Luận văn Thạc sỹ_Enhancing staff motivation ThangLong securities

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Subject: ENHANCING STAFF MOTIVATION AT THANG LONG SECURITIES
JOINT STOCK COMPANY

CHAPTER 1
INTRODUCTION
1.1

Rationale

Vietnamese securities market was born with the mark of the establishment of Hochiminh
Securities Trading Center (HOSTC) in 20/07/2000. The market as many experts said is a
newly developed, emerging, and highly potential. Up to now, there have been 101
securities companies and they continuously have demand in recruiting staffs to expand
their business. The current labor market cannot meet the demand of securities companies.
To attract talent candidates, companies offer lots of good treatment policies. This is a
reason why many staffs change their jobs from this company to another company among
securities companies and leads to the situation of intellectual blooding that can happen at
any company. Intellectual blooding, - increases year by year, threatens the quality and
stability of securities companies. Therefore, keeping high motivation for staffs is highly
demanded in securities companies nowadays.
As for Thang Long securities (TLS) - one of the five first securities companies in Vietnamsince its establishment in 2000, it is always the Company’s policy to enhance human
resource management. After 10 years of operations, the number of staffs of TLS is 425
with the age from 22 to 45.
Currently, TLS is standing at a challenge of high rate of staff turnover, affecting the
company’s operation. Many key staffs are looking for more appealing opportunities outside
the company with very competitive remuneration package. Most of them have left the
company for pursuing the new goals of their career path in a new environment. From 2006
to 2008, the number of employees at TLS was rather stable. Occasionally, one or two staff
resigned the work in a year. After the financial crisis in 2008, TLS had launched a

campaign of becoming the biggest company in market share in brokerage. TLS has
recruited lots of employees. Before October 2008, the number of employees in TLS was
210 employees but at the current time (June, 2010), TLS has 425 employees (excepted for


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probation, noviciate employees). However, from 2009 up to now, there have been 5% of
key mangers and staffs left the company. They were qualified, experienced employees. In
the condition of lack of support from information technology system, this affects to
company’s operation very much.
There are lots of causes that lead to this situation. In the side of staff, some thought that
TLS’s working environment was boring, treat policy was unsatisfactory. Some claimed that
the work was too hard, Information System was unqualified and did not support for their
work, they were always overloaded and worked over-time day by day. The others left
because they were not highly appreciated, etc… There may be reasons that rose from
management, especially in Human Resource management. Being affected in such context,
TLS as many other companies has to face with difficulties in retaining staffs and enlisting
the co-operation of staffs to achieve the business goals. Facing the tough competition of the
labor market, TLS is now focusing on perspectives of its staff on motivation to retain talent
staffs.
Being a Team Leader of Securities Service Department of TLS, witnessing the
continuously “out-in” of the members in the section, which affect heavily to the operation
of the Department,

the author has chosen the topic “ENHANCING STAFF

MOTIVATION AT THANG LONG SECURITIES JOINT STOCK COMPANY ” for the
research, which has not been studied by other students in the previous courses under the
English Master of Business Administration Programs, with a great expectation to explore
the changes in human resource and raise some recommendations for enhancing staff

motivation at TLS.
1.2

Research problem

In the context of global economic integration, competition in securities market is becoming
fiercer, especially from foreign companies and funds. The current human resource shortage
in the securities market threatens the quality and stability of securities companies. The flow
of staffs among securities is one of the important forms of social and enterprises’ human
resource deployment. The company can adjust the proportion personnel composition,
optimize the group structure and maintain the vitality of the company through staffs’
turnover. The staffs just only contribute their best effort to the company when they have
motivation at work. It is said that working motivation is the most important priority of any


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company in order to retain their staffs, however, it is not all companies recognizing this
importance.
TLS is now paying attention to enhance staff’s motivation and consider as a sensitive and
compulsory task in human resource management. This research focuses on finding out the
reason why there have been lots of people leaving the company and try to give some
effective solutions to motivate staffs.
1.3

Research Objectives

The research will try to achieve the following objectives:
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Systematize motivation theories that are suitable with the research.

-

Analyze current situation of staff motivation at TLS.

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Find out motivation factors and de-motivation factors at TLS.

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Propose recommendations to enhance staff motivation at TLS.

1.4

Research questions

This research is designed to answer the following questions:
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What is the actual situation of staff motivation at TLS?

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What factors affecting to staff motivation at TLS?

-

How to enhance staff motivation at TLS?

1.5

Scope of research
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The research was carried out in Hanoi, where TLS’ head office is located. TLS has
branch in Hochiminh and Haiphong city. However, due to the limitation of long
distance and time constraint, the author could not come to these offices to conduct
research. But the author sent them questionnaire for their involvement.

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The research concentrated on enhancing motivation of employee at staff-level
because in TLS, approximate 90% employees are at staff level.

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Company’s data was collected from 2007 to June, 2010 period.

-

Timing for primary data: in July, 2010


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1.6

Research methodology

1.6.1 Research process
Step 1:
Collect
secondary
data

Motivation
background

Theories, documents related
motivation
Designing questionnaires based on
motivation theoretical background
and implementing survey

Step 2:
Collect
primary data

Designing question guidelines
based on motivation theoretical
background and Performing indepth interviews

Motivation
situation at TLS

Analyzing the result

Finding out motivation factors and
de-motivation factors

Proposing recommendations to
enhance staff motivation at TLS
Figure 1.1: Research process
Source: from author’s information
1.6.2 Data collection
In view of specific purposes and limited scope of the study, the author adopted the
following methods of data collection in the research.


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Table 1.1: Research data collection
N
o

Data
collecting

Respondents

methods
Secondary data
1
Desk study

Number of
respondents

Information collected

Fundamental theories and
arguments on staff motivation,
HR policy…
TLS policies and TLS reports and
documents (from 2007 to June,
2010).

Primary data
1
Questionnaires
(20-30

Current TLS

81 staffs

staffs

condition, C&B, reward and

Current TLS

recognition, ...
Comment about current HR

questions)
In-depth
2

Staff’s assessment about working

15 staffs

staffs

policy, working environment…,

interviews

expectation for changes in salary,

(20-30

rewards, promotion…
Comment about TLS‘s HR

questions)

TLS

3 staffs

ex-staffs

policy, working conditions, C&B,
reward, promotion. Reasons for

Staffs in

3

Observation

3 staffs

stop working at TLS….
Expectation for salary, HR policy,

other

ideal working conditions , current

securities

situation of staff motivation at

companies
Current TLS

All staffs

their own companies
Actual situation of staff

staffs, TLS

motivation at TLS, understand

ex-staffs

how the motivation affects work’s
quality and effectiveness, and to
the company’s operation…
Source: author’s information

The sample size was 81 employees (accounted for 19.06 of the population) to ensure the
representative sample of this survey.


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In the survey, the author divided the population by departments in TLS and based on the
sample size that determined, the author calculated the number of employee need to join the
survey.
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Questionnaires: The Questionnaire was designed for TLS staff, TLS ex-staff. For
details, please see Appendix 1 and Appendix 3.

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In-depth interview: In-depth interviews were conducted with some department
managers and vice managers: HRM department, Back Office department,
Brokerage department and some staffs in different departments: Back Office,
Analysis, Accounting and Finance, Brokerage, Transaction departments. Besides,
the author had some interviews with staffs from other securities companies. For
detail, please see Appendix 2 and Appendix 4.

1.6.3 Data analysis
Quantitative data was analyzed using MS Excel.

1.7

Thesis structure

The thesis includes four chapters:
Chapter 1: Introduction
Chapter 2: Theoretical background on staff motivation
Chapter 3: Current situation of staff motivation at Thang Long securities company
Chapter 4: Recommendation for enhancing staff motivation at Thang Long securities
company

TABLE OF CONTENTS
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ACKNOWLEDGEMENT


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Firstly, I would like to send my sincere thanks to my supervisor, Dr. Phan Thi Thuc Anh,
who guides me a lot during the time I wrote this thesis. She always motivates me not only
in conducting this thesis but also in my personal life since I am a very busy and responsible
young mother with my two- month-baby. This thesis certainly cannot finish without her
help. Besides, I want to say thanks to all the lectures, tutors, professors, teaching assistants
and respective people at E-MBA7 program of Business school at National Economics
University.
Secondly, I would like to send my thank to a large number of Thang Long securities
company’s staffs, my friends who helped me a lot in fulfilling questionnaires, supplying
needed information, giving advices..
The last but very important is my beloved family who support me a lot during the last time.
Especially my mother and my husband always give me spirit encouragement that helps me

overcome difficulties at my busy- work life and studying.
Thank you very much!


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ABBREVIATIONS
TLS

: Thang Long securities joint stock company

HOSTC

: Hochiminh Securities Trading Center

HRM

: Human resource management

JD

: Job description

C&B

: Compensation and benefits

F

: frequency

MBA

: Master Business Administration

MA

: Master of art

PH.D

: Doctor of Philosophy

Dr

: Doctor

HSC

: Hochiminh securities joint stock companies

SSI

: Saigon securities joint stock companies

KLS

: Kimlong securities joint stock companies

FPTS

: FPT securities joint stock companies


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LIST OF FIGURES
Figure 1.1: Research process..............................................................................................4
Figure 2.1: The Maslow’s hierarchy of need....................................................................18
Figure 2.2: John Stacey Adams’s Equity theory diagram-job motivation........................21
Source: www.businessballs.com.....................................................................................21
Figure 2.3: Two factor theory of Herzberg.......................................................................23
Figure 2.4: The combination of hygiene and motivation factors.....................................27
Figure 3.1: TLS’s key milestones.....................................................................................30
Figure 3.2: TLS’s organization structure..........................................................................33
Figure 3.3: The TLS’s staff structure categorized by Sex................................................34
Figure 3.4: TLS staff structure categorized by year of service........................................35
Figure 3.5: TLS staff structure categorized by qualifications..........................................35
Figure 3.6: TLS staffs’ satisfied level with current job....................................................39
Figure 3.7: TLS staffs’ satisfied level about working condition......................................45
Figure 3.8: TLS staffs’ satisfied level about C&B...........................................................53
Figure 3.9: TLS’s staffs’ satisfied level of recognition of Supervisor..............................59
Figure 3.10: TLS staffs’ satisfied level about PA.............................................................61
Figure 3.11: TLS staffs’ satisfied level about promotion opportunities...........................63
Figure 3.12: TLS staffs’ satisfied level about customers/partners relationship................66


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LIST OF TABLES
Table 1.1: Research data collection........................................................................................5
Table 3.1: The TLS’s staff structure categorized by Sex......................................................34
Table 3.2: TLS staffs’ opinion about important level of each hygiene factors.....................40
Table 3.3: TLS staffs’ opinion about important level of each motivation factors................41
Table 3.4: Staff needs met by TLS based on Maslow’s model............................................43
Table 3.6: TLS staffs’ satisfied level about internal equity in C&B....................................48
Table 3.7: TLS staffs’ satisfied level about the internal fairness in C&B............................49
Table 3.8: The salary level of some other securities companies..........................................50
Table 3.9: The rate of turnover salary of some other securities companies.........................51
Table 3.10: TLS staffs’ satisfied level about C&B comparing with other companies.........52
Table 3.11: TLS staffs’ satisfied level about C&B comparing with contribution................52
Table 3.12: TLS staffs’ satisfied level about company policy..............................................53
Table 3.13: TLS staffs’ satisfied level about recognition of Supervisor..............................58
Table 3.14: TLS staffs’ satisfied level about performance appraisal (PA)...........................60
Table 3.15: TLS staffs’ satisfied level about promotion opportunities................................63
Table 3.16: TLS training course in 2010..............................................................................64
Table 3.17: TLS staffs’ satisfied level about customers/partners relationship.....................65


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EXECUTIVE SUMMARY
In the context of global economic integration, competition in securities market is becoming
fiercer, especially from foreign companies and funds. This causes increasingly intellectual
blooding among securities companies. Moreover, the current human resource shortage in
the securities market threatens the quality and stability of securities companies. The rate of
intellectual blooding has increased year by year. To attract talent people, 100 securities

companies have more than 101 ways to meet their demand of human resource. This flow of
staffs among securities is one of the important forms of social and enterprises’ human
resource deployment. As a result, TLS has been facing a tough difficulty in human
resource for years. A lot of qualify staffs have moved to the competitor companies, and
following big customers has left with them. This affects so much on business operation of
the company.
So how to enhance staff motivation to have their commitment with the company? It is
considered as a sensitive and compulsory task in human resource department. Actually, not
all organizations recognize the importance of it. For TLS, it is time to find out the reason
why there have had a lot of people leaving the company. From this, the company will have
effective solutions to retain staff because staffs just only contribute their best effort to the
company when they have motivation at work.
With so many above mentioned problems, the author decided to do the research on
“Enhancing staff motivation at Thang Long securities joint stock company”. The
objectives of this research are:
-

Systematizing motivation theories that are suitable with the research.

-

Analyzing current situation of staff motivation at TLS.

-

Finding out motivation factors and de-motivation factors at TLS.

-

Proposing recommendations to enhance staff motivation at TLS.

The research has been done mostly at TLS Head Office in Hanoi with participant of 81
staffs in the company, 3 ex-TLS staffs and 3 staffs from other companies. For staff in other
branches, the author sent them questionnaire for their involvement. Most data were derived
for the period from 2006 to June, 2010 in relation to motivating elements such as working


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conditions, compensation and benefits, reward & recognition, promotion opportunities,
recruitment, training…By identifying the real picture of staff motivation and factors which
affect on staff motivation at TLS, the author has recommended proper solutions to enhance
staff motivation in order to retain talented people.
The author has applied The two factor theory of Frederick Herzberg, The Maslow’s
hierarchy of needs theory, The equity theory of J. Stacey to analyze the problems.
Questionnaires, interviews guidelines were conducted basing on these theories for the fact
analysis and assessment about staff satisfaction and motivation at work.
Through the survey, the author finds that motivation factors at TLS are:
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Attractive turnover salary policy because in TLS, money is a motivator.

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Free training for staffs: TLS pays all training fees of every course for its staff.

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TLS has recognized and created conditions for staff to get achievements.

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TLS has concentrated on developing company culture to strengthen internal
relationship.

However, staff motivation at TLS is not really good. This causes from the fact that some
hygiene factors are not ensured and some motivation factors are not being concentrated on.
These are followings de-motivated factors:
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Working room is too noisy, small.

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Salary increasingly policy is only on paper, not in practice.

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Cooperation between departments is not good, people usually try to push
responsibilities to each other whenever a problem arises.

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Recognition, employee appraisal is not fair enough,

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JD is not clear and it cannot reflect all responsibility of staff.

Based on research findings, the author has recommended some solutions for enhancing
staff motivation at work:

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Improving working conditions.

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Modifying Compensation and Benefits system.

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Strengthening the corporate culture and the relationship between staffs.

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Improving performance appraisal system.

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Designing an effective Reward and Recognition program.

-

Improving Human Resource Policy and Administration.

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Building a standard recruitment procedure and diversifying labor resource in
recruitment.

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If staff motivation has been implemented correctly, it will create spur for staff to
concentrate on their work effectively, thus improve the productivity and indirectly make
the company become “employer of choice” for many people.


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CHAPTER 2
THEORETICAL BACKGROUND ON STAFF MOTIVATION
2.1 Definition of Staffs motivation
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Motivation:

Motivation can be defined as internal and external factors that stimulate desire and energy
in people to be continually interested in and committed to a job, role, or subject, and to
exert persistent effort in attaining a goal. Motivation is the energizer of behavior and
mother of all action. It results from the interactions among conscious and unconscious
factors such as the (1) intensity of desire or need, (2) incentive or reward value of the goal,
and (3) expectations of the individual and of his or her significant others.
(www.businessdictionary.com)
Motivation is the activation or energization of goal-orientated behavior. Motivation is said
to be intrinsic or extrinsic. The term is generally used for humans but, theoretically, 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 the basic need to
minimize physical pain and maximize pleasure, or it may include specific needs such as
eating and resting, or a desired object, hobby, goal, state of being, ideal, or it may be
attributed to less-apparent reasons such as altruism, selfishness, morality, or avoiding
mortality. Conceptually, motivation should not be confused with either volition or

optimism. Motivation is related to, but distinct from, emotion. (Wikipedia -Seligman,
Martin E.P. (1990), Learned Optimism, New York: Alfred A. Knopf, Inc., p. 101, ISBN 0394-57915-1).
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Staff motivation


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There are many researchers and scientists to define the term of “staff motivation”. In
“Working with the leading people” by BBP Professional: “In practice the work motive and
motivation are commonly used in different contexts to mean the following: (1) Goals of
outcomes that have become desirable for a particular individual. We say that money, power
or friendships are motives for doing something. (2) The mental process of choosing desired
outcomes, deciding how to go about them (and whether the likelihood of success warrants
the amount of effort that will be necessary) and setting in motion the required behaviors.
(3) The social process by which other people motivate us to behave in the ways the wish.
Motivation in this sense usually applied to the attempts of organization to get workers to
put in more effort”.
As the author’s idea, staff motivation is a process to stimulate staff by financial and nonfinancial incentives in order to retain talent staffs staying with the company. This definition
is applied to analyze the staff motivation in TLS.
2.2 The role of staff motivation
Actually, employee is the key factor deciding the failure and success of a company. This is
becoming more and more important in the world today. With the development of
technology, the role of employee is more important than the past. Therefore, a company
needs to motivate employee for its repaid changing workplace and managers need to
understand what motivates employees within the context of the responsibilities they
perform.
Performance is considered to be a function of ability and motivation. According to Gerhart,
2003: Job performance = f(ability)(motivation)
This formula shows that if individual can be “motivated”, he or she can perform better. If

their needs and goals are integrated with those of the team and company, individuals will
work more effectively (thus, their productivity will rise) or produce a better quality of
work, or might contribute more of their creativity and initiative to the job. Ability in turns
depends on education, experience and training and needs time to improve while motivation
can be improved quickly.
In order to understand employee motivation, a company must realize that people are
different. This means that different things motivate different employees. There are some
types of employee motivation such as: achievement, affiliation, competence and power
motivation.


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Achievement motivation drives the employee to goal itself. Taking in to this
account, the employers often present challenges to employees and such incentives
like a promotion or cash is suitable.

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Affiliation motivation refers to the case when employee’s motivation is the prospect
of rising up in the ranks of the corporation. They work harder ad better when their
favorable attitudes and cooperation are complimented by their managers and
probably to get a promotion. This type is characterized by ambition.

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Competence motivation is to drive to be good at something, allows the employee to
perform high quality work. Competencies, abilities and skills are required for any
employee to perform the work. Therefore, employers must know to improve their

skills and knowledge time by time.

-

Power motivation is a drive to influence people and change situations. The
employee is driven to a leadership position through successful performance.

Such types of motivation require the employers to define the drives of each staff in order to
find out appropriate solutions to motivate different people for ensuring the company’s
sustainable growth. If there is a lack of motivation at work, it will impact to the low staff
performance, affect the hierarchy of the company or when employee has less job
satisfaction, they tend to behave in a bad attitude to the other people or even the company,
and of courses it may affect the working environment.
2.3 Selected theories on staff motivation
2.3.1

Maslow’s hierarchy of Needs

Abraham Maslow developed the Hierarchy of Needs model in 1940-50s USA, and the
Hierarchy of Needs theory remains valid today for understanding human motivation,
management training, and personal development. Indeed, Maslow's ideas surrounding the
Hierarchy of Needs concerning the responsibility of employers to provide a workplace
environment that encourages and enables employees to fulfill their own unique potential
(self-actualization) are today more relevant than ever.
In his theory, Maslow developed his hierarchy of needs based on research about what
motivates people to work. He argues that until these most pressing needs are satisfied,
other needs have little effect on an individual’s behavior. In other words, we satisfied the
most pre-potent needs first and then progress to the less pressing ones.

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The most pre-potent needs are shown at the bottom of the ladder, with prepotency
decreasing as one progress upwards.
The first level of need, Biological and physiological needs is the basic needs of every one
for basic survival such as need for food, air, water, and oxygen, to be active, sleep and sex.
When these are not satisfied we may feel sickness, irritation, pain, discomfort, etc.. The
next one is the safety needs. When physiological needs are met, people intent to other
higher layer of needs. They will want to find out a safe circumstances, stability and
protection. Belongingness and Love needs are next on the ladder. Humans have a desire to
belong to groups: clubs, work groups, religious, family, gangs, etc. We need to feel loved
(non-sexual) by others, to be accepted by others. Performers appreciate applause. We need
to be needed.

Figure 2.1: The Maslow’s hierarchy of need
Source: BBP professional, 2005
Once a person feels a sense of “belonging”, the need to feel important arises. Esteem needs
may be classified as internal or external. Internal esteem needs are those related to selfesteem such as self respect and achievement. External esteem needs are those such as
social status and recognition. The last level of needs is self-actualization. This is “the desire
to become more and more what one is, to become everything that one is capable of
becoming”. People who have everything can maximize their potential. They can seek
knowledge, peace, esthetic experiences, self-fulfillment, etc.


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In summary, the theory explains that human beings have wants and desires which influence
their behavior, only unsatisfied needs can influence behavior, satisfied needs cannot. The
needs of people are many and different so they are arranged in order of importance from
the basic to the complex. The person moves to the higher level of needs only after he/she
has satisfied with the lower one. And this theory may be applied in business as following:

-

Physiological Needs: Provide lunch, rest breaks and wages, rest facilities that are
sufficient to purchase the essentials of life

-

Safety Needs: Provide a safe working environment, benefit, job security, pension
schemes.

-

Social Needs: Create a sense of community via team- based projects and social
events.

-

Esteem Needs: Recognize achievements to make employees feel appreciated and
valued. Offer job titles that convey the importance of the position.

-

Self- actualization: Provide employees a challenges and the opportunity to reach
their full career potential.

However, needs also are different from this employee to that employee. Therefore, the
manager should identify and understand the employee’s needs to find out appropriate level
of motivation for each employee.
2.3.2

The equity theory of J. Stacey

Equity Theory attempts to explain relational satisfaction in terms of perceptions of
fair/unfair distributions of resources within interpersonal relationships. Equity theory is
considered as one of the justice theories. It was first developed in 1963 by John Stacey
Adams, a workplace and behavioral psychologist, who asserted that employees seek to
maintain equity between the inputs that they bring to a job and the outcomes that they
receive from it against the perceived inputs and outcomes of others (Adams, 1965).
Equity theory proposes that individuals who perceive themselves as either under-rewarded
or over-rewarded will experience distress, and that this distress leads to efforts to restore
equity within the relationship. It focuses on determining whether the distribution of
resources is fair to both relational partners. Equity is measured by comparing the ratios of
contributions and benefits of each person within the relationship. Partners do not have to
receive equal benefits (such as receiving the same amount of love, care, and financial


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security) or make equal contributions (such as investing the same amount of effort, time,
and financial resources), as long as the ratio between these benefits and contributions is
similar.
Much like other prevalent theories of motivation, such as Maslow’s hierarchy of needs,
Equity Theory acknowledges that subtle and variable individual factors affect each
person’s assessment and perception of their relationship with their relational partners
(Guerrero et al., 2007). According to Adams (1965), anger is induced by underpayment
inequity and guilt is induced with overpayment equity (Spector 2008). Payment whether
hourly wage or salary, is the main concern and therefore the cause of equity or inequity in
most cases. In any position, an employee wants to feel that their contributions and work
performance are being rewarded with their pay. If an employee feels underpaid then it will
result in the employee feeling hostile towards the organization and perhaps their coworkers, which may result the employee not performing well at work anymore. It is the
subtle variables that also play an important role for the feeling of equity. Just the idea of

recognition for the job performance and the mere act of thanking the employee will cause a
feeling of satisfaction and therefore help the employee feel worthwhile and have more
outcomes.
An individual will consider that he is treated fairly if he perceives the ratio of his inputs to
his outcomes to be equivalent to those around him. Thus, all else being equal, it would be
acceptable for a more senior colleague to receive higher compensation, since the value of
his experience (an input) is higher. The way people base their experience with satisfaction
for their job is to make comparisons with themselves to the people they work with. If an
employee notices that another person is getting more recognition and rewards for their
contributions, even when both have done the same amount and quality of work, it would
persuade the employee to be dissatisfied. This dissatisfaction would result in the employee
feeling underappreciated and perhaps worthless. This is in direct contrast with the idea of
equity theory, the idea is to have the rewards (outcomes) be directly related with the quality
and quantity of the employees contributions (inputs). If both employees were perhaps
rewarded the same, it would help the workforce realize that the organization is fair,
observant, and appreciative. This can be illustrated by the following equation:


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Figure 2.2: John Stacey Adams’s Equity theory diagram-job motivation
Source: www.businessballs.com
Inputs and outcomes
Inputs

Equity

Outcomes

dependent on comparing

own ratio of input/output
with ratios of 'referent'
others
Inputs are typically: effort, People need to feel that Outcomes
loyalty,

hard

tolerance,

typically

all

work, there is a fair balance financial rewards - pay, salary,

commitment, skill, ability, between
adaptability,

are

inputs

and expenses,

benefits,

flexibility, outputs. Crucially fairness arrangements,
determination, is measured by comparing commission-plus

pension

bonus

&

intangibles-

heart and soul, enthusiasm, one's own balance or ratio recognition, reputation, praise
trust in our boss and between
superiors,
colleagues
subordinates,

support

inputs

and and

thanks,

interest,

of outputs, with the ratio responsibility, stimulus, travel,
and enjoyed or endured by training, development, sense of

personal relevant ('referent') others. achievement and advancement,

sacrifice, etc.

promotion, etc

A state of equity exists whenever the ratio of person’s outcomes to inputs equals the ratio
of another’s outcome to inputs.
If we feel that inputs are fairly rewarded by outputs (the fairness benchmark being
subjectively perceived from market norms and other comparable references) then generally
we are happier in our work and more motivated to continue inputting at the same level.


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If we feel that our ratio of inputs to outputs is less beneficial than the ratio enjoyed by
referent others, then we become demotivated in relation to our job and employer.
Inequity occurs when the input/outcome ratios are out of balance, such as when a person
with a high level of education or experience received the same salary as a new-lesseducated employee. Perceived inequity also occurs in the other direction. Thus, if an
employee discovers she/he is making more money than other people who contribute the
same inputs to the company, she may feel the need to correct the inequity creates tensions
within individuals that motivate them to bring equity into balance
Generally the extent of de-motivation is proportional to the perceived disparity with other
people or inequity, but for some people just the smallest indication of negative disparity
between their situation and other people's is enough to cause massive disappointment and a
feeling of considerable injustice, resulting in de-motivation, or worse, open hostility. Some
people reduce effort and application and become inwardly disgruntled, or outwardly
difficult, recalcitrant or even disruptive. Other people seek to improve the outputs by
making claims or demands for more reward, or seeking an alternative job.
Understanding Equity Theory - and especially its pivotal comparative aspect - helps
managers and policy-makers to appreciate that while improving one person's terms and
conditions can resolve that individual's demands (for a while), if the change is perceived by
other people to upset the Equity of their own situations then the solution can easily
generate far more problems than it attempted to fix.

Equity Theory reminds us that people see themselves and crucially the way they are treated
in terms of their surrounding environment, team, system, etc - not in isolation - and so they
must be managed and treated accordingly
2.3.3

The two factor theory of Herzberg

Frederick Herzberg (1923-2000), clinical psychologist and pioneer of 'job enrichment', is
regarded as one of the great original thinkers in management and motivational theory.
Frederick Herzberg's book 'The Motivation to Work', written with research colleagues
Bernard Mausner and Barbara Bloch Snyderman in 1959, first established his theories
about motivation in the workplace. Herzberg's survey work, originally on 200 Pittsburgh
engineers and accountants remains a fundamentally important reference in motivational
study. In 1959 he proposed the “Two Factor theory” of human motivation in the workplace.


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He explained that the people are influenced by two factors. Satisfaction and psychological
growth was a factor of motivation factors. It belongs to job and personal needs of staff.
When these factors are satisfied, it should create motivation and satisfaction in work.
Dissatisfaction was a result of a lack of hygiene factors. Those factors belong to
organization environment. If it is positive, it will prevent un-satisfaction in work.
On his research, he categorized those factors often caused the employee unsatisfied on
his/her job such as working condition, salary, working relations and company policy and
administration, supervision. For those staff who happy with this, they will satisfy and it
should not cause any discomfort. Herzberg believed that workers responded to feelings of
connection with their work. Besides, he also realized that Motivation factors include
Achievement, Recognition, Work itself, Responsibility, Advancement.

Employees

Employees
not
dissatisfied
but not
motivated

dissatisfied
and
unmotivated

Hygiene factors

Employees
satisfied and
motivated

Motivation factors

Figure 2.3: Two factor theory of Herzberg
Source: www.valuebasedmanagement.net
2.3.3.1 The Hygiene factors
-

Company policy and administration: There are two kinds of overall company

policy and administration. One involved the adequacy or inadequacy or company or
organization management. For example, there can exist a situation in which a man has line
of communication crossing in such a way that he does not really know for whom he is
working, in which he has adequate authority for satisfactory completion of his task, or in

which a company policy is not carried out because of inadequate organization of the work.
The second kind of over-all company policy and administration involved not inadequate
but the harmfulness or beneficial effects of the company’s policies. There are primarily


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personal policies. The agreement or disagreement of the employee with the company
policy, the high or low company status can affect the employee attitude of work, too.
(Frederick Herzberg, 2008, P.48).
-

Supervision-technical: This category mentioned about the competence or

incompetence, fairness or unfairness of the supervisors; the willingness or unwillingness to
delegate responsibilities, to teach. (Frederick Herzberg, 2008, P.47).
-

Salary: This include the amount of money, received unexpected wage or not

received expected increase, received wage increase less or later than expected, wage
compare favorable or unfavorable with others doing the same or similar job. (Frederick
Herzberg, 2008, P.144).
-

Interpersonal relations: There are three major categories: Interpersonal relations-

superior (include: friendly or unfriendly relation with supervisor, learned a great deal from
supervisor, supervisor support or not support employee with management, supervisor
honest or dishonest, willing or unwilling to listen to suggestion); Interpersonal relationssubordinate(Good or poor working relationship, good or poor personal relationship with
subordinates); Interpersonal relations-peers ( liked or did not like people who working

with, cooperation of lack of cooperation on the part of his co-worker, being part of
cohesive group, being isolated from group).
In the work place, sometimes an organization cannot fulfill the need of the employees and
make them feel resent and want to change the job, want to go away and find another job
but with the good relationship with the organization, the employees could forget the desire
and stay in the organization. No one can concentrate all the long day on the work so they
need someone to talk, someone to share their feeling so building a good relationship within
employee is very important. The employee will feel happy and enthusiastic when they
come to work because here they can meet many people who understand them and have
many things in common with them.
-

Job security: Job security can be understood that the organization is working well

in its field and the organization in developing reliably. The organization must has a stable
policy in recruiting and must has a stable policy in compensation so that these organization
and make them to work at the organization for a long time and think that they are having
the jobs for life.


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-

Working conditions: This mention about the physical condition of work, the

amount of work, or the facilities available for doing the work. This also include: adequacy
or inadequacy of ventilation, lighting, tools, space and other such environmental
characteristics. (Frederick Herzberg, 2008, P.48).
Working conditions have an important role in enhancing the employee motivation, in
which working relation is a key element. Besides, another vital factor affect the employee

motivation is working environment. This factor not only refers to atmosphere at the
workplace, it also mentions to other facilities at work such as enough staff to perform the
job, etc.
2.3.3.2 The Motivation factors
-

Achievement: Achievement also includes its opposite, failure, and the absence of

achievement. This category included the following: successful completion of a job or
aspect of it, having a good ideas or solutions to problems, made money for the company,
vindication, and seeing or not seeing the result of one’s work. (Frederick Herzberg, 2008,
P.45, P.143).
Achievement is important for all the people and it is a big motivator for the employees to
work and contribute to the development of the companies. If an employee was assigned
with a difficult and unspecific task, he would not know how to finish this task and he
would not find the motivator to finish the task. Though it is a difficult, specific task, the
employee would easy to see this achievement and the more he does the task, the more he
feels the result of his efforts and that the reason why he wants to complete the job in the
best way. So when the manager assign a task for his employees the task must be specific
and must be clear so that the employees will not misunderstanding. They can finish the
work in the way that the managers are expected and when they get the reward due to the
achievement they made, they will have more motivation to do the job.
-

Recognition: The major criterion for this category was some act of recognition to

the employee. The source could be almost anyone: supervisor, some other individual in
management, management as an impersonal force, a client, a peer, a professional
colleague, or the general public. The evidences of recognition are: work praise with or
without reward given; work noticed-no praise; work not noticed; ideas accepted or not

accepted by the company; inadequate work blamed or criticized with or without