The effects of monetary and non-monetary rewards on employee' s job performance with the moderation effect of gender

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Amsterdam Business School

The Effects of Monetary and Non-Monetary Rewards on

Employee’s Job Performance with the Moderation Effect

of Gender

Name: Ahmet Biyikoglu Student Number: 11083913 Date: 20/06/2016

Word count: 15,000

Supervisor: Sjors van der Heide

MSc Accountancy & Control, specialization [Control Track] Faculty of Economics and Business, University of Amsterdam

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Statement of Originality

This document is written by student Ahmet Biyikoglu 11083913 who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

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Abstract

This study would have the main aim to make an investigation on monetary incentives effect on employee job performance and non-monetary incentives effect on employee job performance. Furthermore, the research has introduced gender as a moderating variable being male and females. This had made the study to have a second aim to examine a) monetary incentives effect on male and female employee’s job performances and b) non-monetary incentives effect on male and female employee’s job performances. Moreover, in order to conduct my research I participated in a project done at The University of Amsterdam, Faculty of Business and Economics. The project I participated was based on a survey research and data gathering was accomplished through pairing the respondents as operational employees with their managers. There were 106 pairs however since my study is based on “employee” job performance the usage of the employee database was made only. After the preliminary analyses, 104 employees were used for the regression analysis. I computed 6 models to test the hypotheses with a multiple regression analysis. From the 104 employees I found the following results: firstly, monetary incentives do not affect employee job performance and non-monetary incentives do not affect employee job performance as well. Secondly, in order to test the moderation effect, the computed split analysis resulted that monetary incentives do not have an effect on the male and female employee’s job performances and non-monetary incentives do not affect the male and female employee’s job performances. A further discussion of the results has been made which is later followed by the practical and theoretical implications, limitations, and recommendations for future studies within this field.

Keywords: Employee job performance, monetary incentives, non-monetary incentives, male employee’s job performance, female employee’s job performance.

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5.0 Results ... 35 5.1 Overview ... 35 5.2 Descriptive of Variables ... 35 5.3 Correlation results ... 37 5.4 Regression Analysis ... 38 5.4.1 Models Descriptive ... 38 5.4.2 Hypothesis Testing ... 40 5.5 Additional Analyses ... 43 5.6 Discussion of Results ... 44 6.0 Conclusion ... 50 6.1 Overview ... 50

6.2 Overall Conclusion of the Study ... 50

6.3 Practical Implications ... 51

6.4 Theoretical Implications ... 51

6.5 Limitations of the study ... 52

6.7 Recommendation for Future Research ... 54

7.0 References ... 56

8.0 Appendices ... 61

Appendix 1: Items used from the survey ... 61

Appendix 2: Normality Graphs ... 62

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1.0 Introduction

The human capital would be seen as a costly and important resource to employers for the accomplishment of organisational goals and strategies (Ross and Mirowsky, 2014; Erbasi and Arat, 2012; Zafarullah and Saleem, 2014). Importantly, there would be many changes that occur within the current global business climate which would make an organisation to increase their reliance on their employee’s performance. This could be a vital issue for business as many employees might not have to the willingness to perform well. Additionally, rewards would be seen a useful tool by the board of management to influence their employee's job performances (Migheli, 2015). Rewards would have a direct effect on employees and it would trigger them to increase their job performances. Therefore, attractive reward schemes would make the employees to maximise their performances and to attract new skilled employees to the organisation. Employees would try to give good efforts for the achievement of firm goals and these efforts would make the dependence on rewards provided (Okwudili et al., 2015). Attractive rewards, as a result, would be important for the engagement of employees with tasks to perform better (Abdullah and Wan, 2013).

My study would aim to initially investigate the relationship between financial and non-financial incentives would have a positive effect on employee job performance. Secondly, as a moderator I will use gender to see the financial and non-financial incentives affect male or female employees at the workplace for better job performance which would be the second aim of my research. According to this, my research question would be: “Do monetary and non-monetary rewards would have an effect on the employee’s job performance with the introduction of gender as a moderator”.

Moreover, my study is going to have many contributions to extend prior and new literature within this field. Firstly, most prior studies have only focused on financial incentives or non-financial incentives and how it affects the performance or they examine gender and performance (Joshi et al., 2015; Kowalewski and Phillips, 2012; Pinar et al., 2008). From this point of view, it could be seen that there is a limited amount of research being done within this field on how does monetary and non-monetary incentives affect both gender’s job performances.

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Importantly, one of my significant contributions is going to make the combination of the three variables within one study. Gender would be an important moderator within my study to see if there are gender effects on performance by monetary and non-monetary incentives. Furthermore, within previous literature “gender” is used a control variable or it is not used at all. Using gender as a main moderating factor is going to make a huge contribution to this new study field. In addition, another contribution would be that my study is going to use a different methodological approach from the prior studies.

The study results would be useful for both employees and importantly to the managers on how they could influence their employee’s performance. It would also give an insight view on better evaluation of their current reward schemes that could be formed to improve employee’s performance levels. Many prior studies have highlighted the current workforce trends of engagement of employees and their importance at different levels of the organisation (Alam et al., 2013; Prendergast, 2008; Zafarullah and Saleem, 2014). However, prior literature is based on archival data and they would make concepts lose sight with the lack of real people being involved. Theoretically, both monetary incentives and non-financial rewards have been believed to affect the job performance of employees (Gerhart et al., 2009; Ivanova and Kubler, 2011). However, there is little systematic research done to look at the connection of male and female employee job performances to financial and non-financial incentives and few efforts being made as a scientific database. With my study results, I am going to make an insight view to this literature and I am going to shed a light on this topic which is going to make a huge contribution to this new study field.

It could be seen that many prior studies have used archival databases to form their research (Brown et al., 2009; Gardener et al., 2004; Moran et al., 2012). Within this study, I am going to use surveys as my data gathering tool to see if real participants would create different ideas about monetary and nonmonetary incentives effect on employee job performance. Therefore, another contribution is going to be with the methodological approach. By this way new and more quality information from employees would be obtained which could positively affect the validity of the results. Significantly this would make a contribution to the management accounting literature with the survey results by the new information generated from real participants with the employees.

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There are many reasons why I would like to conduct this study and why I am interested in making a contribution to this field. Initially, currently within the 21st century, it is still believed that there are still differences between the genders at the workplace which would affect their job performance (Ross and Mirowsky, 2014). This would be due to the social status, motivational and competitive factors (Pichler, 2012; Riketta, 2008). Furthermore, salary and bonuses which are known as the financial incentive and recognition within the workplace known as non-monetary incentives could lead to dramatic effects on the job performance (Al-Nour, 2012; Gneezy et al., 2011; Mehta, 2014). My interest to conduct a study in this area would be based if really these incentives have got a real effect on the each gender’s performance at work. In essence, there is a lack of research being conducted on this topic as mentioned above so I very keep to form this study with a survey and to make a contribution to such literature. As mentioned many prior studies are based on archival research with the lack of real respondents being involved in their studies. Furthermore, directly being involved with real participants had also caught my attention to see if different results would be obtained compared to archival data studies. Conducting a survey research, therefore, has also caught my interest to conduct my study with such research methodological approach.

In addition, prior studies suggested that the relationship between the employers with their employees would be crucial and important which this relationship would be based on the mutual respect of employees and the senior staff (Groen et al., 2016; Ross and Mirowsky, 2014; Westover and Taylor, 2010). This vital relationship increased my curiosity to see if the incentives provided by managers have an effect on their employee’s performance. I would like to find out if employees would be happier and more connected to the organisation they work for by offered rewards from their managers. Furthermore, different types of theories would make different assumptions which I would evaluate within my literature review chapter. These different results made me to be more interested in conducting a study and to see what would be the results that could align with the theories. Also, within the workplace, some employee groups like the men could be more influenced and encouraged by incentives more likely by promotion and wages than women in competitive environments. This issue and subject matter made me interested in doing research upon to see if this situation is correct or not for men and women.

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This study will follow a chronological instruction in order to answer the research question. Firstly, the second chapter is going make the demonstration of theories that are related to the topic and within this chapter an evaluation will be made from prior literature to form the hypotheses. Following the second chapter, the third chapter is going to make the expression of the methodology of the study. Within this chapter, the type of method that had been used is going to be explained, the data collection and responses will be described and the operationalisations of the variables are going to be illustrated. Furthermore, chapter four is going to show the data analysis of this study. Within the data analysis, many tests were done to test the reliability and validity of the data. In addition, chapter 5 would make the demonstration of the results as a multiple linear regression analysis and a split analysis would be conducted to test the hypotheses. A further robustness test would be computed to replicate the findings of the study. Furthermore, a discussion of the results would be accomplished at the end of this chapter. The final chapter which is chapter 6 would include the overall conclusion of this study, practical and theoretical implication, limitations and guidance to future research.

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2.0 Literature Review and Theories

2.1 Overview

In the chapter, I am going to make the analysis of different types of theories. In essences, prior different studies are going to be evaluated and with the assistance of the theories a direction is going to be accomplished for the formation of the hypotheses.

2.2 Variables and Relations

Figure 1 below has made the demonstration of the model about the variables with their relationships which is intended to be researched. First of all, this study is going to look at the relation between financial incentives with job performance. Secondly, the relationship between non-monetary incentives and job performance is going to be researched. Within this study financial and non-financial incentives are going to be used as independent variables and job performance is used as a dependent variable. As it could be seen in figure 1, both independent variables have got a direct relationship with the dependent variable. Furthermore, hypothesis 1 and 2 will be based on this relationship. Importantly, gender representing males and females are introduced in the figure as a moderator. Gender being the moderator is going to look at financial and non-financial rewards effect on male and female employee’s job performance. These relationships are going to be expressed in hypothesis 3a, 3b, 4a, and 4b.

Within the next section below, the variables are going to be demonstrated with their relationships based on prior literature and with related theories. On this foundation, the overall 6 hypotheses will be formed that would link to figure 1.

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Figure 1: Research model

2.3 Theoretical Construct for Incentives and Employee Job Performance

2.3.1 Maslow’s Hierarchy of Needs Theory

Hierarchy of needs theory of Maslow would suggest that the predetermination of needs for individuals is made to set out importance factors on how they would perform that task (Frauendorfer et al., 2014). The initial level of Maslow’s self-actualization pyramid would be the need of physiology. Pratheepkanth (2011) demonstrated that the higher level of the pyramid is the satisfaction of needs that are self-actualized for individuals. Within the higher level, people would have accomplished their intrinsic needs and they would have the willingness to satisfy their needs by external rewards. Moreover, highest needs at the top level of the hierarchal pyramid could be taken under consideration when the lower needs are met (Hackman and Oldham, 1976). According to Maslow’s needs theory employees that have not accomplished their lower level needs would value more non-financial incentives to be motivated to perform that task and employees who have met this would value financial rewards more (Waal et al., 2013).

Monetary Incentives Employee Job Performance Gender Non-Monetary Incentives

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2.3.2 Expectancy Theory

Moreover, the expectancy theory would make the emphasis on the needs with relation to organisational drives by rewards to be directly related to performance (Bova, 2013). The assurance would be given by providing the rewards that the individual deserved to fulfil their satisfaction for better performance. Ivanova and Kubler (2011) claimed that this theory would make the prediction that employees within a firm would have self-believing that the provision of additional effort for a task would make the yield of better performance. Therefore, the employees would present a better performance that would lead them to obtain rewards like bonuses. For managers, it would be important to choose necessary reward type which would encourage their employee’s willingness to increase their performance (Kunz and Pfaff, 2002).

2.3.3 Self-determination Theory

Deci and Ryan (2000) demonstrated that the self-determination theory would include the three basic psychological needs. The first would be competence as feeling efficacious and effective in the person’s behaviour. Secondly, relatedness would be feeling close and allied with important others. The final need would be the autonomy of male and female employees by recognition and ownership feeling in the workplace which would improve performance (Groen et al., 2016). These three features would be important since their evolution took place from the human nature as they have corresponded for the success within adaptive tasks (Moran et al., 2012). The theory suggests that positive feeling would be humans reward from evolution when people do something like producing and succeeding a task with the alliance of others around them and evolving more autonomous and self-regulative (Deci and Ryan, 2000).

The theory would make the recognition of autonomous motivation and controlled motivation of employees. Autonomous motivation would be based on peopling the feeling of having a choice to perform a certain task and with controlled motivation employees would think that they have been pressured to do the task (Drake et al., 2007).

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According to the self-determination theory, extrinsic rewards would negatively affect autonomous motivation. This would be caused by the managers since they might think that employees would be unable to complete the task so the provision of rewards would change their perspective on completion the task (Groen et al., 2016).

Also, some tasks might be seen as unattractive by employees with the lack of the provision of financial rewards so managers would try to influence their employee’s performance with providing monetary incentives. Deci and Ryan (2000) illustrated that the theory suggests that people would be more controlled with providing financial and nonfinancial rewards as managers would make the dependence for the performance measurement of their employees. Senior managers would be required to meet certain targets per year and top managers would make the assumption that giving cash bonuses to senior managers would make them achieve their yearly targets (Moran et al., 2012). Therefore, the theory claims that this type of tactic would reduce the autonomous motivation and job performance.

2.3.4 Agency Theory

According to the agency theory employees would want to perform better only if they obtain an incentive for performing well as a higher performance could result to increase their benefits (Pratheepkanth, 2011). Importantly, rewards would be seen as a screening instrument which would assist to attract more employees. High-skilled workers have the ability to choose their own compensation contract and would choose the most appropriate contract to raise their performance if certain types of rewards are provided (Brown et al., 2009). Economic-based prior research made the demonstration that the usage of monetary rewards would have a positive influence on the employee job performance (Kunz and Pfaff, 2002).

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2.3.5 Comparison of Utility Based and Psychology Related Theories

According to the utility based theories which are the agency theory and expectancy theory would suggest that rewards could be essential since a rational employee would act for their own interest to exploit utility (Brown et al., 2009; Kunz and Pfaff, 2002). Both theories would make the assumption that agents would and might not have the ability to derive utility from performing the task with/without the provision of any type of incentives.

In contrast, the psychology related theories such as Maslow’s needs theory would make an explanation on the variety of employee’s cognitive mechanisms which have a huge effect on between the relationship of monetary incentives and job performance. Individuals would have the willingness to perform that task as an intrinsic feeling (Waal et al., 2013).

2.4 Prior Literature for Monetary Incentives and Employee Job Performance

Groen et al. (2016) made the definition of job performance as the probable value required by the employees from the behaviour carried out during a determined time period. In addition, performance could be seen as a property of behaviour. Employee job performance would be distinguished with two types being task performance and contextual performance. Task performance could be referred as the actions which would make the contribution to the transformation of raw materials into goods and services (Becker et al., 1996). On the other hand, the social and psychological contribution of behaviour to the total effectiveness of the organisational climate could be defined as the contextual performance (Mehta, 2014).

Employee job performance would be defined as the fulfilment of the job requirements for employees which are set by their managers (Ali and Davies, 2003). It could be expressed as a term that is from the managers own perspective. Moreover, Kraimer et al. (2005) claimed that the attitude for a better performance would have a positive correlation with job satisfaction. The attitude for the accomplishment of a better performance would resemble with work motivation which is the initiative forces for the individual's well beings for work-related behaviour (Al-Nour, 2012). According to the expectancy theory employees with high motivation will have better job performance.

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Prior accounting studies suggested that certain business settings could reduce the positive influence of financial rewards on performance with the alteration of the effects on incentives (Bonner and Sprinkle, 2002). This could be linked to the lack of skills of employees to perform a task. Brown et al. (2009) claimed that economic incentives make the cause of having advanced levels of effort to perform that task however if workers lack the required skills their efforts would not increase to perform that that with providing financial rewards. The provision of financial incentives would be thought to have a positive effect on the employee’s overall state of moral by their managers which this could be observed in larger firms (Mehta, 2014). In addition, within large organisations giving rewards to the employees has become an organisational policy since it has been observed that this would improve the employee performance and overall firm productivity. The compensation packages provided in a big corporation would include both financial and non-financial rewards to their employees. Moreover, Bonner and Sprinkle (2002) claimed that the financial incentives would include the efforts and tasks performed would be given a salary, bonus, and promotion as a type of reward. Employees that have been highly involved in their occupations would make the dependence on the monetary rewards that would be provided to them (Alam et al., 2013). Significantly, Abdullah and Wan (2013) suggested that compensation packages that included more financial incentives had resulted in having higher job performance by their employees.

Kunz and Pfaff (2002) suggested that there would be two significant factors which workers would be motivated. These two important aspects would be the achievement of organisational and personal goals. Furthermore, with monetary incentives employee behaviour would be under control which would reduce their intrinsic motivation and self-freedom within a firm (Mehta, 2014). Favourable consideration would be made for the achievement of goals by managers which they would provide their employees with money as a reward to make an influence to better performance. Erbasi and Arat (2012) study on the effects of incentives in the food sector in the Anatolian region of Turkey suggested that both monetary and non-monetary rewards were a vital component for job performance of employees. Importantly, their research demonstrated that financial incentives were placed at a higher priority by workers for the achievement of their goals.

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Managers within a firm might not make the usage of financial rewards to increase performance levels of their employees since they think that satisfying their employees would accomplish to achieve the pre-set firm goals (Sorauren, 2011). The money would have a significant importance for employee motivation during their career. Pratheepkanth (2011) suggested that monetary rewards were insufficient with job performance as it would link to the individual’s motivation levels to rise. Moreover, Ryan et al. (2000) claimed that in order to obtain physiological safety the financial rewards on its own would not be enough to improve their employee’s job performance. They also made the illustration that some employees would increase their job performances with satisfaction within the workplace. According to Gardener et al. (2004) the pay levels and compensation packages offered to employees would have an effect on the employee job performance. This would also have an effect on intrinsic factors like satisfaction productivity and commitment which can directly relate to employee performance and the outcomes of their tasks. Qureshi et al. (2010) study in the telecommunication industry in Pakistan found that financial incentives would have a positive influence on the improving of job performance as it would increase the motivation of workers. In order to be rewarded the employees would have to make an additional effort by the achievement of the required tasks. Therefore, the extra effort given to the employees in return would make them have enhancements within their performances by monetary incentives (Gerhart et al., 2009).

Financial incentives would be said to be in many different forms which could be classified as payments made to employees by their managers would be in a form of commission or bonus (Bonner and Sprinkle, 2002). These types of rewards would be seen as incentives which employees would receive these rewards by performing better than the expected performance from that task. Campbell et al. (1998) mentioned that this type of rewards could be striving by employees if they have done their tasks well. Financial incentives could include stock options, profit-sharing, cash bonuses and other types of rewards which would increase the compensation for employees. Furthermore, financial rewards could have a significant influence that would affect the employee’s performance and overall motivation (Mehta, 2014). Gerhart et al. (2009) study found that the productivity level of employees rose by 30% later the introduction of financial rewards which other types of incentives did not have such strong consequence. The rewards paid to the employees would make the enhancement of their well -being which would make the fulfilment of their desires (Pratheepkanth, 2011).

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Hafiza et al. (2011) made the examination between the relationship of financial and non-financial rewards on performance within three Pakistani non-profit businesses with the use of 127 samples. Their study concluded that the financial incentives made a positive correlation with employee performance and non-financial rewards did not make any significance on performance. Additionally, the provision of monetary incentives and rewards to employees would be achieved when the directors would spend financial resources on the compensation of their employees. The main reason would be to influence the employees to have favourable attitudes for the accomplishment towards organisational goals (Westover and Taylor, 2010). Pinar et al. (2008) made the illustration that these factors would override the influence of intrinsic motivational factors and satisfaction. The correlation could be done with the expectancy theory as the salary increase would influence employees to perform better within the workplace. Moreover, money could be said to be a crucial factor which the comparison other types of motivational techniques or incentives would be made for money being an instrumental asset for employees (Sorauren, 2011).

Financial incentives would be the basis of the provision of significant importance to raise the employee motivation and performance (Weibel, et al., 2010). However, they could be seen as a more short term motivational effect for workers. Importantly, the monetary incentives would make the further creation of intrinsic motivational factors like to increase self-esteem and to enjoy the task performed by employees (Gardener et al., 2004). This would make the evolvement of the need for recognition and promotion.

Abdullah and Wan (2013) made the suggestion that monetary rewards would have a significant influence on employees and as for even candidate employees would believe that financial incentives would have an important attribute on themselves. Furthermore, they also found that the reduction in the salary levels can negatively affect the employee’s job performance.

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2.4.1 Nonmonetary Rewards and Job Performance

An incentive scheme that would be based on non-financials would be a nonmonetary reward based scheme (Zafarullah and Saleem, 2014). These would include the provision of authority by giving the opportunity to participate in a decision-making process, the feeling of accomplishment, advancement prospect, and recognition after a completion of a job. Importantly, these factors would make employees to intrinsically feel their managers are appreciating their efforts which this would positively reflect on their job performance (Hafiza et al., 2011).

A compensation package based on bonuses and salary could be valued by employees, however, they might not be practical as an employee would obtain a certain percentage of their salary as a bonus (Sorauren, 2011). On the other hand, employees would be given certificates as a recognition within their department as the company would appreciate their job performance from given tasks. Bova (2012) illustrated that these intrinsic rewards would result in employees to increase their overall job satisfaction and the willingness to perform better for the given tasks. Furthermore, this type of incentive would give encouragement for leadership to employees within the workplace which would make the employees have the impression that their performed work is being valued by the senior staff (Frauendorfer et al., 2014). The employees would also assume that the company could offer the ability to develop their careers. These kinds of opportunities would be non-monetary rewards provided to employees for their outstanding job performance which is the purpose of this type of incentive (Riketta, 2008). In addition, the rewards given would make the contribution to the well-being of employees which would positively reflect their job performance.

Neckerman and Kosfeld (2008) made the demonstration that when workers have the feeling of stability and security within a workplace they would tend to work harder to obtain these kinds of intrinsic rewards. As a result, the job and organisational performances could be increased to its highest level by the provision of non-financial incentives to employees. Erbasi and Arat (2012) noted that non-monetary rewards would be seen as a vital tool within employee job performance. They also suggested that employees in an organisation would be seen as important since the firm would not be able to accomplish its objectives with the absence of their workers. Therefore, non-financial rewards would make employees feel that their performance is valued by the corporation they work for.

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Okwudili et al. (2015) case study based in Nigeria concluded that non-monetary rewards could be used as an organisational compensation scheme since it would be seen as a dynamic instrument for employees to perform better and to increase their productivity. From this point, employees would be more efficient and productive for the achievement of organisational goals by offering them more non-financial incentives.

In the regard of the reward climate within the organisation, employees would perceive that non-financial incentives would have an important role as this would show that the firm would be a supporting and caring business by offering such rewards. In essence, Sorauren (2011) demonstrated that recognition would be a strong tool that many organisations could use to raise the engagement of their employees. The effective usage of recognition by firms offered to employees would make their employees to improve their job performance. Employees would think that they are valued and their efforts are being appreciated with recognition. Consequently, Alam et al. (2013) suggested that this would increase the morale levels of employees and eventually increase their overall job performance and motivation. Cautious managers would make the recognition for their employees if they had completed their assigned tasks on time that could be recognised as their own achievements (Abdullah and Wan, 2013). With recognition, employees would increase their own contribution when they would perform future tasks. Neckermann et al. (2008) claimed that non-financial rewards such as learning opportunities and future career developments had been highly valued by employees as they saw them as an effective instrument to improve their job performance. In contrast, an employee should have self-esteem and motivation to perform better or if these factors are absent the non-monetary rewards would not have an effect on employee job performance (Drake et al., 2007). Hafiza et al. (2011) suggested that employees should have the well-being and motivated feeling within a workplace to increase their job performances as non-monetary incentives would be insufficient with the lack of motivation on job performance.

Bustamama et al. (2014) study made the explanation that non-financial rewards would be highly visible and seen as a trophy by employees. The research also highlighted the fact that the non-monetary incentives would increase the utility levels in employees which had eventually had a direct influence on job performance. Zafarullah and Saleem (2014) research made the demonstration that non-monetary rewards would make a direct positive contribution to workers satisfaction and job performance.

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They also claimed that monetary rewards would be also beneficial for employee job performance however from their study they concluded that this type of reward was more short-termed compared to non-financial incentives.

Hypothesis 2: Non-monetary incentives have a positive effect on employee job performance.

2.5 Gender and Employee Job Performance

2.5.1 Theoretical Construct for Gender and Employee job performance

The economic theory would claim that employees would try to increase their subjective utilities when they perform a task which would include maximising their goals and values within the organisation (Hafiza et al., 2011). This would lead employees to seek a positive outcome and well-being to do that job. In addition, the theory also demonstrates that women would have the job preference with less pay since that job would include rewards that would maximise their subjective utilities.

On the other hand, the compensating differentials theory would suggest that the employees would be sufficient to compensate the unpleasantness of jobs that are less desirable with higher salary utilities (Motowidlo et al., 1997). The theory suggested that employers should try to eliminate any negative utilities with enough wages. Also, according to the compensating differentials theory jobs offered to women’s provide other internal benefits like satisfaction other than high salaries if not, they would not accept to work there (Al-Nour, 2012). When the two genders are compared the theory illustrated that men would consider less symbolic rewards and women would consider less of economic incentives which would result in women to accept less paid jobs (Prendergast, 2008). Men would value monetary rewards more compared to women since women would compensate and value other forms of rewards. Nevertheless, after the completion of an assignment non-financial rewards such as recognition and appreciation would be sought appreciated more by both women and men as they valued non-monetary rewards first compared to monetary incentives (Kowalewski and Phillips, 2012).

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2.5.2 Prior Literature for Gender and Employee Job Performance

Ross and Mirowsky (2014) demonstrated that the gender factor has got a positive direct effect on the employee job performance at the workplace. Moreover, there would be 3 ways where gender could influence employee job performance. Firstly, the perceived gender roles would have an influence on the expectations of different behaviour from men and women. Linked to this, within the gender orientation being the masculinity and femininity would lead to the identification of certain socially accepted roles and responsibilities. Thirdly, the gender type behavioural expectation would affect the job performance by the job-related segregations. These factors would result in various levels of job performance within the genders which would affect the perception of employee job performance (Joshi et al., 2015).

Within a competitive environment, the dependence on salaries and wages would be done through individual performances for each employee. Significantly, in such condition employees would react differently which this would change the outcome of their performances (Drake et al., 2007). These observed differences would be an explanation of gender gap performance at work. According to Migheli (2015), women would fall back from competition due to the uncertainty of goal achievement compared to men which would negatively affect their performance. The reaction towards competition by employees and their approaches within a competitive environment would be due to the wage differences between genders. Mehta (2014) demonstrated that, in order to have a good performance performed by male and female employee appealing bonuses and motivational factors within a competitive business, setting might increase their job performances. This would depend on the employees which have got a higher engagement within the competitive business environment that could be linked to motivation (Dwyer et al., 2003). Employees who have lower engagement would earn less compared to the others that have higher engagement. Nevertheless, Pichler (2012) illustrated that for the male and female employees higher engagement would not result from earnings or recognition it would be caused by other factors like satisfaction and motivation. Therefore, both genders would make the preference for an ideal safe contract with a stable salary.

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Significantly, Prendergast (2008) claimed that within the functioning of mixed gender groups the competition factor had rose male subjects performances while the stability of performance was seen for females. On the other hand, the improvement of performance was not observed within a same sex group of females during operations of the specific task. Ivanova and Kubler (2011) made the recommendation that competition amongst same sex groups resulted for men groups to perform better than women. For women tendency of loss averse could be expressed within the workplace (Migheli, 2015). Dwyer et al. (2003) suggested that the initial performance of women during performing a task would be considerably worse compared to men. Later on, they made the demonstration there would be a small gender-related difference under certain conditions when repetition of certain tasks was performed.

Hafiza et al. (2011) suggested that factors like personal earnings and psychological well-being could be had high importance for men and women as they perceived interpersonal incentives more priority compared to financial rewards. Furthermore, for the general utility of the task managers should make the elimination of any negative effects on the business environment with non-monetary rewards for men for better performance (Motowidlo et al., 1997). Furthermore, women would have the willingness to accept the lower paid jobs as these kinds of jobs would include more non-monetary rewards compared to jobs that would provide more monetary incentives. Therefore, men would be likely to consider financial rewards compared to women during the selection of a job.

In contract, Al-Nour (2012) found in their results that both genders valued financial factors equally high which they both concluded that this would form a good characteristic for a job. Men and women both claimed that high income would not make them feel accomplished within the workplace it did not positively reflect their job performances (Ross and Mirowsky, 2014). Additionally, even though women employees did not valve financial incentives less than men did, compensation packages that included monetary rewards benefited more men than women (Hafiza et al., 2011). Kowalewski and Phillips (2012) claimed that women were more attracted to jobs that provided them the opportunity with more nonfinancial rewards and helping other compared to men.

Women also valued more tasks that included creating a friendly atmosphere with the interaction with other members of staff than men did. These non-financial factors had positively reflected the job performance during the completion of the tasks by women (Joshi et al., 2015).

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Also, Migheli (2015) made the interpretation that woman would not take advantage of recognition or less from earnings than men. Importantly, with recognition, only a single person’s work would be more valuable and important and since women would obtain more or less of one type of incentive, it would be reasonable that females would seek more compensation than men (Joshi et al., 2015). Ross and Mirowsky (2014) demonstrated that females would be offered with more recognition and appreciation from men when they had obtained less financial rewards for better performance.

Overall, for both men and women employees mainly concerned to have good financial rewards within the workplace for their job position to perform that task better. Migheli (2015) demonstrated that they had both also valued non-monetary rewards in some situation which was seen by the female employees. In contrast, female employees would not only value non-financial rewards and men since they both valued monetary incentives more to complete a task within the workplace since other factors like motivation might have an effect on their job performance (Ivanova and Kubler, 2011).

Hypothesis 3a: Monetary incentives have got a positive effect on male employee’s job performance.

Hypothesis 3b: Monetary incentives have got a negative effect on female employee’s job performance.

Hypothesis 4a: Non-monetary incentives have got a positive effect on male employee’s job performance.

Hypothesis 4b: Non-monetary incentives have got a positive effect on female employee’s job performance.

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3.0 Methodology

3.1 Overview

In chapter, I am going to explain what type of methodological tool was used in order to gather the data. Secondly, I am going to inform the criteria on how the data collection and respondents were made then, the operationalization of the variables is going to be achieved within the survey instruments section.

3.2 Method

Initially, my participation took place for Bianca Groen’s project on “using performance measures to help instead of to control employees/managers” which the project is going to take place at the University of Amsterdam. The methodological approach of this study is going to be quantitative. The data collection for this research would be achieved by conducting newly generated online survey questionnaires under Bianca Groen’s project. The data collection was accomplished through ourselves with the project members via the usage of survey methodology. This was due to the inability of testing the study’s hypotheses from the available public archival data. Moreover, for the quality assessment of the research Van der Stede et al. (2005) framework was used and there would be five categorizations as a requirement for the survey research framework.

Primarily, the study should contain a specific objective to research for the guidance of the overall study. As mentioned before, the objective of the research is to see; do monetary rewards and non-monetary have an effect on the employee job performance both males and female at the workplace. The employees would be classified as the operational employees and the trigger of this relationship would be formed by their managers. The second aspect of the framework is to make the identification of the population that is going to be used within the study and clarification of the sample taken from that population. This would be observed later on within this chapter. Thirdly, for the judgement of the internal validity of the research, the questions of the surveys and other methodological problems should be taken into consideration.

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These points would be explicitly stated in this chapter within the survey instrumentation of the variables. The fourth variable of Van der Stede et al. (2005) framework would be the data collection and accuracy. Thus, this would be described within the data collection and respondents section within this chapter and through the statistical analyses, any possible issues would be shown from the data gathered. The last requirement of the framework would be the assurance provided by the researchers that the other requirements have been met. This could be observed also within the data collection and respondents section.

3.3 Data collection and Respondents

In order to test the hypotheses of the study with surveys, operational employees and their supervisory managers were used and taken as pairs. Importantly, this project has three significant criteria for cooperation within the project. The participants should be: (1) operational activities within their own company have to carry out by the employees, (2) at least one year of work experience is required to the current function by the employees and (3) for the organization, they must have performance metrics about their employees’ performances. Significantly, I needed to find at least 6 respondent pairs of operational managers and employees to have a full access to this project.

Surveys sent out to employees and managers that have a role in the core business function. Operational employees are going to be paired with their manager to see the potential performance measurement technique that is implied to employees. After the pairing, all collected data which would form a new database would be recorded within SPSS to be analysed. For my study, I will be using and modifying the employee database since my study is based on “employee” job performance. Therefore, within my samples, I am going to select from both genders to make my final investigation to answer my research question.

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Significantly, meeting the 3 criteria would make it difficult to find potential participants within the population that would be targeted at the general public. Thus, the application for making a frame of the sample through random sampling tool would be impossible. The usage of snowball sampling which is also known as chain referral sampling was accomplished. Snowball sampling would be defined as the requesting other potential researchers and participants to contact other people who would meet the 3 mentioned criteria. The respondent-driven sampling method would increase the number of samples which would make the validity as much as random sampling technique (Salganik and Heckatorn, 2004). Significantly, this would be the main aim of the project.

In addition, Waal et al., (2013) research made the confirmation that random sampling methods could be comparable with non-random sampling methods. To have suitable respondents for the project contacting the people within our own networks was essential which this was conducted face to face or by email. Being a member of Bianca Groen’s project made it much easier and quicker for data collection as other members of the project had also contacted people they knew to make the participation within the project by answering the survey. By the snowball method, the richness of the data increased as all members had different ethnical backgrounds. In order to have suitable pairs, the following procedures were used which included an employee and supervisor manager as a pair. The employees that wanted to participate in the project that had completed the online survey and they gave the contact details of their manager’s. In addition, supervisors who wanted to participate in the project that had completed the survey provided their employees contact details which they supervised. In order for both managers and employees to participate in the project both of them should have met the criteria which were pre-specified. Subsequently, when an employee completed the online survey an email was sent to the manager again in order to complete the survey which the email contained the name of their employee that completed the survey. This was conducted to make it more obvious to complete the questionnaire about the performance of that specific employee who completed the survey. For all of the respondents of the survey, it was explicitly stated that the answers they provided would not be disclosed to any party and it would keep confidentially. Therefore, the managers and employees only obtained a feedback report of their own results with no other indication of their pair’s results.

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3.4 Survey Instruments

Employee job performance is going to be used as the dependent variable within this study. The measurement of this variable would be made by Podsakoff et al. (2003) and my initial measurement reliance would be made on Groen et al. (2016) study from making the usage of this variable as a dependent variable. By making the usage of employee performance as a dependent variable this would be same from this research as well. The application of Likert scale would be made for the measurement of job performances of employees. The items that are intended to be examined would be attached to a Likert scale. (1) totally disagree, (2) disagree, (3) moderately disagree, (4) neutral, (5) moderately agree, (6) agree, (7) totally agree. With making the usage of the Likert scale would be made for the rise in the extent for meeting the requirements of the jobs for employees which is a need for simulation of performance medics.

Monetary incentives would be used in the study as the independent variable for the research. Moreover, the measurement of the monetary variable would be conducted from the survey questionnaire with the 7 point Likert scale. The managers needed to answer two relevant questions about their employees which included the determination of potential salary increase and bonuses. Within Groen et al. (2016) study they have made the measurement of this variable from Moers (2006) study which within my research my usage of Moers (2006) would be accomplished.

Another independent variable for this study is going to be the non-monetary incentives. In order to measure non-monetary incentives as with job performance and monetary incentives the same 7 point Likert scales measuring that was used within the survey. Furthermore, this 7 Likert scale was used to answer the two questions that were assigned to non-monetary incentives which had been completed by the managers. These included the chance of promotion and increase authority for their employees. Importantly, this variable had been measured this by Merchant et al.’s (2003) research and it was also replicated by Moers (2006) study as well.

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In this study the moderating variable is going to be gender being male and female. The measurement of the moderating variable is going to be made from the questionnaire. There is a section which participants need to give information about their gender. From here, the number of men and women would be recorded and it would enable me to make an analysis as a moderating between the independent and dependent variables.

The control variables that have been used within this research are education level, job type, and organization type. Within prior studies, it has been expressed that these control variables have been effective on the relationship between incentives and job performance (Groen et al., 2016; Moers, 2006; Waal et al., 2013). Furthermore, even though many prior types of research have used age as a control variable when I computed a frequency test for the age variable the mean age 33 and I thought that this would not be representative of younger or older age groups throughout the population. As a result, I did not use age a control variable. In previous studies, it could be seen that organisation type would not be used as a control variable (Abdullah and Wan, 2013; Fareed et al., 2013; Okwudili et al., 2015; Zafarullah and Saleem, 2014). Importantly, these researches indicated that the organization type might have an effect on the relationships between monetary incentives and job employee performance, and non-monetary incentives and employee job performance. Within my study, therefore, I thought that maybe employees that work in a profit or a non-profit firm could have strengthened or weakened monetary and non-monetary effect on employee job performance.

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4.0 Data Analysis

4.1 Overview

In this chapter initially the preliminary analyses are going to be made for the correlation and regression analysis. The respondents are going to be evaluated and eliminated according to the study’s aim and how they responded to the questions in the survey which later on their characteristics are going to be expressed in a table. Furthermore, the descriptive statistics will be given which is going to be followed by a factor analysis, reliability checks and normality test.

4.2 Respondents characteristics

In total 106 respondents had agreed to participate as a pairs being manager and employee on a volunteer basis in the study who had met the initial criteria as mentioned in the previous chapter. The respondents that had completed the survey belonged to many different employment sectors and education levels. Having a pairing method made the survey results to have to 2 databases. However since the aim of my study would be based on “employee” job performance the employee database was taken into account for to make the data analysis on. By this way, I was able to use the instruments I needed from the employee database. This would also increase the accuracy of the overall analysis as well. For example, within the manager database the type of job was an open question, therefore, it was not possible to quantify that therefore using the employee survey was essential since they had three options to choose from. Importantly, when a missing value analysis was conducted it was found that out of the 106 employees 2 of them did not answer the gender question therefore our sample was deducted by 2. In addition, all questions were answered regarding job performance, monetary incentives and non-monetary incentives. This made our total sample is 104 of employees that were going to be analysed which the characteristics of the employees is expressed in Table 1 below.

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Table 1: Respondents descriptive statistics (N=104) Gender Male % 53 Female % ₅₁ Education Lower % 3 Intermediate % 13 Scientific % ₅₁ Higher % ₃₇

Job Type 14% Production

28% Mass Services 56% Professional Services Organisation Type 85% Profit 15% Non-Profit 4.3 Descriptive statistics

From the Table 2, we can see the descriptive statistics for all selected items from the survey which can be seen from Appendix 1. Out of 7, all items had an average mean scored above 5.60 for Job performance. The items monetary incentives resulted in having a mean score above 4.40. The figures have got a lower mean than job performance items but they would have a higher average standard deviation than job performance since both values are above 1.8. Furthermore, table 2 would show the 2 items for non-monetary incentives had a mean score above 4.50 and a standard deviation above 1.74.

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4.4 Factor analysis

For my factor analysis, I have conducted a principal component analysis (PCA) on the 11 chosen items from the survey which could be seen in Appendix 1 with a varimax rotation. Within this analysis I computed two tests which were the Kaiser–Meyer–Olkin measure (KMO) and Bartlett’s test of sphericity to see the adequacy and redundancy amongst the independent and dependent variables. Furthermore, the KMO measure resulted in having a value of .808 which would be seen as a great value since it is above 0.5 and for all individual items, the values were above 0.6 which greater acceptable limit of 0.5 (Field, 2013). The Bartlett’s Test of Sphericity resulted in having a value of χ² (55) = 661.515, p < .001 which would make the indication that there is inter-correlation between items. Table 3 below would show the factor loading of each item.

Table 2: Descriptive Statistics

Variable Items Number Minimum Maximum Mean

Standard Deviation Job Performance 1. 104 1 7 5.85 1.004 2. 104 1 7 5.88 0.993 3. 104 1 7 5.95 1.004 4. 104 1 7 5.83 1.011 5. 104 1 7 5.92 1.037 6. 104 1 7 5.90 0.985 7. 104 1 7 5.61 1.260 Monetary Incentives 104 8. 104 1 7 4.53 1.820 9. 104 1 7 4.46 1.981 Non-Monetary Incentives 104 10. 104 1 7 4.52 1.961 11. 104 1 7 5.58 1.744

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Significantly, Table 3 had showed that monetary and non-monetary incentives are represented in one component. This would make the suggestion that the two independent variables are very similar. This could bring up multicollinearity issues which would be further analysed after the regression analysis. Since the study is based on both monetary and non-monetary reward I will not use these variables as a single variable.

4.5 Reliability

In this study, the level of job performance has been measured by the average score of 7 items. In Appendix 1 the related questions can be seen. When the reliability of this variable has been tested, it resulted in having a Cronbach Alpha of 0.923 which would mean that it has got a high internal consistency. The Cronbach Alpha being above 0.9 could make the suggestion that the 7 items linked to job performances have got high reliability therefore none of them had been removed. Furthermore, from the survey, there were only 2 items that represented monetary incentives. When the reliability of this variable is checked, it resulted in having a Cronbach's Alpha of .834 which would make the implication that is it a valid variable to analyse. For non-monetary incentives, there were also only 2 relevant questions from the survey which can be found in Appendix 1. In addition, this variable had a Cronbach's Alpha of 0.819 that would also suggest that it is a consistent variable within the data.

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Table 3: Rotated component matrix factor loadings

Variable Items Components Communalities Cronbach's Alpha

Job Performance 1 2 0.923 1. .827 .813 2. .804 .874 3. .786 .771 4. .757 .547 5. .734 .674 6. .654 .700 7. .600 .598 Monetary Incentives 0.834 8. .861 .783 9. .837 .772 Non-Monetary Incentives 0.819 10. .834 .835 11. .732 .736

Notes: Factor loadings <0.5 are not shown.

4.6 Normality

In order to check the normality levels of the variables many different measures have been taken. Initially, the univariate descriptive statistics table suggested that job performance is not normally distributed since it has a minimum value of 3.43 and a maximum value of 7.00. Job performance had a range value of 3.57 which would suggest that job performance has no big deviation from normality and has got no outliers. Similar results were seen for both monetary and non-monetary incentives since they had a minimum value of 1.00 and a maximum value of 7.00 that would also represent not having a normal distribution. Furthermore, both had a range value of 6.00 so there would not be any big deviation from normality and they would not have outliers. A Skewness test was computed in order to see the departure of the means for the variables from the horizontal symmetry. The 3 variables had scored very comparable results as job performance scored -.660, monetary incentives -.700 and non-monetary incentives -.673. Furthermore, Field (2013) would suggest that scores between -1 and +1 are acceptable values and as a result the three variables could be used for further analysis.

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The test of normality had been conducted with the Kolmogorov-Smirnova analysis for the 3 variables to measure the normalities. Importantly, job performance, monetary incentives and non-monetary incentives had scored 0.000 significance level which shows that the 3 variables are not normally distributed. This test could be said to be a sensitive test, therefore, it was accurate to check the histograms (Field, 2013). For the 3 variables the histograms had demonstrated that there are not any outliers and they do not have a big deviation from normality which is illustrated in Appendix 2. As a result, the 3 variables would be accurate to use for the correlation and regression analysis.

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5.0 Results

5.1 Overview

In this chapter, I am going to make the illustration of the results of this study. Firstly, the correlations of the variables are going to be demonstrated in a table with the Pearson and Spearman correlations and this is going to be followed by the multiple linear regression analysis to test the hypotheses. Later, I am going to display the additional analyses made to test the variables and to replicate the results that were found from the regression analysis. The last section of this chapter is going to make the discussion of the results by linking them to prior studies and theories.

5.2 Descriptive of Variables

Initially, job performance included 7 items and for the data analysis the mean was taken of the 7 items and the new variable was called JP. The same procedure was made for monetary and non-monetary incentives and for the each variable the mean was taken from the 2 items for monetary and non-monetary incentives and as a result, the new variables were called MonInc and NonMonInc. Furthermore, gender included to possibilities therefore the gender variable was turned into a dummy variable being males 1 and females 2 and again this variable was still named as gender.

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Table 4a: Pearson and Spearman Correlations

Variable MonInc NonMonInc JP Industry JobType Gender Education

MonInc Pearson Correlation 0.757 ** _0.080 _0.173 _-0.194* _0.315* _0.165 Sig. (2-tailed) (0.000) (0.414) (0.079) (0.046) (0.021) (0.091) NonMonInc Pearson Correlation 0.773** 0.089 0.228* -0.04 0.263* 0.177 Sig. (2-tailed) (0.000) (0.327) (0.02) (0.684) (0.035) (0.069) JP Pearson Correlation 0.052 0.092 0.02 0.064 0.204 * _0.086 Sig. (2-tailed) (0.595) (0.347) (0.838) (0.513) (0.038) (0.383) Industry Pearson Correlation 0.125 0.213* -0.004 0.004 0.075 0.178 Sig. (2-tailed) (0.206) (0.03) (0.971) (0.968) (0.455) (0.071) OrganisationType Pearson Correlation -0.215 * _-0.055 _0.096 _0.045 _0.168 _-0.053 Sig. (2-tailed) (0.027) (0.578) (0.326) (0.651) (0.088) (0.593) Gender Pearson Correlation 0.341* 0.281* 0.217* 0.095 0.168 0.011 Sig. (2-tailed) (0.016) (0.027) (0.036) (0.34) (0.088) (0.915) Education Pearson Correlation 0.278 ** _0.190 _0.099 _0.19 _-0.088 _0.000 Sig. (2-tailed) (0.004) (0.051) (0.314) (0.053) (0.37) (0.998)

Notes: The Spearman correlations appear above the diagonal and the Pearson correlations appear below the diagonal. ( ) – significance, ** p < 0.01, * p < 0.05 (2-tailed).

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5.3 Correlation results

Table 4a above would show the Pearson and the Spearman correlations between the independent, dependent, control and moderating variables. Above the diagonal we can see the Spearman’s correlation which is non-parametric and below the diagonal we can see the Pearson’s correlation. Pearson would look at the linear relationship between two continues variables and the Spearman correlation would evaluate the monotonic relationship between ordinal and continues variable (Podsakoff et al., 2003). From the survey instrument, we saw that we both have continuous and ordinal variables, therefore, I thought that using both correlations would be accurate for this study. Initially, when we look at the relationship between the two independent variables, the NonMonInc and MonInc resulted in having a significant positive relationship from the Pearson correlation (r = .773, p = .000). Table 4a would illustrate that there is not any correlation with JP (dependent variable) and the independent and control variable as no significance were found. Moreover, Table 4a would suggest that there are different types of relationships between the control and the independent variables. Firstly, MonInc and OrganisationType had a moderate negative relationship as seen from the Pearson correlation (r = -.215, p = .027). Secondly, the Pearson correlation resulted to have a significant positive relation for Education and MonInc (r = .278, p = .004). Thirdly, IndustryType and NonMonInc had a moderate positive relationship as seen from the Spearman correlation (r = .288, p = .020). Furthermore, the Gender being the moderating variable showed a moderate relationship with JP (dependent variable) which could be seen from the Pearson correlation (r = .217, p = .036). Gender had also shown a moderate relationship with both of the independent variables, Gender and MonInc (r = .341, p = .016) and Gender NonMonInc (r = .281, p = .027) which resulted from the Pearson correlation. In addition, Gender did not have a linear or a monotonic relationship with OrganisationType, IndustryType and Education.

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5.4 Regression Analysis

5.4.1 Models Descriptive

This section would make the demonstration of the multiple linear regression analysis and the 6 models that have been developed to test the hypotheses. Within all models, job performance was used as the dependent variable. Model 1 would only include the independent variables which are monetary incentives and non-monetary incentives. Model 2 would include all the control variables only which are education, organisation type and industry type. Model 3 would be the combination of Model 1 and Model 2 as it includes both the control and independent variables. Model 4 would include the moderating variable being gender to Model 3. Furthermore, in order to test the moderating effect, I computed a split analysis since gender would include two components which are female and male. This would be equivalent to a moderation effect analysis since it would make the same measurement with the testing of the moderator for the independent, dependent and control variables. As a result, I created Model 5 and Model 6 which would represent the split analysis. Within Model 5 I used the female sample towards the independent variables, control variables and dependent variable. In Model 6 I used the male sample as against the predictors which are my dependent variable, independent variables and control variables.

The effects of monetary and non-monetary rewards on employee' s job performance with the moderation effect of gender

Amsterdam Business School