2010

MD. MESBAH UDDIN

[EMPLOYEE MOTIVATION
ACTIVITIES OF IDLC FINANCE
LIMITED]
It is evident that keeping the employees satisfied and motivated to work, by fulfilling
their intrinsic and extrinsic needs, ensures high attainment of goals and improves
financial performance of the organization. IDLC believes in good and friendly working
environment, employees are highly empowered & have career progression opportunities,
and the organization is a top paymaster in the market. As a result of good governance
and clearly defined motivational activities, its financial performance is high, employees
are highly satisfied and motivated, very low turnover and it is treated as a standard in the
field.
 Acknowledgement

At this opportune moment, at first with the name of Almighty Allah, I am delighted to

offer my heartiest thanks and deep gratitude to our course coordinator Dr. Nazrul Islam,

Professor, Department of Business Administration, East West University for giving us

the opportunity to work on such an interesting term project on management. It improves

our understanding about Human Resources Management in practice.

I am really gratified to all the employees of IDLCSL for their cordial cooperation to

complete this term report.

I am very much grateful to all my classmates of MBA 503 program, for their open ended

support to complete the report.

The Author
19 December, 2010

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 Table of Contents

Title Page No.

Acknowledgement 2
Table of Contents 3
Chapter One: Introduction 4-5
1.1 Background 4
1.2 Objective 5
Chapter Two: Methodology 6
Chapter Three: Theories of Motivation 7-13
3.1 Early Theories of Motivation 7
3.1.1 Maslow’s Hierarchy of Needs Theory 7
3.1.2 Douglas McGregor’s Theory X and Theory Y 8
3.1.3 Herzberg’s Two-Factor Theory 8
3.2 Contemporary Theories of Motivation 9
3.2.1 Alderfer’s ERG Theory 9
3.2.2 McClelland’s Theory of Needs 10
3.2.3 Cognitive Evaluation Theory (CET) 11
3.2.4 Goal-Setting Theory 12
3.2.5 Reinforcement Theory 13
Chapter Four: Employee Motivation Activities of 14-17
IDLC Finance Limited
4.1 Overview of IDLC Finance Limited 14
4.2 Vision, Mission, Goal & Corporate Philosophy 15
of IDLC
4.3 Human Resource Development & Motivation 16
Chapter Five: Discussion 18
Chapter Six: Conclusion 19
Chapter Seven: Reference 20

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 Chapter One: Introduction

1.1 Background

Motivation has become increasingly important for organizations and companies of all

sizes that want to reach their organizational objectives in a competitive marketplace.[1]

Motivation plays a critical role in achieving goals and business objectives and is equally

as important for companies that work in a team-based environment or in a workplace

comprised of workers who work independently. Now-a-days, motivated workforce is

more important than ever to survive in the era of globalization. The best businesses more

often have the best motivated workers. Because well-motivated employees are usually

characterized by: higher productivity, better quality work with less wastage, greater

sense of urgency, more employee feedback and suggestions made for improvements,

more feedback demanded from superiors and management and so on. [2] Motivating and

rewarding employees is one of the most important and challenging activities that

managers do.[3] Motivation is the result of an interaction between a person and a

situation.

However, removal of dissatisfaction and then making them satisfied with their job is a

prerequisite to motivate the employees. Without satisfied employee, good performance

can not be imagined, as dissatisfaction leads to higher absenteeism and turnover, which

will eventually hamper the greater interest of the organization.[3] Dissatisfied employees

also have a tendency of misbehavior with the customers and even with colleagues.[3]

They some times create social problems by demonstrating their frustrations on others. So

removal of dissatisfaction is very important.

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On the other hand, today’s employers always seek for top performance, high attainment

of goals, meeting challenges in time to coupe with the pace of globalization challenges.

To survive in this challenging period every organization needs highly motivated

employees in their organization. Motivated employees can not be produced overnight. It

requires good deal of times and efforts. There are some theories which can be practiced

to satisfy and motivate employees. Some of these theories and its implication in real

organization will be discussed later in this report.

1.2 Objective

The objective of the current study is to find out the hygiene and motivation factors

considered by the “IDLC Finance” to satisfy and motivate its employees, and to review

whether they correlate with the prominent motivation theories.

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 Chapter Two: Methodology

The study was conducted by visiting the IDLC Securities Ltd. - a fully subsidiary

company of the IDLC. IDLCSL was considered as the sample of the study. Data used to

prepare this report has been collected from both the primary and secondary sources. To

gather primary information, the work activities of the employees were observed and an

open discussion with randomly chosen employees of the IDLCSL was considered. The

secondary data was collected from annual reports, periodicals, and business articles of

the company, journals, research papers and articles from various online sources.

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 Chapter Three: Theories of Motivation

Motivation is the process by which a person’s efforts are energized, directed, and

sustained toward attaining a goal.[3] There are three key elements for motivation,

mentioned in the definition:

1. Intensity: how hard a person tries

2. Direction: toward beneficial goal

3. Persistence: how long a person tries

Motivation can be self-generating or the product of good management.[4] Either way,

motivation is an important part of performance management because simply having a

common goal is not enough. A person may understand the goal at hand, but may not

have the motivation to pursue it. This chapter outlines several theories of motivation.

3.1 Early Theories of Motivation

3.1.1 Maslow’s Hierarchy of Needs Theory [3, 5, 6, 7]

There is a hierarchy of five needs- physiological, safety, social, esteem, and self-

actualization. As each need is substantially satisfied, the next need becomes dominant.

The needs, listed from basic (lowest-earliest) to most complexes (highest-latest) are as

follows:

1. Physiological needs: Food, drink, shelter, sex, and other physical requirements.

2. Safety needs: Security and protection from physical and emotional harm, as well

as assurance that physical needs will continue to be met.

3. Social needs: Affection, belongingness, acceptance, and friendship.

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 4. Esteem needs: Internal esteem factors such as self-respect, autonomy, and

achievement and external esteem factors such as status, recognition, and

attention.

5. Self-actualization needs: Growth, achieving one’s potential, and self-fulfillment;

the drive to become what one is capable of becoming.

3.1.2 Douglas McGregor’s Theory X and Theory Y [3, 5, 8, 9]

Assumptions of Theory X
i. Employees inherently dislike work and, whenever possible, will attempt to avoid
it.
ii. Since employees dislike work, they must be coerced, controlled, or threatened
with punishment to achieve goals.
iii. Employees will avoid responsibilities and seek formal direction whenever
possible.
iv. Most workers place security above all other factors associated with work and will
display little ambition.

Assumptions of Theory Y

i. Employees can view work as being as natural as rest or play.

ii. People will exercise self-direction and self-control if they are committed to the
objectives.
iii. The average person can learn to accept, even seek, responsibility.
iv. The ability to make innovative decisions is widely dispersed throughout the
population and is not necessarily the sole province of those in management
positions.

3.1.3 Herzberg's Two-Factor Theory [3, 5, 10]

Herzberg proposed the Motivation-Hygiene Theory, also known as the two factor theory

of job satisfaction. He proposed several key findings as a result of this identification.

Intrinsic factors are related to job satisfaction and motivation. These are motivational

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factors. Extrinsic factors are associated with job dissatisfaction and these are

maintenance factors.

According to his theory, people are influenced by two sets of factors:

Motivator Factors (Intrinsic

Hygiene Factors (Extrinsic factors)
factors)

 Pay and Benefits

 Company Policy and Administration
 Achievement
 Relationships with co-workers
 Recognition
 Supervision
 Work Itself
 Status
 Responsibility
 Job Security
 Promotion
 Working Conditions
 Growth
 Personal life

3.2 Contemporary Theories of Motivation

3.2.1 Alderfer's ERG Theory [3, 5]

Alderfer expanding on Maslow's hierarchy of needs, created the ERG theory. This theory

posits that there are three groups of core needs — existence, relatedness, and growth.

 The existence group is concerned with providing our basic material existence

requirements. They include the items that Maslow considered to be physiological

and safety needs.

 The second group of needs is those of relatedness- the desire we have for

maintaining important interpersonal relationships. These social and status desires

require interaction with others if they are to be satisfied, and they align with

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 Maslow's social need and the external component of Maslow's esteem

classification.

 Finally, Alderfer isolates growth needs' an intrinsic desire for personal

development. These include the intrinsic component from Maslow's esteem

category and the characteristics included under self-actualization.

3.2.2 McClelland’s Theory of Needs [3, 11]

McClelland's Need Theory is a motivational model that attempts to explain how the

needs for achievement, power, and affiliation affect the actions of people from a

managerial context.

 Need for Achievement: People who are achievement-motivated typically prefer

to master a task or situation. They prefer working on tasks of moderate difficulty,

prefer work in which the results are based on their effort rather than on luck, and

prefer to receive feedback on their work.

 Need for Affiliation: People who have a need for affiliation prefer to spend time

creating and maintaining social relationships, being a part of groups, and desire

feeling loved and accepted. People in this group do not typically make effective

managers because they worry too much about how others will feel about them.

 Need for Power: This motivational need stems from one's desire to influence,

teach, or encourage others. People in this category enjoy work and place a high

value on discipline. The downside to this motivational type is that group goals

can become zero-sum in nature. For one to win, another must lose. However, this

can be positively applied to help accomplish group goals and to help others in the

group feel competent about their work.

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McClelland proposes that those in the top management positions should have a high need

for power and a low need for affiliation. He also believes that although individuals with a

need for achievement can make good managers, they are not suited to being in the top

management positions.

3.2.3 Cognitive Evaluation Theory (CET) [3, 12]

Cognitive Evaluation Theory (CET) is a theory in Psychology that is designed to explain

the effects of external consequences on internal motivation. Specifically, CET is a sub-

theory of Self-Determination Theory that focus on competence and autonomy while

examining how intrinsic motivation is affected by external forces.

CET uses three propositions to explain how consequences affect internal motivation:

 External events will impact intrinsic motivation for optimally challenging activities

to the extent that they influence perceived competence, within the context of self-

determination. Events that promote greater perceived competence will enhance

intrinsic motivation, whereas those that diminish perceived competence will decrease

intrinsic motivation.

 Events relevant to the initiation and regulation of behavior have three potential

aspects, each with a significant function. The informational aspect facilitates an

internal perceived locus of causality and perceived competence, thus positively

influencing intrinsic motivation. The controlling aspect facilitates an external

perceived locus of causality (a person’s perception of the cause of success or failure),

thus negatively influencing intrinsic motivation and increasing extrinsic compliance

or defiance. The amotivating aspect facilitates perceived incompetence, and

undermining intrinsic motivation while promoting disinterest in the task. The relative

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 salience and strength of these three aspects to a person determines the functional

significance of the event.

 Personal events differ in their qualitative aspects and, like external events, can have

differing functional significances. Events deemed internally informational facilitate

self-determined functioning and maintain or enhance intrinsic motivation. Events

deemed internally controlling events are experienced as pressure toward specific

outcomes and undermine intrinsic motivation. Internally amotivating events make

incompetence salient and also undermine intrinsic motivation.

3.2.4 Goal-Setting Theory [3, 5]

Goal-setting theory is based on the notion that individuals sometimes have a drive to

reach a clearly defined end state. Often, this end state is a reward in itself. Edwin Lockle

proposed that intentions to work toward a goal are a major source of work motivation.

Goals tell an employee what needs to be done and how much effort will need to be

expanded. Specific goals increase performance; that difficult goals, when accepted, result

in higher performance than do easy goals. A goal's efficiency is affected by three

features: proximity, difficulty and specificity. An ideal goal should present a situation

where the time between the initiation of behavior and the end state is close. This explains

why some children are more motivated to learn how to ride a bike than mastering

algebra. A goal should be moderate, not too hard or too easy to complete. In both cases,

most people are not optimally motivated, as many want a challenge -which assumes

some kind of insecurity of success. At the same time people want to feel that there is a

substantial probability that they will succeed. Specificity concerns the description of the

goal in their class. The goal should be objectively defined and intelligible for the

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individual. A classic example of a poorly specified goal is to get the highest possible

grade. Most children have no idea how much effort they need to reach that goal.

3.2.5 Reinforcement Theory [3]

A counterpoint to goal-setting theory is reinforcement theory. The former is a cognitive

approach, proposing that an individual’s purposes direct his or her action. This theory

argues, reinforcement conditions behavior. Behavior is a function of its consequences.

Reinforcement theorists see behavior as being environmentally caused. Reinforcement

theory ignores the inner state of the individual and concentrates solely on what happens

to a person when he or she takes some action.

Following observations can be made from this theory:

 Behavior is environmentally caused.

 Behavior can be modified (reinforced) by providing (controlling) consequences.

 Reinforced behavior tends to be repeated.

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Chapter Four: Employee Motivation Activities of IDLC

Finance Limited

4.1 Overview of IDLC Finance Limited [13]

IDLC Finance Limited commenced its journey in 1985, as the first ever leasing company

of the country. In 1995, IDLC was licensed as a Financial Institution by the country's

central bank, Bangladesh Bank, following the enactment of the Financial Institution Act

1993. Over the last two decades, IDLC has grown in tandem with the country's transition

into a developing country and has emerged as Bangladesh's leading multiproduct

financial institution. To encapsulate the evolving nature of the company, IDLC has

changed its name to IDLC Finance Limited from earlier Industrial Development Leasing

Company of Bangladesh Limited in August 2007.

Since 1985, when IDLC was formed as the pioneering leasing company in Bangladesh,

the company continues to evolve as an innovative financial solutions provider. It is now

able to offer its customers, integrated and customized financial solutions - all under one

roof. Its wide array of products and services range from retail products, such as home

and car loans, corporate and SME products including lease and term loans, structured

finance services ranging from syndications to capital restructuring and a complete suite

of merchant banking and capital market services.

[13]
IDLC firmly believe in corporate governance - the system by which companies are

directed and controlled by the management in the best interest of all the stakeholders,

thereby ensuring greater transparency and better and timely financial reporting. The

platform on which corporate governance principles are structured is that the Board of

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Directors is responsible for proper governance, which includes setting out Company's

strategic aims, providing the necessary leadership to implement such aims, supervising

the management of the business and reporting to the shareholders on their stewardship.

The maintenance of effective corporate governance remains a key priority of the Board

of IDLC Finance Limited. To exercise clarity about directors' responsibilities towards the

shareholders, corporate governance must be dynamic and remain focused on the business

objectives of the Company and create a culture of openness and accountability. Keeping

this in mind, clear structure and accountabilities supported by well understood policies

and procedures to guide the activities of the Company's management have been

instituted.

4.2 Vision, Mission, Goal & Corporate Philosophy of IDLC

Vision: Become the best performing and most innovative financial solutions provider in
the country.[13]

Mission: Create maximum possible value for all the stakeholders by adhering to the
highest ethical standards. [13]

 For Customers: Relentless pursuit of customer satisfaction through delivery of

top quality services.
 For Shareholders: Maximize shareholders' wealth through a sustained return on
their investments.
 For Employees: Provide job satisfaction by making IDLC a centre of excellence
with opportunity for career development.
 For the Society: Contribute to the well being of the society, in general, by acting
as a responsible corporate citizen.

Goal: “Long term maximization of stakeholders' value in a socially responsible

manner.”[13]

Corporate Philosophy: “Discharge our functions with proper accountability for actions
and results and bind ourselves to the highest ethical standards.”[13]

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4.3 Human Resource Development & Motivation
IDLC believes that its human resources are its greatest assets and recognize them as

building blocks on which Company's performance and development are based.[14] IDLC

continues to develop and implement appropriate human resources management policies

and practices to build up its employees, and to ensure their optimum contribution

towards the achievement of corporate goals. As its human resources give the

organization a significant competitive edge, it continues its policy of recruiting best

people and implementing programs to develop and retain high quality human resources.

IDLC is an equal opportunity employer.[15] It has provided challenging career

opportunities for young professionals over the last 24 years. Its goal is to attract, retain

and motivate the most competent people. It maintains the high recruitment standards.

IDLC also provides need based in-house, local and overseas training to its employees.

This is done with a view to encourage human resources development by continuously

upgrading human resources skills, abilities and knowledge and to meet organizational

needs to face future challenges in the ever changing financial services industry. It

successfully identifies employees' relevant and proper training and development needs

and provides them with necessary opportunities to pursue their career goals. IDLC is a

performance driven organization and career development opportunities are based on

merit, performance and productivity.

IDLC is committed to maintain a work environment, free from discrimination based on

race, religion, creed, sex, age or any other category.[16] All the employees work in a

positive, friendly and respectful environment. IDLC aims to maintain workplace and

environmental conditions which permit employees to work to maximum effectiveness

and to their full potentials. It has created an environment of trust and support within the

organization which encourages employees to work well together as a team and at the
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same time, to be innovative and creative. It appreciates effective internal

communications and free flow of ideas, fairness, commitment, teamwork and highest

standards of professional excellence and integrity.

We can put all the maintenance and motivational activities under following headings:

a. Human Resources Development Policies

 Group life insurance policy

 Hospitalization policy

 Transport / Car loan policy

 Home loan policy

 Contributory provident fund

 Gratuity

 Education scheme

b. Training & Development

 In house and local training

 Abroad training

c. Social Gatherings

 Family Day

 Yearly Picnic

 Sports Day

 Annual “Best Employees” recognition and award giving ceremony

d. Promotion opportunities

e. Bonus Scheme

 Festival Bonus

 Performance Based Yearly Bonus

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 Chapter Five: Discussion

From the previous chapter it is clear that IDLC has good and friendly working

environment, employees are highly empowered, employees have good career progression

opportunities and the organization is a top paymaster in the market. Facilities provided

by IDLC quite satisfactorily fulfill Maslow’s hierarchy of needs as they meet-

physiological needs by providing good salary, bonus scheme, home loan, transportation

loan etc.; safety needs by providing job confirmation, life insurance, hospitalization

policy, contributory provident fund etc; Social needs by arranging family gathering,

yearly picnic, sports day etc; Esteem needs by recognizing talents and awarding them,

empowering the employees, employees have social status; and Self-actualization needs

by giving timely promotion, achievement oriented tasks, good career progression

opportunities.

If we consider Herzberg’s two-factor theory, we can see that the organization also satisfy

the theory. They very carefully consider all the hygiene factors e.g. good salary, good

governance, good and favorable company policy, friendly relation with colleagues, good

working environment, social status etc to remove dissatisfaction and then cordially focus

on motivators e.g. achievement oriented tasks, empowering the employees, giving timely

promotion, recognition of the contribution, providing space to learn and grow etc to

make them satisfied and motivated towards attaining goals.

Thus the organization also fulfills the ERG theory, McClelland’s theory of needs etc.

As a result of good governance and clearly defined motivational activities, their financial

performance is high; employees are highly satisfied and motivated, very low turnover

and they are treated as a standard in the field.

18
 Chapter Six: Conclusion

From the above study it is evident that keeping the employees satisfied and motivated to

work, by fulfilling their intrinsic and extrinsic needs, ensures high attainment of goals

and improves financial performance of the organization. But it is only possible, if the top

management is capable of providing these facilities efficiently and effectively.

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 Chapter Seven: Reference

1. Karimi, S., (2010), Why Is Motivation Important? [cited Dec 17,2010]; Available
from: http://www.ehow.com/about_4579837_motivation-important_.html
2. Motivation in theory – introduction.[cited Dec 17,2010]; Available from:
http://tutor2u.net/business/people/motivation_theory_introduction.asp
3. Robbins, S.P. & Coulter, M., (2008), Management, 9th Edition, Prentice-Hall of
India, New Delhi.
4. Motivation: The Not-So-Secret Ingredient of High Performance (2006). [cited Dec
17, 2010]; Available from: http://hbr.org/product/motivation-the-not-so-secret-
ingredient-of-high-pe/an/7386BC-PDF-ENG?Ntt=motivation
5. Motivation. [cited Dec 17, 2010]; Available from:
http://en.wikipedia.org/wiki/Motivation_theories
6. Maslow's hierarchy of needs. [cited Dec 17, 2010]; Available from:
http://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs
7. Maslow, H. (1943). A Theory of Human Motivation. Psychological Review, 50, 370-
396. [cited Dec 17, 2010]; Available from:
http://psychclassics.yorku.ca/Maslow/motivation.htm
8. Theory X and theory Y. [cited Dec 17, 2010]; Available from:
http://en.wikipedia.org/wiki/Theory_X_and_theory_Y
9. Douglas McGregor. [cited Dec 17, 2010]; Available from:
http://en.wikipedia.org/wiki/Douglas_McGregor_%28business_theorist%29
10. Two-factor theory. [cited Dec 17, 2010]; Available from:
http://en.wikipedia.org/wiki/Two_factor_theory
11. Need Theory. [cited Dec 17, 2010]; Available from:
http://en.wikipedia.org/wiki/Need_theory
12. Cognitive evaluation theory. [cited Dec 17, 2010]; Available from:
http://en.wikipedia.org/wiki/Cognitive_evaluation_theory
13. IDLC Finance Limited. [cited Dec 17, 2010]; Available from: http://www.idlc.com
14. Vision. [cited Dec 17, 2010]; Available from: http://www.idlc.com/hrd_vision.html
15. Human Resources Division. [cited Dec 17, 2010]; Available from:
http://www.idlc.com/human_capital.html
16. Work environment & work culture at IDLC. [cited Dec 17, 2010]; Available from:
http://www.idlc.com/work_environment.html

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