PAY POLICY AND EMPLOYEES MOTIVATION IN PRIVATE

UNIVERSITIES IN RWANDA:

A CASE OF KIGALI INDEPENDENT UNIVERSITY

KAMPIRE JEANNE D’ARC

MHRM/22622/2015

A Research Project Submitted in Partial Fulfillment of the Requirement

for the Award of the Degree of Master of Science in Human Resource

Management of Mount Kenya University

SEPTEMBER 2017

ii

DECLARATION

This research project is my original work and has not been presented to any other

institution. No part of this proposal should be reproduced without the author‟s consent or

that of Mount Kenya University.

Student‟s name: Kampire Jeanne d‟Arc

Signature: _______________________Date____________________

This research project has been submitted with my approval as the Mount Kenya

University Supervisor

Name: Dr. Tom Mulegi

Signature: ________________________Date ______________________

For and on behalf of Mt. Kenya university

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DEDICATION

This work is dedicated to my husband Rukumbuzi Blaise, my children Benit and Bruce,

my brother and sisters Egide, Vestine, Lucy and Enatha. To my colleagues who supported

me during this research project.

iv

ACKNOWLEDGEMENT

This work would not be possible if done single handedly. Therefore, I want to extend my

heartfelt appreciation to all who, in one way or another, have stood with me in producing

this work.

I want to express my sincere gratitude and appreciation to my supervisor Dr. Tom Mulegi

whose guidance, suggestion and patience was enormous and inspirational despite his busy

schedule.

I want to thank the management of Mount Kenya University Kigali Campus especially

lecturers in Human Resource Department for their support during my studies.

Special thanks go to my colleagues and a number of people, who contributed greatly to

the completion of this research project.

May God bless you all.

v

ABSTRACT

The general objective of this study was to investigate the influence of Pay Policy on

Motivation of employees in Private Universities in Rwanda with specific reference to

Kigali Independent University. The study was guided by the following objectives: To

analyse Pay Policy in Kigali Independent University; To examine the relationship

between Pay Policy and employees motivation in Kigali Independent University in terms

of Performance, Stability and Compliance; and To establish the challenges facing

employees‟ motivation in the said University.The research was significant to the

researcher, Private Universities in Rwanda and Kigali Independent University. This study

was of important to the researcher as it equipped her with the knowledge of pay policy

and motivation of employees in Kigali Independent University and private universities in

Rwanda generally. It enabled the researcher to obtain a Master‟s Degree in Human

Resource Management. The research report or recommendations will help the private

universities to improve their pay policy which improved employee‟s motivation

accordingly. The research report is available in library of Kigali Independent University

and was used by other researchers who would be interested in the area of motivation of

employees. The study employed a descriptive case study design based on qualitative and

quantitative approaches. Primary and secondary data collection tools with their relevant

tools like questionnaire and documentary analysis was used in data collection. The target

population of this research project is 200 employees from various departments of Kigali

Independent University. Where a sample size of 138respondents calculated using Slovin‟s

formula was derived. The data collected was analyzed using SPSS version 22 and the

results from analysis, interpretation and presentation will be presented in tables. Pearson

movement correlation coefficient was used to establish the relationship between pay

policy and employee motivation.

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TABLE OF CONTENTS

DECLARATION................................................................................................................ ii

DEDICATION...................................................................................................................iii

ACKNOWLEDGEMENT ................................................................................................ iv

ABSTRACT ........................................................................................................................ v

TABLE OF CONTENTS ................................................................................................. vi

LIST OF TABLES ............................................................................................................. x

LIST OF FIGURES .......................................................................................................... xi

LIST OF ABBREVIATIONS AND ACRONYMS ....................................................... xii

DEFINITIONS OF KEY TERMS .................................................................................xiii

CHAPTER ONE: INTRODUCTION .............................................................................. 1

1.0 Introduction .................................................................................................................... 1

1.1. Background to the Study ............................................................................................... 1

1.2 Statement of the Problem ............................................................................................... 4

1.3 Research Objectives ....................................................................................................... 5

1.3.1 General Objective ....................................................................................................... 5

1.3.2 Specific Objectives ..................................................................................................... 6

1.4 Research Questions ........................................................................................................ 6

1.5 Significance of the Study ............................................................................................... 6

1.6 Limitations of the Study................................................................................................. 7

1.7 Scope .............................................................................................................................. 7

1.8 Organization of the Study .............................................................................................. 7

CHAPTER TWO: REVIEW OF RELATED LITERATURE ...................................... 9

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2.0 Introduction .................................................................................................................... 9

2.1 Theoretical Review ........................................................................................................ 9

2.1.1 Employee Motivation in Universities ......................................................................... 9

2.1.2 Pay and benefits ........................................................................................................ 11

2.1.3 Pay Policy ................................................................................................................. 12

2.1.4 Fixed Pay and Performance Based Pay .................................................................... 13

2.1.5 Tangible and Non Tangible Rewards ....................................................................... 14

2.1.6 Flexible and Rigid Benefit Plans .............................................................................. 15

2.1.7 Skill Based and Job Based Pay Systems ................................................................... 16

2.1.8 The challenges facing employees‟ motivation in organisation ................................. 18

2.2 Empirical Literature ..................................................................................................... 20

2.3 Critical Review and Research Gap Identification ........................................................ 21

2.3.1 Critical Review ......................................................................................................... 21

2.3.2 Research Gaps ........................................................................................................... 28

2.4 Theoretical Framework ................................................................................................ 29

2.5 Conceptual framework ................................................................................................. 31

2.6 Summary ...................................................................................................................... 32

CHAPTER THREE: RESEARCHMETHODOLOGY ............................................... 33

3.0 Introduction .................................................................................................................. 33

3.1 Research Design........................................................................................................... 33

3.2Target Population .......................................................................................................... 33

3.3 Sample Design ............................................................................................................. 34

3.3.1 Sample Size Determination....................................................................................... 34

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3.3.2 Sampling Techniques ................................................................................................ 35

3.4 Data Collection Instruments ........................................................................................ 35

3.4.1Questionnaires............................................................................................................ 35

3.4.2 Interview guide ......................................................................................................... 36

3.4.3 Documentary Review................................................................................................ 36

3.4.3 Validity and reliability of instruments ...................................................................... 37

3.5 Data Analysis Procedure .............................................................................................. 37

3.6 Ethical Consideration ................................................................................................... 39

CHAPTER FOUR: RESEARCH FINDINGS AND DISCUSSION ........................... 41

4.0 Introduction .................................................................................................................. 41

4.1.1 Identification of respondents..................................................................................... 41

4.3 Summary of data analysis ............................................................................................ 52

CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSIONS AND

RECOMMENDATIONS ................................................................................................. 54

5.1 Introduction .................................................................................................................. 54

5.2 Summary of major findings ......................................................................................... 54

5.3 Conclusion ................................................................................................................... 55

5.4 Recommendations ........................................................................................................ 55

5.5 Suggestions for further study ....................................................................................... 56

REFERENCES ................................................................................................................. 57

APPENDICES .................................................................................................................. 62

APPENDIX 1:AUTHORIZATION LETTER .............................................................. 63

APPENDIX II: QUESTIONNAIRE .............................................................................. 64

ix

APPENDIX III: INTERVIEW GUIDE ......................................................................... 70

x

LIST OF TABLES

Table 3.1: Evaluation of Mean........................................................................................... 38

Table 3.2: Evaluation of standard deviation ...................................................................... 39

Table 3.3: Evaluation of correlation .................................................................................. 39

Table 4.4: Age group of respondents ................................................................................. 42

Table 4.5: Gender category of respondents ....................................................................... 43

Table 4.6: Level of education of respondents .................................................................... 43

Table 4.7: Duration of working experience of respondents at Kigali Independent

University ........................................................................................................................... 45

Table 4.8: Pay policy Strategies in Kigali Independent University ................................... 46

Table 4.9: Motivation Challenges within Kigali Independent University ......................... 48

Table 4.10 Other motivating factors within the institution ................................................ 49

Table 4.11 Does the pay policy exist ................................................................................. 50

Table 4.12 Correlation coefficient ..................................................................................... 51

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LIST OF FIGURES

Figure 2.1: Maslow's hierarchy of needs ........................................................................... 30

Figure 2.2: Conceptual Framework ................................................................................... 31

Figure 4.3 Position held by respondents ............................................................................ 44

Figure 4.4 Views of respondents on the effect of pay policy as a motivating factor ......... 46

Figure 4.5 Effects of pay policy on motivation in Kigali Independent University ............ 47

Figure 4.6 Reasons for motivation as a challenge ............................................................. 48

xii

LIST OF ABBREVIATIONS AND ACRONYMS

LOC : Locus of Control

MDG : Millennium Development Goal

SACCO : Saving and Cooperative Credit Organisation

SBPS : Skilled Based Pay System

SPSS : Statistical Package for Social Sciences

ULK : Kigali Independent University

VC : Vice Chancellor

xiii

DEFINITIONS OF KEY TERMS

Higher Education of Learning: Higher education, post-secondary education, or third

level education is an optional final stage of formal learning that occurs after secondary

education. Often delivered at a university, academics, colleges, seminaries and institute of

technology higher education is also available through certain college-level institutions,

including vocational schools, trade schools, and other career colleges that award

academic degree or professional certificates, tertiary education at non-degree level is

sometimes referred to as further education or continuing education or as distinct from

higher education.

Monetary pay: Refers to the use of money to motivate employees.

Motivation: Motivation in management describes ways in which managers promote

productivity in their employees.

Non-monetary pay: Refers to the use of non-financial rewards.

Pay Policy: Pay Policy is a set of procedures guiding how employees should be

compensated in the organisation.

Pay Policy Factors: Is the total amount of the monetary and non-monetary pay provided

by employer to an employee in return for work performed as required.

Work motivation: Can be monitory and non-monitory payment system like organization

culture, orientation, training, words of appreciation to mention but few.

1

CHAPTER ONE: INTRODUCTION

1.0 Introduction

This section is to address, background to the study, statement of the problem, objectives,

significance, limitations to the study; and the scope of the study.

1.1. Background to the Study

The role of Universities in the provision and development of manpower required for the

social economic and technological advancement of any nation cannot be over-

emphasized. By their unique nature universities are expected to be a repository of the

most specialized and skilled intellectuals. They serve as storehouses of knowledge for

nurturing the manpower needs of the nation and hence for satisfying the aspirations of the

people for a good and human society. Central to the realization of University goals and

objective are the academic staff whose roles are crucial and their number, quality and

their effectiveness makes the difference in university education production function and

to the wider society (Mwadiani, 2002). Pienaar (2008) strongly argues that the academic

profession is fundamental to the functioning of any university. Without well qualified and

committed academic staff, no academic institution can really ensure sustainability and

quality over the long haul. Higher education institutions are therefore more dependent on

the intellectual and creative abilities and commitment of the academic staff than most

other organisations. This therefore makes it critically important to retain this cadre of

staff.

In recent years, emphasis has been placed on the role motivation tools play in getting

employees to put in their best efforts to work. Various findings have shown that people

2

work hard if their needs are met (Aluko, 1998 and 2001; Mullins, 1999; Lussier, 2000).

They assert that management in institutions must be aware that employees have their

values, attitudes and sentiments that affect their performance to a large extent, and these

values, attitudes and sentiments differ from one employee to another. Since

their emergence in the 1990‟s, private universities have been dogged by challenges

like government policies, curriculum innovations, religion, limited resources, the

limitations of state universities, the prevalence of human immune virus/ autoimmune

diseases (HIV/AIDS), maintenance of quality, and the increasing demand for higher

education.

Pay policy is the total amount of the monetary and non-monetary pay provided by

employer to an employee in return for work performed as required. Cascio (1982) had

stated that pay policy which include indirect cash payment and direct payments in the

form of employee benefits and incentives that are provided by employer in order to

motivate employees to perform well for higher levels of productivity is an important

component of the employment relationship between employer and employee. According

to Milkovich, Newman & Gerhart (2011), pay policy factors refers to all forms of

financial returns and tangible services and benefits that are given by employer to

employee as part of an employment relationship. For monetary pay, it is the return for

employee that work or contribute to organization, while for non-monetary pay is provided

by employer to an employee in order to motivate employee to perform in their

work.Rwanda, like many other countries in Africa, embarked on public sector pay

reforms with the objective of improving effectiveness and efficiency through, among

others, enhancing pay to attract, motivate and retain the requisite skills in the public

service.

3

In the case of Rwanda, current civil service reforms have sought to address issues likely

to hinder Government high performance. Key pay policy reforms started in 2004 when

the Government of Rwanda developed the Guidelines for salary which were implemented

in 2006. Experience and practices have since called for the necessity to develop a new

integrated, comprehensive and systematic pay and retention policy to help the

Government achieve its objectives under Vision 2020, the EDPRS and MDGs which all

require a capable, competent and well-motivated public service. The new Pay and

Retention Policy in Rwanda Public Service was approved by the Cabinet in 2012.

Under the current pay and retention policy, pay is determined based both on job position

and career development. Therefore, pay is not fixed but is subject to increase every three

years by 15% subject to good performance as provided for by Prime Minister‟s Order No

121/03 of 08/09/2010 establishing the procedure of performance appraisal and promotion

of public servants.

For Institutions of Higher Learning, Research, Medical and Clinical personnel, in addition

to horizontal step promotion which results in salary increases every three years of high

performance, vertical professional promotion is also possible and results in pay

enhancements. In addition to the above, the new pay policy has clear directions about

reducing disparities within the public service as a whole. For example, by 2016, only

index-value of 400 and 500 will remain in the public service, resulting in narrowing down

by far pay disparities across the entire public service. Also meriting mentioning is the fact

that the Government of Rwanda has put in place special benefits enhancement

mechanisms for the Education sector by way of special loan access facilities from

Umwarimu SACCO.

4

The Performance Based Financing (PBF) scheme is also used by the Government of

Rwanda as a top up in order to enhance salaries in the health sector. The Government of

Rwanda remains committed to pursuing the principles of compensation including equity,

transparency, competitiveness, employee performance and affordability, as enshrined in

the new pay and retention policy. Looking at disparities in salaries and benefits, in the

new Rwanda pay policy proposal as reported by the East African news paper, Article 2 of

the order sums it up: “Determination of the salary: Salaries for the public servants of the

Central Government shall be determined basing on job classification in accordance with

the general principles on salary fixation for public servants of the Central Government.

”Kigali Independent University ULK is ranked the second private university in Rwanda.

It is destined to stand out as a remarkable university for excellence at the heart of the

Africa with highly motivated students and higher qualified personnel endowed with

elevated ethic values. ULK also takes pride in its very modern infrastructures and

equipments and endeavors to perfectly fulfill its mission.

The fundamental mission of ULK is to provide the people with a training, which may

enable them to become actors and organizers of a complete development of our nation. In

this respect, research work is basically focused on topics of local, national and regional

interests.

1.2 Statement of the Problem

According to Thomas (2009) the main challenge of motivation in workplaces is

identifying what motivates each individual employee taking into account his or her

individual differences. In other words, individual differences have been specified by

Thomas (2009) as the major obstruction for management in engaging in employee

motivation in an effective manner.

5

Herzberg (1968) argued, just because too little money can affect and demotivate an

employee, does not mean that more and more money will lead to increased satisfaction,

much less increased motivation. However, it still remains unclear whether many of

employees would continue working if it was not for the money that they earn. Employees

will expect their employer to give a pay policy plan that is fair and equitable, that

provides them with tangible rewards matched with their skills and, further, that provides

recognition and employees feel their employer appreciates them.

Many employers recognize that the success of their business is highly influenced by the

professional capacity and motivation of their workforce. Companies must face the

challenges of increasing the level of commitment, motivation and job satisfaction among

their employees. In this regard, it is important to take into consideration the impact of

employees‟ needs, motives and ambitions and to negotiate more flexible schemes for

financial participation, career development opportunities and performance recognition as

part of the quality of work agenda.The problem to be investigated in this study, therefore,

is whether pay policy systems have a bearing on employees‟ motivation in Institutions of

Higher Learning in Rwanda.

1.3 Research Objectives

1.3.1 General Objective

The focus of this research was generally to investigate the relationship between pay

policy and motivation of employees at Kigali Independent University.

6

1.3.2 Specific Objectives

i. To analyse Pay Policy at Kigali Independent University;

ii. To establish the challenges facing employees‟ motivation at Kigali Independent

University;

iii. To examine the relationship between Pay Policy and employees motivation at

Kigali Independent University in terms of Productivity, Stability and

Compliance.

1.4 Research Questions

i. What is the composition of Pay Policy at Kigali Independent University?

ii. What are the challenges facing employees‟ motivation at Kigali Independent

University?

iii. What is the relationship between Pay Policy and employee‟s motivation at Kigali

Independent University?

1.5 Significance of the Study

The research would be significant to the researcher, higher learning institutions and

Kigali Independent University. This study would be of importance to the researcher as it

equips her with the knowledge of pay policy and motivation of employees in Kigali

Independent University and Institutions of Higher Learning in Rwanda generally. It

would also enable the researcher to obtain a Master‟s Degree in Human Resource

Management. The research report or recommendations would help the Institutions of

Higher Learning improve their pay policy which will improve employee‟s motivation

accordingly. The research report would be available in library of Mount Kenya and would

7

be used by other researchers who would be interested in the area of motivation of

employees.

1.6 Limitations of the Study

Like any other research, the researcher encountered some limitations. Unavailability or

inaccessibility of the information due to professional secrecy under its performance but

however it was overcome by thorough explanation that the research is meant for

academic purposes not any other intention. Time factor will be overcome by constant

follow up of the appointment. Finance challenges will be overcome by acquiring soft loan

to facilitate the research process.

1.7 Scope

The study was carried out in Kigali City because it has the highest number of Institutions

of Higher Learning. It was carried out in Kigali Independent University. Kigali

Independent University is preferred because it was the second and the first private

University to offer Education programs in Rwanda.It is the first biggest private University

in Rwanda as per the number of students.

The study is to cover the impact of pay policy on employees‟ motivation in Kigali

Independent University between the periods 2012- 2015. Considerations was on

Lecturers, all support Staff and the Management of the Institution.

1.8 Organization of the Study

This study is composed by three (3) chapters: Chapter one is introduction, chapter two is

literature review and chapter three is research methodology.

8

Chapter one is composed of the problem statement, background to the study, objectives,

scope and significance of the study.

Chapter two addresses the theoretical review, empirical literature, theoretical framework

and conceptual framework.

Chapter three is about research design, target population, sample design, data collection,

data analysis procedure and ethical consideration.

9

CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.0 Introduction

This chapter presents the review of literature that has been arranged according to the

themes derived from the specific objectives and research questions. This chapter looks at

some works and thoughts of some scholars and writers about the variables under review.

This chapter discusses literature related to the study variables and focuses on: ( 1)Pay

Policy, (2) motivation of employees, and how the pay the intervening role of the

environment influences the motivation of employees.

2.1 Theoretical Review

2.1.1 Employee Motivation in Universities

The most valuable asset available to an organization is its people, thus retaining staff in

their jobs is essential for any organization. Indeed there is a paradigm shift from human

resource to human capital which consists of the knowledge, skills and abilities of the

people employed in organization which is indicative of their value (Armstrong, 2009).

When employees leave their jobs, it is often a sign that something is going wrong.

According to Zhou et al, (2004) , the costs of academic staff turnover, such as subsequent

recruiting expenses, disruptions of course offerings, discontinuities in departmental and

student planning, and loss of student graduate advisors, are borne at individual,

departmental and institutional levels and have an impact on quality of services and the

image of the institution. In addition, Pienaar et al (2008) note that academic staff turnover

has several disadvantages such as costs related to decreased organizational Loyalty, the

loss of knowledge and experience regarding the institution, and the increase in time and

cost in training novice academics. Tettey (2006) argues that while individuals who move to

10

other organizations may contribute to the specific activities of that organization, their

departure from academic means that the synergies that come with a group of academics

working together is diminished, and the impact and scope of knowledge production and

dissemination is lessened.

Motivation has been at the forefront of research for over ten decades and continues to

generate interest amongst academics and practitioners because of the changing structure

of work attributable to globalization, the change in society and work demography

(Kuvaas, 2006; Keller, 2008; Bouregard, 2011; Ankli, 2012). The issue of how best to

enable workers to render their best mental and physical energies towards organizational

labor – production processes and profit accumulation and maximization sit at the center

of managerial dilemmas (Mason et al, 2008; Mehta et al, 2003; Amar, 2011). This

managerial quandary is founded on the fact that there is a direct relationship between

organizational performance and individual job satisfaction and performance (Tella et al,

2007; Mason et al, 2008; Kuvaas, 2006; Kuvaas and Dysvik, 2009; Aworemi et al, 2011).

The research on motivation techniques was required in the management of human

resources in the Nigerian education sector as intense industrial discontent on the issue has

led to many strikes and litigations (Obioha and Ayilara, 2009; Ebrahim abadi et al, 2011;

Oke, 2012).

Due to the fact that the motivation of university teachers is constantly confronted and

weakened by several complicated situations, activities and perceived social and also

individual responsibility, it is necessary to systematically reinforce it. In this sense

motivation is activation of a certain internal state (e.g. wishes, efforts) through

external stimuli (motivators), (Alexy, Boros&Sivak, 2004). The art of managers to

motivate their employees means to create interest in them, willingness and taste to

actively get involved in accomplishment of activities conforming to the mission and

11

objective of the organization or its parts (Vodacek&Vodackova, 2013). This definition

is fully in accordance also with the view of motivation in the environment of

universities, i.e. the motivation of university teachers. An idea is important the influencing

employees‟ motivation is more difficult than influencing employees‟ abilities through

staffing or training (Milkovich& Boudreau, 1988). Currently it is no more sufficient to

place the employees/teachers only in the position of executors of assigned work tasks

and implementers of requirements of the university managers. Apart from their

education and requiring of constantly more valuable scientific-publication outcomes, it is

necessary to increase their interest and motivation and to actively get them involved in the

happening at the university. “However, simplification of motivation to financial

remuneration is the most common mistake. Even if financial remuneration is

important, practice shows that even a relatively high salary is no guarantee for high

work load. Also motivation based only on money may lead to the need to invest more

and more finances in the achievement of the same motivation effect,” (Luskova, 2013).

2.1.2 Pay and benefits

A low minimum wage has long been a critical issue of the fast food industry`s business

plan (Schlosser, 1998). In view of this, they also import workers from other countries to

work for low wages (Reischman, 2003). According to Streeten (2001, cited in Ukpere,

2007), outsourcing is a cause of the decline in the demand for wages of semi- skilled and

unskilled labour. Their employees are treated poorly especially in the area of pay, which

results in the fact that an average worker that wants to make a living by supporting his or

her family, cannot do so with the average pay or minimum wage that is given to him or

her (Harikripahai, 2007). He further states that instead of the fast food industry increasing

their employees‟ wages, they will prefer to hire other people who are willing to work for

that amount or even less. This mistreatment does not only include poor hourly wages, but

12

the denial of the right to join a union (Schlosser, 2003). Workers assume that picking

strawberries is far better than cooking French fries and jobs, which are filled with people

who are young and unskilled. The extreme standardization of work in the fast food

industry justifies low wages and benefits (Leidner, 1993, cited in Royle and Towers,

2002). Inexperienced people who are capable of doing the work easily accept low paid

jobs because they do not have a choice. This also causes low motivation and high labour

turnover, since workers‟ needs cannot be met with low paid jobs in the fast food industry

(Leidner, 1993). Benefits in the fast food industry are almost non-existent. Other

organizations provide benefits to their workers such as medical insurance and paid

vacations. But the fast food industry does not. Also, the work and life balance of the

employee is not feasible, since they have a lowly, erratic and unpredictable work schedule

that must be planned around, and if they do not comply with this unfair treatment, they

will be asked to quit and their position will be filled by another person (Williams and

Hazer, 1986, Harikripahai,2007).

2.1.3 Pay Policy

Pay is an important job attribute (Jurgensen, 1978) and greater job satisfaction results,

inter alia, from job rewards (Rusbult and Farrell, 1983; Anderson, Jerman and Constantin,

1979). A sound compensation system has the ability to attract the right kinds of people

(Rynes, 1987). This study will focus on how different pay factors influence the perceived

employee reward satisfaction and motivation and on how these two perceptions relate.

The distinguished pay factors are fixed pay and performance.

Based pay, tangible benefits and non-tangible benefits, rigid benefit plans and flexible

benefit plans, skill based pay and job based pay. Both the general, relative preferences of

employees (e.g. do they generally prefer fixed pay over performance based pay) and how

individual character traits affect this preference (e.g. an employee with a high level of risk

13

aversion will prefer a fixed pay more than an employee with a low level of risk aversion)

will be examined. Moreover, for each pay factor the perceived motivational for

employees.

2.1.4 Fixed Pay and Performance Based Pay

A fixed pay can generally be described as a given amount of money that an employee

receives regardless of his performance. An excess (shortage2) with respect to the

employee‟s target performance will not be rewarded (punished). Performance based pay,

on the other hand, is defined as a payment that is, at least partly, dependent on an

employee‟s performance or output. A key advantage of fixed pay is the fact that the pay

cannot be influenced by performance. A well-known theory that distinguishes fixed and

performance based salary, is the agency theory. This theory predicts that a fixed wage

should have a significant positive effect on job satisfaction, regardless of an employee‟s

risk preference (Christen, Iyer and Soberman, 2006). Christen,Iyer and Soberman (2006)

and Igalens and Roussel (1999) find supportive results regarding this theoretic statement.

In literature, not much is written about the composition of the performance based pay.

This is remarkable since a performance based reward scheme often consists of a fixed

part and a variable part. The most obvious explanation for the fact that only little attention

is given to the composition of the reward package is that is often easier to evaluate and

discuss extremes. Agency theory offers a guideline on what an „optimal‟ ratio of fixed

and variable pay would be. The theory suggest that the variable part should be smaller,

the greater the costs of monitoring. Furthermore, a couple of findings of academics can be

presented. First, Holmstrom and Milgrom (1991) show that an optimal incentive contract

can be to pay only a fixed wage, independent of measured performance. However,

Awasthi and Pratt (1990), for example, find a significant result on their hypothesis that

monetary incentives are positively related to time spent on decision tasks. Lazear (2000)

14

reported in a case study that the incentive effect of a piece rate pay was an increase of

about 22 percent in production. The previous seemingly contradictory results are not in

line with the study of Pfeffer and Langton (1993) who conclude that neither performance

based pay nor fixed pay, produces universally superior results.

From a firm perspective the use or nonuse of performance based pay is mostly determined

by the costs of monitoring (Lazear, 1986). If monitoring output is costly, Lazear argues

that a fixed salary should be paid.

Besides these monitoring costs, the optimal pay scheme also depends on lots of other

factors. Balkin and Gomez-Mejia (1987) showed that other firm aspects such as the stage

of the firm (i.e. the age of the firm), the skills and the profitability of a organization are of

influence to the optimal pay composition. The latter are determinants from a company‟s

point of view. A profoundly different approach to determine an employee‟s wage is to use

the efficient wage. The efficient wage hypothesis states that the services an employee

renders are a function of the wage he/she receives (Stiglitz, 1976). This is justified by the

fact that not all employees are equally skilled. One well-paid worker might be able to do

the same tasks as two poorly paid employees can do (Stiglitz, 1976).

2.1.5 Tangible and Non Tangible Rewards

Tangible rewards can be defined as rewards that do not have a direct relation to

performance and are not formally agreed upon beforehand. Examples are a holiday gift

basket, an outing with colleagues or a small additional cash reward. Supporting literature

is scarce. This might be due to the difficulty of using a common term regarding this

„residual‟ group. Similarly, finding an unambiguous definition of non-tangible rewards is

complicated. Many academics use different expressions for the same concept. In this

15

paper non tangible rewards can be defined as rewards that are, quite obviously, not

tangible and cannot directly be expressed in a monetary value.

However, though not directly, some of the non-tangible rewards can perceivably lead to

tangible rewards. For instance the (perceived) prospect of a promotion is a non-tangible

reward; it cannot be valued today but it can at the time of realization. Another reward that

can be considered non tangible is the ability to perform a meaningful and significant task4

in an organization. A last example of a non-tangible reward is appreciation of an

employee‟s superior. For this reward that has value however, the employee should gain

full credit for the tasks he/she was assigned to (Wiley, 1997). An essential difference

between a tangible reward and a non-tangible reward is the time period required for it to

be beneficial to the employee. A tangible reward is considered short term since the

employee is able to receive it the instant the employer grants the reward. In contrast, a

non-tangible reward is often more long term. For instance, receiving enough compliments

can in time result in a promotion to a better paid position however; the moment directly

following the compliment is not of limited value to the employee. Interestingly, Anderson

and Jerman (1979) found that the actual realization of the career growth opportunity is not

a condition that has to be satisfied. The opportunity alone, or perception of the employee,

is enough to give this reward value. A last remark about non tangible rewards is that they

are likely to be more valued after the lower order needs, which are related to extrinsic

rewards such as a financial reward, have been largely satisfied (Deci, 1972; Anderson and

Jerman, 1979). This study will not go into detail regarding these influences.

2.1.6 Flexible and Rigid Benefit Plans

A possible solution to deal with employees that have different degrees of risk aversion is

to use flexible benefit schemes. Barringer and Milkovich (1998) define such a scheme

(also known as 'cafeteria benefits') as "plans that offer employees a choice between

16

qualified (nontaxable) benefits and cash". For instance, under a flexible benefit scheme

employees are allowed to express their relative preferences with respect to topics such as

healthcare, dental and employee life insurance (Milkovich and Sturman, 1993). Rigid

benefit plans, on the other hand, are by management predetermined standard benefits.

Under a flexible benefit scheme, employees are thus allowed to choose between several

different benefits. However, a firm should use this solution with caution since the results

of Igalens and Roussel (1999) suggest that flexible pay lacks efficiency. The reason

behind this statement is that a flexible pay scheme influences only employee pay

satisfaction and not necessarily job satisfaction. This is in accordance with the evidence

provided by Barber, Dunham and Formisano (1992). They add that a firm should consider

different factors, such as risk aversion and demand for leisure, when determining the

reward schemes. Furthermore, Barber et al. (1992) show that an increased understanding

of benefits following implementation of a flexible benefit plan generates increased

satisfaction.

A downside of using flexible schemes is that it takes time for employees to get used to

and subsequently choose the right package (Cable and Judge, 1994). By contrast, not only

do flexible benefit plans lead to higher energy levels and greater focus, it will also reduce

the employee turnover and increase the productivity (Schwartz, 1989).

2.1.7 Skill Based and Job Based Pay Systems

Job based pay systems have dominated the fields of organizational behavior and human

resource management for a long time. However, since the late eighties, developments in,

for instance, global competition, have let academics to believe that a competency-based

approach is often more appropriate (Lawler, 1993). The traditional job based system

assumes that an employee should be paid according to his position in the organization.

17

However, there is growing evidence that a shift of focus from job based systems to skill

based systems is recommendable (Lawler, Ledford and Mohrman, 1992).

A skill based pay system (SBPS) can best be described as ‘a system in which the

capabilities of individuals are the primary focus and which cause them to be managed in a

way that facilitates organizations developing organizational capabilities that provide

competitive advantage‟ (Lawler III, p6, 1993). Simply put, employees are paid in

accordance with the number of positions they are able to fulfill in an organization.

The main reason for adopting a skill based approach is to create a competitive advantage

(Lawler, 1993; Murray and Gerhart, 1998) even though the training costs and hourly

wages are higher (Tosi and Tosi, 1986). Furthermore it would aid in attracting new

employees and retaining existing ones. However, academics argue that, for the skill based

system to work effectively, certain organizational elements have to be met. For instance,

Lawler (1986) found that the system works best in a high involvement environment. In

addition, Gomez-Mejia and Balkin (1992) suggested that the following elements

benefited the results of a SBPS: the organization is situated in a startup or growth phase

has a participative culture and offers other incentive programs complementing skill based

pay.

Murray and Gerhart (1998) suggest that a relevant theory to describe a SBPS is the

expectancy theory. Here, skill seeking and acquisition is motivated by rewarding an

employee for skill or knowledge competencies. In terms of the model of Vroom (1964),

the incremental pay increases are the reward outcome, the value of the increase is the

valence, the exertion of skill competency is the effort outcome and the level of skill

seeking behavior is the input effort (Murray and Gerhart, 1998). This is in accordance

18

with Tosi and Tosi (1986) who state that workers in a skill based pay system have strong

incentives to increase knowledge and skill since higher skill levels are associated with

both higher status and with pay.

2.1.8 The challenges facing employees’ motivation in organisation

Over the years, different perspectives on motivation have evolved. The perspectives can

largely be classified as macro and micro. The macro describes the nature of humans,

while the micro explains the specific behavior likes social, political and cultural factors.

Cherry (2000), states that ancient philosophies Aristotle and Plato, medieval ones like

Aquinas and recently Spinoza view human as rational beings, with divergent needs.

Recent findings published by Hersey and Blanchard (2001) explain that advancement,

autonomy, caring bosses, company philosophy, fringe benefits, improved communication

channels with top management /supervisors, responsibility, good working conditions,

tactful disciplinary machinery, good wages, clear promotion and growth opportunities,

employees. The absence of motivational factors negatively impacts employee behavior

and results to low work morale.

Polarold (2002) identified certain motivational aspects found to be a success story for

well performing organizations. They include good working environment, good financial

incentives, and employee development and training and general welfare services. Aspects

that further satisfy employees include recognition for good performance and employer

branding as a choice employer.

Thomson and Strikland (2001) found that in most successful Japanese companies,

employees met regularly to have professionally inspirational dialogues and recite

professional litany. They further noted that one of the most untapped motivational factors

19

was the creation of „unashamed‟ professional attitude and values including the belief in

doing the best job and profession.

The opportunity for recognition, power, social status, prestige, security, belonging,

growth and development in their career and good leadership are much more important

that money towards good performance. In view of the foregoing, public high school

teachers can motivated by among other things, a good salary, personal growth,

development and sense of belonging/security, pride in the teaching profession, good

working environment and conditions. Researchers (Bellois, 2003) in the field of

motivation by consensus, agree that motivation plays an important role in the productivity

and professionalism of employees.

Whereas there may be no single „best practice‟ concerning motivation to which all

organizations should aspire to meet. Employees must feel valued, part and parcel of the

organization. Some feeling of ownership on the part of the employees must prevail.

Conductive leadership style that stimulates employees‟ performance should be put in

place. Good employee relations that foster informal and interpersonal groups at work

should also beat play. Good compensatory schemes and also good salaries must be in

place. Work must be as much fun as play.

Actions to satisfy employees‟ needs, increase quality of work life must be tied to every H

R practice in the organization. Bryan (2003) summarily contends that motivation is

crucial to every organization that seeks to effectively succeed.

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2.2 Empirical Literature

Barber, Dunham and Formisano (1992) presented findings that showed a positive relation

between flexible benefit plans and benefits satisfaction. Also, they reported, though to a

lesser extent than the previous relation, a significant relation between the use of flexible

benefit plans and job satisfaction.

Also, although flexible benefit plans will generally be more preferred than rigid benefit

plans, Cable and Judge (1994) suggest that the responsibility and time investment it takes

to first learn about the different options and subsequently choose the right package, will

deter some employees. They derive this statement from results presented by

Sturman&Milkovich (1993), who reported that a significant number of employees were

satisfied with the benefit package that was composed with aid of a computerized expert

system.

Tosi and Tosi (1986) report that especially workers with low motivation, ability and

tolerance for work ambiguity will be unsatisfied with a SBPS.

Yet, granting non tangible rewards to employees has also proven to be an important factor

that influences employee satisfaction. In a study of Rousseau (1977) it became evident

that task significance was highly related to employee satisfaction and involvement.

Furthermore, results of Eisenberger, Pierce and Cameron (1999) indicate that task

significance increases motivation, in line with an early study in the seventies by Mitchell

(1973), who reported a positive relation between participation and motivation. In line

with the previous, Wiley (1997) reported that the appreciation an employee receives from

his superior, which is considered a non-tangible reward, is an important determinant of

motivation.

21

Eisenberger (1999) found that a reward for exceeding the past performance of others did

increase motivation; shows that different types of performance pay schemes can render

different results. It could also be the case that the reported relation of Marsden and

Richardson (1994) between pay for performance and motivation was influenced by the

fact that the employees did not perceive the relation between their payments and output

(Igalens and Roussel, 1999).

Bowman, Minehart and Rabin (1999), showed that employees are generally risk averse in

situation involving a sure gain.

Roussel (1999). Cable and Judge (1994) reported statistics from a large national sample

(conducted by the Bureau of National Affairs, 1988) indicating that 63% of the

employees were more attracted to a fixed salary than to a performance based salary.

Lastly, Gomez-Mejia and Balking (1989) reported findings indicating that employees

with a high level of risk aversion, are more likely to experience „withdrawal cognition.

Another important character trait that influences the preference of either fixed or

performance based pay is self-efficacy. Miceli and Lane (1991), reported that employees

with high self-confidence prefer a performance based pay more than employees with a

low level of self-confidence do.

2.3 Critical Review and Research Gap Identification

2.3.1 Critical Review

A general relation between satisfaction and motivation is hard to establish for every

employee. Some employees might be happy and satisfied with their payment and other

job attributes while, at the same time, they do not perceive a high degree of motivation.

For instance, Igalens and Roussel (1999) found that making benefits attractive can favor

22

satisfaction, but this is done to the detriment of (some aspects of) motivation. They will

be satisfied with their job if it offers benefits that suit them, however, their motivation to

perform will not be increased.

Yet, since it is anticipated that a satisfied employee is inclined to work hard in order to

keep his job, an increase in satisfaction will generally lead to a higher perceived

motivation (Locke, Schweiger and latham, 1986; Sheppard, Hartwick and Warshaw,

1988; Walker, Churchill and Ford, 1977). Expectancy theory suggests that, in case of

equal expectancy, i.e. the chance that additional effort will lead to above normal

performance; a higher valence (satisfaction) will lead to a higher perceived motivation.

The assumption is valid for both low and high levels of expectancy, though the relation

will be higher in case of a high expectancy level. Therefore, a positive relation between

job reward satisfaction and the level of motivation that results from a specific reward type

is expected.

The relation, implied by the agency theory, that a fixed compensation should have a

positive effect on job satisfaction is supported by the findings of Christen, Iyer and

Soberman (2006) and Igalens and Roussel (1999). Cable and Judge (1994) reported

statistics from a large national sample (conducted by the Bureau of National Affairs,

1988) indicating that 63% of the employees were more attracted to a fixed salary than to a

performance based salary. Especially in companies where pay may be subject to unstable

factors beyond the control of the employee, such as economic climate, it is apparent that

fixed pay is more preferred than a performance based wage (Cable and Judge, 1994). This

is consistent with the findings offered by Bowman, Minehart and Rabin (1999), which

showed that employees are generally risk averse in situation involving a sure gain.

Furthermore, Eisenhardt (1989) argued in an extensive review about the agency theory,

that agents are, in general, more averse to financial risks than their principals.

23

The individual attraction of employees towards a certain pay scheme largely depends on

the character traits, such as risk aversion, of that individual. A risk inclined employee

would likely appreciate a small fixed pay part whereas a risk adverse person would be

more attracted to a wage that mostly contains fixed pay. As mentioned, Weinberger

(1997) and Deckop, Merriman and Blau (2004) showed that risk averse employees may

be willing to make sacrifices in favor of a payment with less risk (for example, receiving

a fixed salary instead of a performance based payment). This is consistent with the

negative relation, found by Weber, Anderson and Birnbaum (1992), between the

perception of risk and the level of attraction an employee perceives towards a job. They

argued that the evaluation of risk is, although being inversely related to job attraction,

subject to individual differences.

Lastly, Gomez-Mejia and Balking (1989) reported findings indicating that employees

with a high level of risk aversion, are more likely to experience „withdrawal cognition.

Another important character trait that influences the preference of either fixed or

performance based pay is self-efficacy. Miceli and Lane (1991), reported that employees

with high self-confidence prefer a performance based pay more than employees with a

low level of self-confidence do. Employees with a high level of self-efficacy are assumed

to be more confident that they can handle the challenge of performance based pay. This is

emphasized by the statements that identify the level of self-efficacy, created by Sherer

and Maddux (1982), such as „When I make plans, I am certain I can make them work‟

and „ When I set important goals for myself, I almost always achieve them‟.

A last character trait that can determine an employee‟s attraction towards fixed or

performance based pay is the extent to which he/she believes himself/herself to be able to

control his environment and outcomes (either an external locus of control or an internal

locus of control). Those with an internal locus of control (LOC) will be more confident

24

that they can directly influence the performance of an organization and will therefore be

less deterred by a performance based pay scheme. Together with the finding of Mitchell,

Smyser and Weed (1975) that employees with an internal LOC are more satisfied with the

work setting than externals.

Generally, the differences in output resulting from a performance based pay scheme

versus a fixed wage are evident. Whether the performance based reward was evaluated in

the form of a piece rate pay, a tournament or revenue sharing, it did not affect the

outcome: a variable pay scheme results in much higher output compared to a fixed pay

scheme (Dohmen and Falk, 2007). This is in line with the study of Christen et al. (2006),

who report that a fixed reward does not seem to significantly relate with effort and thus

motivation. In a case study, that evaluated the motivational effects of performance based

pay, the authors find at the most a very modest positive relation (Marsden and

Richardson, 1994). They reported even evidence of cases with a demotivation effect. In

accordance, Igalens and Roussel (1999) find a positive relation between fixed pay and

work motivation for some employees.

The explanation for the phenomenon that the performance based pay scheme did not lead

to higher motivation was that not all the „criteria‟19 for a heightened motivation were

met. However, the fact that Eisenberger (1999) found that a reward for exceeding the past

performance of others did increase motivation, shows that different types of performance

pay schemes can render different results. It could also be the case that the reported

relation of Marsden and Richardson (1994) between pay for performance and motivation

was influenced by the fact that the employees did not perceive the relation between their

payments and output (Igalens and Roussel, 1999). Still, since most academics found a

positive relation between performance pay and motivation (e.g. Paarsch and Shearer,

2000; Lazear, 2000; Eisenberger, 1999; Dohmen and Falk, 2007),it is reasonable to

25

assume that, if employees perceive a relation between their effort and output,

performance based pay will indeed increase motivation.

The level of satisfaction an employee perceives by receiving a tangible reward is

expected to influence the reward attractiveness in the same manner as a fixed pay salary

does. This implies that an employee who prefers a fixed pay over a performance based

pay, will also be more attracted to a tangible reward than to a non-tangible reward. It is,

according to Wiley, essential that the employee gains full credit for the task he/she was

assigned to.

In spite of the previous relation, the general attraction is likely to be higher for a tangible

reward than for a non-tangible reward. This assumption is strengthened by the myopic

loss aversion theory, first recognized by Bernartzi and Thaler (1995). This theory states

that not only the general characteristic of people to be loss averse is of influence when

making decisions but also the planning horizon, or rather the evaluation period, carries

great weight (Van der Sar, 2008). The evaluation period of individuals is generally quite

short and although people can gain greater reward by waiting, they often prefer a short or

middle term profit. The two factors, loss aversion and the short evaluation period,

combined increase the chance that employees will prefer a small additional cash amount

(tangible reward) over a compliment from their superior (a non-tangible reward).

Although receiving enough compliments can result in a promotion to a better paid

position, the required long evaluation period makes this option for employees less

attractive.

Looking at the difference in risk level between tangible and non-tangible rewards,

tangible rewards evidently imply less risk but non tangible rewards have the potential to

be far more promising. Furthermore, non-tangible rewards are expected only to be valued

26

after the lower order needs, which are related to extrinsic rewards such as a financial

reward, have been largely satisfied (Deci, 1972; Anderson and Jerman, 1979). This leads

to the assumption that risk adverse employees might be more attracted to tangible rewards

than risk inclined employees promotion to a better paid position21, the required long

evaluation period makes this option for employees less attractive.

Looking at the difference in risk level between tangible and non-tangible rewards,

tangible rewards evidently imply less risk but non tangible rewards have the potential to

be far more promising. Furthermore, non-tangible rewards are expected only to be valued

after the lower order needs, which are related to extrinsic rewards such as a financial

reward, have been largely satisfied (Deci, 1972; Anderson and Jerman, 1979). This leads

to the assumption that risk adverse employees might be more attracted to tangible rewards

than risk inclined employees. The last character trait related to satisfaction is self-

efficacy. Tangible rewards/non tangible rewards combined with self-efficacy are assumed

to be similarly related to satisfaction as fixed pay schemes and performance based pay

schemes do. The rationale is that employees with a high level of self-efficacy are

confident in their ability to cope (Staples, Hulland and Higgins, 1999) and will appreciate

the compliment since they are convinced that they are able to receive the implied

promotion soon.

Similarly, Cable and Judge (1994) suggested that job seekers were generally more

attracted to organizations that offered flexible benefits than to organizations that offered

rigid benefits. In addition, Barringer and Milkovich (1998) argue that, among others,

flexible benefit plans are tied to continued employment and will induce employees to

work at least hard enough to keep their jobs. The only character trait that is supported by

previous literature and relates to the relative attraction towards either a flexible or a rigid

benefit plan, is the perceived locus of control. Miceli and Lane (1991) suggested that an

27

employee‟s control perception may influence the preference for flexible benefit plans.

The rationale behind this statement is that employees with an internal LOC are more

attracted to situations in which they have the possibility to influence the outcome.

Although a skill based pay system (SBPS) is in most cases beneficial for the firm, it is

expected that employees will still prefer a job based pay system. Not only is it hard to

determine how „competent‟ one is, the employee also has to invest in additional

education/training in order to receive a decent salary. The myopic loss aversion theory

states that employees are generally risk averse and have a short evaluation horizon

(Bernartzi and Thaler, 1995; Bowman, Minehart and Rabin, 1999; Van der Sar, 2008).

Uncertainty about the exact demands, additional investments in learning and the fear of

falling behind are all elements that make a SBPS more risk bearing. Risk aversion can be

of major influence regarding the attraction an employee experiences towards either a job

based or a skill based pay system. Employees have to choose between the general job

based pay system and the SBPS that requires firm-specific investments. These firm-

specific investments in skills might not be transferable across firms and are thus

considered more risky than the jobs where you are paid in accordance with your position

and for which you only need a few skills. In other words, one should consider the

uncertainty of the firm‟s future payoffs for the acquired skills (Shaw, 1996). Another

form of risk involvement under a SBPS is the risk of not being able to keep up with

colleagues, which effectively renders the employee redundant or results in wage

stagnation.

Preferences of individuals regarding either the job based system or the SBPS may vary

(Cable and Judge, 1994). It is expected that, in accordance with Bandura (1993),

employees with a high level of self-efficacy will be more satisfied and motivated by a

skill based pay system than those with a low level of self-efficacy since a high level of

28

self-efficacy implies that those employees are willing to exert more effort in order to

master the challenges ahead of them. This is consistent with the already mentioned

findings of Tosi and Tosi (1986) that especially workers with low ability (i.e. low self-

efficacy) will not be attracted to a SBPS.

A last distinguished character trait that is of influence is the perceived locus of control.

Employees with an external LOC believe that they cannot influence their surroundings

and personal outcomes. In case of a job based system, where one is paid in accordance to

the position he/she occupies, this is of no importance. However, when working under a

skill based system, the employee has to increase his skills and invest in education in order

to receive a decent wage. It can therefore be assumed that employees with an internal

LOC are more attracted to a skill based system than employees with an external LOC.

2.3.2 Research Gaps

On the other hand, a research by Lindner (1998) on Understanding Employee Motivation,

determined the ranked order of motivating factors. The top answers were interesting

work, good wages, and full appreciation of work done. These factors are followed by job

security, good working conditions, promotions and growth in the organization. Feeling of

being in on things, personal loyalty to employees, tactful discipline, and sympathetic help

with personal problems ranked low on the results.

In previous studies, it shall be found that job satisfaction affected organizational

commitment that in turn affected the intent to stay. Researchers found that work

experiences that lead to satisfaction (job scope or challenge, considerate supervision,

compatible work groups) were associated with commitment (Kleinbeck, et al, 1990).

Commitment is defined as the acceptance of the goals and values of the organization; the

29

willingness to exert effort on behalf of the organization; and a desire to stay with the

organization.

Wylie (2004) proposes that members of management primarily should be able to maintain

the level of their own motivation at high levels in order to engage in effective motivation

of their subordinates. Accordingly, Wylie (2004) recommends managers to adopt a

proactive approach in terms of engaging in self-motivation practices. Furthermore, Wylie

(2004) recommends concentrating on specific variations of intangible motivational tools

such as celebrations of birthdays and other important dates with the participation of whole

team.

Employees need motivation to improve their performance and productivity. The

approaches as attempted by many scholars are numerous. However, intense research is

needed to come up with improved policies that can be packaged in one go. Pay policy and

its impact on motivation has been the missing link. The researcher believes that this study

shall fill the gap and create more challenges for future research.

2.4 Theoretical Framework

This study is guided by Maslow hierarchy of Needs Theory: Maslow wanted to

understand what motivates people. He believed that people possess a set of motivation

systems unrelated to rewards or unconscious desires.

Maslow (1943) stated that people are motivated to achieve certain needs. When one need

is fulfilled a person seeks to fulfill the next one, and so on.

The earliest and most widespread version of Maslow's (1943, 1954) hierarchy of needs

includes five motivational needs, often depicted as hierarchical levels within a pyramid.

30

By Saul McLeod published 2007, updated 2014

Figure 2.1: Maslow's hierarchy of needs

This five stage model can be divided into basic (or deficiency) needs (e.g. physiological,

safety, love, and esteem) and growth needs (self-actualization).

The deficiency or basic needs are said to motivate people when they are unmet. Also, the

need to fulfill such needs will become stronger the longer the duration they are denied.

For example, the longer a person goes without food the more hungry they will become.

One must satisfy lower level basic needs before progressing on to meet higher level

growth needs. Once these needs have been reasonably satisfied, one may be able to reach

the highest level called self-actualization.

Every person is capable and has the desire to move up the hierarchy toward a level of

self-actualization. Unfortunately, progress is often disrupted by failure to meet lower

level needs. Life experiences, including divorce and loss of job may cause an individual

to fluctuate between levels of the hierarchy.

31

Maslow noted only one in a hundred people become fully self-actualized because our

society rewards motivation primarily based on esteem, love and other social needs.

2.5 Conceptual framework

Independent Variables Dependent Variables

Intervening variables

Source: Researcher compilation

Figure 2.2: Conceptual Framework

The above concept implies that pay policy system such as fixed pay, performance pay,

tangible pay, non-tangible pay, flexible pay and skilled based pay motivates lecturers

which results to productivity, stability at work and compliancy to rules and regulations of

Motivation of employees

Productivity

Stability

Compliancy

Environmental factors

Government policy

Attitude

Culture

Pay Policy

Existing cash reserve

Tangible pay

Non Tangible pay

Skilled and Job based

pay systems

32

the of organization especially if other factors remain constant and these factors include

environmental factors, government policy, attitude and culture.

2.6 Summary

The practice of maintaining a collegial, flexible workplace is associated with the second-

largest increase in shareholder value (nine percent), suggesting that employee satisfaction

is directly related to financial gain. Human resources practices like employee satisfaction,

motivation, and punctuality lead to positive financial outcomes. Therefore, for

organizations to achieve high performance, the interests of customers and employees

should be taken into account like satisfaction, motivation, product, and quality and

manpower competence. Frimpong and Fan (2009), defines performance management as

the process through which managers ensure those employees‟ activities and outputs are

congruent with the organization‟s goal.

Therefore it should be the Universities‟ priority to ensure that motivational tools which

encourages initiative and stimulates efforts from the employees are put in place for a

better performance and deliverance of quality service. Motivation refers to the forces

either within or external to a person that arouse enthusiasm and persistence to pursue a

certain course of action. Employee motivation affects productivity, and part of a

manager‟s job is to channel motivation towards the accomplishment of both personal and

organizational goals.

33

CHAPTER THREE: RESEARCHMETHODOLOGY

3.0 Introduction

This chapter presents the methodology that was used in data collection in terms of

research design, area of study, study population, sample selection and size, research

instruments and data collection, procedure and ethical consideration, data processing and

analysis and limitations of the study.

3.1 Research Design

The study has used a descriptive case study research design based on both qualitative

and quantitative approaches. This is because quantitative research excels at summarizing

large amounts of data and reaching generalizations based on statistical projections.

Qualitative research on the other hand excels at story telling form the participants

viewpoint, providing the rich descriptive detail that sets qualitative results into their

human context. For this study, the quantitative method investigated the pay policy

strategies in private Universities. The qualitative data collection method on the other

hand has investigated the extent to which the pay policy strategies impact on the

motivation of employees in private Universities in Rwanda.

3.2 Target Population

The following categories of respondents participated in this study because of their direct

relevancy with the study objectives. These included a total of 200 employees from

various departments of Kigali Independent University which constituted the population of

the study so as to understand their motivation in relation to Pay Policy Strategies in the

University.

34

3.3 Sample Design

A sample design is a definite plan for obtaining a sample from a given population. It

refers to the technique or the procedure the researcher would adopt in selecting items for

the sample (Kothari, 2004).

3.3.1 Sample Size Determination

When it is not possible to study an entire population but the population is known, a

smaller sample is taken using a random sampling technique. Slovin‟s formula allowed the

researcher to sample the population with a desired degree of accuracy (Stephanie, 2013).

Slovin‟s formula that was used to calculate the sample size

With regard to the level of accuracy, a confidence level of 95% is used as suggested by

Kothari (2004), this means that there are 95 chances in 100 (or .95 in 1) that the sample

results represent the true condition of the population within a specified precision range

against 5 chances in 100 (or .05 in 1) that it does not. The slovin‟s formula is calculated

as follows:

Stephanie (2013)

n= Number of samples or sample size

N= Total population

e= Error tolerance

The population size of this research is 200 employees of Kigali Independent University.

This study adopts a sampling error of 5%, and then the sample size is:

35

n = 200/1+200(0.05*0.05)

n = 200/ 200*0.0025

n = 200/1.45

n = 138

Therefore the sample size is 138 respondents.

3.3.2 Sampling Techniques

This study utilized the simple random sampling and Purposive sampling techniques in

selection of the respondents: Kigali Independent University, Kigali campus was used.

For the qualitative sample selection, purposive sampling was used to select the Vice

chancellor, the Deputy Vice Chancellor Academics, the Deputy Vice Chancellor

Administration and Finance, the Deans of different Schools and some support staff.

For the qualitative methodology the Kigali Independent University, Kigali campus was

used. Staffs were selected from every department in that campus. The Stratified random

sampling techniques were initially be used to capture all the different departments from

the following schools: school of Business and Economics; school of Social Sciences;

School of Science and Technology and school of law.

3.4 Data Collection Instruments

3.4.1 Questionnaires

This is an important method of data collection. Judd (1991) said that a questionnaire is

justifiable in data collection mainly because; it enabled the researcher to collect large

amount of data within a short time period, it also provided an opportunity for respondents

to give frank, anonymous answers. One set of questionnaire is designed for the lecturers;

36

it includes both open and closed ended set of questions to be answered. The questionnaire

is written in a simple and clear language for the respondent to feel free while answering.

In addition to that the use of questionnaire is vital to the research since it provides

accurate information regarding the study.

3.4.2 Interview guide

The interview which was used is composed by open questions which the researcher

wanted to cover during the interview. Here the interviewees were involved and talked

about their views. In addition, interviewees were able to discuss their perception about the

question. The interview was administrated to Top Management, Lecturers and support

staff.

In Top Management, the researcher interviewed the VC who had to give the overall

information about pay policy and motivation of employees, Vice Chancellor Academics

to give information about motivation of employees in the area of Academic, Deans of

various schools to give information about motivation of lecturers in their schools, Deputy

vice chancellor Administration and Finance to give information on motivation of

Administrative staff.

3.4.3 Documentary Review

The researcher reviewed literature obtained from the case study organization. This

literature includes workers motivations policy in different institutions. This is vital in

providing background information and on pay policy in institution of higher learning

before primary data is collected. Indeed, before field data is collected, a wide collection

of data is collected and this was used to cross check with the primary data to be obtained

from the field.

37

3.4.3 Validity and reliability of instruments

The validity of instruments included: item analysis that is carried out with the aid of the

supervisor, research experts knowledgeable about the themes of the study. The process

will involve examining and assessing each item in each of the instruments to establish

whether the item brings out what it is expected to do.

Item analysis were conducted using the scale that runs from relevant(R), neutral (N), to

irrelevant (IR). This assessment gave a content validity ratio (CVR) for each instrument

which is computed using the formula:

CVR=R/(R+N+IR)

Where CVR, R, N, AND IR are as mentioned above. If the CVR obtained is greater than

0.5; it shall imply that the instruments is valid.

The reliability of the questionnaire has been computed using the Cronbach method of

internal consistency. From the computation, the value of the coefficient greater than 0.5,

shall imply that the results from the instruments are reliable.

3.5 Data Analysis Procedure

The data collected was processed and analyzed using SPSS software. This involved data

coding, editing and tabulation especially quantitative data. The purpose of all these was to

make the information clear and understandable for other people. Qualitative and

quantitative approaches were used for analysis. Details from interview were analyzed

using content analysis. These data were categorized in themes which systematically

present patterns for analysis. Mean and standard deviation was used to give a clear

understanding of the research interpretations for clear and easy understanding of the

38

phenomenon studied. Relationship between the variables was established using Pearson

movement correlation coefficient.

The Mean ( X )

According to Aggresti (2009), Mean ( x ): is the average value calculated by adding up

the values of each case for a variable and dividing by the total number of cases.

n

ixi

nX

1

1

Where, X = mean; n = number total of respondents;

xi = scale value of respondent

Table 3.1: Evaluation of Mean

Mean Evaluation

1.00 -2.49 Very weak

2.50 -3.49 Weak

3.50 -4.49 Strong

4.50 - 5.00 Very Strong

Source: Aggresti (2009)

Standard deviation (SD)

The standard deviation is a value which indicates the degree of variability of data. It

indicates how close the data is to the mean. The formula of standard deviation is:

2)( SS Where,

2

1

2 )(1

1

n

iXxi

nS

39

Table 3.2: Evaluation of standard deviation

Standard Deviation Level spreading

SD<0.5 Homogeneity

SD>0.5 Heterogeneity

Source: Aggresti (2009)

Pearson Correlation test: The Pearson correlation coefficient is a very useful way to

measure the statistical relationship that exists between independent and dependent

variables.

Table 3.3: Evaluation of correlation

Correlation coefficient (positive or negative) Label/positive or negative

r=1

Perfect linear correlation

0.9 < r < 1 Positive strong correlation

0.7 <r < 0.9 Positive high correlation

0.5 < r < 0.7 Positive moderate correlation

0< r < 0.5 Weak correlation

r=0 No, relationship

-1 <r = < 0

Negative relationship

Source: (Saunders, 2003)

3.6 Ethical Consideration

The research process considered ethical issues through the research process. That is from

research problem identification to findings dissemination (sekaram, 2003). Ethical

consideration includes doing no harm to the respondents, secrecy, confidentiality and

40

selecting the respondents fairly (Malhotra, 2006). Other ethical issues include only

assessing relevant components and respecting the respondents. It was the responsibility of

the researcher to maintain the confidentiality of all information that might affect privacy

of the respondents. At the beginning of the survey, the researcher explained to the

respondents that their information was only used for research purpose and was not

disclosed to any- one else.

With the regard to full consent of the respondents, they were fully informed about the

procedures, content of the research and objective of the research. First of all, the vice

chancellor of Kigali Independent University was given the research authorization letter

explaining the purpose of this study.

41

CHAPTER FOUR: RESEARCH FINDINGS AND DISCUSSION

4.0 Introduction

This chapter presents the interpretation of research findings obtained from the

respondents. The main objective of this work was to examine the pay policy and

employees motivation in private universities in Rwanda in Kigali Independent University.

The researcher considered the sample size of one hundred and eleven (138) respondents,

this prompted the issuance and collection of 138 structured questionnaires which were

accurately responded and returned.

The data was collected from the field of study by using various methods stated in chapter

three of this study. Closed and open ended questionnaire and direct interviews as well as

interview guide were used as techniques to collect data. In each case, respondents were

asked. The following is the analysis of data whereby responses are summarized in figures

and tables.

4.1 Demographic Characteristics of Respondents

This chapter begins by reviewing the general information of respondents of Kigali

Independent University such as gender, age, qualification and experience.

4.1.1 Identification of respondents

It is of great Importance to indicate the identification of respondents. This helped to know

the relevance of the information given in relation the research.

42

Table 4.4: Age group of respondents

Age group Number of respondents Percent

21-30 38 28

31-40 43 31

41-50 32 23

51 and above 25 18

TOTAL 138 100

Source: Primary data

Table 4.4 reveals that among 138 respondents selected in different departments of Kigali

independent university, 28% fall between the age of 21 and 30, 31% between 31 to 40

years, 23% are in the group of 41 to 50 years while 18% are in the group of 51 and above.

Basing on the findings, 31% of respondents lie in the age group of maturity within Kigali

Independent University. This means that the respondents are mature enough to give

accurate information related to the pay policy and employees‟ motivation in the

university.

43

Table 4.5: Gender category of respondents

Gender Category Number of respondents Percent

Male 82 59

Female 56 41

TOTAL 138 100

Source: primary data

Table 4.5 indicates that 59% of respondents classified as male while 41% of the

respondents are female. Findings show that Kigali Independent University is being

occupied with a large number of male with 59% thus gender was considered yet this helps

in the development of the institution and leading up for effective establishment of pay

policy.

Table 4.6: Level of education of respondents

Level of education Number of respondents Percent

Undergraduate 59 43

Masters 45 32

Others 34 25

TOTAL 138 100

Source: primary data

Table 4.6 reveals that the level of education is by 59 respondents of undergraduate degree

with 43% then by those with Masters Degrees with 32% followed by those with other

44

qualifications with 25% such as technical staff, ACCA and PhD. This shows that the staff

for higher academic qualifications such as PhD is on a low rate thus low capacity in

research. This indicates that there is no proper establishment of firm pay policy as a

needed motivation factor to attract the PHD holders.

Figure 4.3 Position held by respondents

Source: primary data

Figure 4.3 shows that respondents were selected to give the general overview, the

managerial position hold 42% then administrative position with 39%, professional with

12% and lastly the technical positions with a 7%.

The findings are that the managerial positions hold a big percentage of 42% and this may

affect the decision making process within the university thus no engagement of the other

categories.

Administrative 39%

Managerial

42%

Proffessional 12%

Technical

7%

45

Table 4.7: Duration of working experience of respondents at Kigali Independent

University

Duration Number of respondents Percent

1-3 years 58 42

3-5 years 46 33

5 years and above 34 25

TOTAL 138 100

Source: primary data

Table 4.7 indicates that 5 and above years that leads to a 25%, the respondents have spent

such a duration in work. 33% of respondents range from 3-5 years and 42% from 1-3

years. The finding is that, a big percentage which is 42% has spent from 1 to 3 years

which means that there is a high turnover .This explains that the pay policy is not in

conformity with the staff retention in this university.

46

Table 4.8: Pay policy Strategies in Kigali Independent University

Duration Number of respondents Percent

My institution has a fixed

pay 68 49

It has a performance pay 36 26

has a skilled fixed pay 34 25

TOTAL 138 100

Source: primary data

In relation to the first objective of the research, the researcher was more specifically

interested in the pay policy of the university, views of respondents and judgment on the

process of pay policy as detailed in table 4.5 of this research where 49% reveal that the

University has a fixed pay and this does not describe the wellbeing of university staff and

personal growth in general .The fixed pay cannot alone motivate staff.

Figure 4.4 Views of respondents on the effect of pay policy as a motivating factor

Source: primary data

Disagree

69%

Agree 31%

47

Figure 4.4 shows that the respondents asked on the view effect of pay policy as a

motivating factor, 69% revealed that there is no pay policy within Kigali Independent

University while 31% said that the policy does exist. This shows that there are no policies

and procedures to reinforce the established structure.

Figure 4.5 Effects of pay policy on motivation in Kigali Independent University

Figure 4.5 reveals that the highest which is 46 said the timely service delivery was

increased by 2015 which is a good practice and while in 2013 expected objectives had not

been achieved as have been set and too much effort is need to review by establishing the

monitoring mechanism.

33 27 32 46

138

0

20

40

60

80

100

120

140

160

0

100

200

300

400

500

600

700

800

5/1/2012 6/1/2013 7/1/2014 8/1/2015 Total

Total of respondents

Pay policy have made myInstitution met its goals andobjectives

Pay policy have improvedtimely service delivery in myInstitution

Pay policy Mechanisms haveincreased stability of employeesin my Institution

48

Table 4.9: Motivation Challenges within Kigali Independent University

Are the challenges faced as a result

of motivation system in the university

Number of

respondents Percent

Yes 82 59

No 56 41

TOTAL 138 100

Source: primary data

Table 4.9 shows that 59% said the challenges are as a result of the motivation system

within the university while 41% said that it‟s not the case that other factors do affect. This

means that the challenges are based on motivation system and this must be revised to

avoid the challenges faced by employees in the University.

Figure 4.6 Reasons for motivation as a challenge

64

35 39

138

0

20

40

60

80

100

120

140

160

Attitude factorsaffects

motivation ofemployees in

my Institutions

Environmentalfactors affects

motivationemployees inmy Institution

Governmentpolicy affectsmotivation ofemployees in

the Institutions

Total

Rate 1

Rate 2

Rate 3

Rate 4

Rate 5

49

The figure 4.6 shows that a highest percentage is that the Attitudes of employees

seriously do affect the motivation system at Independent university of Kigali with 64

highest ranking while environmental factors come least to affect the motivating system.

Table 4.10 Other motivating factors within the institution

Other

motivating

factors Number of respondents Percent

Promotion 43 31

Higher pay 37 27

Recognition 58 42

TOTAL 138 100

Source: primary data

Table 4.10 indicates that the respondents rated Kigali Independent University on other

factors of motivation as 42% employees of the university not to be recognized within the

system while 31% need promotions as well as 27% request for higher pay but the entire

above have an impact towards the motivating factor. This means that the employees need

to get recognitions to motivate them in this University.

50

Table 4.11 Does the pay policy exist

Perception Number of respondents Percent

Yes 65 47

No 33 24

Not sure 40 29

TOTAL 138 100

Source: primary data

The table 4.11 indicates that a big percentage agree that the pay policy do exist with 47%

while 29% are not sure if it does exist and 24% said that there is no pay policy . This

indicates that employees in the university understand what is pay policy and they are able

to respond to questions related to it.

51

Table 4.12 Correlation coefficient

Model Unstandardized Standardized t

Sig.

coefficients coefficients

B Std. Beta

Error

(constant) 0.768 . 275 3.640

0.01

Cash reserves 0.883 .405 .857 2.931

0.03

Tangible pay 0.717 .546 .722 2.803

0.04

Non tangible 0.868 .520 .791 1.906

0.02

pay

Skilled and job 0.791 .690 .729 1.672

0.01

based pay

Source: researcher, 2016

Predictors: ( Constant) cash reserves, tangible pay, non tangible pay, skilled based pay

52

Dependent: Employees motivation

The resultant study model was,

Y = 0.768 + 0.883 X1 + 0.717X2 + 0.868X3 + 0.791X4 + e

The study indicated that there existed a significant positive impacts of pay policy on

employees‟ motivations as r= 0.768, t=3.640, P=001 < 0.05

From the correlation coefficient analysis, the study analyzed that there existed a

significant positive relationship between cash reserves and employees motivation as r=

0.883, t=2.93, P=0.03 < 0.05. This research also indicated that there was a significant

positive relationship between tangible pay and employees‟ motivation in Kigali

Independent University as r= 0.717 , t= 2.803, P= 0.04<0.05. Between other motivation

factors like non tangible pay, skilled and job based pay and motivation of employees, this

study fund that there was a significant positive correlation.

4.3 Summary of data analysis

In line with the objectives and the results of the study, pay policy do exist but the

motivating challenges need to be taken account for.

From the findings, it was noticed that Respondents were responding negatively on the

process of motivating system within the university.

Although the quantitative method was not the major approach for this study, the

information obtained through the survey from all the respondents was much valuable and

useful in supplementing the qualitative data. It is therefore important to acknowledge that

all respondents had a good understanding of Kigali Independent University as they were

its staff. The researcher made sure that their feedback on key aspects such as their

53

perception on motivation, factors affecting motivation system and challenges, expectation

of Kigali Independent University in the future and others as their recommendations are

included in the main conclusion.

54

CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSIONS AND

RECOMMENDATIONS

5.1 Introduction

Through this chapter, the summary of findings and conclusions drawn from the research

findings are presented with attempt to give recommendations on pay policy and employees

motivation in Kigali independent university

5.2 Summary of major findings

The first objective of this study was to analyze Pay Policy at Kigali Independent

University.

It was revealed that 49 % of respondents revealed that the strategies of the pay policy do

exist with fixed payment while 26% believed that there is the performance pay.

The second objective of this study was to establish the challenges facing employees‟

motivation at Kigali Independent University and 59% of the respondents concurred that

challenges related to motivation of employee do exist while 41% reacted to the centrally.

Also 64% revealed that reasons due to attitudes of employees seriously do affect the

motivation system at Independent university of Kigali with while 35% believed that the

environmental factors might play a part.

Also 42% of the sample respondents revealed that recognition of employees is not put

into consideration thus lack of motivation while 31% said that as to motivate them, need

for promotion as well 27% said that would be motivated when given a higher pay.

55

The third objective was therefore to examine the relationship between Pay Policy and

employees motivation at Kigali Independent University in terms of Productivity, Stability

and Compliance 46% revealed that there is no compliance as there are always changes in

motivation policies and 32% indicates that no correlation with the pay policy as the

production rate does not reflect results from motivation.

5.3 Conclusion

Every staff has his/her own way of perceiving things and thus a selected sample was

taken up to answer the questions on pay policy and employees motivation in Kigali

Independent University.

This research was therefore centered on how pay policy and employees motivation was

poorly implemented due inconsistencies, poor research, resistance to change of activities

etc.

Research questionnaires and interviews administered to respondents who were selected as

a sample, overwhelmingly indicated that there is a need to provide standing and

consistent policy and proper systems, harmonization of activities, revise the structure in

order to reach a proper implementation.

5.4 Recommendations

Further to the analysis of data collected from respondents, the researcher recommends the

following to the Management of Kigali Independent University; Revision of the pay

structure so as to meet the needs of the system for better service delivery. Also any

process to be implemented should be based on thorough research and analysis.

56

Kigali Independent University should look for ways of determining other motivations not

only the fixed payments. Look for strategies of harmonizing activities especially for

implanting pay and motivation systems within the university. Employ effective

management to meet the targets set.

Introduce policies and procedure for better guidelines especially in motivation aspects.

Manage retention strategies in order to avoid expenses on training of incoming new staff.

Documentation and record updates for further reference. Best service delivery provision

to avoid competitions and lack of good reputation.

5.5 Suggestions for further study

Although this research took the necessary steps on pay policy and employees motivation,

it also had certain limitations notably the full access of data which prevented further

exploration of the study. Therefore, exhaustive research on pay policy and employees

motivation may be carried out especially in the coming periods.

Further research topic suggested: The role of Pay structures as a retention program in

rebuilding the economy of Rwandan universities.

57

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62

APPENDICES

63

APPENDIX 1:AUTHORIZATION LETTER

64

APPENDIX II: QUESTIONNAIRE

Dear respondent,

I am a Master‟s student at Mount Kenya University, Kigali campus in the Department of

Human Resource management; I am carrying out a study on “Pay Policy and employees

motivation in Private Universities in Rwanda”.

With reference to this project, some questions are designed for the collection of data that

will lead to the successful completion of this study. The information will strictly be used

for academic purposes, views on various aspects of this study will be of great value and

the information you furnish in response to this questionnaire will be kept with utmost

confidentiality.

Please, I kindly request you to fill this questionnaire.

Thank you for your cooperation

Instructions

The questionnaire is divided into two parts: Bio data of respondents and Specific

objectives

Please tick the response that you think is most appropriate to each question, and indicate

your response in the spaces provided.

Tick whichever is applicable to you:

65

a. BIO DATA

1. Are you Male or Female? (Tick √ one option only)

a. Male [ ]

b. Female [ ]

2. What is your age? ((Tick √ one option only))

a. 21- 30 [ ]

b. 31- 40 [ ]

c. 41- 50 [ ]

d. 51 and above [ ]

3. Highest Educational qualification: (Tick √ one option only)

a. Undergraduate [ ]

b. Post graduate [ ]

c. Others specify [ ]

4. How long have you been working with the institution?(Tick √ one option only)

a. 1 - 2 years [ ]

b. 2 – 3 years [ ]

c. 3 – 4 years [ ]

d. 5 years and above [ ]

66

b. PAY POLICY STRATEGIES IN KIGALI INDEPENDENT UNIVERSITY

Definition of the Scale for assessing the pay policy systems in higher institute of learning

(1 = strongly disagree, 2= disagree, 3= neither agree nor disagree, 4= agree, 5= strongly

agree(Tick √ only one option in each row)

Pay Systems 1 2 3 4 5

5. My Institute has a fixed pay

6. My Institute has a performance pay

7. My Institute has a skilled fixed pay

8. My Institute has a tangible pay

Others specify

………………………………………………………………………………………………

………………………………………………………………………………………………

………………………………………………………………………………………………

67

EFFECTS OF PAY POLICY ON MOTIVATION

Definition of the Scale for the assessing impact of pay policy on motivation(1 = strongly

disagree, 2= disagree, 3= neither agree nor disagree, 4= agree, 5= strongly agree

(Tick √ only one option in each row)

Performance measures 1 2 3 4 5

9. Pay policy has increased productivity in my

Institution

10. Pay policy has increased stability of employees

in my Institution

11. Pay policy has improved timely service

delivery in my Institution

12. Pay policy has made my Institution met its

goals and objectives

13. Pay policy has made employees in my

Institution comply with rules and regulations

68

MOTIVATION CHALLENGES

14. Are there challenges faced as a result of motivation system in the 1nstitutions

(Tick √ only one option only)

a. Yes [ ]

b. No [ ]

15. If yes, what motivation challenges does your Institution face?

Definition of the Scale for the assessing motivation challenges do you face in your

Institution (1 = strongly disagree, 2= disagree, 3= neither agree nor disagree, 4= agree, 5=

strongly agree

(Tick √ only one option in each row)

Performance measures 1 2 3 4 5

16. Attitude factors affects motivation of employees

in my Institution

17. Environmental factors affects motivation

employees in my Institution

18. Government policy affects motivation of

employees in the Institutions

69

19. Specify other motivation challenges

................................................................................................................................................

................................................................................................................................................

................................................................................................................................................

................................................................................................................................................

20. In your view, what could be the solutions to the above challenges?

................................................................................................................................................

................................................................................................................................................

................................................................................................................................................

70

APPENDIX III: INTERVIEW GUIDE

1. Do you have pay policy in this University

a. Yes

b. No

2. If yes, what is the pay policy strategy used in this University?

....................................................................................................................................

....................................................................................................................................

....................................................................................................................................

....................................................................................................................................

....................................................................................................................................

....................................................................................................................................

....................................................................................................................................

3. Why do you think this University uses the above pay policy?

....................................................................................................................................

....................................................................................................................................

....................................................................................................................................

....................................................................................................................................

....................................................................................................................................

....................................................................................................................................

....................................................................................................................................

71

4. Does the pay policy motivate employees in this University?

a. Yes

b. No

5. If yes, what are the effects of the pay policy on motivation?

....................................................................................................................................

....................................................................................................................................

....................................................................................................................................

....................................................................................................................................

....................................................................................................................................

Are there motivational challenges in this University?

a. Yes

b. No

6. If yes, what motivational challenges does this University face?

....................................................................................................................................

....................................................................................................................................

....................................................................................................................................

....................................................................................................................................

....................................................................................................................................

What do you think could be the solutions to the above challenges?

....................................................................................................................................

....................................................................................................................................

....................................................................................................................................