LV thạc sỹ_Enhancing employee motivation at Vinacomin industry and mine investment consulting JSC

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ACKNOWLEDGEMENT
At the beginning, I would like to express my most sincere thanks to Business
School, National Economic University (BSNEU) with its all members, especially
all my teachers, doctors, professors and their assistants for the knowledge and
experience that have been shared through their lectures, discussions and exams
during EMBA program, intake 8.
Next, I would like to send my special thanks to Ph.D …
Lastly, I am deeply obliged to my classmates and my family who always
encourages and helped me during finishing the thesis.
Once again, let me be thankful to other persons who are beside me in the
finishing period of thesis.


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TABLE OF CONTENTS
ACKNOWLEDGEMENT.......................................................................................i
Fiscal Year 2008................................................................................................................................33
Fiscal Year 2009................................................................................................................................33
Fiscal Year 2010................................................................................................................................33


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ABBREVIATION
CODECO

Consultancy, Technology Development & Construction Company
(Hanoi University of Mining and Geology)

HRM
MICC. JSC
MIGECO.,

Human Resource Management
Mining Consultant Joint Stock Company
Mining and Geology Technology Consulting & Expanding Joint

JSC
VIMCC

Stock Company
Vietnam Industry and Mine Investment Consulting Joint Stock

VINACOMI

Company
Vietnam National Coal, Mineral Industries Holding Corporation

N

Limited

LIST OF TABLES
“Motivation is the key to performance improvement”...........................................12


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Physiological Needs.............................................................................................14
Safety....................................................................................................................15
Social Needs.........................................................................................................15
Esteem..................................................................................................................15
Self-Actualization.................................................................................................16
Fiscal Year 2008................................................................................................................................33
Fiscal Year 2009................................................................................................................................33
Fiscal Year 2010................................................................................................................................33


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LIST OF FIGURES
“Motivation is the key to performance improvement”...........................................12
Physiological Needs.............................................................................................14
Safety....................................................................................................................15
Social Needs.........................................................................................................15
Esteem..................................................................................................................15
Self-Actualization.................................................................................................16
Fiscal Year 2008................................................................................................................................33
Fiscal Year 2009................................................................................................................................33
Fiscal Year 2010................................................................................................................................33

EXECUTIVE SUMMARY
In today’s competitive environment, managers are striving to motivate their
employees to perform at high levels. Numerous studies have shown a direct link
between employee motivation and high employee productivity but many companies
still do not recognize the link between workforce motivation and business
performance (Qenani-Petrela, Schlosser, Pompa, 2007). As motivation is critical to
organizational success, understanding the various types of individual motivation is

important for effective use of resources. Managers must find ways of motivating
employees by developing programs or practices aimed at satisfying emerging or
unmet needs.
VIMCC is one of the leading consulting coal and mine for VINACOMIN.
Human resources play an important role in developing company, however, keeping
talent employees staying for a long time is the problems which make VIMCC’s
managers have headache because there are more and more qualified employees left
VIMCC with more different reasons. So VIMCC are facing more difficulties for


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managing employees which affects to the operation of the company. So enhancing
employee motivation is very necessary for VIMCC to limit the left employees.
The thesis about “Enhancing employee motivation at Vinacomin Industry and
Mine Investment Consulting Joint Stock Company” is written in such current
circumstance with the purpose to find our some methods to improve VIMCC’s
human resources. Its objective is to provide the theoretical background on Maslow
Hierarchy needs, two factors of Herzberg and J. Stacy equity to find out the factors
influencing in employee motivation at VIMCC. Last, the thesis find out the hygiene
factors and motivations factors and propose solutions to enhance employee
motivation at VIMCC.
During the research process, the author conducted in-depth interviews with 3
managers and 10 employees at VIMCC and survey 61 respondents at VIMCC and 2
left employees of VIMCC about the relevant issues about enhancing employee

motivation. Moreover, the thesis used Annual reports, Fund and other relevant
reports of VIMCC.
After analyzing the current human management of VIMCC, the author
founded main reasons causing dissatisfaction of employee of VIMCC such as: Lack

of means of business transport; poor facilities (infrastructure) of workplace;
Dissatisfied human resources policy; Unclear recruitment process program;
Unequal compensation system; Uncooperative employees in each department; low
quality and unequal of supervisors; ineffective feedback system, Ineffectiveness of
training program
Hygiene factors are showed as in work environment, company policy and
administration, interpersonal relationship and quality of supervisors.
Motivation factors are showed as in compensation and rewards,
responsibility, work itself and career development and training.
Basing on discovered reasons, the author would like to suggest and
recommend some solutions for “enhancing employee motivation”. These solutions
can make contributions to build up the policies in company. Some recommendations


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to enhance employee motivation for VIMCC should be done such as: Improving
working environment; improving Company policy and administration; establish
better performance appraisal; diversifying the compensation and rewards systems;
setting up new feedback system effectively; completing effective training program;
reforming organization structure
The author hopes that this research’s result will help partly leader of VIMCC
to recognize and consider the importance of “enhancing employee motivation” in
human resources management.


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CHAPTER 1
INTRODUCTION

1.1 Rationale
Motivation is the key of a successful organizations to maintain the continuity
if the work in a powerful manner and help the company to survive. Motivating
employees leads to broaden skill to meet the organization’s demand. The manager
should have responsibility to work with employee to find out the individual needs
and put them closed to the organization’s needs. Satisfaction or dissatisfaction also
might work as guidance for the manager to explore the needs of the employee to
start with it to motivate them and attract them to do better performance.
The manager should motivate the employees to make them satisfaction
because motivations create productive employees who can save more time and
effort for the company. The motivated employees will do more than what is
expected and be more successful than others. It is not just the matter of how
motivated the employees are, but also how prepared they are for the job. Good
performance depends on whether employees are able to do things. The level of
performance depends on the level of motivation that stimulated some one to work
and carry out the necessary tasks to achieve the goals.
The motivation is important in any workplace and it is personal and different
for each employee. Depends on different needs will be created to satisfy these
needs. Some needs and motivation theories have been discussed in the study to
clarify what might affect the motivation.
Vietnam Industry and Mine Investment Consulting Joint Stock Company
(VIMCC) is one of leading companies in mine designing and consulting projects of
industrial and civil serving for the mining, processing and consumption, trade and
technology transfer in Vietnam for many years. However, the employee motivation
in VIMCC is not implemented well enough to develop VIMCC stronger and
stronger which affects to the strategy of the company.


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With the huge employees reaching up to 397 in which university and college
level occupying 83%, which makes VIMCC develop stably and strongly for the past
time, they have ability enough to complete their duty excellent so all works seem
smooth and make turn-over increased rapidly. However, since 2009, there were
more and more employees left from VIMCC makes delayed the process of works.
Many employees disappointed with the motivation performance of company as
salary, reward, recognition, work environment, and so on. Moreover, some
employees felt that they were behavior unequally to others in company. That made
the leader difficult to manage the company. Estimation from 2009 up to 2011, there
have been 50 left employees include chief of department and managers. It was
really problem for VIMCC leader to find out the solution for these problems.
So VIMCC now is facing with some problems of employee motivation. In
fact, there are many employees left VIMCC for the past few years, who are
successful in the other company with the same fields. The employees are complaint
about low income, unstable work, unstable job contract, uncompetitive environment
and dissatisfaction, unfair treatment, unrecognizing and so on. Moreover, the
employees are dissatisfied with their work because there is no motivation for them.
Reward, recognition, training and development are not paid attention properly. To
get achievement which the company set out, improving humane resources play vital
role for the managers to find out in practice what the level of employee motivation
the company is. It is very good for them to dig deeper in reward and recognition
which is valuable in the future as manager.

1.2

Research objectives

Objectives of the research are:
- To synthesize relevant theories of motivation with VIMCC
- To analyze the current motivation of employee to identify motivators and demotivators at VIMCC

- To propose some solutions to enhance employee motivation for VIMCC


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1.3 Research questions
The research must answer the followings questions:
1. What are the motivation factors and de-motivation factors in VIMCC?
2. What are the factors influencing employee motivation at VIMCC?
3. How to enhance employee motivation at VIMCC?

1.4

Research methodology

1.4.1 Research process

Figure 1.1: Research process


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1.4.2

Data collection

The research uses two sources of data to analyze
Primary data collection:
Interviews: The data which is used for researching and analyzing is the
information selected from employees and manager of VIMCC. The purpose of

interview of VIMCC’s employees and managers is to know how the managers
understand their employees and how they evaluate their behavior in the company.
Basing on the analyzed information, the thesis can bring forward the managers of
VIMCC more effective solutions.
Table 1.1: Data collection

Methodology
In-depth interviews

Respondent
3 managers and 10
employees at VIMCC

Information need to collect
- Factors affecting to employee’s
satisfaction and motivation at VIMCC
now.
- Situation of employee motivation at

Survey

61 employees and

(questionnaires)

managers at VIMCC

VIMCC
- Assessment about policy and
administration of employee motivation

at VIMCC

In-depth interviews

2 left employees of
VIMCC

- To make clear about the reason of left
employees
- How to make employees satisfied

- Survey method:
- The survey was sent to 100 people at some departments at VIMCC. The
number of valid questionnaires used in research 61respondents.
- Questionnaires: The questionnaires were designed for VIMCC’S staffs,
employees left from VIMCC. For detailed, please see Appendix 1 for references.
These questionnaires distributed to VIMCC’S managers aiming at finding what are


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HRM policies and practices and which kind of problems they are facing with the
implementations
-

For in depth interview: It was conducted with 3 managers and 10

employees at VIMCC and 2 left employees from some departments as: HRM
Department, Technical Department, Financial and Accounting Departments,
Transaction Department, Lo Thien Department who provided the current

information on human resources management in the company
Secondary data collection: Employee in every department in VIMCC and
other relevant reports of VIMCC to analyze the reality of employee motivation such
as: VIMCC policies and reports and documents from 2008-2010, Salary policies
document, and other regulations

1.4.3 Data analysis
Raw data gathered from the interview and questionnaires are analyzed by
MS Excel. Statistical tests are performed to generate the results suggesting how
employees satisfy with the company’s human resources policies such as motivation
factors. The reaction of employees is also analyzed to determine whether those
policies really satisfy the employees and lead to the better performance.

1.5 Scope of research
The research was carried out at 565 Nguyen Trai, Thanh Xuan, and Hanoi
where VIMCC’S head office is located. With more than 397 employees in 17
departments, the head office has the main responsibility of managing the whole
company in designing, consulting labor, company administration, etc. The research
concentrated on enhancing motivation of employees at staff- level. The research
collected information about VIMCC in the 2008-2010 periods.

1.6 Structure of research
Chapter 1: Introduction
Chapter 2: Theoretical background on employee motivation
Chapter 3: Analyzing current employee motivation at VIMCC
Chapter 4: Solutions to enhancing employee motivation at VIMCC


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CHAPTER 2
THEORETICAL BACKGROUND ON EMPLOYEE
MOTIVATION
2.1 Definition of employee motivation
Motivation is a complex phenomenon which is influenced of individual,
culture, ethnic and historical. According to Den Cenzo at, al, (1996), people who are
motivated use a greater to perform a job than those who are not motivated.
Motivation can be defined as “a series of energizing forces that originate both with
and beyond an individual’s self”. These forces determine the person’s behavior and
therefore influence his/her productivity (Jackson, 1995). In other words this means
that all thinkable factors of physical or psychological aspects that we interact with,
leads to a reaction within our self or of the entire organization. This action can be
either positive or negative and lead to an increased or decreased productivity and
motivation. Energizing forces can therefore be anything from the work environment
to the charisma of the management and so on.
Another definition of motivation may be defined as the desire and willing ness
of person to do the best possible job or to exert the maximum effort to perform
assigned works (Cardy, 2001).
Motivation is the forces within an individual that account for the level,
direction and persistence of effort expended at work. Level refers to the amount of
effort a person puts forth (e.g., a lot, a little, direction refers to what person choose
when presented with a number of possible alternatives (e.g., whether to exert effort
toward product quality or product quantity); and persistence refers to how long a
person sticks with a given action; (e.g. to try for product quantity and give up when
it is found difficult to attain) (Cascio, 1998).
In order to be motivated, a person needs to have certain basic needs fulfilled.
If these needs are lacking, a person self esteem and self -actualization can not
develop. This could result in lack of interest to progress and develop, both

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professional and personally. There are several theories of human needs which are
the foundation of motivation (Latham and Ernst at al., 2006).

2.2 Role and importance role of staff motivation
“Motivation is the key to performance improvement”
There is an old saying you can take a horse to the water but you cannot force it
to drink; it will drink only if it's thirsty - so with people. They will do what they
want to do or otherwise motivated to do. Whether it is to excel on the workshop
floor or in the 'ivory tower' they must be motivated or driven to it, either by
themselves or through external stimulus.
Are they born with the self-motivation or drive? Yes and no. If no, they can be
motivated, for motivation is a skill which can and must be learnt. This is essential
for any business to survive and succeed.
Performance is considered to be a function of ability and motivation, thus:
•

Job performance =f(ability)(motivation). (Gerhart, 2003)

Ability in turn depends on education, experience and training and its
improvement is a slow and long process. On the other hand motivation can be
improved quickly. There are many options and an uninitiated manager may not even
know where to start. As a guideline, there are broadly seven strategies for
motivation.
•

Positive reinforcement / high expectations

•

Effective discipline and punishment

•

Treating people fairly

•

Satisfying employees needs

•

Setting work related goals

•

Restructuring jobs

•

Base rewards on job performance

These are the basic strategies, though the mix in the final 'recipe' will vary
from workplace situation to situation. Essentially, there is a gap between an


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individual’s actual state and some desired state and the manager tries to reduce this

gap.
Motivation is, in effect, a means to reduce and manipulate this gap. It is
inducing others in a specific way towards goals specifically stated by the motivator.
Naturally, these goals as also the motivation system must conform to the corporate
policy of the organization. The motivational system must be tailored to the situation
and to the organization.

2.3 Applied theories on staff motivation
2.3.1 Relevancy of three theories to VIMCC
In this study we use three theories as: Maslow’s hierarchy, two factors theories
of Herzberg and the equity theory of J. Stacy because three theories are suitable for
analyzing staff motivation of VIMCC in case:
Firstly, Maslow’s theories help to understand human motivation management
training and personal development and the manager understand which needs more
important for individual employees to have good human resources policy to
motivate them up to the higher and higher class. From that, VIMCC can stimulate
human resources policy to motivate them more.
Secondly, two factors of Herzbeg help the manager considers about company
policy, supervision, interpersonal relations, working conditions and salary. These
are de-motivation factors and motivation factors. The manager can appreciate the
satisfaction and dissatisfaction about works of employees. From the survey, the
author find out which factors are satisfied the employees of VIMCC, which factors
are dissatisfied them and find out the solution to motivate them.
Lastly, J. Stacy theory of equity helps the manager and policy makers to
appreciate inputs and outputs with relevant people. Apply this theory VIMCC
analyze the external equity and internal equity to find out the way to motivate
employees.


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2.3.2 Maslow’s hierarchy of needs
Abraham Maslow developed Hierarchy of Needs model in 1940-1950s’ 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 to fulfill their own
unique potential (self-actualization) are today more relevant than ever.
If motivation is driven by the existence of unsatisfied needs, then it is
worthwhile for a manager to understand which needs are the more important for
individual employees. In this regard, Abraham Maslow developed a model in which
basic, low-level needs such as physiological requirements and safety must be
satisfied before higher-level needs such as self-fulfillment are pursued. In this
hierarchical model, when a need is mostly satisfied it no longer motivates and the
next higher need takes its place. Maslow's hierarchy of needs is shown in the
following diagram:
Maslow's Hierarchy of Needs

Figure 2.1: Maslow’s hierarchy of needs

Physiological Needs
Physiological needs are those required to sustain life, such as: air, water, food,
sleep, sex… which are essential for life.


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According to Maslow's theory, if such needs are not satisfied then one's
motivation will arise from the quest to satisfy them. Higher needs such as social
needs and esteem are not felt until one has met the needs basic to one's bodily

functioning.
Safety
Once physiological needs are met, one's attention turns to safety and security
in order to be free from the threat of physical and emotional harm. Such needs
might be fulfilled by:
•

Living in a safe area

•

Medical insurance

•

Job security

•

Financial reserves

According to Maslow's hierarchy, if a person feels that he or she is in harm's
way, higher needs will not receive much attention.
Social Needs
Once a person has met the lower level physiological and safety needs, higher
level needs become important, the first of which are social needs. Social needs are
those related to interaction with other people and may include:

• Need for friends
• Need for belonging

• Need to give and receive love
Esteem
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 self-esteem such as self respect and achievement. External esteem
needs are those such as social status and recognition. Some esteem needs are:
•

Self-respect

•

Achievement

•

Attention


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•

Recognition

•

Reputation

Maslow later refined his model to include a level between esteem needs and

self-actualization: the need for knowledge and aesthetics.
Self-Actualization
Self-actualization is the summit of Maslow's hierarchy of needs. It is the quest
of reaching one's full potential as a person. Unlike lower level needs, this need is
never fully satisfied; as one grows psychologically there are always new
opportunities to continue to grow.
Self-actualized people tend to have needs such as:
•

Truth

•

Justice

•

Wisdom

•

Meaning

Self-actualized persons have frequent occurrences of peak experiences, which
are energized moments of profound happiness and harmony. According to Maslow,
only a small percentage of the population reaches the level of self-actualization.
The application of Maslow’s needs hierarchy for management, an
important point for management to keep in mind is that employees are motivated by
needs that are not satisfied. A lower level needs are satisfied, they retain less
motivational value in an individual behavior. A need does not have to be completely

satisfied, however, before the next level of need merges. A person need to move
from stage one to two and three when stage one is 80% percentage. The difficulties
to use need hierarchy concept is the variability in the amount of satisfaction
required before moving from one to other category. The manager can see these
difficulties to determine which needs are relatively unsatisfied in order to affect to
the behavior of employees.


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There are some important implications for management. There are
opportunities to motivate employees through management style, job design,
company events, and compensation packages, some examples of which follow:
•

Physiological needs: Provide lunch breaks, rest breaks, and wages that are

sufficient to purchase the essentials of life.
•

Safety Needs: Provide a safe working environment, retirement benefits, and

job security.
•

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 challenge and the opportunity to

reach their full career potential.
However, not all people are driven by the same needs - at any time different
people may be motivated by entirely different factors. It is important to understand
the needs being pursued by each employee. To motivate an employee, the manager
must be able to recognize the needs level at which the employee is operating, and
use those needs as levers of motivation.

2.3.3 Two factors theory of Herzberg
Frederick Herzberg’s book “The motivation to work”, written with research
colleague Bernard Mausner and Barbara Block 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. While the study involved only 200 people,
Herzberg’s considerable preparatory investigations, and the design of the research
itself, enable Herzberg and his colleagues to gather and analyses an extremely
sophisticated level of data.
Frederick Herzberg’s theory is a modification of Malow’s theory. He had
notices the notion that those factors which cause job satisfactions are the opposite to


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those that caused job dissatisfaction. Herzberg survey was carried from a group of

accountants and engineers. The conclusion is that employee are influenced by two
factors are motivators and hygiene factors Motivators create job satisfaction which
permit psychological growth and development on the job such as achievement,
recognition, responsible, advancement, challenges and the work itself and other
intrinsic aspects when there are fulfilled. On the other hand, hygiene factors will
enhance dissatisfaction when they are not fulfilled. These include security, salary,
work condition, company policy and administration, supervision, interpersonal
relations with subordinates and supervisors, status and so on.
Herzberg (1959) constructed a two-dimensional paradigm of factors affecting
people's attitudes about work. According to the theory, the absence of hygiene
factors can create job dissatisfaction, but their presence does not motivate or create
satisfaction.

2.3.3.1 Hygiene factors
Hygiene factors are those factors which are essential for existence of
motivation at workplace. These do not lead to positive satisfaction for long-term.
But if these factors are absent / if these factors are non-existent at workplace, then
they lead to dissatisfaction. In other words, hygiene factors are those factors which
when adequate / reasonable in a job, pacify the employees and do not make them
dissatisfied. These factors are extrinsic to work. Hygiene factors are also called as
dissatisfies or maintenance factors as they are required to avoid dissatisfaction.
These factors describe the job environment / scenario. The hygiene factors
symbolized the physiological needs which the individuals wanted and expected to
be fulfilled. Hygiene factors include:
* Company policy and administration: There are two kinds of over-all
company policy and administration characteristics. One involved the adequacy or
inadequacy of company organization and management. It means that the
organization and management have to be clear about the task of employees and
make them satisfied with their work.

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* Supervisor- technical: It can be classified as competence or incompetence,
fairness or unfairness of supervisors. This category is also about the supervisor’s
willingness or unwillingness to delegate responsibility or his willingness or
unwillingness. A supervisors kept things smoothly and efficiently reported as factors
in a sequence of events that led to exceptional feelings about the job.
* Salary: It is a compensation role. Salary should be appropriate and
reasonable. It must be equal and competitive to those in the same industry in the
same domain.
* Interpersonal relations- supervision play an important role to involve
recognition or changes in status with the company or company and management
policies. The relationship of employees with his peers, supervisors and subordinates
should be appropriate and acceptable. There should be no conflict or humiliation
* Working condition: is a physical condition of work, amount of work or
facilities available for doing the work. Working condition should be adequate, safe,
clean and hygienic; the work equipment should be updated and well-maintained.

2.3.3.2 Motivation factors
According to Herzberg, hygiene factors cannot be regarded as motivation
factors. The motivation factors yield positive satisfaction. These factors are inherent
to work. These factors motivate the employees for a superior performance. These
factors are called satisfiers. These are factors involved in performing the job.
Employees find these factors intrinsically rewarding. The motivators symbolized
the psychological needs that were perceived as an additional benefit. Motivation
factors include:
* Recognition: This category was some act of recognition including
supervisor, some other individual in management, management as an impersonal
force, a client, a peer, a professional colleague or general public. The defining

characteristic was the emphasis on the act of recognition or on the characteristic of
interaction


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* Work itself: This category mentioned about the feeling of the employee
about the job. Thus, job can be routine or carried, creative or studying, overly easy
or overly difficult. But Richard Hackman and Greg Oldham, job characteristics
theory states that employees will be more motivated to work and more satisfied
with their jobs to extent that jobs contain certain core characteristics which are
related to beneficial work out-comes, including high work motivation. There are
five core job characteristics that activate three critical psychological states are:

Figure 2.2: Job characteristics model

- Skill variety: The degree to which the job requires the person to do different
things and involves the use of a number if different skills, abilities and talents.
- Task identity: The degree to which a person can do the job from beginning
to end with a visible outcome.
- Task significance: The degree to which the job has a significant impact on
the others-both inside and outside the organization.
- Autonomy: The amount of freedom, independence, and discretion the
employee has in areas such as scheduling the work, making decisions and
determining how to do the job


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- Feedback: The degree to which the job provides the employee with clear

and direct information about job outcomes and performance
* Achievement: Achievement also includes its opposite, failure, and the
absence of achievement. This category included the following: successfully
completion of a job or aspect of it, having a good idea or solution to problems,
made money for the company, vindication, and seeing the result of one’s work
* Possibility of growth: This category was considered as an objective factor
in the situation may sound paradoxical. However, in some cases, possibility of
growth were increased or decreased. It includes not only the likelihood that the
individual would be able to move onward and upward within the organization but
also a situation possible of growth to advance the own skills and profession.
* Advancement: Advancement was an actual change in the status or position
of the person in the company. In situation in which an individual transferred from
on part of the company to another without any change in status but increased
opportunities for responsible work, the change was considered and increased
responsibility, but not formally an advancement.
It is important to understand that the two types of factors are not mutually
exclusive and that management must try to fulfill both types of need for an
employee to be truly satisfied with their job. Once the Hygiene factors have been
satisfied providing more of them will not create further motivation but not
satisfying them may cause de-motivation; unlike the Motivation factors where
management may not fulfill all of them but the workers may still feel motivated.
Major companies have recognized this situation when designing their methods of
reward

and

recognition.

( />
herzberg-theory-of-motivation-a78)

The Two-Factor theory implies that the managers must stress upon
guaranteeing the adequacy of the hygiene factors to avoid employee dissatisfaction.
Also, the managers must make sure that the work is stimulating and rewarding so
that the employees are motivated to work and perform harder and better. This theory


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emphasize upon job-enrichment so as to motivate the employees. The job must
utilize the employee’s skills and competencies to the maximum. Focusing on the
motivational factors can improve work-quality.

2.3.4 Equity theory of J. Stacy
According to equity theories, introduced by J. Stacy Adam, stated that
employees compare the ratio of their inputs (efforts) and out comes (rewards) to the
input-outcome ratios of other employees who are viewed as comparable to
themselves. (Bowditch, 1997)
Outcomes
-------------

Outcomes
=

Person’s own inputs

--------------comparable other’s input

Education, experience, job qualifications, skills, etc, are the input to the job by
employees. The outcomes of the employees receive from the job are: pay, benefit,
rewards, intrinsic job factors, etc

The equity happens when an employee compares the outcome/person’s own
inputs is equal to the ratio of the other employee outcome to inputs. The inequity
happens if the ratio is not equal. For example, an consulting senior employee with
many years of working experiences and high education get the same salary as a new
or graduated journal employee, the senior employee will perceive it as inequity and
unfair.
When employee perceive an inequity, he/she will do in one of the following
action (Dubrin, 2002)
- Alter the outcome: An underpaid person will ask for more salary or bonus,
promotional opportunities, or vacation time
- Alter the inputs: An unpaid person or a person who feels treated inequitable
might decrease effort or time devoted to work. Someone even create faking sick
days to take care of personal business
- Distort the perception: a person, who feels of inequity, can distort his/her
perception of their own or other’s inputs or outcomes.


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- Changes the reference source: he/she can change to another reference
source whose outcome/input ratio is similar to his/her own
- Leave the situation: A person, who feels of inequity, can choose to quit a
job and get greater equity in another.

Figure 2.3. Equity theory of J. Stacy

There is very little application of Equity in the workplace. Furthermore, the
individual are very sensitive with inequity. It is better to identify those inequities
and have some research before some application can be applied (motivation to work
2007)

In conclusion, J. Stacy theory show that the individuals are concerned both
their own rewards and comparison with others. The theories also pointed that
employees expect a fair and equitable return for their contribution to their jobs and
decide what their equitable return should be after comparing their inputs and
outcomes with what others get in their colleagues. Last but not least, employees
who perceive themselves as being in an inequity scenario will attempt to reduce the
inequity either by distorting inputs and/or outcomes psychologically, by directly
altering inputs and/or outputs, or by quitting organization.