Effects Of Employees’ Motivation On Organizational Performance

Project and Seminar Material for Business Administration and Management BAM

Effects Of Employees’ Motivation On Organizational Performance


The issue of motivation has continually posed a big challenge to business organizations around the globe especially in the manufacturing industries where high levels of productivity affect or play a major role in determining the profitability, growth, development, stability and future success of an organization. Therefore an organization in a bid to achieve success in maintaining a competitive edge over its rival as well as avoid a steady decline in the productivity levels of its employees, must ensure members of the workforce are adequately motivated. The primary purpose of this study is to examine the effect of employee motivation on organizational productivity. This study adopted a descriptive and causal research design as well as the survey method in investigating the effects of motivation on organizational productivity levels. The entire population of the study was 475 as a result the sample size determined is 217. A well- structured self-administered questionnaire was used as the main tool for data collection and was administered to 217 respondents out of which 185 were retrieved and appropriately filled. Reliability of the research instrument was calculated and the Cronbach’s alpha coefficient was 0.868. Data were analyzed using multiple regression analysis. From the hypotheses tested, the result indicated that there is a significant relationship between employee motivation and organizational productivity. The results also revealed that extrinsic factors were considered to have more significant effects on organizational productivity than intrinsic factors. The study concluded that although both intrinsic and extrinsic factors are significant predictors of productivity, extrinsic factors appear to be more significant or valued by respondents in the organization used as a study. Furthermore this study also recommended that management of organizations should take appropriate measures in figuring out those factors that motivate their employees and seek ways of ensuring that they are adequately motivated in order to improve their performance and productivity levels. Finally the study also suggested that future studies should focus on other industries apart from the aviation sector.

Chapter One


1.1 Background of the Study

Generally most businesses, organizations and their managers are faced with numerous challenges. One of such challenges is in the area of management which refers to the utilization of resources effectively and efficiently in order to achieve an organizations goals and objectives. Some of these managerial challenges are obvious in matters concerning employees such as reimbursement, recruitment, performance management, training and career development, health and safety, benefits, motivation and administration amongst others. The human resource is the most vital of all resources among other factors of production and the human capital is what distinguishes one organization from the other (Maimuna & Rashad, 2013). Therefore, for organizations to survive and remain relevant and competitive, it is essential for them to be able to entice and maintain efficient and effective employees in a bid to enhance productivity (Sunia, 2014). This study however is centered on the aspect of motivation and focuses on the effects of employee motivation on organizational productivity.

Hellriegel (1996) viewed motivation as any influence that portray, direct, or maintain people’s goal directed behaviors. It refers to the driving force that makes an individual to act in a specific way. It is an inner drive that causes an individual to behave in a certain manner. The goal of most organizations is to improve productivity therefore factors of motivation play significant roles in improving employee job satisfaction levels. This will in turn aid in improving an organization’s productivity levels.

Employees make up the workforce of any organization as such they are an integral part of the organization. Aluko (2014), stated that an organization is only as good as the workforce that runs the organization. This is to say that when employees are motivated chances are that their morale would be high as such performance and productivity levels would increase thereby to a large extent boosting overall organizational performance level. In order to achieve high levels of productivity as such boost organizational performance or productivity, managers therefore need to continually seek ways of ensuring that their employees stay motivated. This is because a lack of employee motivation leads to reduced productivity which is harmful to organizational performance and continuous success.

Jennifer and George (2006) defined employee productivity as the level of effort put forth by the workforce of an organization towards achieving organizational goals and objectives. There are several ways by which a workforce can be motivated so as to enhance organizational productivity. George and Jones (2012) states that motivation can be categorized into two classes namely intrinsic and extrinsic. Intrinsic motivation arises from an employee’s internal cravings to execute a task out of self-interest rather than a need or wish for some external reward. External motivation is the type of motivation that arises when an employee is compelled to act in a specific way either as a result of that employee’s desires for external rewards or to avoid punishment.

Extrinsic motivation also helps boost an employee’s effectiveness and efficiency levels. This is because certain external factors such as adequate compensation, work environment as well as training and career development appeal to employees as such are essential in inspiring them to resourcefully and successfully discharge their duties. An organization that fails to provide a conducive work environment, compensate its workforce adequately, create room for proper training and career advancement is at risk of having a demotivated workforce. This means that such a workforce being demoralized would fail to effectively and efficiently discharge their duties leading to low performance and productivity levels (Nwachukwu, 2004). This study therefore focuses on showing the effects of motivation on organizational productivity.

1.2 Statement of the Problem

James (2014) cited three warning signs of a demotivated workforce these include poor workplace atmosphere, slipping job standards and decreased productivity. He further stated that if any of these factors is observed to be trending downwards then there is a great chance that the organization is dealing with a demotivated workforce. Most businesses and organizations especially manufacturing industries have failed to recognize the importance of motivation as a concept be it intrinsic such as employee well-being, relationship with co-workers, relationship with managers, organizational policies etc. or extrinsic such as training and career development, good working conditions, compensation, promotion amongst other factors that enhance or improve employee performance as well as organizational productivity levels.

This in turn has continued to represent major managerial concerns for decades as employee productivity levels has relatively declined which has been acknowledged as a subject of growing concern in the aspect of business and management research (Akerele, 2001). Although a lot of factors may also be responsible or even cause a decline in productivity such as poor strategic and structural changes in decisions and executions, lack of infrastructure, leadership styles and organizational culture amongst others. Contemporary investigations that connects the concept of workforce motivation and productivity has laid an emphasis on employee perspective, needs and expectations as factors affecting their performance and productivity levels respectively. As such investigating those factors of importance to employees in the discharge of their duties at work has taken a new dimension.

Motivation through factors such as employee wellbeing, adequate compensation, promotion, good relationships with co-workers and relationships with managers can enhance an employee’s level of effectiveness and efficiency in the workplace. This is because good relationships with co- workers promote unity and gives the employee a sense of belonging and acceptance which in turn boosts employee performance and productivity levels. Employees who enjoy such relationships both within and outside the work environment tend to be more effective and efficient as such very productive in discharging their duties. Therefore organizations should promote harmony amongst employees by organizing social functions in a bid to bring employees together (Jibowo, 2007).

Therefore an organization’s best strategy is to provide suitable work environs that allow their workforce to meet or exceed expectations as well as offer a range of motivators to improve enthusiasm, performance and productivity levels.

1.3 Objectives of the Study

The primary objective of this study is to acquire a deeper comprehension of how employee motivation affect performance of workers in manufacturing organizations as well as recognize the effects on organizational productivity.

This research therefore seeks to:

  1. Determine the effect of employee well-being on the level of effectiveness of the workers.
  2. Determine the effect of employee relationship with managers on the level of efficiency of the workers.
  3. Examine the effect of compensation on the level of effectiveness of the workers.
  4. Examine the effect of training and career development on the level of efficiency of the workers.
  5. Determine the influence of employee motivation on organizational productivity.

1.4 Research Questions

  1. What effect does employee well-being have on the level of effectiveness of workers?
  2. How does employee relationship with managers affect the level of efficiency of the workers?
  3. What effect does compensation have on the level of effectiveness of the worker?
  4. How does training and career development affect the level of efficiency of a worker?
  5. What influence does employee motivation have on organizational productivity?

1.5 Research Hypotheses

  1. Employee well-being has no significant effect on the level of effectiveness of the worker
  2. Employee relationship with managers have no significant effect on the level of efficiency of the worker
  3. Compensation has no significant effect on the level of effectiveness of the worker
  4. Training and career development has no significant effect on the level of efficiency of the worker
  5. Employee motivation does not influence organizational productivity

1.6 Significance of the Study

For this study not to be an effort in futility, it has to be useful to a number of people and institutions among which are;

i. Organizations:

The aim of this study is that the outcomes, results or findings should be beneficial to business owners, managers and organizations especially in the locality where this study is being conducted. This is to enable them understand the concept of motivation and its effect on productivity. It also gives an insight to managers and business owners on the importance of knowing their employees and ensuring adequate motivation in their organizations.

ii. Research Institutions:

This study is also relevant to research bodies and institutions in the nation as a whole because findings would also be relevant to students and users of information in conducting further research in areas similar to this study.

iii. Government Agencies:

This research is also of paramount importance because it would aid government agencies in making and implementing policies that would enhance the stability, growth and development of businesses throughout the region in matters concerning organizational productivity by seeking ways ensure that employees are adequately motivated in their various organizations thereby increasing overall productivity and performance levels.

1.7 Scope of the Study

The scope of this study is limited to Ethiopian airlines in Addis Ababa State, Ethiopia where the study is being conducted. This study examines employee motivation and its resulting effects on the organization’s productivity levels. The aviation industry is being considered because research has not been done on this area prior to now. Ethiopian airlines was selected because it is the first airline company in Ethiopia and is one of the fastest growing airline companies currently situated in Addis Ababa and Addis Ababa state.

1.8 Limitations of the Study

The demanding schedule of respondents at work made it very difficult getting the respondents to participate in the survey. As a result, retrieving copies of questionnaire in timely fashion was very challenging. Also, the researcher is a postgraduate (student) and therefore has limited time as well as resources in covering extensive literature available in conducting this research. Information provided by the researcher may not hold true for all businesses or organizations but is restricted to the selected organization used as a study in this research especially in ababa the locality where this study is being conducted. Finally, the researcher is restricted only to the evidence provided by the participants in the research and therefore cannot determine the reliability and accuracy of the information provided.

1.9 Definition of Terms


Refers to what stimulates and guides human behaviors and how these behaviors are sustained to attain a specific goal.


Employees are people who are hired working under contract in an organization, they are referred to as the workforce of an organization.


A summary measure of the quantity and quality of work performance, with resource deployment taken into account. It can be measured at individual, group or organizational levels.

Employee Productivity:

Is the rate at which employees effectively and efficiently discharge their duties.

Organizational Productivity:

A measure of how efficiently and effectively managers use resources to achieve organizational goals.


Refers to a measure of how well workers productivity levels meet set goals and objectives of the organization.

Employee Effectiveness:

Is a qualitative characteristic that indicates the extent to which job related issues are addressed and the magnitude at which predetermined goals and objectives are achieved by an employee.


Can be derived from the relationship between inputs and outputs, and refers principally to the degree at which outputs are realized while minimizing costs associated with production.

Employee Efficiency:

Refers to the ability of an employee to do what is actually produced or performed with the same consumption of resources

Chapter Five

Summary, Findings and Conclusions

5.1 Summary of the Work

The major aim of this research is to identify the effects of workplace motivation on employee productivity using the ETHIOPIAN AIRLINES as a study.

Specifically, the study sought to achieve the following objectives:

  1. To determine the effect of employee well-being on the level of effectiveness of the worker
  2. To determine the effect of employee relationship with managers on the level of efficiency of the worker
  3. To examine the effect of compensation on the level of effectiveness of the worker
  4. To examine the effect of training and career development on the level of efficiency of the worker
  5. To determine the effect of employee motivation on organizational productivity

In addition to the objectives, chapter one contains the statement of research problem, the research questions, significance of the study, hypotheses, scope and limitations as well as an operationalization of the research variables used in the study.

In Chapter two, extensive literature and various theories on motivation such as Abraham Maslow’s hierarchy of needs theory, Frederick Herzberg’s two-factor theory and Victor Vroom’s expectancy theory was discussed in relation to productivity measures. Finally the gaps in literature were also outlined.

In chapter three, with the aim of achieving the stated objectives of this study, the researcher adopted the descriptive research design and the survey method. The research instruments used for data collection was the questionnaire.

The questionnaires were administered 217 staff of the Ethiopian airlines. Out of the 217 administered, 185 were retrieved and analyzed.

Chapter four involves the presentation and analysis of data which was gotten from questionnaires administered.

Descriptive statistics was used for the analysis of the data, linear regression analysis was also used to test all the hypotheses.

Chapter five contains discussion of findings with respect to both theoretical and empirical findings.

5.2 Conclusions

Employees are and should be considered the most vital above other factors of production, the most valuable resource available to an organization. This is because they are an integral part of the organization as such it is very important for organizations, in pursuit of a competitive edge, to ensure that the satisfaction of their employees is made a top priority. This is to ensure that employees display positive attitude to work through improved performance and productivity levels. Also it is important to note that a lack of adequate motivation results in low productivity and vice versa.

Furthermore the advent of Globalization has resulted in the ability of different organizations to source for employees across several countries and the previously existing barriers have been reduced, this has resulted in higher competition for personnel with the right skills and experience. As such it is important for employers and their managers who value their staff to recognize those factors that affect employee performance and productivity levels on the job or in the workplace and ensure they are fulfilled accordingly. (Brown & Yashioka, 2003; and Sinha & Sinha, 2012). The concept of motivation may be complex particularly in the workplace and may pose a serious challenge to managers as it is relative to individuals. This is because people differ in what they need and want as such what may be seen as a source of motivation to an individual may not seem so to another. As such managers tend to find it extremely difficult in coping with such a dilemma in trying to figure out how to keep members of the workforce motivated. Although, several factors may affect worker productivity levels in an organization such as organizational culture, leadership style, organizational strategy and structure etc. The aspect of Motivation however plays a major role in improving worker productivity levels and therefore should not be underestimated.

This study concludes that employee motivation be it intrinsic or extrinsic in nature has a significant effect and is a predictor of productivity levels in an organization. It also concludes that both intrinsic and extrinsic factors of motivation appeal to employees and a right mix of both is essential in bringing out best performances from a workforce. These findings validate the Herzberg two- factor theory, Maslow’s hierarchy of needs theory and Vroom’s expectancy Theory. From the findings of the study one can deduce that most workers perceive extrinsic motivation as generally having a larger influence on the psychological aspects of employee productivity. We also found that intrinsic motivation is of importance to employee productivity, albeit to a lesser extent psychologically but rather as a part of the tAddis Ababal package that is offered to the employee by an organization.

5.3 Recommendations

The following recommendations are made based on the findings of the study;

  1. Managers must ensure employees are adequately motivated. Employee well-being should be given due consideration and health and well-being programs should be organized to cater for the needs and welfare of employees.
  2. Management should encourage interpersonal relations amongst co-workers and their managers to promote a sense of belonging and unity amongst staff. Also managers should ensure employees are involved in decision making processes and given a chance to air their views.
  3. Also management must ensure they create a work environment that is conducive for workers with adequate working conditions as well as providing the right tools and resources to ensure worker effectiveness in discharging their respective duties.
  4. Furthermore proper scheduling of job activities is key to achieving efficiency in the workplace. Adequate compensation packages in form of monetary or non-monetary rewards are essential in order to ensure that employees stay productive. Management should ensure that rewards and benefits are fairly, justly and competitively allocated to employees.
  5. Management must also strive to ensure that all employees engage in training programs to acquire new skills and also have equal opportunity to utilize their skills and competencies. Management should make sure that career development opportunities are clearly communicated to employees.
  6. An established career path and an adequate development plan should be put in place for employees, development programs should be linked to each employees career needs and not just the organization’s needs. Employees should be selected for sponsored training programs fairly and justly.
  7. Organizations should ensure that performance management provides adequate information about strength and weaknesses of employees in form of feedback from employee evaluations.
  8. Employees who offer the same level of inputs with respect to skills, efforts, qualifications, experience, should be entitled to equitable outcomes in terms of pay, promotion, job security, and opportunity for advancement. Additional inputs and outstanding performance should entitle an employee to additional rewards.
  9. Finally, this study recommends that management should make policies that aids in ensuring that employees are adequately extrinsically motivated to remain intrinsically motivated on the job. This will in turn enhance or boost employee morale resulting in a competitive edge through higher commitment levels, employee engagement, lower turnover and improved performance and productivity levels.

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