introduced were to reduce travel costs and funds channeled to development and education programmes. The company is in the financial industry, which is highly competitive and the threat of substitutes high. According to Porter’s five forces model, the financial industry’s rivalry, threat of substitutes, ease of entry, and  bargaining power of buyers is high, which means that the sellers have little power (Gomes, & Romão, 2018). As such, the company has to have skilled and highly-motivated employees to have a wider market outreach. However, after the decision to introduce cost-cutting measures, the human resources team is concerned about the effect of such measures on employee motivation. Working closely with the HR team, it is evident that the company has recently emerged from a period with minimal employee engagement, and has indicated a positive trajectory. The sales team works with targets, and there are individual bonuses for targets achieved (Garrett, & Gopalakrishna, 2017). It is evident that introducing such cost-cutting measures would have a negative influence on employee motivation, which will lead to high staff turnover owing to the lucrative opportunities within the job market.

Herzberg-Two Factor Theory

            The Herzberg-Two factor theory is important in analysing employee motivation and engagement. Herzberg identified motivation and hygiene as being significant factors in job satisfaction (Pegler, 2012). According to the theory, job satisfaction/dissatisfaction and hygiene and motivation are the dependent and independent variable respectively. Motivating factors encompass the need for personal growth whereas hygiene factors represent the external environment such as salary, working conditions, and job security. In a broader sense, the motivating and hygiene factors represent intrinsic and extrinsic motivation respectively owing to the fact that motivators represent the act of performing a job whereas hygiene factors the job context (Napolitano, & Skewes, 2014). If an employee is highly motivated, job satisfaction is high. On the other hand, if hygiene factors are not met, there is no satisfaction. To achieve satisfaction, employees need to feel a sense of achievement through recognition and self-advancement. According to Herzberg, there is need to identify inherent dissatisfactions in the workplace in advance; hence, the reason for formulating hygiene factors that promote a healthy working environment. These factors encompass the working conditions such as professional relationships and company policies. If these factors are efficient, it means that there is no dissatisfaction in the workplace. As such, Herzberg recommends that organisations should reduce dissatisfaction factors, by identifying and avoiding them, and increase satisfaction factors. As such, Herzberg-Two factor theory is best positioned to explain the issue in the case study owing to its comprehensive coverage of both the working environment and individual performance.

Analysis of the Case

            Using Herzberg’s two factor theory, it is possible to identify the motivation and hygiene issues in the case study. The root of the issue results from reduced revenues owing to tough economic conditions that resulted in key clients leaving the company. As such, management felt the need to reduce its costs in a bid to remain profitable. However, the cost-reduction measures were employee-related, and this has a significant effect on motivation. To begin with, the company operates in the financial sector, which means it needs to have a well-integrated team of highly-skilled sales people owing to the high level of competition. As such, the sales team is the primary department of operations as it is responsible for sourcing for new clients and adopting customer retention strategies for existing ones. The company cannot risk losing the workforce in the sales department, which calls for high level of motivation. Currently, employee motivation and engagement is high owing to a previous period of poor job performance. They work within targets, and individual bonuses offered. In addition, they are subjected to development and education programmes that foster self-development. The decision to cut such privileges will return the company back to where it was eighteen months before, where it experienced declining scores of job performance.

Application of the Two Factor Theory to Analyse the Issue

            The issues addressed can be split into motivating and hygiene factors as follows;

            Motivating Factors. The sales team felt motivated by the thought of receiving bonuses for meeting high sales targets. This created a sense of achievement, in which they were recognised for high job performance. Achieving high sales targets became a responsibility as they were motivated extrinsically by the reward system of recognition, monetary incentives, and advancement in the job ladder. All these elements are significant in motivating employees where there is a reward system. However, in the event that the reward system is removed, the need to take up the job as an individual responsibility reduces. Once the employees fail to take up sales targets as an individual responsibility, job performance would reduce. As such, the company will have a sales team that does not feel the need to take up the job as a personal responsibility since there is no sense of achievement even after attaining the set sales targets. Where there is no recognition for work well done, there is no advancement in the job ladder. The cost cutting measures adopted by the company will result in the motivating factors being at a low level; hence, no satisfaction.

            Hygiene Factors. The cost-cutting measures within the company are part of company policy and administration that influences the working conditions. Such elements are proportional to the manner in which employees view the work environment. These are the extrinsic factors of motivation that are beyond the control of the individual employee. As such, implementing such a directive from the management will have a negative influence on the perception that the sales team has on the work environment. According to Herzberg, reduced hygiene factors result in dissatisfaction.

            The analysis of both the motivating and hygiene factors indicate that the employees will likely be dissatisfied; hence, less motivated to perform their duties. Lack of motivation will have adverse effects on the company, which will reduce revenues further.

Effects of Lack of Motivation in the Company

            After identifying a looming reduction in job performance due to low levels of motivation using Herzberg’s two factor model, it is important to address what effects such an event would have to the HR team in the company. The effects would be employee and result-oriented as follows;

            Employee-Oriented Effects. Owing to the lack of motivation, the employees will lack job satisfaction. This is because the work environment will become unfavourable for them to take responsibility for their job. Dissatisfaction reduces the passion that employees posses in carrying out a responsibility. Failure to view the targets as individual responsibilities, the employees will feel coerced to perform the responsibilities just for the sake of getting them done. This means that they will have little interest in getting a potential client, but will perform their duties since they are already set. The long-term effect is that targets will not be met and this will be visible in the company’s client base and overall revenues.

            Lack of motivation in the workplace increases cases of absenteeism among employees. The company risks having employees miss work due to the directive that alters the work environment. Employees are keen on factors that motivate them to go to work on a daily basis. For example, if employees were sent on the field to source for potential clients, they will now use such field days to accomplish their personal interests rather than marketing the company. Furthermore, they will not have the will to get more clients considering the fact that it is not possible to convince everybody they come across to buy their services regardless of the level of motivation (Garrett, & Gopalakrishna, 2017). As such, they will report that no clients were willing to take up the company’s services, whereas in the real sense they did not utilise the field day to accomplish the company’s mission. This amounts to absenteeism, which results from lack of motivation to attend work; hence, reduces job performance.

            When there are increased cases of dissatisfaction and absenteeism, the next effect would be staff turnover. The company risks losing its high performers once the directive is in effect. It is evident that the financial sector is currently at its peak, with most companies thriving in both products and client base. As such, the level of employment is high in the industry, and no company in the industry would risk adopting directives that reduce employee motivation and engagement. However, the company risks losing its sales team to other competing firms due to creating a work environment that fails to motivate the employees within the organisation. In the event that the level of dissatisfaction is high and cases of absenteeism rampant, the employees will opt for other employment opportunities; hence, increase the rate of staff turnover in the company.

            Result-Oriented Effects. In the long-run, the effects of employee dissatisfaction will be visible in the results. The company’s going concern objective will be limited owing to reduced client base, which will result in reduced revenues beyond what was experienced before the cost-cutting measures were implemented. As such, the company will have less competitive advantage in the market, and risk closure (Marburger, 2012). Just like all organisations, companies in the financial industry need to report positive results in a bid to maintain customer confidence. However, a steady or consistent reduction in profits will reduce customer confidence, which will result in the company losing its existing clients; hence, closure. As such, the sales team has a high stake in the direction in which the company’s results take. Failure to cater to their needs, which reduces the level of motivation as per the analysis using the Two Factor theory, will increase the level of dissatisfaction; hence, reduce job performance and the going concern objective in the short and long-run respectively.

Recommendations

            Herzberg recommends that employees should be motivated in order to achieve a high level of satisfaction. In addition, job satisfaction is directly proportional to job performance (Pegler, 2012). As such, it is upon the company’s management to acknowledge that applying such a directive would have an adverse effect on satisfaction. As a HR consultant, it is evident that the sales team is in distress, and it is important that the issue is addressed to the HR team and eventually the company’s management. The management’s decision can be described as a ‘knee-jerk’ reaction to economic conditions. Difficult economic times do not last, but the company should find long-lasting solutions to survive through good and bad economic times. Such solutions would involve investing in research and development. R&D may appear as an additional cost, which is against the management’s desire. However, it would aid in implementing new products and better services to the existing customers (Gomes, & Romão, 2018). The positive side of the entire issue is that the economic conditions were felt across the entire industry; hence, not caused by the company. As such, what the company ought to do is to come up with new product packages that would enhance consumer retention (Gomes, & Romão, 2018). Increasing the portfolio of investment options for consumers would be a good package to ensure that the company maintains its competitive advantage.

Conclusion

            The Herzberg-Two Factor theory of motivation is a key component of job performance. The theory addresses the issue of satisfaction; hence, more comprehensive since it incorporates intrinsic and extrinsic factors that influence job performance. As such, companies need to understand the environmental factors that would inhibit satisfaction since their represent the hygiene factor of the conditions at work. In addition, the motivational factors need to be addressed as they are responsible for enhancing intrinsic motivation to perform objectives efficiently. As such, the company should address the hygiene and motivational factors that would have an effect on job satisfaction in a bid to avert interfering with the work environment.

References

Garrett, J., & Gopalakrishna, S. (2017). Sales Team Formation: The Right Team Member Helps Performance. Industrial Marketing Management. doi: 10.1016/j.indmarman.2017.06.007

Gomes, J., & Romão, M. (2018). Gaining Sustainable Competitive Advantage. International Journal of Computers In Clinical Practice, 3(1), 13-26. doi: 10.4018/ijccp.2018010102

Marburger, D. (2012). How Strong is your Firm’s Competitive Advantage? [New York, N.Y.] (222 East 46th Street, New York, NY 10017): Business Expert Press.

Napolitano, G., & Skewes, J. (2014). Motivation in the Workplace. [San Francisco]: Babelcube Inc.

Pegler, C. (2012). Herzberg, Hygiene and the Motivation to Reuse: Towards a Three-Factor Theory to Explain Motivation to Share and Use OER. Journal of Interactive Media in Education, 2012(1), 4. doi: 10.5334/2012-04