Impact of Compensation Policy on the Motivation Level

1 January 2018

Research on motivation attracted academicians and researchers over the last two decades. The combined effect between intrinsic motivating factors, extrinsic motivating factors, psychological ownership and work performance had not previously investigated. This study is important because by investigating the relationship between extrinsic motivating factors, intrinsic motivating factors, psychological ownership and work performance, this research helped to evaluate the significant among these variables in bank employees. Many academicians have tried to come up with numerous theoretical and empirical studies related to motivation, psychological ownership, and performance but all bring different ideas and concepts.

Research has been conducted on this subject and many theories used for the study which greatly influences the organizational behavior. For example, Herzberg theory (1959) of motivation is still utilized in most of the research nowadays. According to Staw (1976), Herzberg is one of the first people helps to differentiate between intrinsic and extrinsic motivation factors as well as clarified in motivating employees at work. So, this study is conducted to enhance those previously established relationships and to assess how the combination of intrinsic and extrinsic motivation factors has an impact on psychological ownership and work performance in the aspect of banking sectors.

Furthermore, psychological ownership will be introduced as a mediator in this research. Based on the academician best understanding, the mediating effect of psychological ownership is the first study on the field of banking sectors in Malaysia. According to Summers (2001), methodological contribution in this aspect means ‘allow the investigation of the probability of third variable description for the results of past studies’. These methodological contributions are expected the mediating variable transmit the effect of intrinsic and extrinsic motivating factors to the work performed.

In conjunction with the theory of social exchange, theoretical researchers concluded that SET is employees are more likely to continue their relationship with manager/ owner or employer when they accept that the relationship is value for them while terminating the relationship when the cost exceeds the rewards which gain from the relationship (Almaaitah, Harada & Sakdaan, 2017). Numerous researchers show that there is a close attachment between social exchange and employees’ contribution. The high-quality social exchange leads to employees’ loyal commitment towards the organization, a better job performance, improvement on the employees’ behavior and low turnover rate (Shore et al., 2009). By combining the theoretical views of social exchange theory and Herzberg theory, this study offers an understanding on the mechanism on how intrinsic and extrinsic motivation factors have an impact on the work performance via the mediating role of psychological ownership

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