Friday, December 4, 2020

Application of Herzberg’s Two –Factor Theory in Banking Industry

 

Introduction

There are numerous motivation theories that have influenced the way organizations manage employees to achieve a motivated work force. These theories attempt to explain why people behave the way they do and advice on factors and strategies which when employed can get the best out of employees in terms of their commitment to work. Notwithstanding, because of the complex nature of the issues worth considering when motivating people, it is always not an easy task when it comes to organizations motivating workers for effective performance. 

Frederick Herzberg’s Two Factor Theory 

Herzberg’s Two-Factor Theory divides motivation and job satisfaction into two groups of factors known as the motivation factors and hygiene factors (Dartey-Baah and Amoako,2011).

According to Frederick Herzberg, “the motivating factors are the six ‘job content’ factors that include achievement, recognition, work itself, responsibility, advancement, and possibility of growth. Hygiene factors are the ‘job context’ factors, which include company policy, supervision, relationship with supervision, work conditions, relationship with peers, salary, personal life, relationship with subordinates, status, and job security” (Ruthankoon, 2003). Herzberg revealed that certain characteristics of a job are consistently related to job satisfaction while different factors are associated with job dissatisfaction Ratzburg (2003). This is classified into motivator factors and hygiene factors which form the basis of his Motivational-Hygiene Model. 

Shermerhorn (2001), emphasizing that Herzberg's two-factor theory clarifies the motivational effects of the work environment. Motivation factors such as recognition, achievement, responsibility, growth, opportunities and promotion make high motivation and high satisfaction further, Hygiene factors include salary, Working Conditions, Job Security, personal life, Company policies and administration create general satisfaction (Kim, 2006). Herzberg says best way to motivate the employees is to give challenging work that they can take responsibility (Leach and Westbrook, 2000). Management need to implement combination of Hygiene and Motivation factors to motivate employees (Dartey-Baah and Amoako, 2011). 

Figure 1.0: Frederick Herzberg’s Two Factor Theory

  (Source: Lumen)

According to Frederick Herzberg, below actions can help, in eliminating job dissatisfaction in organizations (Amoako, 2011).

·         Fix poor and obstructive company policies.

·         Provide effective, supportive and non-intrusive supervision.

·          Create and support the culture of respect and dignity for all team members.

·          Ensure that wages and salaries are competitive.

·          Provide job security.

·          Build job status by providing meaningful work for all positions. 

And following conditions can create job satisfaction and Job enrichment (Amoako, 2011).

·         Providing opportunities for achievement.

·         Recognizing worker’s contributions.

·         Creating work that is rewarding and that matches the skills and abilities of the employee.

·         Giving as much responsibility to each team member as possible.

·         Providing opportunities to advance in the company through internal promotions.

·         Offering training and development opportunities so that people can pursue the positions they want within the company. 


Vedio 1 : Herzberg's Theory Described by Fred Herzberg



(Source : Key Management Skill,2014 )


Application of Motivational-Hygiene Model in Banking Industry 

A basic human urge is to be seen and appreciated for the work performed coupled with the chance to move ahead. This is as true in banking as in any other industries. Previously, employee motivation was restricted to providing required training when a need was felt by the management. Various organizational issues such attractive salaries, benefits, welfare facility and lack of proper rewards, rigid hierarchical structures, lack of proper mechanism to award for efficiency, innovation and excellence, incentive linked schemes etc. were responsible for low levels of motivation. The management of employee motivation through development of soft skills, non-monetary benefits, open communication, were not on the priority list of banks (Shannon Riley, 2005). As well as providing with the best working condition with an ambience of work and satisfaction were often overlooked with respect to banking employees. Compensation benefits were based on industry level settlements between representatives of Sri Lankan Bankers Association and Unions; where they entered into bipartite agreement in lieu of increments. This was applied to all employees across, irrespective of their individual performance.

With the entry of private and multinational banks, issues on employee motivation have taken a new dimension. In the early decades, most of the prevailed organizations including banks were used rigid controls within their organizations. There was no chance to innovate the new motivational practices as everything was activated with rigid orders & practices. Therefore, most of the employees felt that their major source of motivation stemmed from fulfillment of the basic needs. It’s no longer sufficient to provide the basic minimums for the employees. Incentives based on performance, productivity linked bonuses, provision for world class working conditions, allowances based on job profiles etc. need to be incorporated for the benefit of employees as well as organization (Gunasekera & Kulathunga, 2011).

Today banking focus moving towards profits and profitability with increasing of competition therefore the employee motivation becomes one of the top priority issues for the banking fraternity. When the employee is motivated-customer are served well, customer may give more business to the bank, profitability of bank goes up, benefits can energies the deserving employees and finally employees can be more motivated. This circle of excellence is of prime importance in customer centric business processes that we are witnessing in banking today and more so in the years to come.


References

Baah, KD & Amoako, GK 2011, ‘Application of Frederick Herzberg’s Two-Factor theory in assessing and understanding employee motivation at work: a Ghanaian Perspective’, European Journal of Business and Management, Vol 3, No.9, viewed 04th December 2020,

< https://www.iiste.org/Journals/index.php/EJBM/article/view/642/535>

Gunasekare, Thamara & Kulathunga, Nisansala. (2011). An Empirical Study of Herzberg’s Two Factor Theory with Operational Level Employees of Private Banks in Sri Lanka. University of Kelaniya, viewed 04th December 2020,

https://www.researchgate.net/publication/288944504_An_Empirical_Study_of_Herzberg%27s_Two_Factor_Theory_with_Operational_Level_Employees_of_Private_Banks_in_Sri_Lanka

Key Management Skills, 2014,Herzberg's Theory, Online Video, viewed 5th  December 2020,          < https://www.youtube.com/watch?v=0PokpX56G_4>

Kim, D. (2006). Employee Motivation: “Just Ask Your Employees” Seoul Journal of Business. Volume 12, Number 1.

Leach,F.J., Westbrook, J.D. (2000). Motivation and Job Satisfaction in One Government research and Development Environment. Engineering Management Journal. Vol.12, Iss. 4; pg. 3-9.

Lumen Learning, Herzberg Two Factor Theory – digital image, viewed 04th December 2020, https://images.app.goo.gl/cWMNAhdFiQca7kjW7

Schermerhorn,J.R, (2001): Management, Six Edition. John Wiley Sons, Inc., 285-287. 

Stello, CM 2011, ‘Herzberg’s Two-Factor Theory of Job Satisfaction: An Integrative Literature Review’, Department of Organizational Leadership, Policy, and Development College of Education and Human Development, University of Minnesota, viewed 04th December 2020,

<https://www.semanticscholar.org/paper/Herzberg-%E2%80%99-s-Two-Factor-Theory-1-Herzberg-%E2%80%99-s-of-%3A-Stello/5c203ef79d233a1788ee4e9c433af1b71db55ade>

UKEssays. November 2018. Effectiveness of Motivational Strategy In Habib Bank. [online]. Available from: https://www.ukessays.com/essays/business/effectiveness-of-motivational-strategy-in-habib-bank-business-essay.php?vref=1 [Accessed 04th December 2020].

 

14 comments:

  1. Research has demonstrated that “attempts to empirically link personality characteristics to motivational variables have produced inconsistent results” (Gellatly, 1996, p. 474). An ex-ample of a recent study investigating the contribution of personality to Herzberg et al.’s (1959) theory of work motivation is that of Furnham et al. (1999). Results demonstrated that extraverts (identified by the Eysenck Personality Profiler) regarded motivator factors as more important than Introverts, thus confirming the contentions made by Furnham (1997) and Gray (1975). These findings mirror those of Gupta (1976) who found that in a sample of individuals performing a linguistic task, Extraverts responded more to reinforcement and Introverts more to punishment. Results also showed that neurotics placed more importance upon hygiene factors than non-neurotics.

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    1. Hi Surendra, Adding more on to your comment that Rogers (2005) stated, 'employees who lack job satisfaction are likely to withdraw from job involvement and not be motivated to make broader contributions or set higher goals'. Dissatisfaction and, poor performance could be prevented by satisfying the hygiene needs however, to bring in productivity improvements sought by organizations, satisfaction of the motivational factors was required (Stello, 2011).

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  2. According to the research paper of Kwasi and Amoako, The questions raised by Herzberg about the nature of job satisfaction and the effects of intrinsic factors and extrinsic factors on employee behavior have proved a valuable contribution to the evolution of theories of motivation and job satisfaction. The important point presented by Herzberg’s study is that the opposite of satisfaction is not dissatisfaction(Dartey-Baah et.al. 2011).

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    1. Hi Thanuja, While agreeing on your point , noted that Intrinsic motivation is the element considered in engagement. Macey et al (2009: 67) commented that, 'when the work itself is meaningful it is also said to have intrinsic motivation, meaning it is not the pay or recognition that yields positive feelings of engagement but the work itself’ (Armstrong & Taylor, 1977).

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    2. Motivation Factors are Intrinsic Factors that will increase employees’ job satisfaction; while Hygiene Factors are Extrinsic Factors to prevent any employees’ dissatisfaction (Fauziah et.al 2013). Motivation factors included achievement, recognition, the work itself, responsibility, advancement and the possibility for growth, while hygiene factors included company policies and administration, relationship with supervisors, interpersonal relations, working conditions and salary (Alshmemri 2017).

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  3. Hi Thilini, According to Herzberg et al (1959), hygiene factor is used in reference to ‘medical hygiene, which operates to remove health hazards from the environment’. Disease from health hazards or hygiene is preventable; similarly, employee dissatisfaction from hygiene issues at work is preventable. Hygiene factors are the variables correlated with reducing the level of job dissatisfaction, as opposed to motivation factors, which directly influence an employee’s motivation and satisfaction.

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    1. Hi Kanishka, Yes the theory argued on meeting hygiene factors of employees would not motivate them to deploy effort, but would only avert them being disappointed (Stello 2011). In an organization, meeting employees’ hygiene factors will only obviate employees from becoming actively dissatisfied but will not motivate them to contribute more effort toward better performance and efficiency (Hong and Waheed 2011).

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    2. When it considered individual job satisfaction Hygiene factors are more important than motivation factors (Alshmemri, Shahwan-Akl, and Maude, 2017). The Presence of motivational factors can produce job satisfaction and if it is absent leads to no job satisfaction but a poor hygiene factor can cause job dissatisfaction (Alshmemri, Shahwan-Akl & Maude, 2017).

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  4. Employee Engagement is a concept gaining significant importance in the past 10 years. Organization today use engaged employees as a tool for strategic partner in the business. The concept of employee engagement has now gained even more importance, since many drivers have been identified, which impact employee performance and well-being at workplace (Pandita, 2014).

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    1. Hi Malika, Yes employee engagement comprises two important facets, that is, job engagement and organization engagement (Saks, 2006). An engaged employee always does care about their effort, work, and performance, and employees want to feel that their work, efforts, and performance could make a difference. Employee engagement is usually understood as an inner state of mind, that is, physically, emotionally, and mentally, that binds together the commitment, satisfaction, and work effort in an employee. Engaged employees support the organization to attain its mission, execute its strategy, and generate significant business results. Employee engagement can be enhanced by different HR practices comprising job design, recruitment, selection, compensation, training, and performance management (Vance, 2006).

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  5. At the heart of the two-factor theory is the difference between motivation and hygiene factors, or intrinsic and extrinsic factors. Herzberg described motivation factors as intrinsic to the job and hygiene factors as extrinsic to the job. There for, motivation factors operate to only increase and improve job satisfaction; whereas hygiene factors work to reduce job dissatisfaction (Alshmemri, Shahwan-Akl and Maude, 2017)

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  6. Yes Dilini, Herzberg revealed that certain characteristics of a job are consistently related to job satisfaction while different factors are associated with job dissatisfaction Ratzburg (2003). This is classified into motivator factors and hygiene factors which form the basis of his Motivational-Hygiene Model. Shermerhorn (2001), emphasizing that Herzberg's two-factor theory clarifies the motivational effects of the work environment. Motivation factors such as recognition, achievement, responsibility, growth, opportunities and promotion make high motivation and high satisfaction further, Hygiene factors include salary, Working Conditions, Job Security, personal life, Company policies and administration create general satisfaction (Kim, 2006).

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  7. According to Yusoft & Kian (2013), the Two-Factor Theory is closely related to Maslow's hierarchy of needs but it introduced more factors to measure how individuals are motivated in the workplace. This theory argued that meeting the lower-level needs of individuals would not motivate them to exert effort, but would only prevent them from being dissatisfied. In order to motivate employees, higher-level needs must be supplied.

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  8. (McCuiston & DeLucenay, 2010). Employee engagement matters to both the employee as well as the organization. Employees can utilize contract agreement provisions to impede the attainment of the organizational goals and objectives. Management’s capability to leverage employee engagement strategies is essential in an organization.

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