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Literature Review
In this chapter, the fundamental theories followed by previous studies made on the subject will be presented. The chapter ends with a section devoted to the difference between genders
Maslow’s Hierarchy of Needs
Maslow’s Hierarchy of Needs propose that an individual’s needs are divided into five different categories. The categories are physiological, safety and security, belongingness, esteem and self-actualization. The needs are based as a pyramid where the bottom of the pyramid is more important to fulfill before the individual would move up to the next level, starting with physiological and ending with self-actualization (Maslow, 1943).
In a paper on why Maslow’s Hierarchy of Needs are still important to use in today’s society, research was done among Millennials. The author states that we cannot explain social actions if we do not understand what motivates a person. In doing interviews with Millennials the author found that Millennials doubt if they have the possibility to fulfill basic needs of the pyramid, such as safety and physiology. The generation do not only have the need to belong but also to feel needed. Beyond this, they felt that love is a fundamental need that are as important as safety. One of the interviewees noticed that focus lied on what a man’s basic needs where and that shifting the view to a woman would have a different outcome where self-actualization and love would often move them in to two different directions (Abulof, 2017)
Flynn’s Theory
Flynn (2011) further explains how motivation affects job satisfaction and mentions that different “motivations” has its own management maturity level. Currently discussed is the value of psychological contracts between managers and staff members, that are either relational or transactional.
People within the first maturity stage, called compliance management, are motivated by extrinsic factors. The main motivator for employees is money and is therefore seen to be the absolute solution for any difficulties among workers. In this stage, the psychological contract is short-term and transactional and the remaining hygiene factors, attained from Maslow’s Hierarchy of Needs, are most likely ignored. The second stage is called process management, where personal assessments are announced. This level includes for example workers’ wishes for equity and security. At this stage, hygiene factors such as feelings of security, prosperity, physical safety and health are of importance. A managerial tool at this maturity level, is that first line managers should provide basic job training in turn to create a supportive supervisory environment for staff members. Capability management is the third stage where the organizational structure is both functional and delayered. At this level, employees have more specific opportunities of both career development and acquire valued social positions within the corporation. Beyond this, this managerial maturity stage supply possibilities of task variety. In turn to increase employee motivation, organizations can provide Performance Management Systems to improve goals and short-interval measurements to strengthen role clarity by give larger opportunities for feedback. The final and fourth maturity level is strategic management where a wide range of intrinsic motivational factors are applicable. At this level, personal control can be achieved by responsible autonomy, roles can be developed and more variety can be brought from work enrichment. At the fourth maturity stage, the reward system is development to allow vertical, horizontal and now also personal equity. A significant issue at this level is that all employees sense that total organizational rewards are equally distributed among the workforce (Flynn, 2011).
An important matter in this theory, is that the chosen managerial maturity level must be established before the different ‘motivations’ can be provided to the workers. Flynn (2011) states that when lower maturity levels have higher motivations, problems occur. Consequently, it is crucial that the environment is accurate. Managers should also keep in mind that intrinsic motivation suffers from the input of extrinsic motivation. Therefore, monetary rewards should be of absence in the higher maturity stages
Equity theory
According to the Equity theory, employees that experience that they are either not being rewarded enough or overly rewarded will try to solve the inequality that appears due to their experienced distress. The objectives of the theory are concluded into the following four propositions. First, every individual compares their inputs into a relationship with others and the outcomes they receive for this. Second, if the outcome of this comparison turns out unequal the individual reaches the conclusion that inequality exists. Third, if the inequality is perceived as high, the individual will be in more distress and wants to resolve the inequality. Fourth, the higher the level of distress are for this individual the more work will be put into restoring equity.
The individual resolves this by either changing the comparison, altering the inputs or outputs or end the relationship (Huseman, Hatfield, & Miles, 1987)
Work Conditions
An important aspect that contribute to an employee’s job satisfaction is the employees work conditions. Currivan’s (1999) study shows that routinization, peer and supervisory support and workload all have a similar effect on employees’ commitment to an organization and their job satisfaction. Experiencing emotional exhaustion and excessive workload is found to be an important factor in job attitudes and turnover (Cordes & Dougherty, 1993) and an employee that suffers from emotional exhaustion will have a decrease in performance (Wright & Bonett, 1997). An excessive workload where an employee has both a heavy workload and high demands from work can create emotional exhaustion for the employee, which may lead to a burnout (Maslach & Jackson, 1982). Buchheit, Dalton, Harp & Hollingsworth (2016) found out that the burnout level was higher in the four big auditing firms comparing to other certified public accountant (CPA) firms. The findings also indicated that the degree to which accounting staff experiences stress, became higher as the firm size increased. Junior auditors frequently sense they have worked to many hours and feel pressured by time. A consequence of overloaded auditors is the increased risk of work burnout (Brown, Gissel, & Neely, 2016). Employees who experienced role conflict and role ambiguity experienced higher level of tension related to the job. This in turn resulted in one dimension of job burnout, namely emotional exhaustion. Further findings in the study was that experience of emotional exhaustion had a direct negative effect on job satisfaction and an indirect negative effect on organizational commitment. Both of these factors lead to a higher risk for the employee to leave their position (Chong & Monroe, 2015).
Stress in the auditing profession has a significant aspect concerning career, in comparison to other occupations. A reason for this was that auditors during the so called ‘busy season’ work over 10 hours a day resulting in inordinate stress. Another argument was that due to the long working hours, people got less free time and less time for family duties (Jones III, Norman, & Wier, 2010). As management of CPA firms wish to diminish the consequent turnover caused by burnout, Sweeney & Summers (2002) stated that by reducing overtime during the busy season the undesired turnover could be prevented. Jones et al. (2010) studied role stressors in public accounting. Their findings suggested that stress connected to burnout and lower feelings of happiness, impact the work result negative. Choo (1986) however mentions that limited stress positively affects job outcome in public accounting, however when the level of stress exceeds neutral stress the work performance is negatively influenced. Beyond this Collins & Killough (1992) stated that too much stress could lead to negative psychological effects such as depression. The interaction between the decision to quit and stress, was concluded by Haji Hasin & Haji Omar (2007) in their study about job-related stress. Stress was the factor that scored the highest among the options of intentions to leave the profession.
Leading companies are now moving towards a more flexible environment and have a larger focus on work-life balance (Twenge, Campbell, Hoffman, & Lance, 2010). Personnel are widely facing conflicts regarding work and family life independent of auditing firm size (Buchheit et al., 2016). Research concerning the differences between generations regarding work values showed that the younger generations, which companies are now trying to attract, place a higher value on work life balance and that this is one of the fundamental values for this particular generation. Companies work with this by creating possibilities to have a flexible schedule and introducing flextime. These flexible schedules have improved employees job satisfaction, motivation and organizational commitment. It was found that there is a need for more flexible schedules among younger people who have not started a family yet as well as for these who are parents. These alterations are however mostly used by employees with families (Twenge et al., 2010).
Dambrin and Lambert (2008) found a scarcity of middle-aged and mid-career women among in the upper levels of management in public accounting firms. They traced this back to the issue of work-life balance. Even though there are no apparent barriers for women to enter the auditor profession, there is still a strong assumption that women are the main caretaker for the family (Law, 2010). Young women have the perception that they do not have the possibility to have a professional career and live up to the demands that comes with that as well as maintaining a balanced family life (Dambrin & Lambert, 2008). Women see the issue of a role conflict, that is not being able to be both the caretaker of the family and make a career in the audit profession, as the most challenging barrier (Law, 2010). By ignoring these issues and not create a more flexible work environment that allows employees to have a balanced work-life, companies will have a harder time keeping their personnel (Dambrin & Lambert, 2008). Almer & Kaplan (2002) concluded that a flexible work arrangement stimulates greater job satisfaction as well as it lowers the degree of personal emotional exhaustion. Also, their findings indicated that professionals that worked under flexible circumstances had lower intentions to change career than those with stricter work arrangements. According to a study conducted by Buchheit et al. (2016), men are less supportive to flexible working conditions than women.
Carcello, Copeland, Hermanson & Turner (1991) conducted a study that compared the soon to be graduating accounting students’ expectations and the experience of employees within the profession. There were large differences regarding most of the questions, one area however where there was no significant difference were concerning overtime. Both students and employees felt there were no clear guidelines on how late they were expected to stay when working overtime
Work Environment
The second aspect to take into consideration when considering the motivation and job satisfaction of the employees are the environment in which they perform their work. One of the earliest work in the area of job satisfaction among accountants showed that employees who worked at CPA firms valued the ability to have a high level of autonomy in their work (Strawser, Ivancevich, & Lyon, 1969). Similar results have been found where higher level of job autonomy increase the professionalism of an auditor (Fogarty & Kalbers, 2000) and leads to employees feeling more motivated and satisfied as well as being more involved (Bamber & Iyer, 2009). Autonomy is defined as “the freedom enjoyed by a professional to use individual judgment in applying the profession’s body of knowledge” (Lengermann, 1971). Job autonomy is recognized as an important component when it comes to professionalism, and is significant for auditors in particular due to the need to comply with professional standards (Bamber & Iyer, 2009). Auditors with high autonomy where found to be devoted to their profession. A high level of autonomy is also associated with professional approaches in regard to the work within the organization, work across organizations and participation in other professional activities (Fogarty & Kalbers, 2000). Furthermore, a higher level of job autonomy is related to a lower level of role ambiguity (Singh, 1998) and evidence was found that audit quality is positively correlated to job autonomy (Bamber & Iyer, 2009).
Professionals at CPA’s sees the varied and challenging work assignments and the ability to improve their skills as one of the major benefits of working at a CPA firm (Carcello et al., 1991). A diversity of tasks can be beneficial for motivation and are achievable by rotating managers between different departments and jobs, which could lead to a higher performance (Garg & Rastogi, 2006). Employees that have a high status are more likely to have their motivational factors fulfilled as these positions most likely include variety of work assignments among other benefits (Furnham et al., 2009).
According to Parker & Kohlmeyer III (2005) another factor to consider in job satisfaction are fairness. The authors state that individuals tend to leave their jobs and even retaliate against the company if they observe lack of fairness within the organization. The study showed that allocation of rewards received within the organization was an important factor regarding the issue of fairness. Perception of favoritism in this allocation was associated with high level of turnover, low level of job satisfaction and low commitment to the organization.
A study conducted by George & Wallio (2017) examined the difference between distributive justice, which describes employees sense of fairness regarding material rewards and recognition and procedural justice, which describes unbiased treatment within the company’s decision-making. These two different types of justice were examined when it came to turnover intentions among Millennials and the changes in importance between this over the years. They could conclude that a relationship between distributive justice and turnover intention and between procedural justice and turnover intention existed among the Millennials within the accounting profession. The study showed however that procedural justice, which earlier were of less importance might have a stronger importance among this generation than distributive justice.
According to Islam (2013), recognition is often of importance for the employees and is defined as a trans-cultural requirement for social acknowledgment. The author argues that recognition at work is a main concern of respect and dignity at the workplace. He states that even though decent benefits and material working conditions are important, such circumstances are not enough for creating a compassionate work environment. Social recognition needs to be included in contemporary organizations since it has been easy to forget that a workplace is a place of social meaning. If firms underestimate organizational recognition, it could result in an undermining of the behavioral and existential unity of employees. In addition to this, Sturges, Guest & Mac Davey (2000) found that is a clear connection between paying attention to a person’s accomplishments and orderly management processes.
Another factor worth mentioning are affiliation. Based on a study made by Chia, Koh & Pragasam (2008), accounting students were shown to value affiliation. In this case, interpersonal relations as well as the appreciation of working with others, appealed the respondents. Beyond personal affiliation the results presented that accounting scholars also enhance professional support when necessary
Work Opportunities
Nawaz & Pangil (2016) refers to studies made by Nouri & Parker (2013) and Weng & McElroy (2012) among others, who’s findings indicates that there is a difference in the importance of numerous motivational factors which drives the employees. They suggest that development and career goal process have a higher level of importance than for instance remuneration growth and promotion speed. Nouri & Parker (2013) found that a decrease in turnover occur when workers have larger organizational commitment due to the company’s provision of career growth opportunities. They conclude that career growth opportunities and turnover intentions are linked to each other, as well as commitment to the organization (Nouri & Parker, 2013). A way to handle turnover is according to Weng & McElroy (2012) through organizational career growth, and are most effective on those who request a wide professional engagement. To define expectations for recent recruitments, firms can provide specialized training programs and implement career plans together with expressive career directions. The authors state that having clear career development indicators for personnel can be achieved by combining yearly revision and compensation. Huang, Chou & Chen (2017) conclude that career growth opportunities has a positive connection to job satisfaction. Consistent with Weng & McElroy (2012), the authors state that firms should consider developing techniques to stimulate employees’ career progresses.
An approach to foster career growth among employees are mentoring. It is often used as a tool to transfer knowledge for the upcoming partnerships. The lower levels personnel are not prioritized in mentoring processes, which could explain high turnover intentions at those positions (Reinstein, Sinason, & Fogarty, 2012). Mentoring are associated with lower intentions to quit, however, those auditors who would need mentoring the most, will presumably be neglected if the mentoring include rewards since only those who achieve the best result will be seen (Diaz, Loraas, & Apostolou, 2017).
The second most significant career driver trait among accounting students in Hong Kong was expertise (Chia et al., 2008). It was concluded that the value of expertise was high among junior auditors as well (Chia, 2003). Another study found that expectations differed from the actual experience when it came to advancement, training and supervision. The expectations of these areas where higher than what the employees had experienced. One of the largest differentiation was found in the performance evaluation process, adequate training and adequate staffing of professional engagement. In all three of these areas the expectations exceeded the actual experience. The results of this study indicate that expectations from students are likely to be too high and thereby lead to job dissatisfaction when they start working as junior auditors (Carcello et al., 1991). According to Nouri & Parker (2013) effectiveness of training as well as the organizational prestige could have an impact on workers impression of career growth opportunities. The authors argue that companies need to add motivation and their findings indicated that career growth opportunities are directly affected by training efficiency and indirectly influenced by both organizational commitment and turnover intentions
1 Introduction
1.1 Problem Discussion
1.2 Purpose
2 Literature Review
2.1 Maslow’s Hierarchy of Needs
2.2 Flynn’s Theory
2.3 Equity theory
2.4 Work Conditions
2.5 Work Environment
2.6 Work Opportunities
2.7 Work Benefits
2.8 Gender Differences
3 Methodology
3.1 Data Collection
3.2 Data analysis
3.3 Operationalization of Variables
3.4 Sample Selection and Sample Procedure
4 Empirical Findings
4.1 Statistics of control Variables
4.2 Descriptive statistics
4.3 Statistics between genders
5 Analysis
5.1 Work conditions
5.2 Work environment
5.3 Work opportunities
5.4 Work benefits
5.5 Flynn’s theory
6 Discussion and Conclusion
6.1 Importance of career drivers among junior auditors
6.2 Identified gender differences
6.3 Conclusion
Reference list
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