Improving Motivation and Job Satisfaction at the Laredo Federal Credit Union

Motivation is the process of modifying an individual’s behavior to produce an acceptable and desired response to a given circumstance. Motivation is force acting either on or within a person to initiate behavior (Encyclopedia Britannica, 2003). Human motivation has a basis according to Maslow’s hierarchy of needs, which lists human needs in the following order for satisfaction. Physiological needs like food air, and water take up the primary base followed by the need for safety, which includes shelter and belonging to a family. The love is the next step in an individual’s personal self-esteem, and the esteem individuals as perceived from their peers acceptance. The final step is dynamic self-actualization, which encompasses realization and harmony with ones internal and external motivational influences (Kozier, Erb, and Oliveri, 1995).

Whether in a personal or professional setting, individuals are motivated by intrinsic factors that come from personal acquired life experiences that are rooted in an individuals core psyche. Extrinsic factors are the motivators that influence an individual’s drive to modify and adapt their own intrinsic forces to that which are enhancing to personal and professional incentives, and thus motivators for individuals. Esteem, which is how individuals perceive themselves, or how the person feels they are viewed by peers, is a significant motivational force in the professional setting. An individual’s position in an organizational matrix is another motivational factor that greatly impacts an individual’s professional performance. Financial gains and incentives is another significant motivational area that greatly affects the extrinsic drive for adaptation to the given situational model. The final determining factor for an individual’s extrinsic motivation is the need for professional self-actualization, which comes from the personal satisfaction and self-respect derived from knowing that goals and expectations have been achieved (Kozier, Erb, and Oliveri, 1995).

The lack of employee motivation, and management’s lack of proper training and tools to effectively deal with these problems in the work place can have dramatic impacts on the organization’s goals. Management must be able to recognize and properly motivate employees to meet their own goals and those of the organization. By having a standardized format and dealing with all individuals on a unique and dynamic basis, management should be able to properly motivate employees to excel, and thereby meet the common good of the group, individual and organization.

Laredo Federal Credit Union can be included among those organizations with unmotivated employees. Certainly, everyone at the LFCU has been unmotivated at one point or another. However, employee motivation has become a problem in the last year, and no one seems to know the exact reason behind the lack of motivation. In addition, no one knows how to solve this serious problem.

The purpose of this report is to understand why motivating employees is crucial for an organization. Employees lacking motivation can be detrimental to an organization. Decreases in production, morale, and customers are just a few of the negative effects low morale can have on a company. On the other hand, motivated employees can have just the opposite effect. Through secondary research, using the American Business Index, this thorough report will provide crucial information about motivating employees.

The goals of this report are to (1) Determine the current level of motivation and job satisfaction at the LFCU (2) Explain why employees become unmotivated, (3) Identify the consequences a company endures with unmotivated employees, (4) Discuss strategies or techniques organizations can use to motivate their employees, and (5) Illustrate the positive consequences a company enjoys with motivated employees. Finally, the report will analyze the data collected by the population survey and suggest recommendations based on the conclusions derived from secondary research.

PRIMARY RESEARCH

The survey was administered to the total population of fifteen tellers from the McPherson branch of the Laredo Federal Credit Union. The survey consisted of five sections. The first section collected personal information of the respondent regarding employment status, seniority, current salary, the rating of their latest evaluation, type of compensation preferred, and their overall feeling of changing their job. The second section contained a topical module of questions, using a Likert scale, regarding motivation and job satisfaction towards work. This section was made-up of seven different topics: challenge, financial rewards, promotions, relationship with co-workers, resources, comfort, and communication. The third section consisted of two lists, one dealing with motivation factors and the other with incentives, which the respondents had to rank in order of preference and effectiveness, respectively.

Employee Demographics

A majority, 73 percent, of the respondent’s have a full-time employment status. Only 60 percent of the population has been employed by the Laredo Federal Credit Union for one to three years, with 13 percent working for less than six months. A total of 66.7 percent started with an hourly rate under eight dollars. Only 26.7 percent started with an hourly rate between eight and nine dollars. A good number of respondents, 33.3 percent, are currently earning between eight and nine dollars per hour. This is due to the fact that new tellers are currently starting at an hourly rate of eight dollars. There are still 33.3 percent with an hourly rate under eight dollars, ranging between six and eight dollars. The assumption can be made that the hourly rate of the tellers earning less than eight dollars was not adjusted when the hourly rate for new hires rose to eight dollars.

The job performance rating for most of the respondents was the same. A majority, 80 percent, received a rating of “Satisfactory” on their latest evaluation. Their overall performance was also “Satisfactory”. One reason for this unchanged result is that the employees are not getting the motivation required for continual improvement. Also, tellers are not getting rated as “Exceeding Requirements” or “Excellent” because most of them are only aiming to fulfill the necessary requirements for their position, if that. Changes in job performance did not improve due to last year’s annual evaluations, where everyone got the same percentage increment, regardless of their individual performance.

This action by LFCU discouraged the tellers to exceed the required job performance. Monetary compensation was chosen over non-monetary, 66.7 percent and 26.7 percent respectively. When asked if their impression of the LFCU has changed since they were first hired, 53.3 percent said it improved while 26.7 percent said it diminished, and the remaining 20 percent had no change. Again, the reason why a large percent whose view diminish can be linked to last years annual evaluations and a cross the board salary increases. A small amount, 13 percent would not recommend the LFCU as a place for employment. This could be associated with the high percentage of 93.3 that would leave LFCU if given the opportunity, most of which are not eager to leave but would do so if given a better paying job. Lack of motivation can really hurt the Laredo Federal Credit Union in terms of turnover, by increasing training costs, losing a productive employee, and negatively impacting customer satisfaction.

Challenge

Employees are motivated by a challenging job that allows a feeling of achievement, responsibility, growth, advancement, enjoyment of work, and earned recognition. Overall, a majority with 69.6 percent are satisfied with the workplace, with only 7.7 percent disagreeing. A total of 86.6 percent find their work interesting. Eighty percent of the respondents feel they are given the opportunity to develop their abilities. A significant amount of respondents, 33.3 percent, are undecided towards their feeling of having the freedom to decide how they work. This percentage is the same for the amount of respondents that are undecided on whether they are encouraged to learn new skill and cross-train, against 60 percent that agree to being encouraged. Employees want to be challenged at work and most will welcome the opportunity to learn new jobs if they are encouraged.

Financial Rewards

Financial rewards are important, but it should be kept in mind that there are other factors that also motivate employees and influence the level of their performance. To ensure that the reward system is effective and motivates the desired behaviors, it is important that the rewards are based on or linked to performance. Overall, only 54.4 percent of the respondents are satisfied with LFCU’s financial rewards. A percentage of 66.7 of the respondents think that they are not getting paid fairly for the work they perform; only 26.7 percent are satisfied with their pay. Only 33.3 percent of the respondents are satisfied with the organization’s compensation program. A 33.3 percent disagree that pay raises are consistent with the job evaluations versus a 40 percent that agrees that pay raises are consistent with the job evaluations. Merely 53.3 percent believe they can be able to move up in the organization and earn more. ANA

SECONDARY RESEARCH USING PROFESSIONAL

AND SCHOLARLY JOURNALS

Reasons for Lack of Motivation

Different theories suggest that different things motivate humans. All individuals reach a point in their work lives when they simply are not motivated. Different ideas may explain why this occurs. Individuals’ personalities certainly contribute to their attitude about their jobs. Managers and supervisors cannot do much to control these personal variables. However, managers and supervisors do control other variables that can cause employees to lose motivation.

The level of an employee’s self esteem is a major determinant in the quality of professional and productive performance. Arnolds and Boshoff (2002) point out that “esteem as a personality variable exerts a significant influence on the job performance of both top managers and frontline employees” (p.697). Employees that hold themselves in high regard with self-esteem demonstrate and increased motivational endeavor to consistently strive for professional excellence. These employees tend to achieve or exceed organizational goals, and also reflect a desire to find constructive methods to bring about positive and meaningful changes to the work environment. Acknowledgement of employees for a job well done has shown to have a directly proportionally positive correlation to increased job performance (Arnold and Boshoff, 2002). Furthermore, McGraw (2002) states “a well times thank you or recognition can increase production remarkably” (p.26). Therefore, a lack of appreciation from management will significantly impact the performance of employees that are lacking in the area of high self-esteem.

Management should recognize the individuals that lack esteem performance and positively foster those individuals with mentoring and positive reinforcement. How individuals feel they are viewed by their peers also affects the type of self-esteem that motivates employees to excel in the work setting. It was found that the need for acceptance from an employee’s peers superseded the need for professional approval from management, and that measures aimed at increasing employee cohesiveness is a prime method for improving productivity and attitude in the work setting. Management’s lack to foster a team or family approach to the interaction between employees will either have a positive or negative consequence of the motivation of workers to perform according to set institutional goals and standards.

Employees that are able to have a warm and professional attitude towards each other are able to communicate more effectively, thereby producing a higher quality of service to customers. Where as inversely, employees that are unable to maintain a positive work attitude with each other are more likely to give customers a lower standard of service (Arnold and Bishoff ,2002). Van Yperen (2002) states “feeling valued and supported by the supervisor and colleagues obviously makes the work environment more pleasant and rewarding” (p.B2). Therefore, the old adage of lead by example would be a good philosophy for management in the fostering of positive peer working dynamics.

Surprisingly, a review of the literature showed that employee motivation is not driven by financial incentives, but instead by setting out clear and concise goals and expectations. Arnolds and Boshoff (2002) highlight that employees are not motivated by fringe entitlements, “which prevent job dissatisfaction, but do not motivate employees to increase job performance” (p. 709). Motivation for employees is generated by the clear goals set by the management team, and allowing and providing a challenging and inspirational work setting. Workers will rise to increase job demands and challenges set out by management that increases job expectancies and requirements (Tatum and Nebecker, 2002). Knippenberg (2000) further illustrates “more important factors affecting performance arguably is the motivation to perform well on the job.” (p.357). Therefore, setting clear and direct goals and expectations for employees, and incidentally causing employees to feel challenged have a greater likelihood of increasing employee motivation versus financial incentives that only serve as short-term motivators.

Ergonomics in the work setting has a definitive and proportional effect on employee performance motivation that impacts the quality of work that is produced by employee. Ellickson (2002) points out that “having adequate work equipment and resources, training opportunities and an equitable workload distribution had a significant, positive effect on employee satisfaction” (p. 350). Providing an open and friendly environment increases the psychological aspect of a warm and friendly environment versus a stark and cold work setting, thereby increasing employee satisfaction, and work production. The work setting should also be one that promotes a close working environment, instead on a setting void of human interaction that is isolated and lacking in the area of interpersonal interaction between staff members.

The last key point is the theory that employees are mainly positively influenced by the need to be personally challenged, and take responsibility and ownership of their professional actions. This also ties into the basic fundamental fact that employees must also receive positive and timely feedback from management that allows for the gratification of an individuals need to feed the self actualization level of personal ego.

Tatum and Nebecker (2002) illustrate that “job performance and the worker’s affective reactions to the job should also depend on the reliability of the performance feedback the worker receives” (p. 301). Positive feedback from management is a key factor for employee understanding of the organizational goals that need to be met for a positive performance evaluation. Winter and Sarros (2002) state, “another positive work environment feature is role clarity. The work environment also benefits from supportive leadership. Friendly and approachable supervisors help colleagues solve work related problems thus providing the psychological support needed to cope with the complex job demands. This support has a positive impact on work effort and commitment” (p.253). Therefore, management needs to maintain an open and supportive attitude with employees, thereby encouraging individual initiative to meet and exceed organizational goals.

Other factors that cause employees to be unmotivated include creating an environment where employees are bored or do not trust management. Moreover, when employees are not given a chance to learn new skills or grow within the organization, low morale will likely result.

Consequences

After learning why people are unmotivated in the workforce, one may then wonder what the consequences are when a company has unmotivated employees. Many negative results can occur Management faces a multitude of consequences by not appropriately dealing with motivational issues faced by their employees. The major deficiency with poor motivation by workers is that the organization’s goals will not be met according to expectations, despite all other aspects of performance having been met according to set standards. Unmotivated employees will also have a negative impact by demonstrating low or decreased productivity. The employee will lag behind positively motivated employees with all aspects of job goals and performance (Bergen,Soper, & Campbell, 2002). One of the most detrimental aspects of poor employee motivation is the high turnover with staff.

This has a severe negative impact of organization performance in that now the organization is faced with increased training costs, and loss of a productive employee. Dissatisfied and unmotivated employees also tend to negatively impact customer satisfaction, by projecting an effect that is read by customers as a lack of caring for the duties being performed. This perception, if witnessed enough can influence a customer to seek their business with another organization, thereby losing more business, and now also gaining free negative advertisement by the customer through word of mouth communication with acquaintances. By not dealing with employees that lack motivation, management also is responsible for the stressful and non-cohesive work environment that the positively motivated workers are now having to deal with on a daily basis. This day to day bombardment of negative factors will eventually wear down even the most positively motivated employee. The negative non environment then further expounds to the total breakdown and lack of communication between employees and the management hierarchy.

Techniques or Strategies to Motivate Employees

Motivating employees takes time and practice. Not all employees are motivated in the same ways. The underlying factors that lead employees to be motivated are always changing, therefore requiring employers to stay tuned to employees’ needs. Once an employer hires an employee, the objective of the employer is to keep the employee happy, but most of all motivated. Motivated to do the job and motivated to stay interested. Upon first applying for a position, the phrase “sign-on bonus” will further attract the applicant; which is the primary reason the employer is offering a bonus. But, does money really motivate?

“But sign-on bonuses won’t maintain an employee’s interest and motivation.” (A) So, if bonuses will not keep an employee motivated, then what will? “Frederick Herzberg, the best known researcher on employer motivation said, “If you want motivated employees, give them motivating work.” ( A)

Each employee has different needs therefore, employers must troubleshoot to find out what works and what doesn’t. Employers must study their employees’ behavior within a range of motivating factors in order to identify what drives the employee. After the employee has received the bonus, the increase in salary, the stipend, etc., what will drive them to keep them going? “Managers say merely giving people money with vague expectations of return is not sufficient.” (B) Many times an employer will offer an employee a bonus, thus in return for the great outcome of a special project.

In the employer’s mind, the employee has excelled and has made a difference in the positive outcome of the project and is hopeful the employee will continue to excel, which is the reason for the bonus. However, in the employee’s mind, the employee feels long deserved of the bonus and that one should be given for every project, regardless. “Experience showed that for some top management jobs, using money in the form of salaries is not very effective, because staff do not perceive a close connection between their remuneration and the performance desired.” (B) Employers must implement different practices to find out what works for their company. Developing a rewarding system for continuously motivating employees, that works for all employees, is among one of the biggest challenges companies face. “For those people who are career-minded, a sense of well being is more important than money, and factors which influence this should be carefully looked at.” “Among these factors are human contact, mutual trust and the feeling of being appreciated and treated fairly.” (B)

Each company is different in its size, make-up of personnel, management style, and goals, however, the human factor still exists among all companies. It is how each company communicates to employees and the type of message that is sent across that will drive employees to respond. “People respond to practical management-they need to know what’s expected of them, how well they are doing and that their contribution is valued.” (D) Give an employee a bonus and the results will be short-termed, give an employee praise and you will make a long lasting impression.

Max Messmer, chairman of Accountemps, offers some tips for effective motivation: “Give praise in public.” (I) When an employee is praised in public, employee morale increases; further, it motivates other employees to do the same. “Tailor your reward” (I), by having studied your employees’ needs, an employer can then reward each employee based on their needs. Thank you notes, face to face compliments or even starting an Employee of the Month program will work wonders. Employers need to find out what works best for each employee and acknowledge him accordingly. “Know your team” (I), get to know your staff and interact with them. Employees feel valued when they know they are cared for. “Promote two-way communication” (I), maintaining an open-door policy allows for effective communication. An open-door policy makes employees more comfortable with their supervisors; it instills a sense of ease in communicating their opinions.

Most companies recognize employees through a salary increase once a year at evaluation time. However, a salary increase is not always satisfying especially when the employee feels well deserved of it and more while not feeling the same of his co-worker. “To motivate employees, managers need to reward achievements and progress toward goals by employees much more frequently than once a year.” (J) Employers must focus on ways of enhancing the employees’ work/life by understanding the employee’s needs outside of the work environment. Since the events of September 11, 2001, more employers are encouraging employees to take time off to support community events. By employees participating in such events, employees acquire a sense of purpose. “Factors that enhance work/life balance have a definite impact on employee motivation, but how much so depends on the individual” (J) while for other employees a flexible schedule to handle child-raising matters is most important. Whatever motivating incentives the employer feels would work best for the company is what the employer should implement.

Nelson (1996) reports the following ten techniques that managers can use to motivate today’s employees.

1. Personally thank employees when they do excellent work. Thanks should be prompt and courteous. Thanking employees can be done verbally or in writing.

2. Take the time to talk with employees. The best means of communication is face-to-face conversation.

3. Give specific feedback about work performance directly to employees.

4. Strive to create a work environment that is relaxing, fun, and open. Employees should be able to use their imaginations and express new ideas.

5. Show employees how the organization loses and makes money.

6. Allow an employee to participate in decision-making processes, especially when a decision will affect that particular employee.

7. Allow employees to feel a sense of ownership in their jobs and in the work that they do.

8. Make rewards, promotions, and recognition based solely on employee performance.

9. Encourage employees to grow and learn new skills to be used in the company.

10. Celebrate an employee’s performance when he or she is successful. Let employees know that their hard work is valued and appreciated (p. 67).

Along with these strategies, a well-designed incentive program can offer promising results. First, a company must set objectives that are fair, specific, and easy to understand. It should measure results accurately. It should communicate the goals of the incentive program on a regular basis to employees. Memos are a great way to let employees know how they are doing. Rewards should be based on what the employee values. Paying close attention to lifestyle habits makes it easier for a manager to choose a suitable reward for an employee. Once achieved, both managers and employees should celebrate success. Finally, managers should incorporate their incentive programs into marketing plans.

Nelson (1996) suggests that money does have its value in certain situations. When individuals are in need of extra income (for unexpected medical bills, college tuition fees, or a new home purchase, for instance), individuals may be more likely to be motivated by money (p. 66). Here at the Laredo Federal Credit Union, tellers are given $25 every month if their drawers balance perfectly as an initiative to reduce teller errors. In this instance, money does have a motivating effect on the tellers at LFCU.

Benefits of Motivating Employees

As suggested by the research cited in this report, motivating employees can have an important and lasting impact on an organization. When a company decides to invest time and effort to motivate employees, many positive effects can result. Why should companies motivate employees? What should be the end result and why should employers reward employees? Why do some companies spend so much on their employees? “A positive motivation philosophy and practice should improve productivity, quality, and service.” (E) If not for anything else, the purpose of management motivating employees is to achieve company goals. A positive environment leads to positive employees resulting in good customer service, better quality and a less stressful workplace. “A motivated staff is the cornerstone of quality customer service and product innovation,” says Max Messmer, chairman of Accountemps and author of Managing Your Career for Dummies (Hungry Minds, Inc.)” (I).

When employers motivate employees and maintain a positive mind, the positive image creates a ripple effect. By giving constant positive feedback when due, employers strengthen the employee’s attitude and give them a sense of accomplishment and the drive to take on the world. Employees are motivated by the positive enthusiasm certain leaders possess. Management leaders who take on a positive approach with their employees, make them feel energized and empowered; however, the positive approach must be constant and real. The positive energy shared by all employees will increase the chances of the company achieving its goals, together as a team.

When a company achieves its goals, whether it is by increasing profit margins and/or increasing market share, etc., a sense of accomplishment is instilled in employees, therefore, leaving them yearning for more. However, this cannot be accomplished without strong leadership from the top. A positive working environment, a form of rewarding employees, and the feeling of being an integral part of the team lead to a low turnover ratio, less absenteeism, increased employee morale and above all higher production in a company. By creating a positive working environment, “you open up a space in which people are focused on contribution and productive activities rather than gossip, unrest, and unhappiness.” (M).

Motivation benefits both the employee and the organization. Motivated employees are more likely to have higher self-esteem and self-efficacy. Self-efficacy is the belief that one can perform a certain task successfully. Having motivated employees increases morale in an organization. This can have a ripple effect across the company. If others observe workers are excited and motivated to do their jobs, they too are likely to become excited about their own jobs. Overall, the environment in the workplace improves and the workday becomes more enjoyable and bearable.

CONCLUSIONS

Based on the findings of our research using ABI the following conclusions were drawn:

1. Money alone is not enough to motivate employees in today’s workforce.

2. Employees become unmotivated when communication breaks down between management and subordinates and when performance is not recognized or praised.

3. Unmotivated employees cause negativity throughout the workplace. Carelessness, absenteeism, resource waste, and turnover rates increase when employees become unmotivated.

4. Employees are motivated in different ways because each individual possesses different values.

5. Developing and implementing effective communication, incentive programs, and praise in the workplace have proven to be successful strategies or techniques a company can use to motivate its employees.

6. When a company has motivated employees, production and sales rates increase, customer relations improve, the work environment becomes safer, morale increases, and turnover rates decrease.

RECOMMENDATIONS

Supported by the findings and conclusions of this report, the following recommendations are offered in an effort to motivate employees at the Laredo Federal Credit Union:

1. Recognize a teller in each branch by awarding a “Teller of the Month” award at our monthly teller meetings.

2. Have meetings once a month with each branch to recognize, praise, and congratulate employees for successful performance. Specific names and achievements should be discussed during these meetings.

3. Create an environment where tellers are multi-talented, and not specialized, by providing cross-training in other departments such as member services and/or new accounts and giving tellers the opportunity to rotate to these departments.

4. Make rewards, promotions, and recognition based solely on employee performance. Employees should receive promotions, recognition, and/or raises immediately after their performance evaluations.

5. Encourage main office executives to visit the McPherson branch on a weekly basis to ensure that the main office has not forgotten about them.

6. Let each employee know whom he or she can talk to when there is a problem or when help is needed.

7. Designate someone to ask employees how they wish to be rewarded so that when rewards are given, employees value and appreciate the rewards.

8. Allow current employees of the LFCU first choice when an opening occurs rather than posting the job opening in the newspaper.

9. Send memos to every employee showing how each branch is making profits. Specifically, list how much profit each branch makes on a monthly basis. In the memos, also recognize successful performance and outstanding employees. Let employees know what areas need improvements and how they can help management meet its goals.

REFERENCES

Nelson, B. (1996). Dump the cash, load on the praise. Personnel Journal (7), 65-70.