FACTORS AFFECTING EMPLOYEE MOTIVATION IN THE FAST FOOD INDUSTRY: CASE OF INNSCOR KENYA LIMITED BY CYNTHIA KARUNGARI NDIRANGU UNITED STATES INTERNATIONAL UNIVERSITY FALL 2014 FACTORS AFFECTING EMPLOYEE MOTIVATION IN THE FAST FOOD INDUSTRY: CASE OF INNSCOR KENYA LIMITED BY CYNTHIA KARUNGARI NDIRANGU A Research Project Report Submitted to the Chandaria School of Business in Partial Fulfillment of the Requirement for the Degree of Masters in Business Administration (MBA) UNITED STATES INTERNATIONAL UNIVERSITY – AFRICA FALL 2014 DECLARATION I, the undersigned, do solemnly affirm that this report is the work of my original thought and has not been submitted to any other college, institution or university for the attainment of any academic award and any resemblance to it in part or whole is purely coincidental. Signed:………………………………………. Date:………………………. Cynthia K. Ndirangu (623293) This project has been presented for examination with my approval as the appointed supervisor. Signed:………………………………………. Date:………………………. Stephen M. Nyambegera, PhD Signed:………………………………………. Date:………………………. Dean, Chandaria School of Business ii COPYRIGHT Copyright © Cynthia K Ndirangu, USIU-Nairobi, 2014 All Rights Reserved. No part of this project may be reproduced, translated or reprinted in any form either in part or whole including photocopying without prior written permission of the author. iii ABSTRACT The main purpose of the study was to investigate the factors affecting employee motivation in the fast food sector. The study specifically aimed to assess the extent to which non-monetary rewards influence employee motivation, to determine the influence of financial benefits on employee motivation and to establish the effect of working conditions on employee motivation. This study employed descriptive design. The study was conducted within the CBD of Nairobi. According to the Human Resource Manager of Innscor Kenya Ltd there were 337 employees working within Nairobi CBD. These were people best placed to provide the required information. The sampling frames for the study were 337 members. This frame was provided by Innscor Kenya Ltd. Stratified sampling technique was used to select the sample for the general staff while census was used to select both the branch managers as well as the departmental heads were a total of 124 was the studies sample. Primary data was collected using a questionnaire. Data collected was analyzed using descriptive statistics. Data analysis was done using SPSS and Microsoft excels to generate quantitative reports which were presented in the form of tabulations, percentages, mean and standard deviation. The objective of multiple regression analysis predicted the changes in the dependent variable in response to changes in the several independent variables. The study found that non-monetary incentives moderately affected staff motivation. The study also found that; allowances were offered to a moderate extent, increase in salary was offered to a moderate extent and bonuses were offered to a moderate extent. The study further found that, relations between peers influenced employee motivation to a great extent. The study also found that, personal interest affected employee motivation to a great extent, drive to achieve targets affected employee motivation to a great extent. The study concluded that there was no fairness in the way non- monetary incentives were offered in the fast foods industry. The study also concludes that allowances, increase in salary and bonuses were inadequately offered in the organization and this had a negative impact on staff motivation. The study further concludes that the working condition at Innscor Kenya Limited was fair. iv The study recommends that since career development influenced employees’ motivation, the organization should provide the employees with job specific training. From the findings the study recommends that, financial benefits were inadequately offered in the organization and this had a negative impact on staff motivation thus increments in pay, allowances, compensations and fringe benefits both on periodic basis as well as on special occasions should be provided to the employees to keep them motivated in their work. The study also recommends that employees should be given the opportunity to use a variety of skills, and perform different kinds of work. v ACKNOWLEDGEMENT I would like to acknowledge my family and friends for their support, advice, correction and the guidance they have provided me with throughout my project. I would also like to sincerely thank my informants for their input. My sincerest gratitude goes to my immediate supervisor, Prof. Stephen M. Nyambegera, for his constant support and guidance. His constructive criticism and constructive dialogue were invaluable in the completion of this project. Finally, I would like to acknowledge God Almighty for blessing me with good health throughout this period. All this would not be possible without Him. vi DEDICATION I wish to dedicate this research project to my dearest mother, Rosemary Mumbi Ndirangu, for her inspiration, motivation and support throughout my academic life. vii TABLE OF CONTENTS DECLARATION ............................................................................................................... ii COPYRIGHT ................................................................................................................... iii ABSTRACT ...................................................................................................................... iv ACKNOWLEDGEMENT ............................................................................................... vi DEDICATION ................................................................................................................. vii LIST OF TABLES .............................................................................................................x LIST OF FIGURES ......................................................................................................... xi LIST OF ABBREVIATIONS ........................................................................................ xii CHAPTER ONE ................................................................................................................1 1.0 INTRODUCTION ........................................................................................................1 1.1 Background of the Problem ....................................................................................... 1 1.2 Statement of the Problem ........................................................................................... 4 1.3 Purpose of Study ........................................................................................................ 5 1.4. Research Questions ................................................................................................... 5 1.5 Importance of the Study ............................................................................................. 5 1.6 Scope of the Study ..................................................................................................... 6 1.7 Definition of Terms .................................................................................................... 6 1.8 Chapter Summary ...................................................................................................... 7 CHAPTER TWO ...............................................................................................................9 2.0 LITERATURE REVIEW ...........................................................................................9 2.1 Introduction ................................................................................................................ 9 2.2 Non-Monetary Incentives Influence on Employee Motivation ................................. 9 2.3 Financial Benefits Influence on Employee Motivation ........................................... 16 2.4 Working Conditions Influence on Employee Motivation ........................................ 20 2.5 Chapter Summary .................................................................................................... 24 CHAPTER THREE .........................................................................................................25 3.0 RESEARCH METHODOLOGY .............................................................................25 3.1 Introduction .............................................................................................................. 25 3.2 Research Design ....................................................................................................... 25 3.3 Population and Sampling Design ............................................................................. 25 3.4 Data Collection Methods ......................................................................................... 27 3.5 Research Procedure .................................................................................................. 27 3.6 Data Analysis Method .............................................................................................. 28 3.7 Chapter Summary .................................................................................................... 29 CHAPTER FOUR ............................................................................................................30 4.0 RESULTS AND FINDINGS .....................................................................................30 4.1 Introduction .............................................................................................................