Towards Agile Public Sector: Analysing the Effects of IM and EM on WP

Abstract

Most of the public managers are of the firm belief that extrinsic monetary rewards predominantly contribute to employee productivity and that the motivational strategies shall be aligned to sustain extrinsic motivation (EM) rather than intrinsic motivation (IM). A substantial body of literature on motivation does not endorse this perspective. A relook of the present motivational strategies in central public sector enterprises (CPSEs) in India and an evaluation of the suitability of these strategies as drivers of agility are quite appropriate at this juncture. The purpose of this article is to examine the effects of IM and EM on work performance (WP) in CPSEs, in the context of workforce agility. This article also analyses the relationship between EM and IM in public sector settings. Data collected from 371 employees of five selected CPSEs were analysed. We found that the effect of IM on WP is stronger than the effect of EM on WP in CPSEs. We also found that EM influences IM positively. The study offers insights to public managers to review the existing motivation strategies and to focus on enhancing the IM for an inevitable agile transformation.

Keywords

Public sector enterprise agile workforce intrinsic motivation extrinsic motivation work performance

Introduction

Many organizations in the world have recognized the importance of designing and implementing innovative human resource management (HRM) systems to ensure sustainable competitive advantage in the highly volatile market (Voorde et al., 2010; Wendler, 2013). Agility is the buzzword today, which denotes the capability of an organization to cope with uncertainties and unpredictable market (Gunasekaran & Yusuf, 2002). Most of the researches have looked agility as an attribute, which addresses improvements or modifications in the operational aspects of the organization (Goldman & Nagel, 1993). Agility in operations can be driven only by an agile workforce. Kidd (1994) opined that workforce agility consists of two aspects: (a) the capability of the people in the organization to respond to challenges properly within due time and (b) the ability of workforce to look at the challenges as opportunities and to derive benefits out of the situation in hand. It is the attitude and behaviour of the workforce, which determine the fate of the organization during turbulent times. Agile workforce has ability to conceive new ideas and attitude to accept changes and innovate (Plonka, 1997). According to Dyer and Shafer (2003), workforce agility has proactive, adaptive and generative behavioural approach.

Transformation of legacy work culture to a performance-oriented culture is the key to success in today’s business world. Difficulty to adapt to the competition is conceived as one of the weaknesses with public sector employees (PSEs; Khandelwal, 2014). Transformation of PSEs into agile organizations will be strenuous, as these organizations suffer from bureaucratic hassles and ineffective human resource (HR) practices. According to Thompson (1965), a bureaucratic organization is characterized by a great hierarchy of superior-subordinate relationships, in which, the person at the top gives the general order that initiates all activity. His immediate subordinates make the order more specific to their subordinates and specific individuals carry out specific commands. Public sector managers advocate for bureaucracy as it facilitates organization of complex tasks into a well-defined pattern, at the same time ensure accountability and responsibility of performance (Moynihan & Pandey, 2007).

It is beyond doubt that central public sector enterprises (CPSEs) have contributed immensely to the socio-economic development of India. In the past, several initiatives were taken by Department of Public Enterprises (DPE) to improve the competitiveness of PSEs. For instance, the reward policies of DPE were aligned to offering monetary rewards for job performance, considering the postulation that these rewards predominantly contribute to employee productivity. The emphasis of extrinsic monetary rewards was also evident in the third Pay Revision Committee recommendations for PSEs in India (DPE, 2016). Many PSEs have introduced performance-based pay also to increase efficiency of the workforce.

According to incentive theory of motivation, researchers have identified two types of motivation, namely extrinsic and intrinsic (Vallerand, 2004). Extrinsically motivated person performs the activity for the rewards such as pay, incentives, promotions and awards offered by the management, whereas intrinsic motivation (IM) is activity-oriented and derived by the individual himself or herself by executing the activity (Deci & Ryan, 2000). A sense of excitement, accomplishment and interestingness derived by the individual by performing a job is contributing to IM. One of the contemporary theories of motivation called cognitive evaluation theory (CET) proposes that extrinsic rewards may undermine IM (Gagne & Deci, 2005). However, a feeling of competence and autonomy (self-determination) while performing a task will not undermine IM. Self-determination theory (SDT) presented by Ryan and Deci (2000) postulated that IM is the highest form of autonomous motivation and that organizations should frame strategies to enhance IM for positive organizational outcomes. Organizational practices which result in psychological empowerment of employees in the form of fulfilling the intrinsic motivational needs of the employees are considered as effective methods to develop agile workforce (Muduli & Pandya, 2018).

Research by Sherman and Smith (1984) on the impact of organizational structural characteristics such as hierarchy, centralization, formalization and decision-making levels on the IM of employees showed negative correlation. Such kind of mechanistic structure reduces perceptions of self-determination and freedom. According to Sherman and Smith (1984), greater decentralization of authority and decision-making with decreased emphasis on formalization and standardized procedures should positively affect intrinsic activity. There is general perception that bureaucracy advocates conformity and discourage innovation and change, eventually leading to reduction of intrinsic interest (Claver et al., 1999). Even though bureaucracy and red tape have certain benefits inherent with them, research concludes that these characteristics are not conducive for sustainable progress of organizations. Rigidity, excessive formalization and lack of empowerment prevailing in PSEs are impediments to agility. It is evident that the present motivation strategies followed in CPSEs are not aligned to the workforce agility needs of these organizations. A relook of the various policies is essential to understand the current level of agility in these organizations (Zhang & Sharifi, 2000).

SDT posits that both IM and EM have significant impact on work-related behaviour in organizations. Work behaviour or work performance (WP) leads to various organizational outcomes (Kuvaas et al., 2017). There are conflicting evidences of the contribution of extrinsic and intrinsic motives on employee outcomes. The context of motivation is quite different in PSEs, considering the inherent bureaucratic characteristics associated with PSEs. Furthermore, there has been little evidence about the relationship between EM and IM and their relative impact on work-related behaviour in public sector settings. In this article, we attempt to investigate the current motivational preferences of employees in PSEs and to examine the appropriateness of the present reward policy, for building an agile workforce. We attempt to evaluate the relative effect of IM and EM on WP to suggest suitable reward policies for employees in PSEs. We also test the relationship between EM and IM in PSE settings and analyse whether the results are in line with SDT. A WP model, with IM and EM as antecedents of WP is conceptualized and tested empirically and results are presented. We use self-reported measures to capture the IM and EM and WP among employees of five selected PSEs in India.

Literature Review

More than seven decades of studies have produced substantial knowledge about motivation in organizational settings. As a hypothetical construct, motivation usually stands for that which energizes, directs and sustains behaviour (Perry & Porter, 1982). Energy is concerned with the intensity of effort, direction signifies the channelization of effort and sustenance indicates the persistence of the effort. Quite a number of theories have originated from different parts of the world looking at motivation from different perspectives. Content theories such as Maslow’s (1943) need hierarchy theory and Herzberg et al.’s (1959) two-factor theory are oldest theories of motivation. McGregor’s theory X and Y proposed that managers view people as belonging to two different categories, namely theory X and theory Y. According to this theory, theory X people are generally negative and dislike work and they should be coerced to extract work. On the other hand, theory Y people look at work as natural thing just like leisure or play and work can be extracted from them easily (Robbins et al., 2010). McClelland’s (1985) theory of needs focuses on three needs which motivate people. Need for achievement, need for power and need for affiliation. Need for achievement is the drive to excel or succeed. Need for power indicates the need to make others behave in a way in which they would not have behaved otherwise. Need for affiliation is the need for establishing friendship and close relationship with others (Robbins et al., 2010). Further research on this theory provided evidence for support of the relationship of achievement needs with job performance though there have been a few research findings on the relationship between power needs and job performance.

Cognitive theories such as goal-setting theory and expectancy theory are concerned with how an individual is responding to different situations by the process of thoughts rather than internal inbuilt instructions (Robbins et al., 2010). Goal-setting theory suggests that clearly defined goals or end state will drive individuals. Proximity, difficulty and specificity are the three factors affecting the efficiency of the goal. Although substantial changes happened in organizational settings, these theories are still relevant and many organizations are adopting the lessons learned from these theories to motivate the workforce.

According to Ryan and Deci (2000), people have different levels of motivation. Moreover, there are different types of motivation as well. Level shows the intensity whereas the type indicates the orientation of motivation, which is concerned with reason of motivation (Ryan & Deci, 2000). According to Broedling (1976), for explaining motivation, the intrinsic–extrinsic distinction has been applied in two ways, namely as a trait and as a psychological state of the individual. Trait denotes the personality aspects of the individual, which define the orientation towards the work. The latter use is the most frequent, which postulates that the motivation at a given time is characterized by the situation and how the situation is interacting with the personal traits of the individual. Intrinsically motivated people are more interested in the job content as they derive satisfaction by performing the activity itself whereas extrinsically motivated people are more interested in the job context and the external rewards associated with job. IM refers to one in which the major objective is to derive pleasure or enjoyment by performing the activity. On the other hand, EM refers to the kind of motivation in which the performance is governed by the external rewards associated with performing the activity such as money and any kind of incentive.

Dewett (2007) postulated that IM mediates the relationship between certain antecedents and one’s willingness to take risks and this willingness mediates the effect of IM on employee creativity. He concluded that IM is one of the major antecedents of creativity. Lin (2007) examined the effect of IMs and EMs on employee’s knowledge sharing intentions among employees in Taiwan. He found that motivational factors such as reciprocal benefits, knowledge self-efficacy and enjoyment in helping others were significantly associated with employee knowledge sharing attitudes and intentions. Expected rewards do not have significant influence on knowledge sharing attitudes and intentions. Milne (2007), while summarizing the importance of rewards and recognition programmes, highlighted the need for designing team-based incentives in organizations for positive work outcomes. She also suggested that future research needs to focus on the effect of reward systems on employees’ knowledge sharing intentions and learning.

Extrinsic Motivation–Intrinsic Motivation Relationship and Work Performance in Public Sector Organizations

The relationship between EM and IM and their impact on WP in public sector organizations are enunciated.

According to Ryan and Deci (2000), IM is the doing of an activity for its inherent satisfactions rather than for some separable consequence. Intrinsically motivated individuals perform the activity not because of any apparent reward associated with job rather the reason for performance is attributed to satisfaction, fun, challenge and so on associated with the job. Genetically, human beings have inherent motives at varying levels to perform tasks. So even if there is no external reward offered for performing the job, the inherent motive itself drives the individual to perform. Vallerand (2004) proposed three types of IM, namely IM to know, IM for accomplishments and IM for stimulation. IM has the highest self-determination level among all motivation types (Gagne & Deci, 2005).

Ryan and Deci (2000) define EM as a construct that underlies whenever an activity is done in order to attain some separable outcome. In contrast to IM, the activity is regulated by external rewards such as money, incentives, reprimands, warnings and so on. These rewards are not under the control of the employee rather they are controlled by others. Hence the behaviour is controlled by contingencies external to the person. Extrinsic rewards are being extensively used by organizations to motivate their employees. When extrinsically motivated, the individual does not derive pleasure by doing the activity rather performs the activity for the rewards associated externally. When behaviour is so motivated it is said to be externally regulated, that is, initiated and maintained by contingencies external to the person (Vallerand, 2004). This is the classic type of EM and is a prototype of controlled motivation. EM invariably considered as non-autonomous (Deci & Ryan, 2000).

Research on the extrinsic–intrinsic dichotomy has produced substantial body of literature till date. Although researchers have approached the studies on EM and IM from various angles, there is consensus among researchers on the usefulness of the theory in work settings. Herzberg et al. (1959) two-factor theory of motivation has contributed significantly to distinguish between the motivators and demotivators on the work environment. Centers and Bugental (1966) in their research among working population has found that people at higher occupational levels value intrinsic rewards compared to people at lower occupational levels. People at lower occupational levels are motivated by extrinsic rewards.

The interaction of EM with IM has been extensively studied by researchers. However, there is disagreement among researchers about the findings. Several experiments were conducted (Deci, 1971) to understand the interaction effects and it has been observed that extrinsic rewards, especially performance contingent rewards, may undermine IM. However, it was observed that there is no effect on IM when the rewards are non-contingent. Similarly, verbal reinforcement also found increasing IM. Later on, several other experiments were conducted to assess as to what happens if contingent rewards are withdrawn. These experiments showed that whenever non-contingent rewards were withdrawn, the participant’s IM increased. Later on, Calder and Staw (1975) highlighted some of the methodological problems associated with Deci’s experiments and called for further research on the conceptualization of IM. Deci et al. (1975) explained the interaction effect of extrinsic rewards on IM with the help of CET, which states that extrinsic rewards may undermine IM when the person’s perceived locus of causality is shifted from self-determining to externally controlled. Anything which affects the feeling of competency and self-determination may negatively influence the IM. CET also predicts that expected rewards would lead to a larger decrease in IM than unexpected rewards would (Deci et al., 1975).

Ryan and Deci (2000) presented SDT as a theory to explain EM and IM and their relationship in a broader sense. They introduced the concept of motivation continuum with a clear distinction between autonomous motivation and controlled motivation. IM is the fully autonomous motivation as the motive is within the activity itself. But EM is controlled motivation as the motives are external to the individual. The motivation continuum defined by Gagne and Deci (2005) introduces different types of EM based on the level of autonomy enjoyed by the individual. The self-determination continuum ranges from amotivation, which is unregulated and unintentional, to IM, the highest self-determined type of motivation. In between the amotivation and IM, SDT defines four types of EM in the motivation continuum such as pure EM, introjected regulation, identified regulation and integrated external regulation according to level of internalization and integration of self-determined behaviour (Deci & Ryan, 2000). External regulation or EM is a totally externally regulated motivation. EM with internalization of self-determination at the highest level is called integrated external regulation or autonomous EM (AEM).

Benabou and Tirole (2003) postulated that economists generally advocate for extrinsic rewards. However, they usually neglect the fact that explicit rewards may backfire, particularly in the long run, by undermining the employees’ confidence in their capabilities or in the value of the task for which they are rewarded. The influence of positive affect or feeling of good on IM and EM have been studied by Isen and Reeve (2005) and they found that positive affect not only fosters IM, but also encourages people to complete their tasks which are extrinsically rewarded. Positive affect also contributes to flexible thinking, self-control, forward-looking thinking and problem-solving. Several researchers have attested the usefulness of SDT as a theory in various life domains. One of the significant aspects of SDT is the explanation given by it on the effect of environment on the motivational process (Vallerand et al., 2008).

There is continuing argument between researchers on the usefulness of SDT as a theory in organizational settings. Most of the studies on the effect of extrinsic rewards on IM have been conducted in laboratory settings and therefore, the findings of Deci et al. (1975) in work environments, where lot of other factors dominate, are being questioned by researchers in the recent past. For instance, Stringer et al. (2011) have conducted a study among frontline employees in a retail store to analyse the relationship between IM and EM and it was concluded that there is positive association between the above motivations. Moreover, EM has been regarded as one of the significant factors which drive the overall job satisfaction and other organizational outcomes. This finding questions the theoretical base of SDT as SDT suggests that both motivations will not be high and they are on a motivational continuum.

The effects of extrinsic rewards on IM have remained as a relevant topic for discussion because of the varying degree of results of the studies. Till date, studies, to assess the effect of EM and IM in organizational settings, are very limited especially, in Indian public sector context. In complex public organizations, due importance is assigned for extrinsic rewards as well, as there is little evidence that IM alone can bring the desired work outcomes. However, the crowding out of the intrinsic interest has been observed among public employees when focus is given for high powered extrinsic rewards (Canton, 2005). In Indian public sector context, the high-powered performance contingent rewards have rarely been administered and hence the chances of crowding out of IM are very less. However, low powered incentives such as yearly bonus, awards and recognition programmes have not been perceived as controlling and hence the chances of crowding out of IM is low.

Wright (2007) concludes that employees of public sector have repeatedly found to place a lower value on financial rewards and a higher value on helping others. Comparative studies on IM conducted in public and private sector organizations provide evidences to the fact that PSEs motivated less by the extrinsic aspects of their work and more by the intrinsic features of the work. Nevertheless, it is a fact that employees choose to work irrespective of the organization, expecting some form of reward for their work. There may be varying degree of interest as some may expect tangible rewards, at the same time some other employees expect intangible rewards. Therefore, reward is the primary reason for seeking employment in organizations (Taylor, 2008)

Employees with high degree of IM show adaptive, generative and proactive behaviour during hard times. Condry and Chambers (1978) suggest that people with intrinsic motives are ready to accept failures and they consider failures as stepping stones to success. Intrinsically oriented employees can play a momentous role in facing unforeseeable situations, organizations confront. According to Plonka (1997), positive attitude towards learning new skills, innovative thinking and creativity in all spheres of activity are some of the qualities of agile work force. Gunasekaran (1999) postulates that working in teams, adopting new technologies and initiative to handle varying jobs are attributes of agile workforce. Creative thinking, adapting to the unpredictable and highly volatile business situations, coping with stress, team building, multifariousness in execution of activities, positive attitude towards challenges are hallmarks of an agile employee (Dyer & Shafer, 2003; Griffin & Hesketh, 2003; Sherehiy et al., 2007). Workforce agility demands psychological empowerment of employees, which is the creation of feeling of self-efficacy or energy through organizational restructuring and it leads to experience of IM (Liden & Arad, 1996; Spreitzer, 1995).

Anderfuhren-Biget et al. (2010) came out with an explanation that work motivation is a process by which the employees decide to work hard and sustain his/her efforts. Since motivation is connected with the effort, intensity and direction of the activity, employee behaviour patterns at workplace can be the reflection of their work motivation level. Pinder (1998) defined work motivation ‘as a set of energetic forces that originate both within as well as beyond an individual’s being, to initiate work-related behaviour and to determine its form, direction, intensity and duration’ (p. 11). This definition suggests that there are extrinsic and intrinsic elements, which contribute the work behaviour in organizational settings. According to Porter and Lawler (1968) and Vroom (1964), IM and EM jointly predict WP. According to Kanfer (2012), motivation cannot be directly assessed and changes in motivation are associated with changes in behaviour, learning or job performance. Kuvaas et al. (2017) investigated the impact of IM and EM on work behaviour or WP and concluded that the impact of IM on employee outcomes is greater than the impact of EM on employee outcomes. They concluded that IM and EM are separate and they are negatively correlated.

Evidence from Contemporary Research

A few studies in the recent past, however, acknowledge that there exists positive relationship between IM and EM. It is also postulated that the work settings and contexts are determinants of either synergistic or antagonistic effect of EM on IM. Fischer et al. (2019) in their study on influence of EM and IM on creativity and innovation, concluded that both EM and IM have very significant positive effect on creativity and innovation. They also posit that there is synergistic relationship between relational rewards such as praise, recognition and performance management and IM, which eventually leads to creativity and innovation. However, they did not observe any significant effect of transactional rewards like monetary rewards with IM on creativity and innovation. Kolk et al. (2018), based on their study in Dutch public sector, concluded that result-based motivation strategies are advisable for enhancing both EM and IM and result control leads to performance. They also postulate that result control practices, which is primarily extrinsic oriented, need not undermine IM in public sector contexts. Frey (2017), under the ambit of behavioural economics, suggests that administering pay for performance (PFP) in public sector should be done with care, as there may be crowding out or crowding in of IM, depending on how the employee interprets the such actions. If the employee interprets the action as affirmation of his or her dedication to work and not controlling, then the effect of such action will be positive. In such contexts, relational rewards will be the ideal choice (Fischer et al., 2019). Gong et al. (2017) conducted a study in a large manufacturing organization to understand the interaction effect of EM on the relationship between IM and personal creativity goal. They concluded that EM stimulates the employee’s desire to achieve outcome goals and thus acts as a catalyst for personal creativity. Woolley and Fishbach (2018), based on a series of experiments, provide evidence that timing of external reward is an influential factor on the crowding in or crowding out of IM. Immediate rewards strengthen the activity-goal association due to the fusion effect and hence increase IM. They found that immediate rewards are more powerful than larger rewards as the former is psychologically bigger. Saether (2019) conducted a study in three multinational R&D organizations in Norway to analyse the effect of person–organization (PO) fit on IM and found positive effect of PO fit on IM. PO fit is dependent on employee’s perception of the satisfaction of his or her needs and degree of congruence between his or her values and organization values. One of the prominent attributes is the pay justice, which is the measure of intra- and inter-organizational match of pay and rewards. Pay justice communicates organization value and perception of fair pay positively interacts with PO fit, which in turn, leads to increased IM (Saether, 2019). IM contributes to positive innovative work behaviour in organizations (Saether, 2019). Putra et al. (2017) based on their study in hospitality industry in the United States suggest that conducive work environment is the key to increase work engagement. Creating a comfortable workplace positively influences IM. They found that both EM and IM lead to better work engagement. There was no evidence of crowding-out effect of IM as a result of EM as well (Putra et al., 2017).

Not all studies in the recent past support the finding that EM interacts positively with IM (Kuvaas et al., 2017). Kim and Ahn (2017) conducted an experimental study in marketing domain to understand the effect of customer loyalty programme in the presence of both controlled reward and autonomy supported reward. They found that the controlled rewards reduced the intrinsic interest among consumers. Pervasive use of extrinsic rewards to control human behaviour in various environments has not produced the desired outcome, particularly, for tasks which require creativity. Controlled rewards are useful in contexts where only the temporarily benefits matters most (Kim & Ahm, 2017). Korlen et al. (2017) posit that external financial rewards are not motivating own their own and manager’s ability to align EM with employee’s personal values facilitates crowding in of IM. Managers play a vital role in aligning organization values with personal values. Hendijani et al. (2016) based on an experimental study, suggest that factors such as contextual and individual factors can influence the interaction of rewards with IM and performance.

Though a plethora of theories has been formulated till date on motivation, there is a dearth of literature, which explain the relationship between EM and IM and their relative contributions to WP, in public sector settings. The conflicting views of researchers about EM and IM and their effect on WP prompted us to undertake this research. Moreover, we consider this study as very important as IM is one of the prerequisites of ensuring workforce agility.

Hypotheses

We formulate the hypotheses based on SDT and make comparisons of the results with the conclusions of SDT. We also considered the outcomes of various recent studies conducted in multiple organizational contexts to formulate the hypotheses.

Motivation and Performance

SDT promulgates that IM and EM have significant influence on the work behaviour in organizations. SDT considers IM as the highest self-determined form of motivation and the greatest contributor to employee wellness, psychological health, persistence and engagement. Supportive climatic conditions such as allowing employees to take responsibilities and encouraging them to take risks, among other strategies, help to satisfy the innate needs of the employees at workplace. Many researchers summarized the pivotal role of IM on various organizational outcomes such as creativity and agility (Condry & Chambers, 1978; Dewett, 2007; Plonka, 1997; Saether, 2019). Thus, based on SDT and the various models currently available on the effect of IM on performance, the following hypothesis is framed.

H₁: IM has a significant positive effect on WP.

Behavioural economists recommend extrinsic rewards (Benabou & Tirole, 2003) as obvious choice to motivate employees. However, in the long run, such rewards have the potential to bring down the belief of the employees in their capabilities and thereby performance (Benabou & Tirole, 2003). In public sector, employee’s intrinsic needs are strongly aligned with the job content and therefore, the IM dominates. The scope of domination of EM is limited, as the quality of the performance, rather the quantity of the performance, is emphasized in public sector. The pay and other rewards associated with public sector jobs are not tied to performance and hence IM will dominate (Kuvaas et al., 2017; Weibel et al., 2010). According to Kuvaas et al. (2017), EM has conflicting effect on WP. EM is found to have associated with psychological modifications to reduce energy and enthusiasm, even in the case of tasks which are inherently intrinsic, which eventually leads to lesser work effort. This effect will be either zero or minimum considering the work environment in public sector. The effect on EM on performance, which has a subjective measurement, is still unclear (Kuvaas et al., 2017; Weibel et al., 2010) and hence based on the latest literature, it is argued that there exists a minimum level of negative effect of EM on WP in public sector domain. Of course, the EM–IM relationship is also a key defining aspect in the above-mentioned negative relationship. Accordingly, we hypothesize the following.

H₂: EM has a weak negative effect on WP.

Extrinsic Motivation–Intrinsic Motivation Relationship

Till date, there is little consensus among scholars in the field of psychology and behavioural economics about the relationship between EM and IM. Yet, there is agreement within the research community about the significance of both motivations in work settings. Muduli (2017), on the basis of a study conducted in Indian manufacturing and service organizations on work force agility, suggests the noteworthy characteristics of organizations, which invigorate agility. He pinpoints that practices that encourage a sense of self-determination, competence and meaningfulness, promote agility. In addition, skill-based pay systems and non-monetary rewards can also promote agility.

Though a few scholars in the recent past highlighted the ill effects of extrinsic motives on intrinsic interest (Kim & Ahm, 2017; Korlen et al., 2017; Kuvaas et al., 2017), a considerable number of scholars were able to give plausible explanation of positive relationship between EMs and IMs (Fischer et al., 2019; Kolk et al., 2018; Putra et al., 2017; Saether, 2019). It is pertinent to note that the perception of negativity associated with extrinsic rewards started diminishing, as explicated by researchers through the contemporary research findings.

CET, a sub theory of SDT, posits that expected extrinsic rewards would undermine IM (Deci et al., 1975). Contrary to this, in a typical public sector, though salary, promotions and job security are offered, the undermining effects of these rewards are negligible. Instead, extrinsic motives facilitate intrinsic interest, as evidenced in various studies. Many researchers promulgate that the contexts, work environments, personal and organization values significantly influence the outcomes. We take a deviation from some of the principles of SDT, on the basis of many research findings, particularly studies conducted in the recent times in work settings, to justify the positive relationship between EM and IM. Accordingly, the following hypothesis is presented.

H₃: EM has a significant positive effect on IM.

Figure 1 depicts the WP model.

Tremblay et al. (2009) introduced measures such as Work Extrinsic and Intrinsic motivation Scale (WEIMS), theoretically grounded in self-determination theory (Gagne & Deci, 2005), to assess the different types of motivations in the continuum. WEIMS is a tool which provides the levels of different motivations at any point of time. We use the construct WP to measure the effort, intensity and direction of the activity by employees as suggested by Kuvaas et al. (2017) and Kanfer (2012). WP is viewed as a measure of work-related behaviour, and IM and EM are viewed as the contributors to the behaviour.

Figure 1.

Source: The authors.

Research Methodology

Sample

To analyse the motivational orientations and to test the theorized relationships, responses were collected from employees of five CPSEs, by administering a well-structured questionnaire. These five organizations were randomly selected from five distinct groups, formed based on the employee strength. We attempted to collect 400 samples from the population in accordance with the conditions stipulated for scientific sampling. A total of 371 completed questionnaires were taken for analysis. According to Hair et al. (2006), when the model contains constructs five or less, with lesser than three indicators per construct, and communalities are modest, a sample size of 200 is adequate. The present model contains three constructs with minimum of three items per construct. Table 1 shows the biographical profiles of the respondents.

Table 1.

Biographical Profiles

Variable	Frequency	Percentage
Age
Below 25 years	13	3.5
25–40 years	106	28.6
41–55 years	215	58.0
More than 55 years	37	10.0
Gender
Female	138	37.2
Male	233	62.8
Work experience
Below 5 years	55	14.8
5–10 years	76	20.5
11–15 years	30	8.1
16–20 years	24	6.5
More than 20 years	186	50.1
Job status
Top management	7	1.9
Middle management	115	31.0
First level management	164	44.2
Non managerial	85	22.9
Education
High school	4	1.1
Higher secondary	16	4.3
Graduate	155	41.8
Postgraduate	132	35.6
Others (including PhD holders)	64	17.3

Source: The authors.

Measuring Method

WEIMS has been selected (Tremblay et al., 2009) to measure IM and EM. WP is measured using the scale items adopted from the contribution of Anderfuhren-Biget et al. (2010) in their study in public sector and from the studies of Kuvaas et al. (2017) and Kanfer (2012) on motivation. Likert scale with five alternatives, starting from a strongly agree, agree, neither agree or disagree, disagree and strongly disagree, with strongly agree represents a numerical value of five and strongly disagree represents a value of one, was used.

Data Analysis and Results

Preliminary Analysis

Statistical software packages such as Statistical Package for Social Sciences (SPSS) version 23 and Analysis of Moment Structures (AMOS) version 23 were used for the statistical analyses. Distribution of sample respondents based on summated scales for IM and EM is presented in Figure 2.

Analysis of sample reveals that most of the respondents (91.3% for IM and 77.3% for EM) have summated score of three and above for the respective motivations. This result is probably due to the fact that employees in public sector generally have higher intrinsic interest than extrinsic (Wright, 2007). The mean values of constructs, based on summated scale given in Table 2, also support this argument.

Standard deviation values indicate that employees differ in their motives to a considerable extent. There were some noticeable observations with regard to the relationship between demographic variables and motivations. Employees with higher status displayed higher WP, IM and EM. Age group does not have any relationship with IM and EM. Yet, there is a weak relationship between age group and WP. As educational level goes up WP and IM increase. Although weak, the relationship between income and WP is positive and significant. However, monthly income does not have significant association with EM, which implies that there could be factors such as job security which sustain their EM. Gender is not significantly associated with any type of motivation. In general, the demographic factors do not have a great deal of association with the motivations as evidenced in previous studies (Buelens & Broeck, 2007; Crewson, 1997; Jurkiewicz, 2000; Wittmer, 1991).

Figure 2.

Source: The authors.

Table 2.

Mean Values of Constructs Based on Summated Scales

	N	Minimum	Maximum	Mean	Std. Deviation
WP	371	1.00	5.00	4.1585	0.60605
IM	371	1.00	5.00	3.7574	0.65071
EM	371	1.33	5.00	3.3602	0.66940

Source: The authors.

Confirmatory Factor Analysis Results

Structural equation modelling (SEM) was used to test the hypotheses (Hoyle, 1995). Issues related to missing data, multi-collinearity and multivariate normality were addressed during the preliminary analysis of the data. As the data were found multivariate non-normal, the technique suggested was asymptotic distribution free (ADF) estimation for analysing non-normal data (Byrne, 2010). Although studies showed that ADF requires bigger sample size for reliable estimations, latest research suggests that ADF results are trustworthy when the sample size is at least 10 times as that of the number of parameters to be estimated (Byrne, 2010). Prior SEM estimations revealed that among the available estimation techniques, even with all the limitations, maximum likelihood estimation (MLE) method is considered as fairly robust even in cases of deviation of data from multivariate normality (Olsson et al., 2004; Olsson et al., 2000). In this study, the researchers selected ADF technique for model estimation followed by MLE estimation, for comparison and confirmation of mode fit.

While performing the confirmative factor analysis (CFA) with IM, EM and WP as constructs, for proper model identification and diagnosis, path estimates, standardized residuals and modification indices were analysed. Items with factor loading values below 0.5 were eliminated to improve CFA model fit (Hair et al., 2006). The construct validity components such as convergent validity and discriminant validity were assessed and it was found that all constructs have the required construct validity. The average variance extracted (AVE) percentages were also estimated and compared with the square of the correlations between the constructs to test the convergent validity and discriminant validity (Fornell & Larcker, 1981). The construct reliability (Fornell & Larcker, 1981) was also estimated for IM, EM and WP. Table 3 presents the summary of the estimates. The reliability analysis suggests good internal consistency (Cronbach’s Alpha value > 0.7) of all measurements.

SEM reveals that four items such as feeling of achievement, opportunity for self-expression, job interest and pleasure from learning (factor loading > 0.7) by the respondents adequately represent IM construct. Similarly, items such as verbal praise from superiors, power, appreciation and positive feedback from superiors are rated as items representing EM construct to the greatest extent (factor loading is slightly less than 0.7 for two items and greater than 0.7 for two items).

As Table 3 indicates, the factor loading of all items was greater than 0.5, which suggests good convergent validity (Hair et al., 2006). The AVE percentages range from 0.525 to 0.589, which suggests good convergent validity (Fornell & Larcker, 1981). The AVE estimates of constructs IM, EM and WP are greater than square of inter-construct correlations. This indicates acceptable discriminant validity (Fornell & Larcker, 1981). The construct reliability values of IM and WP are extremely good, whereas that of EM is acceptable (Fornell & Larcker, 1981).

Table 3.

Construct Validity and Reliability

Constructs	Factor Loadings	Error Variance	AVE Percentage	Construct Reliability
IM	0.789	0.19	0.589	0.912
	0.821	0.19
	0.703	0.34
	0.752	0.23
EM	0.665	0.40	0.525	0.730
	0.690	0.31
	0.800	0.49
	0.738	0.56
WP	0.630	0.48	0.595	0.905
	0.749	0.07
	0.910	0.19
	Correlations:	IM–EM 0.559	IM–WP 0.515	EM–WP 0.080

Source: The authors.

Structural Model Results

A structural model as given in Figure 3 with both IM and WP as endogenous constructs and EM as exogenous construct has been specified (Hair et al., 2006).

Smaller chi-square (χ²) statistic and corresponding larger p-value (Byrne, 2010), goodness-of-fit index (GFI) values above 0.90 (Hoelter, 1983), root mean square error approximation (RMSEA) values lesser than 0.08 (Browne & Cudek, 1993) and comparative fit index (CFI) values of 0.90 (Bentler & Bonnett, 1980) represent good model fit. In AMOS output, probability PCLOSE (closeness of fit) associated with RMSEA is recommended to be above 0.5 for better fit (Byrne, 2010).

The goodness-of-fit measures with ADF estimation, indicate good model fit (χ² –47.984, df –41, p-value –0.211, GFI –0.948, CFI –0.969 and RMSEA –0.021 with PCLOSE value 0.988). The regression weights and p-value suggest that prediction paths EM–IM, IM–WP and EM–WP are significant albeit the very mediocre predictive power of EM. The standardized regression weight is 0.683 in the IM–WP predication path, which suggests relatively strong impact of IM on WP. The standardized regression weight value of 0.559 in the EM–IM path suggests relatively good impact of EM on IM (Byrne, 2010). The standardized regression weight value of –0.302 in the EM–WP path suggests negative impact of EM on WP (Byrne, 2010). A comparison of goodness-of-fit indices with ML estimation (χ² –76.438, GFI –0.965, CFI –0.979, RMSEA –0.048 and PCLOSE –0.542) supports the model fit suggested by the ADF estimation.

Figure 3.

Source: The authors.

Discussions

Most of the studies on motivation originated from the developed economies such as the United States and the United Kingdom. The influence of distinct motives on the effort and intensity of job performance in Indian context, particularly in public sector environment, has rarely been investigated. The present study is apposite, given the challenges faced by public sector organizations in India. The workforce agility readiness of these organizations is very much dependent on the HRM practices currently followed by them. This study is an attempt to fill the knowledge gap in the field of motivation research, particularly motivational orientations of CPSEs, to gain insight into their agility readiness.

The descriptive analysis revealed that employees in the selected PSEs have higher intrinsic interest than extrinsic. The above finding is consistent with the results of previous studies (Buelens & Broeck, 2007). The study gives evidence to the fact that in CPSEs, EM is positively associated with IM and EM is a significant predictor of IM. This finding is not fully aligned with the evidences from a few contemporary studies (Kim & Ahm, 2017; Korlen et al., 2017; Kuvaas et al., 2017). Alternatively, the positive association between EM and IM is not surprising, particularly in light of the outcomes of another set of contemporary studies (Fischer et al., 2019; Kolk et al., 2018; Putra et al., 2017; Saether, 2019). One reason could be the fact that the implementation of PFP system in these organizations is in its early stages and as such, these rewards do not reduce IM. As long as performance contingent rewards are not offered to employees, their intrinsic interest would remain intact (Gagne & Deci, 2005). According to van der Kolk et al. (2018), the effects of controlling and informing aspects of rewards get neutralized in the context of public sector. Employees believe that rewards have informational effect. They do not feel that rewards are controlling, rather they feel a sense of ownership of their behaviour (Sheldon & Prentice, 2017). The controlling effect of salary, job security, promotion and status as a public servant is negligible compared to the effects of performance contingent rewards like PFP systems. Therefore, the locus of causality remains to be internal to the employee rather than external. Another reason for the positive relationship between EM and IM could be the conditioning happening in a typical public organization context. Ledford et al. (2013), while summarizing the findings of various studies pointed out that social conditions such as supervisor control, organization environment and feedback systems contribute to creation of feeling that the rewards are associated with competence and autonomy, which leads to IM. Generally, in public sector, employees view that they are compensated for the service they are rendering to the society and as such, they instil a feeling of self-control. If the social context is conducive, which is a result of management control, it can nullify or at least reduce the undermining effect of extrinsic rewards (Ledford et al., 2013). There can be yet another explanation for the positive influence of EM on IM. In public sector, IM is dominating in the workplace and extrinsic rewards create a synergizing effect on the relationship between IM and performance outcome (Gong et al., 2017). Better PO fit in public sector contributes to the positive EM–IM relationship (Saether, 2019), as employees join public sector with a notion that formalization, centralization and compliance to procedures are trademark characteristics of a typical public sector. Research happened in a multiplicity of contexts, supports the proposition that there exists a positive relationship between the EM and IM (Fischer et al., 2019; Kolk et al., 2018; Putra et al., 2017; Saether, 2019). Sheldon and Prentice (2017), while elaborating on the relevance of SDT, highlight that whenever participants cognitively view the rewards as informational and supportive, the undermining of IM will not happen. Further, the cognitive assessment on congruence of innate needs of the individual with extrinsic rewards, rather than dissonance, promote IM (Sheldon & Prentice, 2017). In public sector, considering the job context, reward system, PO fit and employee cognitions, it is pertinent to conclude that the positive EM–IM relationship, as evidenced in the present research, is not surprising. Yet, detailed analysis of the impact of contextual and personal factors is also significant to gather further insights into this relationship. This will help managers to frame strategies for much needed agile transformation.

Further, IM has significant positive impact on WP. The hypothesis that EM is a significant predictor of WP is not well established. This finding is consistent with the studies conducted by Kuvaas et al. (2017) and SDT (Gagne & Deci, 2005). Negative regression weight –0.25 in the EM–WP indicates that when IM partially mediates the relationship between EM and WP, there is a weak negative impact of EM on WP. This could be due to the fact that IM is only the pertinent motivation in PSEs and EM only plays a supporting role. Employees perceive that the extrinsic rewards such as salary, job security, promotion and status of a public servant are guaranteed and hence employees are likely to be contented with such extrinsic rewards. In public sector organizations, employees generally disregard extrinsic rewards compared to intrinsic rewards (Buelens & Broeck, 2007; Lee & Wilkins, 2011). Further, as suggested by Kolk et al. (2018), in public sector, result control practices, which is extrinsically oriented, will not lead to reduction in performance. Whenever there is slight interpretation of the action of management as controlling, there will be lesser work effort as the effect of crowding out dominates (Frey, 2017). Given the context in public sector and the prevailing PO fit, the weak negative EM–WP relationship is not surprising (Saether, 2019). The negative relationship indicates a slight imbalance in the work behaviour due to the reduction of feeling of self-determination. Reduction of self-determination, as a result of a feeling of control, is a cause of concern as it will lead to lesser IM, which in turn, leads to lower performance. Nevertheless, it is a fact that employees choose to work irrespective of the organization, expecting some form of reward for their work. There may be varying degree of interest as some may expect tangible rewards, at the same time some other employees expect intangible rewards. Therefore, reward is the primary reason for seeking employment in organizations (Taylor, 2008).

The finding that IM has greater influence on WP is quite encouraging, considering the agility requirement of PSEs. Breu et al. (2002) listed the capabilities of workforce agility as responsiveness to change (Intelligence), speed of acquiring new skills (competencies), ease of collaboration across functional boundaries (collaboration), employee empowerment (culture) and support of IT infrastructure to introduce new information system (information system). Kathuria and Partovi (1999) conducted a study in a manufacturing setup and concluded that relationship-oriented practices such as inspiring, recognizing, supporting, team building, mentoring, rewarding, networking and participative leadership practices such as delegation and consultation positively influence workforce agility. Many studies revealed that these practices play pivotal role for sustaining the intrinsic interest among employees. Weitz et al. (1986) in their study concluded that the degree of intrinsic orientation of salespeople is related to their motivation to practice adaptive selling.

Reward system plays an important role in attracting and retaining highly talented employees in organizations. In Central Government organizations in India, tangible reward systems such as pay, promotions, bonus and incentives are predefined. Although our study reveals appreciable intrinsic interest among employees, the mechanistic structure of the public sector organizations is a hindrance to developing agility. PSEs are known for their hierarchy, centralization, formalization and decision-making levels, which have negative association with IM (Sherman and Smith, 1984). Rigid structure reduces perceptions of self-determination and freedom, which are essential ingredients of intrinsic interest. When employees perceive that they can influence the performance results of their organization, they may tend to show agility in their behaviour (Ashforth, 1989). Sherehiy et al. (2007) concluded that organization with organic design has flexibility, adaptability to change and innovation characteristics, compared to organization with mechanistic design. According to Khandelwal (2014), any reform process can be facilitated by placing the HR function at centre stage as HR management is the key requirement for ensuring sustainability in the competitive environment.

We utilize the learning from SDT and findings of SDT based studies to frame the hypotheses for the present study. The results of our study are in line with SDT in many ways. Present study reveals that IM has positive influence on WP in public sector too. The effect of EM on WP is very weak. IM has a greater influence on WP compared to the influence of EM. However, the evidence that EM influences IM positively is contradictory to the principles of SDT. The context of public sector is different and further analysis of the positive association between EM and IM in such settings is quite relevant.

Conclusion

Managerial Implications

The results of the study invite serious rethinking of the present reward policy of public sector management. Employees are driven by varying levels of motives, which demand for reworking of ‘one-size-fits-all’ motivation strategy for employees. A system which is enabled with artificial intelligence is quite appropriate at workplace to gather data with regard to psychological needs of employees and to guide management in turbulent times. HR practitioners should be careful in their selection of rewards for motivating employees as overemphasis on extrinsic monetary rewards could be costly. The dominating role of IM on performance outcome of employees is evident in this study. It is easy to inculcate a culture of agility among intrinsically motivated employees. The mechanistic design of public sector organizations is a hindrance to sustenance of IM. Managers should create an environment, which satisfies the needs of autonomy, relatedness and competence as posited by SDT (Gagne & Deci, 2005). This does not mean that extrinsic rewards should be sidelined. Managers have to go for a balancing act considering the relative impact of IM and EM on WP.

Limitations

First, the study confined to the analysis of motivations of employees in CPSEs to understand the suitability of existing practice of employee motivation. The study does not include bureaucracy as a control variable, though it is relevant in the context of PSEs. Second, the study would have provided more insights on motivation-workforce agility relationship in public sector environment, if workforce agility was considered as an outcome variable. Finally, the sector-wise comparison of the PSEs would have made the study more meaningful. Generalization of results will be appropriate once all categories of PSEs are included.

Future Research

The primary focus of this research was to study the impact of IM and EM on work behaviour in CPSEs to get an understanding of the prevailing environment of agility transformation (Sherehiy et al., 2007). It would be better if future researches analyse the moderating effect of bureaucracy on the IM–WP relationship. Future research is expected to analyse the positive effect of EM on IM in public sector further, so as to figure out the most suitable motivation strategies. As evidenced, self-motivation and psychological empowerment have positive impact of workforce agility (Hosein & Yousefi, 2012; Muduli & Pandya, 2018). A comprehensive study to assess the impact of IM on workforce agility in bureaucratic organizations will be handy. It is also imperative to undertake a comparative study in service and manufacturing sectors to gain deeper knowledge in the subject.

Concluding Remarks

Public managers are under constant pressure to change the notion that public institutions are generally inefficient with no clarity of organizational goals, ineffective in HRM and incompetent to adapt to market conditions. To give impetus to organizational effectiveness in challenging situations, these organizations have introduced several initiatives in the recent past. One central issue is concerned with improving productivity and efficiency of the HR. Motivated, empowered, flexible and knowledgeable employees are characteristics of agile workforce (Yusuf et al., 1999).

The current agility level of the organization tells the management about the decisions to be taken for agile transformation (Zhang & Sharifi, 2000). In certain cases, the agility transformation requires to be fast. According to Armstrong (2008), the selection of rewards shall be based on the analysis of the present situation prevailing in the organization and an evaluation of the needs of both business and employees. Present study based on SDT, reveals that IM is contributing work behaviour in PSEs predominantly, which is a positive sign from an agility perspective. However, inherent characteristics of public sector may impede the progress. The present article offers valuable insights to top-level management of public sector in India and makes theoretical and empirical advancement over prior knowledge. First, it suggests that intrinsic motives are dominant in public sector than extrinsic motives. Second, the need of maintaining EM at workplace is also emphasized as extrinsic rewards positively influence IM. It seems that this relationship will continue until performance contingent rewards are introduced. Third, though extrinsic rewards such as salary, job security and power have significance, the focus needs to be shifted to sustain and improve IM, as it has highest influence on WP. Finally, the study suggests a relook into the application of SDT in public sector settings and calls for rigorous research to get more clarity on the EM–IM relationship. Managers have to play a crucial role in aligning the objectives of extrinsic rewards with the innate needs of employees to produce the required impetus for agility. Theorists and practitioners may consider the fact that motivating employees by applying a specific motivation strategy is not enough to develop an agile workforce.

Footnotes

Acknowledgements

It is indeed a great privilege to express heartfelt gratitude to all great personalities who have wholeheartedly supported us during our research at Institute of Management in Kerala, University of Kerala, Thiruvananthapuram.

First and foremost, with great respect, we express our sincere gratitude and indebtedness to Dr K. V. Krishnankutty, professor (retired), College of Engineering, Thiruvananthapuram, for his valuable guidance and support which, we believe, are reasons for the successful culmination of the research.

We express our sincere gratitude to Dr J. Rajan, professor (retired), Institute of Management in Kerala, University of Kerala, Dr Udaya S. Mishra, professor, Centre for Development Studies, Thiruvananthapuram, and Dr Vinoj Abraham, associate professor, Centre for Development Studies, Thiruvananthapuram, who have enriched our knowledge and facilitated the smooth progress of the research. We also express our gratitude to the faculty and library staff of University of Kerala and Indian Institute of Management Kozhikode, for their valuable services during our research work.

We express our gratitude to the management of the five ‘central public sector units’ for their support during our research work.

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.

Funding

The authors disclosed receipt of the following financial support for the research, authorship and/or publication of this article: This research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors.

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