Motivation and Rewarding System

Abstract

The objective of this project is to investigate whether employees at WILO company are well motivated and if there is a need for improvement of the level of employee satisfaction in WILO subsidiaries in Poland and Hungary.

This research study presents the methods of employee motivation and the rewarding system adopted by WILO company. This project is a result of a theoretical study of available literature as well as empirical research conducted at the company in order to analyse the effectiveness of the implemented methods and system. The analysis has also provided background for defining the role of managers and the required skills in the process of motivating employees. In addition, salary and benefits, good atmosphere, interesting job, professional development and job security have been tested and proved to be key motivating factors for both Polish and Hungary WILO employees.

Nowadays in the increasingly competitive global economy it seems to be of great significance that motivated employees might turn into the source of the company's competitive advantage, especially in such areas as: quality, service and costs. Therefore, there seems to be a necessity to create a committed workforce, which is an investment for the future resulting in boosted efficiency, creativity, increased turnover, and subsequently a strong position of the company on the competitive market.

PREFACE

The current competitive business world is focused on fast development and sustainability of strong position on the market, therefore companies search for various ways of ensuring their success.

The success of the business seems to be an outcome of the interaction between employees vs. customers, product and the organisation. Therefore, to create a business oriented company these three elements have to work out together to generate a profit for the organisation and financial benefits for employees. Hence, it is significant for an organisation to create a culture where employees would feel appreciated. This might be reached by providing rewards and incentives or benefits in return for their effective work. As a result of this, employees are expected to make efforts to accomplish objectives of an organisation.

Background

Employee motivation is a key factor in the success or failure of any organisation. In hard economic times, which require companies to face the need to increase both budget cuts and productivity, it appears crucial to maintain workers loyalty and motivate them continuously. Should an organisation omit to motivate its staff, less productivity may occur, morale is not high as well as products and services are of a lower standard.

I have selected the topic of motivating and rewarding of employees as my interests are focused on motivation programmes and I wish to gain an improved understanding of the area of building employee engagement. Moreover, my choice was dictated by my willingness to develop a better understanding of what precisely could motivate employees in different subsidiaries at WILO company. Furthermore, I wish to concentrate on factors which could potentially encourage employees to be committed to work and develop a better atmosphere at a workplace.

The objective of the study

The main objective of the project is to investigate whether employees at WILO company are well motivated and if there is a need for improvement of the level of employee satisfaction in WILO subsidiaries in Poland and Hungary.

Moreover, the goal of the research is to conduct a theoretical study of selected literature as well as empirical data collection by means of a survey, questionnaires and interviews at WILO company. I will also attempt to analyse the data to be aware of the current level of motivation as well as classify significant motivators for the Polish and Hungarian employees at WILO company. Finally I wish to draw a conclusion to improve the level of satisfaction and to build a better committed workforce.

Summary

The project has been divided into six chapters: Introduction to the study, literature review, WILO company motivation and compensation system, methodology, results of the survey, and conclusion.

The literature of the field presents all manner of findings concerning solutions to the problem of motivating and rewarding employees. For the purpose of formulating the main concepts of my thesis, I reviewed a wide variety of relevant literature, which serves to provide a theoretical background to my study.

First part of the literature review covers the definition of motivation as well as various theories of motivation. Moreover, I explore Maslow's hierarchy of needs theory, in comparison with Herzberg's theory, Alderfer as well as McClelland theory and McGregor theory (Schermerhorn, 2005). Furthermore, I focus on personalities and behaviour of employees and cover various issues regarding motivation and compensation systems, techniques and tools, and, in addition, I wish to explore the role of a manager.

The following part focuses on a motivation and compensation system at WILO company. I will attempt to present the way of motivating and rewarding employees at WILO company as well as the benefits and perks received by WILO employees. Furthermore, I introduce the training system which is applied at WILO to boost productivity.

The thesis will consist of two parts, that is a theoretical and a practical one.

In the theoretical part of my thesis, I intend to examine selected literature of the field in order to present possible ways of motivating and rewarding.

In the practical part of my thesis, I will conduct a research whose purpose is to analyse empirical data extracted by means of questionnaires carried out in the Polish and Hungarian subsidiaries of WILO company. My study will explore the role of leadership in the process of motivation and methods of improving working conditions, by means of bonuses provided by the company.

Finally, I draw a conclusion and discover crucial findings regarding motivation and compensation of the Polish and Hungarian subsidiaries of WILO company.

Motivating and rewarding employees is one of the most significant and the most challenging activities that managers perform. Managers invariably debate on ways of motivating, thus we are in a position to find numerous views and speculations regarding this topic. It appears to be crucial to demonstrate briefly paramount ideas regarding motivation and rewarding of employees, presented by different authors. Moreover, both academic researchers as well as practicing managers have attempted to understand and explain the problem of employee motivation for years (Robbins, Coulter, 2003 p. 425). Furthermore, effective managers who expect from their employees the maximum effort recognise that they are required to be familiar with the way employees are motivated as well as to modify their motivational practices to satisfy their needs.

Chapter Two

Literature Review

Definition of Motivation

"There is hardly anything more frustrating than working hard, meeting or exceeding expectations and discovering that it doesn't matter to your company. You get nothing special, or you get what everyone else does.... People need to get differentiated rewards and recognition to be motivated." (Jack Welch, 2005:107). There seems to be a wide variety of definitions of motivation. It is a term originally descended from the Latin word "movere", which means "to move" (Rue, Byars, 2000). However, it has been extended to include the various factors by which human behaviour is triggered (Campbell & Pritchard, 1976).

What is interesting, the concept of the motivation was already well-known in ancient times as, for instance, Egyptian pyramids or the Great Wall in China without motivation and determination would not exist.

It should be borne in mind that the problem of motivation is not a current development. Research conducted by William James in the late 1800s pointed out the significance of motivation. He assumed that hourly employees might keep their jobs by applying approximately 20 to 30 percent of their ability. Moreover, he found that highly motivated workers will perform at approximately 80 to 90 percent of their ability. Consequently, highly motivated employees are in a position to increase in performance as well as significantly decrease in problems such as turnover, strikes, absenteeism (Rue, Byars, 2000).

As expressed by the 34th American president Dwight D. Eisenhower:

"Motivation is the art of getting people to do what you want them to do because they want to do it."

Motivation might be analysed by the following sequence:

Consequently, in motivation needs create motives, which lead to the accomplishment of goals. Moreover, a motive is a stimulus which leads to an action that satisfies the need, which means that motives create actions. When employees achieve the goals, they satisfy the needs and simultaneously decrease the motive. Nonetheless, it might occur that other needs may arise. Understanding the motivation sequence provides managers with slight help in determining what motivates employees (Rue, Byars, 2000).

Nowadays it is extremely important to have motivated employees in every organisation. While non-motivated employees will not provide good service, they are likely to make mistakes and the reputation of the organisation may suffer as a result. Therefore, all businesses need enthusiastic and committed employees who work to support organisational goals. What is important, motivation occurs within people; therefore work needs to meet their goals as well. Additionally, people have different motivation, consequently a reward that is attractive to one employee might be unimportant to another (Boddy, 2002). Moreover, one of the paramount factors which has an impact on efficiency and effectiveness of employees work as well as how they organise time at work is their motivation (Bruce and Pepitone, 2001). While, as claimed by Forsyth (2001), non-motivated employees tend to spend more time on breaks, surfing the internet or private discussion.

Nevertheless, motivation commences with employee engagement, and engagement starts with effective communication skills. As mentioned by Jack Welch, former CEO of General Electric (GE) and current "Business Week" columnist, "no company, large or small, can succeed over the long run without energised employees who believe in the mission and understand how to achieve it". It is also worth mentioning that three main words in this quotation remain the secret to motivating employees: "energised", "believe", "understand" (Gallo, 2008).

Moreover, according to Carmine Gallo (2008), successful companies have employees who believe in their mission. As emphasised by Scott Cook (INTU), "people want more than a paycheck. They want to feel as though they are part of something bigger than themselves".

When discussing motivation, not only should we mention a different management style adopted in Europe in comparison to Asia and America, but also the differences between companies in the same country or even differences between workplaces in the same company.

To understand better what precisely could motivate employees I will attempt to explore what motivation means in general. As claimed by Dessler (2004), a motive is an incentive that stimulates the person into the action or provides direction as well as hints to action. However, Robbins and Coulter (2003) presented a different view. They claim that motivation is the willingness which brings out high levels of strivings to achieve goals as well as to satisfy individual needs. What is more, studies conducted by Schermerhorn (2005), also provide a valuable input. He argues that motivation is in charge of the standard, direction, as well as tenacity of effort developed at the workplace. Moreover, in order to understand motivation, it is essential to understand human nature as it might be very simple or very complex at the same time. Hence, understanding the human nature is significant for effective motivation of employees at the workplace.

Gary Dessler (2004) argues that motivation is the intensity of an employee desire to engage in some actions. However, Buford, Bedeian & Lindner (1995) stated that motivation is a tendency to behave in an intentional manner to fulfil particular and insatiable needs. Nevertheless, Kreitner (1995) presented a different view. According to his statement, motivation is a psychological process that provides behaviour aim and direction. Furthermore, as defined by John Schermerhorn (2005) and subsequently supported by Stephen Robbins and Mary Coulter (2003), motivation is the willingness which presents the level, direction, and perseverance of effort expanded at work to satisfy some individual needs.

As claimed by Kondo (1995), motivating the employees is one of the numerous conditions and policies recognised to achieve the objectives of each company. Moreover, people involved in a task have to be sufficiently motivated to overcome all difficulties. Therefore, by saying, "a company is its people" it is meant that "(...) people are our most important assets" (Schermerhorn, 2005). This statement demonstrates that a proper approach to people in an organisation is extremely important, that is, if managers treat employees appropriately, they will be repaid with effective work.

What is important, even if we create an outstanding organisation, it will not be effective and even counter-productive if the employees lack motivation (Kondo, 1995).

To conclude, highly motivated employees seem to be the most important assets for owners, chairmen, managers. Otherwise the productivity of the employees and the costs of the production will dramatically deteriorate.

Personality and behaviour of employees

It is commonly known that people differ in characters, abilities, values, behaviour, and needs. Moreover, different actions cause various reactions on people. One employee might jump whenever the boss wishes, while the other would not execute this order (Dessler, 2004).

For a manager it is significant to be familiar with how to manage different personalities as ineffective management of a team with different personalities as well as working styles might lead to a failure of a particular project. As stated by Schermerhorn (2005) personality is the mixture or overall profile of characteristics that causes one person to stand out from all others. personality

As claimed by Carl Jung, the Myers-Briggs Type Indicator (MBTI) is a popular tool for measuring personality. This system is helpful for organisations to be familiar with the working styles of employees, balance teams and avoid conflicts. According to Myers-Briggs, assessment characteristics of personality are classified as: Introvert/Extrovert; Sensing/Intuition; Thinking/Feeling; and Judging/Perceiving. The MBTI questionnaires categorised people into 16 personality types along four scales (Mutchler, 1998).

Employees who possess the introvert personality tend to be introspective, they are often an analytical and scrupulous team member. However, extroverts are active as well as easy-going and comfortable with expressing their ideas openly.

The sensing/intuition personalities tend to measure process of information. A sensing person seems to be visual and fact-oriented, whereas an intuitive person has a tendency to be more open and creative.

The thinking/feeling type of personalities refers to the decisions making. Thinkers draw conclusions based on external standards and regulations, however, feelers are more focused on protecting feelings and values. As team members, feelers might consolidate people, while thinkers are successful in expressing logical reasons behind decisions.

Finally, judging/perceiving concerns the approach people have to their life. People with judging personality tend to be well organised and they know what to do about their daily activities, while people with perceiving personalities are more flexible and spontaneous.

It is note-worthy that every team is enriched by diversity, therefore, a range of personalities might create a stronger team. Moreover, the diversity of the team might bring into a project different ideas, which is bound to increase performance and creativity of the team (Boddy, 2002).

On the other hand, as claimed by Gary Dessler (2004) and illustrated in Figure 4. psychologists, nowadays emphasise the "big five personality traits" as they apply to such behaviour at work as extroversion, emotional stability, agreeableness, conscientiousness and openness to experience. Extroversion is personality where a person is outgoing, assertive and friendly. While emotional stability names someone who is relaxed, calm and secure. Moreover, this person is emotionally stable and confident. Agreeableness, in turn, is someone who is good-natured, cooperative and trusting. Furthermore, a person who possesses an agreeable personality is also in good relationships with others, and a disagreeable person generates conflicts and discomfort for others. The following personality is called conscientiousness. An employee with this character trait is responsible, trustworthy and careful. On the other hand, a person who lacks conscientiousness is careless and often doing little. Finally, openness is the degree, to which someone is curious, open to new idea and creative. What is more, an open person is tolerant, open to change and receptive to new things. Moreover a person who lacks openness is resistant to change, narrow-minded and has limited sources of interests (Schermerhorn, 2005).

Many studies conclude that these five traits signify the essential structure of personality, and therefore influence how the person behaves (Beck, 2000).

In addition, personality traits are not the only one factor which is responsible for person's behaviour at work. Therefore, individual differences in abilities also influence workers' behaviour and performance (McCormick and Tiffin, 1974). To perform the work successfully every employee needs to possess appropriate abilities. However, even the most competent employee will not perform the task successfully without motivation. Therefore, Performance = Ability x Motivation (Dessler, 2004).

As claimed by Richard Field (2002) the main goal of attitudes is information of how to act with regard to other person. Moreover, attitudes are significant in organisations as they affect behaviour. Additionally, we may distinguish three parts of work attitudes that are the affective, such as what the employee feels about work, as well as the cognitive attitude- what the employee thinks about the work and the international- what actions is the employee planning to perform at work.

Moreover, the job satisfaction is influenced by both the work environment and by the employee's personal traits. It has been assessed that the individual's personality constitute between 10% and 30% of employee's job satisfaction, however, 40% to 60% of the discrepancy in job satisfaction is motivated by situational factors. Furthermore, the interaction between personality and the situation constituted between 10% and 20% (Field, 2002).

Theories of Motivation

There are numerous motivation theories, however, the universal theory of motivation, which can explain all its aspects does not exist as each person is unique and has different needs and expectations.

Managers have for ages attempted to understand why for one person work is enthusiastic and challenging, and means a possibility to improve the ability, while for other person work is something which you have to perform, as compulsion to survive and for living in a good condition. Theories of motivation focused on how managers might motivate their subordinates. However, they also have to motivate other people such as colleagues, consumers, or other managers.

Psychologists created three main approaches when studied what motivates employees such as the need-based, process based and learning/reinforcement-based approaches.

Need-based Approaches to Motivation

Need-based approaches to motivation concentrate on how needs trigger people to act the way they act as well as which needs are the most significant for each person.

The most common theories of motivation are: Maslow's Hierarchy of Needs Theory, Herzberg's theory, McClelland theory and McGregor theory.

Scientists generally commence most discussions concerning motivation by explaining individual needs; therefore, as claimed by Schermerhorn (2005), a need is an unmet desire. An extremely significant and generally known theory of motivation is Maslow's needs-hierarchy theory.

Abraham Maslow - a hierarchy of needs

Abraham Maslow was an American clinical psychologist, who formed a theory of human motivation to understand the needs of his patients. This model suggests that people have different types of needs. He also found it useful to investigate data and observations of Douglas McGregor theory. He proved that the lower-order needs are leading until they are at least partly satisfied (Maslow, 1970). On the basis of this theory, an unsatisfied need can change a person's behaviour while a satisfied one can be a motivator of immediate action. As illustrated in Figure 5, Maslow argued that there is a hierarchy of five levels of needs. Starting from the lowest one, we may distinguish needs such as physiological, security, social, self-esteem and self-actualisation.

Physiological needs are the needs essential for survival, such as: food, water, shelter and clothing. These needs may be satisfied in an organisation by monetary compensation. Maslow proved that if these basic needs are unsatisfied, people will focus on activities that allow them to obtain the necessity of life. If they do not fulfil these basic needs, they will not strive to reach the higher needs (Boddy, 2002). However, if the physiological needs are gratified, new needs would appear which he called security needs.

These needs provide such values as: security, protection, stability, dependency (Maslow, 1970). They protect from fears, anxiety and chaos. In the event of this need being paramount for a person, a stable and regular job with secure working conditions may satisfy them. A company may meet these needs by medical or retirement benefits.

The following need is belongingness which may be reached by assuring a place in the group or family. This need triggers affection and love and also requires closeness and cooperation with other people. This is the desire for acceptance and approval by friends and co-workers (Boddy, 2002).

Maslow discovered that a wide variety of people possess self- esteem needs, which means self-respect and the respect of others. Self-respect is gratified when people have a sense of achievement, confidence, adequacy and competence. Moreover, people search for the respect of others, "a desire for reputation in the eyes of other people" such as prestige, status, attention and recognition. They wish to be noticed by others. In most cases they take challenging or difficult tasks just to demonstrate that they are good at their job. This behaviour gives them respect and status. To motivate employees through satisfying those needs, management may offer them recognition awards.

Finally, Maslow named the paramount range of needs as self-actualisation, which provides the desire for self-fulfilment as well as potential. Maslow's pointed out that this need only begins to dominate when the all lower-level needs have been relatively satisfied. People who wish to gratify self-actualisation needs will search for personal relevance in their work. They are more willing to value new responsibilities to realise their potential and also develop new talents, skills or horizons (Boddy, 2002). Unfortunately, on this level it is almost impossible to satisfy a person completely as this refers to the feeling of self-fulfilment and the realisation of one's potential, which become higher and higher during person's development. This need may be gratified by paying attention to allowing a person to participate in seminars or temporary assignments to special projects.

Maslow's hierarchy of needs model is referred to as a content theory, it focuses on what will motivate a person without exactly explaining why an individual is motivated. It is not a complete model of human motivation, but it does demonstrate how managers can approach the basic needs of their employees (Alderfer, 1969). Moreover, it suggests that there are significant differences among people in terms of the needs they may wish to satisfy. A manager should always have in mind that motivators may change over time due to environmental influences and the individual's life cycle. It is also note-worthy that, until basic needs are satisfied, people will not concentrate on high-level needs. However, there is little evidence that people must meet their needs in the same sequence of the hierarchy, for instance not all of them must gratify social needs such as affiliation and esteem before moving on to satisfy self-actualisation needs (Dalrymple, 1992). Furthermore, there are people for whom self-esteem is often more significant then love, however, for others creativeness is the priority. In this case, they are not searching for self-actualisation once they satisfied their basic needs. Others had such permanently low aspirations that they experienced life at a very basic level (Boddy, 2002).

In other words, it is of great significance that human beings always have a variety of needs (Kondo, 1995).

Clayton Alderfer- Existence Relatedness Growth (ERG) Theory

The following theory provided by Clayton Alderfer (1969) was based on Maslow's research and focuses on three needs: existence, relatedness and growth. His work was built on Maslow's ideas, however, he presented an alternative to them. He created and researched his theory in questionnaires as well as interview-based studies conducted in five organisations such as: bank, a manufacturing firm, two colleges and a school.

His existence needs are similar to Maslow's physiological needs and to security needs such as: concern for losing the job and salary. They include physiological desires such as hunger and thirst which symbolise deficiencies in existence needs. Nevertheless, pay and benefits symbolise ways of satisfying material requirements (Dessler, 2004).

Relatedness needs focus on relationships with important people such as: family, friends, but also bosses, subordinates, team members or customers. Additionally, they require interpersonal interaction to gratify the needs such as prestige and esteem from others. People gratify these needs by sharing thoughts and feelings. Moreover, acceptance, understanding, and confirmation are significant for satisfying relatedness needs (Boddy, 2002).

Growth needs are approximately equal to Maslow's needs for self-esteem and self-actualisation. People satisfy these needs if they deal with problems by using their skills or developing new talents (Alderfer, 1969).

Maslow's and Alderfer models can be distinguished in two major ways. Maslow's created five sets of needs, while Alderfer formulated three. Moreover, Maslow claimed that each of the needs should be satisfied before moving to the next level of needs. However, Alderfer argued that existence, relatedness and growth needs are active simultaneously (Dessler, 2004).

David McClelland- Need for Affiliation, Power and Achievement

David McClelland (1961) examined the way people think in wide variety of situations. Moreover, he claimed that managers should satisfy employees' higher-level needs. His research discovered three categories of human needs. They vary in degree in all employees and managers, and characterise style and behaviour.

The need for affiliation means to develop and maintain interpersonal relationships. People who have the need for affiliation are motivated to maintain strong relationships with family and friends. In social meetings they attempt to create friendly atmosphere by being agreeable or providing emotional support (Litwin & Stringer, 1968).

The need for power means to be in a position to influence and control others. People with the need for power wish to influence others directly by providing opinions, making suggestions. They would find themselves as teachers or public speakers as well as leaders. However, the need for power depends on person's other needs. A person with a strong need for power but a low need for good relationships might turn into a dictator. Simultaneously, a person with strong needs for friendship might turn out to be a social worker or a cleric. McClelland assumed that "a good manager is motivated by a regimented and regulated concern for influencing others" (McClelland, 1995). It means that a good manager should have the need for power; however it always has to be under control.

The need for achievement means taking personal responsibility and demonstrating successful results. People who have a strong need for achievement have a predisposition to reach a success, and they are searching for advancement at work. They possess the strong need to achieve satisfaction from challenging goal or task. These people prefer tasks in which success is reasonably achievable, consequently avoiding tasks which are too easy or too difficult (McClelland, 1961).

To sum up, it is note-worthy that what is valuable to one person might mean nothing to another. One manager may aspire for promotion, while other is searching for stability and is more satisfied with a slower track. For some managers independence and autonomy are of great significance as they wish to work on their own, while others are more concerned with long-run career job security and also they wish to have stable future (Dessler, 2004).

Frederick Herzberg - Hygiene-Motivator (two-factor) Theory

The following theory provided by Frederick Herzberg (1959) is Hygiene Motivation Theory. He split Maslow's theory into lower-level (physiological, security, social) and higher-level (ego, self-actualisation) needs. According to the motivation theory proposed by Herzberg , motivation is managed by two different types of factors such as satisfiers and dissatisfiers. It seems that employees experience dissatisfaction with things such as low pay or noisy working environment and it is significant to eliminate these dissatisfiers. In turn, to motivate employees it is crucial to enrich daily work in satisfiers. Moreover, to motivate employees it is also significant to involve them in preparing working standards and setting work goals, precisely appraising their results, as well as rewarding them appropriately (Kondo, 1995).

Herzberg conducted a research with 200 engineers and he focused on their experience of work. The respondents were asked not only to reminisce about a time when they had good time at work but they were also asked to bring back to memory a time when they felt bad at work and provide the background (Boddy, 2002).

Research analysis demonstrated that when employees thought about good times they mentioned factors such as: recognition, achievements, responsibility, advancement, and personal growth, work itself, etc. However, when they were describing the bad time, they mentioned the following factors: supervision, company policy and administration, salary, working conditions, interpersonal relations, etc. Herzberg concluded that factors which generate dissatisfaction are hygiene factors and these satisfiers he called motivators, as they seemed to influence individual performance and effort (Herzberg, 1959).

According to Herzebrg, it seems to be significant to motivate employees by creating challenges and opportunities for achievement. Consequently, dissatisfied personnel work with lower motivation and their performance might be not efficient. Herzberg observed that when employees were feeling dissatisfied, that was because management treated them unfairly. However, when they were satisfied, they were reaching a sense of self-actualisation and experiencing the feeling of psychological growth. To eliminate awkward situations managers should not disclose to employees discrepancies in salary, company policies, working conditions or in relationships with collaborators and supervisors. On the other hand, managers should attempt to increase motivation by focusing on such factors as achievement, recognition, challenging work and advancement. Helping to motivate employees means more than only understanding their needs. Managers should also remember that successful performance will meet their employee's needs and should know what kinds of behaviours are required in order to perform their jobs successfully.

Douglas McGregor - X ,Y Theory

Another note-worthy theory is Douglas McGregor X, Y theory. McGregor (1960) in his book Human Side of Enterprise argued that ''every managerial act rests on assumption, generalisations and hypothesis - that is to say, on theory''.

He presented two contrary assumptions concerning human nature as well as motivation underlying management policy and practice. Theory X, which is described as the traditional view of direction and control, states that people are indolent, lazy, not ambitious, unwilling to work and need financial incentives to work hard, and, what is more, they avoid responsibility. Common practices related with Theory X philosophy contain time-recording system, close supervision and precise job description. Theory X assumptions focused on the lower-level needs identified by Maslow. However, theory Y, which he called the integration of individual and organisational goals, claims that people need to work creatively, enthusiastically, moreover, they are willing to reach organisational as well as individual goals (Swinton, 2004).

Furthermore, the central principle of theory X is external control by systems, procedures or supervision, while the central principle of Theory Y is integration. McGregor argued that the problem of organisations nowadays is that they do not take advantage of the creative ability of their workers. To deal with these problems, managers should be more willing to provide employees with the possibilities to use their talents (Boddy, 2002).

Process Approaches to Motivation

Process approaches express motivation in terms of the decision-making process, not in terms of particular needs. Analysing the process approaches to motivation I will focus on the study of the psychologists: Adams, Edwin Locke and Victor Vroom.

Adam's Equity Theory

Adam's equity theory assumes that every human searches for fairness as well as good relationships with employer and colleagues at work. Equity theory explains that if an employee observes inequity, then tension and aversion to work might appear. Moreover, it may affect an employee's contribution to work as well as decrease productivity, and consequently reduce performance.

In equity theory an employee might accept a lower salary for more prestigious title or pleasure from charitable work. However, every person has a different perception of work and it might depend on how she or he perceives inputs and outputs as compared with the other person's work (Pinder, 1998).

As illustrated in Figure 6 equity theory forecasts depends on how the person is waged. If someone is paid on a piece-rate plan and thinks that he or she is underpaid then the reaction might be a decrease in the quality or boosting outputs for increasing the next salary. Equally, paying more than expected should lead to higher quality. Consequently, employees paid on a piece-rate basis, per item produced, increase quantity, however, decrease quality when they think they are earning not too much. Nevertheless, employees who are paid a straight hourly rate have a tendency to reduce quality as well as quantity, when they believe they are underpaid (Dessler, 2004).

Edwin Locke's Goal of Motivation

Locke's goal theory assumes that people adjust their behaviour to achieve their goals. Edwin Locke and his colleagues claimed that unsatisfied needs encourage a person to search for the ways to satisfy those needs.

To illustrate this theory, I will provide an example. If a certain person wishes to be a doctor, it involves the specific knowledge which might be reached only by means of medical education. This goal is prompted by his need and consequently motivates his behaviour. The findings demonstrate that reaching the goals is an effective way to motivate workers. It is therefore significant for a manager to ensure that employees have challenging goals as well as have the skills to accomplish them (Dessler, 2004).

Victor Vroom's Expectancy Theory

Victor Vroom observed that a person's motivation to exert some level of effort is a role of three issues such as a person's expectancy, instrumentality and valence.

As cited in Vroom's theory motivation is a product of three issues: Motivation equals (E x I x V) where E represents Expectancy, I means Instrumentality and V symbolises valence.

Vroom's invented expectancy theory to understand why people select the job that they perform. Consequently, expectancy, instrumentality and valence merge to affect motivation to select specific job.

Vroom's theory provides some hints for managers how to motivate their subordinates. Therefore, superiors must ensure that their employees have the abilities to perform their job. It seems to occur very often that employees do not know how to perform their duties; therefore it is significant to implement training, job descriptions and support which is essential for improving performance. Moreover, managers should focus on employees' incentives and perceived value their employees attach to the rewards. For instance, for one employee extra days off would be more important than more money, whereas another person may prefer two days' extra pay (Dessler, 2004).

Learning/Reinforcement Approaches to Motivation

As claimed by Gary Dessler (2004) learning might be identified as a comparatively permanent change in a person that arises as a result of experience. For instance, our parents teach as from childhood that we should be polite to others, which is usually rewarded through their smile, sweets or a material reward. Consequently, we are motivated to be polite throughout our lives, as we identify politeness with some rewards.

Burrhus Frederic Skinner and Operant Behaviour

Psychologist Skinner argued that behaviour is affected by its consequences. He claimed that people have to be rewarded and punished for their actions, thus they will behave in appropriate ways.

He provided a simple example with a dog and rats. For instance if you train your dog and encourage the dog to perform some commands, you should provide a reward. Consequently, the dog would recognise this action with the reward. As claimed by Skinner the action performed by dog is described as operant behaviour, which means behaviour that has an influence on the subject's environment (Dessler, 2004). This training process is called operant conditioning. Managers and psychologist apply the standards of operant conditioning at work throughout behaviour modification, which means changing or modifying behaviour through rewards and punishment. Behaviour modification seems to have two essential principles, such as behaviour that leads to a positive result as reward thus might tend to be repeated and behaviour that leads to a negative result as punishment which might tend not to be repeated (Dessler, 2004).

Job satisfaction

Job satisfaction is a concept closely related to motivation; however, there seem to be significant differences between motivated employees and satisfied employees.

As claimed by Leslie Rue and Lloyd Byars (2000), job satisfaction is an individual's general attitude towards the work. Moreover, job satisfaction might be influenced by a variety of factors such as: the quality of relationships with supervisor, the quality of physical environment of the work as well as the degree of fulfilment in their work or monetary benefits. Furthermore, the individual's health, age, level of aspiration, social status or political and social activities might contribute to job satisfaction. Thus, job satisfaction is an attitude that results from other specific attitudes and factors (Rue, Byars, 2000).

Main points that relate to job satisfaction are as follows: salary, colleagues, supervisor, workload and promotion opportunities. As argued by John Schermerhorn (2005) there seems to be a strong relationship between job satisfaction and absenteeism at work. Consequently, employees who are far more satisfied with their work seem to be less absent then those employees who are dissatisfied. Schermerhorn also claimed that there is a connection between job satisfaction and turnover. Moreover, satisfied employees are more likely to keep their job while dissatisfied employees tend to leave their occupation. These two findings are significant in recruitment process because turnover and absenteeism are extremely cost consuming. It is due to the fact that, future workers have to learn new duties and responsibilities to meet supervisor's expectations, and what is more, training that is needed to replace former employees is time consuming (Schermerhorn, 2005).

On the other hand, Blau and Boal (1987) argue that job involvement and organisational commitment are closely related to job satisfaction. They forecasted that different combinations of organisational commitment and job involvement have various consequences for organisations. They provided an example that employees who demonstrate both high organisational commitment and high job involvement will not leave the organisation. However, employees with low level of organisational commitment and low level of job involvement are the first who might quit the job. Finally, according to Blau and Boal employees with high job involvement and low organisational commitment are called lone wolves, and employees with low job involvement and high organisational commitment are corporate citizens. Consequently, corporate citizens due to their corporate identification tend to leave the organisation less than lone wolves.

Motivation system, techniques and tools

Many philosophers and management experts agree that it seems to be impossible to change the nature of human beings. However, as maintained by Catherine Forrest, a business incentives manager at retailer House of Fraser, if you wish to be aware of employee's motivation switch, subsequently it is achievable to build a company where employees work hard and achieve improved results.

Employees' motivation is extremely significant to managers and supervisors. They should focus on what precisely could motivate employees. According to PhD McNamara managers should create best conditions in employee's environment, where they might motivate and empower themselves. The key factor is to be familiar with establishing the environment for each of the employee, as every human has different expectations. Moreover, people are not motivated by the same thing. Therefore, managers seem to be acquainted with expectations of each of the employee in the company.

As claimed by Gick and Tarczynska (1999) an effective system to motivate employees is to implement in organisation a system of employee's development. This development process might be reached throughout a system of internal and external trainings, in which employees might improve their skills and boost knowledge. These may be additional studies or courses.

Moreover, Gick and Tarczynska (1999) maintained that often evaluation of employees is also an effective system to encourage employees to work. Evaluation should be performed by concentrating on requirements and provide positions and employees' performances. Furthermore, new tasks should be challenging, clear and achievable as unattainable tasks might damage employee's motivation.

According to Dessler (2004) it is crucial to involve employees in significant projects or make them responsible for business process in order to motivate them. Moreover, as claimed by Gick and Tarczynska (1999) one of the most effective systems for motivating employees is compensation. Therefore, the rewarded employees have their improvements constantly encouraged. Additionally, Schermerhorn (2005) pointed out the significant role of sharing information in organisation. If employees observe that business information, plans and ideas are shared with them they automatically feel valued and appreciated.

As noticed by Kondo (1995) the manager should be familiar with their subordinates and also understand them. Moreover, he should be aware of their hobby, interests, plans and even information about their family.

Hopkins (1995) maintains that:

"Nothing can be more motivating than to receive an award honouring achievement in front of the entire company during a formal awards ceremony".

What is more, as cited in Gick and Tarczynska (1999) rewards play major role in motivating employees, however they have to be identified with significant achievements, what is more, they need to be valuable and precisely selected for employees. Another motivating factor might be good atmosphere in the workplace, as in such environments employees have more energy and enthusiasm. Consequently, in such environments absenteeism is lower and satisfaction is higher, which leads also to high productivity.

Work towards motivation

Nowadays work is perceived as natural part of every human life. Without work people would not exist normally. In modern organisations it is common to spend at work eight hours on average, which is one third of the whole day. What happens to them at work, how they are treated, what their rapport with colleagues is, and how they perform might have an influence on their overall quality of life (Schermerhorn, 2005).

Furthermore, one of the most significant roles of managers is to bear in mind that job involves a high level of social responsibility, because poor quality management practices might decrease an employee's overall quality of life. Nevertheless, good management practices have potential to enhance it. Nowadays managers are expected to assist in creating work environments where employees have positive experiences while performing on a high level of expectation.

John Schermerhorn (2005) argues that job is a collection of tasks performed with the support of organisational objectives. The position of employees characterises the standards of life and set the standard in environment of the employee. As described by William Bridges ''the positions are the inflexible solutions of flexible problem''.

As claimed by Dr. Juran, at the beginning of the 1970s motivation started to be a problem as absentee rates commenced to increase. Therefore, he published a series of articles in the American Journal Quality Progress entitled "The Taylor System and Quality Control". In his article we may discover that Taylor offered a revolutionary approach to management. He claims that work should be based on a scientific study, and not on an empirical judgement of employees. Moreover, selection and training of employees as well as the standards of what constitutes a day's work should also be based on a scientific study. To make these suggestions more effective, he divided work planning and its implementation. He also limited the control of a foreman and workmen, which appeared to be an impressive improvement in productivity, and what is more, this process was implemented in many organisations. However, nowadays his system has become obsolete, as in modern organisations a foreman and workmen are well educated.

The idea stated by Kondo (1995) that ''work is nothing more than a means of earning money'' nowadays is widespread in developed countries as the world appears to revolve around money.

As maintained by Gick and Tarczynska (1999), every occupation on a specific position has its own activities and tasks which employees should follow, and signify that they are familiar with their duties and in what way they should execute them. What is important, an employee is assessing positively, if he executes exactly what belongs to his responsibilities. In return he might expect a gradual annual salary increase. Promotions and pay rises seem to be the consequences of growing experience as well as the length of job seniority.

Competencies of every employee depend on their knowledge as well as abilities, which they posses or gain during their work experience. Moreover, it seems to be extremely significant to define the importance of employee's position. It might also help to strengthen the productivity. Employees should believe that they are important and needed, and without their commitment the results would not be reached.

Managers are concentrated on how to motivate individuals to work; therefore it is significant for them to design a motivating system. Job design is a term which refers to the way tasks are combined to create a complete job. As claimed by John Schermerhorn (2005) job design uses the insight of motivation theories to accomplish two main goals such as high levels of job satisfaction and job performance. Moreover, well created job design presents a perfect match between the individual employees and the task requirements.

What is more, studies conducted by Stephen Robbins and Mary Coulter (2003) also provide a valuable input. They claimed that "managers should design job deliberately and thoughtfully to reflect the demands of the changing environment as well as the organisation's technology, skills and abilities, and preferences of its employees". Consequently, if we follow the findings of Robbins and Coulter, our employees will be motivated to reach their full productive capabilities.

A wide variety of research has demonstrated that the design of jobs might have a colossal impact on motivation, behaviour, productivity and, what is more, job satisfaction (Wall, Martin, 1987). As claimed by Tim Hannagan (2002) two major steps have been taken towards optimising the redesigning of work. The first has been focused on expansion the possibility of employee's work to set up greater task variety. This has taken the form of job enlargement and job rotation. Job enlargement strategy has merged two or more specialised jobs; therefore an employee is in a position to apply a wide variety of skills. However, job rotation has the idea to boost task variety by moving at regular intervals among various tasks. Moreover, job enrichment creates the job itself more challenging.

Hackman and Oldman (1975, 1976, 1980) created job characteristics model (JCM), the most recognised and significant attempts to connect situational characteristics of a job with motivation, which is the support for manager to design motivating jobs. As illustrated in Figure 6 below the JCM identifies five main job characteristics which are important as they verify a range of aspects of employee's attitudes and behaviour. According to the JCM job might be illustrated in terms of five core dimensions, such as: skill variety, task identity, task significance, autonomy and feedback (Robbins, Coulter, 2003).

As demonstrated in Figure 7, if the three dimensions such as: skill variety, task identity and task significance meet together it might be predictable that these employees will perceive their job as being important, valuable and worthwhile. Moreover, if the job provides feedback the employee will be familiar with how effectively he or she is performing. If we consider the motivational point of view, the JCM recommends that internal rewards are received when an employee learns from their experience, personally experienced responsibility throughout autonomy of work or performed well on a task that he or she cares about. Consequently, the more these three factors characterise work, the superior the employee's motivation is (Robbins, Coulter, 2003).

Compensation system

According to the Cambridge dictionary "compensation" is defined as "money that is paid to someone in exchange for something that has been lost or damaged or for some problem". However, in a business context rewarding means providing incentives and recognition of employees for their performance (Milkovich, Newman, 1990). Rewarding means providing incentives and recognition of employees for their performance. There are many ways to acknowledge good quality performance. It might be the standard "thank you", as well as granting formal cash incentives.

Many authors describe compensation as regular approach to providing financial value to employees for their performed work. Moreover, compensation might accomplish a number of objectives assisting in recruitment, job performance and job satisfaction. Managers use compensation to recruit and retain qualified employees, boost satisfaction, reward and encourage high performance, reduce turnover and encourage company loyalty.

Every organisation wishes to have motivated employees, as they work more effectively and generate better results. To improve motivation, numerous organisations use monetary rewards, however, awarding them fairly and effectively might be challenging. As claimed by Henderson (1994), one of the main tasks of Human Resource Management is developing an effective and appropriate compensation system, which might attract and retain competent and talented employees to assist the organisation in accomplishing its tasks and objectives. What is more, as reported by Gomez-Mejia (1992) compensation system of an organisation has been demonstrated to have an influence on its strategic performance.

However, Rue and Byars (2000) argue that evaluating performance without a system that merges the results of the evaluation to the organisation's reward system generates an environment where employee are inadequately motivated. What is more, Robbins and Coulter (2003) maintain that the role of a manager is to develop a compensation system that reflects the changing nature of work and the workplace in order to keep employees motivated.

As emphasised by Schermerhorn (2005), a compensation system that awards pay raises commensurate with individual performance contribution is defined as merit pay. Managers assign pay rises in this way as they try to distinguish and positively strengthen high performance. Moreover, they attempt to remind low-performers of their lack of achievement and that they are obliged to improve in the future.

Organisational compensation might contain various types of incentives, rewards, and benefits such as base wages and salaries as well as incentive payment or bonuses, and services or pay for knowledge (Robbins, Coulter, 2003). The base wage or salary might be an hourly, weekly or monthly pay that workers receive for their work. However, incentives are rewards offered in addition to the base wage or salary and are frequently directly related to performance. Benefits are the rewards that workers receive due to their employment with the organisation. Examples of such benefits are paid vacations, health insurance and retirement plans (Rue, Byars, 2000).

It should be borne in mind that a number of factors influence the differences in compensation and benefits packages for various employees. As presented in Figure 8. these factors might be job based and business or industry based.

As maintained by Robbins and Coluter (2003) numerous organisations are applying an alternative approach to establish compensation named skill-based pay. This was implemented by many organisations as employees' levels of skills tend to influence work efficiency and effectiveness. This system rewards workers for the work skills and competencies they might exhibit.

Although a large number of factors might influence the design of an organisation's compensation system, flexibility is turning into a key consideration. It is note-worthy that the traditional approach to paying employees reflected a time of job stability while a worker's pay was mainly characterised by seniority and job level.

What is more, Rue and Byars (2000) also provide a valuable input. They claim that employees will be motivated if they believe good performance will lead to rewards. However, numerous rewards provided by an organisation are not adequate to employee's performance as paid holidays, insurance plans are frequently determined by organisational membership and seniority more willingly than by performance. In addition, other rewards such as promotion might be related to performance.

To conclude, it should be borne in mind that managers ought to establish a fair, equitable, and motivating compensation system which would enable an organisation to recruit and retain productive workforce (Robbins, Coulter, 2003).

The role of Manager

It is well known that managers have an extremely difficult role to play in every organisation. It is expected from them to supervise and manage the overall performance of their employees. Moreover, analyzing, reporting, providing recommendations and developing strategies on how to improve quality and quantity. Additionally, achieve business and organisation goals, visions and objectives as well as be bound up in employee selection, career development, succession planning and training. They also are responsible for identifying problems, making choices and providing alternative courses of actions. Furthermore, it is expected from them to motivate and engage their subordinates as well as to manage compensations and rewards (Robbins, Coulter, 2003).

As claimed by Miller Huggins "A manager has his cards dealt to him and he must play them", which means that managers have power and they have to manage work and give orders in the appropriate way to reach intended objectives.

Nevertheless, managers have their bosses who also have certain expectations. They have their standards which have to be obeyed. However, their expectation list seems to be extremely long, while meeting these expectations requires a different set of skills. Nonetheless, in this chapter I shall concentrate on such activities and skills which relate to motivation of employees exclusively.

The manager plays the most important role in motivation of employees. Effective management in a business workplace is critical to positive employee motivation and high employee morale. As cited in Lipman-Blumen article (1996), nowadays managers seem to lead under new and complicated conditions. As the time frames to accomplish the tasks are becoming shorter, and the expectations are higher. Furthermore, the problems and tasks to be solved are complex, unclear and multidimensional. Everyone who wishes to be promoted to a managerial position, has to take into consideration the difficulties which arise from this position, and, face up to the challenges, become good at communication, interpersonal relations, motivation, teamwork and change.

As reported in Schermerhorn (2005), leadership signifies the process of inspiring employees to work hard to accomplish significant tasks. Moreover, leading is one of four significant functions that constitute the management process. As shown in Figure 9. Planning determines the goals and direction, while organizing connects the resources together to transform ideas into action. Consequently, leading creates the commitment and enthusiasm for employees to apply their talents to help accomplish idea As claimed by Gick and Tarczynska (1999) managers feel comfortable in a situation where employees cannot make any decision as it strengthens their authority. Simultaneously, they delegate final decision making to higher levels to avoid consequences of making mistakes.

Chapter Three

WILO Company Motivation and Compensation System

General information about WILO company

For my research I have chosen WILO company. I have made such choice as I served an apprenticeship in marketing department of this company.

WILO SE headquartered in Dortmund, Germany, is one of the leading manufacturers of engineering pumps. Their products are innovative and have application of high-efficiency technology. Moreover, they are used invarious kinds of technologies like heating, cooling and air-conditioning. WILO was established by Louis OplA¤nder in 1872 as a copper and brass goods factory. Company's history reaches four generations of OplA¤nders family. The brand name comes from the letters combination of the name of the current owner Wilhelm OplA¤nder. WILO is now present in more than 70 countries in Europe, America, Asia and Africa, and hires more than 6,000 personnel all over the world. Their turnover reached over 977 million in 2008.

Their success is supported by standards and rules which they executed without compromise. The WILO product and all linked products with WILO company set the standard for technical performance and productivity, which is supported by an excellent service provided in all European countries and progressively more in other countries, from Asia to North America.

WILO has set itself the goals of rising profitably by generating customer added value. However, their demands go way beyond the straightforward fulfilment of customer requirements, as pump systems are of crucial significance for the basic needs of life and for preserving their environment for future generations. Moreover, they intend to use the higher efficiency and lower life cycle costs of their products to accomplish economic success for wholesalers, craftsmen, planners and the users of their systems.

With technical progress, requirements for the productivity and reliability of systems for conveying fluids also constantly raise. For this reason, WILO is progressing to extend its application specialist knowledge and is increasingly applying it to neighbouring market segments. They are intensely embedded in the techniques and principles of engineering technology.

In my research I will focus exclusively on the Hungarian and Polish subsidiaries of WILO company.

The structure of WILO company

The headquarters of WILO company of Polish subsidiary is based in Warsaw, Janki, on the way from Warsaw to Katowice, while the Hungarian ones is located in TArAbA¡lint near Budapest.

The structure of organisation of the Polish subsidiary of WILO company is demonstrated below:

Employees of WILO company

WILO claims to have a professional approach to employees. They state that the employees of WILO make it a lively place as well as embody and influence their culture. "We thank our employees for giving us an insight into their day-to-day work and for personally introducing themselves" (WILO website: www.wilo.com).

As cited in WILO Sustainability Report (2008), and presented in Table 1. the WILO Group hires an annual average of 6,024 employees worldwide, which conforms to a boost of 3.5% with regard to the previous year. The production division estimated for 3,128 of these employees while 2,896 people were hired in the sales and management departments. What is more, the number of apprentices in the Group has sustained to rise in total. Furthermore, to the GroupA´s own apprentices, in 2008, WILO started to support the best graduates in the year for the trade of systems mechanic for sanitation, heating and climate technology in association with the essential guilds for the eleventh time in North Rhine-Westphalia and for the second time in Thuringia.

In 2008, the percentage of workplaces engaged by women within the Group was almost 29% while the average in France even 44%. The fluctuation rate has improved throughout the break of short-term employment contracts, the leaving of previous apprentices, who changed to full-time training courses, and improved personnel leasing employment contracts, mostly at German and French sites (WILO Sustainability Report, 2008).

According to the international business journal "Business Week" which carried out a study entitled "Europe's 500 Job Creating Companies", WILO is one of the most successfully developing companies in Europe in terms of turnover and employee data. Consequently, the company might be placed at No. 120 in the leading European group of the 500 best companies, while among German companies it was No. 19 (WILO Sustainability Report, 2008).

Considering the further training of employees, WILO concentrates on internationalisation. Therefore, the first international personnel management meeting took place in 2008. Consequently, a platform was installed, where personnel development ideas might be replaced at standard intervals in the future and Group-wide programmes might be introduced into a market. The WILO Welcome Event might be an example of such programme, where new employees from sites all over the world obtain an introduction into the organisation, products and the central mission statement of the WILO Group. Consequently, this is a significant part of an experienced, group-wide corporate culture (WILO Sustainability Report, 2008).

Financial facts, figures and data of WILO company

As cited in the report of the Management Board of WILO company (2008), in spite of the financial crisis and a downturn of the world economy, the WILO Group maintained its longstanding growth trend in 2008 and increased net sales by 5.4 percent to 977 million. However, they compare unfavourably with a slowdown in their Eastern European business in the last third of the year. The hardest obstacle seemed to be the triumph of South Korean and the US dollar and pound sterling decline. Regardless of dramatic rise in raw materials prices and a main boost in R&D expenditure, WILO were close to come up to their earnings quality of past years with an EBIT margin of 9.1 percent (Figure 2.). Their high-efficiency heating pumps provided another extra-strong growth to total earnings in Germany and neighbouring markets. It is also worth mentioning that energy efficiency is now surprising worldwide. On a local-currency basis, their North American business climbed by over 50 percent. Moreover, they generated another above-average year-on-year boost across all sales regions in their Water and Sewage segment.

According to WILO Annual Report (2008), the evaluation of WILO AG into a European Company (Societas Europae, SE) stressed a milestone in the structural development of the WILO Group, reinforcement their position and the active profile of their actions across Europe. Expansion into a European Company is the reasonable following part in the international corporate success story of the WILO Group. This modern corporate form is better fitted to the WILO Group's global focus to develop an open and international corporate culture.

In addition, the main competitors of WILO company are Grundfos, Patterson, Sulzer, Vertiflo, Cornell, Roper Pumps, Ampco, Peerless Pump.

Corporate culture

WILO company is an old company with almost 140 years of history. As emphasised by Federal President of WILO Dr. Horst KAhler: "our main objective should be to work more efficiently with existing energy and to save energy."

The main values of WILO company are: effectiveness, customer service, trust, passion, integrity, cooperation. What is more, their vision is to be recognised as the best manufacturing company producing engineering pumps.

WILO company hires people with greatest competencies adequate for specific positions. Moreover, they provide opportunities for students by organising apprenticeships.

An enormous success of WILO company was the award of "Top Employer", which WILO received as a confirmation of a corporate policy in 2008. This concentrates on systematic employee qualification as the precondition for additional innovation management as well as global turnover increase within the Group. The study was executed by an independent research institute CRF in cooperation with the A.T. Kearney corporate consultancy and the Technical University of Munich. The assessment criteria were internationality, innovation management, compensation, job security, work-life balance, corporate culture and development opportunities. All the aspects which are particularly significant from an applicant's point of view were critically measured in the survey (WILO Sustainability Report, 2008).

WILO company involves engineering students in research projects in various fields of technology and their provide assistance in their thesis and projects. Consequently, WILO employs in Germany over 100 interns every year from the field of engineering. Therefore, the company supports the "Fair Company" initiative, and WILO is authorised to bear the title of "Fair Company" (WILO Sustainability Report, 2008).

WILO focuses on internationalisation in terms of the further training of employees. Consequently, the first international personnel management meeting took place in 2008. Therefore, a platform was installed, on which personnel development concepts might be exchanged at regular intervals in the future and Group-wide programmes might be launched. WILO 'Welcome Event' is one of these programmes for new employees from sites all over the world providing an introduction into the organisation, products and the central mission statement of the WILO Group. This seems to be a significant part of an experienced, Group-wide corporate culture (WILO Sustainability Report, 2008).

Another part of corporate culture which is demonstrated by WILO company is steady development training of employees. These training courses are performed via a wide variety of training opportunities and commitment to numerous projects.

The atmosphere at the WILO company is informal as all employees turn to each other by their first name, independently of age or position which makes the atmosphere more relaxed. It might be easily noticed that employees like and respect each other. The preferences of the dress code are smart casual. However, during business meetings they are obliged to wear professional clothes with the company logo.

The employees of WILO company located in Warsaw, Janki work in an open space office with several separate rooms reserved for management. The employees work from 8 a.m. until 4.30 p.m. with a thirty-minute lunch break. However, the working hours are not strict and, if necessary, employees might also work from home with their access to mobile and e-mail account.

Motivation and compensation system at WILO company

All the information collected in this chapter has been gathered thanks to Mr Jaroslaw Stachurski, the chairman of WILO company in Poland. For the purpose of my research, he allowed me to familiarise myself with the details of the motivating and rewarding system implemented at WILO company.

The objective of the WILO company compensation system is to attract, motivate, and reinforce the abilities needed to achieve success. The principles of the system are to fairly pay for performance as well as design the compensation programmes in a way that supports business strategies.

The most significant purpose and principles of the motivating and rewarding system at WILO company are: transparency, cohesion of principles in all departments and motivating character. They apply comparison of complete pay to the market median.

Their compensation system consists of basic salary, bonuses and perks as well as benefits as illustrated in Figure 10 below.

Employee benefits

WILO company offers a wide variety of benefits and perks for their employees and sets high standards when compared to their rivalry companies. The benefits depend on a position and function.

At the peak of the salary amount, WILO company offers the following major benefits and perks to its employees:

• medical care
• company car/ mobile/ laptop
• discounts for WILO products for employees
• a package of gifts for new born child
• a gift for employee after every fifth year of work
• integration meetings, company parties, Christmas parties
• trainings as well as foreign training courses
• if the turnover is high, WILO company organises a foreign travel for all employees
• flexible working hours or, if necessary, working from home

Training system

There is a wide range of training courses available to the WILO company employees and the company encourages its employees to participate in them. Starting from the training for new employees by means of which they might familiarise themselves with the company structure as well as gain elementary knowledge about WILO company and its business.

WILO employees have many opportunities to participate in a wide variety of trainings which cover such skills as building interpersonal skills or negotiating, cooperation, and communication. It should be borne in mind that each department has its own particular training programme to build competencies among the personnel. Moreover, as WILO company is an international organisation, employees are given the possibility to participate in a session of training courses for all WILO employees worldwide working in particular department.

Such training courses depend on the needs of employees. The role of each manager is to observe progress and select appropriate solutions to ensure improvement. If a particular employee needs to improve, the manager gives him or her such an opportunity by providing required training.

WILO company employs several outsourcing companies to provide training courses. Some of them take place in the head office as well as outside the company, and very often abroad. This sort of training occurs when employees request advanced and professional knowledge. However, a wide spectrum of training courses are conducted throughout managerial coaching and mentoring as well as by more experienced employees to gain and improve practical experience.

Chapter four

Methodology

Research methodology

The research is supported by primary and secondary data. The primary data consists of two parts: (1) quantitative data such as a questionnaire survey and (2) qualitative data, which is an interview with the chairman of WILO company. The secondary data was gathered from selected literature, WILO annual reports as well as from WILO company internal documentation and official powerpoint presentations.

The research project starts with the collection of the secondary data and as emphasised by Ghauri and Gronhaug (2005), the secondary data is useful not only to gain information necessary to carry out a research but also to improve the understanding and subsequently resolve a research problem.

Moreover, the research is more deductive rather than inductive as it follows "a study in which a conceptual and theoretical structure is developed and then tested by empirical observation" (Hussey, 1997:13).

The objective of the employee survey

The aim of the employee survey at WILO company is to collect open and honest opinions of all employees about selected topics. It is an instrument intended to measure job satisfaction and identifies where the need for improvement is.

The survey itself represents only the initial steps of the employee survey (ES) process. The actual activities start when measures are derived and implemented from the potential improvements that have been identified.

The structure of the survey

The employee satisfaction survey has been conducted in eight departments of WILO company in Poland and Hungary, that is marketing, accounting, sales, trade, technical, service, municipal department, and warehouse. In order to obtain reliable data from the informants, the survey was carried out according to strict criteria for anonymity. Also, in order to collect a reliable data sample, it has been assumed that out of a group of at least 10 employees, at least 5 responses must be provided. There are a total of 50 close-ended questions on the following 10 topics:

• Everyday work
• Working conditions
• Career development
• Attachment to the company
• Co-operation with colleagues and superiors
• Flow of information
• Remuneration
• Work and leisure
• Company objectives
• Handling of changes

The employees were asked to estimate the level of their satisfaction in various areas by means of a five-grade scale implemented in the questionnaire. The five grades of satisfaction were represented by the following answers: yes, rather yes, not sure, rather no, and or very important, rather important, neutral, rather unimportant, unimportant.

What is more, 16 motivating factors have been listed in the questionnaire and employees were obliged to mark which ones they find most motivating. The list included the following factors: salary and benefits, training courses, interesting job, good atmosphere, job security, challenging tasks, perspective of promotion, flexibility of work, team work, professional developments, position, rivalry, success of the company, flexible working hour, and fear.

The following set of questions in the questionnaire concerns the importance of the company benefits and perks and are listed as follows: Health Care, training courses, company travels, cultural and sport tickets reimbursed, company car/ mobile/ laptop, company parties, and performance bonuses.

Finally, the last set of questions regards personal information such as: department, gender, age, and seniority at WILO company (Appendix B).

Research Questions

The general question behind the research

How might WILO subsidiaries in Poland and Hungary improve the level of employee satisfaction?

The supporting questions

• What is the basic motivator for Wilo company employees?
• Why does Wilo need motivated employees?

Data collection methods

Primary research might be used to create data to address the information needed with respect to a specific problem, while secondary data includes information which already exists (McGivern, 2003).

Primary data:

• Interview with the CEO of WILO Poland
• Employee satisfaction survey

Secondary data:

• Literature review
• WILO company internal documentation, annual reports and powerpoint presentations
• Publications on Human Resource Management, International Journal of Human Resource Management, etc.
• Market reports/data

In quantitative data the information collected is usually presented as numbers (tables, graphs, charts). Nevertheless, quantitative data provides a wide range of specific descriptions, therefore the information about motivation and rewarding of employees was collected. Consequently, both quantitative as well as qualitative research methods were applied to complete the goals of this study (McGivern, 2003).

Data mining techniques shall be applied for both the quantitative and qualitative data collected from the questionnaires and the interview with the CEO of the Polish subsidiary of WILO company. This technique will allow me to answer the key question of my research.

Sampling population of the research

The informants for the study were selected among a group of employees from WILO company in Poland and Hungary. The following variables were taken into consideration: gender, age, seniority at the company, department and position, etc. Since I had the possibility to observe the organisation and I am acquainted with the employees, they were willing to assist me in data collection for the research.

For the purpose of the research, there are two target populations that I intend to receive information from.

• Polish employees from WILO company.
• Hungarian employees from WILO company.

Both groups were requested to complete a questionnaire which addressed questions significant for my thesis.

Interview with the CEO of the Polish WILO subsidiary

A structured interview with the CEO of WILO Poland was held on 8th January, 2010 at the headquarters in Janki.. The atmosphere of the meeting was informal and the CEO was willing to answer all my questions. Preparation for this conversation meant devising a list of questions, which I considered extremely important as I was in a position to gain all the significant information during this meeting. The CEO of the Polish subsidiary also assisted me in contacting the CEO of the Hungarian subsidiary, which enabled me to conduct the research with Hungarian employees.

Questionnaire survey

The questionnaire was devised in order to collect primary data and gain thorough information about employee satisfaction at WILO company. The questionnaires were provided to the Polish employees in the Polish language while the Hungarian ones received them in English. The distribution of the survey among Polish respondents was done personally, while Hungarian ones received them by e-mail.

The entire survey was carried out according to the universal principles of employee survey, that is:

• Anonymity
• Voluntary participation
• Transparency
• Willingness to change

Chapter Five

Results of the survey

Introduction

This chapter presents the findings of the data collected from the conducted survey. The data were categorised and summarised, and the graphs were created in order to facilitate and illustrate the results of the survey.

Initially, the results were analysed with regard to demographic information in order to understand the nature of the sample. The following part consists of overall satisfaction-index of WILO employees. The results have been discussed in sections which might facilitate the comparison of the whole picture of an employee satisfaction and might be supportive for direct analysis as well as might point out the improvements for the current motivation system at WILO subsidiaries in Poland and Hungary.

Key findings on WILO satisfaction survey

As illustrated in Table 6, there were 37 questionnaires provided to the Polish WILO employees, however 28 responses were collected, which accounts for 76 percent of response rate. 30 questionnaires were provided to the Hungarian WILO employees and 13 responses were collected, which gives 43 percent of response rate (Figure 16).

To conclude, the results of the survey seem to imply that the employees of WILO subsidiaries in Poland and Hungary are rather satisfied. Moreover, the key motivators for the employees are benefits, bonuses and perks, promotion, employee evaluation, total compensation, and training courses. This motivating system plays an essential role in motivating employees to reach better results.

According to the results of the survey, the top motivating factors for the Polish respondents starting with the most significant ones are as follows: salary and benefits, good atmosphere, interesting job, professional development, job security, success of the company, training courses, perspective of promotion, challenging tasks, flexibility of work, team work, and flexible working hours. However, for the Hungarian employees the main motivating factors starting from the most significant areas are: salary and benefits, good atmosphere, professional development, training courses, interesting job, success of the company, perspective of promotion, job security, flexibility of work, challenging tasks. In other words, salary and benefits are the most motivating factors for both the Polish and Hungarian employees. Therefore, WILO company ensures that the remuneration is competitive and attractive to their employees.

One of the key intensions of the employee evaluation at WILO company is to ensure that employees have interesting, challenging and satisfactory jobs, therefore, the CEO of the company organises conversation meetings with each of the employees. Moreover, the training system at WILO company has the goal to ensure that the employees are professionally developing.

Recommendation

WILO company provides general and basic forms of rewarding their employees which might be observed in the level of the employees overall satisfaction. However, there seems to be a gap in such area as: satisfaction of the salary in comparison with the similar position in other companies or other positions in WILO company, where 46 percent of employees exhibited more or less of dissatisfaction.

It should be borne in mind that every international organisation should build employee commitment through the effective reward strategy. This strategy is likely to result in employees' loyalty to their company as well as efficiency of work.

WILO company might improve the level of employee satisfaction by implementing annual anonymous surveys in order to collect the significant information about all the issues. This implementation might be supportive for further planning of employees' incentives.

Another important issue is that 31 percent of the Polish and 39 percent of the Hungarian employees exhibited that they are stressed at work. My suggestion is that WILO company should organise training courses regarding how to prevent stress. The company should hire an external company to execute these training courses.

Moreover, WILO company offers a wide variety of benefits and perks. However, each employee has different expectations and needs. Therefore, my recommendation is to prepare a list where employees could select those benefits that suit them the most as one benefit might suit one employee while other might be better for another.

I strongly believe that one way of the most motivating issues for employees in a long-term period might be an increase in benefits and perks progressively rather than the salary. It is more likely to boost the employee's motivation by offering a set of benefits for a well performed work.

Another significant issue might be the opportunity for promotion. It means that superiors should prepare a list of reserve staff, where they could store the data of young and rapidly developing employees in order to prepare them for promotion. This solution might save money designed for the recruitment process, and what is more, it might increase the employees' morale and consequently motivate them to effective work.

In addition, I would also suggest conducting an informal interview with the employees who decided to leave the company in order to analyse the reason of their resignation. It might be an appropriate method and valuable source of information implementing the improvements of the existing system.

Chapter Seven

Conclusion

Nowadays, managing a company is not only connected with activities that bring revenues but it also seems to be significant to manage the employees' motivation and pay systems at the same level because employees' motivation is an essential part of managing staff. As a result, motivation might be directly associated with job performance.

In current business world it is no longer sufficient to provide only salary as employees need additional motivation to achieve better results; therefore they should be satisfied with the pay they receive. Various theories of motivation prompt managers to encourage employees to bigger efforts and better sales outcomes. Consequently, Maslow and Herzberg, the most significant theorists, emphasised how important understanding personnel needs is and how creating such system might satisfy them.

As all issues in the world are changing continuously, also in area of motivation, new trends are being observed. Lately, increasingly significant for all well functioning organisations is an employee overall satisfaction. As claimed by Kotler (2001) only fulfilled employees are in a position to bring to the company satisfied and loyal customers, on the contrary, employees who are unfulfilled sell less, and they turn out to be frustrated, frequently quit their jobs or are redundant. Consequently, new recruitment process, selection and training costs are required, which would not be necessary in a strong and well-paid position. Therefore, nowadays it becomes a habit on market to emerge new tendencies if it comes to employees' motivation and salary.

It seems that the most visible trends, considering motivation system, are opportunities to select from the list those benefits that are the most desirable for employees. Moreover, very often small companies hire human resources companies which are responsible for creating effective and satisfying salary programme. What is significant, the trend of growing importance of bonuses seems to be also extremely popular nowadays. It should be born in mind that the more attractive they are the better specialists organisation might obtain and it is easier to retain hired employees in the company.

As emphasised by Jack Welch, the chairman of GE company: "when the rate of change inside the company is exceeded by the rate of change outside the company, the end is near", therefore, all directors with expectation for long well-being of their corporations, should invariably have in mind, that the market observation and implementation of up-to-date tendencies as well as understanding customer's needs is a key to success.

The objectives of this study was to investigate whether employees in WILO company are well motivated and if there is a need for improvement of the level of employee satisfaction in WILO subsidiaries in Poland and Hungary. Moreover, the intension was to recommend changes to the existing rewards system in order to suit the employees' expectations.

The project covers the literature review regarding motivating and rewarding systems to understand the employees' needs and expectations. Motivation theories were reviewed to identify the key motivating factors for employees. The theories claimed by Maslow, Herzberg, and others have been extremely useful in the analysis. There seems to be adequate evidence in both the literature and a real business life that these theories might be applied to any organisation. Moreover, motivating and rewarding system in WILO company was investigated in order to understand the researched organisation. The following part includes analysing the findings of the research (questionnaires).

This study was conducted to implement effective and innovative solutions to any organisation. The project was built on a comprehensive framework based on theory and research. Therefore, the findings presented in the research might be adopted by organisations for practical usage.

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