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International Journal of Economics, Commerce and Management, United Kingdom
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Supply Chain Management

Article · December 2015
DOI: 10.1016/B978-0-08-097086-8.73032-7
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Supply Chain Management
Lauren Xiaoyuan Lu
Jayashankar M. Swaminathan
Kenan-Flagler Business School, University of North Carolina at Chapel Hill, Chapel Hill, North
Carolina, USA
Email: lauren_lu@unc.edu, jay_swaminathan@unc.edu
2015
Published in International Encyclopedia of Social and Behavioral Sciences,2nd edition, Vol 23.
Oxford: Elsevier. pp. 709-713. Edited by James D. Wright
Abstract
Supply chain management is a critical aspect of conducting any business. In this article, we
provide an overview of the advancements in supply chain management. In the initial section, we
present alternative definitions and key issues related to supply chain management followed by a
discussion of complexities associated with managing supply chains. Subsequently, we discuss
major inefficiencies of poor supply chain management. Finally, a brief summary of research
activity to date and a discussion of future challenges related to supply chain management are
presented.
Key words: Supply Chain Management; Operations Management; Manufacturing; Service;
Logistics; Sourcing; Outsourcing; Procurement; Competition; Information; Technology;

Globalization; Sustainability.
1. Introduction
Supply chain management is one of the most essential aspects of conducting business. Many
people outside of the direct community (in research and industry) do not realize this because an
ordinary consumer often experiences only its effects. Recall the times when the item that you
wanted was not available in your favorite garments or grocery store, recall how many times you
got a great ‘deal’ at the end of the season, recall the sudden increases in gas prices due to

shortages, recall the times when your e-commerce site promised availability but later could not
send the required product or sent you the wrong product, or recall the times when your
customized product (like a personal computer or kitchen cabinet) was delayed to a great extent.
All the above and several other experiences that consumers have on a routine basis are direct
consequences of supply chain practices followed by firms. As opposed to business-to-consumer
transactions, supply chain practices have immediate impact on business-to-business
transactions. In the late 2000s, due to glitches of its extensively outsourced supply chain for
Dreamliner 787, Boeing experienced substantial delay in launching the new aircraft and incurred
more than $2 billion in charges to support and expedite component supplies. Less than two
years after the first delivery of Dreamliner 787 in 2011, Boeing was ordered to shut down
production of the aircraft due to quality issues with batteries. In 2007, Mattel had to recall of
tens of millions of toys made in China, which becomes poster child for concerns about quality of
offshore goods. While some firms suffered from consequences of bad supply chain
management, firms such as Amazon, WalMart, and Zara, have consistently outperformed
competition due to great supply chain capabilities.
2. Definition
Since Keith Oliver, a consultant at Booz Allen Hamilton, coined the term in 1982, supply chain
management has evolved from originally being understood as only logistics to a complex
multifunctional corporate undertaking that ranges from procurement and demand forecasting
to distribution and after-sales service. Supply chain management is such a vast topic that as a
result people often give it a different definition based on their own personal experience. To
some, supply chain management is all about managing the supplier base, determining what to
outsource and to whom, and managing relationships with the various suppliers. To some others
it is efficient ways of transferring goods from one place to another taking into account the
distribution and transportation costs. To another set of people it is all about how the different
firms in the distribution channel or value chain are integrated in terms of information systems
and inventory management practices. To yet another group it is effective management of fixed
and variable assets required for running the business. In a sense all these definitions are like the
blind men defining the elephant based on its different organs. A comprehensive definition of
supply chain management can be given as follows.
A supply chain is the set of entities that are involved in the design of new products and services,
procuring raw materials, transforming them into semifinished and finished products and
delivering them to the end customers (Swaminathan 2001). Supply chain management is
efficient management of the end-to-end process starting from the design of the product or
service to the time when it has been sold, consumed, and finally disposed of by the consumer.
This complete process includes product design, procurement, planning and forecasting,
production, distribution, fulfillment, and after-sales support (see Fig. 1).

Supply Information Flow: Cost, Capacity, Product Design, etc

S C
Demand Information Flow: Customer Requirement, Orders, etc
U U
P Demand Sourcing and Distribution Customer
S
Manufacturing
P and Supply Supplier
and Operations
and and Order T
Panning Management Logistics Management
L O
I Material Flow: New/Refurbished Products and Components
M
E E
Reverse Material Flow: Recycled/Returned Products and Components
R R
Cash Flow
Figure 1. Supply Chain

Process
Supply chain management issues can be classified into two broad categories—configuration and
coordination. Configuration-level issues relate to the high-level design and basic infrastructure
of the supply chain and coordination -level issues relate to the tactical decisions and day-to-day
operations of the supply chain.
2.1 Configuration-level Issues
Supply base decisions

How many and what kinds of suppliers to have? Which parts to outsource and which to keep in
house? How to standardize and streamline procurement practices? Should one use vertical
marketplaces for auctions or should one invest in developing highly integrated supply
partnerships? How long or short contracts with suppliers should be?
Plant location decisions

Where and how many manufacturing, distribution, or retail outlets to have in a global
production distribution network? How much capacity should be installed at each of these sites?
What part of the supply chain should be kept onshore, near-shore, or offshore? What kind of
distribution channel should a firm utilize—traditional brick and mortar, direct to consumer via
Internet or phone, or a combination?

Product portfolio decisions

What kinds of products and services are going to be supported through the supply chain? How
much variety to provide to customers? What degree of commonality to have across the product
portfolio?
Information support decisions

Should enterprise resource planning software be standardized across functional units of a firm?
Should the supply chain work on standard protocols such as XML (extended markup language)
or on proprietary standards?
2.2 Coordination -level Issues
Material flow decisions

How much inventory of different types of products should be stored? Should inventory be
carried in finished form or semifinished form? How often should inventory be replenished?
Should a firm make all of its inventory decisions or is it better to have the vendor manage the
inventory? Should suppliers be required to deliver goods just in time?
Information flow decisions

In what form is information shared between different entities in the supply chain—paper, voice
via telephone, EDI (electronic data interchange), XML? To what degree does collaborative
forecasting take place in the supply chain? What kind of visibility is provided to other entities in
the supply chain during execution? How much collaboration takes place during new product or
service development among the supply chain partners?
Cash flow decisions

When do suppliers get paid for their deliveries? What kinds of cost reduction efforts are taken
across the supply chain (or expected of suppliers)? In a global firm, in which currency will a
supplier be paid?
Capacity decisions
How to optimally utilize the existing capacity in terms of manpower and machines? How to
schedule on a manufacturing line to complete jobs on time? How much buffer capacity to have
for abnormal situations with excess demand?

As is evident, configuration and coordination issues are interdependent. Configuration issues

can be viewed as strategic long-term decisions whereas coordination issues are medium-to-
short term decisions. Generally, firms develop a strategy for the configuration-level decisions
and then constrain the coordination decisions based on those.
3 Complexities Associated with Supply Chains

As evident from discussions in the earlier section, supply chain management spans several
functional and geographical areas. This introduces complexities both in terms of design and
execution of supply chains. Some of the pertinent factors that complicate supply chain
management decisions are as follows.
3.1 Multiple Agents

Supply chain issues need to be decided by different entities sometimes having different
interests. For example, a retailer may want that the distributor provide very high availability for
the products but at the same time not charge anything additional to the retailer. The distributor
may sometimes agree to that but in turn may want information about actual customer sales
which the retailer may not want to share. Even when decisions have to be made within the
same firm there could be incentive issues. For example, the marketing or sales department,
typically a revenue center, presents the future demand forecast to the manufacturing
department that is a cost center. Clearly, there is incentive for the former to over-forecast and
the latter to under-produce (as compared to the forecast). This creates several difficulties while
deciding on the amount of inventory to be stocked. Another related issue is encountered where
the marketing department may push for huge amount of variety in the product/service
offerings; the manufacturing department may not want to embrace that because additional
complexities are created during execution.
3.2 Uncertainty
Accurately matching supply and demand is the ultimate goal of effective supply chain
management but that is complicated by uncertainty at various levels of the process. There is
uncertainty in product and technology development, in predicting customer demand, in day-
today operations and manufacturing, and supply. Typically, uncertainty creates more
inefficiency in the system. For example, if the final demand for a sweater at a store cannot be
predicted accurately then the firm either stocks too little (in which case it suffers from stock-
outs) or produces too much (in which case it has to salvage the inventory through a huge sale at
the end of the season). Similarly, the uncertainty in supply may necessitate additional buffer
inventory.
3.3 Information Asymmetry

Since supply chain processes extend across multiple functional units within a firm and often
across different firms there is a high degree of asymmetry in terms of information. This is caused
primarily by two main reasons—one relates to lack of adoption of information technology and

the other relates to reluctance to share information with other supply chain partners. The lack
of information causes several problems during actual fulfillment. For example, when a consumer
goes to an e-commerce site and buys an item off the electronic catalog, the consumer expects
to receive the product on time. The consumer is not aware that the inventory status on the
product may be updated only once a week and that the information on the site may be
outdated. As a result, the consumer is disappointed when the product does not arrive on time.
3.4 Lead Time

Each and every task in the supply chain process needs time to be completed and the resources
(labor, machines, or computers) have limited processing capacity. As a result, not all tasks can
be completed after the actual demand is known and some of the tasks need to be done up front
(which may or may not get utilized based on the actual demand realized). Further, the limited
capacity associated with the resources creates variability in the actual realized lead-time, which
in turn necessitates greater resource requirements at the next stage in the supply chain. The
above complexities lead to several types of inefficiencies in the supply chain that are often
perceived as the ‘bad effects’ of inefficient supply chain management. Some of the major
inefficiencies can be classified into the following categories.
3.5 Competition
When making supply chain decisions, firms have to take market competition into consideration.
For example, forming exclusive trade relationship with key suppliers helps prevent proprietary
technology to be leaked to competitors who may source from the same suppliers. As another
example, firms’ outsourcing decisions can be shaped by what competitors do (see Feng and Lu
2012). In the computer and electronics industries, many companies rely on contract
manufacturers to assemble final products. Due to their location in low-cost regions and scale
economies, these contract manufacturers generally have a lower cost structure than OEMs. For
a long time, Dell, operated its own assembly plants in North America to support its build-to-
order model. Under increasing market pressure to lower costs, Dell had to change its supply
chain strategy by outsourcing assembly work to contract manufacturers, a strategy that has long
been adopted by its key competitors.
4 Inefficiencies of Supply Chain Management
4.1 Poor Utilization of Inventory Assets

One common effect of poor supply chain management is having excess inventory at various
stages in the supply chain, at the same time having shortages at other parts of the supply chain.
Since inventory forms a substantial part of working assets of a firm, poor management could
lead to huge inefficiencies. Lee and Billington (1992) provide an excellent overview of pitfalls
and opportunities associated with inventory management in supply chains.

4.2 Distortion of Information

Another effect relates to lack of visibility of demand and supply information across the supply
chain which causes the bullwhip effect. This effect describes how a small blip in customer
demands may get amplified down the supply chain because the different entities in the supply
chain generate and revise their individual forecasts and do not collaborate and share actual
demand information. Lee et al. (1997) describe the causes and controls for this effect.
4.3 Stock-outs
Poor supply chain management also results in late deliveries and large stock-outs.
Fundamentally, these effects are caused due to an inability of the firm to predict the
requirement for raw material and equipment capacity together with the uncertainty associated
with obtaining deliveries of products on time from its suppliers. Fisher et al. (1994) describe how
accurate forecasts in the apparel industry could potentially reduce this inefficiency.
4.4 Customization Challenges

As the degree of customization has increased in the marketplace, one of the immediate effects
of poor supply chain management relates to late deliveries of customized products. Firms are
developing several strategies in order to provide variety while keeping costs under control.
These include delaying differentiation of the product and introducing more commonality and
modularity in product lines (see Swaminathan and Tayur 1998).
5 New Developments in Supply Chain Management
5.1 Global Supply Chains

In the increasingly globalized world economy, even a small manufacturing firm may face the
challenge of managing an oversea supply relationship. Globalization is not a new phenomenon,
but the globalization trend developed in the first decade of the 21st century created a more
flattened world than history has seen. However, in the recent years the cost differential
between the emerging economies and the developed ones is gradually disappearing. This forces
many firms to reconsider their supply chain configurations, particularly their cost-driven
offshoring strategy. In the last few years, some manufacturing firms, large and small, have
brought offshored production back onshore. Meanwhile, the growing market size of the
economies outside the developed has made expansion of one’s global supply chain footprint a
more attractive option. Striking the right balance between onshore and offshore sourcing will
continue to a key task in firms’ supply chain strategy.
5.2 Sustainable Supply Chains

In the last decade, building sustainable supply chains has gathered tremendous attention from
environmentalists, NGOs, and businesses. This society-wide sustainability initiative has

influenced many firms’ supply chain strategies. For instance, Wal-mart in 2005 launched three
overarching sustainability goals: (1) use 100% renewable energy; (2) produce zero waste; (3) sell
products that sustain our resources and environment (Denend and Plambeck 2007). To achieve
these goals, the company examined various aspects of its supply chains to identify areas that
offered the most potential for sustainability. And it used various incentives to motivate its
suppliers to contribute to its sustainability goals.
5.3 Humanitarian Supply Chains

Between 1974 and 2003, there were 6,637 natural disasters worldwide with more than 5.1
billion people affected and a reported damage of $1.38 trillion USD (Ergun et al 2009). Although
the occurrence of these events was hard to forecast, the social and financial impact could have
been reduced with proper planning. In particular, humanitarian supply chains, i.e., supply chains
for disaster planning and response, can be well designed and maintained for the purpose of
quick response and relief effort after disasters strike. Humanitarian supply chains differ from
regular supply chains in terms of their supply and demand patterns. Refer to Ergun et al (2009)
for a detailed review on the subject. Another important type of humanitarian supply chains
relates to delivery of essentials (food supplements, bednets, and vaccines) to people in need
during nonemergency times (see Swaminathan 2010 and Komrska et al. 2013).
5.4 New Technologies Impacting Supply Chains and Big Data
In the last two decades, digital technologies have had a lasting impact on how supply chain
activities are conducted. According to a recent study by Intermec, a leading supply chain
solutions provider, the top 10 technologies that have the most impact on supply chain
operations include: (1) comprehensive connectivity – from 802.11 wireless LAN technologies,
cellular networks, and Bluetooth; (2) voice and GPS communication integrated into rugged
computers; (3) speech recognition; (4) digital imaging; (5) portable printing; (6) 2D & other bar
coding advances; (7) RFID (radio-frequency identification); (8) RTLS (real-time locating system);
(9) remote management; (10) wireless and device security.
The proliferation of the aforementioned digital and communication technologies in business and
consumer uses has created tremendous amount of data on business transactions, logistical
activities, customer characteristics, etc. According to IDC, approximately 750 exabytes (EB) of
data were created online in 2009, and it is forecasted to exceed 35 zettabytes (ZB) by 2021. Big
data, according to Gartner, is defined as “high-volume, high-velocity, and/or high-variety
information assets that require new forms of processing to enable enhanced decision making,
insight discovery and process optimization.” The real impact of big data on improving supply
chain efficiency is yet to be seen, and companies are only starting to tap into the potential
offered by the vast amount of data being collected in their information systems. In the face of
explosive growth of data, the information industry is going through a revolution, and

sophisticated tools are yet to be developed to analyze supply chain related data for
performance improvement.
6. Supply Chain Research: Past, Present, and Future

The science related to supply chain management traces its history back to the early 1950s when
several researchers were interested in understanding the optimal policies related to inventory
management. One of the first pieces of work in this stream relates to the models developed by
Clark and Scarf (1958) for managing inventories at multiple echelons. Several hundreds of
researchers have studied related inventory problems under stochastic and deterministic
environments since the 1950s.
This research is captured concisely in the research handbook edited by Graves et al. (1993).
There is a large amount of literature in the area of transportation and distribution as well as
plant location models in the context of supply chain management. Traditional researchers
focused on developing optimal policies and rules for specific supply chain issues assuming a
centralized control of the supply chain. In the 1990s researchers have started to study problems
which take a decentralized multi-agent approach to analyzing supply chain problems, integrate
information availability across the supply chain with logistics decisions, develop new models for
supply contracts, and demand forecasting and integrate product design with supply chain
management. A collection of prominent pieces of research in this area is contained in Tayur et
al. (1998) and de Kok and Graves (2003). After several decades of studying supply chains with
mathematical models, researchers started to use data and empirical methods to validate supply
chain theories and to systematically characterize supply chain practices. For example, using
industry-level U.S. data, Cachon et al (2007) document the strength of the bullwhip effect, i.e.,
the phenomenon that demand variability increases moving from the downstream of a supply
chain to the upstream. Using firm-level data, Cachon and Olivares (2009) examine the factors
that contribute to the difference in finished-goods inventory between several leading auto
manufacturers. The empirical stream of research will continue to grow as researchers become
more creative in finding relevant data on supply chains.
In addition to academic research, several firms in the 1990s developed successfully and
employed large analytical and simulation models for supply chain optimization and execution.
Arntzen et al. (1995) describe one such system developed for Digital Equipment, and in 2004,
Motorola was awarded the Franz Edelman Award by INFORMS (The Institute for Operations
Research and Management Sciences) for using operations research methods to launch a
comprehensive online negotiation system to support the company's sourcing process which led
to $600 million in savings.
In the twenty-first century, firms face severe challenges in terms of global competition and
customer requirement for greater variety, shorter and reliable delivery times, and lower prices.

The advent of e-commerce has created immense opportunities but at the same time has made
firms more vulnerable to logistics pitfalls. Today customers do not just buy products but they
buy delivered products. As a result fulfillment is as important as making the sale. As opposed to
traditional channels where inventory could be stored to hide other inefficiencies in terms of lead
time and poor forecasts, in the fast-paced electronic business environment such arrangements
are not as useful. As a result, firms are beginning to pay more attention towards supply chain
management. Both business-to-consumer and business-to-business e-commerce environments
have introduced several issues related to supply chain management which are likely to be
studied by researchers in the near future.
The prevalence of the Internet has led to the development of vertical market places that
promise to reduce the inefficiencies in the buying process in several industries. On one hand,
these market places are likely to reduce the cost of goods for the manufacturer due to more
competition leading to better prices. This line of thought indicates that in the future supply
chains may be more agile and supplier relationships may be short-term oriented. On the other
hand, several firms realize that greater benefits can be attained if some of these market places
can in fact be used for process integration and collaboration across the supply chain. In such an
environment, firms need to develop greater trust so that they would be willing to share
information with their supply chain partners. Researchers today are trying to identify under
what conditions one or the other scenario may play out and what kinds of new models and
analysis need to be developed. A related effect of the Internet is the expansion of global supply
chains. Today it is much easier for any supplier located in a remote part of the world to bid on
contracts from large firms in developed nations with whom they may not have done business in
the past. Issues related to coordination of global supply chain management are likely to be an
integral part of supply chain management research in the future. Another important research
topic is sustainable supply chain management. Traditionally, researchers have only concerned
themselves with efficient movement of goods from supplier to the customer. Now a greater
number of researchers are studying problems related to disposal of used products, refurbishing
old products, making packaging more environmentally friendly, and basing supplier selection on
environmental criteria in addition to traditional criteria related to cost, quality, and reliability.
Another new stream of research is the study of supply chains in the service industry. As opposed
to traditional manufacturing-oriented supply chains, service supply chains are more complicated
due to the inability to store inventory. Uncertainty is handled in those cases using additional
buffer capacity. Finally, researchers are beginning to look at behavioral issues such as trust,
bounded rationality, mental accounting, etc. that may arise in supply chain management..
See also:
Commodity Chains; Location Theory; Market Areas; Market Structure and Performance;
Marketing Strategies; Retail Trade

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EMPLOYEE MOTIVATION AND PRODUCTIVITY: A REVIEW OF LITERATURE AND

IMPLICATIONS FOR MANAGEMENT PRACTICE
Article in International Journal of Commerce and Management · December 2017
CITATIONS READS
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2 authors, including:
Muhammad AMINU Bawa

Petroleum Training Institute, Effurun
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Some of the authors of this publication are also working on these related projects:
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International Journal of
Economics, Commerce and
Management
United Kingdom Vol. V, Issue 12, December 2017 http://ijecm.co.uk/ ISSN
2348 0386

EMPLOYEE MOTIVATION AND PRODUCTIVITY: A

REVIEW OF
LITERATURE AND IMPLICATIONS FOR MANAGEMENT
PRACTICE
M. A. Bawa
Department of Petroleum Marketing and Business Studies
Petroleum Training Institute, Effurun, Delta State, Nigeria
maminubawa@gmail.com
Abstract
A substantial body of theory and empirical evidence exists to attest to the fact that
motivation and productivity are concepts which have been subjects of immense
interest among researchers and managers. The objective of this paper is to conduct
a literature review and analysis on theories and empirical evidence on the
relationship between employee motivation and organizational productivity with a view
to drawing important lessons for managerial practice. To achieve this, the paper
conducted a review of some of the key theories and empirical studies on motivation
and its impact on employee productivity drawing experiences from diverse
organizational settings in Nigeria and several other countries. The study revealed
that there are different factors to consider in motivating employees: some monetary
or financial such as pay and others are non-financial like recognition and challenging
jobs. Important implications are presented for managerial practice.
Keywords: Motivation, productivity, theories, non-financial rewards, Nigeria
INTRODUCTION
Motivation and productivity are concepts which have been subjects of immense interest among
researchers and practitioners. Both concepts have been defined in a variety of ways by several
scholars. If we have to review the definitions, the paper will be unnecessarily long and boring.
Therefore, we have adopted the approach of describing what we mean by these two terms and
proceeding to discuss the issues with the understanding that the descriptions will serve the
purpose of definitions.

Licensed under Creative Common

By motivation here we mean the way and manner in which an individual or group of individuals are
inspired to behave in a desired manner with a view to receiving some positive rewards or to satisfy
certain human needs. To be motivated is to do something which is different; to be inspired to go
beyond the call of duty. That is to do more than you have to do not because you are told to but
because you want to. The concept of productivity is one of the most fashionable and frequently
used in the domain of management today. It is described as the optimal utilization of resources in
the production of goods and rendering of services that meets predetermined objectives.
Research in the relationship between motivation and productivity is justified on at least two
grounds. The first justification is the rapidly changing workplace environment and its meaning to
the young generation of employees in high paying jobs in the oil and gas and other high technology
related organizations who do not accept the traditional approach to employee motivation. Who,
according to Singh, et al. (2012), do not accept the 'status quo', and have moved from obedience to
questioning; and who assess work in terms of its significance in human life and human nature.
Secondly, this study is also timely in the Nigerian economy with the current recession characterized
by low employee morale, low sales volumes, challenges to industrial harmony, etc. It is argued that
motivation is the key to economic recovery in the country (Aremu, 2017). A review of theories and
empirical evidence on the central issues at stake on how to boost motivation therefore becomes
timely. The rest of the paper is divided into four sections. The immediate section after this
introduction briefly reviews some theories and empirical studies on motivation. The third section
presents our views on motivation of workers for enhancing their productivity based on the
literature analysis. Section four concludes the paper.
LITERATURE REVIEW Theories of Motivation

It is adequately documented in the literature that several thinkers from Adam Smith to Abraham
Maslow and others have studied human behaviour from different perspectives – economic,
psychological, behavioural, etc., to understand what motivate people to do the things they do. In
the process, they developed several theories of motivation. This section presents a brief review of
some of the theories and empirical evidences on the relationship between motivation and
productivity. Broadly speaking the theories of motivation can be classified in to content theories
and process theories. The former deals with what motivates and are concerned with identifying
people’s needs and their relative strengths, and the goals they pursue in order to satisfy these
needs. The main content theories include Maslow’s hierarchy needs; Herzberg’s two factor

theory and McClelland’s achievement motivation theory. Process theories on the other hand, place
emphasis on the actual process of motivation. These theories are concerned with the relationships
among the dynamic variables which make up motivation and with how behaviour is initiated,
directed and sustained. Examples are expectancy –based models, equity theory goal theory and
attribution theory (Uzonna, 2013).
The most popular theory of motivation in the classical literature is perhaps that of a
United States psychologist, Abraham Maslow’s Hierarchy of Needs Theory. Maslow (1943)
discussed five levels of employee needs: physiological, safety and security, social, esteem or ego
and self- actualizion. According to this theory, people have many needs which motivate them to
work, that those needs are arranged in a hierarchical manner in such a way that lower level needs
(physiological and safety) had to be satisfied before the next higher level social need would
motivate employees to work hard and increase productivity.
The second theory of motivation is the two factor theory or motivator and hygiene theory
developed by Frederick Herzberg (Herzberg, 1966). Motivators or intrinsic factors such as drive for
achievement and advancement, being treated in a caring and considerate manner and receiving
positive recognition are inherent in the job itself and which the individual enjoys as a result of
successfully completing the task, produce job satisfaction and motivate employees to work harder.
Hygiene or extrinsic factors, such as salary, benefits and job security are external to the task and
often determined at the organizational level can lead to dissatisfaction and lack of motivation if not
present in positive degrees. Uzonna (2013) argues that one important element of Herzberg’s theory
is that knowing employee needs can help us motivate today’s young, ambitious and knowledge and
technology-based workers. Given the fact that these workers already command high paying jobs,
we can infer that money or cash rewards alone does not provide enough of an incentive as a
motivator for performance. This implies that to motivate workers, organizations need to look
beyond monetary rewards.
Victor Vroom developed the expectancy theory based on the belief that employee effort will lead
to performance and performance will lead to rewards. Rewards may be either positive or negative.
The more positive the reward the more likely the employee will be highly motivated. Conversely,
the more negative the reward the less likely the employee will be motivated to work harder
(Vroom, 1964, as cited in Malik, et al, 2011: 39). This theory was further developed by Porter and
Lawler (1968).
Another theory is the equity theory of motivation developed in the early 1960’s by J. Stacey Adams,
a psychologist. The theory proposes that a person's motivation is based on what he or she
considers being fair when compared to others (Redmond & Housell, 2015). It recognizes that
motivation can be affected through an individual's perception of fair treatment in social exchanges.
When compared to other people, individuals want to be compensated fairly for their contributions
to the organization. A person's beliefs regarding what is fair and what is not can affect his
motivation, attitudes and behaviours which will in turn affect subsequent performance. When
applied to the workplace, equity theory focuses on an employee's workcompensation relationship
17
or "exchange relationship" as well as that employee's attempt to minimize any sense of unfairness
that might result. According to the theory, underpayment inequity induces anger and distress while
overpayment induces guilt. (Redmond & Housell, 2015).
Lastly, B.F. Skinner's reinforcement theory states that those employee behaviours that lead to
positive outcomes will be repeated and behaviours that lead to negative outcomes will not be
repeated (Skinner, 1953, as cited in Malik, et. al., 2011:39). A reinforcer can therefore be seen as a
reward or incentive to behave in a certain way. Reinforcers may be tangible like food or money and
they can be intangible like approval or praise. The implication is that organizations should reinforce
employee behaviours that lead to positive outcomes and discourage those behaviours that lead to
negative outcomes. This can be achieved through staff training and development, among other
strategies.
Empirical Studies on Motivation

Almost all the theories discussed above have been tested empirically. One of the early empirical
studies on Maslow’s hierarchy of needs theory tried to test whether the list of needs derived from
American culture by Maslow is applicable to other cultures. The study found that managers had
these needs and that they were important. However, although these needs may be universally
accepted the importance attached to the satisfaction of different needs varies from culture to
culture (Haire, et. al., 1963).
A survey conducted by Velnampy (2007) to test Maslow’s hierarchy of needs theory reveals that
consciously or unconsciously lower level employees in both public and private sector organizations
of Sri Lanka attach more importance to lower level needs and higher level employees emphasize
higher level needs.
In another study, Sajuyigbe, et al. (2013) collected data from 100 employees of selected
manufacturing companies in Ibadan, Nigeria and concluded that pay, performance bonus,
recognition and praise were significantly related to organizational performance, supporting
Herzberg’s motivation hygiene theory.
Apart from cash or monetary rewards, motivation theories and empirical studies also attest to the
role of non-cash rewards in motivation especially in technology–based, high paying jobs. Brown and
Armstrong (1999) reported that the non-financial schemes in their survey were particularly popular
among knowledge and technology based sectors as well as sales and service companies. Another
study by Beran (2005) confirmed that majority of companies have in place one form of non-
financial rewards or the other especially employee recognition and that the policy enhanced
productivity. In another study, Rose (1998) discovered that the respondent companies that prefer
non-financial rewards are those that rely on high level of customer contact.
Studies using data collected in the United Kingdom also attests to the role of nonfinancial
incentives in motivating employees to high productivity. In a 2009 McKinsey Quarterly survey of
1,047 executives, managers and employees from a range of sectors in the United Kingdom (Vrancic,
18
2015), the respondents view three non-financial motivators: praise from immediate managers,
leadership attention (for example, one-on-one conversations) and a chance to lead projects or task
forces as no less or even more effective motivators than the three highest-rated financial
incentives: cash bonuses, increased base pay, and stock or stock options. In addition, it was also
found that the survey’s top three nonfinancial motivators play critical roles in making employees
feel that their companies value them, take their well-being seriously and strive to create
opportunities for career growth. According to these researchers, these themes recur constantly in
most studies on ways to motivate and engage employees (Vrancic, 2015).
Another study conducted by Ng, et. al. (2010) as cited in Singh, et. al. (2012) sought to study the
expectations and priorities of young employees. They found that this category of workers rated
opportunities for career advancement as the most desirable work related attribute followed by
good people to relate to and opportunities for good training and development. According to these
researchers, surprisingly, pay, benefits and job security were ranked in the middle behind career
advancement.
In Pakistan, Tausif (2012, as cited in Haider, et al., 2015:348) conducted a survey among public
school teachers and found that non-financial rewards were essential in developing employees’ job
satisfaction and motivation. Similarly, Barton (2006, as cited in Haider, et al., 2015: 348) found that
employee recognition is the most important factor among non-financial rewards in enhancing job
satisfaction. Bull (2005, as cited in Haider, et al., 2015: 348) conducted a study and concluded that
challenging jobs enhanced employee job satisfaction.
Finally, several universities and technology related institutions in the United States like
Massachusetts Institute of Technology (MIT), University of Washington and University of California
have designed, implemented and maintained employee recognition programmes to encourage
hard work and productivity in the workplace.
In an empirical study to test equity theory, Griffeth and Gaertner (2001) developed and tested a
model using data collected from 192 hospital employees using structural equation modeling which
placed satisfaction and intention to quit as mediators of employee turnover. The researchers
utilized many dimensions of perceived unfairness which includes: pay rules (the fairness of one’s
pay relative to one’s coworkers and the fairness of granting pay increases and promotions); pay
administration (or the perceptions of the fairness of the supervisor in administering the rules for
pay increases and promotions); pay level, work pace (or the fairness of the supervisor in
maintaining a fair pace of work activity and rule administration. The results showed that pay rules,
pay administration and work pace or supervisor satisfaction were strongly related to quit
intentions.
Other studies aimed at testing equity theory include Summers and Hendrix (1991, as cited in
Griffeth & Gaertner, 2001: 11019) who found a significant relationship between job satisfaction and
intention to quit and Iverson and Roy (1994, as cited in Griffeth & Gaertner, 2001: 1019) who
19
investigated the perception of various pay and benefits in relation to coworkers and found a strong
correlation between pay equity and job satisfaction.
Staff training and development is another indispensable motivator in the workplace. In a study
conducted by Aibievi (2014) collected data from 100 non-academic staff of University of Benin,
Nigeria to test the impact of training and development on employee motivation. The study found a
significant positive relationship between training and motivation; that trained staff were found to
be more dedicated to duty compared to those who did not receive training and also that training
could lead to increased productivity.
From the above brief discussion of the theory and empirical evidences, it is now time for us to bring
out our views on how to motivate workers to increase their productivity.
Based on the preceding discussion on theories and empirical evidence, we are compelled to arrive
at the following synthesis of the literature. First and foremost, there is the need to motivate
workers in order to increase their productivity and also that there are many financial and non-
financial strategies of motivating workers. Secondly, it appears that there is no single general rule
applicable to each and every circumstance. Differences exist amongst lower, middle and higher
level employees in terms of their needs. For some, the literature suggests that monetary rewards
and supervision are necessary strategies before they can perform.. Others work better in an
atmosphere of fairness, equity, love and encouragement.
Some must be compelled or even punished before they can work.
MANAGERIAL IMPLICATIONS
From the preceding section, it becomes clear that each manager or supervisor needs to study his
workers individually and generally in order to come up with adequate measures of motivation. This
calls for a basket of measures to motivate workers. One single measure of motivation is not likely to
work in the diverse circumstances in which we live.
Against this background, the paper provides a selected menu of how to motivate workers to work
harder in order to raise productivity in the work place.
The first far reaching practical implication for management practice is the application of Maslow’s
theory by using employee expectations and lifestyles. It is established that significant difference
exists between lower level needs and higher level needs of employees. According to Maslow,
physiological needs for food, clothing and shelter are the most dominating in a person while an
employee is just starting his career. At this stage if you want to motivate the person, pay him on
time. This is because it is quite clear that at this stage the basic form of motivation is salary. An
average Nigerian worker is motivated when he receives salary alerts especially if he is expecting
some arrears. If that is guaranteed, Management can also consider additional monetary reward
20
(e.g., productivity bonus) and this can motivate him to increase his productivity. Another man who
has reasonably satisfied the first need but who is now afraid of losing his job (e.g., pre-mature
retirement due to poor performance), can be motivated to put on more effort and increase
productivity on account of that fear. But a person who has reasonably satisfied the second need
now wants acceptance, to love and be loved; you can motivate him to work harder and increase
productivity by providing him with a Staff Club as an easy avenue to make friends or facilitate
membership of social and professional associations subsidized by the employer.
A man who satisfied this need for love is now looking for esteem which is bred by accomplishments.
The man can be motivated by giving him recognition. A man who has satisfied this need now needs
self-actualization. He aspires to reach his highest potential. This man can be motivated by giving
him assignments that praises his worth, opportunity for career growth such as promotion, etc.
The second strategy of motivating workers to increase their productivity is to inculcate the culture
of appreciation, praise and recognition for the slightest improvement. This will spur them into
further improvement. The motivator/hygiene theory provides an essential starting point on which
to build a policy of motivating workers. The questions are: which behaviors should be recognized
and how? There are several types of recognition schemes. According to Thompson and Milsome
(2004, as cited in Silverman, 2004:7), there are those schemes that acknowledge inputs (ideas and
efforts) and those that reflect output (such as service delivery or other forms of successful
contributions). In addition, there are schemes that emphasize pro-social behaviour (such as
communication skills, teamwork, etc.) and those that concentrate on direct benefits to
organizational performance (like improvement and customer satisfaction).
The Management of an organization can design, implement and maintain schemes like “Academic
Staff of the Year”, “Administrative Staff of the Year”, and “Department of the Year”, etc. The
assessment needs to be on a continuous basis (throughout the year) and not necessarily a one off
ballot with clearly defined and communicated criteria for recognition like excellence in teaching,
research, mentoring, community service, etc. or any other criteria which promotes the
achievement of the mission and vision of the organization. It is also important to keep the scheme
fresh and constantly updated. Similarly, since the value of recognition scheme is the attention it
receives (Wiscombe, 2002, as cited in Uzonna, 2013:205); there should be a ceremonial coloration
such as a public appreciation in a Departmental meeting or special award lunch or dinner. The
winner can be presented with a trophy, a certificate and even a token cash award.
Closely associated with this is to give your workers a fine reputation to live up to. “You are from a
family of hard workers” coming from a manager is enough to make the worker try to prove that he
is indeed a handworker from a hardworking family. This will increase efficiency and productivity.
The third important implication from this study is that Management of organizations should
exercise equity and fairness in administration of financial and non-financial motivation strategies
because equity is at the centre of employee job satisfaction, motivation and increased productivity.
In other words, the Management should use objective and justifiable criteria (education level, years
21
of experience, special skills, etc.). There is also need for consistency even with those employees
who may be perceived to try the patience of Management. Management should not ignore the
concerns of employees about unfairness or inequities in pay, promotion, work schedules and other
aspects of the human resource systems. Let Management needs to acknowledge and resolve what
it can and explain what it cannot. There is therefore the need to re-educate and communicate to
employee on fairness issues as circumstances demand.
Fourthly, Skinner’s reinforcement theory of motivation appears useful for management in the area
of employee training and development, job design, supervision, quality control, etc. In the area of
supervision of workers, the process of informing employees how they perform is a form of
reinforcement. The supervisor should provide feedback, approval and show personal interest in
various ways to reinforce desired behaviours.
Staff training and development function is a serious motivation strategy. Participating in special
educational/professional programs, conferences and other developmental activities help
employees to achieve professional growth and development, acquire innovative technical and
decision – making skills. This will enhance their ability to deconstruct tasks and challenges and how
to feel less intimidated by their job roles and prepares them for challenges of training others with
state of the art techniques, for industry attachment and collaboration as well career advancement.
Therefore, demonstrating to staff how to cope in the workplace can lead directly to improved
motivation. In this regard, Management should seek for more funding in annual budgets for staff
training and development.
The fifth practical implication is to take a personal interest in the social life of your subordinates by
supporting them in other aspects of their lives outside work. An example is to visit your workers
when they are sick, attend their naming and wedding ceremonies, condole them when they are
bereaved and give them gifts at important festivals such as Christmas and Sallah. In short when the
Management tries to socialize, the workers will feel free. It is most likely that the workers will feel
happy with the company and identify with it. In short Management should be genuinely interested
in their workers and their problems. Management can also consider flexible working hours for
employees to focus on their family or to pursue further studies. They will see the failure of the
company as their own failure and they will work harder.
The sixth practical technique of motivating workers is to throw challenges at them. Assignments
provide opportunities for employees to develop skills expand knowledge and increase visibility
within the organization. When considering such assignments, supervisors should consult with
employees about the types of assignments they would value (Velnampy, 2007). If you have teams
or shifts, you must be able to encourage healthy competition (in hard work) between them. Let
each group want to excel the other and you will see how productivity will increase as each tries to
do better than the other.
22
The seventh practical method is that Management or supervisors should never be bossy instead put
a cheerful appearance. They should never scold their subordinates but try to correct them politely.
Such politeness breeds respect, creates a feeling of humaneness in the worker and he finds himself
co-operating instead of rebelling which culminate in doing things efficiently.
The eighth practical strategy of motivating workers to high productivity is to empower them; allow
them to use their initiative as long as it does not conflict with the objectives of the company. Show
them that they are competent; let them suggest ideas to you and together you will all run the
organization each thinking it is his idea and each trying to make his ideas to succeed.
The ninth formula make employees feel happy about doing what Management suggests to them to
do. This can be done by giving them responsibility that will boost their ego or an office that will
make them feel important, or a change that will boots their morale. All these will make the workers
to co-operate and to work much better.
The tenth and last strategy to motivate workers is to ensure that infighting and jealousies must not
be allowed to thrive, Management must try to find the cause if necessary straight away dismiss the
culprit. Infighting is one of the greatest causes of inefficiency and insubordination and should not
be promoted.
These ten strategies we feel are very likely to motivate workers to work. There can be many more
methods but these ten will bring no mean results in enhancing productivity leading to the corporate
survival and growth of the business environment.
CONCLUSION
This literature review was carried out on the impact of motivation on productivity. In achieving this
objective, the review and analysis contributes to the research in theory and practice in at least two
ways. First and most notably, this study suggested ten strategies of motivating employees based on
analysis of a catalog of theories and empirical evidence beginning with Maslow’s hierarchy of needs
theory and how to apply it at different levels of employees’ career path by identifying their life
styles and expectations and adopting appropriate strategies to motivate and satisfy them. Secondly,
the paper also analyzed the implications of other theories such as equity theory and what
Management can do to minimize the real or perceived inequities in the administration of financial
and non-financial rewards.
The study has some limitations as well. First, some other theories of motivation are not included in
the current review. For example, McClelland’s Achievement Motivation Theory, Goal Theory and
Attribution Theory (Koontz & Weihrich, 1990, as cited in Uzonna, 2013: 202) as well as McGregor’s
Theory X and Theory Y. This raises the question whether including more theories may explain the
motivation-productivity relationship better. The reason for choosing a few key theories is because
of the need to keep the paper within a manageable size without losing sight of our objectives.
23
In sum, the important managerial implication of this study is that if organizations desire to keep
productivity high, Management must be able to grasp the key theories and strategies of motivation
in the management of their human resources. It is only by so doing that they can hope to
understand their employees and their diverse economic, or physiological, social and psychological
concerns and how to effectively bring about desired performance levels. Based on this review, we
conclude that robust pay, promotion, recognition, conducive working environment, equity and
fairness and other aspects of human resource management systems are important for enhancing
motivation, job satisfaction and higher productivity.
It is however important to point out scope for further studies as a way forward in advancing
research in this area in order to address some of the limitations highlighted. Empirical research
needs to be conducted to examine the role of non-financial strategies of motivation especially
those that appeal to employees’ higher level needs such as ego (esteem) and selfactualization. This
can be achieved by collecting data and testing hypotheses especially in organizations with relatively
robust pay and benefits such as the oil and gas industry in Nigeria and other technology-based
organizations. This is important for research in this area for at least three reasons: First, it will help
us understand the notion that money is not everything when it comes to motivating a certain
category of employees and also that non cash rewards appeal to employees on a personal level
(Uzonna, 2013; Olugbodi, 2017). Secondly, non-cash rewards are important practices in
organizations across the globe with astounding results (Vrancic, 2015). The third reason is the
current recession in the Nigerian economy which calls for cost reduction and as demonstrated in
the paper, non-cash rewards are not only memorable but cheaper or cost effective as well. This will
further our understanding of the role of non-financial rewards in motivating employees to higher
productivity.
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International Journal of Economics, Commerce and Management, United Kingdom

Supply Chain Management

Lauren Xiaoyuan Lu Jayashankar M. Swaminathan

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