- Background Information
In every organizational context, the performance of the organization is gauged by the rate at which the organization’s productivity is determined by the human resource availability. A firm’s performance is a very broad concept that has been synonymously used in place of productivity, competitiveness, efficiency and effectiveness. Relatively, when the firm’s performance is analyzed based on the impacts of monetary and non-monetary incentives, it is usually hard to determine which incentives exactly can impact on the performance of the business.
In a much narrower context, it is sometimes hard to determine what incentives drive employees and impact on their productivity. However, this in most cases may include a combination of both monetary and non-monetary incentives. In this regard, it is therefore, important that any business manager identify the appropriate incentives that will motivate its employees to work towards achieving the set goals of the firm without the employees having to think of moving out of the firm. In incentive in simplistic terms may refer to the stimulus for greater actions. This is so because naturally, no one would act without a purpose behind it and in this case, it would be appropriate for the managers of a business to consider using incentives whether monetary or not, to motivate employees.
Ever since the times of economists such as Marx and Smith, the productivity of labor has been a major concern for firms which are always seen as inventing new ways by which they can have their employees’ productivity improved. This challenge to firms is what has seen many corporate managers design both monetary and non-monetary incentives that can be given to employees to motivate them and thus, lead to improved productivity. According to Marx, in one of his fundamental principles, the extraction of labor productivity and harnessing of the same to ensure improved organizational productivity is one of the basic management problems.
Various studies have in the past been conducted that have sought to determine the most effective schemes that can be used to motivate employees in an organization. According to Guest (1997), examining of the potential contributions that the impact of a good human resource management can have on the performance of an organization is the most rampant topic under study by researchers. Most of these studies are cross-sectional and quantitative in nature and are contained in differing theoretical frameworks.
Motivating employees to a business remains one of the most essential objectives that a firm can achieve and in that context it is imperative that the best scheme is applied by the firm. This can either be monetary or non-monetary. The monetary incentives in this relation are those that have or are assessed based on monetary terms or values such as gifts while the non-monetary incentives have no measurable value such as saying ‘Thank you’ or ‘Good work, keep it up’ to an employee. Expressing the impacts of such strategies on the performance of the business can enable the management to define and implement only the best strategies or incentives that will meet the goals of the business.
A good example of a monetary incentive can be the mutual funds which are provided to the employees in the form of company pension plans or insurance programs. The main reason for using the monetary incentives is to reward employees for the excellent job performances that they do through the use money in most cases.
According to a study that was conducted by Martires (2004), they recognize that the various monetary incentives, which can be used as motivational schemes for employees are stock options and warrants, project bonuses, scheduled bonuses like Christmas gifts, sharing of the firm’s profit and additional paid vacation time. Traditionally, these options when applied by firms in various situations have succeeded in helping motivate the employees towards aiming for better and improved growth as well as maintaining a constructive atmosphere for the employees (Kepner, 2001).
- Problem Identification Statement
The success in any organizational undertaking depends highly on the productivity and performance of its human resources. Human resources functions range from job organization and information, acquisition, maintenance, development and research (Martires, 2004). One of the most imperative reasons of maintaining one’s employees and their services is to keep them satisfied with their job for ensured productivity of the business or organization. The organization’s human resource department therefore needs to design an appropriate motivational scheme that would enhance productivity and above all ensure that the organization achieves average performance.
According to Ballentine et al (2009), “research suggests that the desired monetary incentives differ for associates based on occupation stage and cohort. Studies by the American Association of Retired Persons (AARP) have also shown that most workers will work past their retirement age if they are offered with flexible schedules, part-time hours paid jobs, and temporary employment (Nelson, 1999)”. In this regard, the aim of the current research is to determine which motivational incentive scheme among those available to the employees, would be the most effective when offered to them to lure them to continue working in the firm and thus, ensure increased firm productivity. The categories of the incentives can either be monetary or non-monetary incentives.
Usually, an individual would strive towards the achievement of a particular goal when the right amount or quantities of incentives are provided to trigger growth levels in them. Every firm manager usually constantly searches for various ways by which they can create a motivational environment where their employees work in so as to ensure that they achieve so at the most optimal level; thus, participate in enhancing the goals and objectives of the organization. As has been identified before, the work place motivators can include both monetary and non-monetary incentives, and in this case, the monetary incentives can be extremely diverse but, have the same effect on the employees. This is to say that not necessarily one monetary incentive will be able to trigger exemplary performance on all the employees but, an application of diverse ways can be able to achieve the same.
To this regard, this study’s endeavor shall be to investigate and determine the best motivational scheme that can be applied by a firm on its employees so as to ensure the achievement of higher productivity in its operations. Specifically, this study will seek to determine whether between monetary and non-monetary incentives, which one had the best option of cultivating honesty and allegiance to the firm by the employees thus, enhancing the productivity of the firm.
- Purpose of the study
This study’s purpose will be to investigate or determine the most effective motivational scheme for the employees of a business whether monetary or non-monetary incentives. Consequently, the study shall aim at determining whether there schemes can effectively lead to an improved organizational performance through increased productivity of the business. The study will then recommend appropriate measures, which a business could take based on the findings of this study.
- Objectives of the study
This guidance for this study will be through the following objectives:
- To determine the best motivational scheme between monetary and non-monetary incentives that would be most effective if employed by a company in stimulating improved performance among the employees.
- To find out whether there could be certain organizational problems that could be associated with monetary and non-monetary incentives.
- To investigate whether the lack of inadequate and appropriate motivational incentives is a reason for employees of the business to leave the company and venture into their own businesses.
- To understand what motivates the employees more, monetary or non-monetary incentives.
The study shall determine the statistical significance of the following null hypotheses
H01: There is a relationship between the motivational scheme adopted by a firm and the performance of the employees.
H02: Monetary incentives are more preferred by most employees as an incentive for work motivation than is non-monetary incentives preferred.
H03: There is a significant relationship between the employees’ performance and the choice of incentives they choose as compensation whether monetary or non-monetary.
- Research Questions
To be able to achieve these objectives, the study proposes the utilization of a cross-sectional design that will improve the conducting of surveys through the use of questionnaires. The questionnaires shall be disseminated to the employees of the company with the main focus of having them respond to the questions therein with utmost honesty. In order to be able to achieve these objectives and the purpose effectively, the study shall seek to address the following research questions:
- Does implementing a motivational program or incentive scheme prove effective in improving the performance of the employees?
- What is most motivating to the employees: monetary incentives or non-monetary incentives?
- From among the non-monetary incentives, which is most important:
- Flexible hours or 8 hour shift?
- Health insurance (mental, dental or both)
- Paid vacations leaves.
- Educational benefits for higher education.
- From among the monetary incentive schemes, what is most important:
- Fixed salary, hourly wage or profit sharing?
- Performance bonuses.
- What other incentive schemes would most motivate employees in times that organizations are affected by financial or economic crisis?
- Is there a link between performance and motivational schemes?
- Significance of the study
This study is justified in that it seeks to provide information that is related to employees and their motivational factors in an organization and how the same motivational factors could be harnessed by the management and used in improving the productivity. This study shall provide data on other relevant studies that have been conducted which have proven to shed light on the same from a human resource management perspective.
In addition to these, the findings of this study will be essential as it will contribute to the body of knowledge on the effectiveness of motivational schemes on improving the performance of the employees of an organization. These study findings will be essential to human resource bodies and the government at large in the planning of strategies that best fit into the framework of identifying the best motivational schemes for workers: monetary incentives or non-monetary incentives. In addition to this, the findings will be relevantly used by the organization in planning for the best motivational scheme to offer to its employees (Durai, 2010). If the company chooses on either of the two schemes i.e. monetary or non-monetary incentives, it will need to have justification for choosing one over the other which basically shall be determined through the findings in this study.
- Scope and limitations of the study
This study will basically be conducted within an organization and as such will entail collection of data only from the internal employees. However, the primary data collected will be supplemented by secondary data that shall be obtained from the relevant study materials such as past studies on the same field, online resources, journals, books among others. The study subjects will be the organizational employees.
The major limitation for this study may be the fear of employees in giving the required information accurately for fear of being victimized and as such risk their jobs. Additionally, the employees may willingly refuse to give information as required of them thus, jeopardizing the operations and outcome of the study. It is also likely expected that some employees especially the aged ones may have difficulties reading and comprehensively answering the questionnaires. The study findings will to a large extent depend on the honesty of the informants who shall answer the questionnaires as well as the validity of the information that shall be got from the secondary sources (Mathis & Jackson, 2010).
This chapter starts off by discussing the theoretical framework that explains the various motivational schemes that have since adopted by firms in a bid to woo their employees and encourage them to attain high performance standards. This is followed by reviews under several sub-headings as shall be discussed herein.
2.2. Theoretical framework
There are a number of theories that have been proposed in the past which tried to explain the reasons why employees may prefer one form of an incentive over the other form. While some employees might prefer monetary incentives as their main motivational scheme, others may also prefer the non-monetary incentives. It is quite true that aspect such as controlling of staff, the recruitment of the staff, leading and managing and others more are crucial to the motivation of the employees and the adoption of the right motivational scheme to best suit the interests of the employees. The motivation of the employees is a core element in the successful management and running of a company and as such firms must strive to achieve it (Durai, 2010).
For several years, most researchers in their studies have been majorly concerned with the understanding of the real factors that actually motivated the employees of firms. In most of these studies, the Maslow’s need-hierarchy theory has been at the epicenter of all analyses and in which firm managers have not fully understood. Other approaches that have determined the nature of studies about employee motivation schemes have been the Herzberg’s two-factor theory, Vroom’s expectancy theory, Adam’s equity theory as well as the Skinner’s reinforcement theory. All these theories among others have formed the basis upon which employers have sought to gauge the level of motivating their employees but, much success seems not to have been achieved already.
According to Maslow, employees have five main levels of needs (Maslow, 1948); physiological, social, safety, ego, and self-actualization needs. In his argument, he stated that, the lower needs of employees had to be satisfied before the next higher need that could motivate an employee to attain high productivity could be achieved. His theory recognizes that people have various needs and indifferent ways of satisfying those needs. Therefore, according to him, if people the tasks that they enjoy most will lead to them being motivated a lot. In the context of this study, this can be achieved through the allocation of either monetary or non-monetary incentives to employees.
On the other hand, Skinner’s theory argues that the behaviours that employees portray usually are influenced by the outcomes of their behaviours. When the outcomes from the behaviours are positive, the end result is the repetition of the same practices with the hope of getting similar results while if the results are negative then they shall not be repeated again. This concept can be grasped by firms and used in the analysis if the motivational programs that are adopted towards the enhancement of employees productivity. It is therefore advisable that the organization managers learn to reinforce the positive behaviours on their employees, which will ensure that they attain high productivity in their operations (Mathis & Jackson, 2010).
The theory as proposed by Vroom expresses the belief that the efforts of the company employees will lead to attainment of higher levels of performance, which in turn will lead to the reaping of greater rewards by firms in the form of positive firm returns. This theory also predisposes that the rewards as a result of motivating employees may be positive as well as negative. When the rewards are positive, it is expected that the motivation rate of the employees will be raised than when the rewards are negative.
In other instances, the employees may be competing among themselves for work supremacy and in such instances the noblest way to determine the best incentive to motivate the employees would be to follow after Adam’s theory. This theory highlights that equity between employees is the greatest drive for productivity within the firm. This theory, unlike the others outlines that equity is achieved when the employee outcome ratio over inputs equals outcome over inputs.
Definition, nature and role of motivation in an organization
Various contemporary authors have in most instances sought to define the concept of motivation but have ended up with diverse meanings. A more concise and precise definition of motivation would be that espoused by Kreitner (1995), as a psychological process that gives purpose and direction to the behaviours of an individual. Motivation is seen as a predisposition to behave in a purposive manner with the intent of achieving certain specific and unmet needs. Ideally, motivation may imply to an inner drive among the employees of an organization to achieve a set of unsatisfied needs as well as the will to achieve the same.
In this context, a company can set up strategies to improve productivity, but without awakening the inner drive of its employees through motivators such as monetary and non-monetary incentives, then it would be extremely hard to achieve the set organizational goals. In the case of this paper, motivation is broadly and operationally perceived as an inner force that drives employees towards the achievement of organizational goals without necessarily leaving to start personal businesses elsewhere (Durai, 2010).
The major underlying question with regard to choice of a good motivational scheme is the reason why we need motivated employees. Why should an organization have motivated employees? What possible means can a firm motivate its employees? Smith (1994) records the answer to the first question as for survival purposes. An organization needs motivated employees in this rapidly changing and dynamic business world so as to ensure that the organization remains surviving in its operations. The productivity of employees who are motivated is also high compared to when there is no incentive whatsoever to motivate them.
Therefore, for an organization to be effective in this line and ensure that it maintains a group of employees who are always willing to deliver their services for the growth benefits of the company, the managers need to fully understand and comprehend the motivators for the employees. Is there a possibility that the employees are motivated by monetary incentives or otherwise? This is a question that should always linger in the manager’s mind. However, to be able to clearly recognize the motivators for the workers, the manager should ensure that provision of any incentives whether monetary or non-monetary is provided within the context of the roles played by the workers in the organization (Lusthaus & Centro Internacional de Investigaciones para el Desarrollo, 1999).
The determination of that which exactly motivates particular employees is quite hard as it keep on changing often. This explains the reason why providing the appropriate set motivators to the employees seem to be a challenging and daunting task to the managers (Bowen & Radhakrishna, 1991). Many a time managers have opted into using monetary incentives through the raising of employees’ salaries or giving cash bonuses as a means to motivate workers. Nonetheless, it should be distinguished that the various researches that have been conducted in the past note that as the incomes of the employees increases, money becomes less of a motivator. Consequently, as the employees get older in age and experience in an organization, the interesting work opportunities that are available become more of a motivator. Thus, it would be right to identify beforehand that the choice of motivation scheme a company can adopt will have to factor in other factors such as age of the employees, years of work experience and the organizational culture with regard to incentives (Mathis & Jackson, 2010).
For instance, it is expected that the incentives that may be alluring and interesting to the younger group of employees in the organization may not be the case for the older group. In most cases, the young employees are expected to have the choice of monetary incentives as their motivation while the older employees may often choose the non-monetary incentives. However, this is no universal position as money is perceived by all as an alluring item and hard to resist.
In another study, it is recognized that the nature of motivational incentives that may be adopted and are applicable in one business may not essentially work in a different organization even if they had the same structural compositions. The reason for this is because each firm has different goals and objectives it pursues which may attract different reactions from their employees. Consequently, no strategies really exist in totality that can comprehensively address the incentives factor (Fisher & Fisher, 2008).
With regards to the nature of incentives, managers and most researchers have tried for long to establish the reason behind the fact that some employees tend to work harder than others. It was established that the knowledge of the motivating factors for employees is the best option as it does allow managers to take constructive steps towards improving the work performance of their employees.
Employees are the most essential aspects of an organization hence the managers would do all within their powers to ensure that they are enthusiastic to execute at their best. When the employees work extra hard, come early and regularly to work, and continue to make positive contributions to the organization, it is expected that the business will be able to cut on its operational costs and make more profits; hence, the employees’ dedication would have helped in the attainment of the ultimate objectives of the organization. Having unmotivated employees would mean that the organization will be running at a cost while trying to keep the employees whose productivity is low thus, leading to high operating costs and low profits.
Performance = Ability + Motivation + Better work environment
For an employee to achieve greater productivity, he/she must be able to do the job, be willing to do the job and have the required resources to do the job. Thus, the scenario in the relationship expressed above.
This chapter shall discuss the research design and methodology to be used in the conducting of this study. The chapter provides highlights on the methodology items such as the research design, study site, target population, sample size, sampling method and procedures, instruments of data collection, validity and reliability issues, ethical consideration and data analysis methods.
This study shall engage the application of a cross-sectional survey design, which allows the collection of requisite information from the target population at a single point in time (Fowler, 1993). The design is the most commonly used form of survey design; as the name suggests, cross-sectional surveys cross-analyze respondents’ background information such as age, gender, ethnicity, as well as opinions and attitudes (ASA, 1999).
The design has two key dimensions, the quantitative and qualitative. The quantitative approach consists of structured questions, which are meant to elicit information to be used for descriptive and inferential purposes. The qualitative approach consists of open-ended questions, which are to be used to obtain in-depth information for the validation of descriptive and inferential statistics. It is hoped that the two dimensions will be complementarily and simultaneously used for obtaining of high quality data.
Specifically, this study shall use a descriptive survey design since it is the most method concerned with the description of the best motivational schemes that an organization can adopt. This method is also suitable and informative in the identification of study variables, and as such shall form the basis for formulation of new hypothetical constructs that can be tested by other methods. It facilitates the collection of extensive data within the shortest time period and allows for the studying of the variables in their natural setting. The procedures and the variables can be accurately described, and the relationship between variables easily predicted and identified through this method.
Cross-sectional survey designs are also cheaper than longitudinal designs in terms of finances and time. This quality makes cross-sectional designs most appropriate for academic researchers, who in most cases, are limited by budgetary constraints (Rindfleisch, Malter, Ganesan & Moorma, 2008). Unlike longitudinal designs, cross-sectional designs are not vulnerable to confounding factors such as social, political or cultural changes because data is collected at a point in time.
According to Bryman and Cramer (1997), cross-sectional designs are capable of offering wider ranges of information on population characteristics than other survey designs. It is also applauded for its ability to enhance the validity of the data by subjecting all participants to standardized data collection instruments. Cross-sectional surveys are appropriate for studies that “examine concrete and externally-oriented constructs, sample highly educated respondents, employ a diverse array of measurement scales, and are strongly rooted in theory” (Rindfleisch, et al., 2008, p. 2).
Nevertheless, cross-sectional survey designs have two inherent weaknesses. First, they are likely to suffer from a high non-response rate because they are usually conducted based on voluntary participation of the respondents. Where respondents are not fully informed or motivated to give information, cross-sectional designs may be underproductive. To cope with this limitation, all the respondents will be consented first before taking part in the study. The consenting processes shall involve a detailed explanation about the purpose of the study, participants’ rights, expectations, potential risks and confidentiality guarantee. It is hoped that this explanation will help the employees’ participants to comprehend the research and make knowledgeable decisions about their participation or non-participation.
Second, cross-sectional designs are likely to yield socially-desirable responses. There is a psychological tendency of respondents to provide communally acceptable responses rather than those that replicate their own true opinions (ASA, 1999; Rindfleisch, et al., 2008). To overcome this limitation, respondents will be encouraged to be as honest with their responses as possible. They respondents will be assured that the information obtained during the research will be used for research purposes only and that their identity would be protected. More still, the questionnaires will be designed for self-administration to avoid the possibility of interviewer bias creeping into the results.
This study shall be conducted in the organization of the author’s father business in which the employees will be requested to state the best incentives they would propose as motivators for attaining high profitability and productivity in the business. This organization was chosen because it houses a large number of employees who can be easily contacted for consent to participate in the study.
The population targeted by this study is the employees of the appliance repair business. The target age bracket will be open to all employees as it is expected that they will be able to respond differently to incentives needed depending on their age.
Sample Techniques and Sample size
Subjecting the entire population of interest to investigations can be costly in terms of financial and temporal resources; hence, a sample is a population sub-set that can be studied at a reasonable cost and used to predict population parameters (Fisher & Fisher, 2008). Samples should be representative of the population as much as possible because a small sample is likely to yield under-estimated information due to the effect of sampling error.
In this study non-probability sampling technique will be used to draw the sample from the population. The sample size of will be determined using the central limit theorem which provides that; for a random sample of ‘n’ observations drawn from any population to be valid then, if such observation is greater than 30 (n>30), the sampling distribution of its mean will tend to be about the normal distribution (Arjomand,1996). Therefore, a sample size of 70 informants will be considered sufficient according to the central limit theorem to enhance study reliability.
Stratified random sampling procedure will be used to select the employees to take part in the study basing on the gender, cadre and age groupings. This method shall ensure that there is proportionate distribution of all the organization’s employees in the study from all the categories in the company. The employees’ body will be taken as the population and be sampled into two main strata basing on the gender of the employees. From each stratum, simple random sampling technique shall be used to select the respondents to participate in the study. Stratified random sampling is a probability procedure often applied in social sciences. Stratified sampling procedure is advantageous because it ensure that the elements whose number in the population may be small are given a fair chance of representation in the study.
As previously indicated, a questionnaire-survey method would be designed to assist in achieving the defined problem and to generate appropriate findings to the indicated research questions. The demographic profile and other pertinent background information of the employees will be appropriately defined and recorded in order to establish any link or pattern to the preferred motivational schemes. The employees of the author’s father’s business are earmarked to answer the questionnaire with the ultimate aim of determining which motivational scheme is most effective for them.
This will be aided by the observation method as part of the cross-sectional study design, chosen in this study and be extended to the focus group discussion where survey method will be applied to gather information. The questionnaires will be self-administered. One advantage of self-administered questionnaires approach is that it controls for interviewer bias, which often may arise from non-verbal cues that may influence participants to give potentially misleading answers (Fisher & Fisher, 2008). The self-administered approach has been considered appropriate for this study because it gives respondents the opportunity to complete the questionnaires at their most convenient time.
Validity and Reliability of the Instruments
Validity and reliability of the research instruments are critical elements of data quality, which also ensures that scientific usefulness of the findings is obtained (UNESCO, 2004). While validity is the extent to which an instrument actually captures what it purports to measure, reliability refers to the ability of a research instrument to measure the characteristics of interest consistently over time.
Validity of the instrument is extremely critical in all forms of research, and the acceptable level largely depends on logic and the level of a researcher’s experience (UNESCO, 2004). In this study, a high level of validity will be achieved through the posing of questions in the simplest way possible. Besides, the survey questionnaire shall contain side notes that will enable the respondents to fully understand what is required of them, and thus provide valid responses. The expected nature of sourced data will also first be discussed with my supervisor to ensure that the meaning derived there-from meet the objectives of the study. Validity of the instruments will further be improved by using the self-administered approach to minimize the element of interviewer bias by giving participants the opportunity to express their thoughts without external influence.
The inconsistency of a research instrument reflects the existence of a random error, which may arise at the time of data collection due to inaccuracy by a researcher or the instrument used to elicit information (Nachmias & Nachmias, 1996). Although data collection will be a one-time event, pre-testing of the instrument is expected to play a crucial role in improving its reliability. Further, the split-half technique will be used to estimate the reliability of the instrument.
Pre-testing or conducting a pilot study
The essence of this is that it helps in revealing what works and what doesn’t work in a research instrument. It helps capture the key comments and suggestions from participants that would enable an investigator to improve the instrument and adjust data collection approaches to maximize the response rate. In this regard, it is expected that the pre-testing will be used to determine the validity and reliability of the instruments.
This will allow the researcher to make meaningful observations and identify vague questions, deficiencies (if any) in the questionnaires; test the survey techniques and suitability of the proposal methods of analysis. It will also help in ensuring the effectiveness of the questionnaire in capturing the variables of interest in the study. The instruments will be revised if need be according to the outcome of the pilot study. The findings during the pilot study will not be included in that final study report.
Filled up questionnaires will be collected, edited and coded in preparation of data analysis. Both quantitative and qualitative techniques will be applied to process, analyze and interpret the collected data. Quantitative data processing shall involve coding of the open-ended data, entry, cleaning, transformation, analysis and interpretation. Probable software for analysis to be used shall be the Statistical Package for Social Scientists (SPSS).
Quantitative analysis will be carried out at three distinct levels, namely univariate, bivariate and multivariate. Univariate analysis is expected to yield frequency distributions, percentages and measures of central tendency as appropriate; while bivariate analysis shall obtain crosstab distributions with Chi square (χ2) significance tests.
The χ2 statistic establishes the statistical association between two variables both of which must be in nominal or ordinal scales. The use of the χ2 test necessitates preparation of cross-tabulations of the variables, which then generates significance test results. The χ2 test can only show the presence or lack of statistical association but cannot determine the magnitude and direction of such associations (Nachmias & Nachmias, 1996).
The researcher will need to get appropriate authority from the University as well as from the relevant authorities including the company’s management before conducting the research. Informed consent shall also be sought from the employees who will be participating in the study that will brief them on the purpose of the study. The study respondents will be notified in prior that participation in the study is solely on a voluntary basis and as such they can willingly withdraw their participation from the study whenever they don’t feel like answering the questions.
Again, they will be informed that withdrawing from the study does not affect their relationship with the organization with regards to continuity of their work. In addition to these, the respondents will be informed that the information obtained shall be kept confidential and the questionnaires after being processed shall be kept in a private location to limit unauthorized access to them.
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