How the type of employment contract affects the relationship between intrinsic motivation and performance

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How the type of employment contract

affects the relationship between intrinsic

motivation and performance

MSc Human Resource Management

University of Groningen

Faculty of Economics and Business

Filip Tanchev

s2189534

Supervisor

prof. dr. Eric Molleman

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Abstract

The aim of this study is to determine whether or not different types of employment contracts have an effect on the relationship between employee intrinsic motivation and performance in the work environment.

This paper describes the research executed at the Bulgarian National Television organization. Employee motivation and performance are researched and measured. The researched sample is composed of two distinct groups of employees who are subjected to different types of employment contracts – fixed and flexible ones.

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Introduction

Motivation is an interdisciplinary topic that is studied and defined by a number of authors and researchers mainly in the fields of psychology, sociology, and management. Not surprisingly, the topic has been examined by ample amount of researches which have provided a number of definitions. A short explanation is provided by Pritchard and Ashwood who define motivation as the process for allocating energy to maximize the satisfaction of needs (2008). Although, this statement captures the essence of motivation, it does not define the broad range of factors that regulate motivation. A more extensive definition of motivation is proposed by Pinder as a set of energetic forces that originate both within as well as beyond an individual, to initiate work-related behavior (2008). Here the author introduces an essential division of motivation - intrinsic and extrinsic factors. Those can be treated as separate sources of motivation, but the author does not provide any suggestion about the relevance of each of them.

Work motivation is a topic that has gained research interest as well. The fact is explainable with the proposition that a highly motivated workforce generally has higher performance levels than a low motivated one. The achievement of high work motivation is of particular interest of the management level of an organization. To attain it, managers and researchers have tested a wide range of incentives. According to Decker, a person’s internal nature is to approach and care about positive incentives and avoid negative ones (Decker, 2010).

While motivation can be used as a method to predict performance patterns, it varies greatly between individuals. This difference in the level of motivation is often researched and explained with the help of factors form the environment. Those factors influence behavior and performance in a way that can further reveal what and how motivates individuals. Studying those factors is key for managers to understand and structure the work environment in order to encourage behaviors that are constructive for the organization (Jex, 2008).

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Theory

Motivation

The topic of motivation has been a central construct in a range of models called need-motive-value theories. The common assumption is that we seek out situations that can satisfy our needs and we motivate others by providing opportunities to satisfy personal needs. One of the early works on the topic is Maslow’s need hierarchy theory in which the author focuses on identifying the basic types of motivation and the order in which they should be met (1943). Numerous researchers have built upon the work of Maslow including McClelland with his theory of social motives. His research showed that workers’ motivation is not solely based on hierarchy. In fact, motivational factors have different strength and direction (McClelland, 1961, 1978). For example, motivational factors form the surrounding environment, which are combined under the term extrinsic motivation, could extinguish internal motivational factors, or intrinsic motivation. This is the case of the external rewards, a factor form the work environment, and their impact on motivation (Deci, 1999). This topic has been and is actively researched because of its central role in the corporate world. Although, the studies have provided different results over the strength of the impact of external factors on intrinsic motivation, the researchers are unified under the idea that there is definitely an existing effect.

The research done on external factors is central for the studies involving work motivation. This is the case of the job characteristic model proposed by Hackman and Oldham (1976). These five core job characteristics can be combined to compose a motivating score for a job, which can be used as an key of how likely a job is to affect an employee's attitudes and behaviors. It was proposed that jobs should be improved in ways that enhanced motivation. More importantly, it was shown that job characteristics can predict individual performance. I will return on the topic of performance after I examine the further research that has been done on the topic of motivation.

Intrinsic motivation

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(2000). The authors argued that from birth onward, humans, in their healthiest states, are active, inquisitive, curious, and playful, which converts in readiness to learn and explore. Intrinsic motivation is defined as the doing of an activity for its inherent satisfaction rather than for some separable consequence. When intrinsically motivated a person is moved to act for the fun or challenge entailed rather than because of external prods, pressures, or rewards (Ryan, 2000). Extraneous incentives here are not seen as requirements to motivate towards action.

The positive potential of the human nature is explained by intrinsic motivation as the inherent tendency to seek out novelty and challenges, to extend and exercise one's capacities, to explore, and to learn. (Ryan, 2000). Intrinsic motivation is manifested in the enjoyment and interest in an activity for its own sake and is identified as an important component of the achievement of a goal (Ames, 1992). The author continues by stating that intrinsic motivation fosters perceptions of challenge, encourages task involvement, generates excitement, and supports self-determination.

From these findings it can be inferred that intrinsic motivation is especially important for the general performance and enjoyment of individual’s actions. When connected to the work environment, high intrinsic motivation is important and desirable. But it is not the only one important variable that determines performance and satisfaction. In order to gain a better understanding of the motivational process we will examine the second type of motivation – the external one.

Extrinsic motivation

Both Ryan and Deci acknowledged in their works that external motivation has its place and role. Indeed, much of what people do is not, strictly speaking, intrinsically motivated (Ryan, 2000). Even though intrinsic motivation is highly desirable, a number of activities in which individuals engage are directly influenced by extrinsic rather than intrinsic motivation (Csikszentmihalyi, 1984).

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information, or any other “extrinsic motivator” that can affect, directly or indirectly, the agent’s behavior (2003).

At this point, it is essential to state that extrinsic motivation is not constrained solely to rewards. Researchers distinguish between different types of external motivators. Ryan, along with his colleagues have proposed that there are, in fact, different types of extrinsic motivation that can be ordered along a self-determination continuum (1992). The authors suggest three types – external regulation, introjection, and identification. For the purpose of clarity we will focus on external regulation. It is defined as behavior that is controlled by external sources (1992). In a work environment external regulation can have several sources – legislation, company rules, managerial styles, etc. These regulators are the central topic of this paper and we will return to them shortly.

The vast research on motivation advocates the importance of the topic, but the inconsistency in the results across the studies through the years suggests that a further development on the topic can be meaningful for both practice and theory. In the work environment the need to study motivation is explained by the outcomes of it. These outcomes are individual and organizational performance.

Performance

A simple definition of performance is provided by Nickols, who relates and defines performance as the outcomes of behavior (1977). A more elaborated definition states that performance denotes a quantified result or a set of obtained results and refers to the accomplishment, execution, or carrying out of anything ordered or undertaken and to the execution or accomplishment of work (Stolovich, 1992). Performance in an organization is dependent on an array of variables. Anything form organizational culture and practices to individual characteristics can have an impact on performance.

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A number of measurement systems have been developed. Well known analytical tools are the balanced scorecard by Kaplan and Norton (1996) and the Performance prism by Neely (2002). Performance evaluations can range from simple ratings forms to substantial assessment processes. For the purpose of the current study we will use performance indicators and an assessment method. These are described in the ‘Methodology’ section.

Before focusing on performance measurement we will examine the connection between the topics that we have already discussed - motivation and performance. We will focus on intrinsic motivation as it is central for this research.

The connection between intrinsic motivation and performance

At its rudimentary level the connection between motivation and performance is defined as an equation. Performance is a function of the individual’s ability, motivation and opportunity (Blumberg, 1982). This relation is presented with the performance formula: P = f (A, M, O), where P stands for performance, A for ability, M for motivation, and O for opportunity. The author states that managers aiming to improve individual’s performance should influence positively the three variables from the right side of the equation. Here motivation is one of the key elements for successful improvement of performance.

Of course the work involving motivation and performance is much more multifaceted. Performance measurements are the most prominent way to quantify motivation particularly in the work environment. There are two very distinct branches of theories, one being expectancy theory and the other being the need theory, that heavily rely on performance indicators for their findings. This raises the question how to enhance performance using the motivational models and what techniques give the best result.

Victor Vroom and his expectancy theory states that people believe there is a relationship between their effort and the performance they achieve from that effort (1964). This idea is further developed by Porter and Lawler in their Managerial attitudes and performance (1968). The authors state that actions made by individuals are the consequences of their expectations. The individual bases his/her actions on the beliefs that their accomplishment will achieve the outcome they desire.

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the ideas of Maslow and McClelland which were outlined above. Again performance indicators were used to measure the outcome of motivation. The similarity is that Lunenburg places the need factor in the center of his ideas just like Maslow and McClelland. The difference is that Lunenburg draws his conclusions on top of the substantial work done during the 50 years after the theory of his colleagues was presented to the world.

Continuing our focus on intrinsic motivation, strictly concerning the work environment, another set of theories is presented. Much like Lunenburg, who believes in the strong power of internal drives, Sheldon and his colleagues state that the comparisons between people whose motivation is endorsed and those who are externally controlled reveal that the former, compared to the latter, have enhanced performance among other attributes (Sheldon et al., 1997). Internal motivation is connected to performance in the work of Deci and his colleagues. Their meta-analysis shows that research on intrinsic motivation is focused on the general benefits of performance and wellbeing (Deci et al, 1999). The authors argued that being internally motivated has significant value for applied settings such as education, sports, and work environments.

There is ample evidence that intrinsic motivation is related to performance in a series of theories end experiments created over the last 50 years and which were outlined above. Based on the abundant evidence in the existing research literature I create the following hypothesis:

Hypothesis 1: There is a positive relation between the employee intrinsic motivation and his/her work performance.

When there is a connection between two factors there is a likelihood that under certain conditions this connection can be moderated by a third factor. In the examined case a factor that plays the role of a moderator is most likely to exist in the surrounding environment. A specific factor from the work environment is proposed in the following section as a moderator that changes the connection between intrinsic motivation and performance.

The type of employment contract moderates the relationship between

intrinsic motivation and performance

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literature. Two sides exist regarding the topic, one that argue that extrinsic motivation has s positive moderating effect and another that states that the effect is negative.

On one hand, Benabou and Tirole support the argument that extrinsic motivation has a negative effect on the relationship. They state that extrinsic motivation in the form of rewards has a limited impact on current performance, and reduces the agent’s motivation to undertake similar tasks in the future (Benabou and Tirole, 2000). The effect of external factors is also examined in a review of 128 experiments that observed the influence of extrinsic rewards on intrinsic motivation. Deci with the help of Ryan concluded that tangible rewards have a significant negative effect on the consequences of intrinsic motivation (1999). Here rewards are the external factor that moderate the connection between intrinsic motivation and performance. The meta-analysis of the experiments includes studies that examines different types of outcomes, such as performance and wellbeing.

A shortcoming of this review of the experiments is observed by Latham and Pinder. They comment on the conclusion of those experiments in a chapter of the Annual Review of

Psychology by stating that Deci and Ryan have not paid sufficient attention to newer types of

work that have evolved far beyond the 1972 and 1976 experiments (Latham & Pinder, 2005). What they mean is that for the past 40 years, the work environment has changed so significantly that the lack of experiments in the review after the 1970s creates a bias that makes the findings outdated and therefore not trustworthy.

On the other hand, Sansone and Harackiewicz state that behavioral psychologists disagree that extrinsic factors undermine intrinsic motivation (2000). They argued that the evidence of negative effects of extrinsic rewards on intrinsic motivation is the result of poor research on the reward as reinforce factor, combined with a focus on the short-term effects without consideration of overall reinforcement history. They cite the vast amount of research showing that reinforcement makes behavior more, not less, likely to occur. This review of previous research is an indication of the amount of work that has been done to support this side of the debate.

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First, there is no surprise that researchers debate the factors that bear even the smallest connection to employee performance. After all performance is a central issue in the world of management. Second, the existing evidence that supports both sides of the argument brings into question under what conditions the connection between intrinsic motivation and performance is moderated, if it is moderated at all. Third, Latham and Pinder state that the changes in the work environment in the recent years renders the research done during the past century mostly obsolete (2005). They refer to the research reviewed by both authors supporting either side of the argument and outlined above. This raises the question whether the experiments conducted in the 70s are indeed outdated.

The obvious path to answer these questions is to use the scientific research methodology either to recreate the research that is considered as outdated in the present environment, or to conduct new research which give answers by a novel approach. Each conducted research in the area is a part of the employee motivation and performance puzzle. For the purpose of this study I aim to focus on one of the factors of the work condition – the type of employment contract.

Simply put, the employment contracts are legal documents that manage the relation between an employer and an employee. Usually they state the duties and rights of both sides: the duration, and the rewards. As such the contracts manage several points of interests between the employer and the employee. Here these documents, being factors of the conditions of employment, have a potential to play a role as moderators between the intrinsic motivation of the employee and his/her performance. The purpose of the employment contracts is the creation of a legally binding connection between the employer and the employee making them a tool that serves a specific management purpose. As work in general develops and changes over time, so are the employment contracts.

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As already disused above, there is an ample research on the moderation of external factors in the work environment. It appears that a great deal of attention is paid on extrinsic rewards. The research conducted over the past decades suggests that the employment rewards are a primary factor that form the work environment. They may play a central role in the work environment, but extrinsic rewards are not the only factor that can play the role of moderation. Among other factors, the employment contracts play a fundamental role in the relationship between an employee and an employer as they are the documents that establish the legality of the bond.

If moderation exist it can occur in two ways, either by strengthening the connection between motivation and performance, referred as having a positive effect, or by weakening it, referred as having a negative impact. As already discussed, the flexible contracts represent the recent changes in the work environment. The flexibility is manifested in working hours, contingent external rewards, exit clauses, etc. When employers improve flexibility in the work environment and provide employees with flexible work choices, they create factors that enable the employees to enjoy an optimal quality of life (Victor, 2008). Therefore, the hypothetical assumption that the flexible contracts have a more positive effect on the relationship between intrinsic motivation and performance than the traditional fixed ones.

Based on the work cited above and the theories involving intrinsic and extrinsic motivation and performance I create my second hypothesis:

Hypothesis 2: The flexible employment contracts have a more positive effect on the relationship between intrinsic motivation and performance than the fixed ones.

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theory on intrinsic and extrinsic motivation, performance, and the research challenges that exist in it, I create the following conceptual model.

Conceptual model

The positive relation between the employee’s intrinsic motivation and his/her work performance is affected by type of employment contract.

Figure 1. Conceptual model

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Method

As already stated, a wide range of existing extrinsic motivators exist in a work environment. For the purpose of this study I will focus on one extrinsic factor from the work setting – the employment contracts.

To measure the moderation of contract types as extrinsic motivators I have performed a case study in a Bulgarian based organization. The data was collected at the Bulgarian National Television (BNT). Since the case study is based in Bulgaria, I was interested in the type of employment contracts defined in the Bulgarian Labor Code. Two main types exist and each comes with its specifics, the most notable ones being listed below:

 Labor contract – indefinite duration, fixed salary, fixed working schedule;

 Civil contract – limited duration, unfixed salary, no work schedule, only deadlines.

The Labor contract is a typical employment contract with fixed remuneration and working schedule. The Civil contract was historically created to answer the need of flexibility and has variable remuneration and deadlines. For the latter, a working schedule is not specified, but deadlines exist. In the present time the BNT employs its staff by using both types of contracts and an employee can be subjected to either one of the types. A rule of the organization states that employees are not allowed to be subject to both types of contracts simultaneously. This is done in order to avoid financial scams.

Participants

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Operators, directors, reporters, music editors, makeup artist can be signed under either one of the two types of contracts. Editors, panel-directors, sound engineers and prop employees can only work under civil contracts. To avoid sample bias I will focus on the first group and ignore the second one, since they cannot be a subject to one of the two types of employment contracts and comparison cannot be made between workers sharing the same profession.

The selection of participants was made with the suggestions by the management level of the organization. From the 80 initially selected people 72 responded and filled in the questionnaire. This figure brings the response rate to exactly 90%. The response was closely monitored because a match between the motivation questionnaire and performance evaluation is required to successfully conduct the data gathering. Specifics are provided in the research design and measures section.

All participants subjected to labor contracts were full-time employees. Civil contract employees are not subjected to working schedule by the contact itself. They may or may not follow the working schedule of labor contracts employees depending on their profession and the specifics of the project they are involved in. For the purpose of this study distinction between the employees is made only on the basis of the type of employment contract. Gender, race, ethnicity, age, or any other possible individual characteristic were not taken into account.

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Research design and measures

I have studied employees involved in Channel 1, the main channel of BNT. I have examined 72 employees divided into two distinct groups of 36 members. The division criterion was the contract type. Two types of contracts were examined - labor and civil ones as defined by the Labor Code of the country.

The study was conducted in the form of questionnaires about motivation filled in by the employees and performance evaluations about the same employees filled in by the managers of the organization.

All employees asked to participate in the research were with Bulgarian nationality. From the 72 partakers 25 were male and 47 were female. Information about age or income was not collected. All participants were in legal age for employment according to the national law. No other socioeconomic characteristics of the studied sample were part of the design of this research and therefore and were measured.

Intrinsic motivation questionnaire

The intrinsic motivation questionnaire that was handed to the employees of the organization is based on Intrinsic Motivation Inventory scale used in several studies conducted, but not limited to Deci and Ryan (1982, 1983, 1991, 1994). The interest/enjoyment subscale is considered the self-report measure of intrinsic motivation and the perceived choice and perceived competence subscales are theorized to be positive predictors of both self-report and behavioral measures of intrinsic motivation. Although the overall questionnaire is called the Intrinsic Motivation Inventory‚ only these three subscales assess intrinsic motivation and, therefore, were used in the study.

The questions are measured with a scale from 1 to 7, where 1 is ‘not at all true’ and seven is ‘very true’. The questionnaire form can be examined in Appendix 1.

Performance evaluation

The performance evaluation (see Appendix 2) is based on the Columbia Theological

Seminary, Employee Performance Evaluation form (Columbia Theological Seminary, 2007).

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the managers of the organization to choose four of those factors that they believe are most relevant towards evaluating the performance of their employees. The ones that they have chosen are:

 Job Understanding - understands job duties and responsibilities, possesses sufficient skill and knowledge to perform all parts of the job effectively, efficiently and safely, understands and promotes department mission and values, makes an active effort to stay current with new developments.

 Quality - attentive to detail and accuracy, demonstrates thoroughness, completeness, follow through on presentation and appearance of work.

 Interpersonal Skills and Teamwork - works effectively with other employees/departments, develops positive working relationships, helps improve work processes, helps to accomplish specific tasks;

 Professionalism - promotes and treats peers with mutual respect, demonstrates integrity and deals well with ethical and confidential issues, demonstrates commitment to the stated missions and goals.

The performance evaluation form is presented in Appendix 2.

Procedure

The participants filled in a questionnaire and each one was paired with an evaluation by the managers of the organization. The managers did not have access to the responses of the participants and the participants did not receive the performance evaluations.

After the selection of employees was made, I met each employee and asked them to fill in the paper-and-pencil questionnaire. Each participant received information about the research, and how personal data would be handled. A response of one employee with the preceding discussion of the form took 15-20 minutes on average. Each participant was asked to consent with the questionnaire. Respondents were not compensated.

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Two managers were selected to fill in the performance evaluations. Beforehand, we had a meeting to discuss the evaluation form. Each manager received 36 names of employees and filled out an evaluation form for them.

After this last step of data gathering was done, I collected the 72 evaluations and I was ready to move to the analysis of the data.

Data analysis

The collected data form the performance evaluation and the motivation questionnaires were processed with the statistical software SPSS. The statistical techniques used in the analysis were Cronbach’s Alpha test, T-Test assumptions (kurtosis and skewness), multivariate regression, and “PROCESS” regression analysis, created by Andrew Hayes (www.andrewfhayes.com).

The data was laid out in accordance with 20 items regarding motivation, followed by 4 items concerning performance. This dataset contains 72 respondents, of which 36 were employed by means of a labor contract (LC), and the second half were employed under a civil contract (CC). All respondents completed a questionnaire containing 20 questions regarding their work motivation. Additionally, the company managers were asked to assess each subordinate according to 4 criteria concerning their supervised employees’ performance. Each motivation questionnaire was paired with a performance evaluation. Therefore, there are 72 evaluation forms, 36 per type of contract. Next, to highlight the separation between the two types of contract an additional nominal variable was created, based on which the two groups (LC and CC) were split, for further analytical purposes.

The Cronbach’s Alpha reliability test was performed in order to assess the internal consistency of the observations and determine whether the data can be represented by a single construct or if exploratory factor analysis is required. Furthermore, the Cronbach’s Alpha test of internal consistency was performed on both motivation and performance variables. Following the

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Because the results of the Cronbach’s Alpha were favorable (>.7) there is a possibility to average the items into one construct, according to the Intrinsic Motivation Inventory. Subsequently, new variables were computed, containing the averages of the respective items.

The T-Test assumptions were checked, namely the kurtosis and the skewness. An independent sample T-test was performed in order to determine whether there is a difference in motivation and performance respectively depending on the type contracts.

Furthermore, a multiple regression was performed, with the three categories of motivation as independent variables and the performance construct as the dependent variable in order to test the first hypothesis.

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Results

Reliability

The Cronbach’s Alpha reliability test showed values greater than .7 across all constructs, specifically .917 for intrinsic motivation questionnaire’s questions 1 to 7 (Interest/Enjoyment M1–7), .836 for questions 8 to 13 (Perceived Competence M8–13), .855 for questions 14-20 (Perceived Choice M14–20), and .764 for performance evaluation’s questions 1 to 4 (Performance P1–4).

As a result, the data exhibited internal consistency and therefore the categories according to the Intrinsic Motivation Inventory were kept. Those subscales are Interest/Enjoyment, Perceived Competence, and Perceived Choice. Since the performance evaluation contains 4 question only one new construct was created.

Skewness and kurtosis

The skewness (asymmetry) and kurtosis were tested and showed values within the accepted range. The values for the variables are summed up in the table below. If the absolute value is large (compared to twice the standard error), then a positive number indicates right skew or high kurtosis respectively, and a negative number indicates left skew or low kurtosis. In the data set there is no evidence of abnormal skewness or kurtosis.

Table 1

Skewness and Kurtosis Data

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Means and standard deviations

In Table 2 means and standard deviations are presented. The motivation variables scales are measured on a scale ranging from 1 to 7 and the performance variable on a scale from 1 to 5. The standard deviations represent a value expressing by how much the members of a group differ from the mean value for the group. The data is separated by the type of contract to illustrate the differences in the observations.

Since the performance scale range is 1 to 5 the values of the means are lower compared to the means measured by the motivation scale which rage is 1 to 7. All standard deviations of the members of each groups are between 0.5 and 1 point away from their respective means (see table below). In all instances the labor contract participants reported lower scores than their civil contract counterparts. This can be observed by comparing the values of the means of each variable.

Table 2

Variable’s Means and Standard Deviations

Variables Labor contract or civil contract

Number of participants

Means Std. deviation

Interest/enjoyment Labor contract 36 4.75 .706

Civil contract 36 6.04 .582

Perceived competence Labor contract 36 5.06 .509

Perceived choice Labor contract 36 4.58 .800

Performance Labor contract 36 3.47 .535

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T-test

Homogeneity of variance assumptions were tested in order to check if the variances in both groups are equal. The Levene test was not significant (p-value > .1), and thus the homoscedasticity assumption was not rejected.

Table 3

Independent Sample T-test

Variables t values Sig. (2-tailed) Mean difference between labor contracts and civil contracts

Interest/enjoyment -8.51 .001 -1.30

Perceived competence -6.35 .001 -0.79

Perceived choice -7.32 .001 -1.28

Performance -3.75 .001 -0.48

Independent samples T-test were performed to check if or how the means of the variables motivation and performance differ according to the type of contract. The results in Table 3 show substantial mean differences in favor of the civil contract. The mean difference refers to the difference between the two types of contracts. Table 3 shows that the motivation and performance means are lower under labor contracts as compared to civil contracts.

Correlations

Correlation is a statistical technique that can display whether and how strongly pairs of variables are related. Table 4 shows significant correlations, but the strength of the correlations do not imply multicollinearity. To further verify the issue of multicollinearity variance inflation factors will be checked in Regression analysis section.

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Table 4

Variable Correlations Data

Variables Interest/ enjoyment Perceived competence Perceived choice Performance Type of contract Gender Interest/enjoyment -- .581** .655** .457** .713** -.009 Perceived competence -- -- .596** .705**. .605** -.059 Perceived choice -- -- -- .285* .658** -.121 Performance -- -- -- -- .409** .019 Type of contract -- -- -- -- -- -.088 Gender -- -- -- -- -- --

Note. * Correlation is significant at the .05% level (2-tailed). ** Correlation is significant at the .01% level (2-tailed).

Regression analysis

To test Hypothesis 1 I conducted a regression analysis with performance as dependent variable and the three subscales of intrinsic motivation as predictors. The regression yielded the following results: 55% of the variance in the dependent variable ‘performance’ is explained by the independent variables representing motivation (R-square = .550).

The Interest/Enjoyment (t = 1.925, p = 0.058) independent variable is significant at the 90% confidence interval. The other two independent variables Perceived Competence (t = 7.178, p = 0.000) and Perceived Choice (t = -2.739, p = 0.008) are significant at the 99% confidence interval. The related data is presented in Table 5.

Moreover, the variable with the highest influence on the dependent variable is Perceived Competence because it has the highest standardized regression coefficient (Beta = 0.766) compared to Interest/Enjoyment (Beta = 0.218) and Perceived Choice (Beta = -0.315).

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Regression Analysis

Variables Beta t values Sig.

Interest/enjoyment .218 1.925 .058

Perceived competence .766 7.178 .001

Perceived choice -.315 -2.739 .008

Moderation

To test hypothesis 2 I have examined the moderation of the relationship between the three subscales and performance. Here are the results:

 The type of contract did not moderate the relationship between Interest/Enjoyment subscale and performance;

 The type of contract did not moderate the relationship between Perceived Competence subscale and performance;

 The type of contract moderated significantly the relationship between Perceived Choice subscale and performance.

The “PROCESS” regression analysis was performed. Independent variables were the motivation subscales Interest/Enjoyment, Perceived Choice subscales and Perceived Competence, performance was the dependent variable and the type of contract was the moderator.

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Table 6

Moderation Data for Interest/Enjoyment Subscale

Type of contract (ToC) 0.09 0.99 .33

Interest/enjoyment (I/E) 0.21 2.34 .02

ToC * I/E 0.08 0.85 .40

The type of contract does not significantly moderate the relationship between the Perceived Competence subscale and performance. (t = -0.78; p = .43). No moderation figure is created since the motivation subscale does not provide sufficient support for the second hypothesis. The results of the test are presented in Table 7.

Table 7

Moderation Data for Perceived Competence Subscale

Type of contract (ToC) -0.02 -0.28 .78

Perceived competence (PCo) 0.43 6.75 .00

PCo * I/E -0.05 -0.78 .43

The moderation was slightly significant for Perceived Choice (t = 1.76; p < .08). The results of the test are presented in Table 8.

Table 8

Moderation Data for Perceived Choice Subscale

Type of contract (ToC) 0.21 2.52 .01

Perceived choice (PCh) 0.04 0.48 .64

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Figure 2 represents the moderation of the relationship between Perceived Choice subscale and performance. The coefficients given by the model are the following: constant = 3.61, standardized contract type variable = 0.21, standardized motivation subscale Perceived Choice = 0.04, and interaction = 0.15.

Figure 2. Moderation of the relationship between Perceived Choice subscale and performance

Based on the performed moderation test I conclude that hypothesis 2 is partially supported. The type of contracts significantly moderated only the relationship between Perceived Choice subscale and performance. The positive slope (beta = 0.45, p value = 0.083) of the flexible contract shows that perceived choice is associated with increased performance for employees under flexible contracts. The negative slope (beta = -0.40, p value = 0.014) of the fixed contract shows that perceived choice is associated with decreased performance for employees under fixed contracts. Therefore, there is a significant interaction between the type of contract and the relationship between perceived choice and performance.

The Perceived choice subscale support for the second hypothesis, combined with the results of the other two motivation subscales, have both practical and theoretical consequences. The implications of these findings are discussed in the following section.

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Discussion

The role of employment contract as moderator of the relationship between intrinsic motivation and performance in the case of the studied organization produced mixed results.

Following is a breakdown of the results of both hypothesis and the implications of this study. To recap, Hypothesis 1 stated that there is a positive relation between the employee intrinsic motivation and his/her work performance. Indeed, as proven in the numerous studies outlined in the theory section, the results of this study showed that intrinsic motivation and its three examined subscales are positively linked to performance.

Motivation is related in a number of studies to performance. For example, the motivation subscale Perceived Choice produced dramatic increases in students’ depth of engagement in

learning, the amount they learned in a fixed time period (Cordova, 1996). Evidently, researchers examining the effect of choice in different settings support the idea that the ability to choose has been positively linked to performance. In another study, Rethans and his colleagues found that performance as a product of competence (2002). They have assessed doctors in practice and have concluded that there is a positive relationship between the two variables. In the current studies competence is a subscale of motivation and is as well positively linked to performance. These several examples of researches that back the findings of Hypothesis 1.

Hypothesis 2 stated that the flexible employment contracts have a more positive effect on the relationship between intrinsic motivation and performance than the fixed ones. Here is an analysis of the findings regarding the second hypothesis.

The first motivation subscale, Interest/Enjoyment did not show any moderation effect. The types of contracts did not manage to moderate the connection between intrinsic motivation and performance when it comes to interest/enjoyment. A possible explanation is that the interest and enjoyment of the performed work is not explicitly defined in the employment contracts.

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information. The reason why the type of contract did not moderate the relationship between perceived competency and performance may be explained with the fact that there is no difference in the way that competencies are presented in the examined types of contracts.

Lastly, perceived choice was the only motivational subscale that exhibited significant moderation in favor of the civil contract. As already discussed, the comparison between the two examined employment contracts showed that the civil contract compared to the labor contract gives more freedom to both the employees and the employer. The labor contracts involve fixed working setting - working schedule and salary. The employees subjected to labor contracts follow the already established rules and methods of work conduct of the organization. On the other hand, the civil contracts involve employment arrangements that give the employees choice regarding their work schedule and the ability to negotiate their salary per project. Choice is also given on the way the employees want to perform their tasks. In fact, the organization hires new employees under civil contracts in order to acquire missing skills, abilities and knowledge. These employees have the ability to avoid the established rules and introduce novel approaches in order to accommodate their competencies.

After conducting the research several limitations became apparent. These limitations showed new lines for further research.

First, the context of the organization, and more precisely the business environment in which the company exists undoubtedly have an impact on the results. The organization exist in a competitive environment subject to the economic realities of the region. Factors such as cultural specifics and the organization of labor play their role in the findings of this research. Countries with different cultures will most likely produce different results.

Second, each country has its own laws regarding employment legislation and the observed differences in the types of contacts may not necessarily exist in other countries and regions. The finding of this study should be taken with consideration of the legal system. Also, each organization chooses what to include in their contracts. Although much of the specifics of these documents overlap across different countries and organizations, the content of the employment contracts vary across organizations.

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preparing the performance evaluations, I have held an introductory meeting where the details of the research were presented to the involved managers and all related questions were answered. Even in this case the problem of managerial experience remains. The lack of experience in evaluation can be a source of data alteration. On the other hand employees view questionnaires with a mix of curiosity and irritation. The questionnaires were seen as either time consuming and unnecessary, or were perceived with interest based on their novelty for the participants. In this case, each participant was introduced to the questionnaire and all relevant questions were answered. In this case the self-enhancement bias and self-serving bias can alter the gathered data and skew the results. Self-enhancement involves a preference for positive over negative self-views (Sedikides, 2008). A self-serving bias is the tendency to perceive oneself in an overly favorable manner (Myers, 2015). Both biases are possible downsides of the motivation questionnaire.

Lastly, the participants in the research were separated into two groups. Two managers were assigned with the task to assess the groups and each manager assessed the members of one group only. The reason for choosing this method is that each manager is working with employees subjected under one of the employment contracts. The advantage of choosing this method is that the managers were assessing employees with whom they had a direct work relationship. The downside is that assessment bias can be created since each group was assessed by a different person. Although, care was taken to familiarize both manages with the performance evaluation tool and explanations were given on how to accurately use it, there is no guarantee that bias in the assessment method was not involved in the process. Therefore, the evaluation method used in this research involves a limitation in its design.

Although much care was taken in order to diminish the effect of biases, the above stated factors may have affected the quality of the reported data. A suggestion for further research it to use an assessment method that avoids the possibility of bias created by using several assessors. Another suggestion further research is the introduction of performance measurements that are based on measurable observations, not on managerial evaluation. The same holds true for the motivation measurement. Motivation should be measured by other means than self-reporting. Much care must be taken to identify all possible forms of biases in order to diminish their effect.

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relationship between intrinsic motivation and performance. These factors are the existence of deadlines, variable pay/performance based pay, and working schedule. By doing so the implication of labor legislation will be avoided by using employment factors rather than employment contracts.

The implications of this research are twofold. First, intrinsic motivation is positively linked to employee performance. Performance and intrinsic motivation levels differ between the employees signed under different employment contracts. In the case of the researched organization flexible contracts report higher levels. The organization should take into account this discrepancy by introducing practices and policies that will improve motivation and therefore performance of employees signed under labor contracts. Second, the types of contracts have a moderation effect in the case of perceived choice. Again, employees under flexible employment arrangements showed increased performance levels. Improvements in the way that employees under fixed contract perceive choice should be introduced. This is not an easy task mainly because changes in the way that work is organized can easily produce undesired results. Much care should be taken when changes are introduced. The organization should clearly define which changes will affect perceived choice positively while taking into consideration factors such as cost and turnover.

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Appendixes

Appendix 1: Intrinsic motivation questionnaire

INTRINSIC MOTIVATION QUESTIONNAIRE

Name: Job Title:

Date of Review: Years in Job:

My signature bellows indicates neither agreement nor disagreement with this questionnaire, but it does indicate that I have read it and the supervisor has discussed it with me.

Signature:

Ratings Scale

1 – never, 2 - almost never, 3 – seldom, 4 – half the time, 5 - usually; 6 - almost always, 7 – always

FACTORS RATINGS

I enjoy doing my work very much 1 2 3 4 5 6 7

My work was fun to do. 1 2 3 4 5 6 7

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I would describe my work as very interesting. 1 2 3 4 5 6 7 I thought my work was quite enjoyable. 1 2 3 4 5 6 7 While I was doing my work‚ I was thinking about how much

I enjoyed it. 1 2 3 4 5 6 7

I think I am pretty good at my work. 1 2 3 4 5 6 7 I think I did pretty well at my work‚ compared to my

colleagues. 1 2 3 4 5 6 7

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Appendix 2: Employee performance evaluation form

EMPLOYEE PERFORMANCE EVALUATION

Employee Name: Date of Review:

Evaluator’s Name: Job Title:

Evaluation Period: Years in Job:

Performance Evaluation Ratings

5 - Substantially Exceeded Requirements - Clearly and consistently exceeded many requirements

4 - Exceeded Requirements - Clearly exceeded some, and met all other requirements 3 - Met Requirements - Clearly met all requirements, or balance minor need for improvement in one area with exceptional performance in another

2 - Met Some Requirements - Met some requirements, but clearly needs to improve in one or more areas to fully meet requirements

1 - Did Not Meet Requirements - Clearly needs significant improvement in one or more areas to fully meet requirements

0 - N/A - No Basis for Approval

My signature bellows indicates neither agreement nor disagreement with this Performance Evaluation, but it does indicate that I have read the Performance Evaluation and the evaluator or supervisor has discussed with me.

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PERFORMANCE FACTORS RATING

Job Understanding

Understands job duties and responsibilities, possesses sufficient skill and knowledge to perform all parts of the job effectively, efficiently and safely, understands and promotes department mission and values, makes an active effort to stay current with new developments.

Quality

Attentive to detail and accuracy, demonstrates thoroughness, completeness, follow through on presentation and appearance of work. Interpersonal Skills and Teamwork

Works effectively with other employees/departments, develops positive working relationships, helps improve work processes, helps to accomplish specific tasks.

Professionalism

How the type of employment contract affects the relationship between intrinsic motivation and performance