Effect of Motivation on Employee Performance

Effect of Motivation on Employee Performance Chapter 1 INTRODUCTION 1.1 Background of the Study In todays competitive world, employee is an important asset to every organisation. An organisation cannot progress without employees. However, the success of an organisation depends on how the management utilise their workers capabilities in achieving organisation goals and objectives. Employees need to be inspired as well as motivated to perform well and perform efficiently. According to Smith (n.d.), employees who like where they work will help the company make more money. Sears conducted an 800-store survey that showed the impact of employee attitudes on the bottom line. When employee attitudes improved by 5%, customer satisfactionjumped 1.3%, consequently increasing revenue by one-half a percentage point. Seeking ways to motivate and build worker morale pays dividends to any business or organization. The motivated worker is more committed to the job and to the customer. This shows that happy employees performed well which increases the quality and quantity of their work. Long time ago, employees were considered as merely an input to the production of good and services. However as time goes by, this way of thinking has changed as many studies has been done on the employees behaviour and job performance. An employees performance may affect the production of the company, from the quality to the quantity of the products and services. This is why the management must identify the factors affecting their workers performance. A high performance workforce is the most important foundation for organisations success no matter how big or how small the organisation is. Job performance is the ability and skill that an employee possesses in performing the job required by the employer. The level of performance by the employee is going to affect the organisations goal and productivity. Besides, employees performance may also be affected by the management of the company, the job itself or even the employees own behaviour. Good job performance provides great achievement to the organisation, harmony in the workplace and also employees self-accomplishment. Thus, to have a good workforce and good employee performance, organisation must firstly identify and understand the factors which affect the employees job performance in achieving companys goal. 1.2 Research Problem For centuries, individuals have questioned and performed research on the factors affecting employees job performance and yet the answers may vary from one another. Some researcher said that employees performance is influenced by their pay and some said they are not. Employees are an organisations important asset which is why good performance by the employees is essential in producing good job quality and productivity. Employees are the ones who are running the organisation on behalf of the company. They have the responsibilities to perform well for the company in order to achieve organisation goal and compete with other organisations in the same industry. Employees are the one who plan, manage, organise and run the business activities of an organisation. This means that poor employees job performance may reduce the quality of services and productivity which will eventually slow down the operation of the organisation and lead to wastage of resources such as money and time. Organisations may find ways to solve the problem by terminating poorly performed employees or even choose to ignore it which may lead to unsuccessful business or bankruptcy. By choosing to terminate underperformed employee could not solve the problem as time is needed to hire new employee and extra cost will be incurred for training new employee. Management should find ways that inspires their workers to perform well in order to achieve organisations goal and in order to fully utilise their resources. Management believes that by paying employees more (increase of wages), employees will tend to perform better. Perhaps it might be true according to some researcher. However, there are also recent studies that have shown that employees motivations are not solely affected by pay. Thus, this research is carried out to investigate the factors that affect employees performance. This research will attempt to evaluate the effect of four variables which are motivation, job commitment, job design and work environment. 1.3 Research Objectives The reason for this research is: To investigate if motivation has the significant affect on employees job performance. To investigate if job commitment has the significant affect on employees job performance. To investigate if job design has the significant affect on employees job performance. To investigate if work environment has the significant affect on employees job performance. Job design is techniques that are use in the job design exercise are such as job enlargement, job enrichment, job rotation and job simplification. The work environment or working place which an employee performs in, can affect his or her performance. Work environment can be divided into two categories which are physical environment and social environment. The physical environment includes safe working place with ample resources and equipment such as comfortable chair, lighting and etc whereas the social environment includes people that the employees are working with in the organisation such as working colleagues or subordinates, supervisors and etc. 1.4 Scope of the Study This empirical study consists of dependent and independent variables. The dependent variable is employees job performance whereas the independent variables consist of factors that affect employees job performance such as motivation (pay, benefits, rewards, etc), job commitment, job design and work environment. The population for this study take into account the employees working in the manufacturing companies in Penang and is randomly selected by using convenience sampling method. Questionnaires will be distributed to 150 employees. Questionnaires will then be collected back and data will be analysed using the regression testing that is use to test the effects of the independent variables onto the dependent variables. 1.5 Significance of Study It is definite that every organisation no matter how big or small in size the company is in the whole wide world needs people or employees to operate and manage their company. The significance of this study is to investigate the four factors relationship with employees job performance, as employees job performance is important in producing good job quality and maximum productivity. This study is also essential to find out the influences of the four factors to the organisations. An organisation is considered dead and cannot operate without workers. Well performed employees may lead the organisation to success and earn competitive advantage over competitors while poor performed employees may lead company to failure and even bankruptcy. Besides poorly performed workers causes insufficiency in productivity which indirectly waste company resources. It might also cause company to be defeated by its rival. Therefore this study will help managers and employees to understand better the problem affecting their performance and reduce the negative effects to the company. Chapter 2 LITERATURE RREVIEW 2.1 Introduction These days, the business world is becoming more challenging than ever. This increases the managements awareness that good job performance is the key success to the organisation. To have well-performed employees, various ways or techniques should be conducted to manipulate humans nature and needs to produce desired behaviours and well performance. For that reason, the first thing the management should do is to understand human (employees) needs and wants. Employee job performance is the ability of employees to perform effectively in their job required and they need to have understanding of complete and up-to-date job description for their position. Besides that, they also need to be aware of the job performance requirements and standard that they are expected to meet. Supervisors or the management of the organisation should then review their employees job description and performance requirements. Job performance can be reviewed in terms of overall efficiency in the job or in terms of specific components that the job compromises. The purpose of performance standards is to communicate expectations. Some supervisors prefer to make them as specific as possible, and some prefer to use them as talking points with the specificity defined in the discussion (University Human Resource Services, 2005). In general employees and supervisors use the performance assessment annually to sum up an overall review of how the job has been done over the previous 12 months, to identify whether organisational goals have been met, to identify areas which require additional efforts, and lastly to identify the achievement and development goals for the forthcoming year. Performance reviews typically take place annually, but can be scheduled more frequently. Performance review processes vary depending on whether your appointment is as classified or professional staff. For classified staff covered by a labour contract, the contract establishes the performance review process requirements (University of Washington, 2007). People who are joining the workplace today are not only looking for jobs that earn money, but are also looking for more opportunities such as self-development. They are willing to put more effort on their job when their own needs, goals, expectation and desires are met. For that reason, the management of the organisation have to find out the factors affecting the employees performance and come up with techniques to improve employees job performance. Management must also make sure that employees goals are in line with organisations objectives. As the world become more competitive, organisations around the world are also alerted by the need to compete effectively against each other. In order to do so, organisations need to prepare themselves by making sure the people in their organisation are able to perform well and compete competently. Job performance will be the key success for organisation as it enables employees to work at their best and maximize their contribution to the organisa tion. 2.2 History of Research on Job Performance According to Hersen (2004), â€Å"job performance is a complex, multidimensional construct that can be defined and assessed in varying ways. Job performance can be defined (and assessed) in terms of quantifiable outcomes of work behaviours (e.g., amount of sales measured in dollars, productivity level, number of academic journal publications, number of lines of computer code written) and in terms of behavioural dimensions (work-related communication, decision making, attention to detail) that are less quantifiable†. Employees job performance also stands for the level ability of every employee to work efficiently (in terms of quantity and quality) in their job as required or expected by their employers. The employees job performance is then evaluated by the employer, supervisors or the people in charge. The job performance can be evaluated in terms of effectiveness all together in the job and in terms of particular components that the job compromises. The employees performances will show the personalities, knowledge and experiences of themselves. Each employees performance level is different as each individual has different capability and behaviour. Employees poor level of performance may be affected by many factors which include motivation, job commitment, job design and the work environment of the organisation. Historically, many researchers have attempted to study the factors affecting job performance but it is not as simple as one may think and the answer may vary from one another. Buchanan (n.d.), who has done a study on the relation of job satisfaction and performance, pointed out in her study that â€Å"the relationship between job satisfaction and performance is an issue of continuing debate and controversy. One view, associated with the early human relations approach, is that satisfaction leads to performance. An alternative view is that performance leads to satisfaction†. She also mentioned that many researchers tend to relate job satisfaction and job performance in a specific fashion, which is a happy worker, is a good worker. Job satisfaction is defined as the extent to which people like (satisfaction) or dislike (dissatisfaction) their jobs (Spector, 1997). This definition suggests job satisfaction is a general or global affective reaction that individuals hold about their job (Williams, 2004). Job satisfaction is usually linked with motivation, but the nature of this relationship is not clear. Satisfaction is not the same as motivation. Several numbers of studies has found that there is only a limited amount of relationship between employees satisfaction and their job performance. For example, it was found by Brayfield and Crockett (1955) that there is only a minimal relationship between job performance and job satisfaction (Judge et al., 2001). The increased of job satisfaction does not necessarily mean increased of employees job performance. If the goals of the organisation are not aligned with the goals of employees, then employees are not effectively working towards the mission of the organisation. Therefore, Buchanan concluded in her study that each employees performance is normally determined by motivation, ability, and the work environment. The motivation factor is the desire of the employee to do the job; ability is the capability of the employee to do the job and lastly the work environment which is the tools, materials and information that is needed by the employee to do the job required. 2.3 Past Research on Motivation Affecting Job Performance In the past, employees job performance are traditionally been looked at in terms of ‘motivation. Many researchers have come out with a conclusion that employees levels of performance are influenced by the motivation factor. Examples of researchers are like Maslow (1954), who developed ‘the hierarchy of needs or Hezberg (1966), who developed the idea of ‘hygiene factors, such as pay and conditions which, if not ‘right in the eyes of the employee, act as de-motivators. There is also the work of McClelland who argued that people struggled to fulfil needs of power or influence and social interaction, amongst others. All these ideas have uses in the management of the poor performer. Sometimes, however; they seem to be too complex to use on a day-to-day basis and are more suited to giving the manager a theoretical understanding rather than a useful tool (Proud, n.d.). From the theory of motivation such as Maslows hierarchy of needs,modern leaders, executive managers or supervisors findmeans of motivation for the purposesof employees performance and workforce management. Motivation is always view as an important issue in the business world. This is because motivation is vital in every organisation as it will affect the productivity of the organisation. When the employees in an organisation are unmotivated, the productivity of that organisation will be decreased whereas compared to an organisation which have motivated employees the labour turnover will be lower and production will be higher. According to Dev (n.d.), â€Å"A Gallup organisation study indicated that companies with positive employee attitudes are 50 percent more likely to achieve customer loyalty, and 44 percent more likely to achieve above-average profits. Additionally, the study finds firms that measure in the top quartile with regard to employee engagement averaged 24 percent higher profitability, 29 percent greater revenue and 10 percent less employee turnover than businesses in the bottom quartile. The evidence is clear. Better people management practices produce better business results.† According to Bartol Martin (1998), â€Å"motivation is defined as the force that energises behaviour, gives direction to behaviour, and underlies the tendency to persist. This definition recognises that in order to achieve goals, individual must be sufficiently stimulated and energetic , must have a clear focus on what is to be achieved, and must be willing to commit their energy for a long enough period of time to realise their aim†. Thus, motivated behaviours are performed and controlled voluntarily by the employees themselves whereas supervisors or managers only act as the motivator to encourage employees to increase their level of job performance. Many people who are not motivated keep their performance to an acceptable level by expending only 20% to 30% of their ability whereas managers who know how to motivate their employees can achieve 80% to 90% ability levels and consequently higher levels of performance (Geoff, n.d.). Motivation comes in many different forms. It can be in a simple form like praise by the supervisors or managers, in the form of monetary (increase in pay), rewards, promotion, job security and etc. These factors are important because it will affect the employees level of job performance. Hence it is truly essential that managers and supervisors of an organisation knows how to motivate its employees in performing well and achieving organisation goals. According to Wagner (n.d.), â€Å"Abraham Maslow first introduced his concept of a hierarchy of needs in his 1943 paper, ‘A Theory of Human Motivation. This hierarchy suggests that people are motivated to fulfil basic needs before moving on to other needs†. Maslows hierarchy of needs is most often displayed as a pyramid, with lowest levels of the pyramid made up of the most basic needs and more complex needs are at the top of the pyramid. The basis of Maslows theory is that human beings are motivated by unsatisfied needs, and that certain lower needs need to be satisfied before higher needs can be satisfied. A satisfied need is not a motivator as the most influential employee need is the one that has not been satisfied. From the Maslows hierarchy of needs, management should understand and identify what their employees need and then satisfy them from the lowest to the highest level. Physiological needs are needs which are at the bottom of the pyramid, are the most essential needs to human living. In the workforce, organisation helps employees to satisfy their needs by giving them basic salary. Safety needs are security needs that include the needs for shelter from the environment and health insurance. In the organization context, employees express their security needs as a desire for job security with fringe benefits. The management should provide employees with safe working environment with ample tools and resources. These will be the factor that helps employees to perform well. Social needs are needs related to the need for friendship, love and sense of belonging. At the workplace, these needs include having good relationship with colleagues, superiors or etc. When employees enjoy working closely with each other, it may result in positive behaviour at work which will also result in better employee performances. The management can also help to satisfy employees social needs by showing direct concern for them. Esteem needs are the needs of self-respect, respect or recognition from others and a sense of personal achievement. When these needs are satisfied, the person feels self-confident and valuable as a person in the world (Simons et al., 1987). In the organisation, the management can fulfil employees esteem needs by showing their appreciation through promotion, rewards, recognition and etc. Self-actualisation needs are place at the highest level of the pyramid. These needs are associated to personal growth, self-fulfilment and the realisation of ones full potential. In this stage, the management can help the employees by giving them tasks that challenges their own intelligence. All the elements in the Maslows hierarchy of needs are the motivator for employees to perform well in their job. A motivated employee is usually someone with clearly defined goals who takes action which he or she expects to achieve. Besides that, motivated employees will be likely to put in more effort towards the organisation objectives and goals. A leader that recognises employee efforts and helps employees achieve and grow can help improve motivation which therefore increases job performance. According to Hong et al. (1995), Vroom maintained in his expectation theory that everyone works in expectation of some rewards (both spiritual and material), and welfare is one of them. In other words, the degree of reward influences the quality and quantity of work, and in turn productivity. So it is important for management to explore how to give the stimulus (welfare) in order to promote work motivation and performance. Image. Relationship between the type of employee benefit and impact on job performance However, there are some researchers that found out that motivation has limited relationship with employees job performance. They do not believe that money (salary and bonuses) is a good motivator. McNamara (n.d.), who did a research on employee motivation, said that â€Å"certain things like money, a nice office and job security can help people from becoming less motivated, but they usually dont help people to become more motivated. A key goal for the company is to understand the motivations of each of their employees†. Another researcher, Urichuck (n.d.), stated that â€Å"organisations could provide employee motivation through a bonus in the form of money at the end of a period. For sure they will be glad and grateful. They may even perform better, but what are their expectations at the end of the next period will be more money. External employee motivation is temporary and it is never lasting. Money is an external employee motivator. Its an incentive that once acquired, leads to expectations for more, bigger or better. Nevertheless the employees will not even realise that the company is facing a crisis. They will want a bonus at least equal to what they got last year, but preferably more, not less†. According to him, there is a survey on thousands of workers around the world that uses compared rankings by supervisors and employees on employee motivating factors. The typical supervisory group ranked the factors in the following order; high wages, job security, promotion in the organisation, good working conditions, interesting work, personal loyalty of supervisor, tactful discipline, full appreciation of work done, help on personal problems, and feeling of being in on things. However, when employees were given the same exercise and asked what affects their morale and employee motivation the most, their answers followed this pattern; full appreciation of work done, feeling of being in on things, help on personal problems, job security, high wages, interesting work, promotion in the organization, personal loyalty of supervisor, good working conditions, and tactful discipline. Note that the top three employee motivating factors marked by the employees are the last three felt to be important for them by their supervisors (Urichuck, n.d.). As a result, this research shows that motivation through the form of money, has limited amount of relationship with employees job performance while recognition is the most influential motivator that affects employees job performance. 2.4 Past Research on Job Commitment Affecting Job Performance Job commitment is the willingness of the employees to be devoted in completing the job assigned to them at minimum level of commitment or exceeding the amount that is required. The level of employee commitment to their job is often the key determinant of whether the employee performs as expected or exceeding the expectations. The level of employee commitment may affect employees job performance. Committed employees often performed well and results in companys success and increase of productivity level. Besides job commitment includes the level of employee involvement and employee loyalty to the organisation. Simpson (n.d.), who did a research on building employee commitment for business success, stated that â€Å"the indication of lack of employee commitment could be an indication of a company on the way to becoming another business failure. The workplace is changing dramatically and demands for the highest quality of product and service is increasing. To remain competitive in the face of these pressures, employee commitment is crucial. The two keys to success in todays environment of increasing competition and rapid change are an absolute passion for, and dedication to, excellence in customer service and the effective and enlightened management of our workforce. The employees commitment will lead to achieving desired standards in customer service and high job performance. Without employee commitment, there can be no improvement in any area of business activity. In the absence of good management, employees will simply treat their work as a job; a 9am to 5pm routine without any desire to accomplish any more than is necessary to remain employed. It does not take many uncommitted employees to prevent a business from prospering and thereby ceding a big advantage to its competitors†. Another researcher, Fink (1992), asserted that although there are many factors that affect employees performance, the key factor of employees performance is affected by employees job commitment. He defines commitment as an attitude that develops from a process called identification, which occurs when one experiences something, someone, or some idea as an extension of oneself. While all research on commitment treats it only in terms of identification with organisation, that is, its goals, values, and mission, on the other hand, he focuses on three-dimensional concept including identification with the work itself and with co-workers. He is sure that these are equally important because they can have powerful effects upon employee performance. As basis of his research he makes an interactive model that proposes: good management practices result in an effective reward system and employee commitment, an effective reward system results in enhanced employee commitment and employee performanc e, and employee commitment results in enhanced employee performance. As a result of his research in two companies, who has 418 and 430 employees, respectively, he found that there was significant correlation between employee performance ratings and commitment score in all categories, and also the correlation between performance and commitment for managers and operational employees grouped separately were significant in all categories. The higher the level of employee commitment to work; co-worker, and organisation, the higher the level of the performance will be. Based on Sutanto‘s (1999) findings, instead of concluding that job commitment only has significant affect on job performance, he has found that â€Å"there is also a positive and significant relationship between commitment to supervisors and performance. He also stated that employees commitment to supervisors have become a good predictor to performance rather than commitment to organisations†. After conducting a larger project to all 1,803 members of May 1993 graduating class of large north-western university, Becker (1992), has found that commitment to supervisors was positively related to performance. â€Å"Further, internalization of supervisors and organizations values was associated with performance but identification with these foci (targets) was not. A number of theorists and researchers have begun to view employee commitment as having multiple foci and bases. Foci commitments are the individuals and group to whom an employee is attached†. Thus, in order to increase employees performance, the study suggest that managers should focus on creating employees commitment to supervisors rather than creating employees commitment to the organisation. On the other hand, Cohens (1999) research supported the important status of job involvement as an antecedent to organisational commitment. Specifically, Cohen argued that those individuals with high levels of job involvement, which stem from positive experiences on-the-job (Witt, 1993), make attributions for these experiences to the organisation. Thus, having previously received benefits from the organisation and being obligated by the norm of reciprocity (Gouldner, 1960) to repay them, high job involvement employees feel compelled to reciprocate in some form. This increased affective commitment (i.e. where employees adopt the companys goals as their own and, therefore, desire to remain with the organisation to help it achieve its goals; Meyer and Allen, 1984; Mowday et al., 1979) and later was found to reduce turnover intentions, absence behaviour, and/or turnover, as well as increased job performance. Tough many researchers have confirmed that employees commitment result in high job performance, nevertheless some past researchers have also found that job commitment or involvement has limited affect on employees job performance. According to Rotenberry and Moberg (2007), â€Å"research finding a significant impact of job involvement on employee performance has met limited success (e.g. Brown, 1996; Brown and Leigh, 1996; Diefendorff et al., 2006 and Vroom, 1962)†. Diefendorff et al. (2002) stated that â€Å"research has been limited for two reasons. Specifically, they asserted that past studies had predominantly used inferior measures of job involvement, which led to their insignificant findings. In addition, Diefendorff et al. (2002) argued that the performance domain assessed in those previous studies needed to be expanded in order to ascertain job involvements true impact on performance at work. The researchers tested the validity of these propositions, but called for additional research in the area paying particular attention to theory development regarding the job involvement-performance relationship†. 2.5 Past Research on Job Design Affecting Job Performance Job design is the method of arranging various work elements in forming a job that suit the employees. Job design identifies what work must be performed to be precise, the content of the job, how it will be performed, where it is to be performed and the competencies required by the person who will perform it. Job design also facilitates the achievement of organizational goals and performance of the work the job was established to accomplish (Sharon, 1998). Job design is also important to avoid employees dissatisfaction. The design of the job must follow the organisations and employees requirement including the health and safety requirement. Besides, job design implementation includes methods such as job enlargement, job rotation, job enrichment and job simplification. The first, job enlargement, can be used to increase motivation by giving employees more and varied tasks. Tasks that reduce the amount of specialization required by the employee, as well as, extending the length of time he or she has to complete them. The second, job rotation, allows an employee to work in different departments or jobs in an organization to gain better insight into operations. This, in itself, does not modify or redesigns the employees job, but allows the opportunity to increase his/her skills and knowledge about other jobs. Job enrichment, the third method, allows the employee to take on some responsibilities normally delegated to management. The risk here is that the employee would be transferred too much responsibility and autonomy in the planning and control aspects of the job. Done right, however, the newfound control would invigorate the employee to work more effectively and thus increased it Effect of Motivation on Employee Performance Effect of Motivation on Employee Performance Chapter 1 INTRODUCTION 1.1 Background of the Study In todays competitive world, employee is an important asset to every organisation. An organisation cannot progress without employees. However, the success of an organisation depends on how the management utilise their workers capabilities in achieving organisation goals and objectives. Employees need to be inspired as well as motivated to perform well and perform efficiently. According to Smith (n.d.), employees who like where they work will help the company make more money. Sears conducted an 800-store survey that showed the impact of employee attitudes on the bottom line. When employee attitudes improved by 5%, customer satisfactionjumped 1.3%, consequently increasing revenue by one-half a percentage point. Seeking ways to motivate and build worker morale pays dividends to any business or organization. The motivated worker is more committed to the job and to the customer. This shows that happy employees performed well which increases the quality and quantity of their work. Long time ago, employees were considered as merely an input to the production of good and services. However as time goes by, this way of thinking has changed as many studies has been done on the employees behaviour and job performance. An employees performance may affect the production of the company, from the quality to the quantity of the products and services. This is why the management must identify the factors affecting their workers performance. A high performance workforce is the most important foundation for organisations success no matter how big or how small the organisation is. Job performance is the ability and skill that an employee possesses in performing the job required by the employer. The level of performance by the employee is going to affect the organisations goal and productivity. Besides, employees performance may also be affected by the management of the company, the job itself or even the employees own behaviour. Good job performance provides great achievement to the organisation, harmony in the workplace and also employees self-accomplishment. Thus, to have a good workforce and good employee performance, organisation must firstly identify and understand the factors which affect the employees job performance in achieving companys goal. 1.2 Research Problem For centuries, individuals have questioned and performed research on the factors affecting employees job performance and yet the answers may vary from one another. Some researcher said that employees performance is influenced by their pay and some said they are not. Employees are an organisations important asset which is why good performance by the employees is essential in producing good job quality and productivity. Employees are the ones who are running the organisation on behalf of the company. They have the responsibilities to perform well for the company in order to achieve organisation goal and compete with other organisations in the same industry. Employees are the one who plan, manage, organise and run the business activities of an organisation. This means that poor employees job performance may reduce the quality of services and productivity which will eventually slow down the operation of the organisation and lead to wastage of resources such as money and time. Organisations may find ways to solve the problem by terminating poorly performed employees or even choose to ignore it which may lead to unsuccessful business or bankruptcy. By choosing to terminate underperformed employee could not solve the problem as time is needed to hire new employee and extra cost will be incurred for training new employee. Management should find ways that inspires their workers to perform well in order to achieve organisations goal and in order to fully utilise their resources. Management believes that by paying employees more (increase of wages), employees will tend to perform better. Perhaps it might be true according to some researcher. However, there are also recent studies that have shown that employees motivations are not solely affected by pay. Thus, this research is carried out to investigate the factors that affect employees performance. This research will attempt to evaluate the effect of four variables which are motivation, job commitment, job design and work environment. 1.3 Research Objectives The reason for this research is: To investigate if motivation has the significant affect on employees job performance. To investigate if job commitment has the significant affect on employees job performance. To investigate if job design has the significant affect on employees job performance. To investigate if work environment has the significant affect on employees job performance. Job design is techniques that are use in the job design exercise are such as job enlargement, job enrichment, job rotation and job simplification. The work environment or working place which an employee performs in, can affect his or her performance. Work environment can be divided into two categories which are physical environment and social environment. The physical environment includes safe working place with ample resources and equipment such as comfortable chair, lighting and etc whereas the social environment includes people that the employees are working with in the organisation such as working colleagues or subordinates, supervisors and etc. 1.4 Scope of the Study This empirical study consists of dependent and independent variables. The dependent variable is employees job performance whereas the independent variables consist of factors that affect employees job performance such as motivation (pay, benefits, rewards, etc), job commitment, job design and work environment. The population for this study take into account the employees working in the manufacturing companies in Penang and is randomly selected by using convenience sampling method. Questionnaires will be distributed to 150 employees. Questionnaires will then be collected back and data will be analysed using the regression testing that is use to test the effects of the independent variables onto the dependent variables. 1.5 Significance of Study It is definite that every organisation no matter how big or small in size the company is in the whole wide world needs people or employees to operate and manage their company. The significance of this study is to investigate the four factors relationship with employees job performance, as employees job performance is important in producing good job quality and maximum productivity. This study is also essential to find out the influences of the four factors to the organisations. An organisation is considered dead and cannot operate without workers. Well performed employees may lead the organisation to success and earn competitive advantage over competitors while poor performed employees may lead company to failure and even bankruptcy. Besides poorly performed workers causes insufficiency in productivity which indirectly waste company resources. It might also cause company to be defeated by its rival. Therefore this study will help managers and employees to understand better the problem affecting their performance and reduce the negative effects to the company. Chapter 2 LITERATURE RREVIEW 2.1 Introduction These days, the business world is becoming more challenging than ever. This increases the managements awareness that good job performance is the key success to the organisation. To have well-performed employees, various ways or techniques should be conducted to manipulate humans nature and needs to produce desired behaviours and well performance. For that reason, the first thing the management should do is to understand human (employees) needs and wants. Employee job performance is the ability of employees to perform effectively in their job required and they need to have understanding of complete and up-to-date job description for their position. Besides that, they also need to be aware of the job performance requirements and standard that they are expected to meet. Supervisors or the management of the organisation should then review their employees job description and performance requirements. Job performance can be reviewed in terms of overall efficiency in the job or in terms of specific components that the job compromises. The purpose of performance standards is to communicate expectations. Some supervisors prefer to make them as specific as possible, and some prefer to use them as talking points with the specificity defined in the discussion (University Human Resource Services, 2005). In general employees and supervisors use the performance assessment annually to sum up an overall review of how the job has been done over the previous 12 months, to identify whether organisational goals have been met, to identify areas which require additional efforts, and lastly to identify the achievement and development goals for the forthcoming year. Performance reviews typically take place annually, but can be scheduled more frequently. Performance review processes vary depending on whether your appointment is as classified or professional staff. For classified staff covered by a labour contract, the contract establishes the performance review process requirements (University of Washington, 2007). People who are joining the workplace today are not only looking for jobs that earn money, but are also looking for more opportunities such as self-development. They are willing to put more effort on their job when their own needs, goals, expectation and desires are met. For that reason, the management of the organisation have to find out the factors affecting the employees performance and come up with techniques to improve employees job performance. Management must also make sure that employees goals are in line with organisations objectives. As the world become more competitive, organisations around the world are also alerted by the need to compete effectively against each other. In order to do so, organisations need to prepare themselves by making sure the people in their organisation are able to perform well and compete competently. Job performance will be the key success for organisation as it enables employees to work at their best and maximize their contribution to the organisa tion. 2.2 History of Research on Job Performance According to Hersen (2004), â€Å"job performance is a complex, multidimensional construct that can be defined and assessed in varying ways. Job performance can be defined (and assessed) in terms of quantifiable outcomes of work behaviours (e.g., amount of sales measured in dollars, productivity level, number of academic journal publications, number of lines of computer code written) and in terms of behavioural dimensions (work-related communication, decision making, attention to detail) that are less quantifiable†. Employees job performance also stands for the level ability of every employee to work efficiently (in terms of quantity and quality) in their job as required or expected by their employers. The employees job performance is then evaluated by the employer, supervisors or the people in charge. The job performance can be evaluated in terms of effectiveness all together in the job and in terms of particular components that the job compromises. The employees performances will show the personalities, knowledge and experiences of themselves. Each employees performance level is different as each individual has different capability and behaviour. Employees poor level of performance may be affected by many factors which include motivation, job commitment, job design and the work environment of the organisation. Historically, many researchers have attempted to study the factors affecting job performance but it is not as simple as one may think and the answer may vary from one another. Buchanan (n.d.), who has done a study on the relation of job satisfaction and performance, pointed out in her study that â€Å"the relationship between job satisfaction and performance is an issue of continuing debate and controversy. One view, associated with the early human relations approach, is that satisfaction leads to performance. An alternative view is that performance leads to satisfaction†. She also mentioned that many researchers tend to relate job satisfaction and job performance in a specific fashion, which is a happy worker, is a good worker. Job satisfaction is defined as the extent to which people like (satisfaction) or dislike (dissatisfaction) their jobs (Spector, 1997). This definition suggests job satisfaction is a general or global affective reaction that individuals hold about their job (Williams, 2004). Job satisfaction is usually linked with motivation, but the nature of this relationship is not clear. Satisfaction is not the same as motivation. Several numbers of studies has found that there is only a limited amount of relationship between employees satisfaction and their job performance. For example, it was found by Brayfield and Crockett (1955) that there is only a minimal relationship between job performance and job satisfaction (Judge et al., 2001). The increased of job satisfaction does not necessarily mean increased of employees job performance. If the goals of the organisation are not aligned with the goals of employees, then employees are not effectively working towards the mission of the organisation. Therefore, Buchanan concluded in her study that each employees performance is normally determined by motivation, ability, and the work environment. The motivation factor is the desire of the employee to do the job; ability is the capability of the employee to do the job and lastly the work environment which is the tools, materials and information that is needed by the employee to do the job required. 2.3 Past Research on Motivation Affecting Job Performance In the past, employees job performance are traditionally been looked at in terms of ‘motivation. Many researchers have come out with a conclusion that employees levels of performance are influenced by the motivation factor. Examples of researchers are like Maslow (1954), who developed ‘the hierarchy of needs or Hezberg (1966), who developed the idea of ‘hygiene factors, such as pay and conditions which, if not ‘right in the eyes of the employee, act as de-motivators. There is also the work of McClelland who argued that people struggled to fulfil needs of power or influence and social interaction, amongst others. All these ideas have uses in the management of the poor performer. Sometimes, however; they seem to be too complex to use on a day-to-day basis and are more suited to giving the manager a theoretical understanding rather than a useful tool (Proud, n.d.). From the theory of motivation such as Maslows hierarchy of needs,modern leaders, executive managers or supervisors findmeans of motivation for the purposesof employees performance and workforce management. Motivation is always view as an important issue in the business world. This is because motivation is vital in every organisation as it will affect the productivity of the organisation. When the employees in an organisation are unmotivated, the productivity of that organisation will be decreased whereas compared to an organisation which have motivated employees the labour turnover will be lower and production will be higher. According to Dev (n.d.), â€Å"A Gallup organisation study indicated that companies with positive employee attitudes are 50 percent more likely to achieve customer loyalty, and 44 percent more likely to achieve above-average profits. Additionally, the study finds firms that measure in the top quartile with regard to employee engagement averaged 24 percent higher profitability, 29 percent greater revenue and 10 percent less employee turnover than businesses in the bottom quartile. The evidence is clear. Better people management practices produce better business results.† According to Bartol Martin (1998), â€Å"motivation is defined as the force that energises behaviour, gives direction to behaviour, and underlies the tendency to persist. This definition recognises that in order to achieve goals, individual must be sufficiently stimulated and energetic , must have a clear focus on what is to be achieved, and must be willing to commit their energy for a long enough period of time to realise their aim†. Thus, motivated behaviours are performed and controlled voluntarily by the employees themselves whereas supervisors or managers only act as the motivator to encourage employees to increase their level of job performance. Many people who are not motivated keep their performance to an acceptable level by expending only 20% to 30% of their ability whereas managers who know how to motivate their employees can achieve 80% to 90% ability levels and consequently higher levels of performance (Geoff, n.d.). Motivation comes in many different forms. It can be in a simple form like praise by the supervisors or managers, in the form of monetary (increase in pay), rewards, promotion, job security and etc. These factors are important because it will affect the employees level of job performance. Hence it is truly essential that managers and supervisors of an organisation knows how to motivate its employees in performing well and achieving organisation goals. According to Wagner (n.d.), â€Å"Abraham Maslow first introduced his concept of a hierarchy of needs in his 1943 paper, ‘A Theory of Human Motivation. This hierarchy suggests that people are motivated to fulfil basic needs before moving on to other needs†. Maslows hierarchy of needs is most often displayed as a pyramid, with lowest levels of the pyramid made up of the most basic needs and more complex needs are at the top of the pyramid. The basis of Maslows theory is that human beings are motivated by unsatisfied needs, and that certain lower needs need to be satisfied before higher needs can be satisfied. A satisfied need is not a motivator as the most influential employee need is the one that has not been satisfied. From the Maslows hierarchy of needs, management should understand and identify what their employees need and then satisfy them from the lowest to the highest level. Physiological needs are needs which are at the bottom of the pyramid, are the most essential needs to human living. In the workforce, organisation helps employees to satisfy their needs by giving them basic salary. Safety needs are security needs that include the needs for shelter from the environment and health insurance. In the organization context, employees express their security needs as a desire for job security with fringe benefits. The management should provide employees with safe working environment with ample tools and resources. These will be the factor that helps employees to perform well. Social needs are needs related to the need for friendship, love and sense of belonging. At the workplace, these needs include having good relationship with colleagues, superiors or etc. When employees enjoy working closely with each other, it may result in positive behaviour at work which will also result in better employee performances. The management can also help to satisfy employees social needs by showing direct concern for them. Esteem needs are the needs of self-respect, respect or recognition from others and a sense of personal achievement. When these needs are satisfied, the person feels self-confident and valuable as a person in the world (Simons et al., 1987). In the organisation, the management can fulfil employees esteem needs by showing their appreciation through promotion, rewards, recognition and etc. Self-actualisation needs are place at the highest level of the pyramid. These needs are associated to personal growth, self-fulfilment and the realisation of ones full potential. In this stage, the management can help the employees by giving them tasks that challenges their own intelligence. All the elements in the Maslows hierarchy of needs are the motivator for employees to perform well in their job. A motivated employee is usually someone with clearly defined goals who takes action which he or she expects to achieve. Besides that, motivated employees will be likely to put in more effort towards the organisation objectives and goals. A leader that recognises employee efforts and helps employees achieve and grow can help improve motivation which therefore increases job performance. According to Hong et al. (1995), Vroom maintained in his expectation theory that everyone works in expectation of some rewards (both spiritual and material), and welfare is one of them. In other words, the degree of reward influences the quality and quantity of work, and in turn productivity. So it is important for management to explore how to give the stimulus (welfare) in order to promote work motivation and performance. Image. Relationship between the type of employee benefit and impact on job performance However, there are some researchers that found out that motivation has limited relationship with employees job performance. They do not believe that money (salary and bonuses) is a good motivator. McNamara (n.d.), who did a research on employee motivation, said that â€Å"certain things like money, a nice office and job security can help people from becoming less motivated, but they usually dont help people to become more motivated. A key goal for the company is to understand the motivations of each of their employees†. Another researcher, Urichuck (n.d.), stated that â€Å"organisations could provide employee motivation through a bonus in the form of money at the end of a period. For sure they will be glad and grateful. They may even perform better, but what are their expectations at the end of the next period will be more money. External employee motivation is temporary and it is never lasting. Money is an external employee motivator. Its an incentive that once acquired, leads to expectations for more, bigger or better. Nevertheless the employees will not even realise that the company is facing a crisis. They will want a bonus at least equal to what they got last year, but preferably more, not less†. According to him, there is a survey on thousands of workers around the world that uses compared rankings by supervisors and employees on employee motivating factors. The typical supervisory group ranked the factors in the following order; high wages, job security, promotion in the organisation, good working conditions, interesting work, personal loyalty of supervisor, tactful discipline, full appreciation of work done, help on personal problems, and feeling of being in on things. However, when employees were given the same exercise and asked what affects their morale and employee motivation the most, their answers followed this pattern; full appreciation of work done, feeling of being in on things, help on personal problems, job security, high wages, interesting work, promotion in the organization, personal loyalty of supervisor, good working conditions, and tactful discipline. Note that the top three employee motivating factors marked by the employees are the last three felt to be important for them by their supervisors (Urichuck, n.d.). As a result, this research shows that motivation through the form of money, has limited amount of relationship with employees job performance while recognition is the most influential motivator that affects employees job performance. 2.4 Past Research on Job Commitment Affecting Job Performance Job commitment is the willingness of the employees to be devoted in completing the job assigned to them at minimum level of commitment or exceeding the amount that is required. The level of employee commitment to their job is often the key determinant of whether the employee performs as expected or exceeding the expectations. The level of employee commitment may affect employees job performance. Committed employees often performed well and results in companys success and increase of productivity level. Besides job commitment includes the level of employee involvement and employee loyalty to the organisation. Simpson (n.d.), who did a research on building employee commitment for business success, stated that â€Å"the indication of lack of employee commitment could be an indication of a company on the way to becoming another business failure. The workplace is changing dramatically and demands for the highest quality of product and service is increasing. To remain competitive in the face of these pressures, employee commitment is crucial. The two keys to success in todays environment of increasing competition and rapid change are an absolute passion for, and dedication to, excellence in customer service and the effective and enlightened management of our workforce. The employees commitment will lead to achieving desired standards in customer service and high job performance. Without employee commitment, there can be no improvement in any area of business activity. In the absence of good management, employees will simply treat their work as a job; a 9am to 5pm routine without any desire to accomplish any more than is necessary to remain employed. It does not take many uncommitted employees to prevent a business from prospering and thereby ceding a big advantage to its competitors†. Another researcher, Fink (1992), asserted that although there are many factors that affect employees performance, the key factor of employees performance is affected by employees job commitment. He defines commitment as an attitude that develops from a process called identification, which occurs when one experiences something, someone, or some idea as an extension of oneself. While all research on commitment treats it only in terms of identification with organisation, that is, its goals, values, and mission, on the other hand, he focuses on three-dimensional concept including identification with the work itself and with co-workers. He is sure that these are equally important because they can have powerful effects upon employee performance. As basis of his research he makes an interactive model that proposes: good management practices result in an effective reward system and employee commitment, an effective reward system results in enhanced employee commitment and employee performanc e, and employee commitment results in enhanced employee performance. As a result of his research in two companies, who has 418 and 430 employees, respectively, he found that there was significant correlation between employee performance ratings and commitment score in all categories, and also the correlation between performance and commitment for managers and operational employees grouped separately were significant in all categories. The higher the level of employee commitment to work; co-worker, and organisation, the higher the level of the performance will be. Based on Sutanto‘s (1999) findings, instead of concluding that job commitment only has significant affect on job performance, he has found that â€Å"there is also a positive and significant relationship between commitment to supervisors and performance. He also stated that employees commitment to supervisors have become a good predictor to performance rather than commitment to organisations†. After conducting a larger project to all 1,803 members of May 1993 graduating class of large north-western university, Becker (1992), has found that commitment to supervisors was positively related to performance. â€Å"Further, internalization of supervisors and organizations values was associated with performance but identification with these foci (targets) was not. A number of theorists and researchers have begun to view employee commitment as having multiple foci and bases. Foci commitments are the individuals and group to whom an employee is attached†. Thus, in order to increase employees performance, the study suggest that managers should focus on creating employees commitment to supervisors rather than creating employees commitment to the organisation. On the other hand, Cohens (1999) research supported the important status of job involvement as an antecedent to organisational commitment. Specifically, Cohen argued that those individuals with high levels of job involvement, which stem from positive experiences on-the-job (Witt, 1993), make attributions for these experiences to the organisation. Thus, having previously received benefits from the organisation and being obligated by the norm of reciprocity (Gouldner, 1960) to repay them, high job involvement employees feel compelled to reciprocate in some form. This increased affective commitment (i.e. where employees adopt the companys goals as their own and, therefore, desire to remain with the organisation to help it achieve its goals; Meyer and Allen, 1984; Mowday et al., 1979) and later was found to reduce turnover intentions, absence behaviour, and/or turnover, as well as increased job performance. Tough many researchers have confirmed that employees commitment result in high job performance, nevertheless some past researchers have also found that job commitment or involvement has limited affect on employees job performance. According to Rotenberry and Moberg (2007), â€Å"research finding a significant impact of job involvement on employee performance has met limited success (e.g. Brown, 1996; Brown and Leigh, 1996; Diefendorff et al., 2006 and Vroom, 1962)†. Diefendorff et al. (2002) stated that â€Å"research has been limited for two reasons. Specifically, they asserted that past studies had predominantly used inferior measures of job involvement, which led to their insignificant findings. In addition, Diefendorff et al. (2002) argued that the performance domain assessed in those previous studies needed to be expanded in order to ascertain job involvements true impact on performance at work. The researchers tested the validity of these propositions, but called for additional research in the area paying particular attention to theory development regarding the job involvement-performance relationship†. 2.5 Past Research on Job Design Affecting Job Performance Job design is the method of arranging various work elements in forming a job that suit the employees. Job design identifies what work must be performed to be precise, the content of the job, how it will be performed, where it is to be performed and the competencies required by the person who will perform it. Job design also facilitates the achievement of organizational goals and performance of the work the job was established to accomplish (Sharon, 1998). Job design is also important to avoid employees dissatisfaction. The design of the job must follow the organisations and employees requirement including the health and safety requirement. Besides, job design implementation includes methods such as job enlargement, job rotation, job enrichment and job simplification. The first, job enlargement, can be used to increase motivation by giving employees more and varied tasks. Tasks that reduce the amount of specialization required by the employee, as well as, extending the length of time he or she has to complete them. The second, job rotation, allows an employee to work in different departments or jobs in an organization to gain better insight into operations. This, in itself, does not modify or redesigns the employees job, but allows the opportunity to increase his/her skills and knowledge about other jobs. Job enrichment, the third method, allows the employee to take on some responsibilities normally delegated to management. The risk here is that the employee would be transferred too much responsibility and autonomy in the planning and control aspects of the job. Done right, however, the newfound control would invigorate the employee to work more effectively and thus increased it