CHAPTER II - REVIEW OF RELATED LITERATURE

2.1 Employee motivation

Motivation, generally, was derived from the Latin word movere, which means to

move. However, this definition is not sufficient for purposes of discussion in this study.

Different articles and researches about motivation in relation to employment mean more

than to move. The term has been used in the early years and given definition by different

personalities. According to Atkinson (1964), motivation is the contemporary influence on

the direction, vigor and persistence of action. Vroom (1964), on the other hand, defines it

as a process governing choice made by persons or lower organisms among alternative

forms of voluntary activity. It was also said that motivation is related to a set of dependent

and independent variable relationships providing explanations as to the direction,

amplitude and persistence of an individuals behavior, holding constant the effects of

aptitude, skill and understanding of the task and the constraints operating in the

environment (Campbell & Pritchard, 1976).

Three common denominators appear in the definitions mentioned. Talking about

motivation has primary concerns with: first, what energizes human behavior. Second is

what directs or channels such behavior and third, how behavior is sustained or maintained.

This signifies a significant factor to understand human behavior at work. The concept of

motivation has received vital attention over the course of this century and this has become

increasingly prominent in the efforts of people in the organization and practicing

companies to understand and influence organizational behavior.

 Nilay Yavuzs, in her thesis entitled The Use of Non-monetary Incentives as a

Motivational Tool: A Survey Study in a Public Organization in Kenya, the term motivation

was further elucidated. The strength of the research is that it focuses not only on one

meaning to give a better relation of the word to the purpose of the study. This same

research does the same. It was stated that employee motivation is a focus of attention since

it may be a way to control the gap between the actual desired state of commitment of an

employee to the organization. Because of this, the challenge for the organization is to find

out the values and goals of its employees and where they go beyond in the organization

(Yavuz, 2004). The said study aimed to demonstrate the extent of non-monetary incentives

in utilizing the public sector of Turkey and whether they can motivate the employees

enough as much as monetary incentives do.

Motivation was also studied in a research done by Patrick Lumumba in relation to

non-monetary incentives. It was entitled An Assessment of the Effectiveness of Non-

Monetary Incentives in Motivating Sacco Society Staff: A Case Study of Front Office Savings

Accounts Workers in Nairobi County. The research includes the same scope of this present

study that determines how non-monetary compensation is viewed by employees. However,

the related literature also tackles about the performance of the employees to result in the

success of the organization. The study found that the non-monetary incentives such as job

promotion and career development had the most effect while teamwork had the least

(Lumumba, 2012).
2.2 The two kinds of incentives

In every business, the motivation of employees is a must. Because without this,

there will be no progress. With this, the management critically finds ways of how to

motivate said employees. In order for them to function, they must be given something in

return. This may be in the form of monetary and non-monetary incentives. Monetary

rewards are enough to get the most out of employees in some businesses. However, other

types of compensation may be more effective in some. By definition, the two kinds of

compensation are easy to distinguish but their impacts on an employees performance can

be more difficult to measure (Lewis, 2001).

A study that discusses the concept of both monetary and non-monetary rewards is

The Impact of Monetary and Non-Monetary Rewards on Motivation among Lower Level

Employees in Selected Retail Shops by Martha Harunavamwe and Herbert Kanengoni

(2013). Motivation management is important to improve competitiveness, profit and sales

that is why many retail industries in South Africa are engaging in a strategic approach

(Bateman and Snell, 2007). In Maslows Hierarchy of needs, money is really important in a

sense that it can satisfy various needs like food which is a physiological need. This is why

management depends upon rewards like monetary compensation as a significant factor of

motivation (Wallace & Zeffane, 2001). Money is also important in McClellands Acquired-

Needs Theory because it indicates feedback of performance for high need achievers. In

contrast, non-monetary compensation gets the better of persons who wants to satisfy their

need for affiliation by recognizing them verbally and by challenging jobs to high achievers.
 Monetary and non-monetary are two the groups of rewards. This was divided by

Armstrong (2007). The former includes but is not limited to base pay, merit pay, incentives,

commission and bonus like the Christmas bonus and 13th month pay. On the other hand,

non-monetary rewards include recognition, promotion, flexible working hours and

company uniforms. In this research, training development is an addition to the examples of

non-monetary compensation given to the linemen of Meralco. Money as a motivator has

been downplayed by most behavioral scientists like Herzberg who discussed the

significance of non-monetary factors as motivators. But still, money is a great factor since it

is the means by which employees can buy or get a lot of the things they need (Robbins,

2003).

It is said that it cannot be denied that regular pay is needed to meet the basic

physiological and safety needs which are the first two levels of Maslows Hierarchy of

Needs. Hence, employees who are on a lower level easily get attracted to this. Likewise,

money is treated by employees as an indication of feedback to their services that makes it

having a positive impact in motivation (Langton & Robbins, 2007). However, rewards are

not simply given to employees without having planned it well because in order for these

rewards to motivate, the type of reward must have a value to the employee and it must be

looked forward to as a consequence of performance. The study done by Harunavamwe and

Kanengoni (2013) focuses mainly on whether or not monetary and non-monetary

compensation has significant effects and which reward best motivate the lower level of

employees. It is to say that the basic objective of the study is to compare. However, its

weakness would probably be that all their listed objectives are broad. To compare with this
present study, the researches focus only on one kind of compensation and list down the

standard effects of such compensation.

Another literature studied both monetary and non-monetary compensation. Like

the other researches, both kinds of rewards were taken into consideration that differs it

from the present study. But it is similar in a manner as to measuring the motivation of

employees derived from it. Comparing the Impact of Monetary and Non-monetary Reward

Programmes Towards Employee and Organisational Motivation by Neelkamal Narsee

(2012) mentions that to be motivated by the organization or company, human capital is

necessary. Another similarity with this present research is that retention is also given

emphasis. By the way employees are treated, the organizational growth and survival are

determined (Lawler, 2003). Financial rewards are undeniably important factors to be given

to employees in order that they perform exemplarily. However, forms of recognition are

not limited to money as part of an organizations reward system (Luthans, 2002).

Organizations sometimes forget that appreciation and recognition are important elements

of a reward system and these are actually inexpensive and factors of high return to a

reward program (Sarvadi, 2005). The study of Narsee, being focused on both rewards, is

also concerned about the preferences of employees. In other words, if they will be asked to

choose which from which, what would they prefer? Therefore, there must be an

understanding about the employees preference too (2012). In the present research, it is

not exactly that employees preferences are to be answered. Only if they are motivated

enough with what is given is of primary issue.

2.3 Extrinsic and intrinsic motivation

Intrinsic motivation refers to practice that is directed by internal rewards. In other

words, the motivation to act in a certain way arises from within the individual because it is

innately pleasing. This is different from extrinsic motivation which includes engaging in a

behavior because of getting external rewards or averting penalty (Cherry, 2016). When one

pursues a thing solely because of enjoyment, that is doing so because of intrinsic

motivation. This is the kind of motivation that engages in an act or behavior arising from

within and not for external rewards such as prizes or money. This, however, does not

necessarily mean that being intrinsically motivated is devoid of its own rewards. These

rewards associate developing positive emotions within the individual. These feelings take

place when individual is given a sense of value, a sense of breakthrough or competence.

Another definition is that intrinsic motivation happens when we do things without

any obvious external rewards. We simply enjoy an activity or see it as an opportunity to

explore, learn, and actualize our potentials (Coon & Mitterer, 2010). It also refers to the

reason we carry out certain exercises for deep-seated fulfillment. It may be said that it is

performing an activity in and of itself (Brown, 2007). Experts propose that people who are

intrinsically motivated are more creative. In the workplace, productivity can be increased

by using extrinsic rewards such as monetary compensation, but the truly existing quality of

the work done is activated by intrinsic factors (Griggs, 2010).

Extrinsic motivation, too, can be advantageous in some instances. This is because

extrinsic rewards can be applied to motivate people to obtain new skills or knowledge. In

the process, when these new skills have been mastered, people may then become
intrinsically motivated to continue the activity. Extrinsic motivation is also beneficial when

external rewards become a source of feedback. This permits a person to know that his

performance has achieved a quality that deserves recognition (Cherry, 2016).

2.4 Non-monetary incentives in the workplace

Non-monetary incentive, being an important element of reward systems, has been

applied by many organizations in motivating their employees. Different researches have

already been conducted in order to attest on its impact. However, the findings in one

research are not always the same with the others.

Effects of Non-monetary Benefits on Employee Delight by Ahmed et al. (2011) found

that non-monetary benefits do not significantly affect the delight at the workplace of the

employees. The Employee Delight Model that it conducted contained eight non-monetary

variables. To mention, these were workstation ambience, appreciation and recognition,

recreational activities, career growth opportunities, improved workplace relationships,

advanced technology, flexible working hours and autonomy. These were all proved to be

unsuccessful since these did not bring satisfaction in the lives of the employees. However,

the researchs weakness is the fact that the respondents were very limited (Ahmed et al.,

2011). It could not have been known whether the respondents were sufficient samples for

its population.

A research in Kenya done by Lumumba (2012) entitled An Assessment of the

Effectiveness of Non-monetary Incentives in Motivating SACCO Society Staff: A Case Study

of Front Office Savings Accounts Workers in Nairobi County, the findings were: promotion
has a large effect on the employee motivation at the Saccos as promotion results in the

experience of countless distinct emotional states and performance is a major factor

considered for promotion. It also showed that Saccos working condition affects the

employee motive as there is certainty of an individuals role in relation to the aim of the

organization. This is more likely one of the presumed conclusions of the present study.

Nilay Yavuz (2004) concluded in her research The Use of Non-monetary Incentives

as a Motivational Tool: A Survey Study in a Public Organization in Turkey that the non-

monetary incentives in the organization is lowly applied. Feedback is given about the

employees performance. However, the kind of feedback they receive is of a negative one.

With this, the organization does not necessarily benefit from non-monetary incentives as a

motivational tool. The survey results display that the employees contributions in the

organization are not given adequate recognition.

Another related literature, Impact of Reward and Recognition on Job Satisfaction

and Motivation: An Empirical Study from Pakistan found that there was a close relationship

between several aspects of work motivation and satisfaction but acknowledgement along

with work itself and operating procedures have shown low mean values and minimal

relationship. In Pakistani context, the employees do not expect so much of an appreciation

from the boss on doing a good job. These weaknesses can be worked out if the persons

higher in rank motivate their subordinates with proper recognition and appreciation even

through small things like their personal concerns. Likewise, when employees are allowed

to participate in making decisions, they will be more enthusiastic working in the

organization (Danish & Usman, 2010).

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