CHAPTER ONE

INTRODUCTION

1.1. Background of the Problem

The term motivation is derived from the Latin word ‘movere’ which means to move (Baron, Henley, McGibbon and McCarthy, 2012). Certo (2016) describes motivation as giving people incentives that cause them to act in desired ways. Motivation has also been described as the process of arousing and sustaining goal-directed behaviour (Nelson, 2013).

It is commonly agreed that there are two types of motivation, namely extrinsic and intrinsic. Intrinsic motivation is that behaviour which an individual produces because of the pleasant experiences associated with the behaviour itself (Mosley, Pietri and Mosley Jnr, 2012). They stem from motivation that is characteristic of the job itself. Examples are receiving positive recognition, appreciation, a sense of achievement and meeting the challenge. According to Beer and Walton (2014), intrinsic rewards accrue from performing the task itself, and may include the satisfaction of accomplishment or a sense of influence. Mosley, Pietri and Mosley Jnr. (2012) describe extrinsic motivation as the behaviour performed, not for its own sake, but for the consequences associated with it. Examples include salary, benefits and working conditions. Extrinsic rewards come from the organization as money, perquisites or promotions from supervisors and co- workers as recognition (Beer and Walton, 2014).

Employees are motivated by a combination of both factors at any given point in time (Riggio, 2013). Globalization is being experienced by most of the organizations in Kenya. Neeraj (2014) states that the opportunities and challenges of leadership and management are significantly different from that of the past and in particular, the last decade. Industrial psychologists and management practitioners have long been interested in searching for factors which influence motivation and productivity (Chung, 2013).  According to Stanley (2012), in today’s marketplace, where companies seek a competitive edge, motivation is key for talent retention and performance. No matter the economic environment, the goal is to create a workplace that is engaging and motivating, where employees want to stay, grow and contribute their knowledge, experience and expertise. Chung (2013) continues to state that in an effort to find the determinants of motivation and performance in industry, industrial psychologists and managerial practitioners have developed a variety of theories of (and approaches to) human motivation. Many psychologists have developed motivational theories in terms of human needs or motives, while most management scholars have developed managerial theories in terms of incentives or inducements (Riggio, 2014).

Traditionally, the study of job performance has been based on two somewhat independent assumptions: that performance can be understood in terms of the individual’s ability to perform the tasks, and that performance depends solely upon the level of motivation (Chung, 2013). Motivation is generally defined as the psychological forces that determine the direction of a person’s level of effort, as well as a person’s persistence in the face of obstacles (Stanley, 2012). The responsibility for motivation is three-fold: it falls on the senior leadership, the direct manager and the employee (Bhuvanaiah and Raya, 2015). Numerous factors are involved, from trust, engagement and values (individual and organizational) to job satisfaction, achievement, acknowledgement and rewards. Motivation is essential for working autonomously, as well as for collaboration and effective teamwork (Stanley, 2012). Motivating employees for better performance encompasses these critical factors: employee engagement, organizational   vision   and   values, management acknowledgment and appreciation of work well done, and overall authenticity of leadership (Neeraj, 2014).

Performance appraisal is one of the most important human resource (HR) practice, administered in organizations by which supervisors evaluate the performance of subordinates (Neeraj, 2014).  Aguinis (2013) implies that the focus of the performance appraisal is measuring and improving the actual performance of the employee and also the future potential of the employee; it aims to measure what an employee does. Performance appraisal is generally regarded as one of the most crucial human resource management functions (Judge and Ferris 2013), furthermore; a competent performance appraisal and management system is an indispensable part of an organizations human resource management adequacies (Guest, 1997). Employee reactions to appraisal in terms of perceived employee fairness, accuracy, and satisfaction are important components of appraisal effectiveness because these perceived employee reactions can motivate employees to improve their performance (Taylor, Tracy, Renard, Harrison and Carroll 2015). That is, performance appraisal serves as a means for providing feedback that can result in improved performance (Tornow, 2013).

Research in performance appraisal has demonstrated that performance appraisal characteristics (such as appraisal purpose and source) can elicit positive employee reactions to performance appraisal and, which in turn, can motivate employees to improve their performance (DeNisi and Pritchard 2016).  Therefore, by focusing the attention on performance, performance appraisal goes to the heart of personnel management and sets out different objectives which are directly responsible for the Career development of employees and continued growth and development of the organizations (Selvarajan and Cloninger, 2016).

Employee turnover is a universal problem that all organizations around the world face (Stanley, 2012). One of the factors that contribute to high employee turnover is de-motivation (Mosley, Pietri and Mosley Jnr, 2012). There is a growing consensus among managers and leaders about the significance of combining effective motivation incentives to encourage good performance (Cole and Kelly, 2011). In order for organizations to meet their objectives, they must have a workforce that is motivated and works towards achieving the said objectives (Steers and Porter, 2011).

Motivating employees is a challenge and keeping employees motivated an even greater challenge (Levy, 2013). Today, organizations are under intense pressure to identify and implement programs that will prove effective in improving employee productivity (Deci, 2013). It is no longer enough to increase salaries and expect increased performance; it is more complex than that (George and Jones, 2013).

Employee motivation affects productivity and a poorly motivated labor force will be costly to the organization in terms of lower productivity and performance, excessive staff turnover, increased expenses, frequent absenteeism and a negative effect on the morale of colleagues (Jobber and Lee, 2014). It is a well-known fact that the success of an organization largely depends on the quality of its human resource, irrespective of the industry within which it operates (Deci, 2013). It is with this in mind that leaders and managers must strive to ensure that their workforce is motivated and therefore productive. Motivation is seen as one of the most important factors in issues related to human resources management (HRM) and organizational behaviour management (Nelson, 2013)

Theories of job performance offer that motivation is a key determinant of performance The role of motivation in the work context has been studied to understand what causes employees to try hard to do well, or more specifically what causes the arousal, direction, and persistence of voluntary actions that are goal directed (Mitchell and Linden, 2012). It is therefore imperative that managers understand what motivates employees and also how to motivate them effectively (Deci, 2013).

There have been numerous researches done on motivation and employee performance. Many scholars have postulated theories to try and understand what motivation is, and how it affects individuals (Fincham and Rhodes, 2015). One particularly significant theory was developed by Abraham Maslow and is known as the hierarchy of needs (Riggio, 2014). At the core of Maslow’s theory is a hierarchy of five categories. They are psychological, security, social, esteem and self-actualization needs (Kreitner and Kinicki, 2016).

Frederick Herzberg is another renowned motivation scholar. According to his two factor theory, dissatisfaction results from the absence of hygiene factors which include salary and relationships with others, while satisfaction results from the presence of motivating factors such as job opportunities and recognition (Kinicki and Kreitner, 2016).

Expectancy theory of motivation by V.H Vroom is a more recent theory. It says that people are most motivated to seek results they value highly and think they can achieve. It is based on employees’ perceptions of rewards and whether they are able to achieve them (Certo, 2016).

This study examined the effect of motivation on the employees at centrefor community regeneration and development [CCREAD—CAMEROON]. CCREAD is a community regeneration centre that offers specialized assistance to the communities, covering and letting as well as community management. Centre for Community Regeneration and Development mission statement is: To provide all existing and future clients with a world class standard of differentiated residential and commercial property service, while upholding our reputation for developing long-term customer relationships based on the cornerstones of honesty, integrity and professionalism.

The organization has two types of employees- volunteers and support staff. The agents form the core of the company and the vital personal touch between the brand and its community. The remuneration packages are different for both sets of groups. The volunteers salary is commission based while the support staff are on a monthly salary.

1.2. Statement of the Problem

In a highly competitive, global environment, organizations are constantly under pressure to retain their workforce (Deci, 2013). Highly skilled, reliable and experienced employees are a valuable asset for any organization. It is evident that highly motivated employees are more likely to have high productivity. However, according to Certo (2006), good performance is not as a result of motivation only, but also includes ability i.e. skills, equipment, supplies and time.

Some organizations have been known to experience a high staff turnover despite offering above average salaries (Aguinis, 2012). This tells us that money is not the only way to motivate employees. Additionally, different people are motivated by different factors. It is important for managers and supervisors to understand what motivates individual employees, and not assume a one-size-fits-all approach (George and Jones, 2013).

An organization is only as strong as its workforce. Human resources need to be treated with great care, since they are a special resource that needs to be given special managerial attention and time. (Storey, 2013). Therefore, studies like this are an invaluable resource in helping  organizations  identify  and  maximize  on  ways  to  motivate  employees  whilst mitigating employee turnover and under-performance (Steers and Porter, 2011).

With that in mind, I decided to carry out research in CCREAD into the effect of motivation on employee performance. It is the human resource amongst other factors of production in the organization which really makes a distinction (Kreitner and Kinicki, 2013). Production is considered as satisfactory when gross commission brought in by an agent is high. It is human capability and commitment which ultimately differentiate successful organizations from those that fail (Deci, 2013).

1.3. Research Questions

1.3.1. Main Question

What is the impact of motivation on performance of micro finance institution?

1.3.2. Specific Questions

1. How does motivational goal setting impact the performance of employees in micro finance institution Bamenda?
2. How do financial incentives/monetary factors affect the performance of employees in micro finance institution?

• How do recognition and reward programs affect the performance of employees in micro finance institution?

1.4. Research Objectives

1.4.1. Main Objective

To determine the effect of motivation on the performance of employees in micro finance institutions in Bamenda.

1.4.2. Specific Objectives

1. To evaluate motivational goal setting impact the performance of employees in micro finance institutions in Bamenda
2. To assess the financial incentives/monetary factors affect the performance of employees in micro finance institutions in Bamenda

• To examine recognition and reward programs affect the performance of employees in micro finance institutions in Bamenda

1.5. Research Hypotheses

H0₁: Multinational goal setting has no significant impact in the performance of employee in micro finance institutions in Bamenda.

H0₂: Financial/monetary factors have no significant effect on the performance of employees in micro finance institutions in Bamenda.

H0₃: Recognition and reward programs has no significant effect on performance of employees in micro finance institutions in Bamenda.