The knowledge spillover resulting from the mobility of knowledge workers

Ontology based multi-system for SME knowledge workers Scientific instruments for living lab research - the knowledge worker productivity assessment
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Published Date:10-01-2018
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Abstract With the past decades of a growing trend in the western-world where knowledge workers are replacing traditional workers the importance of finding ways to attract, retain and engage the former is becoming even more challenging as the preferences of this kind of workers is totally different than for other workers. Non-monetary rewards such as achievement, autonomy and feedback have for a long time been highlighted by researchers to be of importance, yet the human relations departments (HR) still seem not to have realized the importance of such rewards and while HR strategies often are focusing on total rewards as a summary of monetary and non-monetary rewards there is a lack of an uniform ranking of the importance in between them. The purpose of this thesis is to make a ranking of the non-monetary rewards being most valuable for a knowledge worker to retain them within a company. The job mobility for this group is high and failing to retain them would except for short-term costs and organizational knowledge loss risk to create a lack of competitive advantage in long-term. Based on an extensive review of literature and papers by both researchers and practitioners with aspect to motivation theories, knowledge workers and rewards a theoretical framework has been constructed derived to five propositions which have been tested in a single case study. The empirical data was collected from a case being described in-depth and consist of archival data from employee surveys during seven years of time which have been supported by interviews and observations to achieve a triangulation of data. During analysis the findings have been put in relation to the environmental factors present within the case to achieve a rich and trustworthy case study. The findings confirms earlier research that autonomy is one of the highest ranked reward for a knowledge worker but that affiliation is of equal or even higher importance. The result also indicates that the difference between knowledge workers and other kinds of workers with aspect to affiliation is low or even non-existent. The thesis has also shown that autonomy, praise/recognition and career/personal development is of far more importance for a knowledge worker than for other kind of workers which may act as an important input to HR professionals. Furthermore this thesis has by the construct of a theoretical framework based on content theories of motivation contributed with a theoretical ground to the system of total rewards defined by HR professionals. 31 Introduction With the past decades of a growing trend in the western-world of knowledge workers replacing traditional workers the importance of finding ways to retain the knowledge workers is becoming even more challenging. A knowledge worker has specialist knowledge and is often involved in developing new products, processes or services (Lee-Kelley, et al., 2007) and innovation is part of both the task and responsibility (Drucker, 1999). Knowledge workers in general have a high job mobility and the organizational knowledge loss thus risk to be high (Englmaier, et al., 2014; Nelson & McCann, 2010), especially since “knowledge is a highly mobile resource, stored in the heads of individuals, and knowledge workers can easily take it with them” (Matzler, et al., 2004, p. 1180). Hence, several kinds of organizational knowledge loss is put on stake such as knowing what, how, why or who (Lee & Strong, 2003) and if the company fails to retain the knowledge workers they except for short term costs for hiring, training and productivity thus also risk a competence drain which may reduce the long-term performance and competitive advantage (Nelson & McCann, 2010). 1.1 Background In today´s business environment a company cannot just buy the competence and expect them to stay within the company. Monetary rewards can be a very powerful tool but may not bring the desirable outcomes if not being properly designed (Aguinis, et al., 2013) and hence, the rewards needs to be valued by the employee aiming to target the employee’s different preferences based on the organizational level (Merchant & Van der Stede, 2012). The full package of potential monetary and non-monetary rewards being valued by the employees thus needs to be taken into consideration and it is important to identify and focus on the most critical ones in order to retain the employees. One way of approaching the effect of a reward is from the efficiency in satisfying the individual needs since normally this also influences the contribution from the reward to achieve the business objectives (Kressler, 2003). Furnham, et al. (2009) argues that the presence of factors that motivates an individual is dictating whether an individual is satisfied at work and hence, the optimal reward is both being highly valued by the knowledge worker while also bringing motivation. An examination and understanding of different motivation theories is thus really helpful in forming human resource policy’s including payment policy’s, personnel development and career strategies (Kressler, 2003). Furthermore, motivation is also interrelated to engagement, satisfaction, commitment and intention to quit – four indicators commonly used in and measured in HR practices (Nohria, et al., 2008). A thesis aiming to find rewards being valuable for a knowledge worker would thus be incomplete without considering motivational theories from earlier research, in particular content theories by famous researchers like Maslow (1943), McClelland (1961) and Herzberg (1968). 1.2 Problem discussion There is a wide base of research focusing on what is motivating employees even though the research is scarcer with aspect to knowledge workers as a specific group. The literature suggests that a knowledge worker in general needs autonomy and freedom within the work (Drucker, 1999); they tend to be highly individualistic (Wang & Ahmed, 2003); they are prone to own accomplishments (Mládková, et al., 2015) and they are in a need of continuous personal development to advance in their career (Drucker, 1999). Based on a review of scholar research, practitioner research and HR strategies there however seems to be a gap of knowledge which kind of rewards that are to be considered as being the most valuable ones. For more than 50 years research have highlighted non-monetary rewards such as intrinsic to the job itself, by Herzberg, et al., (1959) named so-called motivators such as achievement, autonomy and 9feedback but still today companies HR departments have not realized their importance (Giancola, 2014). Even though HR strategies often are focusing on total rewards as a summary of monetary and non-monetary rewards, there are only a few studies permitting a ranking in between them. The rewards are in most cases also implemented without any theoretical grounds (Ramlall, Sep 2004) even if there in recent years are some practitioners e.g. Aon Hewitt (2012) referring to well known motivational theories such as Maslow, (1943) and Herzberg (1968). Rewards and compensation aims to motivate and increase the performance of employees (Malmi & Brown, 2008) and bring incentives to attract and retain employees having both an effort- directing purpose as well as to bring motivational benefits (Merchant & Van der Stede, 2012). In normal HR practices rewards and compensation thus forms an important part of the management control system as shown in Table 1.1 (Malmi & Brown, 2008, p. 292). Cultural Controls Clans Values Symbols Planning Cybernetic Controls Reward and Long range Action Budgets Financial Non-Financial Hybrid planning Planning Measurement Measurement Measurement Compensation Systems Systems Systems Administrative Controls Governance Structure Organizational structure Policies and Procedures Table 1.1 Management control systems package Already more than 50 years ago McGregor (1960, p. 65) stated that “commitment to objectives is a function of the rewards associated with their achievement” and in the past decade(s) the reward and compensation package have by diverse management consultant firms and HR strategies been translated to a concept of total rewards, basically bringing an overview containing all monetary and non-monetary rewards for the employees (Aon Hewitt, 2012; WorldatWork, 2010; Sibson consulting, 2016). A majority of the scholar researchers suggest non-monetary rewards to bring the most positive result. Drucker (1998) claim that intrinsic challenges of work are a more important factor for knowledge worker motivation than financial rewards and Chen, et al. (1999) also suggest intrinsically rewarding as beneficial and that fixed rewards are preferable to variable rewards when dealing with knowledge workers. Schlechter et al. (2014) highlights rewards (monetary and non-monetary) as critical for talent management where remuneration and benefits are most attractive by knowledge workers. Petroni & Colacino (2008) highlight the traditional HR path of incentives, rewards and recognition for engineers and particularly status, authority and promotion as most suitable. Further research by Lau & Roopnarain (2014) found that only nonfinancial measures have a significant importance on job performance and non-financial rewards like work-balance, learning and career advancement were by Schlechter et al. (2015) shown to be significantly positive factors for job attractiveness. The results from various researches however shows on a spread between what is being most valued and even if all factors are included in the total reward systems there is still a lack of research papers providing a ranking between these factors. With aspect to monetary rewards there are still some scholar research showing on positive effects on e.g. individual and organizational performance (Sturman, et al., 2003) and motivation (Pouliakas & Theodossiou, 2012). In a study of 648 engineer professionals, the monetary incentives were also considered as highly important as it represents the proof of the internal rating within the organization and “thus a small salary differential with other non-knowledge workers causes a breach of the engineer´s sense of self-esteem and professional pride” (Petroni 10& Colacino, 2008, p. 28). There is a however a negative association if the amount is low and also a risk for insignificance over time (Pouliakas, 2010). Hence, the justice and equity factor of rewards is also factor that must not be neglected.. 1.3 Problem formulation and purpose There is a variety of results from both scholar and practitioner research with aspect to different rewards and factors for motivating knowledge workers, yet there is a lack of a common view. The total reward system by practitioners also lists the rewards without considering the theoretical foundation (Ramlall, Sep 2004) and hence, by making a literature review of recent and previous scholar research of motivation theories connected to rewards found to be suitable for knowledge workers, this thesis will aim to answer the question Which are the most valuable rewards for retaining a knowledge worker? The purpose of this thesis is to rank the most valuable non-monetary rewards to retain knowledge workers and to bring a guideline to companies which kind of rewards to focus on in their total reward packages to avoid organizational knowledge loss. If successful, this may create a competitive advantage for the company (Giancola, 2014; Nelson & McCann, 2010). 1.4 Delimitations There are a numerous different concepts defined in the literature with an obvious overlapping content such as attract, retain, motivate, engage, job satisfaction, reward, incentive, compensation, intrinsic, extrinsic etc. and it is expected that many of the concepts are partly or fully interacting with each other. To simplify and limit the number of concepts to be included in this thesis, the author will use the following expressions for classification of factors related to the concept of valuable rewards for knowledge workers. Valuable: The main driver for engagement and job satisfaction of a knowledge worker includes the full package of rewards and is also expected to be fully interrelated to motivation. The presence of factors that motivates an individual is considered to dictate whether an individual is satisfied at work (Furnham, et al., 2009) and such factors are the once being valuable. Even if it has been suggested that the driving factors for attracting employees are not necessarily the same as factors for retaining or engage employees (Aon Hewitt , 2012) often the different concepts of attracting, retaining and motivating are bundled into one concept due to the expected interrelationship between them. This paper will use research from motivation, knowledge workers and rewards with a focus on the retention thus leaving the differentiation between attraction, retention and engagement to future research. Motivation: There is a variety of motivational theories as well as classifications of them. This thesis will mainly use content theories describing what motivates the knowledge worker while only briefly mentioning process theories and other emerging theories describing why or how they are motivated. The purpose of this thesis is to rank the rewards being valuable for the knowledge worker to retain within the company and is not considering if the knowledge worker is pulled or pushed towards the organizational goal or being pushed. Hence, e.g. incentive/rewards theories of motivation considered to have a more behavioral focus are deselected from the study and he same reasoning applies to whether the motivation is being intrinsic or extrinsic which is also further described below. Rewards: Rewards is used synonymously with incentives as well as compensation even if the timing when providing a reward may differ as well as if there is a target/goal behind. 11Furthermore this thesis will focus on non-monetary rewards while mainly discussing monetary rewards in relation to dissatisfaction and justice. It is expected that Herzberg (1968) already almost 50 years ago was correct - pay is no longer a reward, it's a pre-requisite that needs to be fulfilled in order not to create dissatisfaction. Rewards as well as motivation are often classified as intrinsic and extrinsic. Intrinsic refers to doing something for joy or interest while extrinsic means doing something based on the outcome (Ryan & Deci, 2000), however such classification referring to psychological states of the reward will not be used even if the single terms still may be referred to. Knowledge worker: there are a variety of definitions of a knowledge worker and this paper will try to combine the properties from various definitions to bundle the common factors while the main focus will be on properties applicable to professions like engineers. 1.5 Limitations This thesis corresponds to ten weeks of full-time study which brings a limitation with aspect to data collection and hence no extensive surveys have been conducted. Furthermore, the archival data in the form of employee attitude measurement which has been collected from the case contained no raw data which have limited the possibility for a quantitative analysis with statistical methods. 1.6 Thesis’ structure The thesis structure starts with the Introduction chapter which brings the background and motivation of the research question followed by the purpose of the thesis. The Theory chapter presents the related theories and earlier research from motivation, knowledge workers and rewards which is summarized in the Theoretical framework chapter to construct a research model and define a number of propositions to be tested. In the Method chapter the research design and detailed case context, the main methods used, the details of empirical data and analysis, and the reliability and credibility will be described. The Empirical findings chapter is summarizing the findings from the data collection related to the propositions with details of importance for the Analysis chapter in which the propositions are tested and the findings discussed in relation to the theory, earlier research and the context of the case. Finally, the Conclusions and Implications chapter is answering the research question and purpose followed by suggestions for further research. 122Theory The Theory chapter will present a literature review of motivation theory followed by earlier research with aspect to knowledge workers and rewards. An understanding of what is being valued for an employee is considered to be strongly connected to the motivational factors for employee retention and the three separate theory parts will show the foundation for the theoretical framework. 2.1 Motivation theory The term motivation origins from the Latin word movere which means movement (Steers, et al., 2004) and like stated by Ryan & Deci (2000, p. 54) “to be motivated means to be moved to do something.”. There is a extensive number of theories with aspect to motivation. A common grouping is between content theories which are focusing on identifying what motivates people and process theories focusing on how motivational choices are made as well as emerging theories like control theories and agency theories (Muo, 2013). From the quote “everything we do, or do not do, has its own motive” (Kressler, 2003, p. 1) combined with the target of this thesis, what motivates a knowledge worker is selected to be most important but as it will be shown in this chapter, interrelations between content theories, process theories as well as emerging theories are existing and thus a complete elimination of the latter two would make the theory chapter incomplete. 2.1.1 Content theories Maslow (1943) presented his hierarchy theory of needs which have become one of the most cited motivational theories. The theory describes a hierarchical pyramid of needs where the psychological needs, safety needs and social needs must be fulfilled before ego and then self actualization may take place. Even if there is a lack of other research supporting the order itself (Aon Hewitt, 2012; Bassous, 2015) the relation to total rewards makes it clear that all factors will have some kind of influence, hence the bottom-up order is not considered as valid when performing a ranking. In relation to Maslow and applied to work-related motivation, Bassous (2015) highlights creative and challenging tasks, development opportunities, and autonomy; Ramlall (Sep 2004) among other factors is mentioning challenges, creativity, praise and awards while Tonnquist (2012) is describing freedom with responsibility, authority, title and promotion as motivators required by workers. Based on a survey of 200 accountants and engineers Herzberg et al. (1959) found satisfying experiences intrinsic to the job itself, so-called motivators (achievement, recognition, the work itself, responsibility, advancement and growth) and the corresponding dissatisfaction experiences called hygiene factors mainly deriving from extrinsic non job related factors (company policy, supervision, working conditions, interpersonal relations, salary, status, job security, personal life). Removing the dissatisfiers would create a neutral state but motivation would only be possible through the motivators (Ramlall, Sep 2004). This so-called two-factor theory has however been criticized as the study is difficult to reproduce, individual and situational differences are not considered and that the theory is too much of a simplification (Matzler, et al., 2004). Such simplification however fits well into the scope of ranking different rewards as the different motivators easily can be translated to different kinds of rewards. Influenced by Maslow, McGregor (1960) in his Human Side of Enterprise describes his assumptions for Theory X, a human being who is lazy, dislikes work and avoid responsibilities. The other assumption, Theory Y, is being committed when supported by rewards and exercise both self- direction and self-control while also learning to seek responsibility. When motivation is the driver, the theory Y was at that time considered by both McGregor and also by Peter F. Drucker 13(indirect in his book “The Practice of Management, 1954”) as the only sound way of managing (Drucker, 1998). Drucker however later concluded that there is not only one way of managing and points out that even full-time employees have to be managed as volunteers, like associates and partners where all partners are equal and that especially with aspect to knowledge workers it goes beyond the Theory X and Theory Y (Drucker, 1998). Still, the property of a Theory Y person is expected to fit well into the scope of the thesis and as the focus is to rank the most valuable rewards it is selected as important in relation to a knowledge worker. McClelland (1961) described in his publication “The Achieving Society” only three needs; achievement as the drive to excel and strive to succeed; power as the need of making other behave in another direction; affiliation as the desire for friendly and close relationships (Ramlall, Sep 2004). Explained by (Miner, 2005) the achievement refers to situations where a personal responsibility can be taken from an opportunity to get personal reward for the outcome. The reward does not have to come from others as the achievement itself is satisfying when being based on the efforts. The risk of the challenge is calculated and feedback for success must be given in a reasonable time frame (Miner, 2005). With aspect to power, the satisfaction comes from a mixture of personalized and socialized power with satisfaction from conquering others (Miner, 2005). From responsibility, power is also important for the achievement and hence autonomy is of importance which is also highlighted by e.g. Ramlall (Sep 2004). A strong affiliation is from a manager perspective in fact considered to interfere with effective performance but for e.g. project and product managers with lack of position power the affiliation i.e. personal relationship needs to be strong, perhaps even stronger than the power (Miner, 2005). Based on responsibility, feedback, autonomy and the discussion with aspect to product and project managers it can be concluded that the theory of McClelland have a high relevance to a knowledge worker. From the influences between all of above researchers and also the period in time when the research was conducted it is clear that interrelations exists. An overview showing such interrelations was constructed by Wilkinson et al (1986) who in their paper concludes that Herzberg´s dissatisfiers are similar to the Maslow first two bottom levels plus a really small portion of the top three needs while also being similar to the Theory X by McGregor. By a rearrangement of the top needs of Maslow, the McClelland theory can be fitted in between Maslow and Herzberg, the latter’s satisfiers well fitting into these needs. This kind of classification is considered to be of high importance as it brings a clear but simple overview of different motivators that may be translated to rewards valued by knowledge workers. Hence, it has been visualized in Figure 2.1. Figure 2.1 Content theory connections (Wilkinson, et al., 1986), free interpretation 14The relationship between Maslow´s hierarchy of needs theory, Herzberg´s two factor theory and McClelland´s need for achievement theory has also been shown e.g. by Pardee (1990) whom describes the overlap between higher level needs and motivators but also a corresponding overlap of hygiene to lower order needs similar to the Herzberg´s dissatisfies which needs to be met. Pardee (1990) also concludes that the higher order needs and satisfiers are the base for intrinsic motivation, which is considered to be particularly important for a “R&D” person as defined by McGregor or the definition of a knowledge worker Drucker (1998). 2.1.2 Process theories and other emerging theories Skinner (1953) launched a theory on operant conditioning and was in contrast to Maslow focusing on behaviorism and showed how a person´s behavior easily can be modified by someone else. The mind has no causal effect on behavior and the environment alone shapes the behavior (Latham & Ernst, 2006). Ryan & Deci (2000) highlights that based on Skinner´s theory rewards are the motivators of all behaviors and intrinsic motivation is the activity itself. As the work itself is a factor also highlighted by Herzberg (1968) and the behavior control have similarities to the power factor of McClelland the important findings from Skinner theory is considered as already indirect covered by the model in Figure 2.1. Adams (1963) theory of equity is based on the motivational driver deriving from an imbalance between the outcomes versus input ratio in comparison to others which will cause a tension bringing the motivation to correct it. Adam´s theory is focusing on the inputs (e.g. work experience, education, efforts, training) and outcomes (e.g. pay, supervisor treatment, job assignments, benefits, status). Three main assumptions are given; (1) People beliefs about a fair and equitable return for the job contribution; (2) Comparison of the perceived exchange with other employees; (3) Actions will be taken to make their own treatment equitable if perceived differently (Ramlall, Sep 2004). The second assumption of the equity theory is considered as important when discussing valuable rewards especially in the context of individual versus group rewards, however as a ranking of different rewards are the main subject within these thesis it will not be of major importance even if being referred to when needed. Vroom (1964) in the expectancy theory as explained by is built by three perception components; Valance, Instrumentality and expectancy. Valence is described as the emotional perception from the achievement; Instrumentality reflects the comparison between one´s own performance to others; Expectancy can be described as the belief if a particular outcome is possible or not (Ramlall, Sep 2004). The theory is based on the individual perception of capability to finalize a task, the reward and the perceived value of the latter (Bassous, 2015). Porter & Lawler (1968) extended Vroom’s theory by identifying the source of the valances and expectancies and linked the efforts to performance and satisfaction. If receiving valuable rewards employees should exhibit more efforts and the effort-performance relationship is moderated by ability, trait and role perceptions (Ramlall, Sep 2004). Locke (1968) was focusing on goals as they focus the attention to the right activities (choice); they lead to increased efforts (energizer); affects persistence and activates cognition to develop and change behavior. The theories by Vroom, Porter & Lawler and Locke are mainly are focusing on how the employee is motivated which is not within the main focus of the thesis and thus they are excluded from further discussions. Based on the theory of Herzberg, Hackman & Oldham (1975) concluded that motivation from job enrichment only takes place for employees with higher order needs of growth with aspect to autonomy, responsibility, task variety, feedback and recognition (Latham & Ernst, 2006). Three psychological states first needs to be fulfilled, (1) personal responsibility for the job outcome; (2) meaningfulness of the job; (3) awareness of the own efficiency for the job. For intrinsic 15motivation responsibility, meaningfulness and awareness should be integrated into the job design (Bassous, 2015) and Hackman & Oldham argued that jobs requiring multiple talents are more intrinsically motivating than simpler jobs (Ramlall, Sep 2004) and thus they are important for a knowledge worker. However like described in the delimitations of this thesis there is no intention to divide motivation into intrinsic/extrinsic and dive deeper into the psychological states of the employees. Hence, based on the interrelation to Herzberg, Figure 2.1 is still considered to cover the important factors for this study. The Stewardship theory by Davis, et al. (1997) is focusing on the higher order needs by Maslow and intrinsic rewards like growth, achievement, affiliation and self-actualization. It is further build on McGregor (1960) Theory Y as well as Hackman & Oldham (1975) job characteristics model and assumes that the situation where the worker is taking action is influencing the performance (Bassous, 2015). Based on the relations to the theories in Figure 2.1, the value of bringing in additional one theory is considered to be limited thus it is deselected. Ryan & Deci (2000) describes The Self Determination Theory (SDT) as most important as there is a relation between autonomous motivation and more effective performance on relatively complex parts (Gagné & Deci, 2005). Based on an investigation of several studies Ryan & Deci (2000) found that conditions supporting the individuals feeling of competence, autonomy and relatedness are the basis for the intrinsic motivation and to become self-determined related to extrinsic motivation. In some cases it is also possible to achieve an internalization, defined as “… people taking in values, attitudes, or regulatory structures, such that the external regulation of a behavior is transformed into an internal regulation and thus no longer requires the presence of an external contingency” (Gagné & Deci, 2005, p. 334). The SDT is a valuable theory and contains factors likely being most valued by a knowledge worker but as the focus lies on what motivates the knowledge worker, how and if being intrinsic or extrinsic is of less importance of the study, thus the theory is also deselected from the scope of this thesis. 2.1.3 Summary of motivational theories The content theories have had a high influence also on the process and emerging theories; the latter two are mainly focusing on how choices are made, in some cases combined with goal setting, characteristics of job as well as if the motivator is being extrinsic or intrinsic. The motivators themselves are in some cases also included but as this thesis focus on what motivates the knowledge worker the process theories will not be in focus even though they still may be referred to. Hence, the construct by Wilkinson, et al. (1986) as shown in Figure 2.1 is considered at most interesting while also partly considering the equity theory by Adams (1963) due to an expected importance of justice and equity factors as described in the problem discussion. A summary of these theories together with key words is shown in Table 2.1. Theory Key words Maslow theory of needs Creativity, challenge, responsibility, autonomy, praise, awards, authority (Maslow, 1943) Herzberg’s theory of two factor Satisfiers (job enrichment): achievement, recognition, work itself, (Herzberg, et al., 1959) responsibility, advancement, growth Dissatisfiers (hygiene): company policy, supervision, working conditions, interpersonal relations, salary, status, job security, personal life McClelland’s need theory Achievement, power, affiliation (McClelland, 1961) McGregor’s theory X and Y Theory X: lazy, lacked initiative (McGregor, 1960) Theory Y: commitment, rewards, achievement, confidence, responsibility, creativity Adams theory of equity Perception, fair and equitable return, perceived exchange, equity actions (Adams, 1963) Table 2.1 Motivation theories selected of most importance for the thesis 162.2 Knowledge workers The main difference between a knowledge worker and a traditional worker can be considered to lie within the work itself. For instance Reinhart, et al. (2011) is defining knowledge work as “the perennial processing of non-routine problems that require non-linear and creative thinking …”, yet more specific a knowledge worker can be defined as “any employee possessing specialist knowledge or know-how who is involved in consultancy based on their specialist knowledge or know-how, or research and development work for new products, services or processes” (Lee- Kelley, et al., 2007, p. 205). Since the knowledge is stored in the head of the individual and easily could disappear if the knowledge worker does not retain within the company (Matzler, et al., 2004), the knowledge worker should be treated as an asset by the company requiring that knowledge workers prefer to work in the particular organization among all other options (Drucker, 1999). According to Frick (2011) the term knowledge worker was firstly defined by Drucker (1999) who claimed that a knowledge worker is managing himself and thus needs autonomy. Innovation is also part of both the task and responsibility and they need challenges and continuous learning (Drucker, 1999). Knowledge workers are present in more or less all industries and the definition may also differ between different branches. Common is however that they are more difficult to manage than traditional workers and one explanation for this can be related to the so-called tactic knowledge (Mládková, et al., 2015) explained as (1) This process cannot be controlled as it occurs inside of the brain. (2) Knowledge does not follow simple rules and is non-linear. (3) Result may differ on short- versus long-term. (4) Knowledge work is often performed during stress and time pressure. To avoid the problem with an occupational or sector-based definition of knowledge work Benson & Brown (2007) are by connecting earlier research using three dimensions for describing the tasks: (1) Variation and dynamic nature of the work where knowledge workers often will lack of cause- effect understanding which leads to uncertainty; (2) Mutual interdependence with other tasks performed both within and outside of the organization with influences to each other; (3) The degree of autonomy when performing the tasks where knowledge workers need to make many judgments in an uncertain decision making process. Wang & Ahmed (2003) in their comparison between a traditional worker and a knowledge worker highlights that a knowledge worker is more intrinsically motivated and prone to recognition related reward. “Knowledge workers are highly individualistic in terms of giving priority to their personal growth“ (Wang & Ahmed, 2003, p. 7) and they by the authors described by using key words like intrapreneurial, individualistic, intuitive, involved, inquisitive and informal. Furthermore they are listing the typical characteristics of a knowledge worker versus a traditional worker according to Figure 2.2. 17Figure 2.2 Characteristics of knowledge worker vs traditional worker (Wang & Ahmed, 2003) Mládková (2015) is summarizing the research definitions of knowledge workers into three clusters; conceptual, job content and industry driven. The conceptual cluster is described as a complex form where the importance for the organization, style of work, educational level and other are considered. The job content is like also described by Benson & Brown (2007) focusing on a special kind of job content while the industry driven is related to different branches and specific work such as IT specialists, R&D workers and so on. The clusters are however not distinct but across all three Mládková (2015, pp. 769-770) have identified several common factors for a knowledge worker and even if being mixed between different clusters, the ones considered as most important for this thesis have been summarized in Table 2.2. No Factor 3 Autonomous work 4 Ambiguous and key focus of career development 6 Accomplishment driven 7 High response from praise and peer-group assessment 9 Requiring continuous learning and improvement 10 Manage their own time. Creativity, innovation and problem solving skills are essential. Table 2.2 Common factors for knowledge workers (Mládková, et al., 2015) Petroni and Colacino (2008) still highlight the most important factor for motivation as the task itself. Technical professionals need also to be treated as individuals and different ranges of salary connected to individual recognition from the efforts. With aspect to rewards they claim that status, advancement, authority and influence are of high importance (Petroni & Colacino, 2008). With aspect to knowledge workers Wang & Ahmed (2003) in their so-called A1 model identifies six motivators to be accountability, advancement, affirmation, association, attraction and autonomy. Mládková et al. (2015, p. 774) in their study of knowledge workers found partly similar motivation and demotivating factors according to Table 2.3 but also ranks salary as number 8. 18Rank Motivating factors Demotivating factors 1 Achievement of objectives Inefficient use of my energy 2 Satisfaction Moral qualities of manager 3 Character of work Work is not appreciated 4 Freedom Favourism 5 Non-monetary benefits Incompetent manager 6 The work is meaningful Lack of trust 7 Good colleagues Manager intervene into my responsibilities 8 Salary Manager moves his responsibility to others 9 Personal development Reluctance to cooperate 10 - Incompetence and reluctance of subordinates Table 2.3 Motivation and demotivating factors (Mládková, et al., 2015) 2.3 Rewards Rewards and compensation aims to motivate and increase the performance of employees and groups by attaching rewards to the achievement of goals (Malmi & Brown, 2008) and permitting intensives to attract and retain employees getting them to act in accordance with the organizational objectives using an informational control showing the important areas to direct the efforts as well as a motivational control by getting credited for the efforts. The incentives thus gives an effort-directing purpose but also motivational benefits as well as non-control purposes like reducing the volatility if the compensation is varying with the company’s performance (Merchant & Van der Stede, 2012). Incentives may thus be both positive/negative and contain monetary/nonmonetary rewards according to Table 2.4 summarized from Merchant & Van der Stede (2012, p. 308). In this paper focus is however purely on positive rewards as negative rewards normally are referred to as punishments and not within the scope of this study. Positive Rewards (Negative Rewards) Autonomy, Power, Decision-making participation, Interference in job from superiors, loss of job, Salary increase, Bonuses, Stock options, Praise, zero salary increase, assignment to unimportant Recognition, Promotions, Titles, Job assignments, tasks, Chastisement, No promotion, Demotion, Office assignments, Job Security, vacation trips, Public humiliation time off Table 2.4 Positive and negative rewards (Merchant & Van der Stede, 2012) A study made by Pouliakas & Theodossiou (2012) showed that an optimal incentive design to maximize the motivation by using contextual factors requiring a participative management approach. Furthermore, the same study showed that job discretion is related to the employee efforts while monetary rewards still brings the best motivational effect. However, even though incentives in general increases motivation, a bad designed incentive system may in fact be worse than having no incentive system at all (Merchant & Van der Stede, 2012) which has been highlighted also by Aguinis (2013) who concluded that monetary rewards can be a very powerful tool but may also bring not desirable outcomes if not proper designed thus giving recommendations to define and measure the performance accurately, make rewards contingent on performance, timely, maintain justice and also suggests use of both monetary and non monetary rewards. The goal should be to get rewards that are valued, aiming to target the employee’s different preferences based on the organizational level, individuality, cultures etc. and also to have a significant impact as well as being understandable, timely, durable, and reversible and cost efficient (Merchant & Van der Stede, 2012). As both monetary and non-monetary incentives have weaknesses in some of above criteria’s also unintended consequences from the system should be considered as the incentives also may risk producing negative effects (Merchant & Van der Stede, 2012). 19Group rewards are often weak/indirect but also direct in case the individual can influence it. They may also bring a form of cultural control by mutual monitoring but also positive motivational aspects (Merchant & Van der Stede, 2012) by e.g. profit sharing, getting the employees to think more like owners similar to when e.g. granting stock options. Other collective monetary rewards are as shown by Chen, et al. (1999) annual group bonuses, cash bonus on team performance / company profits. Many management- and HR consultant firms are today describing the total package of rewards offered to employees using a model of total rewards. One such model is the Sibson employee value proposition (EVP) which by Kochanski & Ledford (2001) is described as a key for understanding the causes of personnel turnover in order to minimize it while also finding way to maximize the motivational forces to retain employees. In the original study for the model, 5 groups of monetary rewards (direct financial, indirect financial) and non-monetary rewards (affiliation, work-content, carrier) were found to be the most valuable for knowledge workers (scientists and engineers). In their latest model Sibson consulting (2016) the naming EVP is SM replaced by Rewards of work model still containing the same factors according to Table 2.5. SM Reward type Rewards of work Factors Base Salary, Incentives, Cash Recognition, Premium Compensation Monetary Pay, Pay Process Benefits Health, Retirement, Recognition, Perquisites Organization, Commitment, Work Environment, Affiliation Citizenship, Trust Non- Variety, Challenge, Autonomy, Meaningfulness, Work content Monetary Feedback Advancement, Personal Growth, Training, Career Employment Security SM Table 2.5 Factors of Rewards of work (Sibson consulting , 2016) A similar bundling is described in the total reward model from WorldatWork (2010), also being SM build on 5 different clusters similar to the Rewards of work model and described as factors important to attract, motivate and retain employees to get the satisfaction & engagement needed for performance and results. A summary of the WorldAtWork model including some factors (WorldatWork, 2010, p. 21) is shown in Table 2.6. Reward type WorldatWork Factors Annual Salary, Premium pay, Individual incentive pay, group Compensation Monetary incentive pay, organizational incentive pay Benefits Health and welfare, Retirement, Pay for time not worked Workplace flexibility, paid and unpaid time off, Health and Work-Life wellness services, Community involvement opportunities and support, Dependent benefits etc. Non- Performance and Performance development, Recognition Monetary recognition Development and Learning opportunities, Coaching/mentoring, Advancement Career opportunities Opportunities Table 2.6 WorldAtWork total rewards including factors (WorldatWork, 2010) Like shown in Table 2.5 and Table 2.6 the grouping of rewards are partly different between the models; for instance WorldAtWork are using a group of Work-Life with factors partly belonging SM to the Affiliation group of the Rewards of work model as the organization brings these 20possibilities. Within this paper work-life is however considered to be included in the Autonomy factor supported by the quite well formulated statement “Autonomy is the fuel that powers work life balance. Having the power to choose (or at least negotiate with your manager) how, when, and where work gets done is a major driver behind work life satisfaction” (Anderson, 2013), an interrelation strengthened also by the recent research by (Mas-Machuca, et al., 2016). The factors SM used in the Sibson Rewards of work model will thus be selected as a base of selection where the Work-life factor is bundled into the autonomy factor. Neither of these kind of models of total rewards themselves indicates a ranking between different rewards and a review of earlier research within this area is thus important, especially considering knowledge workers. Almost 50 years ago Herzberg (1968) stated that money no longer can be considered as a reward but simply rights, and the conclusions in the quite recent research by De Waal (2012) is that thorough rewards system and bonuses is more a basic need and not important for high-performance organizations. Drucker (1998) claim that intrinsic challenges of work is a more important factor for knowledge worker motivation than financial rewards. Schlechter et al. (2014) highlights rewards (monetary and non-monetary) as critical for talent management where remuneration and benefits are most attractive by knowledge workers. Petroni and Colacino (2008) highlight the traditional HR path of incentives, rewards and recognition for engineers in particular being status, authority and promotion being most suitable. Non-financial rewards like work-balance, learning and career advancement is by Schlechter, et al., (2015) significantly positive factors for job attractiveness which is also partly supported also in the survey by Universum (2015) as well as the excitement factors found by Matzler, et al. (2004) namely job training, transparent pay system, career opportunity and decision-making power Chen, et al. (1999) also suggest intrinsically rewarding as beneficial and that fixed rewards are preferable to variable rewards when dealing with knowledge workers. Lau and Roopnarain (2014) argue that only non-monetary measures have a significant importance on job performance which is supported also by Bassous (2015) whom in a quantitative study of non-profit organizations found a significant correlation between motivational level and non-monetary incentives while no correlation was found for monetary ones. Job meaningfulness was found to be the main intrinsic motivator and high performance is related to internal stimulation and not external rewards, the findings supported by the self-leadership concept. Rynes, et al., (Summer 2002) found that most employees prefer an individual pay compared to team/organizational performance and also fixed pay in front of variable pay; merit pay is positive and especially for new companies, for organizational performance it is beneficial if all employees get incentives based on it. Bonner & Sprinkle (2002) however concludes that monetary short- term incentives have a positive effect on performance only for moderate goals while difficult goals makes it worse which would indicate that for knowledge workers such rewards are in fact not preferable as the task of a knowledge worker normally is both complex and difficult and in the research by Markova & Ford (2011) it was concluded that “… non-monetary rewards is a stronger predictor of intrinsic motivation manifested by longer work time in comparison to either group or individual monetary rewards” (Markova & Ford, 2011, p. 813). Horwitz, et al. (2003) defined the most popular, the highly effective and the least effective motivations strategies used as being summarized in Table 2.7 where e.g. incentive bonuses is the third popular factor while not even being part of the top 5 when ranking the most efficient ones which supports the earlier discussion with aspect to monetary rewards. 21Rank Most Popular Highly effective Least effective 1 Freedom to plan and work Freedom to plan work Flexible work practices independently 2 Regular contact with senior Challenging work Employ large group of KW:s executives 3 Used incentive bonuses Access to leading edge Generous funding for conference technology/products studies 4 Challenging work Top management Cash award for innovations support 5 Top management support Ensure fulfilling work Seek recruit who fit culture Table 2.7 Motivation strategy effectiveness and popularity (Horwitz, et al., 2003) There are also other factors highlighted such as justified compensation with transparency as suggested by Morrel (2011) as recommended factors to overcome potential negative perceptions that may danger the motivational effect from non-monetary incentives. George (2015) found retaining factors to be more related to fair salaries, transparency and performance/effort which is supported also by Bryant & Allen (2013) who concluded pay level and pay satisfaction to be weak predictors of personnel turnover. Above examples shows on a variety of results between different scholars’ even though the majority of the studies are highlighting non-monetary rewards as most beneficial. There may however be several reasons for this, such as the target group of survey respondents and the actual time period of response. For instance Boswell, et al. (2003) shows a high importance of monetary rewards upon the response from respondents but concludes that upon the job acceptance factors like company reputation; industry and firm size were considered as more important. Other reasons may derive from criticism such as Giancola (2012) claiming that the scholars have lost the interest to research employee compensation and that such research partly have been filled by practitioners instead. The lack of recent research is exemplified by the really small share (approximately 0,3%) of the members in the Society for Industrial & Organizational Psychology primary interested in the subject (Giancola, 2012). 2.3.1 Findings by practitioners Even if main part of the practitioners research have a lack of reference to any theoretical grounds (Ramlall, Sep 2004) this has recently been addressed by some practitioners and total rewards can as well be connected to several motivational theories. The Total Rewards Survey (Aon Hewitt , 2012, pp. 11-12) is in a study of 750 organizations showing the link between Maslow´s hierarchy of needs compared to total rewards according to Figure 2.3. Figure 2.3 Relation between Maslow and total rewards (Aon Hewitt , 2012) Part of the Maslow theory has not been empirically validated such as the need for bottom-up fulfillment it has been important for both researches and practitioners for the understanding of motivation (Aon Hewitt , 2012). The similar relations have been made by (Ramlall, Sep 2004; Bassous, 2015; Tonnquist, 2012) according to Table 2.8. 22Need (Maslow, 1943) (Bassous, 2015) (Ramlall, Sep 2004) (Tonnquist, 2012, p. 283) Self actualization creative and Give training, provide challenges, Freedom with responsibility, challenging tasks encourage creativity possibility to develop, stimulating work Ego development Design challenging jobs, use praise Responsibility and authority, opportunities and awards, delegate responsibilities, title, promotions, special and autonomy give training, encourage privileges participation Social teamwork and Encourage social interaction, Create Manager-employee relationships team spirit, Facilitate outside social relationship, Being part of a activities, Use periodic praise, Allow group, lunch companionship participation Safety job security and Economic: Wages and Salaries, Workplace, job security, benefits Fringe benefits, Retirement benefits,insurance, pension, Medical benefits information and Psychological: Give Praise /rewards, communication Avoid abrupt changes, Solve employee problem Physical: Working conditions, heat and vent, rest periods Physiological needs wages and Cafeterias Wages, work hours, breaks, working vacation conditions Table 2.8 Work-related examples of the Maslow needs Furthermore, Herzberg’s two-factor model is by Aon Hewit (2012) highlighted as an early framework focusing on total rewards referring to a redrawn model of the original by Herzberg (1968) as shown in Figure 2.4. Figure 2.4 Herzberg - an early framework of Total Rewards (Aon Hewitt , 2012) The importance of intrinsic rewards has been highlighted by many practitioner studies and even if a not being specific for knowledge workers or related to the theory from research, the number of respondents from the surveys is impressing. Such studies have been summarized in Table 2.9 (Giancola, 2014). 23Year Study Respondents Group 2007 Towers Watson 88,612 Mixed Global Workforce Study 2008 Harvard Business School Study: 350 Mixed Employee Motivation a Powerful New Model 2009 Sibson Consulting Rewards of Work Study 2000 Mixed 2009 McKinsey & Company 1047 Mixed Study Motivating People: Getting Beyond the Money 2010 WorldatWork Study: 736 Mixed The Impact of Rewards Programs on Employee Engagement 2012 Society for Human Resource Management (SHRM) 600 Mixed Employee Job Satisfaction and Engagement Survey Table 2.9 Summary of studies supporting intrinsic rewards (Giancola, 2014) There are in some cases also a ranking made from survey results such as the management consultant McKinsey in a survey from 2009 (Giancola, 2011) who found that the monetary incentives are rated as having a lower effectiveness than non-monetary, but the monetary is not to be neglected as shown in Table 2.10 Type Incentive Effectiveness Non-financial Praise and commendation from immediate manager 67% Attention from leaders 63% Opportunities to lead projects or task forces 62% Financial Performance paid cash bonuses 60% Increase in base pay 52% Stock or stock options 35% Table 2.10 Ranking of the survey results from McKinsey 2009 (Giancola, 2011) The importance of monetary rewards is also strengthened by the rating of various incentives for engagement by WordatWork back in 2010 (Giancola, 2011) as shown in Table 2.11. Rank Incentive Average rating 1 Nature of job 3.8 (mean) 8 Short-term incentives/bonuses 3.42 11 Base salary level 3.30 12 Base salary increase 3.23 13 Non-financial recognition programs 3.20 Table 2.11 World at Work 2010 - Incentives for engagement (Giancola, 2011) Like discussed in the introduction of the thesis there however a gap between the importance rating between HR professionals and employees for different factors. With reference to a longitudinal study by SHRM (Giancola, 2014) this gap have in Table 2.12 been sorted based on the employee importance Factor Employee rating HR Gap prediction (delta) The work itself 54% 40% 14% Relationship with supervisor 48% 35% 13% Management recognition of job performance 48% 61% 13% Communication between employees and 47% 65% 28% senior management Autonomy and independence 46% 35% 11% Variety of work 35% 22% 13% Job specific training 34% 49% 15% Table 2.12 Gap between HR and employee rating of importance (Giancola, 2014) 24The focus in above studies has been mainly on nonmonetary rewards. Yet, according to Petroni & Colacino (2008) in their study of 648 engineer professionals, the monetary incentive is important as it represents the proof of the internal rating within the organization and “thus a small salary differential with other non-knowledge workers causes a breach of the engineer´s sense of self-esteem and professional pride” (Petroni & Colacino, 2008, p. 28). It is also clear that the total rewards are related to motivation theories and it be surprising if practitioners such as leading management consultant firms are not aware of these theories. However there is still a lack of reference to research and a theoretical framework is constructed to further show and strengthen the relations between a motivation theory, rewards and what is being valued by a knowledge worker. 253 Theoretical framework The focus of this section is to connect the rewards to the motivational theories and by the definition of a knowledge worker create propositions predicted to be most valuable rewards from a theoretical perspective. The SAGE Handbbok of Applied Social Research defines a conceptual framework as “something that is constructed, not found” (Maxwell, 2009, p. 223) and such theoretical framework describing the interrelations between different theories and propositions have been composed in the end of the chapter. Based on the previous chapters it is clear that there is an interrelationship between various rewards and the key factors identified as important for knowledge workers but also with aspect to different motivators as described in the chapter of motivational theories. One main problem is that there is a wide range of factors and they are also not ranked in between each other making it difficult to predict which ones being most valued in general. Based on the definition of a knowledge worker it can be expected that the Herzberg (1968) satisfiers, McClelland (1961) Affiliation – Power – Achievement as well as the Maslow (1943) top needs are considered to be the most important ones, i.e. a knowledge worker is to be considered as a Theory Y person (McGregor, 1960), a reasoning also supported by the study of e.g. Frick (2011) as well as shown by the relation to “R&D” in Figure 2.1(Wilkinson, et al., 1986). From the grouping of non-monetary rewards in Table 2.5 it is thus clear that affiliation, work content and career all are supported by these theories. The review in chapter 2.2 suggests that a knowledge worker in general needs autonomy and freedom within the work. They are highly individualistic, prone to own accomplishments and have a need of continuous personal development to advance in their career. Furthermore they have a mutual interdependence with others and choose to work in the particular organization in front of other options. Striving for achievement and accomplishment means they are also prone to recognition, praise and other non-monetary benefits. The main difference between a traditional worker and a knowledge worker lies within the work- content (Benson & Brown, 2007) and thus the factors within this group is being further discussed. In the rating of various incentives for engagement in Table 2.11 from a survey by WorldatWork in 2010 (Giancola, 2011) the nature of job is ranked as the most important. From the models of total rewards in Table 2.5 the components from this work-content cluster especially autonomy, challenge and feedback are to be found also in the motivational content theories considering motivators (Bassous, 2015; Ramlall, Sep 2004; Tonnquist, 2012). They are also supported by e.g. (Wang & Ahmed, 2003; Benson & Brown, 2007; Mládková et al., 2015) when defining a knowledge worker. Also Drucker (1999) in the original definition highlighted autonomy as important while both freedom (autonomy) and challenge in the study by Horwitz, et al. (2003) was ranked as the most effective factors. Praise and commendation (feedback) had the highest ranking in another study by Mckinsey (Giancola, 2011). Variety, meaningfulness and challenge of work are however all considered to be part of the nature of the work for a knowledge worker (Wang & Ahmed, 2003) and the job itself is of highest importance for a knowledge worker (Petroni and Colacino, 2008) similar to the rating by WorldatWork (Giancola, 2011). Challenge is also a factor which is expected to be highly individual, connected to various goal-setting motivational theories already being deselected and even if the factor by e.g. (Ramlall, Sep 2004), (Bassous, 2015) related to Maslow is classified as highly important all three factors have in relation to knowledge worker job satisfaction been found to be classified as pure hygiene factors (Matzler, et al., 2004). Hence, these factors are considered as pre-requisites and thus deselected from the rewards to be ranked within this thesis. 26A ranking of the remaining rewards factors from Table 2.5 from the findings from earlier studies in chapter 2.3.1 is shown in Table 3.1. Mean Reward Rewards of Factor Ranking according to table SM type work Table Table Table Table Table Table 2.2 2.3 2.7 2.10 2.11 2.12 Non- Work- Autonomy 1 1 1 - - 2 1 monetary content Feedback 1 - 2 1 - 1 1 Career 1 3 - - 1 3 2 Affiliation - 2 - - - - 2 ) No ranking available. All mentioned factors calculated as 1. Table 3.1 Ranking of rewards based on earlier studies From the table it is clear that no prediction of a ranking between Autonomy and Praise/Recognition (feedback) can be made which leads to the first two propositions. P1: Autonomy is one of the two most valued non-monetary rewards for a knowledge worker P2: Praise/Recognition is one of the two most valued non-monetary rewards for a knowledge worker Career/personal development is from the knowledge worker definition really important (Drucker, 1999) supported by the summaries in Table 2.2, Table 2.3 (Mládková, et al., 2015) and Figure 2.2 (Wang & Ahmed, 2003). From motivation theories it is also supported by the advancement (Herzberg, 1968) as well as self actualization (Maslow, 1943) while also being part of the total rewards in Table 2.5 in Table 2.6 thus being considered as highly valued. However based on Table 3.1 it can be expected to be of lower importance than autonomy and praise/recognition, hence the 3rd proposition is formulated P3: Career/Personal development is for a knowledge worker highly valued but lower ranked than Autonomy and Praise/Recognition The knowledge worker has a mutual interdependence with others and in fact they choose to work in the particular organization rather than other options (Drucker, 1999). Hence, the social aspect from Maslow is also considered to be of importance. The interpersonal relation to others is however by Herzberg named as a dissatisfier and no motivator while McClelland is focusing on Affiliation as one out of three cornerstones being particularly important when dealing with e.g. project managers and product managers (Miner, 2005), i.e. a kind of knowledge worker. Independent of being most suitable for a Theory X of Theory Y person the importance is also supported by (Bassous (2015), Ramlall (Sep 2004) and Tonnquist (2012) in Table 2.8 while Boswell, et al., (2003) also showed on the importance of company reputation and industry upon job acceptance. Base on above reasoning affiliation is considered as important also for retaining knowledge workers supported also by the good colleagues ranking no 7 in Table 2.3 as well as Table 2.2 (Mládková, et al., 2015) and association from Figure 2.2 (Wang & Ahmed, 2003). With aspect to the summary in Table 3.1 however seems to be lower ranked than autonomy and praise/recognition and the fourth proposition is thus constructed to P4: Affiliation is important for a knowledge worker but lower ranked than Autonomy and Praise/Recognition The research showing on importance of monetary rewards (Sturman, et al., 2003; Pouliakas & Theodossiou, 2012; Petroni & Colacino, 2008) are by other researchers shown to have an effect only on moderate goals (Bonner & Sprinkle, 2002) thus not really considered as applicable to 27

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