The Power of Motivational Events

TABLE OF CONTENTS

ACKNOWLEDGEMENT

ABSTRACT

LIST OF APPENDICES

LIST OF ABBREVIATIONS

GENDER SENSITIVITY

LIST OF FIGURES

CHAPTER 1 – INTRODUCTION
1.1 BACKGROUND
1.2 AIM AND OBJECTIVES
1.3 STRUCTURE OF STUDY

CHAPTER 2 – LITERATURE REVIEW
2.1 INCENTIVE TRAVEL
2.1.1 Incentive Travel as Motivator
2.1.2 Form and Content of Incentive Travel
2.2 EXPECTANCY THEORY
2.2.1 The Theory
2.2.2 Criticism and Modification
2.3 EQUITY THEORY
2.3.1 The Theory
2.3.2 Criticism and Modification
2.4 CONJUNCTION OF THE THEORIES

CHAPTER 3 – RESEARCH METHODOLOGY
3.1 RESEARCH MODEL
3.2 RESEARCH PHILOSOPHY AND APPROACH
3.3 RESEARCH DESIGN
3.3.1 Methodological Choice
3.3.2 Research Strategy
3.4 RESEARCH ETHICS
3.5 DATA COLLECTION
3.5.1 Secondary Data
3.5.2 Questionnaires
3.5.3 Sampling
3.6 DATA ANALYSIS
3.7 LIMITATIONS

CHAPTER 4 – ANALYSIS AND DISCUSSION OF FINDINGS
4.1 DEMOGRAPHIC INFORMATION
4.2 OVERALL ANALYSIS
4.2.1 Awarding of Incentive Travel
4.2.2 Characteristics of Incentive Travel Programs
4.2.3 Aftermath of Incentive Travel
4.2.4 Motivational Effects
4.2.5 Concluding Remarks for the Overall Analysis
4.3 SMALL vs. LARGE COMPANIES

CHAPTER 5 – CONCLUSION AND RECOMMENDATIONS
5.1 CONCLUSION
5.2 RECOMMENDATIONS
5.2.1 Recommendations for Employers
5.2.2 Recommendations for Future Researchers

REFERENCES

LIST OF APPENDICES

LIST OF APPENDICES

APPENDIX A – CURRENT APPLICATION OF EXPECTANCY THEORY

APPENDIX B – CURRENT APPLICATION OF EQUITY THEORY

APPENDIX C – PARTICIPANT INFORMATION SHEET

APPENDIX D – ETHIC FORM

APPENDIX E – ONLINE QUESTIONNAIRE

APPENDIX F – GRAPHS FOR COMPARISON

ACKNOWLEDGEMENTS

First of all, I would like to thank my tutor Christine Lundberg for her continuous support and various advices, which she gave me in our regular meetings at the Tikki Café.

A big thank you and appreciation goes to my family for their support and belief in me - especially to my mum, my dad and my brother Marcel for their love, help, support and continuing confidence in my work and me. You are the best! DANKE♥

Thank you to all my friends but especially to Alisha – Thank you for everything during this period of ups and downs: for your kind words and support whenever I needed it, for making me laugh and laughing with me and for going through all these adventures with me. You rock!

WIR HABEN ES GESCHAFFT! J

Finally, I would like to thank all the people who volunteered in participating in my survey and taking the time to answer my questionnaire. It would have never worked out without your support and inspiration!

ABSTRACT

Employee motivation has always been a highly researched topic. Employers spend large budgets on employee motivation because a motivated workforce is said to go hand-in-hand with corporate success. Incentive Travel is one form of a motivational tool and reward. More than a normal travel experience, it is considered to be an appropriate motivational event – from the journey itself, to the various activities and excursions included employees gain motivation. Different analyses have been made investigating the appraisal of Incentive Travel from the attendees’ perspective. However, little research has been made on the employers’ point of view and their appraisal of its motivational power.

Therefore, the aim of this dissertation is to investigate the motivational power of Incentive Travel on employee performance from the perspective of the employer. This is achieved by an in-depth evaluation of the theory behind Incentive Travel, as well as two motivational theories: ‘Expectancy Theory’ by Victor Vroom (1964) and ‘Equity Theory’ by John Adams (1963). To conjoin the theoretical part of this dissertation and to create a basis for primary research, the author has developed the ‘Incentive Travel – Motivation Model’. Research for the dissertation was conducted in form of an online survey of 117 CEO and managers who have personnel responsibility, that include Incentive Travel in the remuneration system of their company.

The main findings of the research project revealed that companies experience notable short and long term changes in their workforce after awarding Incentive Travel, one example being improved teamwork. The findings also highlighted the importance of implementing a comprehensive communication strategy and planning Incentive Trips exclusively and deliberately in order to maximize their impact. With regards to the motivational theories, the author discovered that for large companies Expectancy Theory prevails as these companies award Incentive Trips based on targets and in the aftermath believe in the employees’ subjective appraisal of their rewards. On the other hand, small companies combine the two theories. They award Incentive Trips according to Equity Theory, thus based on the employees’ inputs, after the trip, however, they also adhere to the subjective appraisal as claimed by Expectancy Theory.

LIST OF ABBREVIATIONS

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GENDER SENSITIVITY

In this dissertation, people (employers, employees, etc.) are referred to as "he" for ease of reading. This does not mean that the study is only intended for male people or that only male people are involved in the processes discussed in this study.

LIST OF FIGURES

Figure 1: Top Incentive Travel Destinations 2014 (Source: Incentive Research Foundation, 2014) 10

Figure 2: Vroom’s Expectancy Theory (Source: Own Illustration)

Figure 3: Formula for Level of Motivation (Source: Own Illustration)

Figure 4: Ratio of Inputs and Outcomes (Source: Tankonyvtar, n.d.)

Figure 5: Comparison with Referent Group (Source: Tankonyvtar, n.d.)

Figure 6: Incentive Travel - Motivation Model (Source: Own Illustration)

Figure 7: Research Model (Source: Saunders et al., 2012)

Figure 8: Questionnaire Part II

Figure 9: Questionnaire Part III

Figure 10: Questionnaire Part IV

Figure 11: Questionnaire Part V

Figure 12: Company Sizes

Figure 13: Company Sectors

Figure 14: Characteristics of Targets

Figure 15: Employers' Expectations

Figure 16: Reasons for Incentive Travel

Figure 17: Budgets

Figure 18: Statements I

Figure 19: Statements II

Figure 20: Statements III

Figure 21: Incentive Travel

Figure 22: Changes prior to the Award

Figure 23: Changes in the short-term and long-term

Figure 24: Criteria for awarding Incentive Travel (Small vs. Large)

Figure 25: Instrumentality (Small vs. Large)

Figure 26: Budget (Small vs. Large)

CHAPTER 1 – INTRODUCTION

“If you don’t set a clear target for your employees, they cannot experience the fun and joy to reach them.”

(Reinhold Würth, cited in Senfter, 2013, own translation)

Reinhold Würth is the founder of the Adolf Würth GmbH, a German company that is the world market leader in trading with installation and connection material. The company employs approximately 60.000 employees, half of them in the field of sales (Würth, n.d.). The salesmen are the most important employees of the Würth Group. The executives therefore offer a simple but effective incentive system. If an employee is able to reach or exceed his targets, he can become member of the ‘Success Club’ to receive a cash bonus or of the ‘Top Club’ to receive Incentive Travel as rewards (Zupancic, 2009). Every year such an Incentive Trip takes place to destinations like Canada, Mexico, the Caribbean and others. Such a trip is considered to be the absolute highlight of the year with a variety of unique and memorable activities (Marbet, n.d.). The attendees live in luxury hotels and get the chance to meet the founder of the company and to listen to his speech (Dorfs and Hardt, 2005). Those Incentive Trips can take up to two weeks and each attendee travels with their spouse. The trips end with a gala evening where the attendees learn about the destination and the sales targets for the next year (Kurz et al., 2010).

Reinhold Würth is just one of many employers who use Incentive Travel as a tool to motivate their most successful employees and who have high expectations on the effect of these awards. They are supported by two motivational theories, the Expectancy Theory by Victor Vroom (1964) and the Equity Theory by John Adams (1963), which suggest that managers should combine high performance with rewards. Building on those two theories, the purpose of this dissertation is to discover the relationship between Incentive Travel and employee motivation including a special focus on the (non-)fulfilment of employer expectations regarding the effect of Incentive Travel.

1.1 BACKGROUND

Incentive Travel is part of the Corporate Events Sector, commonly abbreviated as MICE. It is therefore not just a travel experience but also an appropriate event to motivate employees: from the journey as a whole to special events included in the Incentive Travel Program, such as dinners, team activities, sightseeing or excursions (Davidson & Cope, 2003). Incentive Travel is either organised in-house or by professional events management agencies.

In 1980, the Incentive Travel market was at its highpoint, also known as “the age of excess” (Arrigo, 2014, p. 18). This picture changed during the 1990s and the industries started to reduce their budgets for Incentive Travel. The real breakdown of this sector came in 2008 due to the global financial crisis (ibid., 2014). At this time, press releases and public opinion on Incentive Travel were largely negative (Jeffrey, 2014). Nevertheless, current research shows that the sector is experiencing a comeback and the trend is gaining momentum (Arrigo, 2014).

The latest figures demonstrate that approximately $240 billion are invested in Incentive Travel every year by US companies (Ledger, 2014). The average amount of money spent per participant rose from $1600 in 1988 (Shinew & Backman, 1995) to $2500 in 2012 (hotelmarketing.com, 2013).

Regarding the motivational impact of Incentive Travel, previous research has focused on the perspective of employees, otherwise known as ‘attendees’. The employers’ appraisal of their effectiveness, however, has been mostly neglected. The author fills this research gap by investigating if the employers’ expectations of the changes in the workforce caused by the attendance of Incentive Travel can be fulfilled.

Lindner (1998) explains that a motivated workforce is considered to be the main saviour for companies. This is why the motivation of employees has always been a highly examined topic among behavioural scientists. This can be proved by the high amount of existing theories demonstrating various ways to improve employee motivation.

The Expectancy Theory by Vroom (1964) and the Equity Theory by Adams (1963) combine the motivation of employees with rewards, such as Incentive Travel. Vroom (1967) predicates that an employee sees a relationship between effort, performance and a reward for achieving goals set by the employer. The underlying concept of the theory is that the employee has three beliefs: firstly, effort will lead to performance (‘ Expectancy ’), secondly, performance will lead to a reward (‘ Instrumentality ’) and thirdly, the reward will be valuable (‘ Valence ’). If the employee realizes that one of the three beliefs is not fulfilled he will not be motivated in his job (Rue et al, 2013).

Adams’ theory (1963) is based on the idea that employees expect fairness regarding the remuneration for their work. Hence, they consider the ratio of their contributions (Inputs) and their rewards (Outcomes) and compare it with those of colleagues. The more the perceived ratio drifts apart from the ratio of others, the lower the motivation of an employee will be. The employee will try to resolve the situation by taking actions such as increasing or reducing the input, more comparison or quitting the job (Rue et al., 2013)

What both theories have in common is that there is a relationship between high performance and allocation of rewards. This conjunction of Incentive Travel and motivation raises the research question whether Incentive Travel fulfils the expectations of employers and how this tool can be made more effective in motivating employees. These questions will be elucidated in the subsequent chapters.

1.2 AIM AND OBJECTIVES

AIM

To investigate the motivational power of Incentive Travel Programs upon employee performance from the employer’s point of view

OBJECTIVES

- To present the characteristics of Incentive Travel as well as relevant theories on employee motivation related to awarding incentives
- To assess the importance of Incentive Travel in the process of motivating employees in accordance with the selected theories
- To examine the appraisal and expectations of employers regarding Incentive Travel as a motivational tool

1.3 STRUCTURE OF STUDY

Chapter Two comprises the theoretical part and develops the central framework of the thesis. It meets Objective One by analysing Incentive Travel as a motivational tool and by presenting the two motivational theories mentioned above. Moreover, the self-developed ‘Incentive Travel – Motivation Model’ combines the theory and thus answers Objective Two.

Chapter Three explains the methodological approach of this dissertation.

In Chapter Four the researcher presents findings of the online questionnaire conducted among employers who use Incentive Travel as a motivational tool for their employees. The insights fulfil the third objective.

Finally, Chapter Five outlines conclusions from the findings of the secondary as well as the primary research. Additionally, recommendations are made for employers and future research.

CHAPTER 2 – LITERATURE REVIEW

This chapter aims to meet Objective One and Two of this dissertation by providing the theoretical framework of Incentive Travel as well as Expectancy Theory and Equity Theory. These two theories were chosen over other motivational theories due to their focus on extrinsic rewards as source for motivation (Gaud, 2015). In the first part of the literature review, the author discusses the theories and introduces respective extensions. Subsequently, the author combines the three different theoretical approaches in the self-developed ‘Incentive Travel – Motivation Model’.

2.1 INCENTIVE TRAVEL

SITE (n.d., cited in Celuch, 2014, p. 24) defines Incentive Travel as “trips for employees (…) paid by a firm as a reward for achieving appropriate level of sale or fulfilment of other tasks, for distinctive achievements or as encouragement for the future”.

Severt and Breiter (2010, p. 10) give a more comprehensive definition:

“A motivational tool to enhance productivity or achieve business objectives in which participants earn the reward based on a specific level of achievement set forth by management. Earners are rewarded with a trip and the program is designed to recognize earners for their achievements.”

The main statement of those definitions is that Incentive Travel is awarded to employees to motivate them to achieve specific goals set by the employer.

Celuch (2014) states that Incentive Travel is nowadays a popular form of reward and its importance is steadily increasing. This assertion is supported by the result of a survey conducted by Jeffrey et al. (2013) claiming that more than 36% of the interviewed incentive design managers used Incentive Travel as a motivational tool. Approximately a quarter of the respondents invested a budget of more than $1 million in Incentive Trips. According to Jeffrey (2014), Incentive Travel is the second most popular form of award after cash and vouchers.

Managers and employers have specific expectations regarding the impact of Incentive Travel on their workforce. They set specific business objectives that should be attained. These include enhancement of communication between management and workforce, improvement of loyalty and attachment towards the company, increased enthusiasm and motivation as well as reinforcement of a corporate culture and positive image (Sikora & Wartecka-Wazynska, 2010; Witt et al., 1992). Rubin (1992) expands this list by stating that operational problems like recruiting, reducing absenteeism, increasing sales volume or gaining new customers can be mitigated or even solved.

It is therefore important to know why and how Incentive Travel Programs are successful employee motivators. Hence, the following paragraphs will expound the motivational factors and content of such a program.

2.1.1 Incentive Travel as Motivator

It is common knowledge, that travel is highly valued by the majority of today’s population. McIntosh (1995) claims that travel has the ability to address four categories of motivation:

- allocentric motivation (experiencing new cultures and countries)
- near-allocentric motivation (interpersonal contact)
- midcentric motivation (relaxation or activities)
- near-psychocentric and psychocentric motivation (social status and prestige)

Ricci and Holland (1992) relate this concept to Incentive Travel and ascertain that in this case the fourth category is the most important motivational driver.

Incentive Travel Programs are outstanding because of their so called “trophy value” (Hastings et al., 1987; Jeffrey & Shaffer, 2007; Severt, 2013). They cause a long-lasting effect on attendees and provide an abiding positive reinforcement (Davidson & Cope, 2003; Severt, 2013). Respondents of a survey conducted by Hastings et al. (1987) stated that they felt very proud and important and perceived a sense of achievement. The side effects combined with the receipt of the award are highly visible – not only for other employees, but also for their family and friends (Jeffrey & Shaffer, 2007, Ricci & Holland, 1992). The social status of employees therefore increases when having the possibility to attend an Incentive Trip (Davidson & Cope, 2003). They receive more attention as they are considered the elite group of the company (Hastings et al, 1987; Ricci & Holland, 1992). Furthermore, attendees return tangible memories from such trips like photos or souvenirs. This does not only motivate them to sustain their high performance, but also encourages other employees to improve their efficiency (Jeffrey, 2014).

According to Sheldon (1995) and Severt (2013), Incentive Travel improves organizational cohesion and strengthens the loyalty to the employer. Moreover, through an abundance of networking attendees are able to meet other high achievers as well as executives. However, the award of Incentive Travel is often connected to high competition among employees that is artificially generated in such situations (Ricci & Holland, 1992). Thus, employees tend to also consider unethical behaviour to achieve their pre-set goals (Wharton, 2011). Therefore, Milne (2007) reminds managers to be cautious about their employees’ behaviour before granting the award.

Another highly motivating factor of Incentive Travel is its uniqueness and exceptionality. The experiences and memories of those trips are not repeatable (Jeffrey, 2014) and cannot be achieved on a private holiday (Davidson & Cope, 2003). They are seen as a “once in a lifetime experiences” (Celuch, 2014, p. 30) and employees therefore assign a particularly high value to those rewards.

In order to achieve a maximum level of employee motivation through Incentive Travel certain requirements need to be met. Those characteristics will be elaborated in detail within the subsequent chapter.

2.1.2 Form and Content of Incentive Travel

Successful Incentive Travel Programs require long-term planning (Davidson & Cope, 2003). According to Lallande (2008), the planning period can take up to 10 months.

Kastner (2010) characterizes six main factors that should be considered by employers to guarantee successful Incentive Travel.

Firstly, all stakeholders involved in the process should be informed about the value and importance of Incentive Travel.

Secondly, the audience that is eligible to get the reward has to be analysed. Davidson and Cope (2003) add that the analysis of the company itself is very important to create an appropriate program. Factors that should be considered are age, earnings and gender. As the families of the rewarded employees often also participate in Incentive Trips, they should be considered in the target group (Ricci & Holland, 1992). Moreover, planners should not just rely on past experiences or instinct, but should continuously improve the setup according to the above-mentioned aspects (Kastner, 2010).

Thirdly, the program should be designed professionally and preferably with the help of an experienced events agency to manage the efficient use of resources. Successful Incentive Travel Programs should attract all employees and not just the same top performers every year (ibid., 2010).

Fourthly, it is highly advisable to implement an associated communication strategy. Prior to the start of the competition, managers need to sell the destination and promote the trip continuously with videos, postcards, the company’s intranet or conspicuous teasers and slogans (Fisher, 2001; Successful Meetings, 2012). Afterwards, reminders of the trip such as photographs or videos should be provided – not only to encourage the continuation of the high performance, but also to inspire and ideally motivate non-attendees (Davidson & Cope, 2003).

Fifthly, the travel experience itself needs to be planned deliberately. The choice of destination is esteemed to be an important element of the travel experience. It should be inspirational as well as aspirational. Several studies show that the destination needs to be exotic and unusual to evoke excitement (Hastings et al., 1987; Ricci & Holland, 1992). However, others rely on destinations with heritage and cultural resources such as capital cities (Fisher, 2001, Celuch, 2014). In the end, the destination choice depends on the company and the audience. Very important aspects when deciding on a destination are security and political stability of the country. Figure 1 illustrates that the Caribbean was the number one destination for Incentive Travel in 2014.

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Figure 1: Top Incentive Travel Destinations 2014 (Source: Incentive Research Foundation, 2014)

According to Davidson and Cope (2003), the accommodation and means of transportation should be exclusive thanks to a high quality of services. Attendees should feel pleasant and experience a special treatment. Activities need to be extraordinary and non-available to normal tourists. A gala dinner is very popular for Incentive Travel as it forms the perfect final event to a trip (Fisher, 2001).

Finally, successful Incentive Travel always includes measurement and documentation throughout the duration. This is meaningful to provide justification and to be able to analyse whether business objectives have been met (Kastner, 2010; Lallande, 2008).

Incentive Travel Programs can be summarized as a very important motivational tool that primarily stimulates the near-psychocentric and psychocentric motivation. However, they can only be successful when various criteria are fulfilled such as exclusivity and target group orientation.

2.2 EXPECTANCY THEORY

Expectancy Theory is a work motivation theory developed by Victor Vroom in 1964. It is classified as a cognitive theory (Latham, 2012) and a process theory (Liao et al., 2011) since it shows the step-by-step model of the motivation development of individuals from their perception of the environment via their expectations through corresponding actions (Isaac et al., 2001). In the subsequent paragraphs, the original model as composed by Vroom is described first, followed by criticism and modifications.

2.2.1 The Theory

The theory consists of three main components (see Figure 2). The first component is Expectancy, the “momentary belief concerning the likelihood that a particular act will be followed by a particular outcome” (Vroom, 1967, p. 17). This means people believe that their effort results in the receipt of a reward (Hollyforde & Whiddet, 2003). The second component is Instrumentality. This is the belief that there is a positive correlation between performance and the award, meaning that a performance above expectations leads to an accordingly higher reward (Vroom, 1967; Chiang et al., 2008; Hollyforde & Whiddet, 2003). The third factor is called Valence, “affective orientation toward particular outcomes” (Vroom, 1967, p. 15) and completes the model. If the prospective reward is of a high importance for the individual, he will take action to achieve it. At this moment, Valence is just the individual’s subjective appraisal of the reward and not the actual value or satisfaction after the receipt (ibid., 1967).

Chen et al. (2006) summarize the model stating that individuals choose the quantity of effort by analysing if action and effort lead to the provisional outcome, if this outcome results in a reward, and if this reward has a certain Valence for the person.

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Figure 2: Vroom’s Expectancy Theory (Source: Own Illustration)

The level of motivation arises from subjective assessment of those factors by the individual. Expectancy of an individual can hover between a high level (1) and zero depending on the individual’s assessment of the likelihood that effort translates into outcome (Vroom, 1967). Valence can be classified between positive Valence (+1), when a person wants to attain a reward; neutral Valence (0), when the person is indifferent towards the reward and negative Valence (-1), when the person prefers not to achieve the reward (Vroom, 1967). Instrumentality ranges from positive instrumentality (+1) through neutral instrumentality (0) to negative instrumentality (-1). To define Instrumentality, the individual estimates whether the provisional outcome will definitely lead to a reward, is not connected to a reward or prevents him from attaining a reward (Pinder, 1984, cited in Hollyforde & Whiddet, 2003).

The figure below shows a formula to calculate the level of motivation. The formula shows instinctively that if one factor equals zero, the individual will not be motivated to take action to attain a reward.

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Figure 3: Formula for Level of Motivation (Source: Own Illustration)

According to Ferris (1977), this model is very prosperous in constituting individual motivation. Despite its general acceptance in literature, however, certain authors criticised and altered the Expectancy Theory.

2.2.2 Criticism and Modification

There has often been confusion about terms and words Vroom uses in his model (Hollyforde & Whiddet, 2003). For example, it is difficult to differentiate between the terms Valence and Expectancy, as individuals may tend to confound them during their analysis. Additionally, Vroom made a clear distinction between the terms ‘ Valence’ and ‘value’ within his theory as stated above (Chapter 2.2.1). ‘ Valence’ should only be used for the individual’s expected appraisal of a (prospective) reward that the employee has not yet achieved. However, later in his book Vroom compares the term ‘ Valence’ with actual satisfaction of individuals with their jobs. Locke (1969) criticises him for this misleading and confusing double usage of the term ’Valence’.

Although Lawler and Porter as well as Graen (Lawler & Suttle, 1973) agree with the main ideas of Vroom, they criticise the simplicity and obscurity in clear differentiation of actions and outcomes. Therefore, they developed modifications for the theory. Firstly, Lawler and Porters model from 1967 includes the factor ‘role perception’, the belief of the individual that behaviour is important to implement his job successfully (Heneman & Schwab, 1972; Kesselman et al., 1974). Secondly, they add intrinsic rewards as motivators to the extrinsic rewards. In 1971, Lawler complements the distinction of the terms Expectancy I and Expectancy II to this new model. Expectancy I represents the expectation that effort leads to high performance whereas Expectancy II stands for the expectation that this high performance will finally lead to outcomes. However, Hollyforde and Whiddet (2003) argue that Expectancy II just replaces the term ‘ Instrumentality’.

Graen (1969) also developed an extended model, the ‘Instrumentality Theory of Work Motivation’. In addition to the above-mentioned extensions by Lawler and Porter (1967), he added external pressure as a factor that impairs behaviour.

It is misleading that rewards are always directly related to higher performance of employees. It only works if the rewards are beneficial to the immediate needs of the individuals (Lawler & Jenkins, 1992).

Vroom (2007) himself responded to the critique and accepted the modifications of his model. He reassessed his own theory and made four statements of what he personally would change. Firstly, he would eliminate the mathematical formulas as they exacerbate tests of the theory. Furthermore, he sees a restriction of the theory because he only included the amount of activity (effort) and ignored the type of activity. Employees do not only consider how much they work but also the way they manage their tasks. Moreover, he would put a greater focus on the question when behaviour starts and when it stops. Finally, he admits that human behaviour and choices are often misled by subjective rationality.

Despite the criticism, the theory is still regularly used in current studies (cf. Maloney & McFillen, 1986; Ghoddousi et al., 2014; Sucio et al., 2013; Lambright, 2010). Please refer to Appendix A to find a detailed description of these studies.

The author of this dissertation applies the original Expectancy Theory to the field of motivational events to ascertain if employers expect Incentive Travel to be of high Valence for employees and hence, lead to changes in their employees’ work behaviour.

2.3 EQUITY THEORY

The Equity Theory has been developed by John Adams in 1963 and, just like the Expectancy Theory, it is referred to as a cognitive theory since it puts its focus on the perception of individuals (Hayibor, 2008). In the majority of studies the theory has been applied to work situations and thus, relationships between employers and employees. Hence, it belongs to the category of job motivation theories. Nevertheless, the concept of the theory can be used in all forms of interpersonal relationships (Adams, 1963; Hayibor, 2008).

In the following subchapters, the author gives a detailed description of the theory as well as an overview of criticisms and extensions.

2.3.1 The Theory

Adams (1963) stated that he developed the theory to convey knowledge about inequity and to obtain control over it. A feeling of inequity might arise in a situation when social contact takes place.

“Inequity is said to exist when the ratio of an individual’s outcomes to inputs departs to a significant degree from the ratio perceived for the reference source.” (Miner, 2005, p. 136)

The two main components of the theory are inputs and outcomes. In the context of work situations inputs are defined as the contributions an employee makes in the exchange relationship with the employer (Adams, 1963). These inputs include education, training, experience and seniority, but most of all the effort and time an employee puts into his work. Those factors are only seen as inputs if the employee or both employee and employer recognize it.

Outcomes are defined as rewards that an employee receives from his employer for the input he contributes to the exchange relationship (ibid., 1963). Outcomes mainly include wages, but oftentimes other intrinsic or extrinsic rewards, too. Intrinsic reward is positive reinforcement within employees after affirmative experiences, which increases their work effort (Tymon et al., 2010). Rewards are only categorized as outcomes if the employee considers them relevant.

The weighting of inputs and outcomes is a subjective evaluation and assessment by the employee (Hollyforde & Whiddet, 2003).

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Figure 4: Ratio of Inputs and Outcomes (Source: Tankonyvtar, n.d.)

An employee expects a ‘fair’ ratio of his inputs and received outcomes (Adams, 1963). Therefore, he compares the ratio to an external reference also denoted as a “referent group” (Hollyforde & Whiddet, 2003) or referent other (Adams, 1963).

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Figure 5: Comparison with Referent Group (Source: Tankonyvtar, n.d.)

In case of a favourable comparison of his ratio with one of the other party, the individual perceives a sense of equity (Adams, 1963). Inequity arises if the individual feels an imbalance of the two ratios leading to a strong inner tension. Inequity can have various consequences for the employee–employer relationship as individuals have a deep drive to reduce the tension and retrieve equity. According to Adams (1963) and Rue at al. (2013) employees may take one of the following actions:

1. Increase inputs (additional education and training)
2. Decrease inputs
3. Increase outcome (negotiating salary increase or additional benefits)
4. Increase absenteeism, ask for a transfer or quit the job
5. Reassess or sophisticate inputs and outcomes psychologically
6. Affect inputs and outcomes of the referent group
7. Change the referent group

Not all of the above-mentioned actions are satisfactory for the individual and might influence the job satisfaction and as a consequence the work motivation of the affected employee negatively (Hollyforde & Whiddet, 2003).

2.3.2 Criticism and Modification

Just as the Expectancy Theory mentioned above (Chapter 2.2.2), Equity Theory has been criticised by several researchers for its lack of precision (Mahoney, 2013) and simplicity as well as the missing field research to test the theory in practice (Carrell & Dittrich, 1978; Huseman et al., 1987). However, the latter point is no longer relevant, which can be seen in the various current applications of the theory (cf. Disley et al., 2009; Tseng & Kuo, 2013; Westerman et al., 2007). Please refer to Appendix B for a more detailed description.

Main critique and major modifications of the original Equity Theory were raised by Carrell and Dittrich (1978) as well as Huseman et al. (1987).

Carrell and Dittrich (1978) list three problems concerning the applicability of the Equity Theory. Firstly, participants are exposed to a forced, unfamiliar cognitive process being asked to compare defined inputs with respective outcomes. Secondly, the organisation’s allocation system is not included in the theory although this might be the main factor causing inequity – not the compensation itself. Lastly, as mentioned earlier, the theory is limited and simplified by using only one variable (pay).

Accordingly, they developed the ‘Fairness Model’ proposing that an individual compares his ratio with an internally derived standard instead of a referent group. This ensures that the individual gets a comprehensive sense of the social fabric within the exchange relationship.

Huseman et al. (1987) criticize the assertion of the theory that all individuals feel equity when their ratios are equal to those of the referent groups also called the “equity norm” (Carrell & Dittrich, 1978, p. 203). According to Huseman et al. (1987), this norm can change depending on the reward allocation process and individual preferences for the balance of the two ratios influenced by demographic variables and personality traits, see also Hayibor (2008).

In order to take these aspects into account Huseman et al. (1987) developed the ‘Equity Sensitivity Construct’ identifying three groups of individuals with different input-outcome-balances compared to the referent group:

1. Benevolents (input>outcome, prefer smaller input-outcome-ratio compared to referent group)
2. Equity Sensitives (input=outcome, conform the ‘norm of equity’)
3. Entitleds (input<outcome, own ratio should exceed those of the comparison)

The affiliation of one individual can change within different exchange relationships.

In this dissertation, the original Equity Theory will be considered against the background of the employer-employee relationship. More precisely, the author examines whether employers consider fairness (equity) when it comes to the ratio of the individual employee’s effort and his reward, which in this case is the award of Incentive Travel.

2.4 CONJUNCTION OF THE THEORIES

In this paragraph, the author integrates the three above-introduced theories into a self-developed model that can be interpreted as a conclusion of the literature review outlined in the previous subchapters.

This ‘Incentive Travel – Motivation Model’ is depicted in Figure 6 and will be described in detail subsequently.

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Figure 6: Incentive Travel - Motivation Model (Source: Own Illustration)

To ensure a general understanding of the model, the author starts with a broad overview.

Horizontally, the model is divided into three rows. The top row represents the Expectancy Theory (Vroom, 1967). The light green arrows in the centre illustrate the Incentive Travel theory. The row at the bottom shows the elements of the Equity Theory (Adams, 1963). The common goal of all three theories is an increased motivation of employees (dark green box).

Vertically, the model is also divided in three columns. The first column on the left side of the light green ‘Incentive Travel’ box deals with the prerequisites to be rewarded with such a program. The focal light green box represents the Incentive Travel part itself. Finally, the response of employees to such programs is presented on the right side, ideally leading to a higher work motivation.

An in-depth description of the model is important to constitute how the three theories displayed in the model are interlinked.

The model starts with the first part of the Expectancy Theory, the Expectancy itself, which is the process from the effort of an employee to an increased and improved performance (Vroom, 1967). This Expectancy correlates to the Input of the Equity Theory, which Adams (1963) describes as the contribution of employees at their workplace. Whereas the Input of the Equity Theory directly leads to the outcome, there is an interposed step in the Expectancy Theory, named Instrumentality. This is the belief of the employee that the achieved higher performance leads to a more valuable outcome (Vroom, 1967).

Outcome is one factor where the two theories correspond with each other. Since the outcome is an Incentive Trip in the specific context of this study, there is an overlap with Incentive Travel theory as well. The light green arrow to the left shows that Incentive Travel has the ability to feed into both the Expectancy and the Input factor. This is due to the capability of Incentive Travel to increase status and prestige of attendees (Ricci & Holland, 1992; Davidson & Cope, 2003). The light green arrow to the left also represents possible reasons for employers to settle on Incentive Travel as reward.

In the third segment of the model both motivational theories have to be treated separately. In Expectancy Theory, the attendee evaluates Incentive Travel (≙ Outcome) subjectively. In this process, called Valence, the employee assesses whether a trip is of a high value for him – or not (Vroom, 1967; Chen et al., 2006). In Equity Theory, the Outcome leads to a fairness comparison of the employee’s Input - Outcome -Ratio with those of his colleagues (Adams, 1963; Hollyforde & Whiddet, 2003).

After these distinct processes, the two theories coincide a second time. In case of positive subjective appraisal (Expectancy Theory) or perceived fairness of outcomes respectively (Equity Theory), the employee’s work motivation (dark green box) increases. The two light green arrows towards the motivation box show aspects of Incentive Travel that help to achieve high Valence or fairness (Equity) among employees. The most important characteristics are target group orientation (Davidson & Cope, 2003) as well as uniqueness and exclusivity (Jeffrey, 2014).

This ‘Incentive Travel – Motivation Model’ serves as basis for the questionnaire (see Chapter Three) to ensure meeting the aim of this dissertation.

CHAPTER 3 – RESEARCH METHODOLOGY

This chapter examines the methodology used for this study. It is structured based on the research process model by Saunders, Lewis and Thornhill (2012). Initially, the author outlines the research philosophy and the methodological approach. She continues by explaining the method used for the data collection and by characterising the population and sample. Finally, the data recording and analysing is elucidated. The author also characterises ethical issues as well as limitations regarding the primary research and presents solutions to counteract these problems.

3.1 RESEARCH MODEL

According to Saunders et al. (2012, p. 680) research can be defined as “the systematic collection and interpretation of information with a clear purpose, to find things out”. The author uses their research model as a structure for the dissertation as a whole but primarily, for this methodology chapter (see Figure 7).

The formulation and clarification of the research topic are achieved by determining an aim and objectives in Chapter One of this study. The second step, the critical review of the existing literature, is covered in Chapter Two. The remaining steps are dealt with in the subsequent paragraphs.

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Figure 7: Research Model (Source: Saunders et al., 2012)

3.2 RESEARCH PHILOSOPHY AND APPROACH

According to Saunders et al. (2012), the research philosophy of a study comprises thoughts and assumptions of the author. This distinct interpretation of the research question, the choice of methods and the evaluation of the findings, give the overall work a personal note.

This dissertation is based on a positivist philosophy. Following this philosophy, the researcher gathers facts and figures with the help of primary research. This makes it possible to make a generalisation of the results, which leads to the creation of credible data (ibid, 2012). In order to reinforce this, the author uses a highly structured methodology enabled through the self-developed ‘Incentive Travel – Motivation Model’ (cf. Chapter 2.4). The greatest weakness of this approach is that the researcher does not interact with participants and therefore cannot influence the collection process (ibid, 2012).

The author has chosen a deductive research approach in this study to meet the aim of investigating the influence of Incentive Travel upon employee motivation. In a deductive approach “a clear theoretical position is developed prior to the collection of data” (ibid, 2009, p. 41). Hereby, new theory can be developed and tested with the help of data collection (ibid, 2009), which is important since there is no existing study that combines the three theories examined in this work. The characteristics of deduction, namely a structured methodology, operationalization and generalisation (ibid, 2012) comply with those of a positivist philosophy. Hence, this approach supports the chosen philosophy.

Moreover, the fact that the study focuses on motivation theories, which is a highly scientific research area, supports the choice of a positivist philosophy in combination with a deductive research approach. An inductive approach would not be suitable for this study as its focus lies on social studies rather than on scientific ones.

3.3 RESEARCH DESIGN

Saunders, Lewis and Thornhill (2012, p. 159) define the research design of a study as “the general plan of how you will go about answering your research question”.

3.3.1 Methodological Choice

There are two different methods, which can be chosen in a research project. The first is quantitative research focused on the generation of numeric data. Alternatively, qualitative research generates non-numeric data (Saunders et al., 2012). As mentioned in Chapter One, there are only few existing studies that deal with the employers’ point of view on employee motivation. Thus, this dissertation is based on a quantitative method to obtain data for a generalisation.

3.3.2 Research Strategy

The nature of the research design of a study can either be exploratory, descriptive or explanatory.

This dissertation is of an explanatory nature. Explanatory research aims to “determine the accuracy of a principle or theory” (Brotherton, 2008, p. 12). In this type of research, the author builds a link between different topics and can create new theories to make research complete (ibid, 2008). It combines descriptive elements with exploratory elements.

As per the strategy of a research project, there are several strategies to choose from:

- Experiment
- Survey
- Archival Research
- Action Research
- Case Study
- Grounded Theory.

In this study, the research is conducted in form of a survey targeting employers who include Incentive Travel in their remuneration system to motivate their employees.

Advantages of this strategy are flexibility and adaptability, standardisation and generalisation, as well as easy understanding and control. Furthermore, the author does not have to bear a financial burden (Saunders et al., 2012).

3.4 RESEARCH ETHICS

In research projects it is important to consider ethical issues that might arise from the data collection process as it involves human interaction (Collis & Hussey, 2003). Important factors that have to be considered by the researcher are anonymity, confidentiality, sensitivity and personal safety (Saunders et al., 2012; Collis & Hussey, 2003).

The anonymity of the participants of the survey as well as of the researcher’s different contact persons is guaranteed, as the questionnaire does not include questions asking the participants to reveal personal data. Hence, all participants and their companies remain anonymous. In order to get an overview of the participating companies, the author included demographic questions regarding the size of the company, the sector where it is operating in and the hierarchical position of the participant. Moreover, participants could include their company’s name on a voluntary basis – yet, this information is not used or published in the dissertation.

Regarding confidentiality, the author included a participant information sheet [Appendix C] on the introductory page of the survey providing information about the survey’s topic and the handling of the gathered data. The data will be saved on a separate password protected hard drive for 10 years and will not be used for any other purpose than the dissertation. Therefore, information will be kept secret and will not be released.

Since no vulnerable people were asked to participate within the survey, there are no ethical issues concerning the type of participants. The nature of the study is not sensitive and therefore does not evoke ethical issues. Beyond that, the author formulated the questions carefully.

Due to the nature of an online questionnaire there are no physical risks involved for the researcher.

The ethics form of this dissertation has been approved by the ethics committee of the Leeds Beckett University [Appendix D].

3.5 DATA COLLECTION

According to the research process model, there are five methods to collect data, of which three are applied in this dissertation: secondary data, questionnaires and sampling.

3.5.1 Secondary Data

Saunders et al. (2012) state that secondary data includes the study of books, journals, magazines, newspaper and different reports. This dissertation is based on a precise analysis of secondary data in the field of motivational theories and Incentive Travel. There are plenty of books and articles discussing and testing the motivation theories by Vroom and Adams. Several statistics and reports were analysed to retrieve data about Incentive Travel and its current usage as a motivational tool. Such a profound literature analysis is essential for a research project and important to expound a high knowledge of the research subject (ibid,2012). Furthermore, a good literature review justifies the importance of conducting research in this specific field.

The literature review, covered in Chapter Two, is the foundation for the self-developed model and hence, the primary research.

3.5.2 Questionnaires

The only primary research method used in this dissertation is a self-administered and internet-mediated questionnaire (ibid, 2012) that was sent to potential participants by e-mail. The link was activated on January 15th, 2015 and invitation e-mails were sent out with a short cover letter on the subsequent days. Additionally, the author started a second round of recruitment for participants on January 26th, 2015. The author decided against reminder e-mails as it was impossible to pointedly target non-participants.

The selected method of online surveys allows participants to allot their time individually and take time to think about their answers. An online survey was preferred over hardcopy questionnaires to save time and money, reach more people and facilitate the evaluation.

The questionnaire was compiled with the online survey tool ‘umfrageonline.com’. After the completion of the survey, the data was exported as .xls file (Microsoft Excel).

3.5.2.1 Questionnaire Design

The online questionnaire consisted of 22 questions and could be conducted in German and English. The author used different question types, including open, list, category, ranking and rating questions as well as yes-or-no questions. For the rating questions, the author used a five-point Likert scale from 1 “strongly disagree” to 5 “strongly agree”.

After the language selection, the participant reached the participant information sheet. The main part of the survey was divided into five sections, based on the ‘Incentive Travel – Motivation Model’ (cf. Chapter 2.4).

The first section included the demographic questions to get an overview of the participants. The questions in this section asked for the name of the company (not mandatory), the size of the company (number of employees), the sector the company is operating in and the position of the respective participant in the company.

The second section of the questionnaire considered questions about the process of awarding Incentive Trips.

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Figure 8: Questionnaire Part II

As shown in the model above, this section included questions about Expectancy, Instrumentality and Input. An example question is a multiple-choice question asking about the criteria for awarding Incentive Travel. It was particularly difficult to obtain information about Instrumentality from the employers’ viewpoint. Therefore, the researcher decided to include a question where the participants had to put themselves in a specific situation.

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