MOTIVATION INFLUENCE ON PERFOMANCE OF BANK EMPLOYEES

THE INFLUENCE OF MOTIVATION ON PERFOMANCE OF EMPLOYEES IN COMMERCIAL BANKS: CASE STUDY OF COMMERCIAL BANKS IN BUNGOMA TOWN.

BY

KEVIN OGONJI MULUKA

A RESEARCH PROPOSAL SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF MASTERS OF ARTS DEGREE IN PROJECT PLANNING AND MANAGEMENT OF THE UNIVERSITY OF NAIROBI

2014.DECLARATION

I declare that this Research Proposal is my original work and hasnot been submitted to any other University or institution of higher learning for examination Purpose.

Signature…………………………………………………………. Date……………………………………………..

This proposal has been submitted for examination with my approvalas the University Supervisor.

Signature…………………………………………………. Date…………………………………………………..

Mr.Sakaja

Department of Extra mural studies

University of Nairobi

DEDICATION

I dedicate this research proposal to my dad George Muluka, motherA. Muluka and my brothers and sisters..

ACKNOWLEDGEMENT

I begin by registering the utmost profound gratitude by acknowledging the support, advice and tireless effort of my supervisor Mr.Sakaja of the University of Nairobi for the mark that he has imprinted in my academic life.

To my fellow colleagues and group members who gave me the technical support and guidance thus ensuring successful completion of my proposal.

Finally I do thank the Almighty God creator of the heavens and earth, without His grace and love and will, this work would not have turned into a reality.

TABLE OF CONTENT

CHAPTER ONE

INTRODUCTION

1.1 Background of the studyOver the years the need to increase productivity and efficiency in the work place or any organization has led to increasing academic interest in the area of motivation. There is no doubt that most of the growth in any organization comes not from mysterious market forces, but rather from the employees. Keeping the employees motivated can be the most challenging aspect of running an organization for any Human resources department and managers as well. While necessary steps to stay competitive in this trying macro –economic

climate are necessary, an organization’s most important asset , human resources, are taking a real hit.All over the world employee disengagement continues to sweep across the workforce considerably affecting productivity. For instance in the U.S , Gallup’s latest estimates classifies 71percent of U.S workforce is not engaged or actively disengagedcontributing to a pandemic that is costing the U.S organizations three hundred billion dollars annually. In U.S and Japan work is an important part of people’s lifestyle and people work long hours because the cost of living is high but there is much evidence their workers may do far less work in abusiness day than outsiders would suspect. In Germany the number of hours worked has been declining unlike the U.S .The Germans place high value on lifestyle and often prefer leisureto work. Pay disparity within American companies than in German firms create incentives for American employees to work harder. Today's emphasis on quality-improvement teams and commitment-building programs is creating a renaissance for financial incentive of pay-for-performance plans. Today financial incentives constitute less than 5% of the U.S. worker's compensation. Organizations adopt alternative reward systems to increase domestic and international competition. The competitive reasons for the growing emphasis on performance-based compensation are companies cutting costs, restructuring,and boosting performance.It has been shown, argued and proven that unless individual staff are motivated to make sufficient use of the potentials found in them during the employment process they may not achieve the level of performance that is desired from them (Morris, 1998). For a staff to be motivated, he or she has to perceive that his or her needs and wants are being met. Thus the satisfaction of the staff represents an indispensable dimension of the motivational process. A satisfied individual

would certainly contribute positively to the realization of the organizational goals and objectives while a dis-satisfied staff may only not contribute but can even act in such a way that the realization of such goals and objectives could be completely destroyed. This underlines the importance of staff satisfaction to the organization. The influence of motivation on performance of employees in Commercial Banks using the Commercial Banks in Bungoma town, as a case study will therefore form the basis of this study.

1.2 Statement of the problemIt has been noted that motivation is very handy when it comes to how efficient and effective workers carry out their jobs inline with meeting the organizational goals. With the competition in the banking sector getting stiffer with high rate of turnover by banking staff personnel in commercial banks, there is low productivity and a drop in performance. Employees of the bank only perform their duties as much as will enable them to keep their jobs .Despite the fact that the bank has made a positive strides in profitability of late,the employees seem not to be happy and have not utilized theirfull potential and skills. It is against this backdrop that this study examines the influence of motivation on performanceof employees in Commercial banks.

1.3 Purpose of the studyThe purpose of the study is to investigate the influence of motivation on performance of employees in Commercial Banks in Bungoma Town?

1.4 Research Objectives:The research objectives of the study include:-

i. To establish how training influences performance of employees in Commercial Banks.

ii. To investigate the influence of salary increment on performance of employees in Commercial Banks.

iii. To find out the influence management styles on employee’s performance to perform in Commercial Banks.

iv. To establish the influence of working environment on performance of employees in Commercial Banks.

v. To determine the extent to which incentives rewards and promotions influence the performance of employees in Commercial banks

1.5 Research Questions(1) What is the influence of training on performance of employees in Commercial Banks?(2) How does salary increment influence performance of employees in Commercial Banks?(3) How does management style influence performance of employees in Commercial Banks?(4) How does working environment influence performance of employees in Commercial banks? (5)To what extend does incentives, rewards and promotion influence performance of employees in commercial Banks?

1.6 Significance of the study

The study will be important to Bank managers who will find the recommendation and results from the study useful in determining how best to motivate employees the to enhance their performance hence maximizing on the talents of the employees within their disposal.

1.7 Basic assumption of the study

The bank standards for motivating the employees and education levels are assumed to cut across all the Commercial Banks in Bungoma town.

1.8 Limitation of the study

Due to the busy work schedule within the banking industry, it might be difficult for the researcher to meet respondents due to limited time employees have and prejudice from management staff. However, the researcher will mitigate these by persuading respondents to meet outside official working hours and as well encourage response via the email and as well remind the respondents and talking to managers in order to convince them about the objectives of this study.

1.9 Delimitation of the study

This particular research will only be limited to Commercial Banksin Bungoma town and the results will be used cautiously in other Commercial banks outside Bungoma town.

1.10 Definition of significant terms

Motivation: Factors that might influence performance of employees in Commercial Banks

Performance: the activity of doing something fruitfully while employing less amount of effort

Employee: This refers to managerial, secretarial, technical and other personnel in an organization.

Commercial Banks: Banks licensed and regulated pursuant to the provisions of the Banking Act. They are the dominant players in the Kenyan Banking system.

Management style: This refers to the kind of leadership and role played by management employee staff.

Working Environment: workplace factors that influence employee motivation

1.11 Organization of the study

In Chapter one, which is the introductory part; discusses the background of the study briefly touching on role of motivation asfar as performance and productivity is concerned, the statement of the research problem, purpose of the study, the research objectives of the study, research questions, and the significance, basic assumptions, limitations and delimitations tobe adopted shall be discussed. Chapter two will deal with the literature that relates to the topic. The research methodology covering population, sample size, data collection and analysis will be examined in chapter three.

CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

In this chapter, I will discuss what is implied by the term “Motivation” and the factors affecting employees’ motivation and explain the concepts, models and theories which are relevant in the field of motivation and important to facilitate analysis and understanding of the research questions.

2.2 Definition of Motivation

Motivation, according to Bulkus & Green (2009), motivation is derived from the word “motivate”, means a move, push or influenceto proceed for fulfilling a want.

Motivation is simply the will to achieve. Employee motivation describes an employee's basic enthusiasm about work and incentives given to accomplish work. Motivating employees about work is the blend of satisfying the employee's requirements and prospect from work and workplace factors that facilitate employeemotivation.

Employees are motivated by both intrinsic and extrinsic rewards. To be effective, the reward system must recognize both sources ofmotivation. All reward systems are based on the assumptions of attracting, retaining and motivating people. Financial rewards are an important component of the reward system, but there are other factors that motivate employees and influence the level of performance. In fact, several studies have found that among employees surveyed, money was not the most important motivator,

and in some instances managers have found money to have a demotivating or negative effect on employees.

To ensure the reward system is effective and motivates the desired behaviors, it is essential to consider carefully the rewards and strategies utilized and ensure the rewards are linkedto or based on performance. To be effective, any performance measurement system must be tied to compensation or some sort of reward. Rewarding performance should be an ongoing managerial activity, not just an annual pay-linked ritual. This leads to review factors like Training, Reward systems, Leadership (management styles) and the working Environment.

Importance of Motivation

Motivation increases the willingness of the workers to work, thusincreasing effectiveness of the organization hence:-

Best utilization of resources Reduction in Labor Problems Sizeable increase in production and productivity: Basis of Co-operation. Better Image

2.3Training and Performance

Training and development, selection, job rotation, job analysis, job enrichment, job evaluation, performance appraisal, merit rating etc. if properly utilized would to a greater extent revitalize the workforce.

Not all employees progress at the same rate. As a result, it becomes necessary that you give constructive feedback to improve their performance and train them. That process requires

evaluating why an employee isn't meeting your expectations, how you can help him, and working to find a solution.

Training increases a worker’s output and productivity thus a greater chance of commitment. Training makes employees feel worthy and with a higher sense of worth, they feel more loyal to your organization. It also provides employees with a feeling of empowerment which motivates to get a job done well. It’s often recommended to increase the skill and work product level of your employees by implementing ongoing training offers.

2.4 Incentives rewards, Promotion, Salary increment and Performance

While many workers claim that job satisfaction and a sense of purpose drive their productivity, salary also plays a distinctiverole in how well your employees perform. Incentive pay, based on the quantity of work delivered rather than on the time spent on the job, is particularly beneficial for increasing worker productivity. Merit and hard work must be rewarded adequately. Rewards based on personal influences demoralize the workforce. Inany organization where rewards are likely to be misplaced, where a spirited man is not as such respected and admired, motivationaltools cannot bear fruit. It is a problem on advancement in an organization where merit plays second fiddle because of personal influence.

There are various strategies for rewarding employees’ performanceand contributions include both non-financial and financial mechanisms. Promotions and lateral moves - Promotions and lateralmoves may be long term rewards that recognize employees’ professional growth, expertise, and capacity to contribute to theinstitution in new roles. Promotions are typically associated with an increase in salary, and the increase may be any amount upto 5% of an employee’s current salary.

2.5 Management style and Performance

Ultimately, motivation must come from within each person. No leader is ever the single and continuing source of motivation for

a person. While the leader's encouragement, support, inspiration,and example will at times motivate followers, the leader's greatest role in motivating is to recognize people for who they are, and to help them find their own way forward by making best use of their own strengths and abilities. True leaders care aboutthe other person's interests - not just your own interests and the interests of your organization.

An employee's relationship with a manager is the most important indicator of success or failure on the job. Managers have numerous ways to influence employee performance through behavior modeling, constructive feedback, and performance reviews, among other methods. However, these techniques won't succeed unless themanager tries to understand his employees' motivations. Managers who follow a "command and control" leadership model inspire lowerloyalty and productivity than those who allow their subordinates some degree of autonomy.

It is important to engage employees in the decision making process, but create realistic process.Managers and leaders who believe in their employees strengths, treat employees with respect, inquire employees for information about their performance and communicate regularly with employeesreap a lot from them through a strong relationship and friendship.

2.6 Working Environment and Performance

The work environment always involves some level of stress, but your approach to stress has a huge impact on how you respond to it. When you experience stress, your brain interprets it as a threat to your survival regardless of whether the stress is physical or emotional, and your body releases endorphins to help you survive the threat. Stressed-out employees don't work well together, solve problems creatively, come up with new ideas, or provide good customer service. Employees with the tools to handlestress perform better in all of these areas.

A safe and non-threatening work environment is necessary to maintain a high level of employee motivation. Flexible human resource policies, flexible time, work from home, childcare also be liable to have happier and more motivated workers. Employees who feel socially and emotionally disconnected from their co-workers respond by disengaging from the company and the job. Employees who feel a strong sense of social connection at work respond by identifying with their job and their company, and working hard for its success. Rather than focusing on reward and punishment to improve employee performance, companies should workto create an environment in which employees feel a sense of security, some degree of control over their circumstances, an overall sense of support and well-being, and a socially connected, engaging and satisfying workplace

2.7 Theoretical Frame work

The motivational theory relevant for this research study is Frederick Herzberg Theory of Motivation.

Frederick Herzberg developed the two-factor theory of motivation based on satisfiers and dissatisfiers. Satisfiers are motivators associated with job satisfaction while dissatisfiers are motivators associated with hygiene or maintenance. Satisfiers include achievement, responsibility, advancement, and recognition. Satisfiers are all intrinsic motivators that are directly related to rewards attainable from work performance and even the nature of the work itself. Dissatisfiers are extrinsic motivators based on the work environment, and include a company’s policies and administration such as supervision, peers, working conditions, and salary. Herzberg believed providing for hygiene and maintenance needs could prevent dissatisfaction but not contribute to satisfaction. Herzberg also believed that satisfiers hold the greatest potential for increased work

performance. Work-life programs are a form of satisfier that recognizes the employee’s life outside of work which, in turn, helps motivate the employee.

This theory concentrates on the role of internal job factors as motivating forces for employees. He designed it to increase job enrichment for employees, to create the opportunity for employeesto take part in planning, performing and evaluating their work.

Employees are motivated by both intrinsic and extrinsic rewards. To be effective, the reward system must recognize both sources ofmotivation. All reward systems are based on the assumptions of attracting, retaining and motivating people. Financial rewards are an important component of the reward system, but there are other factors that motivate employees and influence the level of performance. In fact, several studies have found that among employees surveyed, money was not the most important motivator, and in some instances managers have found money to have a demotivating or negative effect on employees.

The combination of hygiene and motivation factors can result in four conditions:

High Hygiene / High Motivation: The ideal situation where employees are highly

motivated and have few complaints.

High Hygiene / Low Motivation: Employees have few complaints, but are not highly

motivated.

Low Hygiene / High Motivation: Employees are motivated but have many complaints.

The job is exciting and challenging, but salaries and work conditions are

not acceptable.

Low Hygiene / Low Motivation: The worst situation where employees are

unmotivated and have many complaints about their working conditions.

Examples of Herzberg's 'hygiene' needs (or maintenance factors) in the workplace are:

policy relationship with supervisor(management styles)

work conditions salary company car status security relationship with subordinates personal life

Herzberg's research identified that true motivators were other completely different factors, notably:

achievement recognition work itself responsibility advancement

2.9 Conceptual Framework

The study will be guided by the following conceptual framework whose variables are as illustrated below.

Figure 1 Conceptual Framework

Incentives rewards, Promotion, Salary increment and Performance

Training

Management style

Working Environment

Other factors e.g. Attitude, policies, education e.tc. as

non-measurable factors

Performance

2.9 Summary of Literature review

This chapter focused motivation of employees, factors to encourage or discourage motivation, theoretical framework on motivation in relation to the objectives of the study and also looks at the conceptual framework indicating how various variables both measurable and non-measurable relate to performance of employees.

CHAPTER THREE

METHODOLOGY OF THE RESEARCH

3.1 Introduction

This chapter covers research methodology discussing the followingthemes; research design, target population, sample size and sample procedure, research instruments, piloting of study instruments, validity and reliability of the study instruments, data collection and techniques, and ethical consideration to be considered during the study.

3.2 Research Designs

The survey research design method will be used in this study. It will involve using a self-designed Questionnaire in collecting data from the respondents. Questionnaire will be appropriate given that bankers are very busy and may not have time to enable researcher to conduct interviews and gather accurate information.

3.3 Target Population

The population of this study comprises employees drawn from the top tier Kenyan commercial banks namely; Kenya Commercial Bank, Barclays Bank, National Bank of Kenya, Equity Bank, Co-operative Bank, Standard Chartered Bank, and Bank of Africa in Bungoma town. The target population for this study will be 220 staff involving section heads, management staff and support staff and sub-ordinate staff.

3.4 Sampling Procedure

The study population is two hundred and twenty staff (220) made up of 40 management staff and 60 section heads 100 support staff and 20 sub-ordinate staff.

3.4.1 Sample sizeIn this study the sample size will adopt Krejcie & Morgan (1970) formula to determine the sample size. However, there is no need of using Krejcie & Morgan(1970) formula since the table of determining sample size has all the provisions one would need to arrive at a given sample. From a population of 220 the sample size arrived at is 140 by just referring to the table.

3.4.2Sampling Procedure

From the sample size of one hundred and fifty out of which eightywill be randomly stared with support staff across the commercialbanks while forty questionnaire will be administered randomly to the management and twenty sub-ordinate staff within the seven commercial banks without regard to sex and age.

3.5 Research Instruments

The data collection instrument that will be used is a structured questionnaire because structured questionnaire are extremely flexible and could be used to gather information concerning any topic. The questionnaires will be divided into four sections.

Section A will be to gather demographic data regarding respondents such as gender, age, work experience and qualification. Section B will seek to determine the extent to which motivation is practiced by Commercial banks; section C willcapture information on types of motivation and motivating tools. Section D will capture information on the relationship between extrinsic motivation and performance of employees.

3.5.1 Piloting of the study instruments

In order to standardize the instruments before collecting the data to be used for analysis, a pilot test will be carried out atNational bank of Kenya Bungoma branch and the outcome evaluated to ensure relevant data only will be captured.

3.5.2 Validity of the instruments

Validity refers to the extent to which an instrument measures what it purports to measure.

From the data collected from piloting of the study instruments the researcher will be able to check on the validity of instruments.

3.5.3Reliability of the instruments

Reliability refers to estimates used to evaluate the stability ofmeasures at different times to same individuals or using same standard; the major focus being on reduction of error in the measurement process. I.e.it is the ability of an instrument to measure the phenomena under study and yield consistent results.

From the piloting of the study reliability of the instruments will be analyzed in terms of the consistency of the results collected.

3.6 Data collection procedures

After approval of the proposal the researcher will seek authorityfrom the University and Bank management.

3.7 Data Analysis Techniques

The data collected will be coded and fed into a computer statistical software SPSS (Statistical Package for Social sciences) to run the analyses.

3.8 Ethical consideration

By Ethical consideration the researcher refers to moral standing that should be held and practiced during the research process.

While conducting the research, the researcher is fully aware thatthe banking environment is very competitive and therefore some respondents may withhold some crucial information in terms of howthey keep their staff or are kept motivated incase their businessrivals get wind of their techniques that keep them ahead of the competition. Some senior management staff may not like to be exposed in the event their juniors reveal information they would not recommend. The researcher will therefore be required to observe secrecy and discuss sensitive matters with management. Any information that the researcher may learn of in the course ofthe study not pertaining to his research will be kept confidential.

References

1. Manager's Influences on Employee Performance-by Ralph Heibutzki, Demand Media

2. What Influences Employee Performance?-by Scott Thompson, Demand Media

3. “The Influence of Employee Involvement on Productivity: A Review of Research- June 2000”. http://www.hrsdc.gc.ca/en/cs/sp/hrsd/prc/publications/research/2000- 002584/page03.shtml .

4. How Does Organization Training Influence Employee Performance-by Kristie Lorette, Demand Media.

5. “Frederick Herzberg's motivation and hygiene factors”.http://www.businessballs.com/herzberg.htm

6. Employee satisfaction, http://humanresources.about.com/od/employees survey1/g/employee_satisfy.htm

7. Mani, V.(2010).”Development of Employee Satisfaction index scorecard”. European Journal of Social Sciences,15(1),129-139.

8.”International Journal of Business trends and Technology-vol2Issue4-2012”. http://www.internationaljournalssrg.org

Appendix I: Questionnaire schedules

Appendix II: Krejcie & Morgan (1970)

Table for Determining Sample Size from a Given Population

N S N S N S

10 10 220 140 1200 291

15 14 230 144 1300 297

20 19 240 148 1400 302

25 24 250 152 1500 306

30 28 260 155 1600 310

35 32 270 159 1700 313

40 36 280 162 1800 317

45 40 290 165 1900 320

50 44 300 169 2000 322

55 48 320 175 2200 327

60 52 340 181 2400 331

65 56 360 186 2600 335

70 59 380 191 2800 338

75 63 400 196 3000 341

80 66 420 201 3500 346

85 70 440 205 4000 351

90 73 460 210 4500 354

95 76 480 214 5000 357

100 80 500 217 6000 361

110 86 550 226 7000 364

120 92 600 234 8000 367

130 97 650 242 9000 368

140 103 700 248 10000 370

150 108 750 254 15000 375

160 113 800 260 20000 377

170 118 850 265 30000 379

180 123 900 269 40000 380

190 127 950 274 50000 381

200 132 1000 278 75000 382

210 136 1100 285 1000000 384

Note.—N is population size. S is sample size.