International Journal of Organizational Leadership 10(2021) 401-420
INTERNATIONAL JOURNAL OF
ORGANIZATIONAL LEADERSHIP
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journal homepage: https://www.ijol.cikd.ca
Examining the Role of Motivation and
Reward in Employees’ Job Performance
through Mediating Effect of Job
Satisfaction: An Empirical Evidence
Kalpina Kumari1, Salima Barkat Ali2, Noor un Nisa Khan3, Jawad Abbas4*
1
Faculty of Department of Business Administration, Greenwich University of Karachi, Pakistan
2
Faculty of Department of Psychology, Iqra University of Karachi, Pakistan
3
Faculty of Department of Business Administration, Iqra University of Karachi, Pakistan
4
Faculty of Management Sciences, University of Central Punjab, Lahore, Pakistan
ABSTRACT
Keywords:
Rewards, Motivation, Job
satisfaction, Job performance
Received
09 October 2021
Received in revised form
16 November 2021
Accepted
21 November 2021
*Correspondence:
jawad.abbas@ymail.com
The current research uses the principles of reinforcement theory of motivation and selfdetermination theory and investigates how motivation and rewards impact on job
performance of employees. Motivation and rewards are examined from intrinsic and
extrinsic perspectives, while job performance is measured from the task and contextual
performance aspects. The mediating effect of job satisfaction has also been investigated
between motivation, rewards, and job performance. Using five points Likert scale, the
researchers collected data from the managerial and non-managerial staff working in
manufacturing and services firms. Non- probability convenience sampling technique was
followed to collect 422 empirical responses. The collected data were analyzed using the
structural equation modeling technique. The results indicated that reward and motivation
affect employee job performance positively significantly. However, the dimensional
analysis indicated an insignificant impact of intrinsic and extrinsic motivation on contextual
performance. Besides, the findings substantiate that the relationship between rewards,
motivation, and employees’ job performance depends on job satisfaction. The current
research provides valuable insights to senior management of manufacturing and services
firms on how they can enhance their employees' job satisfaction and performance by
following different motivational and reward approaches in different size firms.
©CIKD Publishing
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Businesses face evolving challenges in the current dynamic market scenario (Din, Shahani, &
Baloch, 2021). Some of these challenges are volatile social and economic conditions, such as
the COVID-19 pandemic (Habib, Abbas, & Noman, 2019), global business competition caused
by technological changes (such as the internet), changing customers’ needs, competitive
industry nature, etc. (Baughman, 2018). Firms can achieve their strategic goals only if they
maintain the highest quality in operations and customer service. Such initiatives will enhance
organizational performance (Guilbault, 2018) and facilitate them to achieve a competitive
advantage (Jeni, Mutsuddi, & Das, 2020). Organizational performance is a multi-faceted
concept that relies on multiple elements, such as financial situation, infrastructure, service
quality, etc. (Anwar & Abdullah, 2021). However, human resource (HR) is the most important
among all the available resources since it has great potential to variate a firm's overall
performance (Abbas et al., 2021). According to Tian et al. (2021), the strength of an
organization is determined by the quality of its workforce. Therefore, the highly competitive
industrial situation is compelling employers to recruit and retain competent and talented
employees for their company (Abbas & Sagsan, 2019). They can follow and do justice to firms’
stated mission with more effectiveness (Hamza et al., 2021). For this reason, retaining welltrained employees who have relevant experience and are open to taking responsibilities is one
of the most important concerns, as they directly affect the performance of an organization.
Employees’ performance plays a critical role in the success or failure of any firm (Yang &
Ai, 2020). With the emergence of the COVID-19 pandemic, in particular, most firms have faced
economic downfall and, at the same time, the performance and motivation level of employees
have also deteriorated (Aguinis & Burgi-Tian, 2021). For this reason, firms must identify means
to bring out the best performance from their employees (Bao et al., 2021). In simple words,
employee performance refers to how they perform the assigned duties and tasks, including
results and the behavior that they demonstrate while performing their tasks (Abbas & Sagsan,
2019). Dynamic firms take employee performance as a driving force for their success and
continuously work to ensure their improvement (Jeni et al., 2020). Performance can be
measured on quantity, quality, and/or work efficiency (Tian et al., 2021). In addition, multiple
factors influence employee performance, such as infrastructure and facilities, workplace
environment (Bao et al., 2021), job satisfaction, relationship with colleagues, etc. (Nguyen et
al., 2020). Motivation is another factor that can play a significant role in their performance
(Abbas & Kumari, 2021).
From an organizational perspective, motivation is a process that stimulates employees to act
to achieve organizational goals (Prasetiyani et al., 2021). According to Yang and Ai (2020),
employee motivation has two sources, namely intrinsic and extrinsic. Extrinsic motivation can
be attributed to factors in the workplace, whereas intrinsic motivation is an inner driving force
that propels you to achieve more (Mazllami, 2020). Likewise, well-rewarded employees feel
that the organization is valuing them. If an employer takes care of the employee and rewards
them for appreciating their work, in return, the employee will put maximum effort to achieve
his defined targets (Jeni, Mutsuddi, & Das, 2020). The absence of a motivation and rewards
system reduces workers' morale (Hammond & Waltemeyer, 2021). Similarly, Shaikh, Shaikh,
and Shaikh (2019) stated that firms with poor motivation and reward systems experience higher
high turnover.
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403
The current study bases its arguments on the reinforcement theory of motivation and selfdetermination. It investigates the role of motivation and reward systems in employee job
performance, specifically task and contextual performance. It also investigates the relationship
between motivation, reward, and employee job satisfaction and if employee job satisfaction
mediates the relation between motivation, reward, and employee job performance. Therefore,
the current research is designed to answer the following queries:
RQ1: Do intrinsic and extrinsic motivation impact employees’ task and contextual
performance?
RQ2: Do intrinsic and extrinsic rewards systems within an organization impact employees’
task and contextual performance?
RQ3: Does job satisfaction mediates the relationship between rewards, motivation, and
employee's job performance?
The findings of this study will benefit industrialists and academicians. It will help to
understand how different motivation and reward orientations can help employees achieve
desirable results. Workers can have different motivational orientations contingent on their
needs, leading to their job attitude, behavior, and overall performance. For this reason, while
designing their human resource strategy, managers must understand employees' different needs.
Given the multidimensional nature of motivation, reward, job satisfaction, and employee
performance, this study differentiates their impact at the individual and dimensional levels to
identify the link between these orientations. This study will also validate some previous studies
that have studied the role of motivation and reward in employee performance in individual or
conjointly format.
Theory and Literature
Every organization has certain goals and objectives to achieve. These objectives are met with
the help of capital, raw materials, infrastructure and facilities, human resources, etc. (Tajeddini,
Martin, & Altinay, 2020). For any organization, human asset and their performance at the
workplace tops the list of resources needed to achieve its defined objectives (Kazmi & Abbas,
2021). According to Campbell and Wiernik (2015), employee job performance refers to certain
behavioral patterns and outcomes that can be observed and analyzed against specific standards
put together by an organization based on its all-embracing goals. Hosie and Nankervis (2016)
proposed a traditional dimensional model and structure that broke down job performance into
contextual and task performance. When we talk about task performance, it encompasses
individual behaviors while performing their defined roles. On the other side, contextual
performance considers the interpersonal relationship that the people forge voluntarily to help
perform the task, which boosts the organization's effectiveness (Imran & Abbas, 2020).
The current study integrates the reinforcement theory of motivation and self-determination
to investigate determinants of employees’ job performance. The reinforcement theory of
motivation was proposed by Skinner (2014) and stated that behavior is influenced by its
consequences. Furthermore, as the reinforcement theory suggests, someone’s behavior can be
changed by using punishment and reinforcement. Rewards can be used to reinforce and promote
the desired and positive behavior, while punishments can be used to prevent the undesired
behavior. Self-determination theory (SDT), presented by Deci and Ryan (1985), explained that
self-motivation is a result of individuals who are self-driven and encouraged to keep a check on
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how they behave (Ryan & Deci, 2020). From the given explanation of both theories, it can be
concluded that the reinforcement theory of motivation deals majorly with extrinsic factors in
terms of rewards and other motivational tactics to keep the employee motivated. In contrast,
self-determination theory (SDT) is concerned with employees’ intrinsic and self-driving
motivation aspects. The conceptual model of this study is based on these two theories and states
that employee motivation and organizational reward system are directly associated with
employee job satisfaction and performance. Therefore, the combination of reinforcement theory
of motivation and self-determination theory to investigate an underlying mechanism of
determinants that can enhance employees’ job performance at the workplace will contribute to
both theory and practice (see Figure 1).
Motivation and Employees’ Job Performance
Motivation is a commonly used word derived from the word “motive,” having different
meanings, such as a person’s desires, needs, wants, and drives (Badura et al., 2020). It is the
process of stimulating people to take the right actions to reach their goals or targets (Liu et al.,
2021). Employee motivation is broadly categorized into two forms, i.e., extrinsic and intrinsic
motivation. Behavior dictated by internal attitudes and motivated by internal rewards is
classified as ‘intrinsic motivation.’ Also, alternatively known as “motivators” or “satisfiers.”
These factors also serve as an additional source of increased employee job satisfaction
(Catharina & Victoria, 2015). These intrinsic factors include a sense of achievement,
responsibility, personal growth, recognition, and work itself. On the contrary, forces that are
present in the external environment connected to your working environment are known as
extrinsic factors. These extrinsic motivators are also called “hygiene” or “dissatisfaction
avoidance.” Ghazi, Shahzada, and Khan (2013) established that the absence of these hygiene
factors can decrease motivation although they cannot guarantee satisfaction.
According to Nyinyimbe (2020), motivation is an ideal tool for achieving employees'
superior performance at the workplace, leading towards organizational effectiveness. Aizza et
al. (2018) indicated that intrinsic and extrinsic motivational factors play a critical role in
building a long-term relationship with employees. Triswanto and Yunita (2021) have also
reported similar results, who stated that both intrinsic and extrinsic motivation has a positive
and significant effect on employees’ output. In the “Human Motivation” theory, Maslow (1943)
identified different factors that impact human motivation. He classified those factors into
physiological, safety, social recognition, self-esteem, and self-actualization needs. Therefore,
from an organizational perspective, HR managers must design and execute diverse
motivational strategies to positively cater to the different needs of their personnel at the
workplace (Gift & Obindah, 2020).
Saengchai, Siriattakul, and Jermsittiparsert (2019) argued that their enhanced enthusiasm
would naturally improve productivity when employees feel motivated and competent.
Consequently, employee motivation is dominant in determining the success of any organization
and ensures that work continues smoothly without any hindrances and in a proficient manner
(Ahsan, Nasir, & Abbas, 2020; Zainal, 2017). In their study, Yousaf, Yang, and Sander (2015)
examined the role of employees’ intrinsic and extrinsic motivation in their task and contextual
performance and identified that task and contextual performance were positively affected by
extrinsic motivation. However, they identified an insignificant relationship between intrinsic
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405
motivation and contextual performance. Guo and Ling (2020) studied if leaders’ motivating
language impacts employees’ task and contextual performance and identified a positive
relationship between them.
The literature provides contradictory findings on the relationship between motivation and
employee performance, particularly at the dimensional level. Thus, it warrants further
clarification. For this purpose, the following hypotheses are proposed:
H1: Employees’ motivation to work is positively associated with their job performance.
H1a: Employees’ motivation to work is positively associated with their task performance.
H1b: Employees’ motivation to work is positively associated with their contextual
performance.
H1c: Employee extrinsic motivation positively predicts employees’ job performance.
H1d: Employee extrinsic motivation positively predicts employees’ task performance.
H1e: Employee extrinsic motivation positively predicts employees’ contextual performance.
H1f: Employee intrinsic motivation positively predicts employees’ job performance.
H1g: Employee intrinsic motivation positively predicts employees’ task performance.
H1h: Employee intrinsic motivation positively predicts employees’ contextual performance.
Figure 1. Conceptual framework
Rewards and Employees’ Job Performance
In Social exchange theory, Blau (1964) stated that employees owe their loyalty to a great extent
to the organization when their financial needs are met in the form of rewards. Hence, it can be
said that employees’ retention and performance are directly proportional to the number and
quality of rewards the organization offers. Therefore, the reward is a focal point of the
employment relationship. Willsen (2020) classified rewards into two broad categories:
monetary and non-monetary. Monetary rewards generally include cash awards, commission,
bonuses, etc., while non-monetary rewards include flexible timing, childcare, mentoring
programs, medical or education assistance, etc. Both types can be utilized to enhance
employees’ behavior and performance. However, organizational rewards were later divided into
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two principal forms: extrinsic and intrinsic (Alhmoud & Rjoub, 2020). Extrinsic rewards
consider tangible benefits like career development, promotion, varied growth opportunities,
monetary compensation, and work-life balance (Sureephong et al., 2020). On the other hand,
intrinsic rewards are immaterial because they are more related to the satisfaction that comes
with one's responsibilities and co-workers' support (Hidayat, 2019).
Employers look for superior strategies to boost the morale of their employees to reach
optimum level performance (Yousuf & Siddiqui, 2019). However, employee performance is a
multi-faceted phenomenon. It can be influenced by several factors such as training and
development, working conditions, job security, worker and employer relationship, company’s
rules, policies to reward employees, etc. (Shakoor, Fakhar, & Abbas, 2021). Considering all
these factors, employee performance is affected by the motivation factor that follows rewards
and ultimately plays a significant role in enhancing workplace productivity (Koralege &
Priyashantha, 2019).
The sum of financial and non-financial rewards plays a pivotal role in retaining employees
at any firm. This further leads to increased productivity (Prasetiyani et al., 2021). This means
that if employees are adequately rewarded for their efforts, they will stay longer and work with
the utmost dedication and commitment (Ngwa et al., 2019). Moreover, when employees feel
valued and acknowledged for their efforts, they strive to surpass their managers’ expectations
with the anticipation that they will be well rewarded for their smart work (Admassie, 2019). It
also serves as a source of inspiration for employees to continuously strive towards excellence
(Fanggidae, Nursiani, & Bengngu, 2019). Parashakti and Ekhsan (2020) stated that the targeted
level of performance could only be achieved if the employee feels a sense of mutual trust,
respect, and attainment of certain personal objectives. Hence, dynamic organizations used to
have an effective reward and recognition program to boost staff morale and motivation, which
led to organizational effectiveness in the long run (Hussain et al., 2019).
Rehman, Ilyas, and Saqib (2017) studied the role of extrinsic and intrinsic rewards in
employees' job performance and found a positive association between them. Shaikh et al. (2019)
also studied the matching model and found similar results. However, Özutku (2019) identified
an insignificant relationship between intrinsic, extrinsic rewards and employee performance in
Turkish manufacturing firms. Based on differences in the literature, this research aims to find a
more specific and clear answer to the role of extrinsic and intrinsic rewards in employee
performance. Thus, the following hypotheses are proposed:
H2: Effective reward system positively predicts employees’ job performance.
H2a: Effective reward system positively predicts employees’ task performance.
H2b: Effective reward system positively predicts employees’ contextual performance.
H2c: Extrinsic rewards system positively predicts employees’ job performance.
H2d: Extrinsic rewards system positively predicts employees’ task performance.
H2e: Extrinsic rewards system positively predicts employees’ contextual performance.
H2f: Intrinsic rewards system positively predicts employees’ job performance.
H2g: Intrinsic rewards system positively predict employees’ task performance.
H2h: Intrinsic rewards system positively predicts employees’ contextual performance.
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Rewards and Job Satisfaction
According to Ayub and Rafif (2011), the degree to which people like or dislike their jobs is
known as job satisfaction. Job satisfaction is a positive emotional state derived from appraisals
of one’s job or the experience of the job itself (Kumar & Singh, 2011). From an organizational
perspective, job satisfaction plays an enormous role in ensuring a greater level of organizational
commitment, ensuring the success of the entire organization and its development. Nazir et al.
(2016) stated that rewards play an indispensable role in encouraging employees to stay
committed, which leads to greater job pleasure among employees. Higher workforce
consistency and higher standards of performance are sure to follow through. Rewards are
important factors in ensuring job loyalty, and it is positively associated with employees’
motivation at the workplace (Zafar et al., 2014). When employees achieve job satisfaction, the
overall organization performance will likely be improved (Ouedraogo & Leclerc, 2013).
In 1964, Herzberg introduced motivation-hygiene theory (also known as two-factor theory)
and stated that two factors at the workplace affect employee job satisfaction, i.e., motivation
and hygiene. Motivation refers to a worker’s eagerness to work better. The other aspect is
hygiene. This aspect will not push workers to perform harder, but their absence will demotivate
workers. Herzberg mentioned salary as a hygiene factor responsible for eradicating job
dissatisfaction and falls under extrinsic factors. From an organizational perspective, this
research takes reward as the hygiene factor and states that if a firm does not adequately reward
its employees, it will negatively affect their satisfaction level. Therefore, based on the above
discussion, the given hypotheses are suggested:
H3: Rewards positively impact employees’ job satisfaction.
H3a: Extrinsic rewards positively impact employees’ job satisfaction.
H3b: Intrinsic rewards positively impact employees’ job satisfaction.
Motivation and Job Satisfaction
According to Febrianti and SE (2020), increasing employee morale and job satisfaction are the
key organizational concerns in the current era. Different motivation theories enlighten and
educate us about employees’ motivation and job satisfaction, for example, process, need-based,
and reinforcement theories. Ali and Anwar (2021) established that although motivation and job
satisfaction are dependent terms, they cannot be used interchangeably. The motivational
process considers job satisfaction an important facet (Safdar et al., 2020). While motivation
helps give us direction and stay consistent on our goals, job satisfaction empowers us with a
sense of accomplishment through different work-related activities and rewards.
Paais and Pattiruhu (2020) stated that the extent of job satisfaction is dependent on both
intrinsic and extrinsic motivational factors. Bayraktar et al. (2017) stated that intrinsic
motivation plays a vital role in affecting employees' association with the company. Employees’
higher intrinsic motivation can be linked with higher employees’ loyalty and vice versa.
Alshmemri, Shahwan-Akl, and Maude (2017) reported that intrinsic factors lead towards
greater employee motivation and promote job commitment at the workplace. From an extrinsic
motivation perspective, Catharina and Victoria (2015) cited job security to be one of the most
integral extrinsic factors which have a considerable impression on employees’ job satisfaction.
Moreover, compensation, including salary and fringe benefits, also directly impacts employees’
job satisfaction. However, a study by Breaugh, Ritz, and Alfes (2018) reported an insignificant
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relationship between intrinsic motivation and job satisfaction. The existing literature presents
contradictory and inconsistent data on the relationship between motivation and job satisfaction.
To cover this issue holistically, the following hypotheses have been proposed:
H4: Motivation positively impacts employees’ job satisfaction.
H4a: Extrinsic motivation positively impacts employees’ job satisfaction.
H4b: Intrinsic motivation positively impacts employees’ job satisfaction.
Job Satisfaction and Employees’ Job performance
In the past literature, job satisfaction has received the attention of many researchers since most
of them believe that it plays an important role in an individual’s performance within the
organization (Mohammad et al., 2017). Generally, it is believed that a happy worker is more
likely to be a productive worker. However, the review of the literature indicates contradictory
findings on the link between job satisfaction and employee job performance. For instance, the
study of Brayfield and Crockett (1955) is among the most prominent that highlighted the
insignificant correlation between employee job satisfaction and their job performance.
Hünefeld, Gerstenberg, and Hüffmeier (2020) also indicated that job satisfaction was not
meaningfully associated with job performance and labeled it as minimal or no relationship. The
study by Alsafadi and Altahat (2021) also reported a similar insignificant relationship between
the relationship of the said variables.
On the other hand, several studies have publicized that job satisfaction is strongly linked
with employees’ job performance. For example, Idris et al. (2020) posited that job satisfaction
creates happiness and enhances morale and employee motivation, leading to increased
productivity. Wolomasi, Asaloei, and Werang (2019) concluded that satisfied employees who
held positive feelings toward their work tend to perform their duties better. Al-Ali et al. (2019)
asserted that a satisfied employee performs his duties more creatively. Given the inconsistent
findings on the relationship between job satisfaction and job performance, this study examines
the direct association between job satisfaction and employee performance. This study also takes
job satisfaction as the intervening variable and investigates whether it mediates the relationship
between motivation, reward, and job performance or not. Thus, the following hypotheses are
proposed:
H5: Job satisfaction positively impacts employees’ job performance.
H5a: Job satisfaction positively impacts employees’ task performance.
H5b: Job satisfaction positively impacts employees’ contextual performance.
H6: Job satisfaction mediates the relationship between rewards and employees’ job
performance.
H7: Job satisfaction mediates the relationship between motivation and employees’ job
performance.
Method
Target population
Since the current research focuses on services and manufacturing industries, the target
population includes all the managerial and non-managerial employees working in
manufacturing and services firms located within Karachi, Lahore, and Islamabad cities of
Pakistan. The reason behind choosing these three cities is that these cities are believed as the
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major business venues of Pakistan. In addition, these cities also constitute a diverse array of
people from different cultural backgrounds, representing our targeted population in the best
possible way.
Sampling Procedure
The ideal sample size for conclusive research would be 30 to 500 samples or 10 times or more
than the number of items that are each assigned a variable which is dependent, independent,
moderating, mediating, and control variables (Sekaran & Bougie, 2003). The authors
distributed 652 questionnaires to the managerial and non-managerial staff working in
manufacturing and services firms in our target cities. At first hand, only 292 filled
questionnaires were returned after two weeks. To collect the data from the remaining
respondents, the soft reminders were sent, and 130 more responses were received; so, the total
number of returned questionnaires was 422. The response rate recorded is an indirect measure
of how the respondents rate the questionnaire in terms of relevancy and rigor. When
respondents perceive that a particular study holds significance and deserves their attention, they
are more likely to return a questionnaire.
The given response rate indirectly indicates the coherence and accuracy of the
questionnaire. The study’s importance and dependency on its respondents motivate the
volunteers to return the questionnaires.
To approach the target population and collect their responses, the authors followed the nonprobability convenience sampling technique because of the inaccessibility of the whole
population (Kumar, 1996). The detailed demographic information of respondents is presented
in Table 1.
Table 1
Demographics of the Respondents
Particulars
Total Responses
Description
Manufacturing
Services
Values
173
249
Percentage
41%
59%
Gender
Female
Male
Prefer not to say
215
207
4
51%
49%
1%
Age
Less than 20
20-30
31-40
41-50
50+
135
203
59
8
13
32%
48%
14%
2%
3%
Years of experience
Less than 5
5-10
11-15
16-20
More than 20
131
207
68
6
11
31%
49%
16%
1.50%
2.60%
Position within the organization
Operational staff
Junior management
Middle management
Top management
165
152
97
9
39%
36%
23%
2.08%
Organizational status
Public
Private
194
228
46%
54%
Data Collection
The authors followed a self-administered questionnaire technique to collect the data. The
researchers also had a detailed face-to-face discussion with some respondents to get unbiased
and reliable data. They explained to the respondents the purpose of the study and guided them
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on how to fill out the questionnaire. The participants were given the assurance of confidentiality
of all their responses.
Description of Measures
To collect the empirical data, the researchers used a five-point Likert scale, in which one
suggested strongly disagree and five suggested strongly agree. The questionnaire listed five
parts: the first part contained information about the demographics of the participants, followed
by measures for intrinsic and extrinsic rewards, intrinsic and extrinsic motivation, job
satisfaction along with task, and contextual performance. Motivation, including intrinsic and
extrinsic, was measured using 13 items taken from Mikander’s (2010) study. Rewards,
including intrinsic and extrinsic, were measured using 12 items. The items were extracted from
Muchiri's (2016) and Ibrar and Khan's (2015) studies. Six items extracted from Mikander’s
(2010) research measured job satisfaction. Finally, task and contextual performance were
measured using eleven items developed by Omokorede and Olufunke (2017).
As Hinkin (1998a) recommended, the authors conducted a pilot study by collecting
responses from 40 employees to ensure that the adopted instrument is reliable and valid. The
primary results indicated the internal consistency of the constructs and showed values in the
range of .79 to .91 and adequately complied with Hair et al.'s (2012) minimum suggested value
of .70.
Data Analysis and Results
The researcher used the SEM technique to analyze the correlation between rewards, motivation,
job satisfaction, and employees’ job performance. The researchers used SPSS v.23 and Amos
v. 23 to conduct the structural and empirical analyses. It has the strength to create a latent
structure hierarchy and eliminate the biases caused by measuring errors (Prajogo & Cooper,
2010). The researchers tested the sample size appropriateness through the Kaiser-Meyer-Olkin
test, which showed .83. This value fulfills the minimum requirement of .6 proposed by Kaiser
and Rice (1974). The multi-collinearity factor was analyzed through the variance inflation
factor (VIF), showing a value of 3.01. This value fulfills the requirement of Hair et al. (2010)
where the value of less than 4 indicates the absence of multi-collinearity. As per Podsakoff,
MacKenzie, and Podsakoff (2012), common method bias (CMB) affects the results when a
single factor accounts for more than 50% of the overall variance. The authors performed
Harman’s single factor test to analyze CMB. The result indicated a value of 36.44% which is
sufficiently below the threshold value of 50% indicating the non-existent data of CMB.
Assessment of the Measurement and Structural Model
The researchers performed the confirmatory factor analysis (CFA) to examine the measurement
model. According to Hinkin (1998a), CFA confirms the accuracy of the measurement process
and its uni-dimensionality. The consistency of the measures was assessed via Cronbach's alpha
and indicated a value of .89. This met the required value of .80 suggested by Peterson (1994)
and indicated adequate reliability. The researcher tested cogency by employing the convergent
and discriminant validity tests. Awang (2012) and Hair et al. (2010) explained that convergent
validity could be evaluated by factor loading. According to Awang (2012), the ideal loading for
already established items is above .60. Moreover, according to Molina, Montes, and Moreno
(2007), for all constructs, the lowest value of the extracted average variance explained (AVE)
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should be greater than .50. The convergent validity result indicated loading items higher than
.60 and AVE values higher than .50 for all constructs. Table 2 displays the description of
loading products along with AVE values and the composite reliability of the constructs. The
discriminant validity was assessed as guided by the criteria of Fornell and Larcker (1981) and
Hair et al. (2010).
Table 2
Instrument Reliability and Validity
Variable
Intrinsic Reward
Extrinsic Reward
Reward
Intrinsic Motivation
Extrinsic Motivation
Motivation
Job Satisfaction
Task Performance
Contextual Performance
Performance
Job Performance
Number of Items
4
4
4
5
4
5
5
5
5
Factor Loading
.85‒.91
.78‒.89
.77‒.82
.62‒.77
.69‒.83
.73‒.95
.71‒.92
.69‒.92
.71‒.89
5
.69‒.87
Composite Reliability
.87
.79
.81
.79
.77
.87
.81
.88
.91
.88
AVEb
.69
.70
.71
.69
.77
.67
.78
.68
.72
.78
Note. a: The value of composite reliability should be ≥ .70 (Molina, Montes, & Moreno, 2007)
b: Average variance extracted (AVE) value should be ≥ .50 (Molina, Montes, & Moreno, 2007)
Table 3
Discriminant Validity Analysis
Variable
Reward
Reward
.83
Motivation
Job Satisfaction
Motivation
.52
.83
Job Satisfaction
.60
.58
.82
Job Performance
.66
.60
.58
Job Performance
.82
Note. * Bold and italic values are AVE square root values for each construct
According to Kaynak (2003), seven indicators determine the fit of the measuring model,
namely chi-square to a degree of freedom (x2/df), the goodness of fit index (GFI), normative fit
index (NFI), adjusted goodness of fit index (AGFI) root mean square error of approximation
(RMSEA) comparative fit index (CFI), and standardized root mean squared residual (SRMR).
The researcher also incorporated the Tucker-Lewis index (TLI) to assure the assessment and
performance of the structural model.
The findings showed that, for the measuring model, the x2/df value was 1.17, which fulfills
the requirement of less than three (Bagozzi & Yi, 1988). The RMSEA value was .03, which is
below the maximum value of .08 suggested by Browne and Cudeck (1992). The SRMR value
was .05, meeting the .1 cut-off criterion suggested by Hu and Bentler (1998). Moreover, the
values of GFI AGFI, CFI, NFI, and TLI are also above the ideal value of .9 suggested by
Bagozzi and Yi (1988), Bentler and Bonett (1980), and Bollen (1986). The structural model
analysis indicated an x2/df value of 1.18. The RMSEA value was .04, and the SRMR value was
.041, which fully complies with the maximum values of .08 and .1 suggested by Browne and
Cudeck (1992) and Hu and Bentler (1998), respectively. Finally, the values of NFI CFI, TLI,
AGFI, and GFI were also above the ideal value of .9 recommended by Bagozzi and Yi (1988)
and Bentler and Bonett (1980). Taking these findings into account, it can be assumed that both
the measurement and the structural models align well with the data. Table 4 gives details of the
measurement and structural models.
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Table 4
Analysis of Measurement and Structural Model
Measures of Fit
CMIN/DFa
NFIb
GFIb
AGFIb
CFIb
TLIb
RMSEAc
Recommended value
≤ 3¹
≥ .9²
≥ .9²
≥ .9²
≥ .9²
≥ .9²
≤ .08³
Measurement Model
1.17
.91
.91
.92
.91
.91
.03
Structural Model
1.18
.92
.92
.92
.92
.93
.04
Note. a (Bagozzi& Yi, 1988); b (Bentler & Bonett, 1980; McDonald & Marsh, 1990); c (Browne & Cudeck, 1992)
d (L. Hu and Bentler, 1998)
SRMRd
≤ .084
.05
.04
Testing the Hypotheses
As presented in Table 5, this study indicated that motivation had a significant positive impact
on employee job performance, β = .29, p = .01, and led to the acceptance of H1, motivation
positively impacts employee job performance. The path analysis also pointed out a significant
positive impact of rewards on workers’ job performance β = .23, p = .01. Hence, H2, rewards
positively impact employees’ job performance, is also accepted. The examination of the
relationship between rewards and job satisfaction also specified a positive result β = .29, p =
.005. Hence, the H3, rewards positively impact employees’ job satisfaction, is accepted.
Similarly, the testing motivation and job satisfaction also presented significant positive results,
β = .26, p = .02. Therefore, the H4, motivation positively impact employeeS’ job satisfaction,
is also accepted. Following this, the authors studied the effect of job satisfaction on employee
job performance. The path analysis presented β = .29, p = .003. This significant finding directed
the acceptance of H5, job satisfaction positively impact employee job performance (see Figure
2).
Figure 2. Structural model
412
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International Journal of Organizational Leadership 10(2021)
Finally, the authors examined the mediating role of job satisfaction. Firstly, job satisfaction
was taken as a mediating variable between rewards and employee job performance. The
inclusion of job satisfaction reduced the direct effect of rewards on job performance β = .23 to
.21. This value is declined since a share of the effect has been transmitted through job
satisfaction. However, since the result is still significant with a p-value of .03, the researchers
concluded the partial mediation of job satisfaction on the correlation between reward and
employee job performance, and H6 is accepted. Similarly, job satisfaction was taken as a
mediating variable between motivation and job performance, and it also indicated a reduced β
= .26 to .24. with a p-value from .02 to .03. This significant value indicates that job satisfaction
partially arbitrates the relationship between motivation and job performance; hence, H7 is also
accepted. Table 5 presents the results of hypothesis testing.
Table 5
Examining the Hypotheses
Hypothesis
H1
H1a
H1b
H1c
H1d
H1e
H1f
H1g
H1h
H2
H2a
H2b
H2c
H2d
H2e
H2f
H2g
H2h
H3
H3a
H3b
H4
Constructs
Estimate
Critical ratio
p-Value
Decision
Mot. → Emp. Job Perf.
.29
2.94
.012*
Accepted
Mot. → Task Perf.
.27
2.88
.023*
Accepted
Mot. → Cont. Perf.
.22
2.79
.026*
Accepted
Ext. Mot. → Emp. Job Perf.
.21
1.99
.038
Accepted
Ext. Mot. → Task Perf.
.27
2.78
.019
Accepted
Ext. Mot. → Cont. Perf.
.10
1.00
.512
Rejected
Int. Mot. → Emp. Job Perf.
.22
2.68
.027
Accepted
Int. Mot. → Task Perf.
.18
1.99
.041
Accepted
Int. Mot. → Cont. Perf.
.11
1.01
.502
Rejected
Rew → Emp. Job Perf.
.23
2.91
.019*
Accepted
Rew → Task Perf.
.31
3.13
.006
Rew → Cont. Perf.
.26
2.63
.029*
Accepted
Ext. Rew. → Emp. Job Perf.
.21
2.13
.041*
Accepted
*
Accepted
**
Accepted
Ext. Rew. → Task Perf.
.22
2.28
.036
Ext. Rew. → Cont. Perf.
.20
2.11
.039*
Accepted
Int. Rew. → Emp. Job Perf.
.20
2.61
.039*
Accepted
Int. Rew. → Task Perf.
.29
3.00
.008
Int. Rew. → Cont. Perf.
.26
2.94
.017*
Accepted
Rew. → Job Sat.
.29
3.00
.005
Accepted
Ext. Rew. → Job Sat.
.27
2.97
.009
Accepted
Int. Rew. → Job Sat.
.25
2.45
.034
Accepted
Mot. → Job Sat.
.26
2.75
.021
Accepted
H4a
H4b
H5
H5a
H5b
Ext. Mot. → Job Sat.
.22
2.31
.039
Accepted
Int. Mot. → Job Sat.
.19
2.00
.047
Accepted
Job Sat. → Emp. Job Perf.
.29
3.00
.003
Accepted
Job Sat. → Task Perf.
.26
2.27
.012
Accepted
Job Sat. → Cont. Perf.
.20
2.22
.034
Accepted
H6
Rew. → Job Sat.
.21
2.21
.031
Rew. → Emp. Perf.
.20
2.27
.026
Job Sat. → Emp. Perf.
.24
2.32
.037
Mot. → Job. Sat.
.24
2.54
.035
Mot. → Emp. Perf.
.55
2.55
.027
Job. Sat. → Emp. Perf.
.53
2.45
.029
H7
**
Accepted
Accepted
Accepted
Note. *p ≤ .05; **p ≤ .01; Mot= Motivation; Emp. Per.= Employees Performance; Task Perf.=Task Performance; Cont. Perf.= Contextual
Performance; Rew. = Reward; Int. Rew. = Intrinsic reward; Ext. Rew. = Extrinsic Reward.
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Discussion
This research examined the role of motivation and reward in employee job satisfaction, leading
to their job performance. As per the structural analysis, motivation has a significant positive
impact on employee job performance. This means that motivation is one of the main sources
for enhancing employees’ efficiency and productivity and enhancing individual and
organizational capacity to achieve desirable goals. This finding is consistent with Riyanto,
Sutrisno, and Ali’s (2017) study, which found a similar impact of motivation on employees’
commitment levels and productivity. Motivation helps an employee in self-development and
reaching its personal goals, which ultimately facilitate the organization to achieve its short and
long-term goals. Thus, managers must motivate their employees and take it as a major
orientation for employees’ effective performance.
The path analysis also pointed out a significant positive impact of rewards on workers’ job
performance. Rewards play a critical role in enhancing workers’ morale to put maximum effort
into the best results and their firm's growth. This finding supports Martono, Khoiruddin, and
Wulansari's (2018) conclusion that rewards play an essential resource in any organization’s
employee output. Management uses incentives to inspire their workers for their goal
achievement. Also, effectively designing incentives programs can attract new talent for
organizations and motivate current employees to meet high work standards with more
efficiency. Desirable behaviors from the employees are required to attain their basic goals,
which rely on how HR management of an organization has designed rewards and incentives
policies to promote and recognize high performers at the workplace.
The examination of the relationship between rewards and job satisfaction also specified a
considerable positive. This confirms the findings of Danish and Usman (2010) but contradicts
Mahmood et al.'s (2014) results. Similarly, testing motivation and job satisfaction also
presented significant positive results. This means that if firms want to enhance the satisfaction
level of their employees, motivation and reward can play a key role in this regard. Moreover,
the sampled firms are adequately benefiting from this approach.
Following this, the authors studied the effect of job satisfaction on employee job
performance which presented significant positive results. This significant result is that a
satisfied employee performs better than the non-satisfied one. This also means that the
management of the sampled firms are taking adequate measures to strengthen the satisfaction
level of their employees so that they perform their tasks with great zeal to deliver their
maximum performance. This finding relates to the study of Danish and Usman (2010) and
Mahmood et al. (2020) that a satisfied employee tends to perform better than the opposite one.
To examine these variables more comprehensively, the authors performed a dimensional
analysis. Each dimension of motivation and reward was examined with each dimension of the
job performance. The dimensional analysis indicated a positive impact of all studied dimensions
given in Table 5, except the intrinsic and extrinsic motivation effect on the contextual
performance of employees. Although the analysis indicated a positive impact, the p-values
exceed the acceptable range. This means that the management of the studied organizations
needs to intrinsically and extrinsically motivate their employees to maximize their performance.
This study shows that motivation and rewards are among the most effective tools that managers
can use to increase their employees’ morale and help them make their organizational culture
healthier and productive.
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International Journal of Organizational Leadership 10(2021)
415
Implications
The results of the current study can be quite beneficial for organizational managers and
supervisors. The empirical results prove that motivation and a fair reward system (i.e., intrinsic
and extrinsic) play a favorable role in amplifying the employees’ performance at the workplace.
The managers need to ensure that people working under their supervision are happy and
satisfied. Setting objectives is not just enough; telling and leading them to drive their desirable
behaviors that promote their high performance is essential. Motivation can play a critical role
in augmenting the productivity of employees. Managers can achieve this by giving small favors,
incentives, bonuses, appreciation, or even a small word of praise. Organizations should
implement a variety of rewards and recognition programs and motivational tactics to make their
employees motivated and dedicated so they can achieve their desired goals with more efficiency
and effectiveness.
The results also showed that financial rewards (extrinsic) are responsible for satisfaction at
the workplace. The non-monetary (intrinsic) incentives are also a major source of job
satisfaction and employees’ improved performance. Therefore, the HR department needs to
make sure that employees are rewarded in fiscal compensations like appraisals and bonuses and
make sure employees’ intrinsic needs are also kept in mind. A fiscal reward might not keep
every employee motivated and directed to the organizational vision. Therefore, it is the major
responsibility of management to motivate and reward all employees according to their needs so
that their satisfaction can be ensured, which eventually will lead towards the attainment of
organizational goals.
Limitations
The study had its limitations as well. The fairly low number of respondents is one of the study's
major limitations. Even though the results found are significant and considerable, but the
moderate size of the sample is expected to lack the component of generalizability. Along with
that, due to lack of time and resources, the authors focused only on three main cities of Pakistan,
i.e., Islamabad, Lahore, and Karachi, which are not providing the complete representation of
the whole region. Therefore, it is recommended that future research broaden its scope by
increasing its sample size and considering other regions. Considering the important role of the
demographic aspect, it is suggested to take employee experience and his position as the control
variable and investigate whether these variables significantly impact the studied variables.
Another limitation of this research is that only two perspectives (i.e., motivation and rewards
system) are considered to see how they can bring desirable behaviors of the employees in terms
of job satisfaction and job performance. Researchers in the future should also consider other
factors, such as organizational culture, management styles, etc., that can affect employee
performance. In addition, the mediatory effect of gender roles can also shift the research results
while studying the effect of extrinsic and intrinsic motivation on employees’ performance.
The responses of top management were far less; taking their more opinions can create better
future insights to understand this phenomenon of research. The covered organizations were
mainly part of the services and manufacturing industry located in Pakistan; thus, it should be
borne in mind that the results may not be generalized to all the industries of Pakistan. Therefore,
if a similar study is carried out in the future, it is suggested that mixed business sectors be
examined to better understand the given research model.
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Kalpina Kumari et al.
Conclusion
This paper’s primary focus is to study the effects of motivation and intrinsic and extrinsic
rewards on employees’ job satisfaction and job performance by building its arguments on selfdetermination theory. The researchers used a non-probability convenience sampling method for
data collection and the SEM technique for data analysis. This research showed a significant
favorable impact of motivation and rewards on employee performance. Additionally, it has also
been proved that where financial rewards play the most important role in motivating employees,
at the same time, intrinsic motivation has a significant effect on employee’s productivity.
Therefore, the findings of the research support those informal recognitions such as (well done,
excellent performance, thank you) also motivate the employees in improving their performance.
Likewise, if the managers are inclined to listen and understand their employees’ different
perspectives and preferences, they will inevitably feel inner satisfaction at the workplace.
Correspondingly, when employees feel satisfied with their employment, they will eventually
continue to give excellent performance at the workplace.
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Acknowledgements
The authors are thankful to all the individuals who directly or indirectly contributed to this
manuscript's completion.
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