AN INVESTIGATION ON THE EFFECT OF REMUNERATION ON MOTIVATION AND PERFORMANCE OF EMPLOYEES

By

KIBET MUREY

Presented To

Department of Business Administration and Management

ABSTRACT
The objective of the study was to identify the effect of remuneration on motivation and performance of employees a case of Nation Media Group.
Understanding what motivated employees and how they were motivated was the focus of many researchers following the publication of the Hawthorne Study results (Terpstra, 1979). Five major approaches that have led to our understanding of motivation are 
Maslow's need-hierarchy theory, Herzberg's two- factor theory, Vroom's expectancy 
theory, Adams' equity theory, and Skinner's reinforcement theory.
Qualitative research was applied in this study. This is ideal because it facilitates the 
identification of variables for the study. In this study, the variables were derived from the 
research objectives. The population of interest in this study was employees at the Nation 
Media Group. A sample size of 100 employees of the target population will be used in this 
research on cessation. The study collected data u§ing a self administered questionnaire. 
Coded data was tabulated in Statistical Package for Social Science and Frequency * 4 ^
tabulation was to capture the effect of remuneration on motivation and performance of 
employees.
From the data analysis finding, Forty one of the targeted 100 staff responded by returning 
the questionnaire. Motivation has a great influence on the output of a business. Enterprises rely on the 
efficiency of the staff to make sure that services meet the demands of the customers. If 
employees lack motivation, their services to the customers are threatened. This indicates 
that employees are the most important of all the factors of production and if their 
motivation is low then there will be an influence on their effectiveness and efficiency.
CHAPTER ONE
1.0 INTRODUCTION
1.1 Background of the Study
The term motivation has been derived from the word ‘motive’. Motives may be defined as 
drives or impulses within an individual. It implies something within a person which 
prompts him into action. Motives are expression of a person’s need or wants and hence 
they are personal or internal. Motives are needs start and maintain activity and determine 
the behaviour of an individual. Motives provide direction to human behaviour as they are 
directed towards certain conscious and sub conscious goals. Therefore motivation is the 
complex of forces inspiring a person at work to willingly use his capacities for the 
accomplishment of certain objectives. It is something that impacts a person into action and 
continues him in action with enthusiasm. According to Dale’s Beach motivation is an 
inspiration process which implies the members of a team to pull their weight effectively 
to give their loyalty to the group to carry out properly the tasks.
The foregoing definition points out the several characteristics of motivation.
Motivation is a psychosocial concept.
It is concerned with intrinsic forces operating within an individual which impel him to act 
or not to act in a particular way.
A motive is a personal and internal feeling.
Motivation is a dynamic and continuous process as it deals with human beings who are an
ever changing entity modifying themselves every moment. Motivation is a complex and
/
difficult function. Therefore a manager must understand and satisfy multiplicity of human 
needs, but needs are mental feelings which cannot be described and measured accurately.
Motivation process has been presented as a circular process; it starts with a feeling of an 
unsatisfied need that causes tension and an individual takes action to reduce this tension.
When the needs are satisfied, tension is removed and the person feels inspired to work in a 
particular direction. This in turn results in revaluation of the situation and discovery of new 
needs. Motivation is different from satisfaction; motivation is the process of stimulating an 
individual or a group to take desired action. On the hand satisfaction implies contentment 
arising from the satisfaction of a need.
At the cognitive level, motivation is the product of anticipated values from a given course 
of action and the perceived probability that the action will lead to these values. Motivation 
has been described as a complex process. To understand or explain it, three approaches 
have been adopted; the content theory approach, Incentive theory approach and the process 
theory approach. From the content theory approach, two prominent theories are those of 
Maslows and Herzbergs
Maslows need hierarchy theory by Abraham H. Maslow an American psychologist has 
developed a theory of motivation on the basis of human needs. The theory positions man as 
perpetually wanting animals and his needs are never fully satisfied as soon as its place is 
satisfied, another one takes its place. This process continues from birth to the death of a 
person.
The Maslows need hierarchy involves the physiological needs i.e. Sex, sleep, clothing, 
shelter etc, Safety needs i.e. physical safety or protection against murder, fire, accident 
and economic security against unemployment, social needs i.e. the need to belong and to 
be accepted by others ego needs i.e. Need for self respect, self confidence, feeling of 
personal worth and independence and self actualization needs. This need lies at the top 
rank.
In some cases, improving worker’s performance and morale can be a secondary objective 
for introducing Performance Related Pay. The real motivation can be to use PRP by the 
corporate organisations as an instrument to obtain political support for more funding or 
more flexibility over pay by the government. PRP may also be used as a way to have better 
control of the pay bill. The introduction of PRP strategies can indeed be a way to contain 
salary costs by reducing the incidence of automatic progression through salary levels. The individualisation of pay may sometimes also be a way to circumvent the collective 
bargaining process, thus reducing the influence of trade unions and re-establishing 
managerial control.
Results of the recently completed survey on strategic human resources management1 show 
that more than four-fifths of European countries have developed a performance appraisal 
system for employees. Two thirds of countries have a system that, at least in formal terms, 
links individual performance with organisational goals. In 80 % of cases, performance 
management systems are “somewhat linked” or “strongly linked” with pay. In countries 
where no reforms of the pay system have taken place, priority is often given to promotion 
policies, position re-classification and other non-pay instruments.
The first experience with pay for performance proceeds the 1980s-1990s periods. In 
Canada, for example, a formal system of merit increments for civil servants was first 
introduced in 1964. In France, the earliest version of the General Regulations for civil 
servants, enacted in 1946, specified that individual or collective bonuses could be granted 
periodically to civil servants in the recognition of exceptional performance. In Japan, there 
has been a provision for a “diligence allowance” for national public employees since the 
early 1950s. However, most of these plans (except in Canada) were ad hoc granting of 
rewards and did not allow financial rewards to be included in salaries - or in the calculation 
of pensions - on a longer term basis.
* 4 %
The introduction of PRP policies across the EC Countries for example took place in the late 
1970s and early 1980s. PRP schemes were introduced in the United States in 1979 for the 
Senior Executive Service and in 1981 for middle-level managers. Denmark, the 
Netherlands, New Zealand, Spain, Sweden and the United Kingdom, all adopted some 
form of performance-related pay policy in central government during the 1980s. 
Experimental policies were tried in the 1980s in selected agencies in Finland, Italy and the 
German postal service. A second wave of introduction of PRP schemes occurred in the late 
1980s and early 1990s, with Australia, Finland, Ireland or Italy adopting PRP policies. A 
more recent wave took place in the late 1990s, with countries such as Germany, Korea, Switzerland and Hungary adopting PRP policies. Norway also adopted performance-related 
pay elements for top level managers at the end of the 1990s.
It is likely that the use of performance-related pay will continue to spread in the public 
sectors of other countries. Yet, there has been very little evaluation of whether 
improvements actually occur and whether benefits justify costs in corporate organisations. 
Studies reveal a similar lack of evaluation of many private sector schemes. Despite this 
lack of evaluation, there seems to be widespread support both among elected officials and 
public sector managers themselves for the principle of linking pay to performance.
The extent of PRP application and its target group differs from country to country and 
organisation to organisation. Initially, PRP policies were essentially directed only at senior 
management and middle management levels. It is still the case in countries like Canada, 
Ireland, and Italy. Progressively PRP policies have tended to include all categories of 
public employees, even if policies are often more effectively applied for managerial staff.
The form of payment as a tool for employee motivation and performance varies 
considerably across countries and organisations. Two main types of systems can be 
identified (in many cases the two are combined in a single policy):
• Merit increments, which take the form of either a fixed or variable increase which 
is added to and can become a permanent part of the basic pay. Pay progression is
* 4 ^
therefore linked, wholly or in part, to individual performance rather than seniority.
• Bonuses, which are one-off payments which are not consolidated into basic pay. 
They may be expressed in either cash terms or a percentage of the basic pay. They 
can be distributed independently of the level of salary.
1.2 Problem Statement ,
In the right circumstances, incentives such as pay lead to enhanced motivation, effort, and 
performance. In the real world, however, incentives often have dysfunctional effects, and 
do not necessarily lead to improved motivation and performance. If the incentive system is badly designed, or badly communicated to staff, it can have serious adverse effects that can 
lead to degradation in individual or collective performance.
Previous reports on PRP in European countries just like in Kenya show that there are 
recurring problems with the implementation of performance-related pay policies , notably a 
lack of discrimination and inflation in performance ratings, and a failure to establish a clear 
relationship between pay and performance. In many cases, PRP policies have been found to 
fail to satisfy key motivational requirements for effective performance pay. Overall, 
previous reports in the UK for example revealed widespread dissatisfaction with PRP 
schemes and raised important questions as to the impact of these schemes on the 
motivation and performance of managers.
A number of academicians have written on the weaknesses and shortcomings of 
performance-related pay systems2 3. Other experts tend to assert that performance pay 
systems have a positive impact on performance4. What is more consensual is the fact that 
despite the growing use of performance-related merit schemes, their true impact remains 
sadly under-researched5.
It seems from the available literature that both collective and individual PRP policies have
risks. These risks include and are not limited to the following:
*
• Under an individual performance pay policy, resources and information are more 
likely to be hoarded than shared. Marsden and Richardson, (1992) reported that 
many workers said that merit produced a degree of staff jealousy and a decline in 
morale. Employees can see PRP as an entitlement, not as a reward. Instead of 
trying harder, low performers may rationalise their poor performance evaluations 
as merely a sign of incompetence or bias on the part of those conducting the -

Learn and Obtain Diploma in Web development, Software development, Business, Technology and Creative Skills taught by industry experts. Explore a wide range of skills with our professional tutorials.

About E-Project Material Centre


E-Project Material Centre is a web service aimed at successfully assisting final year students with quality, well researched, reliable and ready made project work. Our materials are recent, complete (chapter 1 to Minimum of Chapter 5, with references) and well written.INSTANT ACCESS! INSTANT DOWNLOAD. Simply select your department, choose from our list of topics available and explore your data

Why Students Love to Use E-Project Material ?


Guaranteed Delivery Getting your project delivered on time is essential. You cannot afford to turn in your project past the deadline. That is why you must get your project online from a company that guarantees to meet your deadline. e-Project Topics Material Centre is happy to offer instant delivery of projects listed on our website. We can handle just about any deadline you send our way. Satisfaction Guaranteed We always do whatever is necessary to ensure every customer's satisfaction

Disclaimer


E-Project Topics Material Centre will only provide projects as a reference for your research. The projects ordered and produced should be used as a guide or framework for your own project. The contents of the projects should be able to help you in generating new ideas and thoughts for your own project. It is the aim of e-Project Topics Centre to only provide guidance by which the projects should be pursued. We are neither encouraging any form of plagiarism nor are we advocating the use of the projects produced herein for cheating.

Terms and Condition


Using our service is LEGAL and IS NOT prohibited by any university/college policies You are allowed to use the original model papers you will receive in the following ways:
  • As a source for additional understanding of the subject
  • As a source for ideas for you own research (if properly referenced)
  • For PROPER paraphrasing ( see your university definition of plagiarism and acceptable paraphrase) Direct citing ( if referenced properly)
Thank you so much for your respect to the authors copyright