Research Methodology On How Rewards Impact Employee Attitudes

Introduction

In service organizations an individual’s performance will vary depending on multiple factors that are out of systematic and instrumental control. These results depend on creativity and innovation of the service employee. The importance of frontline employee’s service behavior is demonstrated by the organizational outcomes that are a consequence of these behaviors. These behavioral exchanges occur between service employees and customers of the service organization, and it is precisely through these exchanges that the service is provided to the customer. Therefore, employee’s service behavior is responsible for the level of satisfaction of every single customer of the organization, especially in the case of frontline employees, whom interact directly with customers.

As was summarized in the literature review, customer satisfaction leads to customers repurchase intentions, and post consumption attitudes and loyalty are linked to better company outcomes (Anderson, 2006). Service organizations that achieve high levels of customer satisfaction improve customer retention and profitability (Zeithaml, 2000; Bowen and Ford, 2002; Babakus, Armario et al., 2004; de Jong, de Ruyter et al., 2004; Bell, Auh et al., 2005; Anderson, 2006; Payne and Webber, 2006). Therefore, it is important for organizations to focus their efforts on aligning all their policies and practices towards increasing positive service behaviours that deliver high levels of customer satisfaction (Berry, Zeithaml et al., 1990).

The main purpose of this research is to explain how rewards and recognition impact the attitudes of employees towards their organization, manager, and working environment. As well, explain the resultant behavior of such positive attitudes will be. Therefore, the proposed relationships were empirically tested.

Employee’s service behavior cannot be totally contracted by the organization. Employee’s service behavior is unique. Therefore, every transaction with a customer is different, and every customer has different and sensitive expectations (Bettencourt, Brown et al., 2005). The service encounter cannot be forecasted precisely, there is a need to increase the orientation of frontline employees to behave and deliver satisfaction. Increasing creativity and empowering employees through rewards and recognition can deliver desirable outcomes.

Service employee’s encounters with customers are very complex because they involve different situations that are not particularly or explicitly defined in employee’s Standard Operation Procedure. They have to be addressed by the service provider at specific points in time, where not all circumstances and behaviors can be precisely anticipated. Service personnel cannot predict customer’s requests or complaints, but they can learn to display creative and innovative behavior that helps the customer, thus increasing customer satisfaction and service performance.

It seems very simple to classify all the behaviors that enhance customer satisfaction as employee’s service behavior. However, there are some distinctions between what can be imposed as part of the job and what is voluntary of the employee (Bettencourt, 2004). Employees seem to recognize that they do not deserve to be rewarded for doing their job. On the contrary, they link extra effort and creativity with rewards and recognition. In addition, not all service behaviors can be predicted. Behavioral contracts can diminish employee’s creativity on service behaviors. Therefore, employee’s service behavior can be improved through the use of rewards and recognition that increment and strengthen the relationships between the firm and the employees; and the managers and the employees.

Research Methodology

In order to design the rewards and recognition questionnaires and interview questions, and to learn more about the service department, and employees of United Steel, a qualitative research phase is conducted. Individuals in their natural work settings are observed and their normal day to day functions such as interaction with customers, coworkers and managers are observed as well.

Qualitative research methodology is a scientific method used by researchers whenever there is phenomenon about which little is known or one wishes to obtain more, or new in depth insight to the problems in question. Field research is especially appropriate for the study of those behaviors and attitudes that need to be explore in a social context, within their natural setting, “as opposed to the somewhat artificial settings of experiments and surveys” (Babbie, 2001). There are a multiplicity of qualitative methods that allow the researcher to go to the field and collect all the data as possible for later scrutiny and conclusions. The qualitative methodology chosen in this particular research is a case study in that it can be exploratory, explanatory or descriptive and it also considers the complexity and dynamic qualities of the social world.

A case study involves systematically gathering enough information about a particular person, social setting, event, or group to permit the researcher to effectively understand how it operates or functions (Gerring 2007). This methodology is the most suitable approach to accomplish the research objectives of the qualitative phase. It permits the use of different techniques to get the correct data to explore these complex issues, and contributes to the understanding of human behavior in organizational settings (Berg, 2008). This first stage of the research provided the necessary background and information and to develop a survey to quantitatively test out the proposed hypotheses.

Qualitative interviews differ from the survey questions in that there is not a particular set of questions that must follow a set of predetermined words to be asked in a definite order. The interviews allow the researchers to dig out information as the interview prospers (Babbie, 2001). During the interviewing process it is necessary to create an appropriate climate for informational exchanges and individuals’ predisposition to reach the highest possible level of disclosure (Berg, 2008).

Quantitative method was used to gather data from both the survey and interview. This is because this method is usually and efficiently deals with numbers and measurable data. Thereof, data collected were usually able to be presented in table, graph or statistical form. For this research thesis, table form is utilized as it is better at presenting the data for analysis and extracting useful information from the data.

Theoretical Framework

The employee firm relationship and the employee manager relationship will lead to a company’s outcomes and in this case, to customer satisfaction through employee’s service behaviors (Bettencourt, Gwinner et al., 2001; Bettencourt, Brown et al., 2005). The question and challenge for management is how to increase these positive relationships that are essential to eliciting the desired service behaviors from employee. As was discussed earlier, rewards and recognition can trigger attitude and behavior. However, these actions will not be triggered through repetitive schedules, as they are difficult to mechanize, define, and predict with accuracy. Nor can these behaviors be replicated precisely in the future.

Rewards and recognition not only can be used for exceptional employees, but can also trigger extra effort behavior and increase its likelihood. Rewards and recognition can trigger this behavior when used considering that positive attitudes trigger beneficial employee outcomes. Reinforcing the relationships between manager employee and firm employee can lead to these desired outcomes (Podsakoff and MacKenzie, 1997).

The perception employees have regarding the dispersion of consistent rewards and recognition is significant to its correct functioning. Fairness and consistency are fundamental aspects of all personal relationships. Therefore, if rewards and recognition pertain to increase the perceived organizational support relationship and leader member exchange relationships, the personal aspect of these interactions has to be maintained and procured.

Managers and leaders not only expect subordinates to demonstrate service behaviors, but in fact they allocate and distribute rewards contingent with the extra effort or extra activities that subordinates undertake (Podsakoff, Bommer et al., 2006). In many occasions, as mentioned earlier, extra effort behavior is not well defined by employees in words, but is very well recognized by employees and managers. It is also considered a voluntary part of the job; and therefore should be rewarded accordingly (Podsakoff and MacKenzie, 1997). In addition, research has found that employees are more likely to display service behaviors when those behaviors lead to receiving rewards from their managers as means of appreciation (Johnson, 1996). Similarly, it is anticipated that employees expect recognition because recognition improves the relationship with the manger and the firm.

Behavior that is explicitly defined can undoubtedly be reinforced with a traditional incentive system (Luthans, 2002). Because employee’s service behavior cannot be explicitly defined, therefore service oriented behavior requires a degree of creativity and innovation, and its reinforcement depends on the mediation of the positive perceptions employees develop toward the firm and their managers. For example, say an employee succeeding with an “extra effort” is recognized by a peer, then subsequently by the manager. The recognition comes from a colleague initially, but in reality, the source of recognition is the manager because he/she authorizes and gives the reward. The employee perceives that they are valued by the manager and by their coworker. The relationship between manager employee is strengthened by generating positive attitudes and thus, similar behavior is likely to be repeated in the future to satisfy a customer. The manager or the organization could not have predicted this employee’s service behavior in advance, but it can be rewarded or recognized to trigger similar behavior in future occasions.

When employees receive recognition from managers that they appreciate or perceive as sources of personal and social gratification, the positive attitudes increase. On the contrary, if the employee manager relationship is weak, recognition may not have valuable meaning and may create a negative perception and attitude, and weaken the likelihood of the employee’s future extra efforts. Organizations and/or managers who allocate rewards and give recognition may possibly reinforce these relationships.

Variable 1 – Perceived Organizational Support

The relationship an employee and a firm hold is not merely based on monetary exchanges for labor. However, the firm is also a provider of social and emotional resources such as respect, empowerment, and recognition. These generate a feeling of personal value. Therefore, the emphasis that a firm places on either these impersonal or personal values can trigger distinctive attitudinal and behavioral outcomes (Bachrach, Bendoly et al., 2001).

At a cost effective level of this relationship, employees expect a salary every month as an exchange for contracted basic behaviors. These are behaviors that are prescribed by the role for which employees are contracted, and outline specific and detailed tasks that must be accomplished in order to receive their regular income. However, at the more personal level, employees expect other types of exchanges in order to feel that they are a fundamental part of the organization where the social and personal aspects are more valued. Employee’s working behaviors may exceed regular performance due to a sense of belonging and the feeling of being an essential element of the organization.

The perceptions that employees form with respect to the degree of social value that a firm holds for its employees generates positive or negative attitudes. If an employee has a positive attitude about the firm, he or she will be more likely to engage in behaviors that favor the organization as a mechanism of exchange between what the company is giving to him/her, thereby aligning the behavior with the company’s goals (Eisenberger, Fasolo et al., 1990). Employees are more likely to complete their tasks on time and be absent less often even with a strong and justifiable reason, thereby assisting the firm’s growth. They will also be more likely to contribute extra effort, by helping their colleagues, managers, and teams; stay late; take work home to study; and praise the organization with their friends and family (Eisenberger, Huntington et al., 1986). These positive attitudes can be generated and maintained, for example, through employee’s beliefs that the organization fairly distributes and allocates rewards and recognition when favorable behavior for the organization occurs (Podsakoff and MacKenzie, 1997).

As outlined in the literature review, employees with high perceived organizational support demonstrated higher rewards expectations. These employees reasonably expected that their personal efforts would produce pay and promotion and recognition (Eisenberger, Cummings et al., 1997; Moorman, Blakely et al., 1998). Service behavior that cannot be so easily defined, specified, detailed or contracted can be triggered by positive employee employer relationships (Bettencourt, Gwinner et al., 2001; Payne and Webber, 2006). Employees who perceive that the organization values their additional effort in providing customers with high quality service behaviors are more likely to find ways not only to maintain, but also improve these behaviors. (Eisenberger, Fasolo, and Davis-LaMastro, 1990)

Higher levels of perceived organization support are driven by the positive actions that a firm takes towards an employee. This includes fair and valued rewards systems and a positive relationship with managers and supervisors (Eisenberger, Fasolo et al., 1990; Bettencourt, 2004). Therefore, it is proposed that specific sources of rewards and recognition such as from managerial and non managerial sources, and consistency of the system will lead to higher levels of perceived organizational support.

Employees that feel valued and cared for by the organization provide more constructive suggestions for improving the organization than employees with lower perceived organizational support (Eisenberger, Fasolo et al., 1990). Employees with high perceived organizational support also demonstrate more behavior that can be described as “above and beyond” their normal job description.

Variable 2 – Leader Member Exchange

The relationship of an employee with his or her supervisor is critical, as the unit managers or team leaders are often the first initial contact an employee has with the organization. Managers have power over resources, control over the duties an employee must carry out, and the authority to evaluate employee’s performance. More importantly, managers distribute rewards and recognition directly to the employees, which contributes significantly to the perceptions that employees form about the firm and their leaders.

Employees who have a strong and constructive relationship with their manager will be more likely to have positive opinions and attitudes in regards to this manager. In the same manner that a strong employee employer relationship can lead to a company’s profit, positive attitudes towards a unit or team leader can also lead to the same outcome. Nevertheless, it might not be necessary to have a beneficial relationship with the firm to have a constructive relationship with the manager or supervisor (Wayne, Shore et al., 2002). Employee’s service behaviors that lead to customer satisfaction can benefit the overall organization, and may be triggered by the employees’ belief that their manager or supervisor will repay this behavior with a more personal and profitable relationship (Babakus, Yavas et al., 2003).

A constructive relationship with a manager can increase the likelihood of employee’s service behaviors. This employee manager relationship can also lead to, in the long run, a functional employee firm relationship. This is because the managerial level usually represents the firm in many aspects, creating an interpersonal atmosphere and providing gainful employee outcomes (George, Sleeth et al., 1999; Podsakoff, Bommer et al., 2006). However, the foundation for such constructive relationships is built when supervisors notice and recognize employees’ performance with consistency and timely manner. Therefore, recognition and rewards are crucial in facilitating positive employee manager relationships (Wayne, Shore et al., 1997).

As mentioned in the literature review leader member exchange relationships vary in terms of the amount of material goods, information, and support exchanged between superiors and subordinates. The greater the perceived value of the tangible and intangible commodities exchanged, the higher the quality of the leader member exchange relationship,” (Wayne, Shore et al., 1997).

The foundation for such constructive relationships is based on supervisors noticing and recognizing positive employee behavior in a consistent and timely manner. Therefore, recognition and rewards can be crucial in facilitating positive relationships between the employee and their managers (Avolio et al., 2005).

The norm of reciprocity, in terms of leader member exchange, implies that when one party provides non mandated benefits to another party, reciprocity should come into play. In a relationship where the leader provides employees with rewards and privileges, employees may engage in behaviors that directly benefit the leader and of which go “above and beyond” normal role expectations (Wayne, Shore et al., 1997). Employees benefiting from high quality relationships with their immediate manager appear to engage in employee’s loyalty behavior and perform at impressive levels that benefit the organization and customers (Wayne et al., 2002).

If employee’s behavior can be influenced by employee manager and employee firm relationships, it follows that these relationships are influenced by the appropriate rewards and recognition system. Behavioral modification, in the short term, can be obtained through the use of instrumental control, or the manipulation of employee expectations. However, to obtain better levels of certain behaviors, or to maintain the behavior over time, it is necessary to alter behavior through attitudinal change. Therefore, perceived organizational support and leader member exchange mediate the relationship between rewards and recognition and employee’s service behavior (Podsakoff, Bommer et al., 2006).

Rewards and recognition positively impact employee’s customer service behaviors through a positive manager employee relationship and a positive organization employee relationship. Rewards and recognition also impact employee’s service behaviors. The proposed relationships between these variables can be appreciated in the Figure 1.

Research Hypotheses

There will be four hypotheses to be tested for in this research. The first hypothesis deals with employee’s positive perception of rewards and recognition from managerial sources, non managerial sources or from understanding of the rewards and recognition system will correlate with the level of perceived organizational support an employee will receive. Then the second hypothesis deals with the perceived organizational support an employee receive will correlate with higher level of employee’s loyalty behavior.

The third hypothesis deals with employee’s positive perception of rewards and recognition from managerial sources, non managerial sources or from understanding of the rewards and recognition system will correlate with the level of leader member exchange relationship. Then the fourth hypothesis deals with whether or not the level of leader member exchange relationship correlate with higher level of employee’s loyalty behavior.

Research Subjects

An online survey was conducted using 100 employees from United Steel Sdn. Bhd. About 5 of those employees occupy managerial positions, and about 40 of these employees deal directly with customers in a daily basis. In United Steel Sdn. Bhd., 37 employees held position as engineers cum sales executives and well over 90 employees in the manufacturing plant.

The survey was hosted on an internal network within United Steel Sdn. Bhd. Private server to ensure confidentiality, the anonymity of the respondents, and to diminish any socially desirable responses. While reactivity is a common weakness of survey implementation (Babbie, 1990), anonymity and confidentiality of the responses was emphasized to reduce the risk of reactivity of the surveyed items. Also, an incentive was offer to whom decided to complete the survey. Incentives are a useful resource to increase response rates, and research has shown that offering an incentive diminishes any bias associated to preferences for the theme under investigation, the incentive shadows the subject matter of the survey eliminating any bias associated with it (Couper and Miller, 2008).

The responses received summed up to 100 in total: 37 were from engineer cum sales executives who are responsible for selling products to customers, 20 from post sales and service employees who are responsible for after sales services to customers and 43 from other employees such as from IT department and manufacturing plant. The survey included 30 questions regarding the variables of interest in this study and respondents chose to participate voluntarily in the study by clicking a link, to the survey, placed on the organization’s intranet.

Questionnaire Development

The survey measured attitudes and behavior engaged by managers and employees of United Steel Sdn. Bhd. Employees were asked 30 questions about their relationship with their immediate manager, how valued they felt by the organization, their observation of behaviors in the branch, and their perceptions of attitudes about the firm and superiors. The measures of rewards and recognition, perceived organizational support, and leader member exchange were also taken. Finally, in order to fully control for all other potential causes of these attitudinal changes and behavioral perceptions, the survey measured how the employees perceive justice in the organization.

Perceived organizational support was measured using a short version of the Survey of Perceived Organizational Support, which was developed by Eisenberger, Fasolo et al., 1990. The Survey of Perceived Organizational Support original scale consisted of 36 questions; however it was modified for this research and shorted. Applications of this shorter version have a five point scale as standard with scale 5 as strongly agreed and scale 1 as strongly disagree. Please view Appendix B for further detail.

Leader Member Exchange was measured using the five scale model, taken from the seven scale reported by Scandura and Graen, 1984. Please view Appendix B for further detail. An appropriate survey to measure employee perceptions of rewards and recognition was self developed for this measure; therefore an initial qualitative exploratory phase was conducted to develop a behavioral questionnaire on rewards and recognition. A five scale system was used for this and it is available for viewing at Appendix B.

All of the questionnaires utilized the five scale model. This is to get a better understanding from the perspective of the employees. Besides, it increases the accuracy of the questionnaires and hence a more accurate outcome of the questionnaires.

Interview questionnaires were developed keeping in mind of researching about leader member exchange relationship, perceived organizational support to employees and manager’s point of view about the reward and recognition system. At the end of some interview questionnaires, additional questions such as “anything else” were added for more in dept information gathering from interviewees.

Survey and Interview Administration

Using the Internet to administer questionnaires has a number of advantages, for both the researchers and the respondents. This method is convenient because of the flexibility of the delivery medium allows for the customization of information exposed to the subjects under study, allows for varying conditions across groups when needed, and allows systematic comparisons. It reduces the level of error in the data entry process, and permits control over skip patterns, thus making the survey instructions easy to understand for respondents. This control also helps to compute the information directly into a server, reducing error when recording responses, compared to pen and pencil methods (Kreuter, Presser et al., 2008).

There are at least three mayor categories of interview techniques identified, the standardized interviews, the semi-standardized interviews, and unstandardized interviews (www.managementhelp.org). The standardized interview uses a rigid format of questioning that is formally structured and follows a predetermine schedule. The order and words of the scheduled questions do not vary across subjects, and it is presumed to be understood by all the interviewees in the same manner, eliciting thoughts, opinions, and attitudes about the issues under study (Berg, 2008).

The unstandardized interview compared to the rigid format of the standardized interview technique, does not follow an interviewing schedule or predetermine assumptions. It is a good complement of a field observation when the researcher needs to explore additional information about phenomena to which there is little advance knowledge (Berg, 2008). The semi-standardized interview follows between the two other techniques, and it involves a number of predetermined questions. It also follows a schedule and order to ask respondents about a topic. This type of interview contains a predetermined number of questions to be asked in a consistent order, nonetheless using a probing schedule that will serve as a vehicle for more in-depth analysis.

During the interviewing process, an appropriate climate was created for information exchange and guaranteed anonymity by interviewing them in a private location separate from other employees (Berg, 2008). The semi-standardized interview involved a number of predetermined questions. It also followed a schedule and particular order in asking respondents about a topic. However, a probing schedule was followed such as adding “anything else?” after each of the interviewees’ responses that served as a vehicle for more in depth opinion, exploration and information gathering.

Data Collection and Analysis

Interview questionnaires were collected on the spot and analyzed during the interview for better improvising to the answers given and to correct the questions administered to the interviewees. However, an in dept analysis were done on the interview questions immediately after the interview sessions. This is because the mind stills remember the session clearly and the expression given by interviewees. Non verbal language was also recorded to eliminate any bias opinion and answers given. Also, the data collection can be organized easily right after the interview session. On top of that, the researcher is working at United Steel Sdn. Bhd., therefore it is necessary to blind data analyze the data to prevent any bias opinion (www.apa.org).

Survey questionnaires were collected within United Steel Sdn. Bhd. internal server as the questionnaires were hosted there for confidential reason. The data collections were tabulated and will be presented in Chapter 4. The answers collected are tabulated based on percentage for better analysis and ease of presentation. The tabulation also makes analysis easier and the trend or relationship between variables easier to spot on. In order to test the hypotheses, the data were analyzed by performing a blind data analysis. This is to prevent bias analysis towards the answers given by employees. The researcher is working at United Steel Sdn. Bhd., therefore he knows the employees well. In order to avoid any unnecessary invalid data or bias analysis, the names of correspondent were censored. This is necessary as the core of blind data analysis involves the researcher not knowing certain information that will lead to unconscious or conscious bias on the researcher part, thus invalidating the data (www.apa.org). However, employee’s role or position on the organizations is made available to the researcher for more accurate and detailed analysis. Therefore as a conclusion, thematic analysis was utilized. This is because thematic analysis is a formal procedure for classifying information. Thematic analysis is a technique that involves classifying data in particular themes and developing categories of interest to analyze the resultant records (Schneider, Wheeler et al., 1992).

Summary

As a summary to this Chapter, both qualitative and quantitative research methodology was utilized. Qualitative research was utilized because there is a phenomenal where the researcher is unsure about the problems at hand and wished to find out more about it. Quantitative method was utilized as it is better suited for data which is measurable and able to present it in graphical or table form. A questionnaires survey and interview were conducted in order to gather data for this research. Questionnaires survey methods were used for employees while interview were conducted with managerial personnel. Minimum samples of 100 correspondents were obtained for the questionnaires survey while three managerial personnel were selected appropriately for the interview. Questionnaires survey were conducted and hosted at the organization’s private intranet. This is because the questionnaires were able to presented easily to correspondent and allow data collection to be done with ease. On the other hand, interviews were conducted face to face and data collected were written down immediately and analyzed immediately as well.

Two variables were identified for this research: Perceived Organizational Support and Leader Member Exchange. Therefore, four hypotheses were concluded for this research:

Employee’s positive perception of rewards and recognition from managerial sources, non managerial sources or from understanding of the rewards and recognition system will correlate with the level of perceived organizational support an employee will receive.

Perceived organizational support an employee receives will correlate with higher level of employee’s loyalty behavior.

Employee’s positive perception of rewards and recognition from managerial sources, non managerial sources or from understanding of the rewards and recognition system will correlate with the level of leader member exchange relationship.

Leader member exchange support an employee receives will correlate with higher level of employee’s loyalty behavior.

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