The relationship
between reward structure and motivation is quite difficult to determine.
Motivating employees is a very important factor in the success of any
organization, an organization with the right reward structure can attract the right
employees and keep them motivated. During past employee surveys conducted
within ASML, the important question of which kind of rewards intrinsic or
extrinsic motivate ASML employees.

The aim of this
paper is to determine within ASML, (an original equipment manufacturer of
lithography systems for semiconductor industry), which kind of intrinsic or
extrinsic rewards motivate employees, and also to find out if employees are satisfied
with the current reward structure of ASML.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!

order now

A survey was
conducted within ASML to determine the relationship between rewards and job
satisfaction. The questionnaire was taken from existing research conducted by (Tremblay et al,2009) and other questions were
taken from a [email protected] survey which is conducted every two years internally. The
questionnaire was distributed to random employees within ASML Veldhoven campus
who were working in different departments such as marketing, quality, design
and engineering, supply chain. Due to time limitations only 36 respondents were


In today’s fast growing economy, organizations benefit a well from
motivated workforce. Highly motivated, focused and engaged employees are wanted
by every organization.  (Deci and
Ryan,1985) describe motivation as an important factor in the success of any
organization as it leads to positive results. Rewards such as bonus, non-monetary,
psychological payments are provided by an organization to its employees to keep
them motivated, increase their performance and reduce attrition rate. Rewards
schemes can be classified into extrinsic and intrinsic, extrinsic rewards refer
to items such as financial payments, bonus, promotion, working conditions
(fringe benefits), intrinsic rewards relate to the satisfaction derived from
doing the work, recognition, praise and encouragement from senior management or
peers. There has been a long debate amongst researchers which kind of rewards
intrinsic or extrinsic motivate employees.

The primary reasons why organization provide benefits to employees are:
(Ryan, 2013)

To motivate employees

To recruit best talent and
retain it

To align organization’s goals
with its employees

To align risk preferences of

To increase productivity, which
strengthens the organization as well as increase revenues

In current
challenging environment human resource is the most important resource for any
organization, as they contribute to the success of an organization. Motivation
is one of the main factors that inspires employees to work, and also has a major
influence on their performance. Organizations such as ASML is involved in
developing highly innovative and high quality lithography tools, employee
performance plays an fundamental role in realizing its business goals,
therefore ASML needs to understand what the underlying factors in motivating
people are, is the work force more intrinsically or extrinsically motivated? As
ASML’s employment policy focuses on primarily on attracting and retaining specific
technical knowledge and competencies, consequently understanding primary
factors that motivate employees is crucial for ASML. To understand areas where ASML
does well and  in which areas improvement
is needed, the [email protected] survey is conducted every two years. The [email protected] survey
consists of several themes like commitment, engagement, efficiency, role
clarity, vitality, customer focus, work atmosphere, retention factor, however
it does not specifically cover intrinsic or extrinsic motivation dimensions. By
doing this small research these motivation dimensions can be highlighted and
management can focus on those dimensions.

Objective of the research

There has been much
research conducted in the area of rewards and employee satisfaction, and an
increasing frame of evidence states that measuring the effectiveness of reward
practices has substantial benefits for employers. Like any organization it is
essential for ASML to hire and retain the best staff. Motivated employees are
engaged and committed to an organization’s goals and values, overall they
contribute to an organization’s success. Satisfied employees stay longer and
contribute positively to the work environment, therefore it is necessary to
understand the relationship between rewards and employee satisfaction. ASML is
growing at fast pace, in last two years the company grew by 16% and will
continue to grow in coming years, for 2018 approximately 3000 new employees
will be added, it is vital for ASML to ensure 
that the new hires are engaged so that they can be effective as soon as

In order to study
relationship between rewards and employee satisfaction, this paper aims to find
out if current ASML employees are satisfied and motivated with rewards they
get, also the paper aims to find out which kind of rewards (extrinsic,
intrinsic) are preferred by ASML employees. The results of this study will be
presented to the human resources department, they can further expand the sample
which could provide them with better results. In this paper non-parametric
statistics as well as descriptive statistics is used to analyse the results.
The method used in this study can be used further for a large sample.

Different motivation theories

Research related
to motivation has been conducted over a very long time, and theories related to
motivation and organizational behaviour can be applied to different
organizations, two important theories on motivation  that are widely used  are discussed in this paper and are given below.

Self-Determination Theory :
which investigates “people’s inherit
growth tendencies and innate psychological needs that are the basis for their
self-motivation and personality integration.” (Deci and Ryan,1985 pp 68).
The SDT1
discusses that people can be motivated by very different types of factors like
valuing an activity, internal or external pressure, however the experiences and
consequences of factors related to motivation can be quite diverse. The behavior
of people can be influenced by a sense of personal commitment to grow, or from
fear of being watched by someone. Experiments related to “intrinsic motivation”
reveal that people as well as children are active and happy, even in absence of
specific rewards as long they have the freedom to make decisions. Even though
people are motivated by intrinsic rewards organizations need to develop
supportive conditions so that they can provide these kind to rewards. The findings
of SDT reveal that environments that support autonomy and competence have more
satisfied people compared to environments that are controlling and only
motivate people by “extrinsic rewards” (Deci and Ryan, 1985). SDT theory also
examines factors that enhance intrinsic motivation, the theory guides towards
three types of psychological needs namely competence, autonomy and
relatedness-“which when satisfied yield
enhanced self-motivation and mental health and when thwarted lead to diminished
motivation and well-being” (Deci and Ryan,1985 pp


(Herzberg’s, 1976) explains two
factors in his hygiene- motivation theory of job satisfaction, factors that
cause job satisfaction and factors that cause job dissatisfaction. According to
(Herzberg ,1976), motivation comes from within and cannot be generated by
outside factors like reducing time at work, high salaries, fringe benefits,
these fail to generate motivation amongst employees. According to (Herzberg, 1976)
factors that are involved in producing job satisfaction and motivation are
different from factors that lead to job dissatisfaction. Factors also termed as
“motivators” that motivate people in their jobs like achievement, recognition
for achievement, responsibility and progress, these factors are intrinsic in
nature. Factors also termed as “hygiene” factors like salary, bonus, promotion,
status, security, working conditions are more extrinsic in nature. As per (Herzberg’s,
1976) research the “motivators” were the primary cause of satisfaction and
“hygiene” factors were primary cause of dissatisfaction in jobs.

On basis of
Herzberg theory (1976) and SDT theory (Deci and Ryan,1985) a hypothesis is
formulated to understand and predict which rewards intrinsic or extrinsic
motivate employees.

   Hypothesis: “ASML employees are more motivated by
intrinsic rewards than extrinsic rewards”

The method

A Likert2
type of questionnaire (provided in appendix 2) was used which had scales
ranging from 1 to 5 ; 1= strongly disagree, 2= disagree, 3= neutral, 4= agree
and 5= strongly agree. Random employees working in different departments like
quality, design & engineering, marketing, supply chain were handed over the
questionnaire personally. The purpose of the questionnaire was explained to
employees it was also mentioned that they will remain anonymous.

To check the
reliability or internal consistency of questions in the questionnaire
Cronbach’s alpha reliability scale is used, alpha originally developed by Lee
Cronbach is used to provide a measure of internal consistency of a scale. It is
important to determine internal consistency of a questionnaire so that results
obtained are valid and measurement error is reduced (Tavakol and Dennick, 2011).
Cronbach alpha values between 0.6 to 0.7 and above are assumed to indicate a
good level of consistency (Newton,2014). The questionnaire reliability test was
done in Minitab3 using
multivariate item analysis. Index related to intrinsic, extrinsic satisfaction
is given below in table 1.

1 Self-Determination Theory

2 The scale is named after its inventor Rensis Likert.
This scale is used to measure attitudes or opinions of respondents.

3 Stastical Software tool used to analyse data