Description
While psychological knowledge is often applied to the assessment and treatment of mental health problems, it is also directed towards understanding and solving problems in many different spheres of human activity.
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TITLE PAGE
Motivation and Psychological Contract in the Singapore Private Banking Industry By Poh Din Kiat
2008
A Management project presented in part consideration for the degree of Master of Business Administration.
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CONTENTS
TITLE PAGE CONTENTS ACKNOWLEDGEMENTS 1 EXECUTIVE SUMMARY 2 INTRODUCTION 3 SINGAPORE PRIVATE BANKING INDUSTRY 3.1 Introduction to Private Banking 3.2 Singapore's Private Banking Industry 3.3 Manpower Situation in the Private Banking Industry 4 LITERATURE REVIEW 4.1 Research Questions 4.2 Motivation 4.2.1 Introduction 4.2.2 Content Theories 4.2.3 Process Theories 4.3 Psychological Contract 4.3.1 Introduction 4.3.2 Types of Psychological Contracts 4.3.3 Features of Psychological Contract 4.3.4 Psychological Contract Violations 4.3.5 Critics of Psychological Contract 4.4 Key Summary 1 2 5 6 8 11 11 13 14 17 17 20 20 21 23 25 25 26 27 28 29 30
3 5 RESEARCH METHODOLOGY 5.1 Research Approach 5.2 Data and Method 5.3 Sampling Strategy 5.4 Interview Process 5.5 Data Analysis 6 FINDINGS 6.1 Motivation 6.2 Psychological Contract 6.2.1 Awareness of Psychological Contract 6.2.2 Psychological Contract Violations are Common and Unavoidable 6.2.3 Clarifications of Psychological Contract 7 ANALYSIS AND DISCUSSION 7.1 Motivation 7.1.1 Trust and Respect 7.1.2 Interesting and Challenging Work 7.1.3 Sense of Achievement and Recognition 7.1.4 Transparent Appraisal and Reward System 7.1.5 Being Kept Informed of Things 7.2 Psychological Contract 7.2.1 Awareness of Psychological Contract 7.2.2 Psychological Contract Violations are Common and Unavoidable 7.2.3 Clarifications of Psychological Contract 32 32 33 34 35 37 38 38 40 40 41 43 44 44 44 45 46 48 50 51 51 53 55
4 8 CONCLUSIONS 8.1 Motivation 8.2 Psychological Contract 8.3 Limitations and suggestions for future research 8.4 Summary 9 REFERENCES 57 57 59 61 62 65
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ACKNOWLEDGEMENTS
I would like to thank my supervisor, Dr Patrick Reedy, for his understanding, patience, guidance, and advice throughout the course of this management project.
I also want to thank my associates and friends who had taken time off their busy schedules to participate in the interviews to share their views and experiences of the research topics. This project would not have succeeded without them.
Last, but not least, I wish to thank my family members who encouraged and supported me in my pursuit of this MBA.
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EXECUTIVE SUMMARY
This management project seeks to understand the sources of motivation and the
types of psychological contracts prevalent amongst employees in Singapore’s private banking industry. Singapore's private banking industry had seen tremendous growth in the last few years with the Government's push to make it the Switzerland of Asia. This growth has resulted in high demand for talent and high turnover rates. It is often said that money is not the key reason why people stayed motivated. Part of this project seeks to study an employee's source of motivation in his current job, managers' perceptions on employee motivation, and the key factors contributing to an employee's intention to leave an organisation. In the second part of the project, I would like to uncover the prevalent type of psychological contracts amongst employees in Singapore's private banking industry, the type of psychological contract obligations employees value most (Lester & Kickul, 2001), and their experiences on psychological contract. Through this project, I hope to provide an insight into staff motivation and psychological contract in the private banking industry as these factors influence organisational change management, employee satisfaction, productivity, and retention.
Motivation has been defined as the willingness to exert high levels of effort toward organisational goals, conditioned by the effort's ability to satisfy some individual needs (Robbins, 2003). Literature reviews showed that there are numerous theories of motivation. Most literatures agree that motivated employees can be an organisation's competitive advantage due to higher productivity, knowledge retention and lower turnover rates. A psychological contract comprises subjective beliefs regarding an exchange agreement between an individual and the employer (Rousseau, 1995, 2001). A
7 psychological contract is an implied contract and is constantly evolving based on the individual's experience and interactions in the organisation. Using questions developed from literature reviews, I conducted in-depth interviews with ten employees at various organisational levels.
After analyzing the in-depth interviews, it is revealed that the sources of motivations are consistent with earlier research. The top three motivating factors are “challenging and interesting work”, “sense of achievement and recognition”, and “trust and respect”. There is also some cognitive dissonance between what the managers' perceptions of sources of motivation versus what the employees want. This is probably due to self-reference on the part of the managers as reported in the literatures. Lastly, it is revealed that the top three reasons that motivate someone to leave are inadequate and nontransparent reward system which is not tied to performance, relationship with supervisor and long term career developments. On the topic of psychological contract, interviewees reported that they are aware of their psychological contract with the organisation, and they had experienced psychological contract violations. This results in reduced trust in the organisation leading to reduced contributions and increased intentions to leave the organisation. Interviewees ,who are supervisors, revealed that it is often beyond their control when new policies or organisation changes are implemented, which results in subsequent breach and violations of the psychological contract. From their point of view, it could be that the employee's psychological contract is not clarified with the organisation's agents, causing unrealistic perceptions and expectations. In the last section of the dissertation, the theoretical and practical implications of the findings, limitations of the studies, and future research directions are also discussed.
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INTRODUCTION
This dissertation seeks to understand the sources of motivation and the types of
psychological contract prevalent amongst employees in Singapore’s private banking industry. Singapore's private banking industry had seen tremendous growth in the last few years with the Government's push to make it the Switzerland of Asia. This growth has resulted in high demand for talent and high turnover rates.
Huczynski & Buchanan (2007) described motivation as the cognitive decisionmaking process through which goal-directed behaviour is initiated, energized, directed and maintained. It is often said that money is not the key reason why people stayed motivated. Consolidating the various motivation theories and models, here are the critical factors that influence employee motivation adapted from Ramlall (2004). Employees have differing needs based on their demographics, individual circumstances, aspirations, current and tobe state of affairs, and personalities etc. Hygiene factors are crucial to remove job dissatisfaction. Employees expect to work in an environment that is pleasant, respectful, productive, and promotes teamwork. To take employee motivation to a higher level, motivators such as interesting work, recognition, sense of achievement, and promises of advancements must be present. In addition, employees expected to be treated fairly and receive fair rewards for their efforts (Kim, & Mauborgne, 2003; Folger & Konovsky, 1989).
Part of this dissertation seeks to understand the key sources of motivation for employees in Singapore's private banking industry. I plan to study employee's perceptions and effectiveness of the motivation tools used by his organisation. And to reveal any gaps
9 between an organisation's rhetoric and reality. In addition, I would also like to find out if managers have differing views of motivation from their employees as evidenced in Kovach (1987). Lastly, I want to study the key factors that contributes to an employee's intentions to leave an organisation.
A psychological contract comprises subjective beliefs regarding an exchange agreement between an individual and the employer (Rousseau, 1995, 2001). A psychological contract is an implied contract and is constantly evolving based on the individual's experience and interactions in the organisation. In the dynamic and rapidly changing business environment of today, psychological contract violations has become the norm (Rousseau, 1996; Robinson & Rousseau, 1994). Research (Robinson & Morrison, 1995; Morrison & Robinson, 1997; Robinson & Rousseau, 1994) has demonstrated that employees holding different types of psychological contract (relational, transactional, or balanced) treat perceived breach or violations differently.
Through this dissertation, I would like to find out the prevalent type of psychological contracts amongst employees in Singapore's private banking industry, the type of psychological contract obligations employees value most (Lester & Kickul, 2001), and their experiences on psychological contract violations.
This dissertation seeks to critically analyse key motivation theories and the concept of psychological contract. This will allow me to evaluate the applicability of these theories towards explaining employee behaviour and motivation in the private banking industry. Since there are limited literatures on motivation and psychological contract in the Singapore context, I hope to share valuable insights in these two areas with the readers.
10 This dissertation will begin with short overview of the private banking industry in Singapore, its key players and recent employment trends. The next chapter will focus on the research questions, and literature review of motivation theories and psychological contract. The third section will look at different research methodologies, approaches, and methods to select one that is suitable for this dissertation. This will be followed by a chapter discussing key themes developed from the research findings. In the analysis and discussion chapter that follows, each of the key themes are reviewed against literature. After analysis and discussion, I will recommend some solutions to improve motivation and psychological contract for the financial sector. Lastly, I will highlight the limitations of this dissertation and propose topics for future research.
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SINGAPORE PRIVATE BANKING INDUSTRY
In this section, I will be presenting a brief introduction to private banking and
wealth management; an overview of Singapore’s private banking industry and the key industry players; its recent growth and development under the direction of the Singapore Government; and the labour landscape.
3.1
Introduction to Private Banking Private banking is often used interchangeably with wealth management in the
financial industry. Private banking is a form of specialized financial planning and asset management services that are provided to High Net Worth Individuals (HNWI) with net investable financial assets of more than US$1 million (excluding the value of primary residence) (Capgemini & Merrill Lynch, 2007a, 2007b). Traditional private banking services provided to these HNWI are estate planning, trust services, portfolio management, insurance, investment financing, and investment management. However, in recent years, private banking services had been expanded in both breadth and depth. Wealth managers like to position themselves as providing private investment banking services. New products and services such as complex derivatives, alternative investments, co-investment opportunities with the wealth manager, and private equity; that used to be reserved for institutional clients are now made available to the HNWI. Other new innovations include next generation wealth transfer, family office structures and management, and philanthropy. New products and services are developed because traditional products are being commoditised and can no longer satisfy the HNWI appetites for high investments returns. Worse still, once exclusive products are now being offered to the mass affluent consumer market segments.
12 The booming global economy and the rise of the emerging markets created an elite class of Ultra High Net Worth Individuals (UHNWI), individuals or families with more than US$30 millions in financial assets (Capgemini & Merrill Lynch, 2007a, 2007b). This class of UHNWI is more sophisticated and demanding simply due to the vast amount of wealth that needs to be managed. The Swiss banks had long dominated the private banking and wealth management industry in Europe and US. According to Euromoney’s Private Banking and Wealth Management Survey 2007, the top 3 Best Global Private Banks is UBS, Citigroup and HSBC respectively (Euromoney, 2007).
Closer to home, Asia-Pacific (AP) had also seen significant wealth creation in recent years. Capgemini & Merrill Lynch wrote in its 2007 Asia Pacific Wealth Report that: • • AP HNWI wealth totals US$8.4 trillion, an increase of 10.5% over 2005 AP holds 27.1% of the global HNWI population and 22.6% of global HNWI wealth. There are 2.6 million AP HNWIs — an increase of 8.6% over 2005 and slightly more than the global average increase of 8.3% in 2006 • Wealth creation in the region was driven by strong real GDP growth and continued market capitalization growth • Singapore has one of the fastest-growing HNWI populations in the world, with 2006 gains of 21.2% • It is projected that HNWI financial wealth in the region will reach US$12.7 trillion by 2011, growing at an annual rate of 8.5%, well above the global rate of 6.8%
Singapore's HNWI population had swelled due to the booming regional economies and Government's efforts to promote Singapore as the Switzerland of Asia. In the next
13 chapter, I will be elaborating more on the development of Singapore's private banking industry.
3.2
Singapore's Private Banking Industry Singapore's financial services industry employs 5% of the workforce and
contributes 11% to the 2006 Gross Domestic Product (MOM, 2007; DOS, 2007). Singapore is an international financial center tightly integrated into the global financial systems. There are more than 600 local and foreign financial institutions operating in Singapore. Singapore’s central bank, the Monetary Authority of Singapore (MAS), actively promoted activities in which Singapore had competitive advantages and private banking is identified as one of the focus area (MAS, 2007). Singapore offers the financial institutions a pro-business environment, excellent infrastructure, and a highly skilled and cosmopolitan labour force (MAS, 2007). Almost 40 private banks now have regional operations here, including Swiss brand names like Julius Baer, UBS and Credit Suisse. Citi's international private bank and Standard Chartered Bank’s global private bank are now headquartered in Singapore (IHT, 2006). These foreign banking giants now dominate Singapore’s private banking industry. However, the 3 big local banks, United Overseas Bank (UOB), OCBC Bank, and DBS Bank, are not sitting back and had started focusing on their private banking business.
In addition, Singapore changed its tax laws in 2004 to attract funds from abroad. Foreigners can apply for residency if they hold US$3.5 million in a financial institution registered with MAS (Straits Times, 2006a). Capital gains, interest income, and income earned outside Singapore are also tax-exempt (IHT, 2007). Private-wealth assets under management (AUM) in Singapore total US$200 billion, which is 3 to 5 per cent of total
14 wealth worldwide, and it is projected to grow at 15 to 20 per cent a year (Straits Times, 2006a). It is also estimated that 70 per cent of the AUM in Singapore are from other countries within the AP region. Hence, it shows that the Government’s policies are paying off and investors are putting their faith in Singapore’s abilities to manage and grow those assets. This huge asset influx brought the issue of talent shortage in Singapore’s private banking industry to the forefront, with rampant poaching becoming the order of the day (Business Times, 2006a; Business Times, 2008a).
3.3
Manpower Situation in the Private Banking Industry Private banks are adding staff in Singapore to win business in the region, home to
India and China, which has the fastest growth among the world's 20 largest economies (Straits Times, 2006a). However, as private banking is a relatively new market segment compared to the traditional areas of corporate banking, investment banking or consumer banking, there is not a large pool of experienced wealth management professionals at all levels to draw from. To address this issue, the Government is supporting two training programs. The first is to setup the Wealth Management Institute (WMI), touted as Asia’s first educational institution that specializes in wealth management. Together with the Singapore Management University (SMU) and the Swiss Finance Institute, it developed the flagship Master of Science in Wealth Management program. The second is the Financial Industry Competency Standards (FICS), which is a comprehensive quality assurance framework with a certification and accreditation system that helps to raise the quality of the financial workforce and training providers (IBF, 2008; WDA, 2005). The FICS had the strong support of Workforce Development Agency (WDA), leading financial institutions, industry associations, the MAS and the Institute of Banking and Finance (IBF, 2008). It is hoped that a wider pool of qualified private bankers will curb
15 turnover and pay escalation in 3 to 5 years’ time. However, even with these 2 national initiatives in place, financial institutions are having difficulties hiring fast enough. This prompted UBS to setup its own wealth management campus in Singapore to provide training and professional development for its employees in the region (IHT, 2006). UBS’ campus has received accreditation from the IBF as both a financial training provider and an assessment service provider in wealth management (UBS, 2006).
The average resignation rate of Singapore’s financial industry is 22.8% in 2006 (MOM, 2007). Fitz-enz (1997) mentioned that in the US on average, a company loses about US$100,000 when a professional or managerial employee resigns. It is approximately equivalent to 16 months' pay and benefits of an average employee. Taking the same calculations in the Singapore context, the average monthly earnings per employee in the financial services industry is US$ 4,000 (MOM, 2007). A medium sized private bank of 1,000 employees with a turnover of 228 employees per annum stands to lose US$14.6 million due to cost of termination, cost of hiring and training, vacancy cost and loss of productivity. Hence, financial institutions are devising strategies to motivate employees with the hope of retaining talent and knowledge within the organisation to create a sustainable competitive advantage (Benkhoff, 1996). However, it has been noted by Ramlall (2004) that organisations rarely develop these strategies using existing motivation theories.
In addition to practical implementation of motivation theories, psychological contracts motivate employees to fulfill their organisational commitments when they are certain that the organisation would reciprocate in the exchange relationship (Rousseau, 2004). Research (Lester & Kickul, 2001; Rousseau, 1995, 1996; Grant, 1999; Morrison &
16 Robinson, 1997; Robinson & Rousseau, 1994; Robinson & Morrison, 1995) has shown that perception of psychological contract violation by the employee concerned would significantly impact employee performance and job satisfaction, decrease employee's trust of the employer, perceived obligations to the employer, and increase intentions to leave the organisation. Proper management of the employees' psychological contract, especially when the financial industry is undergoing rapid expansion and transformation, would ensure an organisation's sustained performance and competitive edge.
In the next chapter, I will formulate the research questions to understand sources of employee motivation and the role of psychological contract in the private banking industry. After which, I would be performing a literature review of motivation theories and psychological contract.
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LITERATURE REVIEW
In this section, I will be examining the concepts of motivation and psychological
contract. This section commences with the research questions for the dissertation, which seeks to understand sources of employee motivation and psychological contract in the Singapore private banking industry.
Next section commences with a brief overview of motivation and the two main categories of motivation theories. I will focus on motivation theories deemed most relevant to employees’ commitment to the organisation. I will discuss the benefits, deficiencies, critics, and applications of these theories as documented in the literature.
In the second part of this section, I will touch on the concept of psychological contract. I will describe the different types of psychological contracts and what employees value most in a psychological contract. From an organisation's perspective, I will review the literatures on managing changes in psychological contract and the linkages between human resource management and psychological contracts. Shortcomings and critics of the psychological contract concept would also be discussed.
4.1
Research Questions Literature (Herzberg, 1968; Kim & Mauborgne, 2003; Benkhoff, 1996; Locke &
Latham, 2004; Low & Robertson, 2006) has suggested that motivated employees is crucial to an organisation's continued success. In today's competitive and challenging talent market, 86% of employers face difficulties in attracting new employees and 56% of employers had difficulties retaining their employees (Hale, 1998). High turnovers are
18 costly to an organisation's bottom line as each professional or managerial employee resignation costs a Singapore-based financial institution US$64,000 on average using the methodology from Fitz-enz (1997).
Consolidating the various motivation theories and models, here are the critical factors that influence employee motivation adapted from Ramlall (2004). Employees have differing needs based on their demographics, individual circumstances, aspirations, current and to-be state of affairs, and personalities etc. Hygiene factors are crucial to remove job dissatisfaction. Employees expect to work in an environment that is pleasant, respectful, productive, and promotes teamwork. To take employee motivation to a higher level, motivators such as interesting work, recognition, sense of achievement, and promises of advancements must be present.
In addition, employees expected to be treated fairly and receive fair rewards for their efforts (Kim, & Mauborgne, 2003; Folger & Konovsky, 1989). Perceptions of inequity might result in one of several actions such as altering the outcomes, adjust the inputs, rationalize the inequity, compare with someone else, or leave (Huczynski & Buchanan, 2007). However, an outcome that is highly valued can motivate high levels of performance as the employee need to adjust his inputs to commensurate with the desired outcome. However, Kohn (1993) and Kovach (1980) had argued that short term incentives don't motivate in the long term and it is more important to understand and modify employee's attitudes. Lastly, it is crucial that employees receive timely and constructive performance feedback from their supervisors.
19 Psychological contracts are a set of subjective beliefs held by the employee regarding the obligations and the outcomes of the exchange relationship with his organisation (Rousseau, 1995; Sims, 1994). A psychological contract is an implied contract and is constantly evolving based on the individual's experience and interactions in the organisation. A psychological contract adds predictability and structure to the employment relationship, leading employee to trust and be loyal to the organisation (Morrison, 1994).
However, modern organisations, in the face of challenges such as outsourcing, reorganisations and downsizing, mergers and acquisitions, and global competitions and crises, need to change and adapt in order to survive. This implies that the old “employment for life” psychological contract is no longer valid and the fundamental employee-employer relationship had changed. Employees might perceived the changes as a breach or violation in the psychological contract leading to reduced job satisfaction, productivity and ultimately, increased intention to leave the organisation. Research (Robinson & Morrison, 1995; Morrison & Robinson, 1997; Robinson & Rousseau, 1994) had demonstrated that employees holding different types of psychological contract (relational, transactional, or balanced) treat perceived breach or violations differently. Hence, understanding and managing employee's perceptions would aid in organisational change management, improving employee satisfaction and productivity, and retention.
Firstly, this dissertation seeks to understand the key sources of motivation for employees in Singapore's private banking industry. I plan to study employee's perceptions and effectiveness of the motivation tools used by his organisation. And to reveal any gaps between an organisation's rhetoric and reality. In addition, I would also like to find out if
20 managers have differing views of motivation from their employees as evidenced in Kovach (1980, 1987).
Secondly, I would like to examine the topic of psychological contracts amongst employees in Singapore's private banking industry. With rapid growth and talent shortage in the industry, it is important to develop and retain talent. I would like to evaluate the effectiveness of the concept of psychological contract in explaining employee turnovers. I shall focus on the types of psychological contract held by employees; what, in their perception, constitutes a breach or violation; and the appropriate measures an organisation should take to recover from the breach or violation.
I would like to use the findings in this dissertation to evaluate the effectiveness of the theories and concepts in the literature. Since there are limited literatures on motivation and psychological contract in the Singapore context, I hope to share valuable insights in these two areas with the readers.
4.2 4.2.1
Motivation Introduction Motivation, derived from the Latin word movere, can be defined as the set of
forces that causes people to engage in one behaviour rather than some alternative behaviour (Moorhead & Griffin, 1998). Huczynski & Buchanan (2007) described motivation as the cognitive decision-making process through which goal-directed behaviour is initiated, energized, directed and maintained. In other words, in order to motivate an individual, there must be a desired outcome that affects his behaviour and he must expend effort to achieve the outcome.
21 Organisations want to improve employee motivation in order to enhance their competitiveness (Benkhoff, 1996). In the academic realm, interest in work motivation can be attributed to Taylor’s work on Scientific Management (1911) and the Hawthorne studies (Roethlisberger & Dickson, 1939). The scientific management approach suggested that employees are motivated by monetary rewards and seek to maximize financial returns from their job. On the other hand, the Hawthorne studies gave rise to the human relations approach to motivation. This approach suggested that employees are motivated by nonmonetary rewards such as social environment at work. In addition, favorable employee attitudes results in motivation to work hard (Moorhead & Griffin, 1998).
The major motivation theories can be divided into two categories: process theories and content theories (Campbell, Dunnette, Lawler & Weick, 1970). Content theories are concerned with what initiates or energizes behaviour and includes Hierarchy of Needs Theory (Maslow, 1954), McClelland’s Need Theory (1961), and Two-Factor Model (Herzberg, 1959). Process theories try to predict an individual’s behaviour when subjected to external stimulus and include Expectancy Theory (Vroom, 1964) and Equity Theory (Adams, 1965).
4.2.2
Content Theories Content or Need theories attempt to pinpoint internal factors that energize
behaviour (Ramlall, 2004). One of the most famous content theory would be Maslow's (1943, 1954) Hierarchy of Needs Theory. Maslow defined five sets of goals or basic needs which we try to satisfy. These five needs are physiological, security, affiliation, esteem, and self-actualization. Maslow argued that these needs are organized hierarchically staring from physiological at the bottom and ending with self-actualization at the top. People will
22 seek to satisfy the lower level needs first before being motivated by those higher up the hierarchy. The implications for organisations are that they should develop strategies and programs aimed at satisfying the entire needs hierarchy in order to motivate their employees.
Some critics of Maslow's approach mentioned that individual needs are innate, so that questions of social interaction and culture are seriously downgraded, and that needs are not arrayed in a hierarchical manner (Trigg, 2004; Berl, Williamson & Powell, 1984). Despite the critics, Maslow's theory is still relevant to employee motivation when combined with other motivation theories (Ramlall, 2004; Low & Robertson, 2006).
McClelland's Need Theory (1961) focused on three key needs: achievement, power, and affiliation. Achievement need can be defined as a drive to achieve, excel and succeed. A person with a strong achievement motive is turned on by challenge, derives considerable satisfaction from success, and is fairly realistic about the limits of his personal competence (Cook, 1980). Need for power is the desire to influence or control another individual's behaviour to achieve. Lastly, affiliation need is the desire for close social relationships and activities, whereby one finds satisfaction in being accepted, respected and interacting on a personal basis with others (Cook, 1980).
Herzberg's (1966) Two Factor Theory of Motivation proposes that two distinct sets of factors that lead to job satisfaction and job dissatisfaction. These two set of factors are known as the motivator factors and hygiene factors. Motivators can lead to high levels of job satisfaction and employee motivation. They are achievement, recognition, responsibility, advancement, growth and the work itself. On the other hand, improvement
23 of hygiene factors will remove job dissatisfaction but will not increase employee motivation and performance. Examples of hygiene factors are salary, working conditions, company policy and administration, supervision, relationship with supervisor, relationship with peers, status, security, personal life, and relationship with subordinates. Herzberg (1968) mentioned that job enrichment would bring about motivated employees as it utilises motivators such as responsibility, achievement, recognition, and growth.
Herzberg's theory is controversial as it challenged the dominant theoretical assumptions prevailing at the time that job satisfaction and dissatisfaction could be presented on a continuum, at the midpoint of which, an individual would experience a neutral state being neither satisfied nor dissatisfied (Herzberg, 1966; Bassett-Jones & Lloyd, 2005). There are numerous critics of Herzberg's theory, ranging from Vroom (1964) on the use of recall methodology and self serving bias; Hardin (1965) raised the issue of poor respondent recall in the use of recall methodology; Hulin & Smith (1965) critiqued that Herzberg's results are method-bound. However, there are also research that supported Herzberg's theory. Cummings (1975) concluded that factors producing job satisfaction (motivators) are separate and distinct from factors that lead to job dissatisfaction (hygienics) and these factors can be identified, isolated, and measured within varied workgroups. Results of Bassett-Jones & Lloyd's (2005) survey supported Herzberg's assertions that motivation derives from within and the motivators all relate in some way to a sense of achievement; and less to financial inducements.
4.2.3
Process Theories Process theories focus on how people make choices with respect to desired goals
(Huczynski & Buchanan, 2007). In the context of process theories, an individual makes a
24 conscious decision to select the goals he wants to achieve and the means to attain those goals.
In Equity Theory, Adams (1965) argued that individuals are motivated to act when he perceives that the outcomes or rewards of a social exchange relationship is unfair. It is proposed that the greater the inequity the individual perceives, the more distress the individual feels and he will take actions to restore equity. This would be either to reduce the inputs or to obtain additional rewards until the outcome-input ratio has been restored to an acceptable level. Individual expectations about what constitutes fair outcomes are learned through the socialisation process, and by comparing the inputs and outputs of others. Individuals are concerned not only with the absolute amount of rewards they receive for their efforts, but also with the relationship of this amount to what others receive (Ramlall, 2004). The theory's distress prediction, termed the “norm of equity”, is based upon the assumption that individuals are equally sensitive to equity; that is, the general preference is that outcome/input ratios be equal to that of the comparison other (Huseman, Hatfield & Miles, 1987). However, research (Major, McFarlin, & Gagnon, 1984; Hook & Cook, 1979; Gergen, Morse, & Gergen, 1980; Swap & Rubin, 1983) on individual differences suggested exceptions to the norm of equity such as sex, age, nationality, personality traits, and interpersonal orientation. In addition, the effects of individual differences also vary according to whether experimental subjects are allocating outcomes to themselves and/or others, or whether they are simply reacting to inequitable treatment from others (Major and Deaux, 1982; Huseman et. al., 1987).
The next process theory is the Expectancy theory, whereby it is proposed that individual motivation depends on the valence of the outcomes, the expectancy that effort
25 will lead to good performance and the instrumentality of performance in producing valued outcomes (Huczynski & Buchanan, 2007, Vroom, 1964). The three factors, Valence, Instrumentality and Expectancy, are seen to be driving the individual's behaviour. Hence, the expectancy theory is also known as the VIE theory. Motivation is a product and not the sum of all three factors. Therefore, if any of the VIE factors are low, the motivating force would be low or non-existent. Porter and Lawler (1968) further developed the expectancy theory into a model of work motivation in an attempt to identify the source of valency and expectancies, and to establish linkages between effort, performance, and job satisfaction.
Following expectancy theory, compensation planning should be based, at least in part, on establishing the proper goal and reward combinations that will effectively motivate employee performance (Turner, 2006) . However, Baard (2002) argued that when “managers try different methods of incentives or fear to get productivity out of their subordinates, there is a burgeoning literature (Kohn, 1993) suggesting that the use of incentives and attempts to cajole may be experienced by employees as controlling or pressuring and that such attempts to manipulate people have a significant downside".
4.3 4.3.1
Psychological Contract Introduction Levinson, Price, Munden, Mandl, and Solley (1962) and Schein (1965) coined the
term, psychological contract. Psychological contracts are beliefs, based upon promises expressed or implied, regarding an exchange agreement between an individual and, in organisations, the employing firm and its agents (Rousseau, 2004). However, a psychological contract differs from a formal and implied contract as it is based on an employee's perception and expectations, and may or may not be shared by others
26 (Rousseau, 1989; Lester & Kickul, 2001). Psychological contracts are subjective, residing in the “eyes of the beholder” (Robinson & Rousseau, 1994). The types of promises contained in an employee's psychological contract can be explicitly or implicitly communicated in a written document, oral discussion, or organisational practices and procedures (Rousseau, 1989; Rousseau and Greller, 1994; Rousseau & McLean Parks, 1993; Sims, 1994). Psychological contracts motivate employees to fulfill commitments made to employers when employees are confident that employers will reciprocate and fulfill their end of the bargain (Rousseau, 2004).
4.3.2
Types of Psychological Contracts There are three key types of psychological contracts: relational, transactional and
hybrid (“balanced”). In a relational psychological contract, employees tend to be loyal, seek social support, and make long term, open ended commitments. Employee would favor employer who offer him a relational psychological contract over those offering a transactional contract (Rousseau, 2004).
Transactional psychological contract consists of specific job functions and responsibilities, short term in nature, and is based mainly on promises of monetary exchanges. It is open to constant renegotiations. Both employees and employers are likely to immediately terminate a transactional relationship that fails the meet their needs. A transactional psychological contract can arise as a result of violated or poorly managed relational psychological contract (Rousseau, 2004).
27 The third type of psychological contract takes the “hybrid” or balanced form. It entails long term commitments, mutual concerns (relational attributes), demands high performance outputs and renegotiations (transactional attributes).
4.3.3
Features of Psychological Contract According to Rousseau (2004), psychological contract has six key features:
a) Voluntary choice - As psychological contract is entered into voluntarily by the employee, he will be motivated to fulfill his commitments to the organisation. b) Belief in mutual agreement – A psychological contract is based largely on the perceptions and understanding of the terms and conditions by the employee. Hence, he would act on the assumption that it is agreed mutually, regardless if that is the case in reality. c) Incompleteness – It is seldom possible to have a complete psychological contract right from the start of the employment relationship. Over time, the psychological contract would change and things would be added in or taken out depending on the experience of the employee. d) Multiple contract makers – Many different sources of information within the organisation such as top management, direct supervisor, co-worker, human resource policies, would influence how an employee perceives what should be the correct psychological contract. e) Managing losses when contracts fail – Losses occur when there is a psychological contract breach or violation. How the losses are managed has an impact on the subsequent motivation of the employee. f) The contract as model of the employment relationship - A psychological contract creates an enduring mental model of the employment relationship and provides a
28 stable understanding of what to expect in the future and guides efficient action without much need for practice.
4.3.4
Psychological Contract Violations In the last two sections, I had described the types of psychological contracts and
the key features of a psychological contract. In this section, I will touch on psychological contract violation and the resulting impact on the organisation.
In the dynamic global environment, corporate mergers and acquisitions, outsourcing, downsizing, and restructuring are the order of the day. These trends make it difficult at times for an organisation to fulfill all its obligations to the employees or to be very clear what those obligations are. When an employee perceives that the organisation has failed to fulfill the promised obligations, and felt betrayed, angry and resentful, he is experiencing psychological contract violation. Morrison and Robinson (1997) made a distinction between a perceived breach, a cognitive assessment of contract fulfillment, versus violation, the emotive and affective state that may follow from the belief that one's organisation failed to fulfill it's obligations. Hence, violation is an emotional experience arising from an interpretation process that is cognitive in nature (Morrison & Robinson, 1997).
Various research had shown that psychological contract violation produces strong feelings of betrayal, anger and resentment, leading to reduced trust in the employer, lower job satisfaction, withholding of contributions, reduced engagement in organisationallydirected citizenship behaviour, increased intentions to leave the organisation, and positively correlated to actual turnover (Robinson, 1996; Robinson & Morrison, 1995;
29 Robinson & Rousseau, 1994; Robinson et al., 1994; Rousseau, 2004). Robinson (1996) further showed that the effects of psychological contract violations on reduced employee contributions are enduring. Hence, understanding how to reduce incidences of violations or to manage them when it is unavoidable is crucial for an organisation that seeks to motivate and retain it's employees.
4.3.5
Critics of Psychological Contract
The main critique leveled at the concept of psychological contract is that it has typically been studied from the individual worker’s perspective and the primary focus is therefore the employment relationship at the individual level between the employer and employee (Cullinane & Dundon, 2006; Guest, 2004a). Cullinane & Dundon (2006) critiqued four aspects of the psychological contract. First, the continued use of the contractual concept in the literature is questioned as there are ambiguities surrounding the legitimacy of the term ‘contract’ being subsumed into an unvoiced social exchange interaction. Second, there is the possibility of mixed messages and divergent expectations surrounding the delivery of the deal. In other words, employees might have unrealistic or false expectations and rather than employer having reneged on their obligations. Also, employers might deem fit to change the psychological contract at their discretion and they expect the employees to accept the new terms and conditions. As Guest and Conway (2002) conclude: ‘Senior managers responsible for relevant policy acknowledge that their organizations often fail, partially or more completely, to keep their promises and commitments.’ Third, most literature on psychological contract violations pinned the blame on the failure of the employer to keep their promises due to external market conditions. The structural explanation could be due to the design of the employment
30 relationship under capitalism leading to conflicts of interests between employee and employer, and employee distrust. There could also be possible influences arising from structural factors and institutional inertia. Finally, potentially powerful sources of influence that could serve in constructing an employees’ psychological contract have not been fully explored in the literature. These influencing sources can be internal, such as the management, and external, wider socio-economic factors that have shaped the employee's value and judgment system.
As mentioned earlier, various research (Robinson, 1996; Robinson & Morrison, 1995; Robinson & Rousseau, 1994; Robinson et al., 1994; Rousseau, 2004) has been done on psychological contract from the employee perspective but employer perspectives have been largely unexplored (Guest & Conway, 2002). There is little research within a psychological contract framework on the perceptions of employers and their agents of how they react when they believe that employees have failed to keep their promises or to meet their obligations (Cullinane & Dundon, 2006). Guest (1998) and Rousseau (1998) debated about the validity, feasibility, and utility of employer’s perspective on the psychological contract, and brought increased attention and attempts to apply the psychological contract to analysis of the employment relationship (Shore & Coyle-Shapiro, 2003). However, as Guest (2004a) has acknowledged, there is much more to do if the psychological contract is to become a viable framework capable of understanding the complex and uneven social interactions of both employer and employee.
4.4
Key Summary In the literature review section, I presented key motivation theories such as
Maslow Hierarchy of Needs, McClelland's Need Theory, Herzberg's Two Factor Theory
31 of Motivation, Adam's Equity Theory, and Vroom's Expectancy Theory. These motivation theories seek to explain what or how to motivate an individual to expend effort to achieve the desired outcomes. However, the theories diverge as to whether motivation is intrinsic to the individual or is in response to external stimuli. I will attempt to apply these theories towards explaining the sources of motivations from the research findings and evaluate if there are any gaps between theories and research findings.
The concept of psychological contract has gained prominence in recent years due to research works by Rousseau (1989, 1990, 1995, 1996, 1998, 2001, 2004), Robinson (1996), Robinson et. al. (1994), Morrison & Robinson (1997) and many other academics. Psychological contract is subjective as it is based on an employee's perception and expectations. Psychological contract can motivate employees to fulfill commitments made to employers when employees are confident that employers will reciprocate and fulfill their end of the bargain (Rousseau, 2004). In this dissertation, I will validate the theoretical concept of psychological contract and violations against the research findings for accuracy.
Psychological contract has been criticised as one sided as it is mainly studied from the employee's perspectives (Cullinane & Dundon, 2006; Guest, 2004a). To address this, I intend to have research participants from different organisational levels and I hope to understand psychological contract from organisational agents' point of view.
32
5
RESEARCH METHODOLOGY
In this section, I will be developing the research methodology, deciding on the
research approach, data collection approach and research methods based on the research questions raised in the preceding section.
5.1
Research Approach A methodology can be defined as a general approach to studying research topics
(Silverman, 2004). Qualitative research is a naturalistic, interpretive approach concerned with understanding the meanings which people attach to phenomena (actions, decisions, beliefs, values etc.) within their social worlds (Denzin & Lincoln, 2000; Snape & Spencer, 2004). The key elements of qualitative research are small and carefully selected sample populations; close, interactive contact between researcher and research participants; detailed data which are extensive and information rich; exploratory and interpretive in nature; suitable in exploring complex issues; studying processes that occur over time; and produces output that focus on interpretation of social meaning (Snape & Spencer, 2004; Ritchie & Lewis, 2004).
Based on the research questions derived in the preceding section, I would seek to understand and interpret the perspectives, history and, experiences of the research participants. This research seeks to identify the participants' sources of motivation, personal experience, and perceptions of employer’s motivation techniques. In addition, I would like to establish the types of psychological contract research participants have with their employers, what contributed to that outcome, and their feelings and actions in the event of a breach or violation. The research participants need to have different
33 demographics, career paths and working experience, and personal circumstances in order to give balanced and representative view. The research approach used are closely aligned with the key elements of qualitative analysis. Hence, the research methodology used for this study would be the qualitative approach, taking on the form of an explanatory research, which is concerned with why phenomena occur and the forces and influences that drive their occurrence (Ritchie & Lewis, 2004).
5.2
Data and Method Qualitative data collection methods are dependent on the data type. The two broad
categories of qualitative data are naturally occurring data and generated data. Approaches used for collection naturally occurring data will yield data which is an “enactment” of social behaviour in its own social setting, rather than a “recounting” of it generated specifically for the research study (Ritchie & Lewis, 2004). Some examples of methods to collect naturally occurring data are participant observation, observation, documentary analysis, discourse analysis, and conversation analysis.
Generated data collection methods usually requires the research participant to reconstruct or recount attitudes, beliefs, behaviour or other phenomena (Ritchie & Lewis, 2004). Some methods to generate qualitative data are biographical methods, individual interviews, paired (or triad) interviews, and focus groups. Very often, generated data is the only means to understand certain psychological phenomena and allows the researcher to gain insights of the participants' perspectives and interpretations of the social world.
In the context of this project, I would be using generated data as I need to understand the participants' beliefs, interpretation, attitudes and perceptions on motivation
34 and psychological contract. The next step would be to select the appropriate data generation method. Due to the somewhat sensitive and personal nature of the research topic, I would be using individual in-depth interview as my research method. In-depth interviews are commonly used in qualitative research and allows focused attention on the research participant. The key features of in-depth interviews are flexibility, interactive, enables researchers to achieve depth of answer through use of appropriate techniques, and allows generation of new thoughts or knowledge (Legard, Keegan & Ward, 2004). During the interview, I will be able to investigate thoroughly and understand the participant's contexts, perspectives, experiences, and decision making process. After the interviews, the data would be reviewed using conversation analysis to determine underlying themes or trends.
5.3
Sampling Strategy In general, qualitative research uses non-probability samples to select the
population for study. In a non-probability sample, units are deliberately selected to reflect particular features of or groups within the sampled population (Ritchie & Lewis, 2004). In this project, I will be performing purposive sampling with small scale heterogeneous samples so that we can identify if there are common trends amongst interviewees of diverse backgrounds.
Once the sampling strategy had been decided, I would proceed to establish the selection criteria and sample selection. Sample selection is based on the two principles of qualitative sampling, that is symbolic representation and diverse sample within the boundaries of the defined population (Ritchie & Lewis, 2004). As a result, the final samples selected should have the following desired characteristics:
35
? ? ? ? ? ? ? ?
Sample size: 8-10 Work experience: Two to fifteen years Organisational levels: Equal mix of individual contributors and supervisors Gender: Equal mix of male and female Age: Between twenty five to forty five Marital status: Equal mix of single and married participants Job nature: Equal mix of client facing and non-client facing staff Employment status: Eighty percent are staying with their current organisation and twenty percent are serving their notice period and waiting to join another organisation.
?
Employer: Foreign financial institutions
The research participants are sourced through my personal contacts within the private banking industry. They are briefed on the intents and purposes of the project, and assured of privacy and confidentiality of the opinions they had provided. With the above sample population, I am confident that I would able to address the issues that are contained within the research questions.
5.4
Interview Process The in-depth interview has a few established process steps (Rubin & Rubin, 1995).
In general, during the interview, the researcher seeks to channel and focus the interviewee's attention to a specific set of issues or topics. My interview process would follow the six stages outlined in Legard et. al. (2004). The six stages are arrival, introducing the research, beginning the interview, during the interview, ending the interview, and after the interview.
36
My interviews for this project lasted 40 minutes on average. The interview location is a small discussion room within an office so as to avoid outside distraction. At the beginning of the interview, I first put the interviewee at ease by making casual conversations. Thereafter, I would introduce the research topic by providing a clear reiteration of the nature and purpose of the research, reaffirming confidentiality, and seeking permission to record the interview (Legard et. al., 2004). Once into the interview proper, I asked opening questions to collect background and contextual information. These information are important as they help me to formulate the questions to be asked and plan for the approach of the interview. For example, their personal circumstances can serve as a starting point for further discussions on motivational sources. Their work experiences can shed light on their attitude towards psychological contract.
During the interviews, the questions are divided into two major sections. In the first section on sources of motivation, the questions, adapted from Low & Robertson (2006), revolve around:
? ? ? ?
What are their key sources of motivation? What needs or motives primarily motivate them? What are their strongest (weakest) forces of motivation? If they are managers, their views on their subordinates' key sources of motivations.
Part two of the interview would focus on psychological contract. The questions would be on:
?
How would they describe their employment relationship and feelings towards their organisation?
37
?
Have they experienced breach, violations, or unfulfilled promises from agents organisational agents?
?
What are their responses and reactions after these incidents?
After finishing majority of the questions on motivation and psychological contract, I would signal the end of the interview through use of phrases such as “the final topic...” or “in the last few minutes...” (Legard et. al., 2004). I ensured that all follow-up questions and issues had been resolved. After the interview, I thanked the interviewees and assured them once again that the information provided will be kept confidential.
5.5
Data Analysis The interview recordings and field notes would be transcribed and analysed using
conversation analysis. In performing the conversation analysis, I identify sequences of related talk, examine how interviewees take on certain roles during the interviews, and look for outcomes and trace the sequence from which the outcome was produced (Silverman, 2001). Through the use of conversation analysis, I would uncover underlying themes for each topic. Each of these themes would be presented in details in the next chapter.
38
6
FINDINGS
In this section, I will be presenting the findings from the in-depth interviews
conducted over a two weeks period. All invited participants contributed their time and opinions to the research topic readily. Out of 10 participants, 3 are currently holding supervisory positions and the rest are individual contributors.
6.1
Motivation The first section of the interview focused on the interviewees' sources of
motivation and the current motivational techniques used by their organisations. Consistent with findings from literature (Kovach, 1995; Benkhoff, 1996; Herzberg, 1968; Low & Robertson, 2006), 80% of the participants mentioned that monetary rewards is not the most important motivating factor though it is critical in Singapore, which is facing high inflationary pressures. Instead, participants mentioned “challenging and interesting work” (90%), “sense of achievement and recognition” (70%) and “trust and respect” (90%) as the top three important motivating factors to them.
All interviewees mentioned that their organisation use monetary rewards as the main motivation tool, supplemented by non-monetary rewards such as long service awards, service excellence awards, and training. The non-monetary awards seek to satisfy the employees' needs for achievement and growth. However, most interviewees are
skeptical as to the retention effect of monetary rewards. It is mentioned that “everyone is only waiting for the bonus before they leave the bank”, “I wonder who will be left after the bonus is handed out” (interviewees' inputs).
39 One interesting finding is that interviewees who are also supervisors still hold the opinion that money is the key motivation factor of their subordinates. “The junior staff are motivated by money” and “staff are easily lured away by competitors paying 10-20% more” are common inputs from the interviewees. This self referencing bias is consistent with findings in Kovach (1987, 1995) and Gellerman (1963) stated that “it is quite clear that money's reputation as the ultimate motivator is going to be a long time a-dying.”
I summarized the key perceptions and meanings expressed by the interviewees on their monetary and non-monetary needs in Table 1, adapting the format from Low & Robertson (2006) . Based on conversation analysis of the interview data, I had identified five key themes that were consistently brought up by the interviewees on the topic of motivation. The five key themes are “trust and respect”, “challenging and interesting work”, “sense of achievement and recognition”, “transparent appraisal and reward system”, and “being kept informed of things”. Each of these key motivators would be discussed in greater details in the analysis and discussion section.
My Monetary Needs and Perceptions are:
Meaning
“Everything is so expensive now! Our increments Money is still a basic necessity and are not keeping up with inflation.” people need to satisfy their “Bonus is necessary as it supplements our physiological needs. income.” “Money is not the most important source of motivation.” My Non-Monetary Needs and Perceptions are: Meaning “People only listen to you if you hold a higher ranking.” “Some managers resort to “bullying” tactics to get things done their way.” “My supervisor thinks I don't know anything.” People wants to be respected as a person regardless of their status in the organisation. They want to feel valued as an individual.
“I feel good when I am being recognized for good People feel motivated when they are client service. It motivates me to work harder.” recognized for a job well done. Also, “I like the challenging work environment as they like to be given challenging and
40 everything is dynamic!” interesting jobs. “The job is interesting as we face different situations and challenges everyday.” “You will get promoted if you hang around long enough.” “There is no clear linkage between performance and monetary rewards.” “I am not rewarded for the things I had done.” “I don't get regular feedback from my supervisor on my performance!” “Management and Human Resource are not doing enough to motivate the staff.” It's important to have procedural and distributive justice. People want to be assured that performance appraisal and reward management is a fair process.
“Career mobility is just management rhetoric.” People are interested in developing a “There's no proper career planning program in long term career with their place.” organisation. “The Management Associate program is just a mass recruitment exercise.” “Current management is not listening to the staff.” “Employee surveys are useless. Management only pays lip service and doesn't act on the findings.” “My boss is not open to new ideas and opinions.” Source: Survey Responses, Jan-Feb 2008 The staff wants to be kept informed of what's happening in the organisation and have their say on how things are being run.
Table 1. Interviewee response on both monetary and non-monetary needs/rewards.
6.2
Psychological Contract The second half of the interviews focused on the interviewees' perception and
experience of psychological contract. The key themes identified for psychological contracts are “awareness of psychological contract”, “psychological contract violations are common and unavoidable”, and “clarifications of psychological contract”.
6.2.1
Awareness of Psychological Contract All the interviewees are aware of the psychological contract they have with their
organisation. With the changing business environment and the demise of the “employment for life” mentality, the interviewees embraced either a hybrid or a transactional
41 psychological contract. This is because they had come to realize that “nobody is indispensable and the company doesn't owe you a living”, “hire and fire is very common in the financial industry”, and “we have to take care of ourselves and look after our own careers” (interviewees' inputs).
Surprisingly, seventy percent of interviewees already have a preset type of psychological contract they want to have with the organisation when they join. It is rarely influenced by the work environment, immediate supervisor or colleagues at the onset. This can be attributed to the fact that the interviewees, having worked a few years prior to joining their current organisation, had seen numerous perceived breaches and violations of psychological contract. To them, human resource department, senior management and their immediate supervisors, are the agents of the organisations and their actions are used as a proxy of the organisation. These three areas are commonly pointed out as to where the perceived breaches or violations of psychological contract start or perpetuate. Interviewees vividly recalled incidents whereby “Management never kept their promises to reward us for our stellar performance”, “Our team is treated like second class citizens in the organisation”, “My supervisor promised me a promotion that never materialized”, or “There are so many management changes over the past few years that I am unsure if my psychological contract is still valid”.
6.2.2
Psychological Contract Violations are Common and Unavoidable All the interviewees reported reduced trust in the organisation after one or more
psychological contract violations. They experienced anger and frustrations but “based on my past experience, this is to be expected” (interviewee's inputs). They had come to accept the fact that these incidents are “unavoidable and it's only a matter of time before one
42 happens.” With each violation, interviewee responded with reduced contributions, levels of trust, and organisation citizenship behaviour.
One of the most significant incident of psychological contract violation is reneging and lack of realistic job previews recounted by two interviewees. They were recruited by a well known financial institution under the prestigious management associate program. This is a well known program in the financial industry and recruits can expect fast track career progression commensurable with strong performance. They were told that they will be groomed to become private bankers in three to five years' time but they have to start as banker's understudy first. However, the new hires quickly discovered that the understudy role is “no more than a high class order taking clerk and errand boy” to the private bankers. At the same time, they also realised that “the actual job scope is monotonous and vastly different from their expectations”. Their sense of breach and violation is further aggravated by the fact that they are bonded to serve out a two years contract, failing which they have to pay a significant termination penalty. As a result, most recruits maintained a transactional psychological contract with the organisation, and more than eighty percent of the recruits left the company upon completion of the contract.
For supervisors, they are sometimes not in control of the breaches or violations of psychological contract with their employees. Interviewees remarked that “This is due to the new corporate or human resource policies being implemented”, “I am just carrying out the instructions from head office”, or “The employee has an unrealistic expectation that is influenced by rumors and hearsay from his colleagues”. The supervisors try to soften the impact when breaches or violations happen but they are “limited in what they can do”.
43 6.2.3 Clarifications of Psychological Contract Some interviewees commented that different organisations have very diverse approaches when it comes to clarifying the psychological contract with the employees. Some organisations are more structured and had in place orientation programs whereby the human resource officers and the supervisors would highlight key expectations, obligations at the beginning. Other organisations, however, adopt a laissez-faire approach and it is left to the supervisor's discretion to discuss psychological contract with the employees. In the absence of clarifications from the organisational agents, employees would normally “learn about their obligations and the organisation's track record of fulfilling promises through anecdotes and interactions with fellow colleagues” (interviewee's inputs). The interviewees agreed that it is good practise to clarify psychological contract and “it would be great if someone had clarified the expectations at the beginning so that everyone starts out on the same page”. This is so that “I can carry out my duties in full confidence that it is in line with the organisation's expectations” and “there will be no surprises during performance appraisal time”.
Supervisors mentioned that they would try to “set realistic expectations with their staff when they come on board” so as to “avoid complications and misunderstanding further down the road”. Clarifying the psychological contract with the employee in the early stages would also enable the supervisor to apply corrective actions if the employee did not fulfill his obligations under the exchange relationship.
44
7
ANALYSIS AND DISCUSSION
Based on the findings from the interviews, I would present the identified themes
from each section of the interviews in this section and reference them to the literature and theories reviewed earlier.
7.1
Motivation Most of the key motivators identified from analysis of the interview transcripts are
in agreement with the literature (Herzberg, 1966; Lawler & Porter, 1968; Vroom, 1964; Adams, 1965) reviewed earlier. To recap, the five key motivators are “trust and respect”, “challenging and interesting work”, “sense of achievement and recognition”, “transparent appraisal and reward system”, and “being kept informed of things”. Out of the five motivators, “trust and respect” can be linked to either status (a hygiene factor) or recognition (a motivator) (Herzberg, 1966). However, “trust and respect” can also be considered as fulfilling the “Esteem” needs on Maslow's Hierarchy of Needs (1954).
7.1.1
Trust and Respect The first source of motivation for the interviewees is “trust and respect”. The
importance placed on trust and respect could be due to the fact that Singapore is an Asian society steeped in traditional value systems and culture. The concept of “face” is very important in everyday life. Employees can be motivated if they feel that the organisation, their bosses or peers give them “face” or respect. “I am motivated to work harder and contribute more as I feel that my managers respect my views” and “The trust placed in me by the company motivates me to put in extra effort” are common inputs from the interviewees who regarded trust and respect as key motivating factors. Interviewees had
45 also mentioned that respect from colleagues in the organisation makes it “easier to get things done” leading to a sense of achievement and accomplishment. The interviewees are experienced financial industry professionals, hence, they appreciate if the organisation trust them to “get the job done” and not “restrict them with too many bureaucratic process”. To the interviewees, trust is also a two way social exchange. They will reciprocate and place their trust in the organisation and management if they perceive that they had been given enough trust. This is consistent with the findings of Costigan, Ilter & Berman (1998), which reported a positive correlation between affect-based trust in work relationships and employee behavior such as motivation, and personal initiative to improve professionally. Fifty percent of the interviewees had indicated that if the organisation or management do not trust or respect them or vice versa, it would contribute to their intentions to leave the organisation. This again coincides with the findings of Costigan et. al. (1998), whereby employee trust of the CEO and top managers is negatively related to intention to voluntarily leave the firm. It is interesting to note that interviewees holding more senior or supervisory positions place more emphasis on trust and respect. It could be attributed to the fact that they are motivated by power as suggested by McClelland (1961), and McClelland & Burnham (1976).
7.1.2
Interesting and Challenging Work The next key motivating factor, “interesting and challenging work” had been
identified as a top motivator in various literature (Kovach, 1980, 1987; Benkhoff, 1996). Interviewees felt that they need to be “challenged to their full potential instead of doing mundane stuff”, and “I get bored after I had mastered the skills require for my role after one or two years”. The human resource officers and management are aware that employees are looking to develop themselves fully in different areas. Hence, some
46 organisations have a job rotation policy whereby employees are allowed to apply for internal transfers after a minimum period of service, say two years, in their current job roles. However, managers are concerned that constant rotation of staff out of their teams is not healthy in the long term due to knowledge loss and lack of continuity. Therefore, managers would instead carry out job rotation and job enrichment (Herzberg, 1968) for their employees within the same team to motivate them. Sometimes, this led to employee perceptions that “career mobility within the company doesn't work as intended”, “my boss discourages me from applying for a internal transfer”, and “some managers resort to emotional blackmail in order to retain a key staff”. In this instance, a policy that was originally intended to motivate employees became human resource rhetoric and might even lead to perceived breach or violation of psychological contract. Putting this in context of Expectancy Theory, the employee's motivation might decrease as the valence of the outcome is not as per expected and the employee realized that performance is not instrument in getting the desired outcome.
One key push factor mentioned by the interviewees for leaving the organisation is long term career advancement. Although pay is a signaling tool used by the prospective employer to entice new recruits to join them (Cable & Judge, 1994), interviewees still look for long term prospects and challenging work (Martin, 1979). They opined that interesting and challenging work would increase their market value and employability, and that would in turn bring them more monetary rewards.
7.1.3
Sense of Achievement and Recognition Closely linked to the key motivator of “challenging and interesting work” is the
third motivator, “sense of achievement and recognition”. Consistent with Kovach (1987,
47 1995) and Herzberg (1966), most interviewees mentioned that a sense of achievement and recognition is what drive them and keep motivated in their job. In this aspect, interviewees reported that their employers have various formal recognition programmes in place. These programmes include long service award for employees who had served at least five years (to recognise and reward loyalty), service quality awards (to reward customer-oriented behaviour and continuous process improvement), and team challenge awards (to
recognise and promote teamwork). Besides the formal recognitions, interviewees mentioned that it is also important to be given positive strokes and verbal affirmative actions (Low & Robertson, 2006; Arnold, 1988). As supervisors, some interviewees apply the principles of recognition to their staff, and celebrate milestones and achievements together as a team.
Another form of recognition discussed during the interviews would be sending employees for training (Ramlall, 2004; Benkhoff, 1996). The interviewees interpret it as a signal to the employee that the organisation is taking an interest in his career advancement, growth and development. This would be considered a motivator, leading to job satisfaction and motivated employee (Herzberg, 1968).
Interviewees reported that the aggressive American corporate culture prevalent in their organisations made them “push and stretch themselves to the limits to achieve more.” It is very common for one to multi-task in several roles or handle several projects simultaneously. Although the interviewees felt a sense of achievements after the completion of the tasks, they also lament the fact that they have no work-life balance. As a result, some interviewees reported feeling “fatigue and demotivated after several years.” At this point, some interviewees left their American employers and joined European or
48 local banks, thinking that the slower work pace will satisfy their need for personal time. Interestingly, they realised that they are not suitable for the slower pace as “nothing gets done as fast as before.” Kohn (1993) mentioned that “no artificial incentive can ever match the power of intrinsic motivation.” For these interviewees, their intrinsic motivation would be the sense of achievement in completing tasks, getting the associated recognitions, and move on to the next job on hand.
7.1.4
Transparent Appraisal and Reward System In this section, I will be discussing “transparent appraisal and reward system” as a
key motivator. Most interviewees' organisations have gone to great lengths to design their performance appraisal and reward system. The employers usually attempt to incorporate motivation theories such as Expectancy Theory, Needs Theory and Equity Theory into a practical framework to motivate employees to higher performance. The rhetoric of the appraisal system is that it fosters an environment where continuous personal and professional growth is encouraged, and where employees understand employers' expectations of high performance and individual development. Steensma & Visser (2006) had been shown that perceived procedural justice in the performance appraisal system succeed in promoting feelings of satisfaction, organisational commitment and motivation of the employees. However, the interviewees had feedback that the reality experienced is far removed from this ideal.
During the interviews, participants opined that non-transparent appraisal and compensation system actually reduces employee motivation. At times, there is no clear linkage between their performance appraisal ratings and the amount of increments and bonus awarded. This leads to employee mistrust of the validity of the appraisal instrument
49 (McGregor, 1957). In fact, they might perceive “inequitable” rewards given to certain individuals to be due to crony effect (Redman, 2001), and deem the appraisal exercise more political than objective (Longnecker et al., 1987). Another reason contributing to the mistrust is that the performance evaluators, normally the direct supervisors, might have perceptual biases (Swiercz et al., 1993). The lowly rated employees will feel a sense of inequity and lack of procedural justice (Folger & Konovsky, 1989). As a result, these employees’ motivation is reduced, which in turns lowers their performance (Locke, 1975) and it becomes a self-fulfilling prophecy that they are low performers. These demotivated employees might even resort to social loafing (Comer, 1995).
The issue of non-transparency in reward and appraisal system is further exacerbated by the fact that for Singapore's private banking industry, most employees are given discretionary bonuses. The only exceptions would be the relationship and product managers who are normally on commission or incentive plans. The manager would be given a bonus pool for his team. The bonus would be allocated to the team members at his discretion. As a consequence of inadequate reward practices, individual motivation is affected and lowered, leading to increased intentions to leave (Porter & Lawler, 1967, 1968; Martin, 1979) (Figure 1). The employee’s relationship with the organisation becomes transactional, and develops organisational cynicism in the process (Ulrich, 1998; Wilkerson, 2002).
50
7.1.5
Being Kept Informed of Things Last but not least, interviewees mentioned that open and timely communication
from the management “projects a sense of transparency and confidence.” At the point of communications, management should also “invite suggestions, inputs and involvement from the employees.” In doing this, employees can are assured that they are part of the decision making process and their views are taken seriously. Very often, interviewees experienced situations whereby as employees, they are the last group of people to know about corporate restructuring, downsizing or mergers and acquisitions.
Besides top down communication from the management, it is also important to conduct employee attitude surveys to try and “understand what is the heartbeat of the staff population” (Kovach, 1987, 1995; Arnold, 1988; Martin, 1979). However, interviewees view the employee surveys as management rhetoric. Very often, results and findings from
51 such surveys are not acted upon by the management or management does not allocate enough resources and attention to address the shortcomings.
As part of communication, interviewees also mentioned that timely and open performance feedback would provide motivation as it provides them with directions and guides them towards the desired outcomes (Ramlall, 2004; Low & Robertson, 2006; Kovach, 1987). It is shown by Martin (1979) that higher amount of formal communication will produce lower amounts of intentions to leave, thereby confirming our findings that communication from the management and supervisor is a key motivator and would contribute towards employee retention.
7.2
Psychological Contract The concept of psychological contract is not alien to the interviewees, having
learned about the concept during one of their earlier academic pursuits or management trainings. Hence, the interviewees can readily share their experiences of psychological contracts in various organisations. From the interviews, the key themes identified for psychological contracts are “awareness of psychological contract”, “psychological contract violations are common and unavoidable”, and “clarifications of psychological contract”. I will discuss each theme in more details in the following sections.
7.2.1
Awareness of Psychological Contract The interviewees are aware of the concept of psychological contract even though
they might not be aware of its academic nomenclature. The interviewees had been using it in some shape of form to guide their behaviours, and to judge if the employers are fulfilling their end of the bargain (Rousseua, 2004). Psychological contracts are used to
52 supplement the formal employment contracts signed between the employee and the employer as not all obligations and commitments required are clearly spell out. One key difference of the interviewees' psychological contracts and that reported in Robinson & Rousseau (1994) and Rousseau (1989, 2004) is that seventy percent of the interviewees have a specific type of psychological contract they want to have with their organisation when they join, be it relational, transactional or balanced. It might be changed or influenced during the course of employment with the employer. The reasons for the change could be due to increased trust in the organisation or perceived breach or violations of the psychological contract (Robinson & Rousseau, 1994; Morrison & Robinson, 1997).
As mentioned in the findings section, the types of psychological contracts commonly expressed by the interviewees are transactional or hybrid/balanced. This is because most of the interviewees are experienced finance professionals who had worked at one or more financial institutions. This is consistent with the findings of (Raja, Johns & Ntalianisthe, 2004) whereby it is mentioned that past job experience has a significant impact on shaping employees' psychological contract. They had witnessed the cyclical nature of the financial industry and had encountered repeated violations of their psychological contract. To them, organisations violating the psychological contract is a norm and is bound to happen during the tenure of one's employment, consistent with findings of Robinson & Rousseau (1994). Hence, by having transactional or balanced psychological contract, and lowered trust at the onset, they hoped to avoid the strong feelings of betrayal and deeper psychological distress (Rousseau, 1989) that may accompany subsequent violations. They are also more likely to stay vigilant and scrutinise every move by the employer for signs of unfulfilled promises, perceived breach and violations (Morrison & Robinson, 1997).
53 7.2.2 Psychological Contract Violations are Common and Unavoidable All the interviewees reported having experienced, in their opinions, either perceived breach or violations of the psychological contracts by their organisations. Interviewees mentioned that in most cases, the causes of violations are due to reneging and/or incongruence (Morrison & Robinson, 1997). Reneging had been defined as when the agents of the organisation recognise that an obligation exists but they knowingly fail to follow through on that obligation. Reneging occurs either because the organisation is unable to fulfill a promise or because it is unwilling to do so. Incongruence occurs when an employee has perceptions of a given promise that differ from those held by the organisational agent or agents responsible for fulfilling that promise. (Morrison & Robinson, 1997) However, approximately seventy five percent of the incidents mentioned by the interviewees attributed the cause of violations to reneging by the supervisors, human resource department or the senior management team. Despite the high percentage that attribute violations to reneging, it must be noted that experiences reported by the interviewees could be clouded by ego defenses due to the use of recall methodology (Bassett-Jones & Lloyd, 2005).
Interviewees recognised the fact that violations of the psychological contracts are unavoidable given the dynamic nature of today's business environment, and organisations need to constantly evolve in order to stay competitive and relevant (Morrison, 1994; .Robinson & Rousseau, 1994). In part, acceptance of change can be attributed to the Government's push for structural change in Singapore's economy and called upon people to change their mindset about employment contracts and relationships. Changes often lead to violations of contracts, reduced trust of the employees and shifts in the types of psychological contracts employees have with the organisations. However, the interviewees
54 are beginning to realise that, for the time being, the level and direction of power symmetry within the employment relationship (Emerson, 1962) are stacked in their favor. This is due to the talent shortage and increased number of financial institutions setting up operations in Singapore (Business Times, 2008a, 2008b; Straits Times, 2006a). This results in the organisations' agents less likely to renege as the costs of reneging would outweigh the benefits. It would be more detrimental to the organisation if the employee withdraws his contributions or leave (Morrison & Robinson, 1997). Until such time when the Singapore Government and the private sectors are able to train enough private banking professionals, employees will have more power in the employment relationship.
Supervisors interviewed mentioned that on occasions, they are forced to violate the psychological contract as the organisation and it's agents or external circumstances do not allow them to fulfill the promises. They have to adhere to the organisation's protocol and policies. Despite that, supervisors try their best to apply the concept of psychological contract to their subordinates as a form of motivation and management tool. Through the use of psychological contract, the supervisors hoped to align employees' expectations and reduce perceptions of breach and violations due to incongruence. By constantly discussing and reaffirming the psychological contracts with their staff, they hope to avoid cognitive dissonance between the two parties. This is consistent with the findings of Ronbinson & Rousseau (1994) which suggested that managers who promote open two-way communication may be able to nip in the bud discrepancies in employer commitments and employee experiences. Indirectly, by building trust and confidence of the employees in the organisation, the supervisors hope to elicit organisational commitment, motivation and reduce intentions to leave the organisation.
55 7.2.3 Clarifications of Psychological Contract Following from the previous theme of psychological contract violations, interviewees brought up the topic of clarifying the psychological contract. Morrison & Robinson (1997) posited that the other root cause of psychological contract violation is incongruence. Therefore, it follows that if the psychological contracts are clarified by the organisation or its agents from time to time, perceptions of breach or violations should be reduced (Sims, 1994; Morrison, 1994). Morrison & Robinson (1997) also mentioned that accurate feedback will make it more difficult for employees to hold biased perceptions of their performance and contributions, thereby reducing feelings of unmet promises, contract breaches and violations.
However, two interviewees reported significant incident of violation due to reneging. In this instances, the human resource officers did not provide realistic job previews during recruitment resulting in a mismatch between reality and interviewees' expectation. This violation is the result of the organisation's inability to fulfill promises made at the point of recruitment (Robinson & Rousseau, 1994). In the end, a lot of their fellow recruits left the organisation upon completion of their two years bond, leading to increased costs to the organisation.
Nine of out of ten interviewees echoed the importance of clarifying the psychological contract as early as possible, preferably during the interview process (Sims, 1994) or when the recruits first join the department. Otherwise, incongruence might develop due to divergent schemata, complexity and ambiguity of obligations, and miscommunication (Morrison & Robinson, 1997).
56 As the nature of psychological contract is such that it is perceptual and constantly evolving (Rousseau, 1989, 1998), the interviewees reported that they often seek confirmation of their perceptions through social interactions with colleagues, communications with supervisors, and simply observing organisational developments. The information collected during these processes helped shape their beliefs and type of psychological contract developed, be it transactional or balanced. They also remain vigilant and lookout for signs of unfulfilled promises. One out of two interviewees would voluntarily seek clarifications with the supervisors or human resource officers whenever they perceive a breach or violation.
57
8
CONCLUSIONS
In this section, I will discuss the implications of the interview results for
organisations in the Singapore private banking industry, limitations and suggestions for future research, and provide a summary of the dissertation.
Addressing the issues raised by the interviewees on the topics of motivation and psychological contract, I propose some strategies to improve employee motivation and mitigate negative impact of psychological contract violations.
8.1
Motivation In this section, I will recommend some solutions to motivate employees based on
the five identified themes: “trust and respect”, “challenging and interesting work”, “sense of achievement and recognition”, “transparent appraisal and reward system”, and “being kept informed of things”. From the research findings, the key motivation factors mentioned by the interviewees are consistent with the established literature. Hence, it is recommended that organisations should build and implement motivation practices based on sound theories (Ramlall, 2004).
In today's work environment, employees are no longer receptive to command and control management style. The interviewees had indicated that they wanted the organisation to treat them with “trust, decency, and respect”, employees should not be “just a number in the system”. Hence, organisations should trust, and delegate decision making authority to its employees.
58 Providing employees with challenging and interesting work can come in many forms. The usual recommendations would be job enrichment (Herzberg, 1968) and job rotation. However, I would also venture to add that there should be periodic two way communications between the employee and his supervisor to discuss on career planning and development. In this way, the supervisor can better understand the employee's needs and can plan for the employee's career progression using need, expectancy and equity theories. The employee also benefits as he can understand what skills is required for him to grow professionally. To prevent job rotation and internal labour market from becoming just another human resource rhetoric, supervisors should encourage such transfers for their good performers. This helps to groom and develop employees for the organisation and will also contribute to employee retention.
All organisations implement some form of performance appraisal systems to evaluate their employees' performance and to determine the amount of compensation and bonuses to be awarded. However, it can be demotivating for the employees if the performance appraisal system is seen as non-transparent, unfair and inequitable (Longnecker et al ,1987; Ramlall, 2004; Redman, 2001). Performance evaluators such as supervisors and human resource officers should be adequately trained to reduce perceptual biases. The mechanics of the performance appraisal system and the link between performance and rewards dispensed must be clearly communicated to employees. The performance appraisal system should be multi-dimensional and if possible, a three-sixty degree performance evaluation method should be used. Employees should be assessed at regular intervals throughout the calendar year and given performance feedback instead of it being an annual affair.
59 Following up on the expressed needs of the interviewees to be kept informed, it is recommended that organisations constantly communicate to the employees on business strategies, organisation performance and developments, and seek feedback from the employees. Annual employee attitudinal surveys should be carried out to find out what employees feel about the organisation and its agents (Kovach, 1980, 1987, 1995; Low & Robertson, 2006; Ramlall, 2004). To motivate employees further, management must dedicate resources to tackle issues identified from the surveys and communicate the actions plans. This would increase employee confidence that their views are valued and taken seriously.
At the business unit levels, supervisors must coach and mentor their employees by providing timely performance feedbacks and a sense of direction. In addition, positive feedbacks would give individuals acknowledgment and sense of self esteem that can influence their level of effort (Benkoff, 1996).
8.2
Psychological Contract In terms of psychological contracts, it is proposed that organisational agents such
as senior management, human resource department and the direct supervisor must work together with the employee to fulfill both parties' contractual obligations. It is important to act in good faith and signal concern for each other's interests (Rousseau, 1996). Also, the organisational agents must be consistent in the implementation of the psychological contract throughout the organisations (Rousseau, 2004). When it is deemed necessary to change the psychological contract, it can be done via accommodation or transformation (Rousseau, 1996). Accommodation is the preferred choice for change management as it involves changing or modifying terms and conditions within the boundaries of the existing
60 contract. Hence, employees might feel more receptive as the original contract still exists. On the other hand, transformation is a more drastic move as it implies the creation of a new contract. Rousseau (1996) highlighted the four stages of successful transformation as effective communication of reasons for the change; prepare for change by dismantling the old contract; creating a new contract and mindset; adopt new contract throughout all levels in the organisation. It also helps if the organisation can build flexibility and creativity when changing the psychological contract so as to minimise sense of contract breach and violations (Rousseau, 2004).
It is important to buildup and maintain employees' perception of trust and contract fulfillment as prior trust had been shown to moderate the impact of contract breach (Robinson, 1996). Senior management should have open communications and clarifications with the employees. Also, they can reduce reneging on their obligations by not over promising in the first place. Human resource officers should provide realistic job previews during recruitment, and continue to clarify the psychological contract through frequent communications after the employee is hired (Sims, 1994; Morrison & Robinson, 1997). It has been shown from the research findings that employees felt betrayed and violated if they are not given realistic job previews during recruitment and that contributed strongly to their subsequent intentions to leave the organisation.
For supervisors, it is recommended that they have periodic discussions with their employees to minimise incongruence. This should prevent feelings of violations as both parties are clear about what is expected of them in the exchange relationship. Although it is impossible to completely eliminate psychological contract breach, organisational agents
61 can reduce and manage negative feelings by providing clarifications, validations, and honest explanations for the occurrence.
8.3
Limitations and suggestions for future research Motivation and psychological contracts are two very complex and broad issues
covering a wide spectrum of human emotions. The small sample size of 10 participants limits the representational generalisation (Ritchie & Lewis, 2004) of the findings. The main limitations during the course of this study are the time constraints. Hence, additional interviews, surveys or focus group studies have not been made. It would be good to have conducted surveys or focus groups to further substantiate or confirm the interview findings as in-depth interviews approach alone might be vulnerable to participants' post-hoc rationalisation and ego defense bias. This is especially true in this project whereby two interviewees are in the midst of serving their notice period to leave their organisation. It is also possible that the participants were exhibiting a social desirability bias when assessing their behaviours due to dissatisfaction and psychological contract violations. They might under-report activities that are deemed to be socially or culturally undesirable such as social loafing or acts of sabotage against their organisation (Comer, 1995; Bernardi, 2006).
The interviews were conducted with Singaporean research participants working in American financial institutions. Therefore, we need to raise the question of how employees working in European or Singaporean financial institutions would respond given the same in-depth interview questions. Only by doing a cross sectional research would we be able to tell if the interviewees' responses are influenced by the differences in corporate culture or is unique to Singaporeans. Next, I did not examine how employers and
62 employees seek to repair and rebuild the employment relationship after experiences of violations. Lastly, the impact of personality on psychological contract (Raja et. al., 2004) has not been explored in this dissertation. Hence, I believe that the above issues are interesting topics and directions for future research.
8.4
Summary In this study, I seek to understand the sources of motivation and types of
psychological contracts of employees in Singapore's private banking industry. This is crucial in the context of Singapore's private banking industry; which is facing manpower and talent shortage due to increased number of financial institutions setting up their operations in Singapore to tap into the booming Asian economies.
In the literature review section, I highlighted several key motivation theories and concepts of psychological contract. Critics of these theories and concepts were also discussed. The research approach is qualitative in nature and the research method employed was in-depth interviews. A total of ten research participants took part in the interviews and shared their experiences on motivation and psychological contracts. The interviews are analysed through the use of conversation analysis and the key themes from each topic are presented and discussed.
The key findings of this study on motivation are that money is not the key source of motivations and the five key themes that motivate employees are “trust and respect”, “challenging and interesting work”, “sense of achievement and recognition”, “transparent appraisal and reward system”, and “being kept informed of things”. It is also revealed that
63 there still exist some self referencing bias by the supervisors when it comes to understanding employees' key source of motivation.
On the topic of psychological contract, the key findings are that interviewees are aware of the concept of psychological contract, view psychological contract violations as common and unavoidable, and deem it important to clarify psychological contract constantly. Supervisors use psychological contract as a tool to motivate their employees manage expectations, especially during periods of change management when violations are unavoidable.
Drawing from the interview analysis and literature reviews, I proposed some solutions for organisations to implement in order to motivate their employees and manage their psychological contract in the employment relationship. Recommended solutions include implementing fair and transparent performance appraisal system, recognise achievements, provide challenge through career advancements and job enrichments, and create environment of trust and mutual respect.
In terms of psychological contracts, it is proposed that organisational agents such as senior management, human resource department and the direct supervisor must work together with the employee to fulfill their contractual obligations. Although it is impossible to completely eliminate psychological contract breach, organisational agents can reduce and manage negative feelings by providing clarifications and honest explanations for the occurrence.
64 There are not many research being carried out on motivation and psychological contracts in the Singaporean context. It is hoped that my dissertation would provide readers with some preliminary insights into the mindset of the employees in the private banking industry and help them implement motivation and retention strategies with ease.
65
9
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74 Behavior, 11, 389-400. Rousseau, D.M. (1995) Psychological Contracts in Organizations: Understanding Written and Unwritten Agreements. Newbury Park, CA: Sage. Rousseau, D.M. (1996) “Changing the deal while keeping the people”, Academy of Management Executive, 10, 50-61. Rousseau, D.M. (1998) “The ‘problem’ of the psychological contract considered”, Journal of Organizational Behavior, 19, 665–672. Rousseau, D.M. (2001) “Schema, promise and mutuality: The building blocks of the psychological contracts” Journal of Occupational and Organizational Psychology, 74, 511-541. Rousseau, D. M. (2004) “Psychological Contracts in the Workplace: Understanding the Ties That Motivate”, Academy of Management Executive, Vol. 18 (1), 120-127. Rousseau, D. M., & Greller, M. M. (1994) “Human resource practices: Administrative contract makers”, Human Resource Management, 33, 385-401. Rousseau, D. M., & McLean Parks, J. (1993) “The contracts of individuals and Organizations”. In L. L. Cummings & B. M. Stow (Eds.), Research in organizational behavior, Vol 15, 1-47. Greenwich, CT: JAI Press. Rousseau, D.M. & Schalk, R. Psychological contracts in employment: Cross-national perspectives. Newbury Park, CA: Sage, in press. Rubin, H.J. & Rubin, I.S. (1995) Qualitative Interviewing: The Art of Hearing Data. Thousand Oaks, CA: Sage. Schein, E.H. (1965) Organizational Psychology. Englewood Cliffs, NJ: Prentice Hall. Scholl, R.W. (1981) “Differentiating Organizational Commitment From Expectancy as a Motivation Force”, Academy of Management Review, Vol. 6 No. 4, 589-599. Silverman, D. (2004) Doing Qualitative Research. Sage Publications: London.
75 Sims, R.R. (1994) “Human Resource Management's Role in Clarifying the New Psychological Contract”, Human Resource Management, Vol. 33 (3), 373-382. Singapore Dept of Statistics (DOS) (2007) “Economic Survey of Singapore Third Quarter 2007”, 45-46. Snape, D. & Spencer, L. (2004) “The Foundations of Qualitative Research”, in Ritchie, J. & Lewis, J. (eds.) Qualitative research practice. A guide for social science students and researchers, Sage Publications. London. Straits Times (2006a) “More private bankers needed in S'pore as sector expands”, Straits Times, 28th June 2006. Steensma, H., Visser, E. (2006) “Procedural Justice and Supervisors' Personal Power Bases: Effects on Employees' Perceptions of Performance Appraisal Sessions, Commitment, and Motivation”, Journal of Collective Negotiations, Vol. 31(2), 101-118. Swap, W.C, & Rubin, J.Z. (1983) “Measurement of interpersonal orientation”, Journal of Personality and Social Psychology, 44, 208-219. Swiercz, P.M., Icenogle, M.L., Bryan, N.B. & Renn, R.W. (1993) “Do Perceptions of Performance Appraisal Fairness Predict Employee Attitudes and Performance?”, in D.P. Moore (eds.), Proceedings of the Academy of Management. Atlanta: Academy of Management, 304-308. Taylor, F.W. (1911) Principles of Scientific Management. New York: Harper. Trigg, A.B. (2004) “Deriving the Engel Curve: Pierre Bourdieu and the Social Critique of Maslow’s Hierarchy of Needs”, Review of Social Economy, LXII (3), 393-406. Turner, J.H. (2006) “Pay for performance: contrary evidence and a predictive model”, Academy of Marketing Studies Journal, Vol. 10(2), 23-40. UBS (2006) “UBS 'breaks ground' on new Wealth Management Campus in Singapore”.
76http://www.ubs.com/1/e/media_overview/media_global/search1/search10newsId=105313
(Accesed: 1st Feb, 2008). Workforce Development Agency (WDA) (2005) “Getting Skills for the Financial Services Industry”.http://wsq.wda.gov.sg/IndustrySkills/Finance/ (Accessed:1st Feb, 2008). Wherry, Sr, R.J. & South, J.C. (1977) “A Worker Motivation Scale”, Personnel Psychology, 613-636. Vroom, V.H. (1964) Work and Motivation, New York: John Wiley. Wilkerson, J.M. (2002) “Organizational Cynicism and Its Impact on Human Resources Management”, in G.F. Ferris, M.R. Buckley and D.B. Fedor (eds.), Human Resources Management. Upper Saddle River, NJ: Prentice Hall, 532-546.
doc_780503024.pdf
While psychological knowledge is often applied to the assessment and treatment of mental health problems, it is also directed towards understanding and solving problems in many different spheres of human activity.
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TITLE PAGE
Motivation and Psychological Contract in the Singapore Private Banking Industry By Poh Din Kiat
2008
A Management project presented in part consideration for the degree of Master of Business Administration.
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CONTENTS
TITLE PAGE CONTENTS ACKNOWLEDGEMENTS 1 EXECUTIVE SUMMARY 2 INTRODUCTION 3 SINGAPORE PRIVATE BANKING INDUSTRY 3.1 Introduction to Private Banking 3.2 Singapore's Private Banking Industry 3.3 Manpower Situation in the Private Banking Industry 4 LITERATURE REVIEW 4.1 Research Questions 4.2 Motivation 4.2.1 Introduction 4.2.2 Content Theories 4.2.3 Process Theories 4.3 Psychological Contract 4.3.1 Introduction 4.3.2 Types of Psychological Contracts 4.3.3 Features of Psychological Contract 4.3.4 Psychological Contract Violations 4.3.5 Critics of Psychological Contract 4.4 Key Summary 1 2 5 6 8 11 11 13 14 17 17 20 20 21 23 25 25 26 27 28 29 30
3 5 RESEARCH METHODOLOGY 5.1 Research Approach 5.2 Data and Method 5.3 Sampling Strategy 5.4 Interview Process 5.5 Data Analysis 6 FINDINGS 6.1 Motivation 6.2 Psychological Contract 6.2.1 Awareness of Psychological Contract 6.2.2 Psychological Contract Violations are Common and Unavoidable 6.2.3 Clarifications of Psychological Contract 7 ANALYSIS AND DISCUSSION 7.1 Motivation 7.1.1 Trust and Respect 7.1.2 Interesting and Challenging Work 7.1.3 Sense of Achievement and Recognition 7.1.4 Transparent Appraisal and Reward System 7.1.5 Being Kept Informed of Things 7.2 Psychological Contract 7.2.1 Awareness of Psychological Contract 7.2.2 Psychological Contract Violations are Common and Unavoidable 7.2.3 Clarifications of Psychological Contract 32 32 33 34 35 37 38 38 40 40 41 43 44 44 44 45 46 48 50 51 51 53 55
4 8 CONCLUSIONS 8.1 Motivation 8.2 Psychological Contract 8.3 Limitations and suggestions for future research 8.4 Summary 9 REFERENCES 57 57 59 61 62 65
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ACKNOWLEDGEMENTS
I would like to thank my supervisor, Dr Patrick Reedy, for his understanding, patience, guidance, and advice throughout the course of this management project.
I also want to thank my associates and friends who had taken time off their busy schedules to participate in the interviews to share their views and experiences of the research topics. This project would not have succeeded without them.
Last, but not least, I wish to thank my family members who encouraged and supported me in my pursuit of this MBA.
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EXECUTIVE SUMMARY
This management project seeks to understand the sources of motivation and the
types of psychological contracts prevalent amongst employees in Singapore’s private banking industry. Singapore's private banking industry had seen tremendous growth in the last few years with the Government's push to make it the Switzerland of Asia. This growth has resulted in high demand for talent and high turnover rates. It is often said that money is not the key reason why people stayed motivated. Part of this project seeks to study an employee's source of motivation in his current job, managers' perceptions on employee motivation, and the key factors contributing to an employee's intention to leave an organisation. In the second part of the project, I would like to uncover the prevalent type of psychological contracts amongst employees in Singapore's private banking industry, the type of psychological contract obligations employees value most (Lester & Kickul, 2001), and their experiences on psychological contract. Through this project, I hope to provide an insight into staff motivation and psychological contract in the private banking industry as these factors influence organisational change management, employee satisfaction, productivity, and retention.
Motivation has been defined as the willingness to exert high levels of effort toward organisational goals, conditioned by the effort's ability to satisfy some individual needs (Robbins, 2003). Literature reviews showed that there are numerous theories of motivation. Most literatures agree that motivated employees can be an organisation's competitive advantage due to higher productivity, knowledge retention and lower turnover rates. A psychological contract comprises subjective beliefs regarding an exchange agreement between an individual and the employer (Rousseau, 1995, 2001). A
7 psychological contract is an implied contract and is constantly evolving based on the individual's experience and interactions in the organisation. Using questions developed from literature reviews, I conducted in-depth interviews with ten employees at various organisational levels.
After analyzing the in-depth interviews, it is revealed that the sources of motivations are consistent with earlier research. The top three motivating factors are “challenging and interesting work”, “sense of achievement and recognition”, and “trust and respect”. There is also some cognitive dissonance between what the managers' perceptions of sources of motivation versus what the employees want. This is probably due to self-reference on the part of the managers as reported in the literatures. Lastly, it is revealed that the top three reasons that motivate someone to leave are inadequate and nontransparent reward system which is not tied to performance, relationship with supervisor and long term career developments. On the topic of psychological contract, interviewees reported that they are aware of their psychological contract with the organisation, and they had experienced psychological contract violations. This results in reduced trust in the organisation leading to reduced contributions and increased intentions to leave the organisation. Interviewees ,who are supervisors, revealed that it is often beyond their control when new policies or organisation changes are implemented, which results in subsequent breach and violations of the psychological contract. From their point of view, it could be that the employee's psychological contract is not clarified with the organisation's agents, causing unrealistic perceptions and expectations. In the last section of the dissertation, the theoretical and practical implications of the findings, limitations of the studies, and future research directions are also discussed.
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2
INTRODUCTION
This dissertation seeks to understand the sources of motivation and the types of
psychological contract prevalent amongst employees in Singapore’s private banking industry. Singapore's private banking industry had seen tremendous growth in the last few years with the Government's push to make it the Switzerland of Asia. This growth has resulted in high demand for talent and high turnover rates.
Huczynski & Buchanan (2007) described motivation as the cognitive decisionmaking process through which goal-directed behaviour is initiated, energized, directed and maintained. It is often said that money is not the key reason why people stayed motivated. Consolidating the various motivation theories and models, here are the critical factors that influence employee motivation adapted from Ramlall (2004). Employees have differing needs based on their demographics, individual circumstances, aspirations, current and tobe state of affairs, and personalities etc. Hygiene factors are crucial to remove job dissatisfaction. Employees expect to work in an environment that is pleasant, respectful, productive, and promotes teamwork. To take employee motivation to a higher level, motivators such as interesting work, recognition, sense of achievement, and promises of advancements must be present. In addition, employees expected to be treated fairly and receive fair rewards for their efforts (Kim, & Mauborgne, 2003; Folger & Konovsky, 1989).
Part of this dissertation seeks to understand the key sources of motivation for employees in Singapore's private banking industry. I plan to study employee's perceptions and effectiveness of the motivation tools used by his organisation. And to reveal any gaps
9 between an organisation's rhetoric and reality. In addition, I would also like to find out if managers have differing views of motivation from their employees as evidenced in Kovach (1987). Lastly, I want to study the key factors that contributes to an employee's intentions to leave an organisation.
A psychological contract comprises subjective beliefs regarding an exchange agreement between an individual and the employer (Rousseau, 1995, 2001). A psychological contract is an implied contract and is constantly evolving based on the individual's experience and interactions in the organisation. In the dynamic and rapidly changing business environment of today, psychological contract violations has become the norm (Rousseau, 1996; Robinson & Rousseau, 1994). Research (Robinson & Morrison, 1995; Morrison & Robinson, 1997; Robinson & Rousseau, 1994) has demonstrated that employees holding different types of psychological contract (relational, transactional, or balanced) treat perceived breach or violations differently.
Through this dissertation, I would like to find out the prevalent type of psychological contracts amongst employees in Singapore's private banking industry, the type of psychological contract obligations employees value most (Lester & Kickul, 2001), and their experiences on psychological contract violations.
This dissertation seeks to critically analyse key motivation theories and the concept of psychological contract. This will allow me to evaluate the applicability of these theories towards explaining employee behaviour and motivation in the private banking industry. Since there are limited literatures on motivation and psychological contract in the Singapore context, I hope to share valuable insights in these two areas with the readers.
10 This dissertation will begin with short overview of the private banking industry in Singapore, its key players and recent employment trends. The next chapter will focus on the research questions, and literature review of motivation theories and psychological contract. The third section will look at different research methodologies, approaches, and methods to select one that is suitable for this dissertation. This will be followed by a chapter discussing key themes developed from the research findings. In the analysis and discussion chapter that follows, each of the key themes are reviewed against literature. After analysis and discussion, I will recommend some solutions to improve motivation and psychological contract for the financial sector. Lastly, I will highlight the limitations of this dissertation and propose topics for future research.
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3
SINGAPORE PRIVATE BANKING INDUSTRY
In this section, I will be presenting a brief introduction to private banking and
wealth management; an overview of Singapore’s private banking industry and the key industry players; its recent growth and development under the direction of the Singapore Government; and the labour landscape.
3.1
Introduction to Private Banking Private banking is often used interchangeably with wealth management in the
financial industry. Private banking is a form of specialized financial planning and asset management services that are provided to High Net Worth Individuals (HNWI) with net investable financial assets of more than US$1 million (excluding the value of primary residence) (Capgemini & Merrill Lynch, 2007a, 2007b). Traditional private banking services provided to these HNWI are estate planning, trust services, portfolio management, insurance, investment financing, and investment management. However, in recent years, private banking services had been expanded in both breadth and depth. Wealth managers like to position themselves as providing private investment banking services. New products and services such as complex derivatives, alternative investments, co-investment opportunities with the wealth manager, and private equity; that used to be reserved for institutional clients are now made available to the HNWI. Other new innovations include next generation wealth transfer, family office structures and management, and philanthropy. New products and services are developed because traditional products are being commoditised and can no longer satisfy the HNWI appetites for high investments returns. Worse still, once exclusive products are now being offered to the mass affluent consumer market segments.
12 The booming global economy and the rise of the emerging markets created an elite class of Ultra High Net Worth Individuals (UHNWI), individuals or families with more than US$30 millions in financial assets (Capgemini & Merrill Lynch, 2007a, 2007b). This class of UHNWI is more sophisticated and demanding simply due to the vast amount of wealth that needs to be managed. The Swiss banks had long dominated the private banking and wealth management industry in Europe and US. According to Euromoney’s Private Banking and Wealth Management Survey 2007, the top 3 Best Global Private Banks is UBS, Citigroup and HSBC respectively (Euromoney, 2007).
Closer to home, Asia-Pacific (AP) had also seen significant wealth creation in recent years. Capgemini & Merrill Lynch wrote in its 2007 Asia Pacific Wealth Report that: • • AP HNWI wealth totals US$8.4 trillion, an increase of 10.5% over 2005 AP holds 27.1% of the global HNWI population and 22.6% of global HNWI wealth. There are 2.6 million AP HNWIs — an increase of 8.6% over 2005 and slightly more than the global average increase of 8.3% in 2006 • Wealth creation in the region was driven by strong real GDP growth and continued market capitalization growth • Singapore has one of the fastest-growing HNWI populations in the world, with 2006 gains of 21.2% • It is projected that HNWI financial wealth in the region will reach US$12.7 trillion by 2011, growing at an annual rate of 8.5%, well above the global rate of 6.8%
Singapore's HNWI population had swelled due to the booming regional economies and Government's efforts to promote Singapore as the Switzerland of Asia. In the next
13 chapter, I will be elaborating more on the development of Singapore's private banking industry.
3.2
Singapore's Private Banking Industry Singapore's financial services industry employs 5% of the workforce and
contributes 11% to the 2006 Gross Domestic Product (MOM, 2007; DOS, 2007). Singapore is an international financial center tightly integrated into the global financial systems. There are more than 600 local and foreign financial institutions operating in Singapore. Singapore’s central bank, the Monetary Authority of Singapore (MAS), actively promoted activities in which Singapore had competitive advantages and private banking is identified as one of the focus area (MAS, 2007). Singapore offers the financial institutions a pro-business environment, excellent infrastructure, and a highly skilled and cosmopolitan labour force (MAS, 2007). Almost 40 private banks now have regional operations here, including Swiss brand names like Julius Baer, UBS and Credit Suisse. Citi's international private bank and Standard Chartered Bank’s global private bank are now headquartered in Singapore (IHT, 2006). These foreign banking giants now dominate Singapore’s private banking industry. However, the 3 big local banks, United Overseas Bank (UOB), OCBC Bank, and DBS Bank, are not sitting back and had started focusing on their private banking business.
In addition, Singapore changed its tax laws in 2004 to attract funds from abroad. Foreigners can apply for residency if they hold US$3.5 million in a financial institution registered with MAS (Straits Times, 2006a). Capital gains, interest income, and income earned outside Singapore are also tax-exempt (IHT, 2007). Private-wealth assets under management (AUM) in Singapore total US$200 billion, which is 3 to 5 per cent of total
14 wealth worldwide, and it is projected to grow at 15 to 20 per cent a year (Straits Times, 2006a). It is also estimated that 70 per cent of the AUM in Singapore are from other countries within the AP region. Hence, it shows that the Government’s policies are paying off and investors are putting their faith in Singapore’s abilities to manage and grow those assets. This huge asset influx brought the issue of talent shortage in Singapore’s private banking industry to the forefront, with rampant poaching becoming the order of the day (Business Times, 2006a; Business Times, 2008a).
3.3
Manpower Situation in the Private Banking Industry Private banks are adding staff in Singapore to win business in the region, home to
India and China, which has the fastest growth among the world's 20 largest economies (Straits Times, 2006a). However, as private banking is a relatively new market segment compared to the traditional areas of corporate banking, investment banking or consumer banking, there is not a large pool of experienced wealth management professionals at all levels to draw from. To address this issue, the Government is supporting two training programs. The first is to setup the Wealth Management Institute (WMI), touted as Asia’s first educational institution that specializes in wealth management. Together with the Singapore Management University (SMU) and the Swiss Finance Institute, it developed the flagship Master of Science in Wealth Management program. The second is the Financial Industry Competency Standards (FICS), which is a comprehensive quality assurance framework with a certification and accreditation system that helps to raise the quality of the financial workforce and training providers (IBF, 2008; WDA, 2005). The FICS had the strong support of Workforce Development Agency (WDA), leading financial institutions, industry associations, the MAS and the Institute of Banking and Finance (IBF, 2008). It is hoped that a wider pool of qualified private bankers will curb
15 turnover and pay escalation in 3 to 5 years’ time. However, even with these 2 national initiatives in place, financial institutions are having difficulties hiring fast enough. This prompted UBS to setup its own wealth management campus in Singapore to provide training and professional development for its employees in the region (IHT, 2006). UBS’ campus has received accreditation from the IBF as both a financial training provider and an assessment service provider in wealth management (UBS, 2006).
The average resignation rate of Singapore’s financial industry is 22.8% in 2006 (MOM, 2007). Fitz-enz (1997) mentioned that in the US on average, a company loses about US$100,000 when a professional or managerial employee resigns. It is approximately equivalent to 16 months' pay and benefits of an average employee. Taking the same calculations in the Singapore context, the average monthly earnings per employee in the financial services industry is US$ 4,000 (MOM, 2007). A medium sized private bank of 1,000 employees with a turnover of 228 employees per annum stands to lose US$14.6 million due to cost of termination, cost of hiring and training, vacancy cost and loss of productivity. Hence, financial institutions are devising strategies to motivate employees with the hope of retaining talent and knowledge within the organisation to create a sustainable competitive advantage (Benkhoff, 1996). However, it has been noted by Ramlall (2004) that organisations rarely develop these strategies using existing motivation theories.
In addition to practical implementation of motivation theories, psychological contracts motivate employees to fulfill their organisational commitments when they are certain that the organisation would reciprocate in the exchange relationship (Rousseau, 2004). Research (Lester & Kickul, 2001; Rousseau, 1995, 1996; Grant, 1999; Morrison &
16 Robinson, 1997; Robinson & Rousseau, 1994; Robinson & Morrison, 1995) has shown that perception of psychological contract violation by the employee concerned would significantly impact employee performance and job satisfaction, decrease employee's trust of the employer, perceived obligations to the employer, and increase intentions to leave the organisation. Proper management of the employees' psychological contract, especially when the financial industry is undergoing rapid expansion and transformation, would ensure an organisation's sustained performance and competitive edge.
In the next chapter, I will formulate the research questions to understand sources of employee motivation and the role of psychological contract in the private banking industry. After which, I would be performing a literature review of motivation theories and psychological contract.
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4
LITERATURE REVIEW
In this section, I will be examining the concepts of motivation and psychological
contract. This section commences with the research questions for the dissertation, which seeks to understand sources of employee motivation and psychological contract in the Singapore private banking industry.
Next section commences with a brief overview of motivation and the two main categories of motivation theories. I will focus on motivation theories deemed most relevant to employees’ commitment to the organisation. I will discuss the benefits, deficiencies, critics, and applications of these theories as documented in the literature.
In the second part of this section, I will touch on the concept of psychological contract. I will describe the different types of psychological contracts and what employees value most in a psychological contract. From an organisation's perspective, I will review the literatures on managing changes in psychological contract and the linkages between human resource management and psychological contracts. Shortcomings and critics of the psychological contract concept would also be discussed.
4.1
Research Questions Literature (Herzberg, 1968; Kim & Mauborgne, 2003; Benkhoff, 1996; Locke &
Latham, 2004; Low & Robertson, 2006) has suggested that motivated employees is crucial to an organisation's continued success. In today's competitive and challenging talent market, 86% of employers face difficulties in attracting new employees and 56% of employers had difficulties retaining their employees (Hale, 1998). High turnovers are
18 costly to an organisation's bottom line as each professional or managerial employee resignation costs a Singapore-based financial institution US$64,000 on average using the methodology from Fitz-enz (1997).
Consolidating the various motivation theories and models, here are the critical factors that influence employee motivation adapted from Ramlall (2004). Employees have differing needs based on their demographics, individual circumstances, aspirations, current and to-be state of affairs, and personalities etc. Hygiene factors are crucial to remove job dissatisfaction. Employees expect to work in an environment that is pleasant, respectful, productive, and promotes teamwork. To take employee motivation to a higher level, motivators such as interesting work, recognition, sense of achievement, and promises of advancements must be present.
In addition, employees expected to be treated fairly and receive fair rewards for their efforts (Kim, & Mauborgne, 2003; Folger & Konovsky, 1989). Perceptions of inequity might result in one of several actions such as altering the outcomes, adjust the inputs, rationalize the inequity, compare with someone else, or leave (Huczynski & Buchanan, 2007). However, an outcome that is highly valued can motivate high levels of performance as the employee need to adjust his inputs to commensurate with the desired outcome. However, Kohn (1993) and Kovach (1980) had argued that short term incentives don't motivate in the long term and it is more important to understand and modify employee's attitudes. Lastly, it is crucial that employees receive timely and constructive performance feedback from their supervisors.
19 Psychological contracts are a set of subjective beliefs held by the employee regarding the obligations and the outcomes of the exchange relationship with his organisation (Rousseau, 1995; Sims, 1994). A psychological contract is an implied contract and is constantly evolving based on the individual's experience and interactions in the organisation. A psychological contract adds predictability and structure to the employment relationship, leading employee to trust and be loyal to the organisation (Morrison, 1994).
However, modern organisations, in the face of challenges such as outsourcing, reorganisations and downsizing, mergers and acquisitions, and global competitions and crises, need to change and adapt in order to survive. This implies that the old “employment for life” psychological contract is no longer valid and the fundamental employee-employer relationship had changed. Employees might perceived the changes as a breach or violation in the psychological contract leading to reduced job satisfaction, productivity and ultimately, increased intention to leave the organisation. Research (Robinson & Morrison, 1995; Morrison & Robinson, 1997; Robinson & Rousseau, 1994) had demonstrated that employees holding different types of psychological contract (relational, transactional, or balanced) treat perceived breach or violations differently. Hence, understanding and managing employee's perceptions would aid in organisational change management, improving employee satisfaction and productivity, and retention.
Firstly, this dissertation seeks to understand the key sources of motivation for employees in Singapore's private banking industry. I plan to study employee's perceptions and effectiveness of the motivation tools used by his organisation. And to reveal any gaps between an organisation's rhetoric and reality. In addition, I would also like to find out if
20 managers have differing views of motivation from their employees as evidenced in Kovach (1980, 1987).
Secondly, I would like to examine the topic of psychological contracts amongst employees in Singapore's private banking industry. With rapid growth and talent shortage in the industry, it is important to develop and retain talent. I would like to evaluate the effectiveness of the concept of psychological contract in explaining employee turnovers. I shall focus on the types of psychological contract held by employees; what, in their perception, constitutes a breach or violation; and the appropriate measures an organisation should take to recover from the breach or violation.
I would like to use the findings in this dissertation to evaluate the effectiveness of the theories and concepts in the literature. Since there are limited literatures on motivation and psychological contract in the Singapore context, I hope to share valuable insights in these two areas with the readers.
4.2 4.2.1
Motivation Introduction Motivation, derived from the Latin word movere, can be defined as the set of
forces that causes people to engage in one behaviour rather than some alternative behaviour (Moorhead & Griffin, 1998). Huczynski & Buchanan (2007) described motivation as the cognitive decision-making process through which goal-directed behaviour is initiated, energized, directed and maintained. In other words, in order to motivate an individual, there must be a desired outcome that affects his behaviour and he must expend effort to achieve the outcome.
21 Organisations want to improve employee motivation in order to enhance their competitiveness (Benkhoff, 1996). In the academic realm, interest in work motivation can be attributed to Taylor’s work on Scientific Management (1911) and the Hawthorne studies (Roethlisberger & Dickson, 1939). The scientific management approach suggested that employees are motivated by monetary rewards and seek to maximize financial returns from their job. On the other hand, the Hawthorne studies gave rise to the human relations approach to motivation. This approach suggested that employees are motivated by nonmonetary rewards such as social environment at work. In addition, favorable employee attitudes results in motivation to work hard (Moorhead & Griffin, 1998).
The major motivation theories can be divided into two categories: process theories and content theories (Campbell, Dunnette, Lawler & Weick, 1970). Content theories are concerned with what initiates or energizes behaviour and includes Hierarchy of Needs Theory (Maslow, 1954), McClelland’s Need Theory (1961), and Two-Factor Model (Herzberg, 1959). Process theories try to predict an individual’s behaviour when subjected to external stimulus and include Expectancy Theory (Vroom, 1964) and Equity Theory (Adams, 1965).
4.2.2
Content Theories Content or Need theories attempt to pinpoint internal factors that energize
behaviour (Ramlall, 2004). One of the most famous content theory would be Maslow's (1943, 1954) Hierarchy of Needs Theory. Maslow defined five sets of goals or basic needs which we try to satisfy. These five needs are physiological, security, affiliation, esteem, and self-actualization. Maslow argued that these needs are organized hierarchically staring from physiological at the bottom and ending with self-actualization at the top. People will
22 seek to satisfy the lower level needs first before being motivated by those higher up the hierarchy. The implications for organisations are that they should develop strategies and programs aimed at satisfying the entire needs hierarchy in order to motivate their employees.
Some critics of Maslow's approach mentioned that individual needs are innate, so that questions of social interaction and culture are seriously downgraded, and that needs are not arrayed in a hierarchical manner (Trigg, 2004; Berl, Williamson & Powell, 1984). Despite the critics, Maslow's theory is still relevant to employee motivation when combined with other motivation theories (Ramlall, 2004; Low & Robertson, 2006).
McClelland's Need Theory (1961) focused on three key needs: achievement, power, and affiliation. Achievement need can be defined as a drive to achieve, excel and succeed. A person with a strong achievement motive is turned on by challenge, derives considerable satisfaction from success, and is fairly realistic about the limits of his personal competence (Cook, 1980). Need for power is the desire to influence or control another individual's behaviour to achieve. Lastly, affiliation need is the desire for close social relationships and activities, whereby one finds satisfaction in being accepted, respected and interacting on a personal basis with others (Cook, 1980).
Herzberg's (1966) Two Factor Theory of Motivation proposes that two distinct sets of factors that lead to job satisfaction and job dissatisfaction. These two set of factors are known as the motivator factors and hygiene factors. Motivators can lead to high levels of job satisfaction and employee motivation. They are achievement, recognition, responsibility, advancement, growth and the work itself. On the other hand, improvement
23 of hygiene factors will remove job dissatisfaction but will not increase employee motivation and performance. Examples of hygiene factors are salary, working conditions, company policy and administration, supervision, relationship with supervisor, relationship with peers, status, security, personal life, and relationship with subordinates. Herzberg (1968) mentioned that job enrichment would bring about motivated employees as it utilises motivators such as responsibility, achievement, recognition, and growth.
Herzberg's theory is controversial as it challenged the dominant theoretical assumptions prevailing at the time that job satisfaction and dissatisfaction could be presented on a continuum, at the midpoint of which, an individual would experience a neutral state being neither satisfied nor dissatisfied (Herzberg, 1966; Bassett-Jones & Lloyd, 2005). There are numerous critics of Herzberg's theory, ranging from Vroom (1964) on the use of recall methodology and self serving bias; Hardin (1965) raised the issue of poor respondent recall in the use of recall methodology; Hulin & Smith (1965) critiqued that Herzberg's results are method-bound. However, there are also research that supported Herzberg's theory. Cummings (1975) concluded that factors producing job satisfaction (motivators) are separate and distinct from factors that lead to job dissatisfaction (hygienics) and these factors can be identified, isolated, and measured within varied workgroups. Results of Bassett-Jones & Lloyd's (2005) survey supported Herzberg's assertions that motivation derives from within and the motivators all relate in some way to a sense of achievement; and less to financial inducements.
4.2.3
Process Theories Process theories focus on how people make choices with respect to desired goals
(Huczynski & Buchanan, 2007). In the context of process theories, an individual makes a
24 conscious decision to select the goals he wants to achieve and the means to attain those goals.
In Equity Theory, Adams (1965) argued that individuals are motivated to act when he perceives that the outcomes or rewards of a social exchange relationship is unfair. It is proposed that the greater the inequity the individual perceives, the more distress the individual feels and he will take actions to restore equity. This would be either to reduce the inputs or to obtain additional rewards until the outcome-input ratio has been restored to an acceptable level. Individual expectations about what constitutes fair outcomes are learned through the socialisation process, and by comparing the inputs and outputs of others. Individuals are concerned not only with the absolute amount of rewards they receive for their efforts, but also with the relationship of this amount to what others receive (Ramlall, 2004). The theory's distress prediction, termed the “norm of equity”, is based upon the assumption that individuals are equally sensitive to equity; that is, the general preference is that outcome/input ratios be equal to that of the comparison other (Huseman, Hatfield & Miles, 1987). However, research (Major, McFarlin, & Gagnon, 1984; Hook & Cook, 1979; Gergen, Morse, & Gergen, 1980; Swap & Rubin, 1983) on individual differences suggested exceptions to the norm of equity such as sex, age, nationality, personality traits, and interpersonal orientation. In addition, the effects of individual differences also vary according to whether experimental subjects are allocating outcomes to themselves and/or others, or whether they are simply reacting to inequitable treatment from others (Major and Deaux, 1982; Huseman et. al., 1987).
The next process theory is the Expectancy theory, whereby it is proposed that individual motivation depends on the valence of the outcomes, the expectancy that effort
25 will lead to good performance and the instrumentality of performance in producing valued outcomes (Huczynski & Buchanan, 2007, Vroom, 1964). The three factors, Valence, Instrumentality and Expectancy, are seen to be driving the individual's behaviour. Hence, the expectancy theory is also known as the VIE theory. Motivation is a product and not the sum of all three factors. Therefore, if any of the VIE factors are low, the motivating force would be low or non-existent. Porter and Lawler (1968) further developed the expectancy theory into a model of work motivation in an attempt to identify the source of valency and expectancies, and to establish linkages between effort, performance, and job satisfaction.
Following expectancy theory, compensation planning should be based, at least in part, on establishing the proper goal and reward combinations that will effectively motivate employee performance (Turner, 2006) . However, Baard (2002) argued that when “managers try different methods of incentives or fear to get productivity out of their subordinates, there is a burgeoning literature (Kohn, 1993) suggesting that the use of incentives and attempts to cajole may be experienced by employees as controlling or pressuring and that such attempts to manipulate people have a significant downside".
4.3 4.3.1
Psychological Contract Introduction Levinson, Price, Munden, Mandl, and Solley (1962) and Schein (1965) coined the
term, psychological contract. Psychological contracts are beliefs, based upon promises expressed or implied, regarding an exchange agreement between an individual and, in organisations, the employing firm and its agents (Rousseau, 2004). However, a psychological contract differs from a formal and implied contract as it is based on an employee's perception and expectations, and may or may not be shared by others
26 (Rousseau, 1989; Lester & Kickul, 2001). Psychological contracts are subjective, residing in the “eyes of the beholder” (Robinson & Rousseau, 1994). The types of promises contained in an employee's psychological contract can be explicitly or implicitly communicated in a written document, oral discussion, or organisational practices and procedures (Rousseau, 1989; Rousseau and Greller, 1994; Rousseau & McLean Parks, 1993; Sims, 1994). Psychological contracts motivate employees to fulfill commitments made to employers when employees are confident that employers will reciprocate and fulfill their end of the bargain (Rousseau, 2004).
4.3.2
Types of Psychological Contracts There are three key types of psychological contracts: relational, transactional and
hybrid (“balanced”). In a relational psychological contract, employees tend to be loyal, seek social support, and make long term, open ended commitments. Employee would favor employer who offer him a relational psychological contract over those offering a transactional contract (Rousseau, 2004).
Transactional psychological contract consists of specific job functions and responsibilities, short term in nature, and is based mainly on promises of monetary exchanges. It is open to constant renegotiations. Both employees and employers are likely to immediately terminate a transactional relationship that fails the meet their needs. A transactional psychological contract can arise as a result of violated or poorly managed relational psychological contract (Rousseau, 2004).
27 The third type of psychological contract takes the “hybrid” or balanced form. It entails long term commitments, mutual concerns (relational attributes), demands high performance outputs and renegotiations (transactional attributes).
4.3.3
Features of Psychological Contract According to Rousseau (2004), psychological contract has six key features:
a) Voluntary choice - As psychological contract is entered into voluntarily by the employee, he will be motivated to fulfill his commitments to the organisation. b) Belief in mutual agreement – A psychological contract is based largely on the perceptions and understanding of the terms and conditions by the employee. Hence, he would act on the assumption that it is agreed mutually, regardless if that is the case in reality. c) Incompleteness – It is seldom possible to have a complete psychological contract right from the start of the employment relationship. Over time, the psychological contract would change and things would be added in or taken out depending on the experience of the employee. d) Multiple contract makers – Many different sources of information within the organisation such as top management, direct supervisor, co-worker, human resource policies, would influence how an employee perceives what should be the correct psychological contract. e) Managing losses when contracts fail – Losses occur when there is a psychological contract breach or violation. How the losses are managed has an impact on the subsequent motivation of the employee. f) The contract as model of the employment relationship - A psychological contract creates an enduring mental model of the employment relationship and provides a
28 stable understanding of what to expect in the future and guides efficient action without much need for practice.
4.3.4
Psychological Contract Violations In the last two sections, I had described the types of psychological contracts and
the key features of a psychological contract. In this section, I will touch on psychological contract violation and the resulting impact on the organisation.
In the dynamic global environment, corporate mergers and acquisitions, outsourcing, downsizing, and restructuring are the order of the day. These trends make it difficult at times for an organisation to fulfill all its obligations to the employees or to be very clear what those obligations are. When an employee perceives that the organisation has failed to fulfill the promised obligations, and felt betrayed, angry and resentful, he is experiencing psychological contract violation. Morrison and Robinson (1997) made a distinction between a perceived breach, a cognitive assessment of contract fulfillment, versus violation, the emotive and affective state that may follow from the belief that one's organisation failed to fulfill it's obligations. Hence, violation is an emotional experience arising from an interpretation process that is cognitive in nature (Morrison & Robinson, 1997).
Various research had shown that psychological contract violation produces strong feelings of betrayal, anger and resentment, leading to reduced trust in the employer, lower job satisfaction, withholding of contributions, reduced engagement in organisationallydirected citizenship behaviour, increased intentions to leave the organisation, and positively correlated to actual turnover (Robinson, 1996; Robinson & Morrison, 1995;
29 Robinson & Rousseau, 1994; Robinson et al., 1994; Rousseau, 2004). Robinson (1996) further showed that the effects of psychological contract violations on reduced employee contributions are enduring. Hence, understanding how to reduce incidences of violations or to manage them when it is unavoidable is crucial for an organisation that seeks to motivate and retain it's employees.
4.3.5
Critics of Psychological Contract
The main critique leveled at the concept of psychological contract is that it has typically been studied from the individual worker’s perspective and the primary focus is therefore the employment relationship at the individual level between the employer and employee (Cullinane & Dundon, 2006; Guest, 2004a). Cullinane & Dundon (2006) critiqued four aspects of the psychological contract. First, the continued use of the contractual concept in the literature is questioned as there are ambiguities surrounding the legitimacy of the term ‘contract’ being subsumed into an unvoiced social exchange interaction. Second, there is the possibility of mixed messages and divergent expectations surrounding the delivery of the deal. In other words, employees might have unrealistic or false expectations and rather than employer having reneged on their obligations. Also, employers might deem fit to change the psychological contract at their discretion and they expect the employees to accept the new terms and conditions. As Guest and Conway (2002) conclude: ‘Senior managers responsible for relevant policy acknowledge that their organizations often fail, partially or more completely, to keep their promises and commitments.’ Third, most literature on psychological contract violations pinned the blame on the failure of the employer to keep their promises due to external market conditions. The structural explanation could be due to the design of the employment
30 relationship under capitalism leading to conflicts of interests between employee and employer, and employee distrust. There could also be possible influences arising from structural factors and institutional inertia. Finally, potentially powerful sources of influence that could serve in constructing an employees’ psychological contract have not been fully explored in the literature. These influencing sources can be internal, such as the management, and external, wider socio-economic factors that have shaped the employee's value and judgment system.
As mentioned earlier, various research (Robinson, 1996; Robinson & Morrison, 1995; Robinson & Rousseau, 1994; Robinson et al., 1994; Rousseau, 2004) has been done on psychological contract from the employee perspective but employer perspectives have been largely unexplored (Guest & Conway, 2002). There is little research within a psychological contract framework on the perceptions of employers and their agents of how they react when they believe that employees have failed to keep their promises or to meet their obligations (Cullinane & Dundon, 2006). Guest (1998) and Rousseau (1998) debated about the validity, feasibility, and utility of employer’s perspective on the psychological contract, and brought increased attention and attempts to apply the psychological contract to analysis of the employment relationship (Shore & Coyle-Shapiro, 2003). However, as Guest (2004a) has acknowledged, there is much more to do if the psychological contract is to become a viable framework capable of understanding the complex and uneven social interactions of both employer and employee.
4.4
Key Summary In the literature review section, I presented key motivation theories such as
Maslow Hierarchy of Needs, McClelland's Need Theory, Herzberg's Two Factor Theory
31 of Motivation, Adam's Equity Theory, and Vroom's Expectancy Theory. These motivation theories seek to explain what or how to motivate an individual to expend effort to achieve the desired outcomes. However, the theories diverge as to whether motivation is intrinsic to the individual or is in response to external stimuli. I will attempt to apply these theories towards explaining the sources of motivations from the research findings and evaluate if there are any gaps between theories and research findings.
The concept of psychological contract has gained prominence in recent years due to research works by Rousseau (1989, 1990, 1995, 1996, 1998, 2001, 2004), Robinson (1996), Robinson et. al. (1994), Morrison & Robinson (1997) and many other academics. Psychological contract is subjective as it is based on an employee's perception and expectations. Psychological contract can motivate employees to fulfill commitments made to employers when employees are confident that employers will reciprocate and fulfill their end of the bargain (Rousseau, 2004). In this dissertation, I will validate the theoretical concept of psychological contract and violations against the research findings for accuracy.
Psychological contract has been criticised as one sided as it is mainly studied from the employee's perspectives (Cullinane & Dundon, 2006; Guest, 2004a). To address this, I intend to have research participants from different organisational levels and I hope to understand psychological contract from organisational agents' point of view.
32
5
RESEARCH METHODOLOGY
In this section, I will be developing the research methodology, deciding on the
research approach, data collection approach and research methods based on the research questions raised in the preceding section.
5.1
Research Approach A methodology can be defined as a general approach to studying research topics
(Silverman, 2004). Qualitative research is a naturalistic, interpretive approach concerned with understanding the meanings which people attach to phenomena (actions, decisions, beliefs, values etc.) within their social worlds (Denzin & Lincoln, 2000; Snape & Spencer, 2004). The key elements of qualitative research are small and carefully selected sample populations; close, interactive contact between researcher and research participants; detailed data which are extensive and information rich; exploratory and interpretive in nature; suitable in exploring complex issues; studying processes that occur over time; and produces output that focus on interpretation of social meaning (Snape & Spencer, 2004; Ritchie & Lewis, 2004).
Based on the research questions derived in the preceding section, I would seek to understand and interpret the perspectives, history and, experiences of the research participants. This research seeks to identify the participants' sources of motivation, personal experience, and perceptions of employer’s motivation techniques. In addition, I would like to establish the types of psychological contract research participants have with their employers, what contributed to that outcome, and their feelings and actions in the event of a breach or violation. The research participants need to have different
33 demographics, career paths and working experience, and personal circumstances in order to give balanced and representative view. The research approach used are closely aligned with the key elements of qualitative analysis. Hence, the research methodology used for this study would be the qualitative approach, taking on the form of an explanatory research, which is concerned with why phenomena occur and the forces and influences that drive their occurrence (Ritchie & Lewis, 2004).
5.2
Data and Method Qualitative data collection methods are dependent on the data type. The two broad
categories of qualitative data are naturally occurring data and generated data. Approaches used for collection naturally occurring data will yield data which is an “enactment” of social behaviour in its own social setting, rather than a “recounting” of it generated specifically for the research study (Ritchie & Lewis, 2004). Some examples of methods to collect naturally occurring data are participant observation, observation, documentary analysis, discourse analysis, and conversation analysis.
Generated data collection methods usually requires the research participant to reconstruct or recount attitudes, beliefs, behaviour or other phenomena (Ritchie & Lewis, 2004). Some methods to generate qualitative data are biographical methods, individual interviews, paired (or triad) interviews, and focus groups. Very often, generated data is the only means to understand certain psychological phenomena and allows the researcher to gain insights of the participants' perspectives and interpretations of the social world.
In the context of this project, I would be using generated data as I need to understand the participants' beliefs, interpretation, attitudes and perceptions on motivation
34 and psychological contract. The next step would be to select the appropriate data generation method. Due to the somewhat sensitive and personal nature of the research topic, I would be using individual in-depth interview as my research method. In-depth interviews are commonly used in qualitative research and allows focused attention on the research participant. The key features of in-depth interviews are flexibility, interactive, enables researchers to achieve depth of answer through use of appropriate techniques, and allows generation of new thoughts or knowledge (Legard, Keegan & Ward, 2004). During the interview, I will be able to investigate thoroughly and understand the participant's contexts, perspectives, experiences, and decision making process. After the interviews, the data would be reviewed using conversation analysis to determine underlying themes or trends.
5.3
Sampling Strategy In general, qualitative research uses non-probability samples to select the
population for study. In a non-probability sample, units are deliberately selected to reflect particular features of or groups within the sampled population (Ritchie & Lewis, 2004). In this project, I will be performing purposive sampling with small scale heterogeneous samples so that we can identify if there are common trends amongst interviewees of diverse backgrounds.
Once the sampling strategy had been decided, I would proceed to establish the selection criteria and sample selection. Sample selection is based on the two principles of qualitative sampling, that is symbolic representation and diverse sample within the boundaries of the defined population (Ritchie & Lewis, 2004). As a result, the final samples selected should have the following desired characteristics:
35
? ? ? ? ? ? ? ?
Sample size: 8-10 Work experience: Two to fifteen years Organisational levels: Equal mix of individual contributors and supervisors Gender: Equal mix of male and female Age: Between twenty five to forty five Marital status: Equal mix of single and married participants Job nature: Equal mix of client facing and non-client facing staff Employment status: Eighty percent are staying with their current organisation and twenty percent are serving their notice period and waiting to join another organisation.
?
Employer: Foreign financial institutions
The research participants are sourced through my personal contacts within the private banking industry. They are briefed on the intents and purposes of the project, and assured of privacy and confidentiality of the opinions they had provided. With the above sample population, I am confident that I would able to address the issues that are contained within the research questions.
5.4
Interview Process The in-depth interview has a few established process steps (Rubin & Rubin, 1995).
In general, during the interview, the researcher seeks to channel and focus the interviewee's attention to a specific set of issues or topics. My interview process would follow the six stages outlined in Legard et. al. (2004). The six stages are arrival, introducing the research, beginning the interview, during the interview, ending the interview, and after the interview.
36
My interviews for this project lasted 40 minutes on average. The interview location is a small discussion room within an office so as to avoid outside distraction. At the beginning of the interview, I first put the interviewee at ease by making casual conversations. Thereafter, I would introduce the research topic by providing a clear reiteration of the nature and purpose of the research, reaffirming confidentiality, and seeking permission to record the interview (Legard et. al., 2004). Once into the interview proper, I asked opening questions to collect background and contextual information. These information are important as they help me to formulate the questions to be asked and plan for the approach of the interview. For example, their personal circumstances can serve as a starting point for further discussions on motivational sources. Their work experiences can shed light on their attitude towards psychological contract.
During the interviews, the questions are divided into two major sections. In the first section on sources of motivation, the questions, adapted from Low & Robertson (2006), revolve around:
? ? ? ?
What are their key sources of motivation? What needs or motives primarily motivate them? What are their strongest (weakest) forces of motivation? If they are managers, their views on their subordinates' key sources of motivations.
Part two of the interview would focus on psychological contract. The questions would be on:
?
How would they describe their employment relationship and feelings towards their organisation?
37
?
Have they experienced breach, violations, or unfulfilled promises from agents organisational agents?
?
What are their responses and reactions after these incidents?
After finishing majority of the questions on motivation and psychological contract, I would signal the end of the interview through use of phrases such as “the final topic...” or “in the last few minutes...” (Legard et. al., 2004). I ensured that all follow-up questions and issues had been resolved. After the interview, I thanked the interviewees and assured them once again that the information provided will be kept confidential.
5.5
Data Analysis The interview recordings and field notes would be transcribed and analysed using
conversation analysis. In performing the conversation analysis, I identify sequences of related talk, examine how interviewees take on certain roles during the interviews, and look for outcomes and trace the sequence from which the outcome was produced (Silverman, 2001). Through the use of conversation analysis, I would uncover underlying themes for each topic. Each of these themes would be presented in details in the next chapter.
38
6
FINDINGS
In this section, I will be presenting the findings from the in-depth interviews
conducted over a two weeks period. All invited participants contributed their time and opinions to the research topic readily. Out of 10 participants, 3 are currently holding supervisory positions and the rest are individual contributors.
6.1
Motivation The first section of the interview focused on the interviewees' sources of
motivation and the current motivational techniques used by their organisations. Consistent with findings from literature (Kovach, 1995; Benkhoff, 1996; Herzberg, 1968; Low & Robertson, 2006), 80% of the participants mentioned that monetary rewards is not the most important motivating factor though it is critical in Singapore, which is facing high inflationary pressures. Instead, participants mentioned “challenging and interesting work” (90%), “sense of achievement and recognition” (70%) and “trust and respect” (90%) as the top three important motivating factors to them.
All interviewees mentioned that their organisation use monetary rewards as the main motivation tool, supplemented by non-monetary rewards such as long service awards, service excellence awards, and training. The non-monetary awards seek to satisfy the employees' needs for achievement and growth. However, most interviewees are
skeptical as to the retention effect of monetary rewards. It is mentioned that “everyone is only waiting for the bonus before they leave the bank”, “I wonder who will be left after the bonus is handed out” (interviewees' inputs).
39 One interesting finding is that interviewees who are also supervisors still hold the opinion that money is the key motivation factor of their subordinates. “The junior staff are motivated by money” and “staff are easily lured away by competitors paying 10-20% more” are common inputs from the interviewees. This self referencing bias is consistent with findings in Kovach (1987, 1995) and Gellerman (1963) stated that “it is quite clear that money's reputation as the ultimate motivator is going to be a long time a-dying.”
I summarized the key perceptions and meanings expressed by the interviewees on their monetary and non-monetary needs in Table 1, adapting the format from Low & Robertson (2006) . Based on conversation analysis of the interview data, I had identified five key themes that were consistently brought up by the interviewees on the topic of motivation. The five key themes are “trust and respect”, “challenging and interesting work”, “sense of achievement and recognition”, “transparent appraisal and reward system”, and “being kept informed of things”. Each of these key motivators would be discussed in greater details in the analysis and discussion section.
My Monetary Needs and Perceptions are:
Meaning
“Everything is so expensive now! Our increments Money is still a basic necessity and are not keeping up with inflation.” people need to satisfy their “Bonus is necessary as it supplements our physiological needs. income.” “Money is not the most important source of motivation.” My Non-Monetary Needs and Perceptions are: Meaning “People only listen to you if you hold a higher ranking.” “Some managers resort to “bullying” tactics to get things done their way.” “My supervisor thinks I don't know anything.” People wants to be respected as a person regardless of their status in the organisation. They want to feel valued as an individual.
“I feel good when I am being recognized for good People feel motivated when they are client service. It motivates me to work harder.” recognized for a job well done. Also, “I like the challenging work environment as they like to be given challenging and
40 everything is dynamic!” interesting jobs. “The job is interesting as we face different situations and challenges everyday.” “You will get promoted if you hang around long enough.” “There is no clear linkage between performance and monetary rewards.” “I am not rewarded for the things I had done.” “I don't get regular feedback from my supervisor on my performance!” “Management and Human Resource are not doing enough to motivate the staff.” It's important to have procedural and distributive justice. People want to be assured that performance appraisal and reward management is a fair process.
“Career mobility is just management rhetoric.” People are interested in developing a “There's no proper career planning program in long term career with their place.” organisation. “The Management Associate program is just a mass recruitment exercise.” “Current management is not listening to the staff.” “Employee surveys are useless. Management only pays lip service and doesn't act on the findings.” “My boss is not open to new ideas and opinions.” Source: Survey Responses, Jan-Feb 2008 The staff wants to be kept informed of what's happening in the organisation and have their say on how things are being run.
Table 1. Interviewee response on both monetary and non-monetary needs/rewards.
6.2
Psychological Contract The second half of the interviews focused on the interviewees' perception and
experience of psychological contract. The key themes identified for psychological contracts are “awareness of psychological contract”, “psychological contract violations are common and unavoidable”, and “clarifications of psychological contract”.
6.2.1
Awareness of Psychological Contract All the interviewees are aware of the psychological contract they have with their
organisation. With the changing business environment and the demise of the “employment for life” mentality, the interviewees embraced either a hybrid or a transactional
41 psychological contract. This is because they had come to realize that “nobody is indispensable and the company doesn't owe you a living”, “hire and fire is very common in the financial industry”, and “we have to take care of ourselves and look after our own careers” (interviewees' inputs).
Surprisingly, seventy percent of interviewees already have a preset type of psychological contract they want to have with the organisation when they join. It is rarely influenced by the work environment, immediate supervisor or colleagues at the onset. This can be attributed to the fact that the interviewees, having worked a few years prior to joining their current organisation, had seen numerous perceived breaches and violations of psychological contract. To them, human resource department, senior management and their immediate supervisors, are the agents of the organisations and their actions are used as a proxy of the organisation. These three areas are commonly pointed out as to where the perceived breaches or violations of psychological contract start or perpetuate. Interviewees vividly recalled incidents whereby “Management never kept their promises to reward us for our stellar performance”, “Our team is treated like second class citizens in the organisation”, “My supervisor promised me a promotion that never materialized”, or “There are so many management changes over the past few years that I am unsure if my psychological contract is still valid”.
6.2.2
Psychological Contract Violations are Common and Unavoidable All the interviewees reported reduced trust in the organisation after one or more
psychological contract violations. They experienced anger and frustrations but “based on my past experience, this is to be expected” (interviewee's inputs). They had come to accept the fact that these incidents are “unavoidable and it's only a matter of time before one
42 happens.” With each violation, interviewee responded with reduced contributions, levels of trust, and organisation citizenship behaviour.
One of the most significant incident of psychological contract violation is reneging and lack of realistic job previews recounted by two interviewees. They were recruited by a well known financial institution under the prestigious management associate program. This is a well known program in the financial industry and recruits can expect fast track career progression commensurable with strong performance. They were told that they will be groomed to become private bankers in three to five years' time but they have to start as banker's understudy first. However, the new hires quickly discovered that the understudy role is “no more than a high class order taking clerk and errand boy” to the private bankers. At the same time, they also realised that “the actual job scope is monotonous and vastly different from their expectations”. Their sense of breach and violation is further aggravated by the fact that they are bonded to serve out a two years contract, failing which they have to pay a significant termination penalty. As a result, most recruits maintained a transactional psychological contract with the organisation, and more than eighty percent of the recruits left the company upon completion of the contract.
For supervisors, they are sometimes not in control of the breaches or violations of psychological contract with their employees. Interviewees remarked that “This is due to the new corporate or human resource policies being implemented”, “I am just carrying out the instructions from head office”, or “The employee has an unrealistic expectation that is influenced by rumors and hearsay from his colleagues”. The supervisors try to soften the impact when breaches or violations happen but they are “limited in what they can do”.
43 6.2.3 Clarifications of Psychological Contract Some interviewees commented that different organisations have very diverse approaches when it comes to clarifying the psychological contract with the employees. Some organisations are more structured and had in place orientation programs whereby the human resource officers and the supervisors would highlight key expectations, obligations at the beginning. Other organisations, however, adopt a laissez-faire approach and it is left to the supervisor's discretion to discuss psychological contract with the employees. In the absence of clarifications from the organisational agents, employees would normally “learn about their obligations and the organisation's track record of fulfilling promises through anecdotes and interactions with fellow colleagues” (interviewee's inputs). The interviewees agreed that it is good practise to clarify psychological contract and “it would be great if someone had clarified the expectations at the beginning so that everyone starts out on the same page”. This is so that “I can carry out my duties in full confidence that it is in line with the organisation's expectations” and “there will be no surprises during performance appraisal time”.
Supervisors mentioned that they would try to “set realistic expectations with their staff when they come on board” so as to “avoid complications and misunderstanding further down the road”. Clarifying the psychological contract with the employee in the early stages would also enable the supervisor to apply corrective actions if the employee did not fulfill his obligations under the exchange relationship.
44
7
ANALYSIS AND DISCUSSION
Based on the findings from the interviews, I would present the identified themes
from each section of the interviews in this section and reference them to the literature and theories reviewed earlier.
7.1
Motivation Most of the key motivators identified from analysis of the interview transcripts are
in agreement with the literature (Herzberg, 1966; Lawler & Porter, 1968; Vroom, 1964; Adams, 1965) reviewed earlier. To recap, the five key motivators are “trust and respect”, “challenging and interesting work”, “sense of achievement and recognition”, “transparent appraisal and reward system”, and “being kept informed of things”. Out of the five motivators, “trust and respect” can be linked to either status (a hygiene factor) or recognition (a motivator) (Herzberg, 1966). However, “trust and respect” can also be considered as fulfilling the “Esteem” needs on Maslow's Hierarchy of Needs (1954).
7.1.1
Trust and Respect The first source of motivation for the interviewees is “trust and respect”. The
importance placed on trust and respect could be due to the fact that Singapore is an Asian society steeped in traditional value systems and culture. The concept of “face” is very important in everyday life. Employees can be motivated if they feel that the organisation, their bosses or peers give them “face” or respect. “I am motivated to work harder and contribute more as I feel that my managers respect my views” and “The trust placed in me by the company motivates me to put in extra effort” are common inputs from the interviewees who regarded trust and respect as key motivating factors. Interviewees had
45 also mentioned that respect from colleagues in the organisation makes it “easier to get things done” leading to a sense of achievement and accomplishment. The interviewees are experienced financial industry professionals, hence, they appreciate if the organisation trust them to “get the job done” and not “restrict them with too many bureaucratic process”. To the interviewees, trust is also a two way social exchange. They will reciprocate and place their trust in the organisation and management if they perceive that they had been given enough trust. This is consistent with the findings of Costigan, Ilter & Berman (1998), which reported a positive correlation between affect-based trust in work relationships and employee behavior such as motivation, and personal initiative to improve professionally. Fifty percent of the interviewees had indicated that if the organisation or management do not trust or respect them or vice versa, it would contribute to their intentions to leave the organisation. This again coincides with the findings of Costigan et. al. (1998), whereby employee trust of the CEO and top managers is negatively related to intention to voluntarily leave the firm. It is interesting to note that interviewees holding more senior or supervisory positions place more emphasis on trust and respect. It could be attributed to the fact that they are motivated by power as suggested by McClelland (1961), and McClelland & Burnham (1976).
7.1.2
Interesting and Challenging Work The next key motivating factor, “interesting and challenging work” had been
identified as a top motivator in various literature (Kovach, 1980, 1987; Benkhoff, 1996). Interviewees felt that they need to be “challenged to their full potential instead of doing mundane stuff”, and “I get bored after I had mastered the skills require for my role after one or two years”. The human resource officers and management are aware that employees are looking to develop themselves fully in different areas. Hence, some
46 organisations have a job rotation policy whereby employees are allowed to apply for internal transfers after a minimum period of service, say two years, in their current job roles. However, managers are concerned that constant rotation of staff out of their teams is not healthy in the long term due to knowledge loss and lack of continuity. Therefore, managers would instead carry out job rotation and job enrichment (Herzberg, 1968) for their employees within the same team to motivate them. Sometimes, this led to employee perceptions that “career mobility within the company doesn't work as intended”, “my boss discourages me from applying for a internal transfer”, and “some managers resort to emotional blackmail in order to retain a key staff”. In this instance, a policy that was originally intended to motivate employees became human resource rhetoric and might even lead to perceived breach or violation of psychological contract. Putting this in context of Expectancy Theory, the employee's motivation might decrease as the valence of the outcome is not as per expected and the employee realized that performance is not instrument in getting the desired outcome.
One key push factor mentioned by the interviewees for leaving the organisation is long term career advancement. Although pay is a signaling tool used by the prospective employer to entice new recruits to join them (Cable & Judge, 1994), interviewees still look for long term prospects and challenging work (Martin, 1979). They opined that interesting and challenging work would increase their market value and employability, and that would in turn bring them more monetary rewards.
7.1.3
Sense of Achievement and Recognition Closely linked to the key motivator of “challenging and interesting work” is the
third motivator, “sense of achievement and recognition”. Consistent with Kovach (1987,
47 1995) and Herzberg (1966), most interviewees mentioned that a sense of achievement and recognition is what drive them and keep motivated in their job. In this aspect, interviewees reported that their employers have various formal recognition programmes in place. These programmes include long service award for employees who had served at least five years (to recognise and reward loyalty), service quality awards (to reward customer-oriented behaviour and continuous process improvement), and team challenge awards (to
recognise and promote teamwork). Besides the formal recognitions, interviewees mentioned that it is also important to be given positive strokes and verbal affirmative actions (Low & Robertson, 2006; Arnold, 1988). As supervisors, some interviewees apply the principles of recognition to their staff, and celebrate milestones and achievements together as a team.
Another form of recognition discussed during the interviews would be sending employees for training (Ramlall, 2004; Benkhoff, 1996). The interviewees interpret it as a signal to the employee that the organisation is taking an interest in his career advancement, growth and development. This would be considered a motivator, leading to job satisfaction and motivated employee (Herzberg, 1968).
Interviewees reported that the aggressive American corporate culture prevalent in their organisations made them “push and stretch themselves to the limits to achieve more.” It is very common for one to multi-task in several roles or handle several projects simultaneously. Although the interviewees felt a sense of achievements after the completion of the tasks, they also lament the fact that they have no work-life balance. As a result, some interviewees reported feeling “fatigue and demotivated after several years.” At this point, some interviewees left their American employers and joined European or
48 local banks, thinking that the slower work pace will satisfy their need for personal time. Interestingly, they realised that they are not suitable for the slower pace as “nothing gets done as fast as before.” Kohn (1993) mentioned that “no artificial incentive can ever match the power of intrinsic motivation.” For these interviewees, their intrinsic motivation would be the sense of achievement in completing tasks, getting the associated recognitions, and move on to the next job on hand.
7.1.4
Transparent Appraisal and Reward System In this section, I will be discussing “transparent appraisal and reward system” as a
key motivator. Most interviewees' organisations have gone to great lengths to design their performance appraisal and reward system. The employers usually attempt to incorporate motivation theories such as Expectancy Theory, Needs Theory and Equity Theory into a practical framework to motivate employees to higher performance. The rhetoric of the appraisal system is that it fosters an environment where continuous personal and professional growth is encouraged, and where employees understand employers' expectations of high performance and individual development. Steensma & Visser (2006) had been shown that perceived procedural justice in the performance appraisal system succeed in promoting feelings of satisfaction, organisational commitment and motivation of the employees. However, the interviewees had feedback that the reality experienced is far removed from this ideal.
During the interviews, participants opined that non-transparent appraisal and compensation system actually reduces employee motivation. At times, there is no clear linkage between their performance appraisal ratings and the amount of increments and bonus awarded. This leads to employee mistrust of the validity of the appraisal instrument
49 (McGregor, 1957). In fact, they might perceive “inequitable” rewards given to certain individuals to be due to crony effect (Redman, 2001), and deem the appraisal exercise more political than objective (Longnecker et al., 1987). Another reason contributing to the mistrust is that the performance evaluators, normally the direct supervisors, might have perceptual biases (Swiercz et al., 1993). The lowly rated employees will feel a sense of inequity and lack of procedural justice (Folger & Konovsky, 1989). As a result, these employees’ motivation is reduced, which in turns lowers their performance (Locke, 1975) and it becomes a self-fulfilling prophecy that they are low performers. These demotivated employees might even resort to social loafing (Comer, 1995).
The issue of non-transparency in reward and appraisal system is further exacerbated by the fact that for Singapore's private banking industry, most employees are given discretionary bonuses. The only exceptions would be the relationship and product managers who are normally on commission or incentive plans. The manager would be given a bonus pool for his team. The bonus would be allocated to the team members at his discretion. As a consequence of inadequate reward practices, individual motivation is affected and lowered, leading to increased intentions to leave (Porter & Lawler, 1967, 1968; Martin, 1979) (Figure 1). The employee’s relationship with the organisation becomes transactional, and develops organisational cynicism in the process (Ulrich, 1998; Wilkerson, 2002).
50
7.1.5
Being Kept Informed of Things Last but not least, interviewees mentioned that open and timely communication
from the management “projects a sense of transparency and confidence.” At the point of communications, management should also “invite suggestions, inputs and involvement from the employees.” In doing this, employees can are assured that they are part of the decision making process and their views are taken seriously. Very often, interviewees experienced situations whereby as employees, they are the last group of people to know about corporate restructuring, downsizing or mergers and acquisitions.
Besides top down communication from the management, it is also important to conduct employee attitude surveys to try and “understand what is the heartbeat of the staff population” (Kovach, 1987, 1995; Arnold, 1988; Martin, 1979). However, interviewees view the employee surveys as management rhetoric. Very often, results and findings from
51 such surveys are not acted upon by the management or management does not allocate enough resources and attention to address the shortcomings.
As part of communication, interviewees also mentioned that timely and open performance feedback would provide motivation as it provides them with directions and guides them towards the desired outcomes (Ramlall, 2004; Low & Robertson, 2006; Kovach, 1987). It is shown by Martin (1979) that higher amount of formal communication will produce lower amounts of intentions to leave, thereby confirming our findings that communication from the management and supervisor is a key motivator and would contribute towards employee retention.
7.2
Psychological Contract The concept of psychological contract is not alien to the interviewees, having
learned about the concept during one of their earlier academic pursuits or management trainings. Hence, the interviewees can readily share their experiences of psychological contracts in various organisations. From the interviews, the key themes identified for psychological contracts are “awareness of psychological contract”, “psychological contract violations are common and unavoidable”, and “clarifications of psychological contract”. I will discuss each theme in more details in the following sections.
7.2.1
Awareness of Psychological Contract The interviewees are aware of the concept of psychological contract even though
they might not be aware of its academic nomenclature. The interviewees had been using it in some shape of form to guide their behaviours, and to judge if the employers are fulfilling their end of the bargain (Rousseua, 2004). Psychological contracts are used to
52 supplement the formal employment contracts signed between the employee and the employer as not all obligations and commitments required are clearly spell out. One key difference of the interviewees' psychological contracts and that reported in Robinson & Rousseau (1994) and Rousseau (1989, 2004) is that seventy percent of the interviewees have a specific type of psychological contract they want to have with their organisation when they join, be it relational, transactional or balanced. It might be changed or influenced during the course of employment with the employer. The reasons for the change could be due to increased trust in the organisation or perceived breach or violations of the psychological contract (Robinson & Rousseau, 1994; Morrison & Robinson, 1997).
As mentioned in the findings section, the types of psychological contracts commonly expressed by the interviewees are transactional or hybrid/balanced. This is because most of the interviewees are experienced finance professionals who had worked at one or more financial institutions. This is consistent with the findings of (Raja, Johns & Ntalianisthe, 2004) whereby it is mentioned that past job experience has a significant impact on shaping employees' psychological contract. They had witnessed the cyclical nature of the financial industry and had encountered repeated violations of their psychological contract. To them, organisations violating the psychological contract is a norm and is bound to happen during the tenure of one's employment, consistent with findings of Robinson & Rousseau (1994). Hence, by having transactional or balanced psychological contract, and lowered trust at the onset, they hoped to avoid the strong feelings of betrayal and deeper psychological distress (Rousseau, 1989) that may accompany subsequent violations. They are also more likely to stay vigilant and scrutinise every move by the employer for signs of unfulfilled promises, perceived breach and violations (Morrison & Robinson, 1997).
53 7.2.2 Psychological Contract Violations are Common and Unavoidable All the interviewees reported having experienced, in their opinions, either perceived breach or violations of the psychological contracts by their organisations. Interviewees mentioned that in most cases, the causes of violations are due to reneging and/or incongruence (Morrison & Robinson, 1997). Reneging had been defined as when the agents of the organisation recognise that an obligation exists but they knowingly fail to follow through on that obligation. Reneging occurs either because the organisation is unable to fulfill a promise or because it is unwilling to do so. Incongruence occurs when an employee has perceptions of a given promise that differ from those held by the organisational agent or agents responsible for fulfilling that promise. (Morrison & Robinson, 1997) However, approximately seventy five percent of the incidents mentioned by the interviewees attributed the cause of violations to reneging by the supervisors, human resource department or the senior management team. Despite the high percentage that attribute violations to reneging, it must be noted that experiences reported by the interviewees could be clouded by ego defenses due to the use of recall methodology (Bassett-Jones & Lloyd, 2005).
Interviewees recognised the fact that violations of the psychological contracts are unavoidable given the dynamic nature of today's business environment, and organisations need to constantly evolve in order to stay competitive and relevant (Morrison, 1994; .Robinson & Rousseau, 1994). In part, acceptance of change can be attributed to the Government's push for structural change in Singapore's economy and called upon people to change their mindset about employment contracts and relationships. Changes often lead to violations of contracts, reduced trust of the employees and shifts in the types of psychological contracts employees have with the organisations. However, the interviewees
54 are beginning to realise that, for the time being, the level and direction of power symmetry within the employment relationship (Emerson, 1962) are stacked in their favor. This is due to the talent shortage and increased number of financial institutions setting up operations in Singapore (Business Times, 2008a, 2008b; Straits Times, 2006a). This results in the organisations' agents less likely to renege as the costs of reneging would outweigh the benefits. It would be more detrimental to the organisation if the employee withdraws his contributions or leave (Morrison & Robinson, 1997). Until such time when the Singapore Government and the private sectors are able to train enough private banking professionals, employees will have more power in the employment relationship.
Supervisors interviewed mentioned that on occasions, they are forced to violate the psychological contract as the organisation and it's agents or external circumstances do not allow them to fulfill the promises. They have to adhere to the organisation's protocol and policies. Despite that, supervisors try their best to apply the concept of psychological contract to their subordinates as a form of motivation and management tool. Through the use of psychological contract, the supervisors hoped to align employees' expectations and reduce perceptions of breach and violations due to incongruence. By constantly discussing and reaffirming the psychological contracts with their staff, they hope to avoid cognitive dissonance between the two parties. This is consistent with the findings of Ronbinson & Rousseau (1994) which suggested that managers who promote open two-way communication may be able to nip in the bud discrepancies in employer commitments and employee experiences. Indirectly, by building trust and confidence of the employees in the organisation, the supervisors hope to elicit organisational commitment, motivation and reduce intentions to leave the organisation.
55 7.2.3 Clarifications of Psychological Contract Following from the previous theme of psychological contract violations, interviewees brought up the topic of clarifying the psychological contract. Morrison & Robinson (1997) posited that the other root cause of psychological contract violation is incongruence. Therefore, it follows that if the psychological contracts are clarified by the organisation or its agents from time to time, perceptions of breach or violations should be reduced (Sims, 1994; Morrison, 1994). Morrison & Robinson (1997) also mentioned that accurate feedback will make it more difficult for employees to hold biased perceptions of their performance and contributions, thereby reducing feelings of unmet promises, contract breaches and violations.
However, two interviewees reported significant incident of violation due to reneging. In this instances, the human resource officers did not provide realistic job previews during recruitment resulting in a mismatch between reality and interviewees' expectation. This violation is the result of the organisation's inability to fulfill promises made at the point of recruitment (Robinson & Rousseau, 1994). In the end, a lot of their fellow recruits left the organisation upon completion of their two years bond, leading to increased costs to the organisation.
Nine of out of ten interviewees echoed the importance of clarifying the psychological contract as early as possible, preferably during the interview process (Sims, 1994) or when the recruits first join the department. Otherwise, incongruence might develop due to divergent schemata, complexity and ambiguity of obligations, and miscommunication (Morrison & Robinson, 1997).
56 As the nature of psychological contract is such that it is perceptual and constantly evolving (Rousseau, 1989, 1998), the interviewees reported that they often seek confirmation of their perceptions through social interactions with colleagues, communications with supervisors, and simply observing organisational developments. The information collected during these processes helped shape their beliefs and type of psychological contract developed, be it transactional or balanced. They also remain vigilant and lookout for signs of unfulfilled promises. One out of two interviewees would voluntarily seek clarifications with the supervisors or human resource officers whenever they perceive a breach or violation.
57
8
CONCLUSIONS
In this section, I will discuss the implications of the interview results for
organisations in the Singapore private banking industry, limitations and suggestions for future research, and provide a summary of the dissertation.
Addressing the issues raised by the interviewees on the topics of motivation and psychological contract, I propose some strategies to improve employee motivation and mitigate negative impact of psychological contract violations.
8.1
Motivation In this section, I will recommend some solutions to motivate employees based on
the five identified themes: “trust and respect”, “challenging and interesting work”, “sense of achievement and recognition”, “transparent appraisal and reward system”, and “being kept informed of things”. From the research findings, the key motivation factors mentioned by the interviewees are consistent with the established literature. Hence, it is recommended that organisations should build and implement motivation practices based on sound theories (Ramlall, 2004).
In today's work environment, employees are no longer receptive to command and control management style. The interviewees had indicated that they wanted the organisation to treat them with “trust, decency, and respect”, employees should not be “just a number in the system”. Hence, organisations should trust, and delegate decision making authority to its employees.
58 Providing employees with challenging and interesting work can come in many forms. The usual recommendations would be job enrichment (Herzberg, 1968) and job rotation. However, I would also venture to add that there should be periodic two way communications between the employee and his supervisor to discuss on career planning and development. In this way, the supervisor can better understand the employee's needs and can plan for the employee's career progression using need, expectancy and equity theories. The employee also benefits as he can understand what skills is required for him to grow professionally. To prevent job rotation and internal labour market from becoming just another human resource rhetoric, supervisors should encourage such transfers for their good performers. This helps to groom and develop employees for the organisation and will also contribute to employee retention.
All organisations implement some form of performance appraisal systems to evaluate their employees' performance and to determine the amount of compensation and bonuses to be awarded. However, it can be demotivating for the employees if the performance appraisal system is seen as non-transparent, unfair and inequitable (Longnecker et al ,1987; Ramlall, 2004; Redman, 2001). Performance evaluators such as supervisors and human resource officers should be adequately trained to reduce perceptual biases. The mechanics of the performance appraisal system and the link between performance and rewards dispensed must be clearly communicated to employees. The performance appraisal system should be multi-dimensional and if possible, a three-sixty degree performance evaluation method should be used. Employees should be assessed at regular intervals throughout the calendar year and given performance feedback instead of it being an annual affair.
59 Following up on the expressed needs of the interviewees to be kept informed, it is recommended that organisations constantly communicate to the employees on business strategies, organisation performance and developments, and seek feedback from the employees. Annual employee attitudinal surveys should be carried out to find out what employees feel about the organisation and its agents (Kovach, 1980, 1987, 1995; Low & Robertson, 2006; Ramlall, 2004). To motivate employees further, management must dedicate resources to tackle issues identified from the surveys and communicate the actions plans. This would increase employee confidence that their views are valued and taken seriously.
At the business unit levels, supervisors must coach and mentor their employees by providing timely performance feedbacks and a sense of direction. In addition, positive feedbacks would give individuals acknowledgment and sense of self esteem that can influence their level of effort (Benkoff, 1996).
8.2
Psychological Contract In terms of psychological contracts, it is proposed that organisational agents such
as senior management, human resource department and the direct supervisor must work together with the employee to fulfill both parties' contractual obligations. It is important to act in good faith and signal concern for each other's interests (Rousseau, 1996). Also, the organisational agents must be consistent in the implementation of the psychological contract throughout the organisations (Rousseau, 2004). When it is deemed necessary to change the psychological contract, it can be done via accommodation or transformation (Rousseau, 1996). Accommodation is the preferred choice for change management as it involves changing or modifying terms and conditions within the boundaries of the existing
60 contract. Hence, employees might feel more receptive as the original contract still exists. On the other hand, transformation is a more drastic move as it implies the creation of a new contract. Rousseau (1996) highlighted the four stages of successful transformation as effective communication of reasons for the change; prepare for change by dismantling the old contract; creating a new contract and mindset; adopt new contract throughout all levels in the organisation. It also helps if the organisation can build flexibility and creativity when changing the psychological contract so as to minimise sense of contract breach and violations (Rousseau, 2004).
It is important to buildup and maintain employees' perception of trust and contract fulfillment as prior trust had been shown to moderate the impact of contract breach (Robinson, 1996). Senior management should have open communications and clarifications with the employees. Also, they can reduce reneging on their obligations by not over promising in the first place. Human resource officers should provide realistic job previews during recruitment, and continue to clarify the psychological contract through frequent communications after the employee is hired (Sims, 1994; Morrison & Robinson, 1997). It has been shown from the research findings that employees felt betrayed and violated if they are not given realistic job previews during recruitment and that contributed strongly to their subsequent intentions to leave the organisation.
For supervisors, it is recommended that they have periodic discussions with their employees to minimise incongruence. This should prevent feelings of violations as both parties are clear about what is expected of them in the exchange relationship. Although it is impossible to completely eliminate psychological contract breach, organisational agents
61 can reduce and manage negative feelings by providing clarifications, validations, and honest explanations for the occurrence.
8.3
Limitations and suggestions for future research Motivation and psychological contracts are two very complex and broad issues
covering a wide spectrum of human emotions. The small sample size of 10 participants limits the representational generalisation (Ritchie & Lewis, 2004) of the findings. The main limitations during the course of this study are the time constraints. Hence, additional interviews, surveys or focus group studies have not been made. It would be good to have conducted surveys or focus groups to further substantiate or confirm the interview findings as in-depth interviews approach alone might be vulnerable to participants' post-hoc rationalisation and ego defense bias. This is especially true in this project whereby two interviewees are in the midst of serving their notice period to leave their organisation. It is also possible that the participants were exhibiting a social desirability bias when assessing their behaviours due to dissatisfaction and psychological contract violations. They might under-report activities that are deemed to be socially or culturally undesirable such as social loafing or acts of sabotage against their organisation (Comer, 1995; Bernardi, 2006).
The interviews were conducted with Singaporean research participants working in American financial institutions. Therefore, we need to raise the question of how employees working in European or Singaporean financial institutions would respond given the same in-depth interview questions. Only by doing a cross sectional research would we be able to tell if the interviewees' responses are influenced by the differences in corporate culture or is unique to Singaporeans. Next, I did not examine how employers and
62 employees seek to repair and rebuild the employment relationship after experiences of violations. Lastly, the impact of personality on psychological contract (Raja et. al., 2004) has not been explored in this dissertation. Hence, I believe that the above issues are interesting topics and directions for future research.
8.4
Summary In this study, I seek to understand the sources of motivation and types of
psychological contracts of employees in Singapore's private banking industry. This is crucial in the context of Singapore's private banking industry; which is facing manpower and talent shortage due to increased number of financial institutions setting up their operations in Singapore to tap into the booming Asian economies.
In the literature review section, I highlighted several key motivation theories and concepts of psychological contract. Critics of these theories and concepts were also discussed. The research approach is qualitative in nature and the research method employed was in-depth interviews. A total of ten research participants took part in the interviews and shared their experiences on motivation and psychological contracts. The interviews are analysed through the use of conversation analysis and the key themes from each topic are presented and discussed.
The key findings of this study on motivation are that money is not the key source of motivations and the five key themes that motivate employees are “trust and respect”, “challenging and interesting work”, “sense of achievement and recognition”, “transparent appraisal and reward system”, and “being kept informed of things”. It is also revealed that
63 there still exist some self referencing bias by the supervisors when it comes to understanding employees' key source of motivation.
On the topic of psychological contract, the key findings are that interviewees are aware of the concept of psychological contract, view psychological contract violations as common and unavoidable, and deem it important to clarify psychological contract constantly. Supervisors use psychological contract as a tool to motivate their employees manage expectations, especially during periods of change management when violations are unavoidable.
Drawing from the interview analysis and literature reviews, I proposed some solutions for organisations to implement in order to motivate their employees and manage their psychological contract in the employment relationship. Recommended solutions include implementing fair and transparent performance appraisal system, recognise achievements, provide challenge through career advancements and job enrichments, and create environment of trust and mutual respect.
In terms of psychological contracts, it is proposed that organisational agents such as senior management, human resource department and the direct supervisor must work together with the employee to fulfill their contractual obligations. Although it is impossible to completely eliminate psychological contract breach, organisational agents can reduce and manage negative feelings by providing clarifications and honest explanations for the occurrence.
64 There are not many research being carried out on motivation and psychological contracts in the Singaporean context. It is hoped that my dissertation would provide readers with some preliminary insights into the mindset of the employees in the private banking industry and help them implement motivation and retention strategies with ease.
65
9
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