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Is Financial Reward Still an Important Motivator for the Indonesian Multi-Generational Workforce?

Authors:
  • Faculty of Economics & Business Universitas Indonesia

Abstract and Figures

Objective – Considering the importance of work motivation in the workplace for staff performance and organizational success, employers need to be sensitive and focusing more on work motivation of their employees to avoid losing them. However, previous studies still have conflicting results on this issue whether there is a significant difference on intrinsic and extrinsic motivators or not among employees from Baby Boomers, Gen X and Gen Y because many studies find generation is not the only driver influencing work motivators. The objectives of this study are to investigate whether a three-generation workforce differs in the level of work motivators and whether differences in generational work motivation are better explained by gender, education, or types of job to design effective human resources development programs. Methodology/Technique – Using survey method to collect data, 415 respondents who work in a manufacturing company were gathered and analyzed by applying descriptive and multivariate analysis. Intrinsic and extrinsic motivators were the subscales of work motivators. Findings – Results indicate that all generations are intrinsically motivated, in which Gen Y employees are found to have higher intrinsic motivators than Gen X and Baby Boomers. However, this study reveals that financial rewards are still considered as an important motivator for the three generations. Novelty – The study presents evidence that work motivators should not only be measured based on generational alone because other factors, such as gender, education, and types of job, can give impact to various outcomes.
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ISSN 0128-2603 © 2017 Global Academy of Training & Research (GATR) Enterprise. All rights reserved.
JournalofManagementandMarketingReview
Journal homepage: www.gatrenterprise.com/GATRJournals/index.html
J. Mgt. Mkt. Review 2 (3) 1 – 9 (2017)
Is Financial Reward Still an Important Motivator for the Indonesian
Multi-Generational Workforce?
Yanki Hartijasti
1
* and Surya Dwi Kusuma Darpita
2
1,2
Faculty of Economics and Business, Universitas Indonesia, Depok Campus, 16424, Indonesia
ABSTRACT
Objective – Considering the importance of work motivation in the workplace for staff performance and organizational
success, employers need to be sensitive and focusing more on work motivation of their employees to avoid losing them.
However, previous studies still have conflicting results on this issue whether there is a significant difference on intrinsic
and extrinsic motivators or not among employees from Baby Boomers, Gen X and Gen Y because many studies find
generation is not the only driver influencing work motivators. The objectives of this study are to investigate whether a
three-generation workforce differs in the level of work motivators and whether differences in generational work
motivation are better explained by gender, education, or types of job to design effective human resources development
programs.
Methodology/Technique Using survey method to collect data, 415 respondents who work in a manufacturing company
were gathered and analyzed by applying descriptive and multivariate analysis. Intrinsic and extrinsic motivators were the
subscales of work motivators.
Findings – Results indicate that all generations are intrinsically motivated, in which Gen Y employees are found to have
higher intrinsic motivators than Gen X and Baby Boomers. However, this study reveals that financial rewards are still
considered as an important motivator for the three generations.
Novelty – The study presents evidence that work motivators should not only be measured based on generational alone
because other factors, such as gender, education, and types of job, can give impact to various outcomes.
Type of Paper: Empirical
Keywords:Intrinsic Motivators; Extrinsic Motivators; Financial Rewards; Gen Y; Gen X; Baby Boomers; Indonesian
Workplace.
JEL Classification: J28, J33, M52, M54.
_______________________________________________________________________________________
1. Introduction
In today workplace, many organizations still have three generations working side-by-side: Baby Boomers,
Gen X, and Gen Y. The multiple generations in the workforce are pushing employers to consider how
generational differences might create both opportunities and challenges in work performance and productivity
because it apparently affects each generation’s expectations of the leaders and work environment (Stanley,
2010). Additionally, several of scholars believe that the three generations have fundamental differences in the

*
Paper Info: Received: January 16, 2017
Accepted: June 20, 2017
*
Corresponding author:
E-mail: yanki.hartijasti@ui.ac.id
Affiliation: Faculty of Economics and Business, Universitas Indonesia, Indonesia.
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J. Mgt. Mkt. Review 2 (3) 1 – 9 (2017)
characteristics, values, attitudes towards work, behaviors (Smola & Sutton, 2002; Appelbaum, Serena, &
Shapiro, 2004), views on authority, and communication style (Stanley, 2010).
Failure to recognize the differences in work motivators will lead to lower levels of employee engagement
and loyalty (Zemke, Raines, & Filipezak, 2000; Lancaster & Stillman, 2002). Unfortunately, researchers have
given limited attention to generational differences in work motivation (Jurkiewicz, 2000; Cennamo & Gardner,
2008).
Previous studies have reported differences in attitudes and values related to work motivation among the
three generations. For example, Baby Boomers are employees who have shaped the workforce (Wesner &
Miller, 2008), hold most of the senior positions in organizations, and are often described as hierarchical, job-
focused, and highly motivated to climb the corporate ladder (Smola & Sutton, 2002; Egri & Ralston, 2004).
Gen X highly value continuous learning opportunities and knowledge sharing (Borges et al., 2010) and at the
same time independent and antihierarchy (De Meuse et al., 2001; Egri & Ralston, 2004), therefore, are looking
for a fast track career (Reisenwitz & Iyer, 2009) and challenging work. Gen Y gives value to an organization
that invested heavily in training and development (Broadbridge et al., 2007; Terjesen et al., 2007), economic
return and work environment, but less concerned about personal growth such as intellectual stimulation and
achievement (Chen & Choi, 2008).
Nevertheless, until now numerous previous studies still have conflicting results on this issue. For example,
several researchers argue that there is no significant difference among the three generations on intrinsic and
extrinsic motivators (Cennamo & Gardner, 2008; Gursoy et al., 2008). This finding is supported by a study
which claims that there is no difference in extrinsic work motivators, such as salary, benefits and job security
across generations (Lyons et al., 2005). Moreover, Catania and Randall (2013) did not find any differences
between older and younger respondents concerning their intrinsic motivators, but young respondents in the
study were more concerned with extrinsic motivators, especially financial factors.
However, a meta-analysis study finds that there is a significant difference between age and motivation
(Kooij et al., 2011). However, the findings vary among several studies. For instance, many scholars are
consistent in claiming that Baby Boomers and Gen X employees have an intrinsic motivation (Twenge et al.,
2010; Twenge et al., 2012; Krahn & Galambos, 2014). Contrary to popular belief, prior studies revealed that
Gen Y is found to be intrinsically motivated (Yusoff & Kian, 2013). On the other hand, some empirical studies
claim that Gen X and Y have an extrinsic motivation (Gursoy et al., 2008; Twenge et al., 2010; Yusoff & Kian,
2013; Krahn & Galambos, 2014). Another study even reveals that Gen Y employees have a mix of both
intrinsic and extrinsic motivation (Srinivasan, 2012).
Additionally, given the different values and preferences of each generation working in a competitive
business environment today, many studies find generation is not the only driver influencing the differences in
work motivation. There are other factors such as gender (Parker & Chusmir, 1990; Terjesen et al., 2007;
Cennamo & Gardner, 2008; Parry & Urwin, 2011; Weberova et al., 2017), education (Schuman & Rogers,
2004), and types of job (Wall & Jackson, 1995; Houkes et al., 2001).
According to several authors, there may be more heterogeneity within a generation than between
generations (Giele & Elder, 1998; Denecker et al., 2008). In other words, there are various characteristics
within a single generational work motivation. For example, would women within Gen X of different levels of
education have similar values to men of this generation? Would we expect Gen Y of different types of job or
with different gender and levels of education to be similar?
Given the importance of work motivation in the workplace for employee recruitment, training and
development, career development, rewards and working arrangements (Parry & Urwin, 2011), employee
performance (Gagné & Deci, 2005; Springer, 2011), and organizational success, employers need to be sensitive
and focusing more on work motivation of their staff to avoid losing them (Kim et al., 2005). Failure in
satisfying these aspects could result in a decline of organizations’ total effectiveness, and subsequently
resulting unwanted working environments (Yusoff & Kian, 2013). Consequently, it is necessary to motivate
Gen Y and X employees to be more engaged in the organization and encourage Baby Boomers to share their
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work experiences with the younger co-workers. The objectives of this study are to investigate whether a three-
generation workforce differs in the level of work motivators and whether the differences in generational work
motivation are better explained by gender, education, or types of job to design effective human resources
development programs.
2. Literature Review
There are many beliefs about characteristics of Gen Baby Boomers, Gen X and Gen Y which are supported
by research, based on opinion, and even based on pure stereotyping (Deal et al., 2013). For example, Baby
Boomers think of work as being more central to their lives (Smola & Sutton, 2002), having a comfortable and
exciting life and social recognition at work (Parker & Chusmir, 1990), and having perceived greater alignment
between their work motivations and organizations’ reward systems (Cennamo & Gardner, 2008). Gen X has
high levels of status-oriented values (Cennamo & Gardner, 2008), and strong desire to learn new things and to
be free from supervision (Jurkiewicz, 2000). Gen Y is more motivated by personal enjoyment, career success,
a supportive culture (Broadbridge et al., 2007), being in an affiliative workplace but less motivated by power
(Wong et al., 2008), and economic returns (Chen & Choi, 2008).
Based on the theory of gender stereotyping, men and women have different goals and needs, and that is
why they are motivated differently (Arnania-Kepuladze, 2010). For instance, men prefer to work
independently and seek help from those who are in a position of authority, while women prefer to work
interactively and ask for help from colleagues with whom they are in a group (Peterson, 2004). Performance
incentives such as financial income, freedom, career advancement, challenges, opportunities of self-
realization, and so on are more significant for men, while women should fulfill the need for incentives linked
to family care and the quality of their family life (Meece et al., 2006). However, according to Eak et al. (2013)
and Sood (2006), there is no difference between gender and intrinsic and extrinsic motivation.
Moreover, characteristics of job can also affect the level of work motivation. For example, job autonomy
can facilitate the time necessary for learning and development (Wall & Jackson, 1995), while work content
(skill variety) has a positive relationship with work motivation (Houkes et al., 2001).
Moreover, characteristics of job can also affect the level of work motivation. For example, job autonomy
can facilitate the time necessary for learning and development (Wall & Jackson, 1995), while work content
(skill variety) has a positive relationship with work motivation (Houkes et al., 2001). Additionally, employees
with the different educational background will have different motivation to work. For instance, older
generation likes skills training in the area of their qualification, while younger generation prefers leadership
training (Deal, 2007).
3. Methodology
Work motivation is the willingness to exert high levels of effort, toward organizational goals, conditioned
by the effort’s ability to satisfy some individual need (Saraswathi, 2011) which is triggered specifically as part
of employee’s goal-oriented (intrinsic or extrinsic) behavior. Intrinsic and extrinsic motivators were the
subscales of work motivators.
Intrinsic motivator is the desire to do or achieves something because one actually wants to and takes
pleasure or sees value in doing so (Pintrich, 2003). Intrinsic motivator is measured by four dimensions,
namely: (a) self-acceptance (achieve psychological growth, autonomy, and self-regard), (b) affiliation (have
satisfying relationships with family and friends), (c) community feeling (improve the world through activism,
helpfulness or generativity), and (d) physical fitness (feel healthy and free of illness). Extrinsic motivator is
the desire to do or achieves something, not for the enjoyment of the thing itself, but because doing so leads to
a particular result (Pintrich, 2003). The three dimensions are (a) financial success (be wealthy and materially
successful), (b) attractive appearance (look attractive in term of a body, clothing, and fashion), and (c) social
recognition (be famous, well known, and admired).
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Data were gathered from 415 respondents who work in an automotive manufacturing company (PT KLM,
a disguised name). They were grouped into three generations using the reference of Twenge et al. (2010): (a)
Gen Y (born in 1982-1999), (b) Gen X (born in 1965-1981), and (c) Baby Boomers (born in 1946-1964). Gen
Y has the highest proportion of total respondents because PT KLM wants to hire productive age in the
workforce. The respondent composition of Gen Y (63.6 percent), Gen X (33.7 percent), and Baby Boomers
(2.7 percent) at least is proportionally equivalent to the employee population distribution based on generations
in PT KLM (Gen Y: 76 percent, Gen X: 22 percent, Baby Boomers: 2 percent).
Since PT KLM is an automotive manufacturing industry, most of the respondents are male (63.6 percent)
with a degree in bachelor (44.1 percent), diploma (37.1 percent), and high school (18.8 percent). Their job is
54 percent in supporting function (Human Resource, Legal, Accounting and Finance, etc.) and 46 percent in
operational function (Production, Quality Control, Fabrication, Warehouse, etc.).
This study uses descriptive analysis and multivariate analysis of variance (MANOVA). Descriptive
analysis is used to find out the level of work motivators of each generation, while MANOVA is used to analyze
whether differences in generational work motivation are better explained by the interaction of gender,
education, and types of job. General Linear Model (GLM) MANOVA is used because this study has more
than one dependent variable.
4. Results
To answer the first objective of this study in determining the level of work motivators of each generation,
mean scores of intrinsic and extrinsic work motivators are calculated. Intrinsic motivator consists of four
dimensions which are physical fitness, community feeling, self-acceptance, and affiliation, while extrinsic
motivator consists of three dimensions which are a financial success, attractive appearance, and social
recognition.
Table 1. Generational Work Motivators: Descriptive Results
Dimension and Variable Gen Y Gen X Baby Boomers
Mean SD Mean SD Mean SD
Physical fitness 4.13 .516 4.19 .463 4.11 .606
Community feeling 4.22 .527 4.17 .421 3.60 .322
Self-acceptance 4.30 .485 4.21 .499 3.95 .557
Affiliation 4.41 .483 4.26 .417 4.07 .560
Intrinsic Motivator 4.26 .434 4.18 .350 3.85 .383
Financial success 4.09 .580 3.75 .609 3.61 .466
Attractive appearance 3.19 .653 2.89 .649 3.20 .544
Social recognition 3.40 .586 3.12 .714 3.06 .201
Extrinsic Motivator 3.56 .506 3.25 .572 3.29 .351
Note: Based on 5-scale Likert; SD = standard deviation
Table 1 shows that all generations are more intrinsically motivated in which Gen Y respondents (4.26) are
found to have higher intrinsic motivators than Gen X (4.18) and Baby Boomers (3.85). Gen Y and X prefer
affiliation as their important motivator, while physical fitness is more important for Baby Boomer than any
other intrinsic motivators.
Gen Y respondents also have higher extrinsic motivator (3.56) than Baby Boomers (3.29) and Gen X (3.25).
All generations prefer financial success as their extrinsic motivator even though the underlying reason might
be slightly different from them. Interestingly, Gen Y and X prefer social recognition in their second place
while attractive appearance is important for Baby Boomer.
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Table 2. Generational Work Motivators Differences
Dimension and Variable df F Sig. 2p Observed Power
Physical fitness 2 0.843 .431 .004 (ns) 0.195
Community feeling 2 8.740 .000 .041 0.970
Self-acceptance 2 3.617 .028 .017 (ns) 0.667
Affiliation 2 6.527 .002 .031 0.907
Intrinsic motivator 2 6.559 .002 .031 0.909
Financial success 2 17.114 .000 .077 1.000
Attractive appearance 2 10.079 .000 .047 0.985
Social recognition 2 9.465 .000 .044 0.979
Extrinsic motivator 2 15.804 .000 .071 0.999
Note: ns = not significant. Classification of effect size 2p: < .01 = small, .01 to .10 = medium, > .10 = large
(Cennamo & Gardner, 2008). Effects are treated as significant if the observed power > .80 (Cohen, 1988).
GLM multivariate analysis yields significant differences in both intrinsic and extrinsic motivators by
generation with moderate effect (See Table 2). However, extrinsic motivators have higher effect size, F(2,
415) = 15.804, p < .01, observed power = .999, 2p = .071, than intrinsic motivators F(2, 415) = 6.559, p <
.01, observed power = .909, 2p = .031. Financial success has the highest effect size, followed by attractive
appearance, social recognition, community feeling, and affiliation. Physical fitness and self-acceptance are
found not significantly different.
The second objective is to investigate whether differences in generational work motivation are better
explained by gender, education, or types of job. Table 3 shows that in generational work motivators by gender,
there are significant differences in extrinsic motivators which has a larger effect size, F(5, 415) = 7.741, p <
.01, observed power = 1.0, 2p = .086, than intrinsic motivators F(5, 415) = 2.954, p < .05, observed power =
.855, 2p = .035. The same with work motivators by generation, financial success has the highest effect size,
followed by attractive appearance, affiliation, social recognition, and community feeling.
Table 3. Generational Work Motivators Differences by Gender, Education, and Types of Job
Dimension and Variable 2p (Gender) 2p (Education) 2p (Types of Job)
Physical fitness .011 (ns) .032 (ns) .016 (ns)
Community feeling .044 .056 .045
Self-acceptance .021 (ns) .038 (ns) .036
Affiliation .055 .060 .062
Intrinsic motivator .035 .056 .048
Financial success .093 .106 .104
Attractive appearance .077 .069 .104
Social recognition .045 .051 .053
Extrinsic motivator .086 .084 .109
Note: ns = not significant
Generational work motivators by education has significant differences in extrinsic motivators with a larger
effect size, F (11, 415) = 3.371, p < .01, observed power = .995, 2p = .084, than intrinsic motivators F(11,
415) = 2.180, p < .05, observed power = .932, 2p = .056 (See Table 3). Financial success has the highest
effect size, followed by attractive appearance, affiliation, community feeling, and social recognition.
Table 3 also exhibits generational work motivators by types of job has significant differences in extrinsic
motivators with a larger effect size, F (5, 415) = 10.014, p < .01, observed power = 1.0, 2p = .109, than
intrinsic motivators F(5, 415) = 4.094, p < .01, observed power = .954, 2p = .048. Financial success has the
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highest effect size, followed by attractive appearance, affiliation, social recognition, community feeling, and
self-acceptance.
To sum it up, all generations have the same order of effects on financial success and attractive appearance,
but a different order regarding affiliation, social recognition, community feeling, and self-acceptance,
depending on the characteristics influencing the work motivation.
5. Discussion
Respondents across generations express a different level of work motivators. In contrast to several previous
findings, this study reveals that Gen Y is more intrinsically motivated than Gen X and Baby Boomers. This
finding is in direct conflict with a popular belief that younger generations are less intrinsically motivated
(Zemke et al., 2000). With higher mean scores in affiliation and community feeling, Gen Y has a significant
difference with moderate effect size with Gen X and Baby Boomers. This situation is consistent with the prior
research because the sources of motivation of Gen Y is connected to friendly colleagues and a good work
community (Hurst & Good, 2009; Kultalahti & Viitala, 2014), as well as dependent on a great collaboration
with their colleagues (Yusoff & Kian, 2013).
With a lower mea n sco re, G en Y i s also mor e extrinsic motivated than Gen X and Baby Boomers. However,
generational extrinsic motivators have a stronger relationship than intrinsic motivators, especially in financial
success and followed by an attractive appearance and social recognition. It is important for all generations in
this study to be materially successful to support their living. As the senior workforce who have shaped the
working culture (Smola & Sutton, 2002; Wesner & Miller, 2008) and hold most of the leadership and senior
positions in organizations, Baby Boomers expect a corresponding financially reward (Gursoy et al., 2008).
Just like Gen Y, Baby Boomers and Gen X have similar motivational factors on a high salary and a stable and
secure future (Appelbaum, Serena, & Shapiro, 2005) and generally want to progress in terms of income,
responsibility, and influence within the organization (Jurkiewicz & Brown, 1998). However, this finding is
inconsistent with the study of Catania and Randall (2013) which finds Gen Y is more concerned with financial
factors.
This study is done in PT KLM which is partly owned by a Japanese company. In general, Japanese
manufacturing companies implement a high level of supervision, a frequency of reporting, and degree of
control, as well as hierarchical decision-making (Negandhi et al., 1987; Elger & Smith, 1994). In a disciplined
and long-hours working culture, the company has lacked the concern to promote work-life balance to improve
morale and prevent competent employees to quit. For examples: (a) calling and disturbing employees during
non-working time and (b) pushing employees to work hard which make them seldom take vacations and lack
of time with family. With these circumstances, PT KLM has a high turnover. In 2015, the turnover rate was
12.5 percent which was higher than the industry level of 10 percent (Fatahillah, 2016).
The working culture in PT KLM might be a culture shock, especially for Gen Y who dominates the
workplace. Feeling unfitness with the working culture, Gen Y quit the job to pursue a higher educational
degree, start own business, or aim for a career opportunity with better compensation and benefits. The reason
Gen X quit was to look for promotion opportunity in another company because they had an unsatisfying
relationship with supervisor, family purposes, lack control of their life, and physical health issues. With a tiny
proportion in the company, Baby Boomers almost never leave the workplace because they have been working
for more than 20 years. It is more beneficial for them to wait for their retirement period because they do not
have to actively work during the last two years before their retirement. It seems all generations expect to work
in a supportive culture and an affiliative workplace (Broadbridge et al., 2007; Wong et al., 2008), with a good
balance between work and personal life (Kunreuther, 2003; Cennamo & Gardner, 2008) to earn commensurate
financial income (Appelbaum et al., 2005; Chen & Choi, 2008).
The generational work motivation can be explained by gender, education, or types of job because it has
different effect. The highest effect is by types of job, followed by education and gender. However, the largest
effect is the interaction between types of job and education as compared to types of job and gender or education
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and gender. In this study, Gen Y employees with master’s degree have a strong relationship with intrinsic
motivators, whereas Gen Y employees in supporting job function have a stronger relationship with extrinsic
motivators. It means, having higher educational level among their co-workers who are senior to them, Gen Y
feels more confident in sharing and expressing their knowledge and ideas to achieve team goal at work.
Located in the head office, most of the employees from supporting function (Human Resource, Legal,
Accounting and Finance, etc.) have the opportunities to meet clients, wear no uniform, and have a more flexible
working environment, as compared to the ones in operational (Quality Control, Fabrication, Warehouse, etc.).
6. Conclusion
This study reveals that all generations are intrinsically motivated, in which Gen Y employees are found to
have higher intrinsic motivators than Gen X and Baby Boomers. However, stronger relationships are found in
generational extrinsic motivator by types of job, education, and gender; while generational intrinsic motivator
by education, types of job, and gender.
Results show that financial reward is still an important motivator to be wealthy and materially successful
for Baby Boomers, Gen X, and Gen Y with all characteristics measured (gender, education, types of job).
Therefore, work motivators should be grouped not only by generation but also other characteristic such as
education, types of job, and gender.
This generational work motivators were analysed by gender, education, and types of job. Future research
should consider managerial level because it is proven to be a better predictor of work motivators (Deal et al.,
2013).
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