The Effects of Motivation and Job Satisfaction on Employee Retention. A Case Study on Zara

Case Study , 2020 , 65 Pages , Grade: A

Leadership and Human Resources - Employee Motivation, Employee Satisfaction

Employee retention is one of the biggest challenges that human resource management of organisations is currently faced with. The uncertainty in the changed economic conditions, diversity in workplace and increased competition has forced majority of the organisations to hold on their top performers at any cost that they have to pay. It is very crucial task for recruiters in organisations to hire such professionals that have right skills and expertise to serve for the company. Thus, the focus of organisation has shifted from numbers to quality and from recruitment to retention. Based on the research topic, the researcher has gathered primary data regarding employee motivation and satisfaction at Zara and its effect on employee retention. The study aimed to assess whether there exist a relationship between employee motivation, satisfaction and employee retention.

The literature review has described major factors that influence job satisfaction while the levels of employee job satisfaction were found through surveys at Zara. The literature also described the link between employee motivation and employee retention, in addition to employee satisfaction and employee retention. Survey and interview questionnaires were designed to gather primary data. The interviews revealed what employee motivation and satisfaction measures were adopted by Zara. The interviews also found the importance of employee retention from manager’s point of view. The study concluded that employee motivation and satisfaction has effect on employee retention. It was also found that organisation found significant to make their employee feel happy, motivated and satisfied so that they can give their best to achieve organisational goals. Organisational productivity is dependent on employee’s productivity, and employee’s productivity can be increased by making them best satisfied with their jobs. For such reasons, organisations provide their employees with flexible work culture, benefits, welfare services, job promotion opportunities and other measures that keep them motivated and satisfied with their jobs. By doing so, the ultimate goal of organisation in retaining its best talent is achieved.

TABLE OF CONTENTS

ACKNOWLEDGEMENT

LIST OF TABLES

CHAPTER 1: INTRODUCTION / AIMS OF THE RESEARCH
Introduction
Background of Study
Industry Background
Research Aim and Objectives
Primary Objectives
Theoretical Objectives
Empirical Objectives
Research Questions
Purpose of Study
Significance of Study
Outline of Study

CHAPTER 2: LITERATURE REVIEW
Introduction
Employee Retention
Factors Influencing Employee Job Satisfaction
Psychological Factors and Job Satisfaction
Physical Factors and Job Satisfaction
Environmental Factors and Job Satisfaction
Employee Motivation and Employee Retention
Employee Satisfaction and Employee Retention
Hypotheses Development

CHAPTER 3: RESEARCH METHODOLOGY
Introduction
Research Design
Research Philosophy
Research Approach
Research Instruments
Data Collection method
Primary Data
Secondary Data
Population and the Sample
Sampling Technique
Procedure for Data Collection
Data Analysis
Reliability and Validity
Research Ethics
Limitations

CHAPTER 4: DATA ANALYSIS
Introduction
Quantitative Findings
Correlation of Employee Satisfaction and Employee Retention
Correlation of Employee Motivation and Employee Retention
Qualitative Findings
Importance of Employee Retention
Employee Motivation and Employee Satisfaction
Measures to Motivate and Satisfy Employee at Zara
Employee Motivation, Satisfaction and Turnover

CHAPTER 5: DISCUSSION
Introduction
Discussion

CHAPTER 6: CONCLUSION AND RECOMMENDATIONS
Conclusion
Recommendations

CHAPTER 7: CRITICAL EVALUATION
Introduction
Critical Evaluation
References

Appendices
Appendix A - Informed Consent Form
Appendix B – Survey Questionnaire
Appendix C – Interview Questionnaire
Appendix D – Reflection

ACKNOWLEDGEMENT

I would take this opportunity to thank my research supervisor, family and friends for their support and guidance without which this research would not have been possible.

LIST OF TABLES

Table 1 - Working Period

Table 2 - Relationship between Employee Job Satisfaction and Retention

Table 3 - Relationship between Employee Motivation and Retention

CHAPTER 1: INTRODUCTION / AIMS OF THE RESEARCH

Introduction

The paper aims at exploring the “Effects of Motivation and Job Satisfaction on Employee Retention”. Furthermore, the paper analyses the research methodology, which was used to conduct the research and obtain results. The literature review of the study is also highlighted in the paper, followed by online articles, researches, extensive studies and relevant books. This chapter will present the background of the study, research aims and objectives, significance of the study in addition to overall organisation of the study.

Background of Study

Employee retention is the amount of measures taken by the managers and organisation to encourage employees to remain in the organisation for a maximum time period as possible (Griffeth & Hom, 2001). Motivation is the behaviour or attitude that drives one to complete a task. Organisations at times use incentives or bonuses to motivate staff to meet a deadline or perform a task that the staff would otherwise have resisted completing. Emery and Oertel (2006, p. 15) stated that employee motivation is comprised of the employee’s valences, expectancy, and instrumentality per task. Similarly, Venkatesh (2000, p. 342) considered internal and external control, intrinsic motivation, and level of computer anxiety as motivators. Both authors relate employee motivation to be based on intrinsic and extrinsic behavioural and emotional factors. Motivation basically referred to such conditions that impact arousal, maintenance and direction of individual's behaviour relevant in a specific work setting. The motivational force is stimulated as an outcome of needs that require being satisfied (Bartlett, 2009, p. 1902). Motivation tends to emphasise result oriented management in organisations with the help of setting smart objectives as well as efficient communication system within organisation (Johnson & Yang, 2010, p. 227).

Job satisfaction is a general attitude of an employee towards his organisation and current job which consists of feelings, thoughts, and beliefs regarding the job (Khan, Asghar & Zaheer, 2014, p. 375), while employee retention includes different steps that are taken to retain an employee who wishes to leave the organisation (Frey, Bayón & Totzek, 2013, p. 2). Employee satisfaction is considered as a reliable predictor of employee retention. This is why when managers engage employees in such practices which support good working relationships, satisfaction of employee improves as workers believe that organisation is utilising their skills and appreciating their commitment and services (Humayoun, 2011, p. 7316). As a consequence, higher levels of job satisfaction results in high levels of employee retention.

The phenomenon of job satisfaction is mostly studies in organisational behaviour. Most people in organisation believe that job satisfaction is closely linked to performance and various other important work behaviours that include turnover, absenteeism and organisational citizenship behaviour (Griffin & Moorhead, 2011, p. 21). Findings from 2008 survey of HR Council of employees working in non-profit sector indicated that there is some association between employee retention and job satisfaction: whether employees are currently searching for a job whether employees expect to resign from their jobs, in addition to their commitment to their organisation. The study found that nearly forty percent of employees who expect to resign from their jobs within twelve months were less satisfied with their jobs (The HR Counci, 2009, p.1).

Industry Background

The retail sector of UK forms an important part of overall UK economy as it contributes 16% of overall GDP. The sector employed around 4.3 million people in the year 2012, which represented 15.9% of total employment in Great Britain (Nickson et al., 2012, p. 66). The retail sector is one of the largest industrial groups in UK pertaining to the proportion and total number of employees. The retail properties in UK controls institutional investment in the region that accounts for over half of the value of capital of direct property assets held by property companies and other institutions. The UK retail industry is influential and enormous as it is operated through many single shop capitalist businesses, virtual shops and mobile businesses (Higón & Vasilakos, 2011, p. 645). Retailing is considered as a local affair with local demands. However, some retailers are increasingly global and certainly international retail brands. The UK retail sector is also subjected to a wide number of pressures such as changing in customer preferences and shopping habits in addition to the current economic downturn that reduced consumer spending (Burt, Sparks & Teller, 2010, pp. 1-2). Conclusively, retail sector is the UK'S largest private employer that is providing jobs to more than three million people. Between 2013-2020, the workforce in retail sector is projected to increase by 54,800 (Sena, 2011, p. 2662). The majority of growth is supposed to increase to be in managerial positions. However, demand for higher skilled managers are because of customer trends, technology and more refined supply chain management (Prospects.ac.uk, 2015).

Research Aim and Objectives

The aims and objectives of study provide researcher with a clear picture of what particular issue needs to be investigated in the research. Since the purpose of this study revolves around investigating the effects of employee motivation and satisfaction on employee retention, the researcher has designed some primary objectives, theoretical objectives and empirical objectives which are given below:

Primary Objectives

- To identify the correlation between motivation, job satisfaction and employee retention at Zara.

Theoretical Objectives

- To carry out a literature review on the correlation between motivation, job satisfaction and employee retention in Zara.

Empirical Objectives

- Evaluate employee job satisfaction levels
- Identify factors influencing employee job satisfaction
- Evaluate employee expectations for job satisfaction
- Propose a strategy for employee retention

Research Questions

A research question provides the researcher with an answerable inquiry into a particular issue or concern. It provides an initial framework in the study that guides what is going to be studied in the research. With respect to this study, the specific research question is “What are the effects of motivation and job satisfaction on employee retention at Zara?” This research question is answered with the help of review of background studies in addition to primary research of this study.

Purpose of Study

Considerable changes have occurred in work environment in recent times that have affected the nature and scope of work. In the light of these changes, Kunz and Linder (2012, pp. 591-621) suggested that approaches to management have also changed. One of the factors of management that has remained constant is need of motivating workforce in order to achieve the organisational goals. However, a variation based on changes in nature and scope arises in matching the organisational goals with employees’ individual goals so that motivation can be increased to highest possible levels.

It was stated that enhancing worker's motivation and satisfaction has gained considerable attention in both public and private sector (O'Neil & Drillings, 2012, p. 36). Significant attention required to be placed in the efforts of motivating employees and to identify the reasons and causes that lead to optimal performance of employees. Previous studies were focused on motivation and performance in other sectors such as retail sector, healthcare sector and others (Weibel, Rost & Osterloh, 2010; Brewer, 2010; Cox & Patrick, 2012; Lambrou, Kontodimopoulos & Niakas, 2010). On the other hand, there have been less studies that focuses on the relationship between employee motivation, employee satisfaction and employee retention. To fill this gap, the purpose of current study is to evaluate what effects employee motivation and satisfaction have on employee retention specifically in retail sector. The study has selected an organisation "Zara" who operates in UK retail sector. The research revolved around single organisation so that the research topic can be thoroughly investigated.

Significance of Study

This research will be of significant importance to diverse groups of people such as researcher, future researchers and most importantly to the management of Zara. With regards to the researcher, the study will be of considerable importance as the researcher hopes to acquire research skills that can be applied to conduct research in other areas as well. Research skills including development of questionnaires, interacting and meeting with new people and attain require information for the study, as well as, analysing data were developed by researcher. On the other hand, this study will also assist the management of Zara to evaluate the effectiveness of their overall level of employee motivation and satisfaction in retaining them, which ultimately affects the overall performance of organisation. The research will help the organisation to view the effectiveness of its retention strategies in increasing employees' performance. This will come up with more enhanced techniques of motivation that will lead to the improved performance of employees.

This study will also benefit future researchers who will conduct the study about the similar topic of motivation, satisfaction and employee retention. Future researchers will get to know about the employee satisfaction levels, factors that affect employee job satisfaction and to evaluate the expectations of employees for job satisfaction. If future researchers intend to focus on retail industry, then this study will provide them with more meaningful insights regarding the research topic in this sector.

Outline of Study

The aim of study is to conduct an analysis of effects of motivation and job satisfaction on employee retention at one of the biggest retailers in UK, Zara. The study will be divided into seven chapters. First chapter will include the research introduction by explaining the aims and objectives, research questions, problem statement and significance in detail. Second chapter will comprehensively guide on the key concepts and terms. Previous researches and findings will also be discussed in this chapter. Third chapter will suggest the most feasible research design of study after directing complete understanding of different research approaches. It will also shed light on research philosophy and strategy, data collection and analysis methods. Fourth chapter will present and analyse both qualitative and quantitative findings from sample population which will be interpreted in light of previous studies. Fifth chapter will discuss the findings of this study in the light of research aims and objectives. Sixth chapter will conclude the study and will recommend various strategies and methods to motivate the employees using rewarding system.

Finally, seventh chapter will provide critical evaluation of researcher's own work and will provide areas for further research.

CHAPTER 2: LITERATURE REVIEW

Introduction

This section will emphasise on the argument and analysis of various authors, relating to the purpose of the study. The studies which will be emphasised in the paper, carries a noteworthy impact in providing theoretical concepts, research approaches and key themes to strengthen this research.

Employee Retention

Employee retention (ER) is a wide ranging phenomenon which has been studied by many authors (Fang, 2014; Yam & Raybould, 2011). Many studies based on different variables explain the concepts of employee retention (Mann & Gupta, 2014). Chiboiwa et al. (2010, p. 2103) suggest age, tenure, job satisfaction, job content are those factors which are negatively related to employee turnover. It is the ability of an organisation to keep its employees happy and satisfied with their job so that they have no plans to leave. According to Garboua et al. (2007, p. 252) if workers are dissatisfied the organisation will typically experience greater job turnover. Hiring top quality employee in a very important task for the managers as well as training them and retaining them.

Once employees are trained, they receive a tendency to move to other organisations for better prospects. Therefore, to retain employees organisations invest efforts to satisfy them by providing a lucrative salary, comfortable timings and ambience, growth prospects and other factors (Garboua et al. (2007, p. 254). Managers need to appreciate the workforce members every single day to keep them on board. There are number of factors that contribute to the forthcoming wave of turnover. Replacing staff is an expensive process with high costs associated with recruitment and training (Singh & Dixit, 2011, p. 441). According to Brown (2006, p. 61) employees prefer the environment where their wages are equivalent to the marginal revenue to the products and optimism for their future employment relationship.

Factors Influencing Employee Job Satisfaction

In organisations, job satisfaction is the degree to which workers like their jobs and its components (Wright & Bonett, 2007, p. 141). The area of job satisfaction is one of the most widely research topics in the organisational and industrial literature (Tella, Ayeni & Popoola, 2007; Klassen & Chiu, 2010). Currently, a review of business and psychology databases consisted of over ten thousand publications on the area of job satisfaction. Even though this increasing attention in job satisfaction is without any doubt beneficial to the field of organisational and industrial psychology, the amount and degree of research has become devastating to both practitioners and researchers (Choo & Bowley, 2007; Aziri, 2011). .

An overall job satisfaction of employee is an outcome of a combination of factors, out of which financial compensation is the only one of those factors (Lee & Cummings, 2008, p. 768). The role of management in enhancing job satisfaction of employees is to ensure that work environment is positive, self-confidence is high and workers have the resources they require to achieve the tasks that they have been assigned. While there have been many factors that influence employee satisfaction (Wright & Bonett, 2007; Kafetsios & Zampetakis, 2008; Tsai et al., 2007), but six main factors influencing job satisfaction is clustered as physical, psychological and environmental factors as below:

Psychological Factors and Job Satisfaction

Although many psychological factors tend to affect job satisfaction (Wright & Bonett, 2007; Ahsan, Abdullah & Alam, 2009), but out of those factors, the major factors included nature of job, safety and health, job promotion and job security. Each factor is discussed below.

- Health and Safety: The management of healthy and safe working environment is considered one of the significant environmental challenges that are faced by organisations (Christian, 2009, p. 1103). Good health and safety brings more benefits that are healthy workers are more productive and can produce at a higher quality. According to Maslow’s’ Hierarchy, physiological needs are the first stage in job satisfaction where as long are the work place is healthy and safe, it will create a pleasant and secure impression in employee’s mind towards work (Grant, Christianson & Price, 2007, p. 51).

- Nature of Job: In many organisations, the major source of employee satisfaction is certainly job satisfaction. Researchers such as Judge and Klinger (2008) have dedicated this factor as major job characteristic and also indicated a relationship with working place, provided evidence that the very content of job work in addition to autonomy by its implementation represented two major motivation factors that were correlated with labour (p. 393). On the other hand, the design of job and the nature of work organisation can significantly effect on the overall levels of staff job satisfaction plus the level of organisational performance. Still, an attempt to understand the effect of nature of job on job satisfaction is not always easy (Bakker & Demerouti, 2007, p. 310). The content theories of motivation such as Maslow's hierarchy of need and Herzberg's two -factor theory assumed a direct association between job satisfaction, motivation and performance at work (Udechukwu, 2009, p. 69). However, expectancy theories such as that of Porter and Lawler suggested a more complex viewpoint of motivation, and argued that job satisfaction does not assure increased performance at work (Latham, 2011, p. 14).

- Job Security: Job security is the assurance that a particular employee will have their job in long term due to the low probability of losing it potentially (Böckerman, Ilmakunnas & Johansson, 2011, p. 547). Positive job security nature also adds more value to the image and the reputation of an organisation as job offered has the guaranteed security and reliable. Also, job security has a great influence in increasing job satisfaction of its employees where once the employee is confident about not losing the job, it will create no mental stress where the employee has its own freedom to fully concentrate on the work they perform (Zeytinoglu et al., 2012, p. 2809). A study by Nikolaou, Theodossiou & Vasileiou (2005, p.1) investigated the relationship between job security and job satisfaction in European countries. The study has taken into account the endogenous nature of the relationship between job security and job satisfaction after controlling various personal and economic characteristics. The study showed that, yet after controlling for endogeneity, employees with low probability of job termination gain higher value from work as compared to the employees with insecure jobs.

- Job promotion: Organisations provide promotion to their employees considering experience, service and some companies reward promotions through measuring employee’s talents and capabilities (Mangi et al., 2011, p. 83). Company’s give their priority to current employees to apply vacancy is arises. In that situation employees can achieve their individual goals obtaining promotion. Through such a situation, increases employee’s satisfaction and they more contribute to the productivity. A study by Mustapha and Zakaria (2013, p. 2) determined the influence of promotion opportunity on employees job satisfaction among lecturers in four public universities in Malaysia. The researchers collected data from 320 lecturers using systematic random sampling by using self-administered questionnaires. The results found that there was a significant positive relationship between job satisfaction and promotion opportunities. The study concluded that companies must consider promotion opportunity as important variable in promoting satisfaction among employees that can retain their best talent (Mustapha & Zakaria, 2013, p. 2).

Physical Factors and Job Satisfaction

This section will discuss the major physical factors that affect job satisfaction.

- Payment: Money rewards are multi-sided and multi-complex factor of job satisfaction. In organisations, money does not only offer employee an opportunity to fulfil his primary basic needs, but also fosters fulfilment of higher level of needs. Tan and Waheed (2011, p. 1) also argued that those employees who make more money are little more satisfied as compared to those who earn less money. Employees in organisation more likely perceive their level of salary as a reflection of that how management measure their contribution to the activity of company. Although money can serve as basis to job satisfaction (Smaglik et al., 2014, p. 267), but study conducted by Harvard Business Review (2013, p.1) showed the negative association between money and job satisfaction. The study found correlation value r=0.14 which indicated that there was less than 2 percent overlap between job satisfaction levels and pay levels. Additionally, the relationship between pay satisfaction and pay was only slightly higher (r=0.22) which indicated that satisfaction of people with their pay level is mostly independent of their actual salary.

- Working Groups: It was stated that direct affect on employee job satisfaction makes the very nature of work groups (Moreland, Levine & Wingert, 2013, p. 12). Working groups in organisations serve as a source of support, advice, comfort and enjoyment to a single worker. Tyler and Blader (2013, p. 41) stated that an effective working group nurture to gain greater pleasure and joy from job. A study by Van Dick, van Knippenberg, Kerschreiter, Hertel & Wieseke (2008) researched on the interactive effects of work groups and organisational identification on job satisfaction and extra role behaviour. The study found that in case of positive connection of identifications (organisational identification and work groups), they were mainly strongly linked with employee job satisfaction and extra-role behaviour as compared to when only when one of the identifications was high (p. 388). However, Van Knippenberg & Schippers (2007) also stated that diversity of work groups might affect group performance and process positively as well as negatively (p. 515).

- Welfare Services: In organisations, welfare involves anything which is done for the improvement or comfort of employees which is provided over and above the basic pay. Kim et al. (2012, p. 99) stated that welfare assist in motivation and increasing morale of employees so that they can be retained for longer time period. Different organisations provide labour laws which include different facilities, amenities and services to provide their workers with improved health, social status, economic betterment and efficiency (Zhu, Yin, Liu & Lai, 2014, p. 29).

- Use of abilities and skills: Employees in organisation posses some skills and abilities which help them to achieve their job tasks in a better manner. The company should identify which skills and abilities are available in the employee and should give opportunities for improve them (Robbins & Judge, 2012, p. 48). On the other hand, actions by management team have direct impact of employee job satisfaction. Study conducted by Hicks and Britt (2010, p. 58) gathered feedback from radiologic technologists on their opinion regarding how management skills affected their job satisfaction, performance and employee communication. The research found the four major qualities of management: conflict management skills, staff communication, and ability to teach staff and perceived corrective action kills were related to employee satisfaction (Hicks & Britt, 2010, p. 59).

Environmental Factors and Job Satisfaction

Two key environmental factors which influence employee job satisfaction in organisations are organisational culture and management style, and working conditions.

- Working conditions: It is the significant factor that poses moderate impact on employee job satisfaction. If working conditions are good, employees can easily manage their jobs. However, if working conditions are inadequate, it would be problematic for workers to continue their work (Kumar, Dass & Topaloglu, 2014, p. 2). A study by Bakotić and Babić (2013, p. 206) empirically analysed the effect of working conditions on job satisfaction. The study showed that there was no statistically important variation in the overall job satisfaction between employees who work under difficult working condition and those who work in normal working conditions. The study also found that employees who worked in normal working conditions were more satisfied with working conditions as compared to other workers who worked under difficult working conditions. In case of employees who worked under complex working conditions, the working conditions were significant factor in overall job satisfaction (Bakotić & Babić, 2013, p. 206).

- Management style and culture: Organisational culture is the organisation’s pattern of beliefs, expectations, and values as in company and industry practices. A major organisational factor to which new employees must be socialised is the culture of the group they are joining (Voon et al., 2011; Schneider, Ehrhart & Macey, 2013). Voon, Lo, Ngui and Ayob (2011, p. 24) found that transactional and transformational leadership were directly related to job satisfaction of employees. Style of leadership is the key factor that helps to achieve goals of organisation. Similarly, Bogler (2001, p. 662) found that transformational leadership style of principles affected the job satisfaction of teachers both indirectly and directly through their occupation perceptions. Organisational culture also influences employee job satisfaction. Jaun and Kaur (2014, p. 1) argued that efficient human resource management and good work culture and environment does not only affect employee performance, but affects the growth and development of overall organisation.

Employee Motivation and Employee Retention

As stated by Griffin and Moorhead (2011, p. 36), the phenomenon of motivation is a complex set of internal and external forces which stimulate energy and desire in individuals to be frequently committed and interested to a job, subject or role, or to make an effort to achieve a particular goal. Similarly, the concept of motivation is referred to as something which puts an individual to action, as well as, enables him to carry out a course of action that has been already initiated (Parker, 2014, p. 662). The concept of motivation is referred to the way a person is passionate at work so as to strengthen his willingness and desire to utilise for power for the attainment of goals of organisation. It is something that shifts an individual into an act and maintains his devotion in the course of action (Stringer, Didham & Theivananthampillai, 2011, p. 162). The phenomenon of motivation is complex and is affected by individuals, ethnic, cultural, as well as, chronological factors.

Motivating and retaining employees are the key objectives of an organisation, as the costs associated with personnel recruiting and development is enormous. In literature, a lot has been stated regarding employee retention (Fernet, Austin & Vallerand, 2012; Yamamoto, 2011). However, the most general assumption about what motivate employees was centred on monetary aspects, still it was proven that it takes more than that (DelVecchio & Wagner, 2011, p. 5). Retention of employee includes different steps taken to retain those employees who wish to move on. According to Sandhya and Kumar (2011, p. 1778), employee motivation is the key factor which can help managers to improve worker and organisational performance. The study found that employee retention can be practiced well by motivating employees through open communication, reward and career development programs, recreation facilities and performance based bonus and gifts at some occasion (Sandhya & Kumar, 2011, p. 1778).

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• College: University of Edinburgh (College of Arts, Humanities and Social Sciences)
• Grade: A
• Author: Nashra Rafiq (Author)
• Publication Year: 2020
• Pages: 65
• Catalog Number: V1361182
• ISBN (PDF): 9783346884497
• ISBN (Book): 9783346884503
• Language: English
• Tags: employee satisfaction, employee retention, employee motivation, importance of employee retention, job satisfaction, employee engagement, motivation, employee satisfaction surveys, employee engagement and job satisfaction, employee retention meaning, factors that effect employees motivation, employee retention strategies, employee engagement and motivation, impact of low employee motivation levels at work, important of employee retention strategy, satisfaction