Impact of Extrinsic Motivation on Employee Performance at Team Guards Security

Topic: A study on the impact of extrinsic motivation towards employee performance at
Team Guards Security
Chapter 1
1.1 Background of the study
It is certain that motivated people tend to carry a positive outlook and there is a certain level
of excitement for the responsibilities performed, such motivated employees spend time in
something that is genuinely worthwhile. When it comes to extrinsic motivation, it occurs when
business use external factors to encourage to do what the business wants such as pay raises, time
off, bonus checks as well as the threat of job loss (Hanus and Fox 2015). So, employee
motivation is required and should be built by business to reach the desired productivity, which is
further reflected on the growth of the business. Even though, the businesses are aware of the
consequence of extrinsic motivation, organizations are not able to deal with the issues related to
workforce.
Many studies have been performed to identify how pay hikes, bonus, time off, etc influence
employees but all these are vague and superficial in nature, as most of the studies have discussed
about the process of motivating people in the workplace. Existing studies have mainly paid
attention to implementation of theories and models of motivation but lack adequate amount of
real-world facts on extrinsic motivation. Thus, it is highly necessary to perform a study in the
area of how extrinsic motivation is required in a workplace, what impact it creates on employees
and how business can address the challenge of employee turnover, employee retention and
productivity. So, on the basis of the stated concerns, the present study is performed to unveil the
importance of extrinsic motivation in workplace, challenges that a business faces when dealing

with the elements of extrinsic motivation and the impact it creates on employees. More
specifically, this study is performed in response to the failure of previous studies in presenting
adequate real-world facts and information about employee leaving jobs due to poor pay, tight
work schedule, limited time-off, etc. The present study particularly investigates the potential
impact of extrinsic motivation on employee performance. The significance of performing a study
on the context of extrinsic motivation lies in the fact that market environment in each sector has
become dynamic and employees being lured by money, fame and career growth opportunities
tend to switch to other jobs. So, it is important to know how businesses are dealing with the
challenge of retaining employees and developing a desired employee performance through
extrinsic motivation approaches. Even though, multiple studies have been conducted on
motivation but most of the studies are based on “employee motivation” as a whole. A research,
which is centred on extrinsic motivation is rare, as scholars mainly cover motivation and its
impact.
1.2 Problem Statement
The high turnover rate in the organization is a genuine issue which indicates that there is a
problem with culture, management and policies of Team Guards Security. The turnover rate in
the security guards industry is high but the current turnover rate in Team Guard Security is 60%
which is more than the industry average (Teamguards.my 2018). It is also identified that rate of
employee turnover in the security guard industry has been fluctuating for last three years, as in
2015, employee turnover rate in Team Guards Security was around 39%, while the industry as a
whole observed a fall of 31%. Likewise, in 2016 due to the demand of security especially in the
construction industry, Team Guards Security controlled its increasing rate of turnover by
reporting 35% of decrease, while the whole industry observed an increase of 3% compared to the

last year. Nonetheless, the scenario has further deteriorated in 2017 as due to organizational
culture and implementation of inappropriate policies, Team Guards Security experienced a
massive employee turnover of 51% which has increased to 60% in 2018 (Teamguards.my 2018).
It has been further identified that due to shrinking workforce, the existing employees tend to face
increasing work burden which is further reflected on their personal life. Workers at Team Guards
Security are not able to keep a healthy balance between their work-life and personal life. In
addition, the workers who are working for additional hours are not receiving the payment of
additional hours on time (Teamguards.my 2018). On the other side, it has also been identified
that motivational issues are also affecting the middle level management as the supervisors find a
communication gap with the senior level of management and this issue is further reflected on the
lower level of employees.
1.6 Significance of the study
The significance of the study lies in the fact that extrinsic motivators can largely
influence employee performance which is further reflected in overall business performance. It is
a well-known fact that motivation plays a great role in overall employee job satisfaction but it is
yet unclear how elements of extrinsic motivation or motivators affect an employee behaviour and
performance. Moreover, outcome of the study may benefit businesses to understand how it can
formulate strategies to implement such extrinsic motivators for the employees so that employees
could deliver a desired level of performance. Besides these, the organizations can enhance
retention ration of the employees as due to lack of motivation in general, the businesses are on
the verge of losing experienced as well as well-trained employees (Cerasoli, Nicklin and Ford
2014)

Furthermore, this study will address the gap in research of previous researches where
extrinsic and intrinsic motivation has been taken into consideration in most of the cases for
analysing the factors responsible for motivating the employees and enhancing employee
performance. The study is significant as it will take into context the motivation factors for the
employees in Team Guards Security which is a Malaysian company. The value and upbringings
of the society may have significant impact on the lifestyles and motivation aspects. Thus, the
study will significantly evaluate the impact of the extrinsic motivational factors on employees in
Team Guards Security and provide the organization with solutions that will facilitate in
improving employee retention rate and reduce operational cost.
1.7 Summary
This chapter has been instrumental in familiarising the readers with the background,
problem statement, aims, research questions, research hypothesis and significance of the study.
The chapter has clearly depicted the reason for conducting the research and the implications the
study has on the chosen organization.

CHAPTER 2: LITERATURE REVIEW
2.1 Introduction
This chapter of the dissertation provides a detailed review of existing papers that have been
performed by many authors on motivation and employee performance. The major purpose of this
chapter is to derive a proper understanding about employee motivation its background and
employee performance. The researcher in this chapter focus on the dependent and independent
variables such as motivation and employee performance.
2.2 Motivation
According to Anitha (2014), motivation fundamentally refers to the action of facilitating
behavioural alteration; particularly, it is a force which could enable an individual to act in a
particular direction of particular objective. The author has also stated the fact that motivation can
derive result in the form of increased productivity, performance and persistence.
On the other side, Farooqui and Nagendra (2014) performed a study on employee
motivation and mentioned that motivation is a significant part of understanding behaviours and
the author has defined motivation as a method which begins with a psychological deficiency or
the requirement that instil a behaviour or a drive. The drive is goal oriented. In addition, this
definition stated by the author also talks about three more elements such as needs, drives and
incentives.
A study performed by Kuvaas et al. (2017), on employee motivation on employee
performance and author has defined motivation as a set of forces that individuals to behave in a
certain way. The authors elaborated motivation to refer reasons for somebody’s action, which
means to cause somebody to act in a certain and to stimulate the interest of somebody. In a

general sense, according to the author, motivation is something that encourages or drives an
individual to do what he does or loves to do what she/he does.
2.2.1 Defining compensation
As put forward by Hameed, Ramzan and Zubair (2014), compensation is an output and
the benefit that workers receive in the form of payment, wages as well as some rewards
monetary exchange for employees’ enhanced performance. On the contrary, Adeoye and Fields
(2014) defined compensation as the segment of transaction the business owner and employee
that the outcome employee receive. The author has also mentioned that compensation is basically
equal to half of cash flow of the organisations. Fu and Deshpande (2014) defined compensation
as all forms of financial returns and tangible services and benefits that workers receive as a part
of their employment contract.
As put forward by Anitha (2014), money remains as stimulus and no other element
comes such close to it with respect to influential value. This means that the money has the
dominancy, which helps to retain and motivate individuals toward greater and higher
performance. It is a certain concept that people do not work for free; aspect of compensation is
there in the employment policy and workers need to be compensated for the work. Workers
should be motivated through adequate incentive plans as well as reward system and this could
invariably encourage employees to be proactive as well as carry influential attitude to work.
Thus, this eventually leads to enhancing organizational productivity. Cania (2014) commented
that monetary benefits mean any stimulus involving monetary payment as well as reduction in
price paid for the job or any award of credit. The author of this study has also mentioned that
financial compensation and rewards positively influence employee commitment or the loyalty.

2.2.2 Defining career growth
Dialoke and Nkechi (2017) defined career as a slab of positions acquired by an individual
throughout his/her lifespan and it is a constant progress, experience and skill acquisition of a
person in particularly work field, while Nasution, Mariatin and Zahreni (2018) defined career
growth as individual’s perception of opportunities of development and advancement within a
work field. On the other side, Oduma and Were (2014) defined career growth -“career ladder” as
growth in the position or designation of employees who put in effort to acquire essential skills
and enhance performance.
In this context, Farooqui and Nagendra (2014) commented that the desire for promotion
is usually strong among the employees since it includes changes in job responsibilities, pay and
independence. It is no surprise that employees take promotion as the eventual achievement in
career growth; thereby, it is often considered as motivational element creating enormous impact
on employees.
Therefore, when employers provide employees with appropriate benefits such as skill
development paths, learning and development opportunities and promotional slab, employees
feel motivated and remain loyal towards the organization. As put forward by Caillier (2014), the
principles of Maslow Hierarchy of needs theory imply that when esteem needs of people are
fulfilled, satisfaction of job is often found. Herzberg theory of motivation states that workers’
demand for job growth and development is an essential requirement and like other needs theories
imply the same fact people tend to look for power and control to stabilize their career.
2.2.3 Defining reward and recognition

As put forward by Huang et al. (2015), rewards and recognition are compulsory factors in
improving employee job satisfaction as well as work motivation which is directly linked to
organizational achievement. This study has been performed on rewards and employee motivation
in commercial banks and the finding of this study imply that recognition correlates significantly
with employee work motivation. It is certain that rewards can be of two different categories
namely monetary and non-monetary but monetary rewards on performance has visible impact on
individuals. Consequently, employees remain active towards the job responsibilities. In the
context of reward, Ahammadet al. (2016) mentioned that reward is something which increases
the frequencies of an employee action, while recognition is referred to a relationship between
two or more people and recognition is a return on employee’s effort and dedication at work.
Muda, Rafiki and Harahap (2014) performed a study and mentioned the fact that employee
performance is certain to be influenced by rewards and recognition. For example, when
employees tends to work under excessive pressure or in a competitive target, recognition on the
month-end achievement works as the motivator. Consequently, employees try to carry that
attitude for the next months and simultaneously, besides recognition, when employees receive
adequate monetary rewards then attitude of doing extra work turns into habit as employees are
motivated.
2.2.4 Defining employee performance
According to Sharma and Dhar (2016), performance of the employee is usually
considered as what an employee does and what he/she does not; employee performance could
involve quality and quantity of output, presence at work, accommodative and useful nature and
timeliness of output. Fu and Deshpande (2014) performed a study on employee performance and
mentioned the fact employee performance is actually influenced by motivation because if