Remuneration as a Managers tool to Motivation

This dissertation is based on a concept of human resource management, which is an important aspect for the success of the firm. The research topic of this dissertation is ‘Investigate the impact of Remuneration to motivate employees in the Fast Food Industry: A Case Study of McDonald’s’.

Remuneration is one of the main tools to appraise the performances of the employees, which ultimately motivates them to work with zeal and enthusiasm. This topic is mainly focused that managers uses remuneration as a tool of motivation. Case study of McDonalds will help to evaluate the importance of remuneration as an important tool for managers to motivate employees.


Remuneration is directly or indirectly one of the mainsprings of the motivation in the society. A well defined compensation system leads to motivate the employees, which further leads to increase productivity (Chi and Han 2008). This research study mainly focuses on the relationship between remuneration and motivation. Yermack (2004) has asserted in his study that all the business organizations act like a profit maximization institution, so they put their efforts to improve performance of its employees by motivating them. This motivation ultimately helps the organizations to increase productivity level. Work motivation is interrelated with job satisfaction.

Money often is looked upon as a means of fulfilling the most basic needs of man. These needs are made available through the purchasing power provided by monetary income: remuneration and salary of individual (Stajkovic and Luthans 2003). According to different motivation theories, such as Maslow’s Need Hierarchy, Two factor theory given by Herzberg’s, McGregor’s theory X and theory Y, Achievement Theory, Taylor’s Motivational Theory, etc. Money is one of the main sources to persuade the behaviour of an individual towards his organization and work productivity (Wheeler 2008). Thus, it is necessary for the corporate executives or managers to be aware with the economical and social background of employees to offer good remunerations as per their talent and skills and motivate them to work. The general meaning of remuneration is the basic salary or pay of an employee, but in the broader sense, remuneration comprises salary, fringe benefits, compensation, bonus, commissions, employee stock option, etc. (Guedri and Hollandts 2008).

In the current business scenario, managing and motivating human resources has become a complicated task. In this highly changing and competitive environment, remuneration is one of the main tools for the manager to improve the productivity of the employees, to attract competent personnel, to retain present employees, to reduce the rate of absents and employee turnover, to manage job sequences, to strengthen union management relationships, to improve public image of the company, etc. (Perry, Mesch and Paarlberg 2006).

This research study would target the remuneration procedure in fast food industry of the United States of America, by using McDonalds, world’s number one fast food restaurant. Presently, the structure of fast food industry has become complicated and its success is mainly dependent upon the qualified and talented employees, who are able to understand the changing needs and requirements of the customers. Competitive pressure and environmental changes has increased the importance of motivational practices for managers to boost the performance of the employees. This dissertation will focus on the issue that how managers of McDonalds use remuneration practices to motivate the employees and creating competitive advantages in the industry. Additionally, this dissertation will also discuss the interrelationship between remuneration and motivation with the help of different motivation theories.

Research Aims and Objectives

During this research work, the researcher would examine the need and importance of motivation tools for the managers and how remuneration would help the managers to motivate employees in McDonalds. The main objectives, which are coming out of this research, are as follow:

? The foremost objective of this dissertation is to identify the impact of remuneration practices on the performance of the employees in the fast food industry.

? Second objective of this research study is to identify the relationship between remuneration and motivation, on the basis of different motivational theories.

? Next objective is to understand the remuneration practices and procedures used by managers in McDonalds to motivate the employees.

? Another objective of this research dissertation is to compare performances of employees in McDonalds with its rival companies to identify the importance of and advantages remuneration to motivate the employees.

? Additionally, suggesting different strategies and practices to compensate employees as per remuneration act is also one of the main objectives of this study.

Background Information

McDonalds is one of the biggest fast food family restaurants, which operates in more than 120 countries and serve more than 47 million customers in a day (McDonalds: About Company, 2010). It doles out some of the favourite foods all around the world like World Famous French Fries, Big Mac, Quarter Pounder, Chicken McNuggets and Egg McMuffin. Success of the firm is highly dependent upon its HRM practices and efforts put by its managers and employees. All the HR policies of the companies are defined very clearly for the benefit of all stakeholders. The main aim of the HRM department of the company is to offer best services to the customers by ensuring that the company has skilled, motivated and committed employees. Remuneration practices used by the firm are also very good and effective and based on various motivational theories.

Remuneration is not a new concept for the business organizations. In the corporate world, all the members from owner to lower level employees work for money. Not only in MNCs but also in small shops, everybody wants high remuneration and financial incentives to fulfil their basic needs, thus, it is necessary to work hard to improve the productivity of the employees and earn more money (Yermack 2004). Corporate world has become competitive, in this concern, top executive and managers uses management practices and motivational theories to enhance the skills and productivity of the employees and earn high money. Thus, fair remuneration practise are used by the managers. This creates a feeling of satisfaction among employees to fulfil their needs (Chi and Han 2008).

According to the assumptions of motivation, compensation and incentive is direct tool to motivate employees. Managers in McDonalds have taken a complete overview of this concept and motivate employees by offering good remuneration and performance incentives. Presently, companies are following the system of paying for performance. Qualification and experience are also important but work performance enables employees to get good remuneration (Perry, Mesch and Paarlberg 2006).

For example, if a marketing manager is highly qualified but he is not able to conduct a market research effectively and his working output is very low, company would not give a high remuneration and other financial incentives to him. On the other hand, if a sales executive has average qualification and he serve more number of customers by showing his abilities and maintaining good relations with them; he would be definitely promoted by the company and would get monetary rewards also (Wheeler 2008).

Thus, it is very clear that money matters for all the employees, whether they are at high position or belongs to middle and lower levels. Remuneration requires by all the employees to fulfil their basic needs and non-monetary and monetary rewards and compensation are also given by the firm to develop job satisfaction and control the rate of employee turnover (Guedri and Hollandts 2008). Thus, this research study would focus on McDonalds, which has effective HR and compensation policies to pay its employees and motivate them to put their best efforts to achieve the goals and objectives of the firm.

Literature Review

Motivation is a process to push employees towards some work in order to satisfy a need. Most of people work to reach some specified goals. It is the reason that motivation is goal-directed drive that causes to person to act. Mathis and Jackson (2008) defined that need, desire; want and drive all are similar to motivation. They described that understanding of motivation is important for organizations as reaction to compensation. Compensation and motivation are directly proportional to each other (Ajila and Abiola 2004). Performance of employees, rate of absenteeism and turnover are affected by motivation and remuneration and also influenced to motivation.

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Managers can use different motivational tools to motivate their employees and remuneration is one of main tools among all of them. Remuneration can be defined as the monetary motivation tool that influences the behaviour of employees towards work (Armstrong, Murlis and Group 2007). In the words of Perry, Mesch and Paarlberg (2006) each employee should receive a general compensation for their efforts, role and responsibilities followed by him in the company. Before deciding a form and amount of remuneration, several considerations are there such as general economic climate, specific business condition, cost-of living and worker qualification and productivity that a firm must consider (Carraher 2011). Different authors described about the relationship between remuneration and motivation. In order to support this relationship, Mathis and Jackson (2008) stated that remuneration is different from motivation and it is related with Herzberg’s hygiene factors. Remuneration includes several things such as bonuses, commission, salary, fringe benefits such as pensions, holiday entitlement.

The study of Chapman and Kelliher (2011) represent that employees motivation does not only come from decision mix (amount of pay) of an organization policy but also it comes from the understanding of individuals. The remuneration of an employee depends on several factors such as basic needs, psychological needs, social needs, performance of individual, productivity, profitability return, etc. (Khan, Farooq and Ullahb 2010). In favour of this, Kmiotek and Lewicka (2008) stated that effective motivation does not only involves proper implementation of remuneration policy but also involves some other motivators such as organization of work, HR development and training, performance management tools, performance appraisal, etc.

According to the HR experts, creation of effective reward system is necessary to motivate employees but there is a need of good and enthusiastic managers, who can drive people towards good performance. In order to create an effective motivation process, it is necessary that there should be an appropriate remuneration policy for employees (Kubr 2002). According to Ajila and Abiola (2004) there are two types of rewards such as intrinsic or extrinsic. Intrinsic rewards are related with the rewards that are natural with job. This reward is achieved by individuals when they successfully achieve their own objectives. On the other hand, extrinsic rewards are outside the job such as working condition, security, promotion, working environment and service contact.

Presently, in order to motivate employees, both intrinsic and extrinsic rewards should be a part of remuneration policy. It is also well discussed that individuals effectively work to the extent for the job, which provides them remuneration if they are intrinsically motivated. In contrast to this, if people are extrinsically motivated, they effectively work to the extent by which they can attain external rewards from the job (Chapman and Kelliher 2011). Thus, it can be concluded that if the remuneration is intrinsic to the job, desire for motivation is also intrinsic or if the remuneration is extrinsic to the job, desire for motivation is also extrinsic to the job (Ajila and Abiola 2004).

Perry, Mesch and Paarlberg (2006) stated in their research study that in this new government era, in order to increase the performance and productivity of the employees, managers should adopt good remuneration policies. This will ultimately help the business organizations to offer quality services and products to the customers (Maxwell 2008). It is the reason that most of employers now use remuneration policies to attract, motivate, retain and satisfy employees. It is founded through different research that performance-based remuneration motivates employees to work hard (Ajila and Abiola 2004).

The study of Khan, Farooq and Ullahb (2010) support the arguments of Ajila and Abiola (2004) and said that in an effective rewards system, there are several factors that influences the performance of employees such as basic remuneration, bonus, incentives, fringe benefits, monetary and non monetary rewards, commission, etc. All these factors are good sources to boost the performance of the employees. Carraher (2011) defined that remuneration helps in developing strong relationship between employers and employees.

It is founded by researchers that employees motivate through different monetary remuneration and an effective remuneration helps in reducing absenteeism, turnover intentions, provides organizational attractiveness to different job seekers and also helps in increasing employees’ job performance (Kmiotek and Lewicka 2008). It has been stated by Guedri and Hollandts (2008) in their study that managers in different organizations consider remuneration as a major factor that helps in increasing productivity of employees.

Remuneration is an important tool that focuses on motivating employees’ performance and behaviour. The study of Employee retention and organizational performance (2011) also support the views of Carraher (2011) and asserted, it is necessary that there must be appropriate rewards in order to satisfy and motivate employees. In contrast to both Carraher (2011) and Employee retention and organizational performance (2011), Mathis and Jackson (2008) said that other factors such as job itself, participation, appropriate feedbacks, morale and discipline are more important than remuneration that impact on remuneration.

According to Blythe (2005), in the present competitive environment, job satisfaction is more important than money, thus, manager should concentrate on all non-monetary factors, promotions, health insurance, rewards systems, etc. Zyl (2010) has stated in his research study that there is a positive relation between labour productivity and employee remuneration, which is also supported by Carraher (2011). It is the reason that greater the employee remuneration, higher the level of labour productivity. Several reasons support this fact such as if an organization adopts more differentiate remuneration, it will enhance the human efforts and a higher remuneration structure also enhances the productivity of employees (Montana and Charnov 2008).

At the same time Zyl (2010) also assesrted that if gaps between employee remuneration is regularly increase, it would ultimately increases gap and convert positive relations between employees’ performance and remuneration into negative. There are several reasons such as if it is filled by employees that their real remuneration is less than the fair remuneration, it can cause for negative relationship. Kubr (2002) Stated that an effective remuneration system does not only enhance the performance of people, who are already working well but also it is used to enhances the performance of people who are not performing well. Remuneration play an important role in motivating employees but different employees’ motivate through different factors. An effective remuneration package includes several elements. These elements are as below:

First, element is salary that includes different things such as pay, commission, profit related pay and share dividends. Second element is related with different facilities such as insurance, healthcare schemes and pension. Other elements are availability of discounts on companies’ product and service for employees and subsidiary for meals and accommodation (Kubr 2002). Salais and Villeneuve (2004) support, Kubr (2002) and said that remuneration is a better tool to motivate employees for better performance. There are three basic remuneration components such as bonuses, basic pay and profit-sharing schemes that influence the performance of employees.

Armstrong, Murlis and Group (2007) described about the effectiveness of remuneration as a mean of motivation such as:

? In order to motivate employees through remuneration, it is necessary that remuneration should be equitable and externally competitive.

? Contribution systems and pay for performance system are created on the basis and understanding that directs that motivation is only takes place when the rewards are worthwhile.

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? Each employee understands about the workings of financial reward system and about the benefits that is provided by it. They also know about the skills and competences of remuneration system (Murlis and Hay Group 2007).

In the fast food industry, remuneration is an important part that managers use to motivate employees and enhance their productivity level. In contrast to this statement Schlosser (2001) defined that if there are lack of secure employment and good wages in fast food organization, managers use ‘team spirit in order to motivate employees by saying that, if one employee is arriving late and do not work hard, it also affects the performance of their friends as well as their co-workers. It also helps in motivating employees, so that they can improve their performance’.

It has been also defined that employees work only to increase their profits and this is the reason that if organizations provide more remuneration to the employees, it helps in generating more output (Wales and Reaich 2004). Development of an employee is directly proportional to the development of the organization. If the remuneration is directly related with work performance, employee will work hard. It is the reason that most of managers use remuneration to motivate employees. Managers clearly stated in their organizations policies that if employees work hard they can earn higher profits and it is the reason that employees are motivated through this policy. Good return and high profit will allow the organizations to hare the profit with employees, thus they should work hard to get good remuneration (Yermack 2004).

Zyl (2010) has been also found in their research that if employees are motivated through remuneration, there are two positive effects of this such as it helps in reducing the labour turnover from organizations and it also helps in enhancing the more salary and good working environment.

Thus, it is fact that it helps in generating a productive team of efficient and talented people for the enterprise (Wales and Reaich 2004). According to them remuneration as a managerial tool to motivate employees is important for several reasons. These reasons are as below:

? Remuneration is a tool to impartial measurement of different employees. It is because if employees get more facility instead of money, it does not motivate employees to work harder.

? With the increment in salary, employees can maintain their honour, prestige and ensure economic security (Wales and Reaich 2004).

? They also argued that remuneration is a more efficient motivating factor as it can easily increase or decrease according to the proportion of work.

? Remuneration also helps in increasing the self-confidence of employees that further helps in improving the standard of living (Wales and Reaich 2004).

Thus, finally it has been concluded in many research studies that remuneration is an important tool that several managers use to increase the performance of their employees.

Justification of the Study

This research study has its own significance to understand importance of remuneration for the business firms to improve the performances of employees and for the individuals to fulfil their desires. Although this research topic is related with the HRM but it has a broad significance in the society. Remuneration means salary and pay that is paid by employers to its employees. Money is the foremost sources for the well living of individuals, which help them to fulfil their basic needs. Presently, innovations and changes in the economical, social and technological environment have enhanced the living standard of individuals (Mathis and Jackson 2008).

Money allows them to enjoy a lavish life and raise their social standard, thus, this research topic is very much beneficial for the managers to understand that how remuneration practices enables them to motivate employees to work with zeal and enthusiasm. The main reason behind selecting the fast food industry and McDonalds is the popularity. Growth and success of fast food industry attract individuals to earn good remuneration. McDonalds provide good remuneration to its employees, who develop high level of job satisfaction among the employees; thus, this example would provide valid and true information.

Although job satisfaction and enrichment is also important for the development of the employees, but money has also its own importance. This research study would be beneficial for all kinds of firms such as international, MNCs, small and medium size firms, to improve the productivity of the employees. Managers would also able to understand the significance of remuneration tool to boost the morale of employees and motivate them to achieve the goals on time.

Research methodology

Research methodology can be discussed as a systematic process, which assists researchers to collect, organize, record, and evaluate the data and information to resolve the problem and draw a valid and reliable conclusion (Bordens 2006). Selection of research methodology is a significant task for the researcher. In order to select suitable methodology, firstly, researcher would use appropriate approach.

Research Approach:

There are mainly two kinds of research approaches inductive and deductive.

Inductive Research Approach: In this kind of research, theories are developed according to the situation or problem (Crowther and Lancaster 2008). All these theories enable the researcher to explain data and information. This is very flexible in nature and based on bottom up approach. In this kind of approach, researcher evaluates a main concept and generalizes this view as per the research problem. It is related to the interpretivism point of view (Gill and Johnson 2002). On the other hand, this kind of research approach also involves some extent of uncertainty.

Deductive Research Approach: Deductive research approach is mainly based on the positivism paradigm. In this kind of approach, research develops theories and hypothesis and tests these theories with the help of empirical observations. This approach is top to bottom approach in which researcher evaluates general views to reach at specific situation (Hyde 2000).

The suitable research approach for this study would be inductive because this research focuses on the specific areas of human resource management, which are remuneration and employees motivation. Both of these concepts have their own significance in the success of a company as well as individuals. Thus, this research approach is more appropriate to explore the effectiveness of remuneration to motivate the employees and improve their productivity (Burke 2007). Deductive research approach would not be used because HRM has not given any kind of theory to defined remuneration. Basically, this is a pay given by companies to the employees for their job performance that can be used to develop a hypothesis for the research study.

Appropriate Research Methodology:

There are numerous research methodologies such as theoretical, applied, analytical, descriptive and empirical. Selection of research methodology would be based on the nature of research problem. In order to select the appropriate research method, it is essential to understand the nature of the research problem.

The suitable research methodology for this research topic would be descriptive and applied research methodology. The main reason behind choosing this methodology is its advantage of identifying population characteristics (number of employees to collect primary data) in McDonalds to understand the impotence of remuneration to motivate employees and develop feeling of job satisfaction among them. It is a flexible methodology in which researcher uses several variables and lot of information to solve the problem or to achieve research objectives. It has flexible nature, which comprises both qualitative and quantitative research process (Cooper and Schindler 2007).

We are not using other research methodologies because they are not appropriate for this study. In theoretical research, there is lack of experimental analysis and in analytical research there is a restriction of theoretical background (Goddard and Melville 2004). On the other hand, empirical research methodology is highly based on observation and field data rather than theoretical. Thus all these methodologies are not well appropriate for this study. In descriptive and applied research methodologies, the research got a chance to use both concepts and observational method. Both of these methods are also beneficial to manage cost and time (Marczyk, DeMatteo and Festinger 2005).

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Data Collection Method to collect Primary and Secondary Data:

After deciding research approaches and methodologies, appropriate data collection method would also be selected. In order to investigate impact of remuneration and different motivational tools on the performance of employees in McDonalds, we would focus on two different types of methods. Primary research and secondary research are two different types. In order to complete this research study, the propose research types are primary as well as secondary.

Primary research type comprises observations, survey and interviews through questionnaires, whereas secondary research methods comprises evaluation of reliable academic articles and published studies that are previously done by other researchers (Scruggs and Mastropieri 2006). Questionnaire can be defined as a set of some important questions that are related to the research problem. In order to collect primary data, a set of questionnaire would be used to conduct a survey process. Some well defined questions would be e-mailed to the participants in the form of questionnaire, so that it will be easy for the researcher to get back the responses of participants and carry out the research study in a systematic way. This is a suitable way to collect important qualitative data, which comprises low cost and also free from discrimination (Stead 2001).

On the other hand, this research methodology has also some restrictions such as dully filled questionnaires, lack of reliability on data, low rate of return, etc. This kind of research strategy can be used only in the situation when the participants are well educated and collaborates (Bordens 2006). In case of this research study, the research would target the employees of McDonalds, who are well qualified and experienced to understand the importance of research topic for their personal, social and organizational welfare. In order to minimize the chances of discrimination, an observation methodology would also used. The information gathered by researcher at his personal level would be observed through graphical and tabular presentation to manage the thematic analysis (Crowther and Lancaster 2008).

In order to collect secondary data and information variety of academic journal would be analyzed after assessing their credibility. Most of the portion of this research study would be based on the secondary data. Primary data would be used for a limited extent because it is really difficult to select appropriate participants and contact with all the participants for their valid and reliable response. By using secondary data and information, it would be easy for the researcher to enhance the credibility of the research (Cooper and Schindler 2007). Apart from research articles, companies report, different case studies would also be used.

The researcher philosophy for this study would interpretive, which provide subjective reasoning according to the secondary data and real life examples (Scruggs and Mastropieri 2006).

Justification of Research Methodology

Both primary and secondary research methods are used to collect data, which are questionnaire, observation and review of academic journals. All these methodologies would be beneficial for this study to find the real facts and figures. According to the inductive research approach and descriptive and applied research methodologies, these are absolutely suitable strategies for this dissertation. The main aim of the researcher is to understand the impact of remuneration and motivational practices on employee performances by minimizing the errors, thus all these strategies would be beneficial to reach at the valid conclusion (Silverman 2004).

Survey through questionnaire and observation method has many advantages and it is very much useful for the researcher to understand the real life situations to achieve the objectives of this research study. Survey through questionnaire is a very efficient technique to collect data and information from a large number of populations. In this research study, researcher has selected a small sample size, which gives an idea to him for the large population, thus both survey and observation methodology would be appropriate (Marczyk, DeMatteo and Festinger 2005).

It is valid and reliable research methodology, through which research can study beliefs, attitude and behavior of employees and managers due to different remuneration packages. In questionnaire and observation method, extent of subjectivity and discrimination is limited. On the other hand, secondary research method enables researcher to evaluate the subjectivity of the research topic.

Ethical Consideration

In order to conduct any research study, it is necessary for the researcher to concentrate on the research ethics and integrity. Without ethics and integrity, research study has no value. This research study would also be conducted on ground of ethical boundaries, which ultimately help the researcher to achieve consistent and dependable result. Following ethics in research also shows the concern and responsibility of the researcher towards society and corporate environment (Resnik n.d.). The researcher would develop a code of ethics with the help of corporate lawyer. The researcher would establish ethical guidelines according to the law and regulations. Conducting an unethical research will ultimately lead confusions for the society and readers, which would waste the effort and hard work of the researcher (Ethics in Research 2010).

The code of ethics would lead surety about the safety and security of data and information. The researcher would ensure the participants that he would not disclose their personal and professionals information. Researcher, his team and all the participants would follow integrity, honesty and dependability to conclude and authentic result. The researcher will record all the information to in hard copies and soft copies to by accessing passwords and security codes (Resnik n.d.). Researcher would follow non-discrimination practices to collect and evaluate primary and secondary data.

Possible information sources

In order to collect secondary data to accomplish the research and achieve the objectives, different sources would be used by the researcher. These sources are academic journal articles, books, authentic and academic web sources, company websites, different database sources such as Willey, JSTOR, EBCOHost, Emerald, etc. All these database sources would provide recent and reliable journal and academic articles.

Potential difficulties and Research Limitations

All the potential difficulties of the research cannot be foreseen but some highlighted difficulties are the time and cost constraints. Successful completion of this research study is also associated with some limitations. All these limitation can consider difficulties to conduct research effectively. Survey through questionnaire and observation methods need enough time to give valid conclusion. It may be possible that research have limited time to collected data (Cooper and Schindler 2007).

Budget and cost limitations are also a problem for the researcher to use effective tools and technologies. Observational method needs effective techniques and budget limit would be a problem for the researcher. Lack of ability to analyze authentic data will also be a limitation for the successful accomplishment of the research.

Data Analysis and Findings

Data analysis and finding are also one of the important steps of a research study. With the help of research methodology and strategies, data would be collect. In order to analyze this data, research would accomplish a thematic framework analysis. This thematic analysis would be based on posteriori and priori themes. Both of these themes would enable the research to give a valid result and conclusion of this research topic.

Schedule or time scale

Appendix A would provide a time scale for this research study.

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