The Importance of Performance Related Pay in Motivating Employees - Research Proposal Example

The Importance of Performance Related Pay in Motivating Employees [Institute] Contents Exercise Research Question 3 Exercise 2 - The Timetable 6 Exercise 3 - Locating Literature 6 Exercise 4 – Research Philosophy and Approach 9 Exercise 5 - Sample 12 Exercise 6 - Ethical Considerations 13 Exercise 7 - Research Techniques 15 References 18 Exercise 1 - Research Question The fact that pay is a major motivating tool for employees cannot be neglected. Though there are intrinsic motivational factors as well, but this fact cannot be denied that without monetary compensation employees may not be interested in job. Among different types of compensation, monetary benefits are the most tempting because recognition and appreciation alone are not enough to meet daily expenses of life. It is therefore clear that financial benefits are crucial in keeping employees motivated. There are different types of financial benefits; this study aims to explore the role of performance related pay in enhancing employee motivation. The research question this study aims to answer is; “How performance-related pay can work as a motivational tool for the employees?” Reviewing the literature on the topic of investigation reveals that this is not a new topic. There has been several studies on the same topic; however, the findings are varied. Nonetheless, most of the researches that investigated the same area revealed that in longer run performance-related pay (PRP) is not motivating for the employees (Boachie-Mensah and Dogbe, 2011; Forest, 2008; Marsden et al., 2000; Perry et al, 2009). The researches quoted the reason for demotivating effects of PRP as biased appraisal systems and its effects on employees who are not benefited from PRP techniques. These findings are accomplished by several researchers but PRP is still in practice which indicates that there must be something behind this technique that motivates employers to use it in their organisations. These differences in theory and practice indicate a need to link PRP techniques for employee motivation with entire compensation system (practises) to ensure its positive effects are realised. The underpinning issue identified by this study is that how PRP can be integrated into the compensation system in a way that it works as a motivational tool for the workforce. The findings from other research studies that guide the stance of this study are stated below; Performance related pay is not motivating because appraisal systems are not fair (Boachie-Mensah and Dogbe, 2011). Most of the time, due to unfair appraisal systems the employees who are not benefited from PRP feels further demotivated. There are employees who are satisfied with PRP because they are the ones getting benefits, however at large employees are demotivated because the appraisal systems are corrupt (Marsden et al., 2000). PRP may work as a motivational tool if the inherent issues with this technique are resolved (Perry et al., 2009). Based on these findings it cannot be said directly that PRP is not motivating but it can be said that fair appraisal systems may help motivate employees and encourage them to achieve the set standard. This study explores how the issues identified by the research in PRP can be tackled and how it can be used as a strong motivation tool. The guiding statement for this research is that PRP is motivating however there should be elements that needs to be integrated if performance related pay is to be used as a motivational tool. Now the question is what elements can make PRP motivational for employees. Perry et al (2009) suggested that in order to make PRP work, it is important to focus on robust pay systems where the pay is linked to performance in a well-designed pay system. The researchers assert that organisations should not rely on traditional PRP systems rather they should focus on contextual possibilities for designing the PRP systems in order to enhance employee motivation and performance. Schmidt et al., (2011) also suggested, though it the context of public services, that for PRP to have a positive effect on employee performance it should focus on employee participation in designing the pay system. According to the researchers, this collective designing of system will help renegotiate the performance criteria which will then have an impact of employee performance and motivation. Furthermore, Forest (2008) also suggested that PRP can be used to keep employees intrinsically motivated by linking pay for performance with fair appraisal systems; hence it can be said that it is time to merge intrinsic and extrinsic rewards systems with the help of collective negotiations and participative interactions in order to keep employees motivated. Revolving around the research question outlined earlier, following are the research aims and objectives; To critically evaluate the elements that can help PRP enhance employee motivation. To investigate how different elements within organisation can link together to design a robust contingent compensation system. Based on these objectives following conceptual framework is designed for this study; Figure I – Conceptual Framework for this Study This framework suggests that if different elements in a compensation system are well-blended and if intrinsic and extrinsic elements are combined well outcomes would be enhanced performance and motivation. This study will aim to explore these aspects on how PRP can be used as a motivational tool if the whole compensations system is looked at as a whole. Exercise 2 - The Timetable Tasks First half of April Second half of April First half of May Second half of May First half of June Second half of June Third Week on June Topic selection and justification through literature search. Agreeing on aims and methodology. Refining aims and objectives and studying further literature to form topic base. Approaching participants and taking informed consent. Data Collection Data Documentation and Analysis Report Writing (though few parts have already been written previously) Proofreading and submission of dissertation. Exercise 3 - Locating Literature Boachie-Mensah and Dogbe (2011) carried out an exploratory study to find out the effectiveness of PRP as a motivational tool to enhance organisational performance. The researchers hold that employee contribution in achieving organisational objectives is one of the major concern for employers and hence besides skills of employees, pay has always remained a major focus of attention to keep employees motivated toward their jobs. Boachie-Mensah and Dogbe (2011) carried out a survey using questionnaire as data collection tool in a manufacturing company in Ghana. 150 respondents took part in the survey and the researchers have used two-way ANOVA table to assess the results. The study found that PRP is not much effective in enhancing employee performance because of the biased performance appraisal system. The researchers assert that this lead to demotivation of employees who fall prey to biased appraisals. The study has limitations that it doesn’t cover all manufacturing companies hence its results cannot be generalised. Another study on the same subject was carried out by Perry et al (2009); the researchers raise the question that why PRP is still adopted in organisations despite of the persistent findings over the years that it fails to deliver? The researchers carried out a review of literature and went back to the roots of the problem in 1993 when it started to reveal that PRP is not effective in improving employees’ performance. The researchers used published peer-reviewed studies and to keep the study bias-free have used three research processes in order to ensure none of the new or unpublished work is included. Based on the analysis, the researchers outlined seven lessons and concluded that conventional PRP systems should not be followed as it is as they fail to produce results. Besides, the organisations should keep an eye on contextual contingencies in order to ensure the system is not plagued by implementation problems and hence the best outcome is achieved. In yet another study, Schmidt et al., (2011) explored the introduction of PRP in German public service. The study aimed to explore how variety in PRP schemes and its implementation may affect its acceptance among employees. Both primary (interview excerpts) and secondary data (215 previous studies) were analysed and the researchers found that PRP is not adopted in organisations only to enhance employee motivation and hence different PRP schemes bring different results. The study concluded that traditional PRP schemes fail to bring results in the form of employee enhanced performance whereas participative schemes leads to collective development of performance objectives which then leads to enhance motivation and organisational performance. Overall, the paper produced good results in terms of practical implications for German public organisations on how to improve acceptance and functionality of PRP in this sector. Other articles that will be used in the study are: i. Booth. A.L., & Frank. J. (1999). Earnings, Productivity and Performance Related Pay. Journal of Labour Economics 17 (3): 447-463. ii. Forest, V. (2008). Performance-related pay and work motivation: theoretical and empirical perspectives for the French civil service. International Review of Administrative Sciences 74 (2): 325-339. iii. Frey, B. S., & Jegen, R. (2001). Motivation Crowding Theory. Journal of Economic Surveys 15 (5): 589-611 iv. Gabris, G. T., & Ihrke, D. M. (2000). Improving Employee Acceptance toward Performance Appraisal and Merit Pay Systems: The Role of Leadership Credibility. Review of Public Personnel Administration, 20 (1): 41 – 53. v. Heinrich, C. J. (2007). False or Fitting Recognition? The Use of High Performance Bonuses in Motivating Organisational Achievements. Journal of Policy Analysis and Management, 26 (2): 281 – 304. vi. Kessler, I., & Purcell, J. (1992). Performance Related Pay: Objectives and Application. Human Resource Management Journal 2 (3): 16-33. vii. Marsden, D., French, S., & Kobi, K. (2000). Why Does Performance Pay Demotivate? Financial Incentives versus Performance Appraisal. London: Centre for Economic Performance, Discussion paper 476. viii. Rynes, S. L., Gerthart, B., & Minette, K. A. (2004). The Importance of Pay in Motivation: Discrepancies between What People Say and what they do. Human Resource Management 43 (4): 381-394. ix. Stabilet, S. J. (1999). Motivating executives: does performance-based compensation positively affect managerial performance? U. AP. Journal of Labour and Employment Law 2 (2): 227-285. x. Waal, A. A., & Counet, H. (2009). Lessons learned from performance management systems implementations. International Journal of Productivity and Performance Management 58 (4): 367-390. Exercise 4 – Research Philosophy and Approach Four basic research philosophies can be used in a study as guided by Betz and Fassinger (2011). These philosophies include positivism, post positivism, constructive-interpretivism and critical-ideological. Positivist research philosophy is geared to control natural phenomenon in order to test the hypothesis. This philosophy believes that natural realities can be tested using laws and there is always a hypothesis which can be verified. Post positivist philosophy aims to get closer answer to justify a reality however the philosophy believes that there are several variables that stop from revealing the reality. This philosophy believes that realities cannot be understood fully due to the hidden variables that prevent the full knowledge of the answer. Interpretivist philosophy suggests interpreting the reality from different lenses as reality is a result of different experiences. This approach believes that there is no single reality and not one scientific truth is enough to answer all questions. Social reality has different contexts and they can have several meanings hence can be understood using several lenses and different interpretations. Finally, critical ideological philosophy believes that existing realities can be evaluated critically to reach results that can answer several questions about reality and lead to an ultimate answer. Knowledge in this approach is viewed as a subjective entity that can be used to critically evaluate scenarios and reach conclusions to answer research questions. Former two research philosophies mostly guide quantitative research that need to verify hypotheses using scientific tools and that do not take explanation for an answer. Quantitative studies do not interpret situations and believe in having ‘yes’ or ‘no’ as a result. On the other hand, later two research philosophies, that is, interpretivism and critical ideological usually guide qualitative studies where the answer is not always accurate. These philosophies believe in explanations and interpretations as according to them every situation has its own existence and context in which the reality is interpreted. This study will be using constructive-interpretivist philosophy also referred to as interpretivism. Betz and Fassinger (2011, p. 238) defined interpretivism as a research philosophy that “assumes a relativist notion of multiple, equally valid realities that are constructed in the minds of actors and observers”. Having being focused on the evaluation of performance-related pay and its effects on employee motivation and performance, it is believed that every employee has a different perspective and a different acceptance level towards compensation system followed in an organisation. There will be employees who believe that PRP enhances motivation and there will be those who believe that PRP is not a good motivational tool. Both these types of employees holding different views towards PRP has their own different experiences and contexts in which they were viewing PRP. This is why interpretivist philosophy is the best to be used in this study as it will allow evaluating opinions on the basis of rationale and logic unique to every participant. Following interpretivist philosophy, research design used in this study will be qualitative which is defined by Strauss and Corbin (1990) as a research design which does not rely on numerical figures and statistical tools to draw conclusions. Using this research design will allow in-depth analysis of the topic of investigation. Advantages of qualitative study as highlighted by Robson (2002) and Strauss and Corbin (1990) suggest that it is best for investigations that need detailed analysis since it allows exploration. Areas that are ambiguous and need several justifications to reach conclusions are best explored using qualitative research designs and hence this research design is selected for this study. Argyrous (2010), highlighting the benefits of qualitative design suggested that qualitative designs allow exploration of several dimensions of a single issue hence leading to the identification of areas that would have remained invisible to the researcher otherwise. As far as the reasons of using this research design for the study is concerned, strengths of this approach best answer the question. Qualitative design allows subjective analysis of data collected during the research which is well-suited to the topic of investigation. It also justifies the philosophy that guides the stance of this study, that is, interpretivist philosophy which suggests interpreting data in the light of several logical reasons presented by different individuals before drawing any conclusions. Exercise 5 - Sample From the different data collection tools used in a qualitative study, this study will use focus group interviews to analyse how performance related pay can be used as a motivational tool to enhance employee motivation and performance. For carrying out focus group interview, participants from five organisations (two employees from each organisation) will be invited to take part in the interview session. It will be tried that one of the participants from each organisation is senior and the other one junior to ensure balance of opinions. Organisations will be selected on the basis of ease of accessibility and willingness of organisation to allow its members take part in this qualitative research. Hence it can be said that the sampling technique used in this study is non-probability convenience sampling. Jackson (2010) defined non-probability sampling as a sampling technique that does not provide equal opportunity to all members of the population to be a part of the sample. Convenience sampling is a type of non-probability sampling where the sample is selected on the basis of convenience of the researcher as the sample is readily available and willingness of the participant (Black, 2009). As for the sample size, Lehmann et al. (1998) stated that preferably a focus group should comprise of six to twelve people. It is therefore this study has decided to include ten employees in the focus group session so that a robust and healthy discussion is achieved leading to a conclusion that can be generalised. To make the study specific, service industry organisations will be considered. Another reason to go for service industry organisations is that it is evident from the review of literature that the topic under investigation is studied in several sectors, however almost none of the studies were found that investigated PRP and its effects on the motivation levels of service industry employees. Choice of the sample is appropriate for the investigation of the said topic because the sample comprises of employees itself who will be in a better position to state that how they think PRP can become a better motivation tool for them affecting their performance positively. Appropriateness of the sample size is justified as the theory suggested that best focus group size is 6 to 12 people (Lehmann et al., 1998). Here 10 employees are selected which is an appropriate number for the investigation of the said subject. As far as approaching the sample is concerned, no such progress is made as of yet; however, it is identified that service industry organisations will be approached. From service industry organisations, this study will specifically target hotels and restaurants from where employees will be invited to take part in the focus group session. This will be appropriate because performance of hotel industry employees is utmost important for ensuring customer services which is at the heart of all restaurants and hotels. This will also help identify how PRP can further motivate employees to help organisation achieve its objectives. Exercise 6 - Ethical Considerations Considering ethical issues in any study is vital to ensure it meets all the parameters and is approved in academic context. It is important for the research studies to be ethically sound as it enhances research validity and reliability. There are different codes of conducts suggesting how a study can become ethically sound and what the researchers are expected to consider while carrying out a study. This study will follow ESOMAR codes of conduct to ensure the study meets all the ethical standards set out by the authorised body. ESOMAR code of conduct is given by European Society for Opinion and Marketing Research and it presents fourteen codes which a researcher should follow in order to meet all the set ethical standards (International Chamber of Commerce, 2008). ESOMAR codes suggest that there lies a responsibility on researcher to display professional attitude and carry out the study in an honest manner which should be kept separate from any sort of commercial activity and should be carried out with an intention to contribute to the existing body of knowledge. The code makes it clear that falsification and biasness in the research is not an option to ensure the research community gets true, authentic, and credible data (International Chamber of Commerce, 2008). The ESOMAR codes give rights to the respondents that they should not be forced to take part in the research and their participation should be voluntary. The data provided by the respondents should be kept confidential. The researcher must ensure that the respondent is not cheated or misguided and is given all the information necessary to make his/her choice to take part in the study. The code of conduct suggests that the respondent secures the right to withdraw at any point in time during the research and should not be forced in any way (International Chamber of Commerce, 2008). Then there are codes protecting the rights of the minor respondents which are not discussed here due to its non-relevancy to the topic. To ensure all the above given codes are practiced in the study, the researcher of this study will take following steps; Participant Information Leaflet – All the participants that will be approached to become a part of the study will be given a leaflet explaining the purpose of the research and why they are approached to take part in the study. The leaflet will explain research aims and objectives and what the participant is expected to do in case they agree to take part in research. Informed Consent – Informed consent means the respondent knows well the purpose of the research and is willingly and voluntarily taking part in the study and for that he/she is signing a letter giving informed consent. The letter also clarifies that respondent’s right to withdraw. The researcher of this study will take a signed informed consent letter from all the participants who will agree to become a part of the study. Data Protection and Confidentiality – The respondents will be ensured about the data protection and that all the data they provide will be kept confidential. Further to this, to maintain anonymity respondents’ names will not be disclosed and will be kept confidential. In addition to taking all the measures stated above to ensure the research meet ethical standards, the study will also complete the Research Ethical Review (RER) given by the research supervisory team. This will ensure the study is ethically sound and has met all the ethical parameters. Exercise 7 - Research Techniques As mentioned earlier, the study will be based on qualitative design and from different qualitative data collection techniques, the study will use focus group interview. Focus group interviews are characterised by group discussions (Hague et al., 2004). This technique of data collection differs from individual interviews in that in focus group, discussion is not only restricted between the researcher and the respondent but also among participants (Hollowa, 2005). There is a group discussion where everyone is sharing their thoughts and opinions unlike in individual interviews where the only two parties interacting are the researcher and the respondent. The reason to choose this research technique to carry out the study is to take benefit from the several advantages offered by this data collection tool. Malhotra and Birks (2006) highlighted that focus group discussions are broad in their scope and offer a variety of opinions due to the fact that discussions are taking place among the participants and the researcher is giving feedback to further the discussion on the topic. This robust group discussion leads to the identification of several themes that leads further discussion and adds to the final conclusion. During focus group discussions there is a chain of opinions where one participant present an idea which is supported or countered by another participant and this chain reaction leads to a variety of ideas leading to a detailed discussion having a huge magnitude (Malhotra and Birks, 2006). Another advantage of focus group discussion presented by Malhotra and Birks (2006) is that unlike individual interviews where respondent might feel uncomfortable as he/she is the only one giving opinions, focus group session creates a friendly and comfortable environment where everyone is willing to share which encourages others to speak their mind. This leads to the creation of a healthy environment where opinions are welcomed and this leads to varied opinions and in-depth data. Other than the listed advantages, choice of this technique for the study is also because it fits in well with the research philosophy guiding this study. Having being based on qualitative design and interpretivist philosophy, focus group discussions will lead to identification of themes that can be pondered upon to see how well PRP can contribute towards enhancing employee motivation and how it can be used as a tool to keep employees intrinsically motivated and achieve organisational objectives. To justify the use of focus group technique, Coule (2013) suggested that it is important for the researcher using focus group technique to have fair knowledge about the area of investigation. To ensure the researcher has adequate knowledge and is well prepared to carry out a focus group discussion, variety of literature on the subject is explored prior to the focus group session. This was done in order to ensure adequate knowledge has been gained and new trends are identified to put forward for the participants during the session. Data collected during the focus group will be analysed using thematic analysis. King and Horrocks (2010) defined themes as patterns that reveal interesting facts about the topic of investigation. The authors suggested that defining themes is a matter of care and the researcher must be vigilant in what to include and what to discard. King and Horrocks (2010) further stated that themes are defined based on their frequency of occurrence during a discussion; an issue which is raised just once cannot be a theme. Hence using thematic analysis for this study suggests defining data under specific themes and justifying how themes identified relates to the research aims as also highlighted by Liamputtong (2011) that thematic analysis should be used after checking for its suitability to research aims and objectives. References Argyrous, G. (2010). Evidence for Policy and Decision-Making: A Practical Guide. Australia: UNSW Press. Betz, N. E., & Fassinger, R. E. (2011). Methodologies in Counselling Psychology. In: Altmaier, E. M., & Hansen, J. C. (eds.). The Oxford Handbook of Counselling Psychology, pp. 237-269. New York: Oxford University Press. Black, K. (2009). Business Statistics: Contemporary Decision Making. New York: John Wiley & Sons. Boachie-Mensah, F., & Dogbe, O. D. (2011). 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