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The rewarding system as a

useful tool for a culture

change

University of Groningen Faculty of Economics and Business

Msc Change Management June, 2012

Supervisor / University Dr. C. Reezigt Drs. J.C.L. Paul

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2 ABSTRACT

In this quantitative study we focused on the relationship between rewards and employee behaviour as a contribution to culture change. Ability was added as a moderator in this model. The research was performed with 83 employees, all working at Company X N.V. With the use of questionnaires it was found that intrinsic rewards are the only type of reward that can positively influence the motivation of employees to show their behaviour. The rewards in the category meaningfulness rewards seemed to have the strongest influence on this motivation.

Ability appeared not as a moderator in the relationship between rewarding and motivation. Therefore intrinsic rewards can be used as a tool to contribute to the success of a organizational culture change.

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TABLE OF CONTENTS

INTRODUCTION 4

THEORETICAL FRAMEWORK 7

Cultural change 7

Motivating behavioural change through the reward system 9

An effective reward system 10

Extrinsic and intrinsic rewards 12

Desired performance 15 Ability 16 Summary 16 METHODS 17 Research object 17 Data collection 18 Participants 19 Measures 20 Data analysis 23

RESULTS & ANALYSIS 24

DISCUSSION 29

Findings 29

Theoretical implications 30

Practical implications 32

Limitations and future research 33

CONCLUSIONS 34

REFERENCES 35

APPENDICES 41

Appendix A: Organization chart Company X 42

Appendix B: Desired behaviours of Project Y 43

Appendix C: Questionnaire 44

Appendix D: Factor analysis 49

Appendix E: Kolmogorov-Smirnov tests 52

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INTRODUCTION

Organizational culture change

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products), the most successful firms of the last few decades (e.g. Wal-Mart and Tyson Foods) did not have these competitive advantages. They all argue that a strong and unique corporate culture was their most powerful ingredient for their success (Cameron and Quinn, 2006). It is increasingly recognized that the organizational culture enhances organizational performance and more important increases the long-term effectiveness of the organization (Swanink, 1991; Trice and Beyer, 1993). This importance is also recognized by the organization Company X. After a research, executed by themselves, they found that ‘high performance companies often define a compelling and inspirational vision that outlines its ambitious growth objectives in order to inspire and provide the workforce with an authentic point of reference (Executive summary, 2007).Unfortunately, they also found that Company X does not have a vision that inspires the workforce or lives throughout the company. Instead they are short-termed focused and their vision is too generally determined. Next to that the desired behaviour of the workforce is not defined, communicated or integrated in the business. Consequently they started a project in November 2007 in order to create a strong company culture. This culture must facilitate the day-to-day operations that finally must result in a customer-centric organization. It must become clear what is expected from Company X employees according to the new company culture and their behaviour should be shaped accordingly. Finally this cultural change must result in Company X as a high-performance growth company.

Rewarding and culture change

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they must show consistent and visible commitment in order to inspire the employees. But they must also make the necessary resources available (Gagliardi, 1986; Kaliprasad, 2006; Swanink, 1991;). Another often returning factor is communication. All messages in the organization need to be consistent and often repeated. ‘The message has to be the same all the way throug the organization, from top to bottom’ (Drennan, 1992: 90). This message does not only exist of words, but more important are the signals that leaders and employees give to others while performing their task (Drennan, 1992). The last often returning aspect is participation. The employees in an organization actually are the company and together they shape the culture. Therefore they need to be involved right from the beginning (Alvesson and Sveningsson, 2008; Claus, 1991).

Surprisingly, the facet rewarding gets only little attention in the literature about organizational culture change. In an organization the rewards structure motivates and stimulates the employees to behave in a certain manner. Without adequate rewards, employees will not behave in a way consistent with the vision or strategy of the firm (Milkovich, Newman and Gerhart, 2010) Rewards are one of the most important drivers of behaviour (Kinicki and Kreitner, 2006). Together with the fact that cultural change is mainly about changing behaviour (Kavanagh and Ashkanasy, 2006), there is a strong need for an adequate reward system in accomplishing culture change. However, current rewards systems often fail to accomplish their main purpose (Wilson, 2003). So to make the rewards effective in contributing to an organizational culture change seems to be a difficult and challenging job. This results in the following goal of this research:

‘To give Company X advice about its reward structure in order to improve the process of their cultural change project’

Towards a research design

To reach this goal, the theory of Porter and Lawler (1968) is used, which is derived from the expectancy theory of Vroom (1964). It is argued, by Vroom (1964), that people show behaviour that they think will lead to rewards they value. So, to motivate people to change their behaviour the reward system must fulfill the expectancies of the employees.

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‘To what extent can a reward system and the ability of the employees contribute to a cultural change within an organization?’

FIGURE 1 Conceptual model

THEORETICAL FRAMEWORK

Cultural change

Organizational culture is one of the most widely researched phenomena in organization theory the last decades. However, it also seems to be one of the least understood phenomena. This can be concluded from the broad variety of perspectives on the concept of organizational culture both in academic debates, and in organizations themselves. Shepstone and Currie (2008: 358) define organizational culture as ‘a collective understanding, a shared and integrated set of perceptions, memories, values, attitudes and definitions that have been learned over time and which determine expectation (implicit and explicit) of behaviour that are taught to new members in their socialization into the organization. It is the organizational culture that gives identity, provides collective commitment, builds social system stability and allows people to make sense of the organization.’ Cummings and Worley (2005) share this view by arguing that organizational culture is about the shared basic assumptions, values, and norms that guide the members of the organization. Suchman (2006) takes a more practical view that translates organizational culture to day-to-day operations. He argues that culture is shown in everyday patterns of human interaction. Aspects like what is or is not allowed to talk about, how people behave in a meeting, who makes decisions or accessibility of information are examples of these patterns of human interaction. Similarly, Deal and Kennedy (1983:14) define culture as ‘an informal understanding of the way we do things around here and what keeps the herd moving roughly west’. Although the list of definitions

Reward system Desired behaviour

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important aspects of organization culture change is purposefully and forcefully changing employees’ behaviour so it will turn into habits.

Motivating behavioural change through the reward system

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10 An effective reward system

The link of rewards resulting in behavioural change can be explained by employee

expectation. In other words, in order to make a reward system able to contribute to behavioural change it should meet the expectations of employees. In literature this way of explaining employee motivation is called the expectancy theory of motivation. This theory aims at identifying factors in the reward system that are necessary for worker motivation to occur. There exist several theories that strive for influencing behaviours based on beliefs or expectancies of people. Although the theory of planned behaviour (Ajzen, 1991)has received a lot of attention, the most widely tested expectancy theory is the model of Vroom. It is a theory of work motivation which can be helpful in either explaining job effort or job choice (Mitchell, 1974). Central thought in this theory is that people make voluntary choices among different actions. There is only a very small part of the total behaviour that is made involuntary. Consequently, we can assume that behaviour that is shown by people is voluntary and therefore motivated (Vroom, 1964).

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variables is required for motivation to occur. When one of these variables is absent, people will be less motivated to show the required behaviour.

FIGURE 2 Model of Vroom

(Source: derived from Ehrlich, 2006, p 135)

Based on Vroom’s expectancy theory, Lawler and Suttle (1973:51) argue that ‘People within organizations are assumed to follow conscious processes and make rational choices among the different behaviour alternatives available to them, always selecting the behaviour they perceive to be more likely to lead to the achievement of their personal goals. Individuals are seen to make their behavioural choices on the basis of anticipated reward or outcome preferences (valences) and their forward-looking estimations (expectancies) of the possibility of attaining these outcomes. Eventually, the decision to engage in a given behaviour is made only when they perceive this behaviour will indeed provide the rewards and outcomes they need (instrumentality) and, subsequently, value’. Put it more simply, people are motivated to show a certain behaviour when they expect that their behaviour will result in rewards they value.

This means that behaviour of employees can be influenced, so changed, by developing a reward system according to the preferences of the employees in the organization. So, when changing employee behaviour an organization should develop a reward system that provides the rewards employees value. Next to that, the organization should strengthen the perceptions of the effort-performance and performance-outcomes beliefs of employees. As LeBoeuf (1985) argues, influencing the perceptions of employees of how you reward them is the best means of changing their behaviour and improving their performance. Important, however, is that these are linked to the desired behaviours. Employees must see a clear link between the behaviour they show and the rewards they receive.

So we can conclude that an organization indeed has opportunities to stimulate their employees to show the desired behaviour. First, they have the possibility to reinforce desired behaviour by compensating employees with preferred rewards when desired behaviour is shown. Also, the perception of the effort-performance and performance-reward relations

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should be made strong and reliable so employees believe their effort results in the desired reward. This brings us to the first hypothesis.

H1: A reward system that shows a high level of valence, instrumentality and expectancy towards rewards leads to employees showing the desired behaviour.

Extrinsic and intrinsic rewards

There are numerous definitions and classifications of rewards. According to Wilson (2003:35) a reward is ‘a resource we use to recognize, encourage, and compensate individuals’. While Milkovich, Newman and Gerhart (2010) refer to all kind of financial compensations and tangible service that employees receive in return for their work. Comparing these views on rewards, it can be concluded that there is a strong disagreement about the use of rewards. The views range from a very broad perspective including everything that encourages people to a very limited view of only financial returns. This is not surprising as the discussion about the best way of rewarding people is still continuing. Basically, this discussion is about whether extrinsic or intrinsic rewards are more important in motivating people to perform a good job.

Extrinsic rewards can be directly linked to the behaviour of an employee (Uchibe & Doya, 2008). ‘Extrinsic rewards are tangible benefits that are doled out by supervisors to ensure that work is done properly and according to the rules (Thomas, 2000: 6). Some examples are pay raise, bonuses or commissions. Wilson (2003) has developed a categorization that covers probably most of the extrinsic rewards. He defined four categories of extrinsic rewards; verbal/social, tangible/symbolic, work-related and money-related (figure 3). Verbal/social

rewards include the aspects that makes people feel valued for what they reached. It can come

from the direct manager, but also from colleagues or customers. In general these are the most powerful motivators. Tangible/symbolic exist of non-financial rewards that are given for a specific accomplishment. The motivational power comes from the emotional value people give to them. Work-related rewards are based on a person’s role or task and the corresponding performance, e.g. promotion or development opportunities. Monetary rewards exist of all kind of financial compensations that an employee receives in return for his performance.

FIGURE 3

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13 VERBAL/SOCIAL Specific compliments Recognition Commendation letters Award dinners Celebration activities

Take an interest in their work

WORK-RELATED Promotions

Special development programs Increased decision authority Increased control over resources Access to top executives

More challenging assignments TANGIBLE/SYMBOLIC

Trophies/Plaques

Special recognition clubs

Work related tools and equipment Office equipment (e.g. computer) Personal items of interest (e.g. trips)

MONETARY

Special recognition awards (€) Individual bonuses

Group incentives/gain sharing Pay increases based on merit Stock related rewards

(Source: derived from Wilson, 2003, p48)

Intrinsic rewards, on the other hand, are implicitly linked to the work (Uchibe & Doya, 2008). This means that the work itself is the reward because people receive value from it (Wilson, 2003). Many scholars talk about feelings of self-esteem and satisfaction in terms of intrinsic rewards. Intrinsically motivated people ‘do something because it is inherently interesting or enjoyable’ (Ryan & Deci, 2000: 55). One of the broadly accepted classifications of intrinsic rewards comes from Thomas (2000). According to him there are basically four kinds of intrinsic rewards; sense of choice, sense of competence, sense of meaningfulness and sense of progress (Figure 4). Sense of choice means that a person feels rewarded when he is able to do something in the way he thinks it needs to be done. Sense of

competence means that a person feels that he performs a task very well. Sense of meaningfulness comes from the feeling that someone realizes that he is doing something

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FIGURE 4

Categorization of intrinsic rewards

OPPORTUNITY rewards ACCOMPLISHMENT rewards From task ACTIVITIES Sense of CHOICE Sense of COMPETENCE From task PURPOSE Sense of MEANINGFULNESS Sense of PROGRESS

(Source: derived from Thomas, 2000, p43)

Despite the broad attention that is given to the topic of extrinsic and intrinsic rewards, still many questions remain unanswered. It is questioned, for example, if extrinsic rewards are stronger than intrinsic rewards and therefore drive out intrinsic rewards. Consequently, more and more scholars start to argue that the best way to motivate employees is to develop a reward system that includes both kinds of rewards. In fact, almost two decades ago it was already argued that ‘reward management is not just about money, but it is concerned with non-financial as well as financial rewards’ (Armstrong, 1991:17). This is still agreed on as Cummings and Worley (2005) argue that many OD practitioners have experienced that both intrinsic and extrinsic reward contribute to increased satisfaction and better performance. So, to develop a reward system that contributes to behavioural change and finally cultural change, both extrinsic and intrinsic rewards will be included in this research.

Desired performance

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derived from the model of Vroom (1964). They developed a theory that looks beyond motivation and investigates performance as a whole. It is argued that behaviour does not only depend on motivational force, but also on what the abilities and traits are of the people concerned(Mullins, 2007). More specifically, the relationship between motivation and performance is moderated by the factor ability (figure 5). Several scholars investigated this theory and concluded that indeed ability increases the chance of motivation to result in desired performance. For example, Pringle and Duboss (1995), found that ability quadrupled correlation between motivation and performance. Also Heneman and Schwab (1972) concluded that role perception is significantly related to performance. Interestingly, they did not find a relation between ability and performance. So, it can be concluded that increasing motivation to change is not the only way for an organization to make a cultural change successful. Also the factor ability needs to be taken into account when increasing the chance on success. As a cultural change seem to be one of the most difficult changes, it must be obvious that the importance of this factor should not be underestimated.

FIGURE 5

Performance model of Lawler and Porter

( Source: derived from Lawler and Porter, 1967 p 125)

Ability

The variable ability is ‘the individual’s currently developed power to perform’ (Lawler & Porter, 1968: 129). In fact it is about what a person ‘can’ do and not about what a person ‘does’ do. Factors that influence the ability are for example the skills, personal traits or knowledge of a person (Lawler & Porter, 1968). When employees have to change, organizations cannot unthinkingly presume that all employees are able to meet the new expectancies. Some people simply lack, for example, the right skills or knowledge for performing the new behaviours. Even when the motivation of those employees is very high, it will not result in acting the desired behaviours. It is argued that there is an interaction effect between motivation and ability (Lawler and Suttle, 1973). This means that if either motivation or ability is low, the level of desired performance will also be low (Oliver, 1974).

Motivation

Ability

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As a result, it can be concluded that the right ability of employees to show the desired performance is a requisite to make a cultural change successful. Of course, it could be argued that ability is something that can be developed and therefore not intrinsically is a condition for behavioural change to occur. But, ability is a relatively stable factor. By training, the ability of a person can be modified. Though, ability change can only be reached in the long run (Lawler and Porter, 1968). This makes ability, especially in the beginning of the process of a cultural change, an important factor that needs to be taken into account. Based on this theory the following second hypotheses can be formulated.

H2: Ability positively influenes the relationship between motivation and performance.

Summary

Summarized, in this section it argued that one of the important parameters of a cultural change is the change of the behaviour of the employees for the long term. Therefore the organization needs to actively and purposefully change behaviour. For behavioural change to occur, the reward system can be a useful tool. It needs to be used to motivate employees to show the desired behaviour. Therefore, the rewards must meet the expectations of the employees in the organization and the rewarding process should have sufficient motivational capacity. Next to that, the chance for motivation to result in desired performance can be improved by the factor ability. Based on the theoretical explanations in the previous sections, a theoretical framework is developed (figure 6)

FIGURE 6

Conceptual model with operationalized variables

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METHODS Research object

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18 Data collection

Procedures The process of investigation has been done in two sequencing steps, namely

exploratory interviews and questionnaires. In the next section it is explained why these two methods are used. At both steps it was clarified to the participants that all information should be dealt with confidentially and kept anonymous.

Exploratory interviews. Interviews were held with 10 employees from the X department and

5 employees from the Y department. Main goal was to get a general impression about the opinions of the present rewarding process and the cultural change project. This was done to create a focus for the questionnaire of the next step and consequently avoid insignificant questions. The interview was divided into three topics. First, the importance of several rewards was tested in order to filter out unimportant rewards. Consequently the unimportant rewards were not investigated in the questionnaires of the next step. Second, a few questions were asked about the rewarding process in order to get a feeling about the (dis)satisfaction of the process. The last topic was familiarity and motivation towards the project Y. As a result of these interviews the number of investigated rewards is reduced. Next to that as a main conclusion it could be said that the employees of both teams were dissatisfied with the current rewarding process and both teams were very unfamiliar with the project.

Questionnaires. Based on the outcomes of the exploratory interviews, a questionnaire was

constructed (see Appendix C for complete questionnaire). By e-mail all employees were invited to participate in the survey. This e-mail contained a direct link to the questionnaire which could be filled in online. This online tool prevent non-response problems, as finishing was impossible when answers were failing. After two weeks reminders were send by e-mail to increase the response rate. Participation was voluntary and confidentiality was guaranteed.

Participants

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To be included in the study the participants needed to satisfy two criteria: (1) They followed the workshop about Project Y and (2) they were included in the PPM tool of Company X.1 All 83 participants met these criteria. In total there were 83participants from whom 79.5 per cent were men and 20.5 per cent were women. The company tenure was 6 years or more for 66.3 per cent of the participants and the mean age of the participants was 42.9 years.

Measures

To develop the scales under research a factor analysis (SPSS 16.0) was performed to investigate the amount of components in the investigated scales. The items were tested with an exploratory principal component analysis with Varimax with Kaiser Normalization rotation. Two criteria were taken into account when judging the outcomes of the factor analysis. First, if the items do not show cross loadings. Second, if the loading on the scale is minimal .500 (Field, 2009). Both features indicate that the items do belong clearly to one of the scales. Based on the outcomes of the factor analysis 6 scales were developed, four motivation scales, one ability scale and one performance scale.

Motivation – The motivation variables were not measured itself in the questionnaire. Instead

they exist of the multiplication of the factors instrumentality, valence and expectancy (see theory section) that were measured separately in the questionnaire.

The measure of Instrumentality was derived from Lawler and Suttle (1973). This measure wascombined with the extrinsic rewards classification of Wilson (2003) and the theory about intrinsic rewards of Thomas (2000). Based on these theories 14 different rewards were investigated in this research. For every reward participants were asked to indicate on a 7. Likert scale (7 = always, 1 = never) how often it was true for them personally that good performance results in these rewards.

To assess the variable valence the measure of Lawler and Suttle (1973) was used in combination with the 14 rewards that are investigated in this research. It was measured with an indication of personal desirability of 14 different rewards (e.g. ‘Being passionate about your work’ and ‘Pay raise’) on a 7. Likert scale (7 = extremely desirable, 1 = extremely undesirable).

The measurement of expectancy was based on the theory of Sims, Szilagyi and McKemey (1976). This theory was combined with the requirements for good performance of Company

1 PPM stands for People Performance Management. This is the performance measurement tool that is used for

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X. On a 7. Likert scale (7= extremely likely, 1 = extremely unlikely) respondents indicated for six items of good performance (e.g ‘High quality of work’) how likely it was that doing the best they can results in these performances.

Before performing the factor analysis new items were created for every reward under research. The new items existed of the multiplication of the variables instrumentality and valence for every reward, called performance-rewarding. Reason for doing this before the factor analysis was to create consistency within the research, because the instrumentality and valence of exact the same rewards could be multiplied. These new items were included in the factor analysis instead of including the scores on instrumentality and valence separately. As a result of the factor analysis four different factors of performance-rewarding were found (see Appendix D for SPS outcomes of the rotated factor analysis), while based on the theoretical constructs it was expected to find seven factors. The results of the factor analysis showed two scales concerning intrinsic rewards (sense of pleasure/challenge and sense of meaningfulness) and two scales of extrinsic rewards (verbal/social rewards and money/work-related rewards). Because of the implications for validity, the original theoretical constructs were neglected and the outcomes of the factor analysis was used to develop the new scales. See table 1 for characteristics of the performance-rewarding scales (see Appendix D of specification of items per scale).

TABLE 1

Characteristics of performance-rewarding scales

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21 Performanc-rewarding Verbal/social rewards 3 .83 27.32 8.75 Performance-rewarding Money/work-related rewards 4 .83 17.49 9.27

Based on the outcomes of the factor analysis one scale concerning the variable expectancy was developed. After the factor analysis all 6 items of the expectancy variable remained (e.g. ‘High quality of work’ ). The scores of these six items were averaged to create one overall expectancy scale (M=6.4, D=0.57). Internal consistency reliability for this six-item measure was 0.86.

Having constructed four performance-rewarding connection factors and one expectancy factor, the motivation variables could be calculated. This was done by multiplying the performance-rewarding connection variables with the expectancy variable. So, four different motivation variables were formulated. The characteristics are shown in Table 2.

TABLE 2

Characteristics of Motivation scales

Scale M SD

Sense of meaningfulness 184.32 67.53

Sense of pleasure/challenge 232.00 61.93

Verbal/social rewards 175.67 60.24

Money/work-related rewards 113.84 65.13

Ability. The ability measure was derived from Wigfield and Eccles (2000). In 3 different

ways people indicated if they have the right capacities for performing according to the new Project Y principles on a 7. Likert scale (7 = extremely good, 1 = extremely bad). After the factor analysis 1 item was removed (e.g. The other two items were averaged to develop ne ability scale with reliability .75. The mean is 5.86 and the standard deviation was .49.

Performance. To measure performance the self-rating scale from Mahoney et all (1963) was

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22 Data analysis

Exploratory interviews. The outcomes of the exploratory interviews are analyzed using the

predictor-outcome matrix of Miles and Huberman (1994). This matrix is mainly explanatory and provides data on each case. The main goal is to find out what items need to be investigated in the questionnaire of the next step of the research.

Questionnaires. The data have been analyzed using SPSS 16.0. The hypotheses were tested

using a moderated hierarchical regression analyses (Cohen and Cohen, 1983; Aiken and West, 1991. This was done in three sequencing steps. First, the correlations between the variables were tested using the Spearman’s correlation test. This test is used to investigate if there is a linear relation between the four different motivation variables and performance. Secondly four single and one multiple hierarchical regressions analysis (Cohen and Cohen, 1983; Aiken and West, 1991) were performed to determine the directions of the correlations (=hypothesis 1). The regression analyses were controlled for the background variable gender because of its possible influence on the dependent variable (e.g. Ferssizidis, Adams, Kashdan, Lummer, Msihra, Ciarrochi, 2010). At the third step the moderator ability is added to the analyses for testing its possible influence on the relationship between motivation and performance (=hypothesis 2). To minimize the effects of multicollinearity the standardized variables have been used (Field, 2009).

Before doing the analyses the four general assumptions for parametric tests were checked. These are 1) the data have to be normally distributed, 2) there is homogeneity of variance, 3) the data is of at least interval level and 4) the data needs to be independent (Field, 2009). An analysis of the data suggested that all of the assumptions were met (see Appendix E for results of Kolmogorov-Smirnov test) except the normal distribution for one variable. As you can see in Appendix E the variable motivation Money is not normally distributed. But, because the histogram strongly looks like a normal distribution. Also the remark has to be made that the data were obtained by Likert-scales which means ordinal data. But, it is commonly accepted that these data may interpreted as interval data (Field, 2009).

RESULTS AND ANALYSIS Questionnaires

The independent variable of the model, motivation, exists of four different types of motivation.

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multiple regression analysis is performed with all four types of motivation as independent variables.

Results on Motivation ‘sense of meaningfullness’ as independent variable

Correlation – Table 3 presents the means, standard deviations and correlations for all

variables (see Appendix F for SPSS outputs). The mean of the meaningfulness motivation factor (232) is the highest score in comparison to the means of the other motivation factors. It is shown that this lifestyle motivation variable correlates significantly (P < .01) with the dependent variable performance. So this relation is strongly generalizable.

TABLE 3

Characteristics and pearson correlations of all variables

M SD 1 2 3 4 5 6

1. Motivation ‘sense of meaningfulness’ 232.00 61.93 1

2. Motivation ‘sense of pleasure/challenge’ 184.83 67.53 .61** 1

3. Motivation ‘verbal/social’ 175.67 60.24 .39** .49** 1

4. Motivation 4 ‘materialism’ 113.84 65.13 .41** .52** .52** 1

5. Ability 5.86 .49 .08 .22* .08 .12 1

6. Performance 4.87 1.64 .55** .36** .13 .20* .16 1

The standardized coefficients are shown.

** Correlation is significant at the 0.01 level (1-tailed) * Correlation is significant at the 0.05 level (1-tailed)

Regression – Results of the regression analysis with meaningfulness motivation as

independent variable are depicted in table 4 (see Appendix F for SPSS outputs). In the first step the dependent variable was regressed for the background variable gender to control the effects. In the second step the independent variables ability and meaningfulness motivation were added to test hypothesis 1. This hypothesis posits that motivation positively influences performance. With regard to meaningfulness motivation, the results reveal that the hypothesized relationship between meaningfulness motivation and performance did reach significance in the analysis (step 2: β=.54, p= <.01). This model explains 32 per cent of the variance of performance. This means that hypothesis 1 is supported for the meaningfulness motivation variable.

Moderated regression – The third step of the regression analysis tested hypothesis 2 by

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interaction term was not significantly related to performance. This means that ability has no influence on the relationship between meaningfulness motivation and performance. So hypothesis 2 is rejected for meaningfulness motivation.

TABLE 4

Results of moderated regression analysis on meaningfulness motivation.

β Step 1 Gender R2 .13 .02 Step 2 Gender Motivation Meaningfulness Ability R2 ∆ R2 .06 .54 .10 .32 .30 ** Step 3 Gender Motivation Meaningfulness Ability

Motivation Meaningfulness * Ability R2 ∆ R2 .06 .54 .11 -.02 .32 .00 ** **

The standardized coefficients are shown. * p < .05 (1-tailed)

** p <.01 (1-tailed)

Results on Motivation ‘sense of pleasure/challenge’ as independent variable

Correlation – From table 3 it can be seen that the mean of the pleasure motivation variable is

the second highest score. Looking at the correlations it can be seen that this motivation variable is significantly correlated with the variables under research. With performance the correlation is .36 (p<.01) and with ability the correlation is .22 (p<.05).

Regression – In table 5 the results of the moderated regression analysis can be seen for the

motivation variable pleasure/challenge (see Appendix F for SPSS outputs).. It is shown that also for this independent variable the second model is found significant. The regression analysis shows a direct relation (β=.33, p=<.01) with the dependent variable performance. Pleasure motivations shows a significant share (R2=.14, p=<.01). So, it can be concluded that hypothesis 1 is supported for the pleasure motivation variable.

Moderated regression – At step 3 the results of the regression analysis with ability as

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significant (p<.01), the interaction term does not show a significant result. This means that the moderator ability does not show a significant share in the relation between pleasure motivation and performance. So, for the motivation variable pleasure/challenge hypothesis 2 cannot be accepted.

TABLE 5

Results on moderated regression analysis on pleasure/challenge motivation. β Step 1 Gender R2 .13 .02 Step 2 Gender Motivation Pleasure Ability R2 ∆ R2 .08 .33 .07 .14 .12 ** ** Step 3 Gender Motivation Pleasure Ability

Motivation Pleasure * Ability R2 ∆ R2 .07 .34 .07 -.04 .14 .00 ** **

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** p <.01 (1-tailed)

Results on Motivation ‘verbal’ as independent variable

Correlation – The mean of the motivation variable verbal is 175.67. Therefore the verbal

rewards can be seen as the second least highest motivation variable. From table 3 it can be seen that the motivation variable verbal is the only independent variable in this research that is not significantly correlated to the dependent variable performance. Neither the moderator variable ability is significantly correlated to any of the variables in this analysis.

Regression and moderated regression – Because there is not found any significant

correlation, hypotheses 1 and 2 are rejected for the motivation variable verbal. It can be concluded that the verbal rewards do not influence the dependent variable performance.

Results on Motivation ‘materialism’ as independent variable

Correlation – From table 3 it can be seen that the motivation variable materialism is valued

as the lowest (113.84). This table also shows that there is a significant correlation between this motivation variable and performance (r=.20, p <.05). This implicates a relationship between materialism rewards and performance.

Regression – Table 6 shows the results of the regression analysis of materialism motivation

on performance controlled for the control variable (see Appendix F for SPSS outputs).. The results of the second model do not show a significant result. This implicates that hypothesis 1 is not supported for the motivation variable materialism.

Moderated regression – In step three the moderator ability was added to the model. Neither

this model was found significant. So also hypothesis 2 is not supported for the motivation variable materialism.

TABLE 6

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Step 3 Gender

Motivation Materialism Ability

Motivation Materialism * Ability R2 ∆ R2 09 .20 .12 -.04 .07 .00

Results on multiple regression

Table 7 presents the results of the multiple regression on performance with all four types of motivation as independent variables controlled for the background variable gender (see Appendix F for SPSS outputs).. As can be seen at step two the total model is responsible for 32 per cent of the variance of performance. Within this model only meaningfulness motivation is a significant (β=.54, p<.01) predictor. So, the variance of performance can be mainly explained by the independent motivation variable meaningfulness.

TABLE 7

Results on multiple regression analysis β Step 1 Gender R2 .13 .02 Step 2 Gender Motivation Pleasure Motivation Meaningfulness Motivation Verbal Motivation Materialism R2 ∆ R2 .09 .08 .54 -.13 -.00 .32 .28 ** ** DISCUSSION Findings

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extrinsic rewards. Besides this, we tested the possible moderating effect of ability in this relationship.

It was argued that purposefully changing the behaviour of the employees plays an considerable role when aiming for an organizational culture change. This purposeful change can be established using the expectancy theory of Vroom (1964) which resulted in the following first hypothesis: ‘A reward system that shows a high level of valence,

instrumentality and expectancy towards rewards leads to employees showing the desired performance’. Based on the outcomes of the regression analyses we need to conclude that

this hypothesis cannot be generally accepted for all type of rewards. The outcomes of the regression analyses have shown that there is a significant positive relationship between the expectancy towards pleasure rewards (i.e. being passionate about your work and receiving more challenging task) and the shown behaviour. The same result was found for the relationship between the expectancy towards meaningfulness rewards (i.e. seeing how your task contributes to the corporate vision of the organization and when you manager delegates important projects/tasks to you) and the behaviour of employees.

Contradicting to the expectations the regression analyses also show that hypothesis 1 is not supported for extrinsic rewards. The relationship between both categories of extrinsic rewards, verbal and money, and the performance of the employees is found non-significant. Secondly, at hypothesis 2, it was argued that ability has a moderating effect on the relationship between the expectancy towards rewards and performance. From the analyses we can conclude that ability does not have a moderating effect on this relationship for both intrinsic and extrinsic rewards.

So based on the outcomes of the analyses we can argue that when the level of valence, instrumentality and expectancy towards intrinsic rewards increases, the employees will show the desired performance on a higher level. At the same time we can conclude that this relation does not exist for extrinsic rewards. For both relationships, ability does not have influence on this relationship.

Theoretical implications

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influence behaviour of employees, but only by the use of intrinsic rewards. This implicates that the expectancy theory of Vroom (1996) cannot be generally accepted, instead it is only applicable for intrinsic rewards. From this implication we can conclude that a culture can be changed purposefully by the use of intrinsic rewards. However, this conclusion cannot be made this easily.

One important reason for taking this conclusion into consideration with reserve is the fact that this research is focused only on changing behaviour of employees. There are indeed several scholars who argue that employee behaviour is a substantial part of an organizational culture (e.g. Eubanks and Lloyd, 1993, Keyton, 2011). Following these concepts we can argue that changing employee behaviour considerably contributes to a culture change. Also the object under research put their focus on changing the behaviour of the employees, when trying to realize a change in their culture. But there are also many researchers arguing that an organization culture is much broader or different concept than employee behaviour. Schultz (1994) for example defines organization culture as ‘organizational culture focuses on the beliefs, values and meanings used by the members of an organization to grasp how the organization’s uniqueness originates, evolves and operates‘. Cook and Yanow (2011) take another approach by putting the focus on skills. They think that organization culture exist of the special competencies of employees that are embedded and that get passed on from generation to generation. Schein (2010) has compared different approaches to organizational culture and shows that there are indeed many different concepts like group norms, values, rules of the games, habits of thinking but also behaviour. So, the focus of this study indeed fits to the concept of organization culture as defined by several researchers, but there are also many other concepts. Apparently, when aiming for a culture change at an organization it needs to be considered if the desired change corresponds to the focus of this study.

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Next, it needs to be considered to what extent intrinsic motivation can be increased by managers. The conclusion of this study is that the behaviour of employees can be changed by increasing the intrinsic motivation, specifically the category of pleasure motivation. But, as the name of the category already explains, this kind of motivation is probably difficult to influence by other people than the employees themselves. As argued by Frey and Osterloh (2002) intrinsic motivation is mainly caused by the activity itself. They give the example of reading a book. People mainly experience pleasure from reading the book and not from reaching the last page of the book. Translating this example into business means that people need to experience pleasure from what they do on their job and not from reaching goals within their job. This means that providing rewards after the activity has no sense. In this case the only thing managers can do is making sure that the job provides pleasure to the employees. But, as everybody will admit, pleasure in a job is mainly caused by the fact that the type of work matches to the personal preferences. So, the variable that increases the motivation to show desired behaviour seems difficult to influence and therefore the results of this study seem less useful.

Lastly it needs to be taken into account that this research is done at only one organization. The effects of rewards are subject to personal preferences. Therefore the results of this study cannot be generalized easily.

So, this research contributes to the understanding of the expectancy theory of Vroom and consequently the process of cultural change. That is, intrinsic rewards is found as one of the success factors in this change process. Still, there are several reservations that needs to be taken into account when considering the use of intrinsic rewards in a cultural change process. The same applies to the conclusion about extrinsic rewards. It was found that extrinsic rewards cannot be used when aiming for a cultural change. But, also this conclusion should be considered with reserve because this research was done at only one organization which decreases the possibility to generalize the conclusions.

Practical implications

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performance. Instead, the leaders of a cultural change should put their efforts in increasing the level of intrinsic rewards, mainly pleasure rewards.

Another guideline that can help managers make their culture change successful concerns the instrumentality and expectancy of the intrinsic rewards at their organization. According to the expectancy theory of Vroom, the motivation to show a certain behaviour exists of the expectancy, instrumentality and valence towards rewards. The valence is something personal and therefore, logically, cannot be influenced by managers. But, the other two factors are mainly determined by the managers. Instrumentality is the expectancy of the employees that their behaviour will result in a reward. Managers should take care that the relationship between the behaviour that they desire in the new culture and the rewards that they provide to their employees is good. When employees expect to receive a reward they will be stimulated to repeat that behaviour. The factor expectancy exists of the relationship between the effort of employees and the expectancy that this effort will result in good behaviour. Also for this factor applies that the manager needs to make sure as much as possible that this relationship is good. He can do this by making sure that the employees now what is expect from them. Consequently the employees will do the best to show this behaviour. As shown these relationships are only applicable for intrinsic rewards. Therefore it is important that managers put their focus on intrinsic rewards when trying to improve these relationships.

So, based on this research, managers should take these guiding rules into account when aiming for a culture change at their organization that is mainly focused on the behaviour of the employees.

Limitations and future research

Limitations. Although this study has some positive methodological strengths (i.e. a very

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Taking all these limitations together the results of this research should be taken into account with reserve.

Future research. Important to future research is an attempt to understand the different kinds

of rewards within the expectancy theory, because this research suggest that this theory is not generally applicable for all type or rewards.

Next to that, practical questions arise by whom, when and to what degree intrinsic rewards can be influenced and how they can be kept motivating. Now it is proven that intrinsic rewards can contribute to a culture change, future research should not only take into consideration whether intrinsic rewards can contribute to a cultural change, but how intrinsic rewards can help an organization successfully change their culture. Thus, under what conditions will intrinsic rewards be most effective in a culture change.

Lastly a suggestion for future research is the suitability of the expectancy theory in different areas. This research has been done in only one sector. The conclusion is that for this sector the expectancy theory is only relevant for intrinsic rewards. But, the preference for rewards can differ per sector. Research with these focuses may ultimately provide support to organizations that are looking for possibilities to successfully change their culture.

CONCLUSION

A cultural change is one of the most difficult changes to realize at an organization. In this research it is shown that the reward system contribute to the process of cultural change. By repeatedly rewarding the desired behaviours, the employees will repeat these behaviours. In the end these behaviour can change into habit which means that it is embedded in the culture. But, this conclusion is only applicable for intrinsic rewards, especially rewards that influence the motivation of meaningfulness. Extrinsic rewards, on the other hands, cannot be used to change behaviour of employees according to this research. One very important restriction in this research is the fact that the dependent variable, behaviour, is measured by self

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APPENDIX B: Desired behaviours of project Y.

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APPENDIX C: Questionnaire

Dear employee

It is very nice to see that you are willing to support me in my survey! Please read the questions carefully and take your time to fill in you answers.

I hope you enjoy it!

Kind regards, Lianne Jeucken

There are 14 questions in this survey.

1) Please indicate to what extent each of the following items correspond to the reasons why you are presently involved in your work (1 = Corresponds not at all, 7 = Corresponds exactly)

 Because this is the type of work I chose to do to attain a certain lifestyle  For the income it provides me

 I ask myself this question, I don’t seem to be able to manage the important tasks related to this work.

 Because I derive much pleasure form learning new things  Because it has become a fundamental part of who I am

 Because I want to succeed at this job, if not I would be very ashamed of myself  Because I chose this type of work to attain my career goals

 For the satisfaction I experience form taking on interesting challenges  Because it allows me to earn money

 Because it is part of the way in which I have chosen to live my lie  Because I want to be a ‘winner’ in life

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 I don’t know why, we are provided with unrealistic working conditions

 Because it is the type of work I have chosen to attain certain important objectives  For the satisfaction I experience when I am successful at doing difficult tasks  Because this type of work provide me with security

 I don’t know, too much is expected of us  Because this job is part of my life

2) Listed below are a number of things you can either do in your job or can receive from your job. For each one, would you please indicate how desirable these are in your job? In other words, how much do you like it to experience or receive these factors in your job? (1 = Extremely undesirable, 7 = Extremely desirable)

 Seeing how your task contributes to the corporate vision of Company X.  Receiving individual bonuses

 Receiving compliment from your manager(s) and/or colleagues

 Receiving work related tools and/or equipment for achieving good results  When your manager delegates important projects/tasks to you that significantly

impact the overall success of your department  Mastering the necessary skills for your job

 Receiving extra awards (trips, tickets, dinners) for achieving good results  When your manager recognizes when you competently perform your job  Being passionate about your work

 Recognition from your boss or other persons of importance 9i.e. expressions of thanks and appreciation)

 Autonomy in determining how you do your job  Getting promotion

 Receiving more challenging tasks  Pay raise

3) If you do the best you can at your job, how likely is it that it will result in the following? (1= Extremely unlikely, 7 = Extremely likely)

 High quality of work

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 Delighted customers both external and/or internal (depends on what applies to you)

 High productivity

 High level of cooperation with colleagues

4) You are to indicate how often it is true for you personally that when you perform well it leads to the following factors in your job. In other words, how often does good performance results in the following factors?

 Seeing how your task contributes to the corporate vision of Company X  Receiving individual bonuses

 Receiving compliment from your manager(s) and/or colleagues

 Receiving work related tools and/or equipment for achieving good results  When your manager delegates important projects/tasks to you that significantly

impact the overall success of your department  Mastering the necessary skills for your job

 Receiving extra awards (trips, tickets, dinners) for achieving good results  When your manager recognizes when you competently perform your job  Being passionate about your work

 Recognition from your boss or other persons of importance 9i.e. expressions of thanks and appreciation)

 Autonomy in determining how you do your job  Getting promotion

 Receiving more challenging tasks  Pay raise

In the following part you will be asked questions about your job performance. A your coming performance appraisal is based on the new Project Y values, pleas answer these questions according to the Project Y principles.

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6) If you were to list all you colleagues in your team from the worst to the best in their job, where would you put yourselves? Remember to keep in mind the new Project Y appraisal system as explained in the introduction (1 = the worst, 7 = the best). 7) Compared to most of your colleagues, how your are you at performing your job?

Remember to keep in mind the new Project Y appraisal system as explained in the introduction. (1 = A lot worst, 7 = A lot better).

8) According to the new Project Y requirement which of the following statements about your results applies to you? (what axis)

 My actual achievement, contribution and results are considerably beyond what is normally expected in my role

 My actual achievement, contribution and results are in line what is normally expected in my role

 My actual achievement, contribution and results are below what is normally expected in my role

9) According to the new Project Y requirements which of the following statements about your behaviour applies to you (=’how’ axis)

 I demonstrate the required behaviours at an exceptional level  I effectively demonstrate the required behaviours

 I fail to demonstrate one or more of the required behaviours. 10) What is your gender?

 Male  Female 11) What is your age?

12) What is your nationality?

13) How long do you work at Company X?  < 1 year  1 – 3 years  3 – 5 years  6 – 10 years  11 – 20 years  > 20 years

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