CHAPTER ONE

INTRODUCTION

Background

Successful companies need motivated employees. According to

Bruno S. Frey and Margit Osterloh (2001), many managers nowadays

are not cognizant of the effects that motivation can have on

their business. Therefore, it is imperative that they learn and

understand the importance of the factors that determine positive

motivation thereby influencing turnover behavior in the

workplace.

It is important for the company well being that they find ways of

fostering and sustaining intrinsic motivation. But motivating

people is normally easier said than done. Employees cannot be

programmed to embrace the company objectives very easily. At the

moment, many employers are focusing to motivate the employees by

means of monetary incentives. However, these extrinsic

motivations are not always enough to keep employees motivated,

and intrinsic motivation is very important for many reasons for a

company. Extrinsic motivation satisfies indirect needs, which are

unrelated to the task they are performing. Intrinsic motivation

on the

Beswick, the intrinsic motivation comes from carrying out an

activity rather than from the result of an action. According to

Thomas S. Bateman job tasks are intrinsically motivating when

motivators like the responsibility involved in their job, the

challenges at work, the achievement in the work, the amount of

skill variety, and advancement opportunity. According to Bruno S.

Frey and Margit Osterloh (2001), one of the key functions of an

organization is therefore ensuring the “right” form of

motivation. It is also crucial for management to focus on the

right ways of motivating the employees so that the company can

use its shared resources as effectively as possible.

99.9It is very important for management to have knowledge about

the ways the employees are motivated; by monetary incentives or

by internal factors like recognition and challenge at work. The

employee’s are the company's greatest assets and no matter how

efficient is the company’s technology or machinery, the

effectiveness and efficiency of a company staff cannot be

replaced.

There is no generally accepted definition of work motivation

because motivation is somehow hard to define. However, Rudolp and

Kleiner (1989) defined work motivation as follows: “Motivation is

the development of a desire within an employee to perform a task

to his or her greatest ability based on that individual's own

initiative.” According to Christina Björklund (2000, pp.4) there

can be found three common denominators, which categorize the

phenomenon of motivation and confines the issues we are concerned

with when talking about motivation. These three common

denominators are

(1) What energizes human behaviors?

(2) What directs or channels such behavior and

(3) How this behavior is maintained or sustained?

Motivation is a multi-dimensional concept. One well-established

way to think about dimensions of motivation is according to the

origins of individual motivation: intrinsic and extrinsic. The

former arises from the task itself, while the latter comes from

expectations of external rewards. Amabile (1993, p.186) define

the two concepts as follows; “Individuals are intrinsically motivated

when they seek enjoyment, interest, satisfaction of curiosity,

self-expression, or personal challenge in the work. Individuals

are extrinsically motivated when they engage in the work in order to

obtain some goal that is apart from the work itself.” The two

motivations are likely to have unique influences on work

attitudes. We compare their relatedness to work attitude:

employee intent to leave.

On this stance the researcher will explore the influences of

intrinsic and extrinsic motivations as pertaining to employee

intent to leave (employee turnover).

Employee turnover occurs when employees leave their jobs and

must be replaced. Replacing exiting employees is costly to

organizations and destructive to service delivery. It is

therefore imperative for management to reduce, to the minimum,

the frequency at which employees, particularly those that are

crucial to its operations leave. Predicted shortages of highly

specialized employees in this regard and an increasing demand for

tax officers have made the retention of experienced, qualified

staff a priority for public service organizations. High civil

servants turnover has been shown to have a negative impact on an

organization’s capacity to meet national targets and provide

quality service (Gray and Philips, 1996; Tai et al., 1998;

Shields and Ward, 2001). Researchers have established that staff

turnover is costly; it reduces the effectiveness and productivity

of an organization and decreases the quality of service delivery

(Saratoga Institute and Kepner-Trogoe, 1999, Hay Group 2001).

High turnover rate for public workers requires government of

Ghana to spend scarce resources for training, retention and

recruitment of new staff, leaving considerably fewer resources

for other viable sectors of the economy.

Human resources research has well established the importance of

intrinsic and extrinsic motivations on job satisfaction for

retention (Arthur 2001). Mobley (1977) and his colleagues (Mobley

et al. 1979) were the first to theorize the effect of job

dissatisfaction on thoughts about quitting and, ultimately,

turnover. According to Cranny, Smith, and Stone (1992), job

satisfaction is generally agreed upon by researchers to be an

affective reaction to a job that results from the employee’s

comparison of actual outcomes with those that are desired. Job

satisfaction has been defined as “a pleasurable or positive

emotional state resulting from the appraisal of one’s job or job

experiences” (Locke, 1976: 1300). Improving job satisfaction thus

appears to be instrumental for decreasing employee turnover

(Zeytinoglu et al. 2007). Organizations with satisfied employees

have satisfied customers/clients. This results in organizations

with satisfied employees having higher levels of customer

retention, which increases overall profitability (Reichheld and

Sasser, 1990). Satisfied workers have been found to be more

committed to organizations, have more favorable attitudes towards

work and the organization, to be more conscientious, to be more

likely to help co-workers, to have greater willingness to report

unethical behaviors, and to be less likely to leave their jobs

than dissatisfied workers.

Employee job satisfaction is perhaps the most critical factor in

job retention. Dissatisfied employees not only leave when more

suitable employment has been found, but they tend to perform

poorly once they have unofficially decided to leave. Satisfaction

factors may include: compensation, the physical work environment,

co-worker relations, and opportunities for advancement, job

content, feedback, employee development, and supervision

(Discenza and Gardner 1992).

Companies strive to develop a workforce of committed employees

based on the belief that organizations with committed employees

achieve superior long-term performance (Luchak & Gellatly, 2007).

Committed employees are characterized as loyal, productive

members of work organizations (Porter, Steers, Mowday & Boulian,

1974) who identify with organizational goals and values

(Buchanan, 1974). Employees attach to their organizations

emotionally as they come to believe in its value and vision

(Mulki, Jaramillo & Locander, 2006). The notion of commitment has

been broken down into three levels: affective, continuance, and

normative. Ideally for organizations, employees will have an

affective level of commitment. Affective commitment refers to the

employee’s emotional attachment to, identification with, and

involvement in the organization. Employees with a strong

affective commitment continue employment with the organization

because they want to do so. Continuance commitment refers to

awareness of the costs associated with leaving the organization.

Employees that exhibit continuance commitment remain with an

organization because they need to do so. Finally, normative

commitment refers to employees that feel they ought to remain

with the organization (Meyer & Allen, 1991).

Given the difficulties encountered by managers in retaining their

best employees as articulated above, the present study formulated

the fundamental research question to be addressed as: to what

extent are intrinsic and extrinsic motivational variables being

used in influencing employee satisfaction, organizational

commitment hence turnover of employees in public sector

organizations?

PROBLEM

STATEMENT

Scholars and practitioners have emphasized the retention,

reduction of employee turnover and employee satisfaction to be

related to conditions of service and motivational incentives.

An effort by management in this regard over the years has proved

futile in the achievement of a reduction in employee turnover.

This emanates from the fact that management underestimated the

significance of intrinsic and extrinsic motivational variables

pertaining to employee satisfaction and employee turnover. On the

other hand the inadequacy, presence or the absence of intrinsic

and extrinsic motivational factors such as hiring practices,

managerial style, lack of recognition, lack of competitive

compensation system and toxic work environments. Others include

lack of interesting work, lack of job security; lack of promotion

and inadequate training and development opportunities, amongst

others, can assist managers to influence employee satisfaction

and turnover in their organizations. The problem, however, is

that managers have failed in identifying and properly using these

variables as retention strategies to curtail turnover rate in

organizations. Turnover is not only destructive to organizations,

it is also costly. Every time an employee quits, a replacement

must be recruited, selected, trained and permitted time on the

job to gain experience. Apart from the costs that are directly

associated with recruiting and training a new employee, other

indirect costs exist. Bliss (2007) and Sutherland (2004) contend

that organizations lose productivity, social capital and suffer

customer defection when a productive employee quits.

It is on this note that the research is geared towards the extent

to which intrinsic and extrinsic motivation relates to employee

turnover. That is to ascertain the relationship existing between

intrinsic, extrinsic motivation and turnover

.

OBJECTIVES OF

THE STUDY

The general objective of the study is to identify and establish

the key intrinsic and extrinsic motivational variables being used

by the domestic unit of Ghana Revenue Authority. The specific

objectives of the study are:

To determine the extent to which the various motivational

variables influences employees’ turnover.

To examine the adequacy or otherwise of these motivational

variables, with a view to minimizing labour turnover in IRS.

CHAPTER TWO

REVIEW OF LITERATURE

Theoretical

Framework

There are several frameworks which can be applied to study

motivation (intrinsic and extrinsic). Some of these are the Two-

factor theory approach by Herzberg (1959) and self-determination

theory approach by Deci and Ryan’s (2004).

Herzberg (1959) two factor theory as cited in Bassett- Jones and

Lloyd (2005) provided a theoretical background for this study.

Herzberg argued that employees are motivated by internal values

rather than values that are external to the work. In other words,

motivation is internally generated and is propelled by variables

that are intrinsic to the work which Herzberg called

“motivators”. These intrinsic variables include achievement,

recognition, the work itself, responsibility, advancement, and

growth. Conversely, certain factors cause dissatisfying

experiences to employees; these factors largely results from non-

job related variables (extrinsic). These variables were referred

to by Herzberg as “hygiene” factors which, although does not

motivate employees; nevertheless, they must be present in the

workplace to make employees happy. The dissatisfiers are company

policies, salary, co-worker relationships, and supervisory styles

(Bassett-Jones and Lloyd, 2005, p.929). Herzberg (1959) as cited

in Bassett-Jones and Lloyd (2005) argued further that,

eliminating the causes of dissatisfaction (through hygiene

factors) would not result in a state of satisfaction; instead, it

would result in a neutral state. Motivation would only occur as a

result of the use of intrinsic factors.

Empirical studies (Kinnear and Sutherland, 2001; Meudell and

Rodham, 1998; Maertz and Griffeth, 2004) have, however revealed

that extrinsic factors such as competitive salary, good

interpersonal relationships, friendly working environment, and

job security were cited by employees as key motivational

variables that influenced their retention in the organizations.

The

implication of this therefore is that management should not rely

only on intrinsic variables to influence employee retention;

rather, a combination of both intrinsic and extrinsic variables

should be considered as an effective strategy to curtail

turnover.

Deci and Ryan’s (2004) self-determination theory. Their theory is

the source of a common distinction between extrinsic and

intrinsic motivations. Extrinsic motivation refers to whenever an

activity is done in order to attain some instrumental outcome. In

contrast, intrinsic motivation refers to doing an activity simply

for the enjoyment of the activity itself.

The Deci and Ryan (2004) theory actually envisions a continuum of

motivations, ranging from controlled to autonomous motivation.

Ryan and Deci (2005) contend that the internalization of values

into an identity, which for them is a source of motivation, is

based upon the satisfaction of three basic psychological needs,

competence, autonomy, and relatedness. They thus distinguish four

types of identity regulation corresponding to types of extrinsic

motivation: external regulation, introjections, identification,

and integration. If an environment fosters the basic needs of

individuals, the degree of internalization of identities will be

higher. More importantly, the effect of this regulation will be

stronger to the extent that the associated identities are

autonomous. In the current version of the Deci and Ryan (2004)

theory, two forms of extrinsic motivation, identification and

integration, afford individuals relatively high degrees of

autonomy. These types of extrinsic motivation permit relatively

high motivation, but fall short of motivation levels attained

from intrinsic motivation, which involves doing an activity for

its inherent satisfactions.

An issue long contested in the motivational literature is whether

extrinsic motivations encroach on intrinsic motivations (Calder

and Staw, 1975). Empirical research and recent theoretical

developments suggest that increasing extrinsic rewards may lead

to individual perceptions that their behavior is under the

control of the rewards and that this, in turn, reduces intrinsic

motivation. From a meta-analysis of 128 experiments, Deci,

Koestner and Ryan (1999) concluded that contingent rewards

undermined free-choice intrinsic motivation. Recent economic

research on motivation crowding (Frey, 1997; Frey and Jegen,

2001) supports the view that extrinsic rewards can “crowd out”

intrinsic motivation. But this research also specifies 5 certain

conditions under which extrinsic rewards may “crowd in” intrinsic

motivation. Research about public service motivation (Perry and

Wise, 1990; Hondeghem and Wise, 2009) also predicts tradeoffs

between extrinsic rewards and public service motivation.

Re

lated Literature

Employee turnover is a much studied phenomenon. There is vast

literature on the causes of voluntary employee turnover dating

back to the 1950s. By developing multivariate models that combine

a number of factors contributing to turnover and empirically

testing the models researchers have sought to predict why

individuals leave organizations. Many studies are based on only a

small number of variables which often only explain a small amount

of variability in turnover. Another criticism of turnover studies

is that they do not adequately capture the complex psychological

processes involved in individual turnover decisions. A recent

study of turnover by Boxall et al (2003) in New Zealand confirmed

the view that motivation for job change is multidimensional and

that no one factor will explain it.

However, over time there have been a number of factors that

appear to be consistently linked to turnover. An early review

article of studies on turnover by Mobley et al (1979) revealed

that age, tenure, overall satisfaction, job content, intentions

to remain on the job, and commitment were all negatively related

to turnover (i.e. the higher the variable, the lower the

turnover). In 1995, a meta-analysis of some 800 turnover studies

was conducted by Hom and Griffeth, which was recently updated

(Griffeth et al, 2000). Their analysis confirmed some well-

established findings on the causes of turnover. These include:

job satisfaction, organisational commitment, comparison of

alternatives and intention to quit. These variables are examined

in more detail below, as are a number of other factors where the

evidence on the link to turnover is less conclusive.

Much of the empirical research on turnover is based on

actual turnover, although some studies are based on intentions to

quit. Apart from the practical difficulty in conducting turnover

research among people who have left an organisation, some

researchers suggest that there is a strong link between

intentions to quit and actual turnover.

Mobley et al (1979) noted that the relationship between

intentions and turnover is consistent and generally stronger than

the satisfaction-turnover relationship, although it still

accounted for less than a quarter of the variability in turnover.

Much of the research on perceived opportunities has been found to

be associated with intentions to leave but not actual turnover

(Kirschenbaum & Mano-Negrin, 1999). One of the possible reasons

is that intentions do not account for impulsive behaviour and

also that turnover intentions are not necessarily followed

through to lead to actual turnover.

Many studies have reported a significant association between

organisational commitment and turnover intentions (Lum et al,

1998). Tang et al’s (2000) study confirmed the link between

commitment and actual turnover and Griffeth et al’s (2000)

analysis showed that organizational commitment was a better

predictor of turnover than overall job satisfaction.

Researchers have established that there are different types of

organisational commitment. Allen & Meyer (1990) investigated the

nature of the link between turnover and the three components of

attitudinal commitment: affective commitment refers to employees’

emotional attachment to, identification with and involvement in

the organisation; continuance commitment refers to commitment

base on costs that employees associate with leaving the

organisation; and normative commitment refers to employees’

feelings of obligation to remain with the organisation. Put

simply, employees with strong affective commitment stay with an

organisation because they want, those with strong continuance

commitment stay because they need to, and those with strong

normative commitment stay because they feel they ought to. Allen

and Meyer’s study indicated that all three components of

commitment were a negative indicator of turnover. In general,

most research has found affective commitment to be the most

decisive variable linked to turnover.

The relationship between satisfaction and turnover has been

consistently found in many turnover studies (Lum et al, 1998).

Mobley et al 1979 indicated that overall job satisfaction is

negatively linked to turnover but explained little of the

variability in turnover. Griffeth et al (2000) found that overall

job satisfaction modestly predicted turnover. In a recent New

Zealand study, Boxall et al (2003) found the main reason by far

for people leaving their employer was for more interesting work

elsewhere. It is generally accepted that the effect of job

satisfaction on turnover is less than that of organizational

commitment.

The research conducted on the link between dissatisfaction

with pay and voluntary turnover appears to be inconclusive.

Mobley et al (1979) concluded that results from studies on the

role of pay in turnover were mixed but that often there was no

relationship between pay and turnover. Other studies found no

significant relationship.

On the other hand Campion (1991) cited in Tang suggests that the

most important reason for voluntary turnover is higher

wages/career opportunity. Martin (2003) investigates the

determinants of labour turnover using establishment-level survey

data for the UK. Martin indicated that there is an inverse

relationship between relative wages and turnover (ie

establishments with higher relative pay had lower turnover).

Career development and life- long learning activities in

organization promote job satisfaction, increased retention of

employees and enable continued provision of high- quality service

(Yoder, 1995; Kennington, 1995; Donner and Wheeler, 2001;

Davidson et al., 1997; Collins et al., 2000). Dissatisfaction

with promotion and training opportunities has shown to have a

stronger impact on employee turnover than workload or pay

(Shields and Ward, 2001). Multivariate analysis of data collected

by Davidson et al. (1997) in a longitudinal survey of Public

staff indicated that predictors of intent to leave were the

perception of little promotional opportunities, high

routinization, low decision latitude and poor communication.

Perceived interest in one’s career development and feelings of

being valued influence of staff intent to stay (Yoder, 1995).

RESEARCH HYPOTHESES

H1: There will be a negative relationship between job

satisfaction and employee

turnover.

H2: Pay/benefit satisfaction will have significant negative

relationship with intention to turnover.

H3: There will be a significant negative relationship between

organizational commitment and

intent to turnover.

H4: There will be a significant negative relationship between

promotion satisfaction and

turnover intention.

OPERATIONAL DEFINITIONS

Job satisfaction: employee’s perception and evaluation of their

jobs.

Organizational commitment: employee’s loyalty to their

organization.

Promotion satisfaction: employee’s attitude towards promotion

within the organization.

Pay/benefits satisfaction: employee’s evaluation of their

pay/benefits in relation to their job.

Labour turnover: employees’ voluntary quitting their job.

CHAPTER THREE

METHODOLOGY

The chapter covers the methods used to achieve the outlined

objectives of the study.

It discusses the data collection, data descriptions and sources,

research design, estimation

techniques and some diagnostic checks

Participants

The study would involve participants from the Domestic Unit of

the Ghana Revenue Authority. The Domestic Unit is part of the

Public Service which administers collection of Direct Tax on

behalf of the State under Internal Revenue Service Act 2000 (Act

592). Before the promulgation of the Act 529, the Service was

operating under Income Tax Decree SMCD 5 and PNDC Law 143 of

1985.

Potential participants would be 200 staff of the unit at the head

office and selected tax district across the country. These

participants would comprise males, females, senior staff and

junior staff of the unit. A total number of 200 staff would be

invited to participate in the study, out of which 50 respondents

(males, females, senior staff and junior staff) formed the sample

size for the study. This sample would consist of females and

males.

Procedure

Ethics clearance would be collected from the researcher's

university; the researcher would dispatch letters to the Chief

Inspector of Taxes, Assistant Commissioner of Administration, at

the head office of the Domestic Unit and head of the selected tax

district of the Ghana Revenue Authority for permission to conduct

the survey. Upon approval, the researcher would meet participants

in their department work areas and, after brief introductions,

would distribute the questionnaires to those who would be willing

to take part. Each questionnaire would be attached with letter of

introduction entitled “Study Information for Participants” that

again reiterated all conditions under which the survey would be

conducted. It would state that participation would be completely

voluntary and participants would be assured of their freedom to

withdraw from the study at any time if they so wish and that

their decision to participate or not will have no influence on

their employment.

The researcher would go daily to provide questionnaires to those

who would postpone their participation and to collect completed

questionnaires from those who would respond. The researcher

established good rapport and familiarity with all the

authorities, thus, resulting in maximum co-operation from the

unit authorities and participants.

Study

Materials

The primary materials to be used for the study would consist of a

questionnaire that would be self administered at the head office

and the selected tax district of the Domestic Unit of the Ghana

Revenue Unit. The questionnaire would be made up of 37 survey

items to obtain responses about respondents’ perceptions under

six sections: Job satisfaction, Pay benefits satisfaction,

Promotion satisfaction, Organizational commitment, Quitting

intentions, and Demographic Information. The contents of each

section would be explained further in the following:

Job satisfaction. Questions in this section deal with the

general feelings of participants about their jobs such as

“Generally speaking, I am satisfied with this job”. Participants

would indicate, with a tick, how much they would agree with each

statement. The statements would rated on a 5 point Likert scale

ranging from Strongly Agree (1) to Strongly Disagree (5) as

propounded by (Hackman & Oldman, 1974; Quinn & Shepard, 1974).

Pay/Benefits satisfaction. This section contains items that

describe facets of participants’ job with respect to Pay and

Benefits Satisfaction such as “I feel I am being paid a fair

amount for the work I do”. Participants would tick the degree to

which they would agree with each of the statements on a 5 point

Likert Scale ranging from Strongly Agree (1) to Strongly Disagree

(5) (Spector,1985).

Promotion satisfaction. This section also contains statements

that describe another facet of participants’ jobs, relating to

participants’ perception and satisfaction with the promotional

structure present in their organization. It includes statements

such as “There are no definite chances of promotion in my job.”

Participants again would be instructed to tick the number that

best describe the degree to which they would agree on a 5 point

Likert Scale ranging from Strongly Agree (1) to Strongly Disagree

(5). (Spector, 1985).

Organizational commitment. This section contains statements that

describe participants’ commitment to the organization in which

they worked, such as “I enjoy discussing my organization with

people outside. Participants would indicate the extent to which

they agree or disagree with each statement on a 5 point Likert

Scale ranging from strongly Agree (1) to strongly Disagree (5)

(Meyer & Allen, 1997).

Quitting intention. This section contains questions designed to

investigate the intentions of participants to quit their jobs in

the near future. Some of the questions include “How often do you

feel like quitting your job in this organization?” Participants

would answer these questions by circling rated responses that

best describe their intentions. The rated responses would be;

Almost Never/ Very Unlikely (1 – 2), Somewhat Likely/ Sometimes

(3), Almost Every day/Very likely (4 – 5) (Mobley, 1982a).

It also contains items designed to investigate activities of the

participant towards the search for alternative jobs on the job

market. Participants responded to statements such as “I am

actively seeking an alternative job/role” and indicated their

agreement or disagreement on a 5 point Likert Scale ranging from

Strongly Agree (1) to Strongly Disagree (5) (Mobley,1982a).

Demographic information. This section would consist of questions

about participants. It contains individual characteristic items

such as: gender, age, education and job title (Author’s design).

Data Analysis

All questionnaire responses obtain in the study would be

subjected to analysis. Basic descriptive statistics such as means

and standard deviation together with correlation would then be

use to characterize the data. Following that, Cronbach’s alpha

would be computed for all scales to describe the scales'

reliabilities. Pearson correlation coefficients would be use to

examine associations between variables, presented in a

correlation matrix style. The analyses would be done using the

Statistical Package for Social Sciences (SPSS), Version 16 (see

SPSS, Inc., 2007).