Compensation, esteem valence and job performance: an empirical

Int. J. of Human Resource Management 13:4 June 2002 697-719
i j Routledge
^___^
S %
_ _ ^ _
Taylor & Francis G K
Compensation, esteem valence and job
performance: an empirical assessment of
Alderfer's ERG theory
CA. Arnolds and Christo Boshoff
Abstract Improving the job perfomiance of employees has been the focus of many
motivation theories, especially the need theories. These theories have however been
questioned because of a lack of research on the causal relationship between need
satisfaction and job perfonnance. Research on the link between the need satisfaction-job
performance relationship and individual personality differences among people has also
been neglected. This study addresses these research gaps as far as the intervening
influence of personality variables on the need satisfaction-job performance relationship is
concemed.
The present study investigates the influence of need satisfaction (as suggested by the
Alderfer theory) on self-esteem (the personality trait) and the influence of self-esteem on
perfonnance intention (the surrogate measure for job performance) of top managers and
frontline employees. The empirical results show that esteem as a personality variable
exerts a significant influence on the job performance of both top managers and frontline
employees. These and other findings provide important guidelines for managers on how
to address the motivational needs of top managers and frontline employees in order to
improve their job performance.
Keywords Job performance; esteem valence; existence needs; relatedness needs;
growth needs.
Introduction
One of the most important organizational goals of any business firm is the maximization
of its return on investment by reducing production or service delivery costs. This goal,
together with the competitive nature of global business today, has increased the
importance of cost reduction and the delivery of quality goods and services. As a result,
many firms have had to re-evaluate the effectiveness of their operations. Organizational
effectiveness, defined as the extent to which an organization achieves its goals (Mullins,
1999: 861), is largely dependent on the productive utilization of the materials,
machines, money and people power in the production and delivery processes of firms.
It is particularly important that the people power input of the production process of
firms is effectively and efficiently utilized, as people to a large degree control the other
input elements in the production process. In other words, firms need effective and
productive employees whose job performance is at an optimal level to be able to
C.A. Arnolds, Department of Business Management, University of Port Elizabeth, PO Box
1600, Port Elizabeth, South Africa (tel: -F041 5042692; fax: +041 5832644; e-mail:
ecacaa@upe.ac.za). Christo Boshoff, Department of Business Management, University of
Port Elizabeth, PO Box 1600, Port Elizabeth, South Africa (tel: +041 5042577; fax: +041
5832644; e-mail: ecahcb@upe.ac.za).
The International Joumal of Human Resource Management
ISSN 0958-5192 print/ISSN 1466-4399 online © 2002 Taylor & Francis Ltd
http://www.tandf.co.uk/journals
DOI: 10.1080/09585190210125868
698
The International Journal of Human Resource Management
achieve their organizational goals (Kopelman, 1986; Spence, 1983). The link between
employee motivation and job performance is the focus of this study.
Statement of the problem
The need theories have been the focus of much of the research on motivation (Stahl,
1986: 39), because they have been seen as among 'the most enduring ways to
understand motivation' (Aram and Piraino, 1978: 79). Need theory suggests that
employees are motivated to increase their job performance by their individual striving
to satisfy certain needs. Understanding what the needs are and how they are satisfied
will enhance insight into work-related behaviours that increase job performance (Stein
and Hollowitz, 1992: 20). To this end, the need theory of Alderfer (1967, 1969) has
been selected to assess the infiuence of need satisfaction on job performance of top
managers and frontline employees.
The Alderfer need theory
One of the most widely used of the need theories, is Maslow's (1943) needs hierarchy
(Bryan, 1983: 81; Hoffman, 1988: 79; Stahl, 1986: 39). Maslow contends that man has
five basic categories of needs, which are ranked and satisfied in order of importance.
The physiological needs, which are regarded as the most basic in all human beings,
must be satisfied first. They are then followed by safety and security needs, affiliation
or love needs, esteem needs and self-actualization needs respectively. Although
Maslow's theory is intuitively appealing, various criticisms have been levelled at it (De
Cenzo and Robbins, 1988; Steers and Porter, 1991). One of the most important of these
shortcomings is that it is a broad theory of human development rather than a description
of work motivation (Landy, 1985).
Alderfer (1967, 1969) attempted to address the shortcomings in Maslow's theory by
aligning the needs hierarchy with empirical research (Robbins, 1998). According to
Alderfer, man is motivated by three groups of core needs, namely Existence,
/?elatedness and Growth needs, hence the name ERG theory. The existence needs
include the human basic needs necessary for existence, which are the physiological and
safety needs. The relatedness needs refer to man's desire to maintain important
interpersonal relationships. These are man's social, acceptance, belongingness and
status desires. The last group of needs is the growth needs, which represent man's
desire for personal development, self-fulfilment and self-actualization.
Alderfer's ERG theory has not stimulated a great deal of research according to
Ivancevich and Matteson (1999). The ERG theory is however regarded as a more valid
version of the need hierarchy (Robbins, 1998) and has elicited more support from
contemporary researchers as far as motivation in the work situation is concerned
(Luthans, 1998). One of the main strengths of the Alderfer theory is the job-specific
nature of its focus. In the theory specific reference is made to pay fringe benefits,
relatedness needs from co-workers and superiors and growth need satisfaction at work.
Much confusion and lack of conclusive evidence are still evident in the motivational
impact of these variables on the job performance of employees and particularly the
influence of pay.
As recently as 1998, Pfeffer (1998) still refers to the six dangerous myths about pay.
Pfeffer (1998) reflects on whether or not individual incentive pay improves employee
job performance and whether people generally work for money. Igalens and Roussel
(1999) are of the opinion that 'postulates which underlie compensation policies in
France and which appear in the discourse of chief executive officers, human resource
Arnolds and Boshoff: Compensation, esteem valence and performance
699
managers, consultants and politicians have never been based on hypotheses tested by
field research'. More importantly, research has emphasized what the content of the
compensation package should be in order for it to motivate employees, but no research
has been done on the social psychology of the package (Heath, 1999: 26).
The social psychological impact of the compensation package refers to the question
of how well the principal (the manager who motivates) understands the agent (the
employee being motivated). The social psychology of compensation is important,
because if the principal infers wrong motivations about the agent, compensation
packages can be misdirected. Heath (1999) found that these lay theories of motivation
often result in an overemphasis of extrinsic incentives in motivation strategies. Social
psychology also suggests that external rewards, such as pay, will affect behaviour only
if people have an intemal desire for these rewards and that intrinsic rewards will
influence behaviour only when something in the external environment makes that
behaviour worthwhile (Heath, 1999: 27). This means that the influence of rewards on
variables within people, such as their personality, beliefs, values, etc., could play a
significant role in whether they will be motivated or not.
It appears that the last word on the motivation of employees has not yet been spoken.
Ettorre (1999: 8), for instance, still asks the question: is salary a motivator? Many
companies are still struggling with motivational issues and bemoan the job-hopping and
concomitant brain drain of skilled people from their companies (Bennett, 2000: 2). To
overcome this problem and following the notion of different motivational strategies for
different people, the idea of customized compensation packages for employees is often
suggested (Scharge, 2000: 274). Igalens and Roussel (1999: 1016), however, could not
find empirical support for the proposal that employees on various organizational levels
differ in how they value flexible pay and fringe benefits.
Against this background, the present study attempts to make a more complete
assessment of the influence of need satisfaction on work behaviour by revisiting the
Alderfer ERG theory. To achieve this purpose the interrelationship between the
Alderfer needs, personality and job performance is investigated.
Empirical assessment of the Alderfer theory
Previous empirical evaluations of Alderfer's theory have focused primarily on the
investigation of the correlational relationship between elements of the theory, on the
one hand, and work behaviours, on the other hand (Fox et al., 1993; Salancik and
Pfeffer, 1977; Wanous and Zwany, 1977). It has been suggested that a more appropriate
way of testing motivation theories would be to investigate the causal linkages between
the content of these theories and work behaviours (Wahba and Bridwell, 1976). For
instance, a better empirical test of the Alderfer needs theory would be to ascertain what
needs caM.se certain behaviours, rather than just showing the correlation between needs
and behaviour. Results of causal investigations can, for example, enable those in charge
of motivating employees to compile motivation packages that are tailor-made for
specific individuals or groups of employees. Investigating causal linkages should also
contribute to addressing the concern of Luthans (1998: 170) that need theories do not
necessarily predict work behaviour. As needs are often rooted in the social selves,
beliefs, attitudes and values of people (Schein, 1971), need satisfaction has the potential
of consistently predicting work behaviour. The need satisfactions that cause the desired
work behaviour, however, need to be identified first. The present study addresses this
research gap by empirically assessing the causal relationship between the Alderfer
700
The International Journal of Human Resource Management
motivation theory, on the one hand, and employee job performance (as work behaviour)
of top managers and frontline employees, on the other hand.
One of the most recent investigations into the causal relationship between various
need satisfactions, as proposed by the Alderfer motivation theory, and employee job
performance, was conducted by Arnolds and Boshoff (2000). Job performance was
measured by eliciting the performance intentions of top managers and frontline
employees. Frontline employees are employees who interact directly with clients or
customers and who are not supervisors or managers. Examples of frontline employees
are bank tellers, secretaries, sales clerks, security personnel, office staff, library
assistants, catering staff, etc. Several researchers have described performance intentions
as a potent measure or predictor of employee job performance (Carkhuff, 1986; Shore
et al., 1990; Sumerlin and Norman, 1992).
Arnolds and Boshoff (2000) found that the satisfaction with pay exerts a significant
positive influence on the job performance of both top managers and frontline
employees. The satisfaction with fringe benefits and relatedness needs from superiors
did not infiuence the performance of top managers and frontline employees significantly. The influence of relatedness need satisfaction from peers, however, had a
significant positive infiuence on the job performance of frontline employees. The
satisfaction of growth needs impacted significantly on the job performance of top
managers, but not significantly on the job performance of frontline employees.
The findings of the Arnolds and Boshoff (2000) study contradict certain general
beliefs on motivation. For instance, the fact that lower-order need satisfaction (fringe
benefits) does not influence the job performance of frontline employees is dissonant
with Maslow's theory, as lower-order needs are supposed to motivate lower-level
employees. The empirical results also contradict the findings of Hong et al. (1995), that
lower level employees are more concemed about security (which includes fringe
benefits) need satisfaction. The results are further in disagreement with Alfred's (1991)
findings that blue-collar employees are motivated to increase their job performance
by the satisfaction of higher-order needs (respect, recognition and personal
development).
The Arnolds and Boshoff (2000) study brought to the fore important questions, as far
as the motivation of top managers and frontline (lower-level) employees is concerned.
First, does the satisfaction of security (fringe benefits) needs not influence the job
performance of frontline employees as suggested by Maslow's theory? Second, are
frontline employees not motivated by the satisfaction of higher-order needs (growth) as
Alfred's (1991) findings suggest? Third, does the satisfaction of fringe benefit needs
and the respect from peers and superiors play no important role in the motivation of top
managers?
The answers to these questions seem to be present in the elements of valence and
instrumentality as proposed by the expectancy theory. According to Victor Vroom's
(1964) expectancy theory an employee's job performance is determined by the extent to
which first-level outcomes (higher levels of performance) lead to second-level
outcomes (need satisfaction, such as praise, friendship, wages etc.). The level of
performance will, however, be determined by the extent to which these second-level
outcomes (need satisfaction) are valued by the individual (Steers and Black, 1994). This
study considers whether higher job performance will be attained if needs to which an
employee attaches high valence are satisfied.
Against the background of the above-mentioned questions, another important
variable, namely individual differences among people, needs to be considered. An
expressed shortcoming in the research on need theories is the fact that no provision is
Amolds and Boshoff: Compensation, esteem valence and perfonnance
701
made for individual differences among people. Although a theory such as Maslow's, for
instance, recognizes individual differences in what motivates people (Mullins, 1999:
417), research on his theory has often neglected this aspect. No comprehensive study
has as yet been done on the intervening effect of individual characteristics on the
relationship between need satisfaction and job outcomes. The relationship between need
satisfaction and personality variables and their effect on performance outcomes have
not been investigated. This is necessary because according to Sharma (1991) an
individual is said to be an individual because 'he has acquired a distinctive pattern of
cognitive style as a trait of his personality, and a specific level of motivational process'.
It is believed in some quarters that knowledge on personality traits, such as locus of
control, authoritarianism, self-monitoring (Smit and Cronje, 1992: 273) and self-esteem
(Schein, 1971) enables management to predict the work behaviour of employees more
accurately.
Personality, need satisfaction and job performance
Schein (1971) suggests that individual attributes, such as personality structure and more
especially one's self-concept, are important determinants of career perfonnance in
organizations. In combination with social self, beliefs, attitudes and values, self-concept
has a significant impact on an individual's needs (Mullins, 1999: 430). For this reason
the infiuence of self-esteem, as a personality variable, on people's behaviours is often
cited in the literature (Fox et al, 1993; Levine, 1994).
Self-esteem is:
the evaluation that the individual makes and customarily maintains with regard to
himself; it expresses an attitude of approval or disapproval and indicates the extent to
which the individual believes himself to be capable, significant, successful and worthy. In
short, self-esteem is a personal judgement of worthiness that is expressed in the attitudes
the individual holds.
(Bums, 1979: 55)
Self-esteem has a significant impact on an individual's needs. An individual's positive
or negative self-esteem will affect needs such as affiliation, esteem and selfactualization. Vroom (1964), for instance, found that the self-esteem of employees
could be reinforced by letting them feel accepted in the firm. Alfred (1991) found that
employees placed a high premium on dignity and respect as elements of their selfesteem. Enhancing an individual's self-esteem with a continuous outpouring of
appreciation for work well done and allowing an employee ample room for selfdetermination (autonomy) has been found to increase job performance (Levine, 1994;
Shouksmith, 1989).
Research on self-esteem, especially as far as job performance is concerned, is
underpinned by the proposition that individuals with positive self-esteem have higher
self-perceived competence, self-image and success expectancy (Miner, 1992). People
with low self-esteem, on the other hand, adhere to norms of low job performance which
inhibit creativity, performance and effective interpersonal relations and conflict
resolution in the organizations where they are employed (Korman, 1971; Tharenou,
1979).
The extent to which self-esteem can be enhanced through the satisfaction of certain
needs can improve job performance significantly. Levine (1994: 77), for example,
found that by allowing ample room for self-determination and in so doing enhancing the
employee's self-esteem, the job perfonnance of such an employee could be increased.
702
The International Journal of Human Resource Management
NEED SATISFACTION
PERSONALITY
JOB PERFORMANCE
Self-esteem
Performance
intentions
ALDERFER NEEDS
• Growth
• Relatedness
• Existence
Figure 1 The hypothesized model
It was also reported by Fox et al. (1993: 690), that pay, when perceived as instrumental
to improving self-esteem, was significantly related to increased job performance.
The preceding review suggests that a positive self-esteem is a personality trait that
people attach much value to, because it is associated with valued outcomes such as
competence, self-image, success, creativity and effective interpersonal relations, among
others. It is therefore hypothesized that:
HI:
Need satisfaction (as measured by the Alderfer needs) exerts a positive
influence on self-esteem, which in turn, exerts a positive influence on employee
job perfonnance (as measured by performance intentions).
The hypothesized relationships are graphically depicted in Figure 1.
Objectives
The main objective of this study is to investigate whether the job performance of top
managers and frontline employees can be improved by satisfying the human needs they
value in the work situation. More specifically, the study investigates to what extent a
personality variable (self-esteem) acts as intervening variable moderating the relationship between need satisfaction (as modelled by Alderfer) and the performance
intentions (as surrogate measure of employee job performance) of top managers and
frontline employees.
Methodology
The sample
The sampling procedure used in this study was a combination of random sampling, on
the one hand, and convenience and judgemental sampling, on the one hand. Address
lists of a sample of business organizations from the manufacturing, trade and service
sectors in South Africa, which employ fifty and more employees (management
included) were randomly selected from the database at the Bureau of Marketing
Research at the University of South Africa (UNISA). One thousand five hundred
(1,500) questionnaires were mailed to the chief executive officers of these firms.
Organizations with sufficient numbers of lower level/frontline employees were
identified on a convenience basis. Employees who fit the definition of a frontline
employee were selected on a judgemental basis. One thousand (1,000) questionnaires
were distributed in this manner to frontline employees in the banking, retail, security
and legal industries in various South African metropolitan areas. Frontline employees
Amolds and Boshoff: Compensation, esteem valence and performance
703
were regarded, for the purpose of this study as lower level employees and include those
non-management groups of employees who are at the frontline of service provision,
such as bank tellers, secretaries, sales clerks and security personnel.
Five hundred and seventeen (517) usable questionnaires (an overall response rate of
20.7 per cent) were retumed. This was made up of 304 top managers (response rate =
20.2 per cent) and 213 frontline employees (response rate = 21.3 per cent). The overall
and individual response rates exceeded the absolute minimum response rate of 8 per cent
needed in both finite and infinite populations (Martins ef a/., 1996: 271). For the purposes
of applying structural equation modelling, the sample size also comfortably exceeds the
minimum of 100 respondents per model suggested by Hair et al. (1995: 637).
Out of 304 top management respondents only thirty-five (11.5 per cent) were
females, while the frontline sample consisted of 114 females and 99 males. This is a fair
reflection of the composition of the workforce at these occupational levels in South
Africa. The gender sub-samples were, however, too small (Hair et al., 1995) to conduct
a multivariate analysis based on gender. Such an analysis was therefore not done in this
study. For the same small sub-sample reason and due to the highly sensitive nature of
racial classification in South Africa an analysis based on race was not conducted in this
study. Respondents often refuse to complete questionnaires that refer to race.
The measuring instruments
The instrument used to measure the extent to which the respondent's job permits the
satisfaction of needs according to the ERG theory was developed by Alderfer (1967),
who reported favourable results on the convergent and discriminant validation of the
instrument. Spearman-Brown reliability coefficients ranging from 0.80 to 0.88 were
reported for the five ERG sub-scales.
Performance intentions of respondents were assessed using the instrument developed
by Shore et al. (1990). One item, namely 'I could do a lot more work if I tried a little
harder', from the Cranny et al. (1992) scale was added to make the performance
intention scale a 4-item one. This was done for reasons of consistency as all other scales
comprised four or more items. Cronbach (1951) reliability coefficients ranging from
0.60 to 0.84 were reported for the performance intention scale (Shore et al., 1990).
Rosenberg's (1965) scale was used to measure the self-esteem variable. This measure
taps a uni-dimensional index of global self-esteem and has been reported to have a
reproducibility index of 0.93, an item scalability of 0.73 and test-retest reliability of
0.85 (Burns, 1979). Lopez and Greenhaus (1978) reported adequate convergent and
discriminant validity levels, and a reliability coefficient of 0.78 for this instrument.
It is evident from the preceding review that instruments with acceptable validity and
reliability were used to investigate the variables under scrutiny. Respondents were
requested to respond to all questions in the above-mentioned instruments on a sevenpoint Likert scale.
Data analysis
Internal reliability and discriminant validity
The internal reliability of the measuring instruments was assessed by calculating their
Cronbach alpha coefficients. To assess the discriminant validity of the measuring
instruments exploratory factor analyses were conducted, using the computer programme
BMDP4M (Frane et al., 1990). Maximum likelihood was specified as the method of
704
The International Journal of Human Resource Management
Table 1 Rotated factor loadings: Alderfer's model: top management sample'
ALFBl
ALFB2
ALFB3
ALFB4
ALRSl
ALRS2
ALRS3
ALRS4
ALPYl
ALPY2
ALPY3
ALPY4
ALRPl
ALRP2
ALRP4
ALGRl
ALGR2
ALGR3
ALGR4
Eigen values
Factor 1
Existence
benefits
Factor 2
Growth
0,744
0.765
0.826
0.940
-0.013
0.074
0.095
-0.067
0.070
0.112
0.014
0.057
0.044
-0.051
0.070
0.090
0.040
-0.013
-0.057
2.770
Factor 3
Relatedness
superiors
pay
Factor 5
Relatedness
peers
-0.007
-0.014
0.060
-0.032
0.100
0.018
-0.122
0.016
0.083
0.277
-0.028
-0.054
-0.136
0.161
0.109
0.584
0.794
0.686
0.648
-0.005
-0.060
0.114
-0.026
0.827
0.693
0.691
0.527
0.065
-0.054
0.051
0.109
-0.042
0.052
0.077
0.156
-0.025
-0.061
0.157
0.007
0.124
-0.052
0.012
-0.020
0.115
0.005
0.025
0.644
0.395
0.862
0.715
0.189
-0.025
-0.119
-0.070
0.041
-0.037
0.214
0.081
0.073
-0.064
-0.043
-0.054
-0.035
0.053
0.058
0.092
-0.035
0.047
-0.018
0.823
0.624
0.410
0.137
-0.037
0.061
0.039
2.035
2.023
1.963
1.302
Factor 4
Existence
Note
' Loadings greater than .03 were considered significant
factor extraction and a Direct Quartimin oblique rotation of the original factor matrix
was used (Jennrich and Sampson, 1966) in all instances.
The extraction of five factors (existence needs-pay, existence needs-fringe benefits,
relatedness needs-respect from superiors, relatedness needs-respect from peers and
growth needs) was specified in the factor analyses of the Alderfer needs for both the top
management and frontline employee samples. The empirical evidence supported the
surmized five separate and distinct variables as suggested in the literature.
Based on the factor analyses (and the resultant Tables 1 and 2), Table 3 identifies the
items which were regarded as measures of the individual latent variables retained in the
theoretical models. Only these items (see Table 4 for description) were used in all
subsequent statistical procedures.
Table 3 also indicates the Cronbach alphas of the latent variables that were included
in the final theoretical models. All the Cronbach reliability coefficients were above
0.550 and thus above the cut-off point needed for basic research (Pierce and Dunham,
1987; Smith et al., 1983; Tharenou, 1993).
Structural equation analysis
It has been suggested that an empirical investigation of the causal relationships between
need satisfaction and certain behavioural outcomes could provide a more appropriate
test of motivation theory (Wahba and Bridwell, 1976: 231). As the present study is an
Arnolds and Boshoff: Compensation, esteem valence and performance
705
Table 2 Rotated factor loadings: Alderfer's model, frontline employee sample'
ALFBl
ALFB2
ALFB3
ALFB4
ALRSl
ALRS2
ALRS3
ALRS4
ALPYl
ALPY2
ALPY3
ALPY4
ALRPl
ALRP2
ALRP3
ALRP4
ALGRl
ALGR2
ALGR3
ALGR4
Eigen values
Factor 1
Existence
benefits
Factor 2
Relatedness
superiors
Factor 3
Growth
0.740
0.765
0.816
0.865
0.045
0.038
0.136
-0.114
0.055
-0.034
0.066
0.059
-0.146
0.107
-0.078
0.126
0.019
-0.039
0.126
0.069
Q.Qll
-0.001
0.029
-0.063
0.773
0.830
0.620
0.461
0.012
0.032
-0.005
-0.016
0.266
0.022
-0.176
0.170
-0.003
-0.064
0.037
0.182
2.672
2.064
Factor 4
Existence
pay
Factor 5
Relatedness
peers
-0.033
0.006
0.095
0.076
-0.032
-0.061
0.059
0.183
-0.048
0.191
-0.136
-0.026
0.078
0.018
0.093
-0.050
0.543
0.856
0.616
0.662
0.109
0.022
-0.015
0.054
0.044
-0.024
-0.020
0.097
0.699
0.715
0.606
0.674
0.119
0.060
0.001
0.024
-0.084
0.078
0.038
0.040
-0.058
0.037
0.037
-0.033
-0.067
-0.028
0.184
-0.025
-0.068
-0.075
0.139
0.101
0.444
0.527
0.738
0.355
0.226
-0.077
-0.040
0.131
1.979
1.883
1.307
Note
' Loadings greater than 0.3 were considered significant
Table 3
The empirical factor structure
Latent variable
Measuring
variables
Final
Cronbach
alpha
Alderfer existence needs (pay)
Alderfer existence needs (fringe benefits)
Alderfer relatedness needs (superiors)
Alderfer relatedness needs (peers)
Alderfer growth needs
Performance intentions
Self-esteem
ALPY 1,2,3,4
ALFB 1,2,3,4
ALRS 1,2,3,4
ALRP 1,2,3,4
ALGR 1,2,3,4
PERF 1,2,3,4
ESTE 1,2,3,4
0.788
0.892
0.788
0.653
0.789
0.727
0.556
attempt to assess the causality of need satisfaction according to the Alderfer theory,
structural equation modelling was considered as the appropriate technique for this
purpose.
Structural equation analysis, or modelling (SEM), is a multivariate technique
combining aspects of multiple regression and factor analysis to estimate a series of
706
The International Journal of Human Resource Management
Table 4 Description of scale items
Alderfer existence needs (pay)
ALPY I
I get enough money from my job to live comfortably
ALPY 2
My pay is adequate to provide for the basic things in life
ALPY 3
Considering the work required the pay is what it should be
APLY 4
Compared to the rates for similar work here my pay is good
Alderfer existence needs (fringe benefits)
ALFB 1
Our fringe benefits cover many of the areas they should
ALFB 2
The fringe benefit programme here gives nearly all the security I want
ALFB 3
Compared to other places, our fringe benefits are excellent
ALFB 4
The fringe benefit programme here is adequate
Alderfer relatedness needs (superiors)
ALRS 1
My boss encourages people to make suggestions
ALRS 2
My boss takes account of my wishes and desires
ALRS 3
My boss keeps me informed about what is happening in the company
ALRS 4
My boss lets me know when I could improve my performance
Alderfer relatedness needs (peers)
ALRP I
1 can count on my co-workers to give me a hand when I need it
ALRP 2
My co-workers will speak out in my favour if justified
ALRP 3
1 can tell my co-workers honestly how I feel
ALRP 4
My co-workers welcome opinions different from their own
Alderfer growth needs
ALGR 1
I always get the feeling of leaming new things from my work
ALGR 2
My job requires that a person use a wide range of abilities
ALGR 3
My job requires making one or more important decision(s) every day
ALGR 4
1 have the opportunity to do challenging things at work
Performance intentions
PERF 1
I often think of improving my job performance
PERF 2
I will actively try to improve my job performance in the future
PERF 3
I intend to do a lot more at work in the future
PERF 4
I will probably do my best to perform well on the job in the future
Self-esteem
ESTE 1
I wish I could have more respect for myself
ESTE 2
I feel that I am a person of worth, at least on an equal plane with others
ESTE 3
1 take a positive attitude toward myself
ESTE 4
I certainly feel useless at times
interrelated dependence relationships simultaneously (Hair et al., 1995). The benefit of
SEM is that it is a technique that allows for 'stating theory more precisely, testing
theory more precisely' (Hughes et al., 1995: 129). The technique has three particularly
salient characteristics, namely the ability to estimate multiple and interrelated
dependence relationships; the ability to represent unobserved concepts or variables in
these relationships; and the ability to account for measurement error (Hair et al., 1995:
622; Hoyle, 1995: 10). SEM is therefore regarded as a more comprehensive, advanced
and rigorous statistical technique to analyse attitudinal data than other techniques, such
as analysis of variance (ANOVA) and multiple regression (Hoyle, 1995).
It is true that causation is less well defined in the behavioural sciences than in
physical processes (Hair et al., 1995: 626-7). Thus, although some of the strict classical
provisions for causation may not be met in the behavioural sciences, 'strong causal
assertions can possibly be made if the relationships are based on a theoretical rationale'
(Hair et al., 1995: 627). It is for this reason that SEM is recommended for testing and
Arnolds and Boshoff: Compensation, esteem valence and performance
707
confirming theoretical relationships rather than for exploratory purposes or the
generation of new theories. In other words, SEM can confirm that a theoretical model
does (or does not) approximate the data. It does not imply that no other plausible
models exist.
Despite possible limitations, SEM is therefore generally accepted as measuring
causal relationships (Hair et al., 1995: 626-7; Hoyle, 1995: 10), because of the abovementioned unique improvements, for instance, on multiple regression and, more
importantly, because SEM models are based (or should be) on sound theory. It is also
believed that a claim of causality can be made in the present study, because the criteria
for causation (Bollen, 1989: 40) have been met. In other words, there is an association
between the hypothesized variables; there is evidence of at least what Bollen (1989)
calls 'pseudo-isolation'; and there is strong theoretical support for the directionality of
the need satisfaction-performance relationship.
Tbe empirical results
The influence of the satisfaction of the Alderfer needs on self-esteem and self-esteem
on job performance of top managers
Figure 2 depicts the causal model constructed to investigate the influence of the
satisfaction of the Alderfer needs on employee job performance via the effect of the
former on self-esteem as an intervening variable. The computer programme RAMONA
(Browne and Mels, 1996) was used to analyse the causal model and the results thereof
are reported in Figure 2.
The empirical results confirm the importance of self-esteem as a significant
determinant of job performance. Figure 2 shows that self-esteem significantly (0.583,
p<0.0\)
influences the performance intentions (the surrogate measure of job
performance) of top managers.
The results indicate that growth need satisfaction was significantly (0.760, p < 0.01)
related to self-esteem. The satisfaction of existence needs (pay and fringe benefits) and
relatedness needs (to peers and superiors) has no significant influence on self-esteem.
The results reveal that the job performance of top managers can be increased by
enhancing their self-esteem via the satisfaction of their growth needs. Providing for
opportunities for creativity, self-fulfilment, advancement and autonomy for top
managers in the firm could thus significantly improve their job performance.
The results also suggest that the positive self-esteem of a top manager is not
reinforced by the manager's perception of the extent to which the firm satisfies his/her
need for pay and fringe benefits. The satisfaction of relatedness needs from peers and
superiors also does not improve a top manager's self-esteem. It appears that the results
support the theory of Herzberg et al. (1959) that lower-order needs, such as pay, fringe
benefits and relatedness (affiliation) needs, are all hygiene factors, which eliminate
dissatisfaction, but do not motivate top-level employees. According to Herzberg et al.
(1959), top-level managers are motivated by higher-order needs, such as growth,
advancement and achievement.
The empirical results (path coefficients) indicate that the hypothesis (HI), that need
satisfaction (as measured by the Alderfer needs) exerts a positive infiuence on selfesteem, which, in tum, exerts a positive influence on employee job performance (as
measured by performance intentions), is supported as far as growth need satisfaction is
708
The International Journal of Human Resource Management
1 Unless indicated otherwise, all the relationships
are significant at the/;<0.01 level of significance.
NS denotes non-significant relationships.
Figure 2 The influence of need satisfaction on employee job performance with self-esteem as
intervening variable: Alderfer's theory - top management
concemed. The hypothesis (HI) is, however, not supported as far as the satisfaction of
relatedness needs (peers and superiors) and existence needs (pay and fringe benefits) is
concemed.
Amolds and Boshoff: Compensation, esteem valence and performance
709
The influence of the satisfaction of the Alderfer needs on self-esteem and self-esteem
on job performance of frontline employees
The causal model, constructed to investigate the influence of the satisfaction of the
Alderfer needs on employee job performance of frontline employees via the
enhancement of self-esteem as an intervening variable, is depicted in Figure 3. The
computer programme RAMONA (Browne and Mels, 1996) was again used to analyse
the causal model and the results are reported in Figure 3 as well.
Similar to the results of the top management sample (Figure 2), self-esteem emerged
as a significant determinant of employee job performance. The empirical results (0.362,
p < 0.01) concur with previous research that the job performance of employees can be
significantly increased if a positive self-esteem is inculcated and nurtured.
The empirical results reveal that the satisfaction of growth needs had a significant
infiuence (0.243, p < 0.05) on self-esteem and thus an indirect impact on performance
intentions of frontline employees. It is important to note that Amolds and Boshoff
(2000) reported that growth need satisfaction had no direct infiuence on the
performance intentions of frontline employees. The results therefore suggest that
teaching frontline employees new things on the job, using a wide range of their abilities,
allowing them to make more decisions everyday and providing for opportunities to do
challenging things at work, will enhance their self-esteem and consequently their
performance intentions.
Figure 3 shows that satisfying the need for respect from superiors is negatively
(—0.314, p < 0.01) related to the self-esteem of frontline employees. It would seem that
the frontline employees in this sample do not seek the acceptance of their superiors, but
rather the respect and acceptance of their peers. It could also mean that employees are
afraid of being ostracized by their co-workers for seeking the favour of management.
The satisfaction of relatedness needs from peers had a significant positive effect (0.484,
p<O.Ol) on self-esteem and therefore on performance intentions. The respect of coworkers seems more important to frontline employees than the acceptance of
supervisors. Endeavours to improve commitment to superiors would not increase
performance intentions among frontline employees. Strategies to improve work group
cohesion and the image of the employee among his/her co-workers could be the recipe
for increased job performance. Self-esteem can be reinforced by effective recognition
systems geared at highlighting employee achievements.
For frontline employees, the satisfaction of the need for pay does not affect selfesteem. Amolds and Boshoff (2000) found a direct relationship between the satisfaction
with pay and the job performance of frontline employees. The empirical results also
show that the satisfaction of fringe benefits does not have a significant influence on
perfonnance intentions via self-esteem as an intervening variable. Amolds and Boshoff
(2000) also reported that fringe benefit satisfaction does not influence performance
intentions significantly. The Alderfer model therefore appears to support Herzberg et
al.'s (1959) theory that pay and fringe benefits are hygiene factors, which prevent job
dissatisfaction, but do not motivate employees to increase job performance.
The results show that the satisfaction of the related needs and growth needs as
suggested by the Alderfer theory significantly influences the self-esteem of frontline
employees. Self-esteem, in tum, influences the job performance of frontline employees.
The hypothesis (HI) that need satisfaction positively influences employee job
performance via its effect on personality variables (self-esteem in this case) is thus
supported as far as the satisfaction of growth needs and relatedness needs from peers is
concemed. Hypothesis HI is, however, rejected as far as the satisfaction of relatedness
710
The International Journal of Human Resource Management
1.0
I Unless indicated otherwise, all the relationships
are significant at the/)<0.01 level of significance.
NS denotes non-significant relationships.
Figure 3 77ie influence of need satisfaction on employee job performance with self-esteem as
intervening variable: Alderfer's theory -frontline employees
needs from superiors is concerned, because the results show a negative relationship
between the satisfaction of relatedness needs from superiors and self-esteem as a
Arnolds and Boshoff: Compensation, esteem valence and performance
111
personality variable. Hypothesis HI is also rejected with regard to the satisfaction of
existence needs for pay and fringe benefits. There was no significant causal relation
between these need satisfactions and the self-esteem of frontline employees.
The indices of fit
The fit indices of the causal models were examined to establish the extent to which
these models represent acceptable approximations of the data. To this end various fit
indices (Hair et al., 1995) were calculated.
Table 5 shows that the relationship between the chi-square, degrees of freedom and
exceedance probability values of the models indicates that the Alderfer model does not
represent an acceptable fit between the observed and predicted matrices. An exceedance
probability (significance) level of above 0.1 shows a non-significant difference between
the observed and predicted matrices (Hair et al., 1995: 683) and therefore an acceptable
model fit. Table 5 indicates that the Alderfer model shows no statistical difference
(significance level = 0.001) between the observed and predicted input data. Against this
background the hypothesized fit of the Alderfer model must be rejected. Hair et al.
(1995: 683-4), however, caution that the chi-square exhibits the shortcoming of
indicating significant differences between the actual and estimated matrices as sample
sizes become larger than 200 respondents. The sample size in the present study is 213
respondents. Due to this shortcoming more improved fit indices, namely the root mean
square error of approximation (RMSEA) and the goodness-of-fit (GFl) indices were
considered.
The RMSEA and GFl indices reported in Table 5 meet the minimum acceptable
standards proposed by Hair et al. (1995: 689). The RMSEAs of 0.068 and 0.065
(MacCullam et al., 1996) of the two models, for example, indicate that both models
represent a reasonable fit of the responses from the sample from which they were
drawn. The GFl, believed to be one of the best absolute indices of model fit (Hoyle,
1995), indicates the overall degree of fit of the hypothesized model on the data. High
GFl values in the range from nil (0) to one (I), such as those reported in Table 5, are
indicative of reasonable or acceptable model fit.
The normed chi-square (x^) index, which provides an indication of the extent to
which model fit has been achieved by 'over fitting' the data, shows acceptable
parsimony. Although the normed x^ is subject to the same shortcoming of the chisquare as discussed above, the Alderfer (1.906) model produced a parsimony level
which falls within the acceptable limits of more than 1.0 and less than 2.0 as suggested
by Hair era/. (1995: 687).
Table 5
The absolute fit indices
Alderfer
Index
management
Alderfer
frontline
employees
RMSEA
LISREL GFl
Normed x^
Chi-square
Degrees of freedom
Exceedance probability
0.068
0.849
2.396
737.88
0.065
0.832
1.906
636.80
308
334
top
0.000
0.001
712
The International Journal of Human Resource Management
Summary of empirical findings
The empirical results revealed that top managers are primarily motivated by growth
needs, in other words, higher-order needs. This means that a challenging working
environment that provides opportunities for creativity, self-fulfilment, advancement and
autonomy is a key motivator of the job performance of top managers. The need for
autonomy, creativity and advancement can be satisfied by putting the manager in charge
of projects that have to be driven from the conceptual phase to the completion phase. It
is believed that a person often experiences the feeling of self-fulfilment and creativity
enhancement when a person starts and finishes a task.
Creativity must be actively managed by engendering an organizational culture that
promotes a fair and constructive judgement of ideas, rewards and recognizes
programmes for creative work and provides for mechanisms for the development and
active flow of ideas (Amabile, 1997). Role models and mentors who set goals, support
colleagues, value the contributions of top managers and show confidence in top
managers need to be identified and inspired to play this role. Creativity teams, which
include top managers and diversely skilled employees from various organizational
levels, need to be established and supported with the necessary resources in terms of
funds, materials, facilities and information. Impediments to creating a culture of
creativity, such as unhealthy internal politics in the firm, destructive criticism of new
ideas, negative intemal competition, the tendency to avoid risk and the over-emphasis
on maintaining the status quo, must be avoided, reduced or eliminated.
The empirical results suggest that the performance intentions of top managers would
be affected by their perceptions of advancement opportunities and personal growth.
This is an indication to the human resources directors in charge of identifying top
management potential in the firm, to pay particular attention to promotion policies and
programmes of their firms. In this regard, personal and organizational plateauing must
be managed effectively (McCampbell, 1996: 63).
The results show that frontline employees are primarily motivated by the satisfaction
of relatedness needs from peers and existence needs and particularly monetary
compensation. Relatedness from peers need satisfaction is a direct motivator, as well as
an indirect motivator via its effect on employee self-esteem. Remuneration and the
satisfaction with fringe benefits do not enhance the self-esteem of frontline employees.
They seem to be hygiene factors that must be in place to prevent employee
dissatisfaction.
According to Maslow's theory, higher-order needs, such as growth needs, do not
usually motivate lower-level employees, including frontline employees. The empirical
results reported in this study suggest, however, that higher-order needs such as growth
needs can motivate frontline employees via self-esteem enhancement of such
employees.
In terms of the expectancy theory it appears as if the satisfaction with pay and fringe
benefits does not influence the performance intentions of frontline employees, because
these need satisfactions do not have any esteem valence for these employees. In other
words, frontline employees do not have a higher regard of themselves if their firms of
employment pay them enough to acquire basic necessities such as a house, furniture and
clothes. Their self-esteem is also not enhanced by security associated with fringe
benefits. These working conditions and fringe benefits that satisfy these needs must,
however, be in place to prevent job dissatisfaction according to the empirical findings
and in concurrence with Herzberg's theory.
Amolds and Boshoff: Compensation, esteem valence and performance
113
The second finding relates to the question of whether lower-level employees, such as
frontline employees, are never motivated by higher-order needs. Amolds and Boshoff
(2000) found that the satisfaction of higher-order needs, such as self-actualization, does
not influence the performance intentions of frontline employees significantly. The
results of the Alderfer model, however, indicate that frontline etnployees associate
growth need satisfaction (learning new things on the job, optimal use of abilities,
participation in decision making and opportunities for challenging work) with selfesteem enhancement. The results suggest that the satisfaction of these needs does not
impact directly on the job performance of frontline employees. Tbe satisfaction of these
growth needs will however improve job performance if they reinforce the self-esteem of
these employees in a way that increases the acceptance, respect and status these
employees receive from their peers.
The empirical results in the present study show that managers would err if they
unquestioningly accept that lower-level employees are not motivated by higher-order
needs. The results suggest that higher-order need satisfaction does infiuence the job
performance of lower-level employees, provided that the motivation strategies directed
at these higher-order needs are correctly implemented. Motivational interventions
should be clearly defined in terms of the goals and end results they are directed at
achieving. In other words, any managerial intervention (training, job enrichment,
recognition systems) aimed at higher-order need satisfaction will have to have 'esteem
enhancing properties' to be successful in improving job performance. Efforts to use
higher-order need satisfaction as a motivational tool will simply fail if frontline
employees do not believe that their participation will enhance their self-esteem.
Managerial implications
A holistic overview
The impact of individual traits, such as personality characteristics for example, has
often been ignored in past studies of motivation. For this reason, managers' motivation
interventions based on these studies could therefore also have been ineffectual.
The empirical results of the present study show that an individual's personality (selfesteem in this study) can exert a significant intervening influence on the relationship
between need satisfaction and work behaviour. This indicates to tnanagers that
differentiation in rewards is necessary when motivation interventions are made. This is
only possible when managers know their employees. This finding therefore suggests
that efforts must be made to understand employees at a more intimate level.
Management by walk-around, open door communication policies, social events and
personal interviews are activities management dare not neglect in order to reward
employees effectively.
The results also show that the self-esteem of frontline employees is not enhanced by
monetary rewards. Frontline employees are therefore not motivated to increase their job
performance because the pay they receive enhances their self-image. It appears that
their job performance is directly linked to their remuneration package. These employees
want to receive a fair and equitable pay for a fair day's work, in other words, share in
the gains of their productivity. This brings to the fore the new buzz word in job
performance improvement, namely gainsharing. Gainsharing is an approach to enhance
organizational effectiveness which embraces the whole firm through a formal system of
employee involvement and financial bonuses based on perfonnance gains. Pay is but
one way in which employees can perceive gainsharing. Hanlon and Taylor (1991:
714
The International Journal of Human Resource Management
238-56) found that gainsharing improves employee productivity, organizational
effectiveness, positive communication and problem-solving activities by individuals
and groups. Managers therefore need to regularly evaluate employee remuneration
packages against the background of the gainsharing principle.
The empirical results also reveal that the satisfaction of relatedness needs from peers
is a significant causal determinant of the employee job performance of frontline
employees. This result indicates that frontline employees value the acceptance,
belongingness and respect of their peers in their working groups. Downsizing has been
shown to be a destroyer of work groups and thus employee goodwill, loyalty and
morale. The effects of downsizing on survivors in enterprises include worries about
long-term job security, a deep sense of loss, grief and depression and a drop in
credibility and trust in management on the part of survivors (Clark and Koonce, 1995).
Negative perceptions about superiors were also evident in the Alderfer tnodel in the
present study. The empirical results showed that the satisfaction with relatedness needs
from superiors exerted a negative influence on the self-esteem of frontline employees.
These findings possibly indicate the necessity of a rethink of the issue of job security on
the part of management in business enterprises. Slabbert (1997: 16) believes, if
unemployment goes unchecked its social, economic and psychological consequences
could spell the demise of mankind. Profit-maximization at the expense of job security
is a recipe for disaster. Slabbert (1996: 49) therefore suggests that 'reduced profit and
redistribution of generated wealth over a wider spectrum of humanity are morally and
economically sound' and should provide the philosophical foundation of management
thinking in the future.
The empirical results also show that the motivation of top managers must not be
neglected. Top managers are responsible for determining the vision and future direction
of an enterprise. They are the ones who must develop the long-term plans and strategic
thrust of firms and are therefore immensely important to the growth and survival of
firms. For this reason they are often headhunted by competitors. A survey by a human
resource consultancy firm, FSA-Contact, in South Africa, as reported in the Business
Times of 16 January 2000, showed that 47 per cent of engineering manufacturing toplevel staff leave their jobs for improved career opportunities elsewhere. The empirical
results of the present study suggest that the retention of top executives can be
significantly increased by the provision for growth need satisfaction in firms. Top
managers need challenging assignments that provide for innovativeness, autonomy and
personal growth. Matching these need satisfactions with the strategic goals of firms can
significantly impact the growth and survival of firms.
Pay as a motivator
The empirical results show that the performance intentions of both chief executive
officers and frontline employees are significantly influenced by their satisfaction with
pay. It appears that this relationship suggests that employees want to see their monetary
compensation as fair and equitable reward for the effort they put in. Their satisfaction
with pay, however, has no direct causal influence on the respect the employee has for
himself, his perception of whether he is on an equal plane with others, whether he holds
a positive attitude towards himself or whether he feels useful or not. In other words, pay
has no direct influence on an employee's self-esteem, which means that it does not
matter whether the employee is paid adequately or not, his self-esteem will not be
affected by pay.
Amolds and Boshoff: Compensation, esteem valence and performance
115
An employee's compensation package is thus much more than a cash reward for a
piece of work completed. A paradigm shift in management thinking may be required to
improve the effectiveness of motivational interventions. The empirical results suggest
that pay is only important to the extent that it is instrumental in satisfying higher-order
needs, growth needs in the case of top managers and respect and acceptance by coworkers and growth needs in the case of frontline employees. To employees their pay
is a barometer which shows that the firm values their contributions and that their inputs
contribute to the prosperity of the firm.
Pay is therefore a much stronger motivational force when linked to higher-order
needs. The empirical results confirm the proposals by Glassock and Gram (1995: 97-9)
that rewards, such as handwritten thank-you cards, tokens ('funny money', exchangeable in the firm's cafeteria, health centre, day care centre or store, but never for cash),
team celebrations during working hours, nights on the town whereby achievers and their
family members are wined and dined by the firm, and I-made-a-difference-awards
which allow team members or individuals to go on a shopping spree or an extravagant
dining experience, could have a stronger motivational impact on the work behaviour of
employees than cash rewards. The empirical findings also support the belief of Alfie
Kohn, as cited by Levine (1994: 78), that employees must be paid well and fairly and
that everything possible then be done to help them forget about money. Kohn suggests
that this could be achieved by promoting teamwork, participation and genuine interest
in the job.
The self-esteem perspective
The present study has a significant contribution to the demystification of motivation.
Managers are perplexed on a daily basis by why well-paid top and middle managers
resign from firms or are just not performing as expected. It is also not always
understood why lower-level employees, who are not paid big salaries, are very
enthusiastic about their jobs and never leave them even when they receive better job
offers. The empirical results suggest that the answer could lie in the personality
variable, self-esteem. In the present study the self-esteem of both top managers and
frontline employees has a significant positive infiuence on their performance intentions.
Shifting compensation specialists' focus from what need satisfactions cause improved
job performance to identifying what need satisfactions are important for the self-esteem
enhancement of employees could be an important shift in motivational thinking.
For chief executive officers the satisfaction of growth needs influences their selfesteem considerably. These top managers need challenging assignments, continuous
training and development and the freedom and space to plough back their skills and
expertise in the upliftment of their communities. The self-esteem of frontline employees
is strongly influenced by the respect and acceptance from their peers. Any reward that
would enhance the image, respect and acceptance of the frontline employee by their
peers would motivate them to higher job performance. This could be achieved by the
implementation of various recognition tools and job enrichment strategies.
Frontline employees also need to feel that there are always new things to learn at
work. They would also like to make one or more important decisions every day, use a
wide range of their abilities and have the opportunity to do challenging things at work.
These are all growth needs which were shown to have a significant influence on the
self-esteem of frontline employees in the study.
In summary, this study shows that perceptions of pay influence the performance
intent of both chief executive officers and frontline employees. Compensation via the
716
The International Journal of Human Resource Management
satisfaction of higher-order needs has a stronger motivational impact on the job
performance of these categories of employees. It is the higher-order needs that improve
job performance via self-esteem enhancement and not monetary compensation. Finally,
self-esteem is a strong determinant of job performance. Identifying the need satisfaction
that enhances self-esteem will improve employee job performance and in so doing
improve the effectiveness and profitability of enterprises.
Limitations of tbe study
The present study has made significant contributions to the body of knowledge on
motivation and employee job performance. Certain areas, however, still need to be
explored or expanded. These areas include the application of the motivation models to
blue-collar employees and the inclusion, respectively, of determinants or antecedents of
needs (such as age, gender, marital status, education, personal values, cultural
background, kinship responsibility, supervisory style, and promotion opportunities) and
personality variables (such as locus of control, self-monitoring and risk proneness) in
the theoretical models to improve job performance. It could, for instance, be
hypothesized that older frontline employees would be more concerned about the need
for self-actualization (growth need) the satisfaction of which will affect their selfesteem and performance intent differently from younger frontline employees. Females
can for example be more concemed about the satisfaction of working and material
conditions (the existence need for pay and fringe benefits) that would allow them to
carry out their maternal duties. Hong et al. (1995: 14), on the other hand, found males
to be more concemed with relatedness and growth needs, entertainment, education and
training in particular. For males the satisfaction of these needs could therefore have a
stronger infiuence on their self-esteem and performance intentions. In a similar fashion,
differences in cultural socialisation can cause different influences on self-esteem and
job performance of different cultural groups.
As far as the inclusion of personality variables in theoretical models to improve job
performance is concemed, locus of control has been reported to be an important
determinant of needs. Cunningham et al. (1995: 41), for instance, reported that extemal
locus of control is negatively related to the need for recognition (esteem need) and
innovativeness (growth need). Allen et al. (1997: 123), on the other hand, found
significant positive correlations between internal locus of control, on the one hand, and
the need for friendship of co-workers (affiliation need), self-respect, responsibility,
achievement (esteem needs), growth and development of new skills (growth needs).
Against this background, the impact of different need satisfactions on the locus of
control of 'extemals' and 'intemals' could have a differential impact on their respective
perfonnance intentions. The inclusion of other personality variables, such as locus of
control, could therefore increase our understanding of the interactive nature of need
satisfaction, personality and job performance.
The measures of fit in Table 5 suggest that the data fit the theoretical model
reasonably well. In other words, the theoretical model is a very plausible explanation of
the relationship between need satisfaction, self-esteem and performance intentions. This
does not mean that it is the only model that explains these relationships. Other equally
plausible models can also be constructed. The present study cannot and does not claim
that self-esteem is necessarily an antecedent of job performance, or the only antecedent
of job performance, or that job performance will not influence self-esteem. The study
(based on the empirical findings) can however claim that, for the present sample, the
satisfaction of growth needs will enhance the self-esteem and the job performance
Arnolds and Boshoff: Compensation, esteem valence and performance
111
intentions of top managers and frontline employees; that the satisfaction of the need for
relatedness to peers will enhance the self-esteem and job performance of frontline
employees; and that the satisfaction of the need for relatedness to supervisors will
negatively affect the self-esteem and job performance of frontline employees.
References
Alderfer, C.P. (1967) 'Convergent and Discriminant Validation of Satisfaction and Desire
Measures by Interviews and Questionnaires', Joumal of Applied Psychology, 51(6): 509-20.
Alderfer, C.P. (1969) 'An Empirical Test of a New Theory of Human Needs', Organizational
Behaviour and Human Performance, 4: 142—75.
Alfred, M. (1991) 'A View from the Other Side', Productivity SA, 17(3): 7-11.
Allen, R.E., Lucero, M.A. and Van Norman, K.L. (1997) 'An Examination of the Individual's
Decision to Participate in an Employee Involvement Program', Group and Organization
Management, 22(1): 17-143.
Amabile, T.M. (1997) 'Motivating Creativity in Organizations: On Doing What You Love and
Loving What You Do', California Management Review, 40(1): 39-58.
Aram, J.D. and Piraino, T.G. (1978) 'The Hierarchy of Needs Theory: An Evaluation in Chile',
Interamerican Journal of Psychology, 12(2): 179-88.
Amolds, C.A. and Boshoff, C. (2000) 'Does Higher Remuneration Equal Higher Job Performance? An Empirical Assessment of the Need-Progression Proposition in Selected Need
Theories', South African Journal of Business Management, 31(2): 53—64.
Bennett, J. (2000) 'Salaries Not the Only Drawcard', Sunday Times Business Times, 26 March:
2.
Bollen, K.A. (1989) Structural Equations with Latent Variables. New York: Wiley.
Browne, M.W. and Mels, G. (1996) Path Analysis: RAMONA, SYSTAT6.0for Windows: Statistics.
Chicago, IL: SPSS Incorporated.
Bryan, L.A. (1983) 'From Whence the Theory?', Training, 20(June): 81-3.
Burns, R.B. (1979) The Self-Concepts in Theory, Measurement, Development and Behaviour.
London: Longman.
Carkhuff, R.R. (1986) Human Processing and Human Productivity. Amherst, MA: Human
Resource Development Press.
Clark, J. and Koonce, R. (1995) 'Engaging Organizational Survivors', Training and Development,
49(8): 22-30.
Cranny, C.J., Smith, P.C. and Stone, E.F. (1992) Job Satisfaction. How People Feel about their
Jobs and How It Affects their Performance. Lexington, MA: Lexington Books.
Cronbach, L.J. (1951) 'Coefficient Alpha and the Intemal Structure of Tests', Psychometrika, 16:
297-334.
Cunningham, B., Gerrard, P., Chiang, F.P., Yong, L.K. and Linn, C.S. (1995) 'Do Undergraduates
Have What It Takes to Be Entrepreneurs and Managers of Small Businesses in Singapore?',
Journal of Asian Business, 11(4): 35—49.
De Cenzo, D.A. and Robbins, S.P. (1988) Personnel/Human Resource Management, 3rd edn.
Englewood Cliffs, NJ: Prentice-Hall.
Ettorre, B. (1999) 'Is Salary a Motivator?', Management Review, 88(1): 8.
Fox, J.B., Scott, K.D. and Donohue, J.M. (1993) 'An Investigation into Pay Valence and
Performance in a Pay-for-Performance Field Setting', Journal of Organizational Behaviour,
14(7): 687-93.
Frane, J., Jennrich, R.I. and Sampson, P.F. (1990) 'P4M-Factor Analysis'. In Dixon, W.J. and
Brown, M.B. (eds) BMDP Statistical Software Manual, Vol. 1. Berkeley, CA: University of
California Press, pp. 311-37.
Glassock, S. and Gram, K. (1995) 'Winning Ways: Establishing an Effective Workplace
Recognition System', National Productivity Review, 14(3): 91-102.
Hair, J.F., Anderson, R.E., Tatham, R.L. and Black, W.W. (1995) Multivariate Data Analysis:
With Readings. Englewood Cliffs, NJ: Prentice Hall.
718
The International Journal of Human Resource Management
Hanlon, S.C. and Taylor, R.R. (1991) 'An Examination of Changes in Work Group Communication Behaviours Following Installation of a Gainsharing Plan', Group and Organizational
Studies, 16(3): 238-67.
Heath, C. (1999) 'On the Social Psychology of Agency Relationships: Lay Theories of Motivation
Overemphasize Extrinsic Incentives', Organizational Behavior and Human Decision Processes,
78(1): 25-62.
Herzberg, F., Mausner, B. and Snyderman, B. (1959) The Motivation lo Work. New York:
Wiley.
Hoffman, E. (1988) 'Abraham Maslow: Father of Enlightened Management', Training, 25
(September): 79-82.
Hong, J.C., Yang, S.D., Wang, L.G., Chiou, E.F., Sun, F.Y. and Huang, T.L. (1995) 'Impact of
Employee Benefits on Work Motivation and Productivity', International Journal of Career
Management, 7(6): 10-14.
Hoyle, R.H. (ed.) (1995) Structural Equation Modelling: Concepts, Issues, and Applications.
London: Sage.
Hughes, M.A., Price, R.L. and Marrs, D.W. (1986) 'Linking Theory Construction and Theory
Testing: Models with Multiple Indicators of Latent Variables'. In Hair, J.F., Anderson, R.E.,
Tatham, R.L. and Black, W.W. (eds) Multivariate Data Analysis: With Readings. Englewood
Cliffs, NJ: Prentice Hall, pp. 694-707.
Igalens, J. and Roussel, P. (1999) 'A Study of the Relationship between Compensation Package,
Work Motivation and Job Satisfaction', Journal of Organizational Behaviour, 20: 1003-25.
Ivancevich, J.M. and Matteson, M.T. (1999) Organizational Behavior and Management.
Singapore: McGraw-Hill.
Jennrich, R.I. and Sampson, P.F. (1966) 'Rotation for Simple Loadings', Psychometrika, 31:
313-23.
Kopelman, R.E. (1986) Managing Productivity in Organizations: A Practical, People-Oriented
Perspective. New York: McGraw-Hill.
Korman, A.K. (1971) Industrial and Organizational Psychology. Englewood Cliffs, NJ: PrenticeHall.
Landy, F.J. (1985) Psychology of Work Behaviour, 3rd edn. Homewood, IL: The Dorsey
Press.
Levine, H.Z. (1994) 'Why Incentive Plans Cannot Work', Compensation and Benefits Review,
26(1): 77-8.
Lopez, E.M. and Greenhaus, J.H. (1978) 'Self-Esteem, Race, and Job Satisfaction', Journal of
Vocational Behaviour, 13: 75-83.
Luthans, F. (1998) Organizational Behavior. Singapore: McGraw-Hill.
McCampbell, A.S. (1996) 'Promoting productivity of plateaued managers by providing autonomy'. Production and Inventory Management Journal, 37(1): 61-4.
MacCullum, R.C., Browne, M.W. and Sugawara, H.M. (1996) 'Power Analysis and Determination of Sample Size for Covariance Structure Modeling', Psychological Methods, 1(2):
130-^9.
Martins, J.H, Loubser, M. and Van Wyk, H.D. (1996) Marketing Research: A South African
Approach. Pretoria: Unisa Press.
Maslow, A.H. (1943) 'A Theory of Human Motivation', Psychological Review, 50: 370-96.
Miner, J.B. (1992) Industrial/ Organizational Psychology. New York: McGraw-Hill.
Mullins, L.J. (1999) Management and Organizational Behaviour. Harlow, Essex: Prentice
Hall.
Pfeffer, J. (1998) 'Six Dangerous Myths about Pay', Harvard Business Review, May-June:
109-19.
Pierce, J.L. and Dunham, R.B. (1987) 'Organizational Commitment: Pre-Employment Propensity
and Initial Work Experiences', Journal of Management, 13(1): 163-78.
Robbins, S.P. (1998) Organizational Behavior: Concepts, Controversies, Applications. Upper
Saddle River, NJ: Prentice-Hall.
Rosenberg, M. (1965) Society and the Adolescent Self-Image. Princeton, NJ: Princeton University
Press.
Arnolds and Boshoff: Compensation, esteem valence and performance
119
Salancik, G.R. and Pfeffer, J. (1977) 'An Examination of Need-Satisfaction Models of Job
Attitudes', Administrative Science Quarterly, September: 427-56.
Scharge, M. (2000) 'Cafeteria benefits? Ha! You Deserve a Richer Banquet', Fortune, 3
September: 274.
Schein, E.H. (1971) 'The Individual, the Organization, and the Career: A Conceptual Scheme',
Journal of Applied Behavioural Science, 7(4): 401-26.
Sharma, P. (1991) 'Need Motivations as a Function of Age, Educational Status and Cognitive
Style of Managers and Workers', Indian Joumal of Psychometry and Education, 22(1):
43-50.
Shore, L.M., Newton, L.A. and Thornton III, G.C. (1990) 'Job and Organizational Attitudes in
Relation to Employee Behavioural Intentions', Journal of Organizational Behaviour, 2:
57-67.
Shouksmith, G. (1989) 'A Construction of a Scale for Measuring Work Motivation', New Zealand
Journal of Psychology, 18(2): 76-81.
Slabbert, A. (1996) 'Capitalism at the Crossroads', International Journal of Social Economics,
23(9): 41-50.
Slabbert, A. (1997) 'An Exploratory Investigation of the Hypothetical Relationship between
Downsizing and Employee Attitudes', unpublished research article. Cape Technikon, Cape
Town.
Smith, A.S., Organ, D.W. and Near, J.P. (1983) 'Organizational Citizenship Behaviour: Its Nature
and Antecedents', Joumal of Applied Psychology, 68(4): 653—63.
Smit, P.J. and Cronje, G.J. de J. (1992) Management Principles. Kewyn: Juta and Co.
Spence, J.T. (1983) Achievement and Achievement Motives: Psychology and Sociological
Approaches. San Francisco: W.H. Freeman.
Stahl, M.J. (1986) Managerial and Technical Motivation: Assessing Needs for Achievement.
Power and Affiliation. New York: Praeger.
Steers, R.M. and Black, J.S. (1994) Organizational Behaviour, 5th edn. New York: HarperCollins
College.
Steers, R.M. and Porter, L.W. (1991) Motivation and Work Behaviour, 5th edn. New York:
McGraw-Hill.
Stein, M. and Hollowitz, J. (1992) Psyche at Work: Workplace Applications of the Jungian
Analytical Psychology. Wilmette, IL: Chiron.
Sumerlin, J.R. and Norman, R.L. (1992) 'Self-Actualisation and Homeless Men: A Known-Group
Examination of Maslow's Hierarchy of Needs', Journal of Social Behaviour and Personality,
7(3): 469-81.
Tharenou, P. (1979) 'Employee Self-Esteem: A Review of the Literature', Journal of Vocational
Behaviour, 15: 316—46.
Tharenou, P. (1993) 'A Test of Reciprocal Causality for Absenteeism', Journal of Organizational
Behaviour, 14: 269-90.
Vroom, V.H. (1964) Work and Motivation. New York: Wiley.
Wahba, M.A. and Bridwell, L.G. (1976) 'Maslow Reconsidered: A Review of Research on the
Need Hierarchy Theory', Organizational Behaviour and Human Perfonnance, 15: 2 1 2 ^ 0 .
Wanous, J.P. and Zwany, A. (1977) 'A Cross-Sectional Test of Need Hierarchy Theory',
Organizational Behavior and Human Perfonnance, February: 78-97.