AN INVESTIGATION OF THE RELATIONSHIP BETWEEN WORK MOTIVATION (INTRINSIC & EXTRINSIC) AND EMPLOYEE ENGAGEMENT A STUDY ON ALLIED BANK OF PAKISTAN Authors: Waseem Khan and Yawar Iqbal Supervisor: Kiflemariam Hamde Student Umeå School of Business Umeå University Autumn semester 2013, Master thesis, two-year, 30 ACKNOWLEDGEMENT This thesis would not have been possible without the help and support of generous people around us. It is of particular importance to mention all of them with their names. We would like to thank our supervisor Kiflemariam Hamde for his countless support and directions on our thesis. This thesis would not have been possible without the assistance, advocacy and diligence of our supervisor. We would like to thank our thesis coordinator Ulrica Nylen for giving the opportunity to start and complete our thesis on time. We are also grateful to Umea University library staff, especially the facility of research room and excess to data base services. We would like to thank all the respondents who helped us in data collection phase. We are grateful to management of Allied Bank of Pakistan for their cooperation in collecting the data. Few names are important to mention here Shahzad khan, Muhammad Iqbal SiddiquiSajid Wadud, Zahoor Ahmad, Shah Hussain, Zakir Ullah and Muhammad shafi. Heartedly thanks to all of them. Finally we would like thank our parents and family members who supported us financially and mentally. This thesis would not be completed without their kind support and help. Waseem Khan Yawar Iqbal i ABSTRACT Introduction: Work motivation (intrinsic & extrinsic) and employee engagement is the hot issues for today‟s management. Employee‟s motivation has been in discussion for years, different compensation plans and strategies were adopted over years to make employees more productive. Recently, the introduction of employee engagement as a new construct to business, management, and human resource management fields make it an imperative to adopt in organizational settings. Many studies made indirect link between work motivation (intrinsic & extrinsic) and employee engagement. Moreover, motivational factors (intrinsic & extrinsic) are often considered a useful tool for employee engagement. But very few studies investigated the direct relationship between work motivation (intrinsic & extrinsic) and employee engagement. Purpose: This study explored the relationship between work motivation (Intrinsic & Extrinsic) and employee engagement. Moreover, the study also examined the impact of intrinsic and extrinsic motivation on employee engagement. Methodology: In order to fulfill the research purpose, quantitative study was adopted. Questionnaires were designed using Google survey tool. 187 questionnaires were collected from employees of Allied Bank of Pakistan. Later on, SPSS was used to perform the required test of descriptive statistics, reliability analysis, bivariate correlation, ANOVA test and multiple regression analysis. Findings: The results of SPSS revealed strong agreement of respondents to positive relationship between intrinsic motivation and employee engagement, and extrinsic motivation and employee engagement. Four intrinsic factors namely interesting work, job appreciation, satisfaction and stress, and four extrinsic factors namely job security, good wages, promotion & growth and recognition were considered important by respondents for engagement. Conclusion: From the findings it is concluded that there is positive relationship between intrinsic motivation and employee engagement, and extrinsic motivation and employee engagement. Furthermore, it is also accomplished that both intrinsic and extrinsic motivation has strong positive impact on employee engagement. From the results it is also concluded that the relationship and impact of extrinsic motivation was stronger on employee engagement as compared to intrinsic motivation. The study will enrich the current literature of work motivation and employee engagement. On practical level this study will not only help practitioners and consultants but also bank management will also be equipped with useful information regarding work motivation and employee engagement in organizational settings. Key Words: Motivation, Intrinsic motivation, Extrinsic motivation, Employee engagement ii Table of Contents CHAPTER NO 1 ...................................................................................................................... 1 1.1 Introduction ........................................................................................................................ 1 1.2 Background of the Study ..................................................................................................... 2 1.2.1 Motivation ....................................................................................................................... 2 1.2.2 Employee Engagement ..................................................................................................... 5 1.3 Knowledge Gap .................................................................................................................. 7 1.4 Research Questions ............................................................................................................. 8 1.5 Purpose of the Research ...................................................................................................... 9 1.6 Significance of the Study ..................................................................................................... 9 1.7 Delimitation ........................................................................................................................ 9 1.8 Introducing Key Concepts ................................................................................................... 9 1.9 Disposition of the study ..................................................................................................... 10 2.1 Choice of subject ............................................................................................................... 11 2.2 Preconception ................................................................................................................... 12 2.3 Research Philosophy ......................................................................................................... 12 2.3.2 Epistemological Assumption .......................................................................................... 13 2.4 Research Approach............................................................................................................ 14 2.5 Research Strategy .............................................................................................................. 15 2.6 Research Design................................................................................................................ 16 2.6.1 Case Study ..................................................................................................................... 16 2.7 Research Time Horizon ..................................................................................................... 18 2.8 Strengths and weakness of the research choices ................................................................. 18 2.9 Literature selection criteria ................................................................................................ 18 CHAPTER NO 3 .................................................................................................................... 20 3.1 Motivation ........................................................................................................................ 20 3.2 Historical development in Motivation ................................................................................ 20 3.3 Theories of Motivation ...................................................................................................... 21 3.3.1 Maslow‟s Hierarchy of Needs ......................................................................................... 22 3.3.2 Alderfer ERG theory ...................................................................................................... 24 3.3.3 Herzberg‟s Two-Factor Theory ....................................................................................... 25 3.3.4 Similarities among Motivational theories ........................................................................ 27 3.3.5 Self Determination Theory (SDT) ................................................................................... 27 3.3.6 Four-Drive theory ........................................................................................................... 29 3.4 Types of Motivation .......................................................................................................... 30 3.5 Extrinsic and Intrinsic motivation ...................................................................................... 30 3.6 Importance of Scientific management and Human Resource Management ......................... 33 3.7 Intrinsic Motivational Factors ............................................................................................ 34 3.7.1 Interesting work: ............................................................................................................ 34 iii 3.7.2 Job appreciation ............................................................................................................. 34 3.7.3 Job satisfaction: .............................................................................................................