Fudan J. Hum. Soc. Sci.

(2018) 11:553–572
https://doi.org/10.1007/s40647-018-0215-1

ORIGINAL PAPER

On the Influencing Factors and Strategies of Employee

Loyalty
Facebook case study

Yifei Pan1,2

Received: 15 September 2017 / Accepted: 12 February 2018 / Published online: 22 February 2018
 Fudan University 2018

Abstract Employee loyalty has drawn a lot attention from both academics and
practitioners since high employee loyalty plays a significant role in a companies’
success. Generally, most research concentrate more on the relationship between
employee motivation and employee loyalty, and the relationship between employee
satisfaction, commitment, engagement and employee loyalty especially in the
general companies. However, there are a few researches connecting all these factors
together and aimed at understand the relationship between employee motivation,
performance appraisal and employee loyalty, especially in a context of a specific
company. Thus, this research aims to understand the clear relationship two
important factors have in influencing employee loyalty, including motivation and
performance appraisal in a specific case of Facebook. This research will use a case
study research method, supported by semi-structured interviews, gathering data
from secondary sources including literature, internet sources and so on and primary
data. Findings suggest that employees in Facebook have great loyalty towards the
company due to the company’s effective motivation and performance appraisal
system. In regard to Facebook, there are a lot of benefits motivating employees and
there is a complete appropriate appraisal system to review staff performance, which
all can increase employees’ loyalty. This research has both academic and practical
implications, which will contribute towards staff performance within companies.

Keywords Employee motivation
Employee loyalty
Appraisal system

& Yifei Pan

[email protected]
1
Durham University, Durham, UK
2
Shanghai, China

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1 Introduction

1.1 Topic and Scope

Employee loyalty plays a significant role in a company, and it can contribute to a

company’s success. When employees are satisfied and fulfilled with their job, they
will go above and beyond to help the company improve and thrive. Through these
loyalties, employees can share their expertise, enhance working morale, solve
conflicts, help colleagues, suggest improvements and so on. All these efforts can
help companies operate more effectively and efficiently, which will help the
company to develop and succeed (Goodman 2013). It can be a challenge for
managers and supervisors to get their employees to do their best work and it is
always a puzzle for managers to understand what truly motivates human beings
(Nohria et al. 2008). Motivation can be defined as a theoretical construct used to
explain the behaviour and it can explain individuals’ needs, actions and desires
(Elliot and Covington 2001). Performance appraisal is one method that is used to
document and evaluate an employee’s job performance (Abu-Doleh and Weir
2007). Both excellent motivation and performance appraisal can increase employ-
ees’ loyalty and enable them to commit more to their work, which is beneficial for
the company’s development and future. Performance appraisal is very important for
an organisation because it can make organisational operations fair and transparent
and can develop people. Four factors including commitment, engagement,
satisfaction and turnover can influence employees’ motivation and then influence
employees’ loyalty.
Currently, the majority of research concentrates on relationships between
employee satisfaction, employee loyalty, employee motivation and so on. However,
there is minimal research concentrating on the relationship between employee
motivation, performance appraisal and employee loyalty. This research combines all
three factors and tries to understand the insights of how employees’ motivation and
appraisal system can influence employees’ loyalty. Also, present research uses
quantitative research methods, developing relationships between different variables
such as employee motivation, employee satisfaction, employee loyalty, turnover
and so on. However, there is minimal research concentrating on a specific company,
using case study research method to dig out the deep insights in the company.
Generally, technology focused companies face great competition and they need to
gain a competitive advantage in order to survive and succeed in the competitive
environment. As a high technology company, Facebook faces a lot of competition,
but it remains one of the most valuable and quickly developing companies in the
world, ranking 98 in the Fortune 500 list in 2017 (Fortune 2017). Facebook has
numerous loyal employees and there is high employee satisfaction in the
organisation, so employees try their best to contribute to the company (Crum
2015). One of the key factors that lead to Facebook’s development success is its
great human resources practices including effective motivation practices and

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appraisal systems. It is therefore useful to research Facebook’s employee

satisfaction, employee loyalty, motivation and appraisal systems.

1.2 Research Objectives

Research aims and objectives are very important as they are key for all research
endeavours. The main research aim of this paper is to understand what factors and
strategies can influence employee loyalty including employee motivation and
performance appraisal. There are several research questions in this research and
they are: what is the current situation of motivation and performance appraisal
systems in Facebook; what is the relationship between employee motivation,
employee satisfaction and employee loyalty in Facebook; what is the relationship
between the company’s appraisal system and employee loyalty in Facebook; what
else should Facebook do improve their employee motivation, satisfaction and
loyalty.

1.3 Paper Structure

This paper will be divided into five parts to illustrate the research topic in detail. The
first part is an introduction illustrating the research questions and the meaning of the
research. The second part is the literature review that discusses useful literature
about employee loyalty, employee motivation and performance appraisal. The third
part analyses the research methodology in detail including research philosophy,
design, strategies, data collection and analysis, and research ethics. The fourth part
is the discussion analysing the findings. The final part is the conclusion summarising
the research.

2 Literature Review

2.1 Motivation and Employee Retention

Motivation means the psychological process that can lead to the arousal, direction
and persistence of voluntary actions that are goal oriented (Mitchell 1982). Robbins
(1993) defined motivation as ‘‘the willingness to exert high levels of the efforts
towards the organisational objectives, conditioned by the effort’s ability to satisfy
some individual need’’. The need means an internal state that can make some results
attractive. If employees’ needs are not satisfied, this will cause tension and then,
employees will search elsewhere to find some specific objectives that will satisfy
their needs and reduce the tension (Robbins 1993). If workers are sufficiently
motivated, although they have tension they will be able to relieve the tension.
Nohria et al. (2008) suggest that there are four factors that can be used to measure
motivation and they are commitment, engagement, satisfaction and turnover.
Engagement means the initiative, effort and energy that employees bring to their

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jobs. Satisfaction can reflect the extent to which they feel that the organisation meets
their expectations in the work place and can satisfy its explicit and implicit contracts
with them. Commitment can indicate the extent to which workers engage in the
company. Turnover is employees’ intention to leave. If companies have a great
ability to meet these four factors, they can drive about 60% of employees’ variance
in terms of the motivational indicators, so organisations can improve their overall
motivations by satisfying all four drives. There are many drives that can motivate
employees. Specifically, companies need to classify good or poor performance
effectively. Secondly, organisational culture is very important because an organ-
isational culture promoting openness, friendship, collaboration and teamwork can
enhance motivation. Thirdly, job design is important too because an interesting,
meaningful and challenging job can improve employees’ motivation. Finally,
trustworthy, fair and transparent performance-management and resource-allocation
processes can also increase employees’ motivation (Nohria et al. 2008).
The average company loses about $1 million with every 10 managerial and
professional employees who leave the organisation. The loss of managerial and
professional employees will generate both direct and indirect costs that can be equal
to a minimum of 1 year’s pay and benefits, or can be a maximum of 2 year’s pay
and benefits (Fitz-enz 1997). Therefore, there is a large economic effect when a
company loses important staff. Moreover, the company will lose the knowledge the
employee acquired before leaving and this knowledge is very important to meet
customers’ needs and expectations. There are a few motivational theories that are
important.
Need theories of motivation try to indicate the internal factors that can energise
behaviour. Needs are physiological or psychological deficiencies that can arouse
behaviour, and these needs can be affected by environmental factors (Ramalall
2004). Maslow’ need hierarchy theory explains that there are five objectives and
they are physiological, safely, love, esteem and self-actualisation (Maslow 1943).
Similar with all human beings, employees can be motivated by the needs and wants
to achieve or sustain different conditions and these satisfactions are more
intellectual desires. This theory can provide managers and other organisation
leaders with many useful and significant implications. Specifically, managers should
find a way to motivate employees through devising programmes or practices that
aim to satisfy emerging or unmet needs. Also, managers and companies should
carry out focus groups or support programmes in order to help employees to deal
with pressure, especially during the more challenging times. Companies should also
take time to understand their employees’ needs (Kreitner and Kinicki 1999). Steers
and Porter (1983) suggest that organisations should create an appropriate climate for
employees to develop to their fullest potential. If companies cannot offer such a
climate, staff may feel frustrated, which will lead to lower job satisfaction, bad
performance and increased withdrawal from the company.
Equity theory indicates that people are not only concerned about the total rewards
they receive for their efforts, but are also concerned about the relationship of these
rewards with the rewards others receive. According to their inputs like education,

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competence, experience and efforts, employees can compare rewards, such as salary
and other benefits, recognition and so on. Tension will be generated when
employees find an imbalance in their result-input ratio. This kind of tension can
provide a foundation of motivation because employees strive for what they perceive
as fairness and equity (Robbins 1993). Expectancy theory indicates that individuals
can be motivated to behave in ways that can create desired combinations of
expected results (Kreitner and Kinicki 1999). Steers (1983) stated that expectancy
theory regards the motivation as a combined function of the individual’s perception
that the efforts can cause the performance. Vroom developed a formal model in
1964 and this model assumes that individuals’ behaviours come from conscious
choices amongst all alternatives. These choices are associated with psychological
processes (Pinder 1984). There are three mental factors that can direct behaviour
and they are valence, expectancy and instrumentality. The core idea of the job
design theoretical approach to motivation is that the task itself is important to
employee motivation. A monotonous job may decrease motivation whilst a
challenging job can improve motivation. There are three methods to increase the
challenges of a job and they are decision authority, autonomy and variety. Job
rotation and job enrichment are two approaches to add to the challenge and variety.
Job characteristics models have indicated many features that can be built into jobs
so employees can and be motivated and satisfied.

2.2 Performance Appraisal

Performance politics has a huge relationship with job satisfaction because rewards,
benefits, promotions and compensation decisions are given based on the
performance appraisal of an employee. If there are some differences in the ratings,
it can influence the reward system of the employee and compensation, which will be
able to affect the job satisfaction (Arshad et al. 2013). Ali and Ahmad (2004)
indicate that performance appraisal can influence job satisfaction and employees’
motivation. If the company has frequent performance feedback and fair perfor-
mance evaluations, employees will have more job satisfaction at the workplace.
Also, this will contribute to personal growth. Social interaction with other members
in companies shape employees’ attitudes. Therefore, the organisational context of
the work is very important, and the context can lead to job satisfaction (Westover
et al. 2010). If employees have more positive and better attitudes towards their job
environment and can communicate well with their colleagues and managers, they
will have higher level of job satisfaction (Westover et al. 2010). Performance
feedback plays a very important role in numerous activities such as performance
management, career development, job satisfaction and motivation (Alma and
Thomas 2001). Job satisfaction can increase to a large extent if the performance
appraisal is of a very high quality. Factors such as employee turnover and decreased
motivation will cause employees’ dissatisfaction about the appraisal procedures
(Dobbins et al. 1990; Whiting et al. 2008).

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Performance appraisals can help managers and employees to identify and realise
the advantages and disadvantages of staff performance. The appraisal system gives
managers and employees an opportunity to discuss the company’s and employees’
goals and figure out a way that the company and employees can work together to
achieve these goals (Martin 2013). A good and appropriate performance appraisal
system can create a link between the organisation’s success and the employees’
expectations (Martin 2013). Performance appraisal has many advantages including
increasing job satisfaction, enhancing the rapport between managers and staff and
improving employees’ motivation and loyalty, because the appraisals can help
workers to identify how their roles contribute to the organisation’s overall success.
Therefore, employees’ productivity and the organisation’s productivity can be
improved (Martin 2013).
Staff are rewarded when they contribute to and finish the essential tasks that are
indicated by role requirements (Van Scotter et al. 2000). Extra-role behaviours
include discretionary and non-prescribed activities that are not essential for
technical functioning. Extra-role performance is valued because these can be
connected with activities that make supervisors more effective, through enhancing
the coordination, improving morale, decreasing communication barriers and
increasing trust (Rosen et al. 2017). Performance appraisal systems have the ability
to make things fair and transparent in the organisation. Another advantage of
appraisal is development. When managers and employees are given feedback, staff
sometimes struggle to work out what information is the most important and what
should be ignored. A comprehensive analysis of 607 studies indicated that more
than a third of all feedback interventions backfired, reducing employees’
performance rather then improving it (Goler et al. 2016).

2.3 Employee Loyalty

There are numerous methods that can increase employee loyalty. Specifically,
companies could invest more time in the hiring process because a rigorous
complicated process can be very useful for companies to find the right person. Also,
developing a very good working relationship is beneficial for both employers and
employees, as it provides employees with regular and frequent opportunities to
improve their professional skills. Managers and supervisors are a significant source
of growth for employees so managers should share their expertise, train and inspire
their employees, and offer more opportunities for employees to grow. Moreover,
companies should set numerous ways to promote employees and these methods
should be tailored to employees’ aims and skills. Furthermore, it is important to give
employees a sense of control and freedom and empower staff to make their own
choices and decisions (Goodman 2013).
Duboff and Heaton (1999) indicate that employee loyalty is a very action-
oriented concept because it deals with employees’ behaviours. Employee loyalty is
important because it can reflect whether or not staff are committed and take personal
responsibility for their work, and whether or not employees want to look for another

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job. Employee satisfaction affects the prosperity and gratification that staff obtain
from their job (Moorehead and Griffin 1998; Benson 2006). To put that another
way, job satisfaction is about whether or not employees are happy with their work.
Satisfied employees regard their job as meaningful and this can have a positive
physical and psychological effect on them. Improving employees’ positive
organisational attitudes such as organisational commitment and job satisfaction is
important to sustain and enhance employees’ high performance. Especially in the
‘‘knowledge economy’’, employee satisfaction and loyalty are of paramount
importance (Matzler et al. 2004). Numerous studies have proven that employee
satisfaction has a positive relationship with employees’ commitment and loyalty
(Martensen and Gronholdt 2001). On the contrary, employee satisfaction has a
negative relationship with absenteeism and turnover (Muchinsky 1977). In order to
enhance employee satisfaction and loyalty, a lot of organisations monitor their
workers’ satisfaction continuously and systematically through standardised surveys.
Employee satisfaction is positively related to employee loyalty, so it can be
illustrated that employee motivation is positively related to employee loyalty.

3 Methodology

3.1 Research Philosophy

In general, this research is interpretive and constructive, and it tries to get a very
detailed and in-depth understanding of the research questions and objectives. This
research is a qualitative approach, using the case study method, researching a
specific topic and understanding research objectives through a very specific case.
Semi-structured interviews were conducted to support the content analysis because
semi-structured interviews have many advantages including flexibility and the
ability to gather deep and detailed insights from the interviewees. Therefore, the
discussions, analysis and findings are drawn from the researcher’s interpretations
and understanding from the secondary data collected and interviews conducted.
Research methodology has four different paradigms, and they are positivism,
realism, constructivism and critical theory (Riege 2003). Commonly, qualitative
researches like case studies come under the paradigm of realism, where the main
aim is to discover new relationships of realities and to create an understanding of the
meanings of experiences instead of simply verifying predetermined hypotheses
(Perry and Coote 1994). The main aim of case study researches is to develop and
construct a theory, and this requires a medium to high level of prior theories
(Gillham 2000).
Perry and Coote (1994) indicated that researches need to be classified through
objectives because research objectives can show the research’s paradigm and nature,
which can influence the research method choice such as descriptive, explanatory or
exploratory approaches. Wilson (2010) suggests that explanatory descriptive
research is heavily influenced by previous researches and that the research objective

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is to describe the population’s characteristics. On the other hand, exploratory

research is a common paradigm and can be used to research ambiguous problems.
This research will be an exploratory research in order to get a more detailed and in-
depth understanding of employee loyalty, motivation and performance appraisal.
Semi-structured interview is a very popular qualitative method because it is flexible
and enables the researcher to find a deeper insight into the research participants.

3.2 Research Design

There are two research approaches, and these are either a qualitative or quantitative
approach (Wilson 2010). Wilson and Williams (2007) suggested that qualitative
research aims to understand complex issues and relationships through testing
different variables in their natural settings. Particularly in qualitative researches,
researchers’ understandings can influence their findings to a large extent. Generally,
no research should be entirely qualitative or quantitative alone, but combining both
qualitative and quantitative researches can contribute to better reliability, validity
and generalisity than one single methodology approach (Bannister 1986). Support-
ively, Ritchie and Lewis (2003) believe that there is potential value to integrate and
combine both qualitative and quantitative research methods, especially for a social
or business phenomenon. This case study research is a qualitative research and
analyses the issue with a deductive approach.

3.3 Research Strategies

This case study research will be generally qualitative in nature and the reasons are
threefold. Initially, qualitative research enables a phenomenon to be understood in
depth and it cares more about depth than figures and statistics (Creswell 2007). The
second reason is that this research is a case study so a qualitative approach
combining content analysis will be appropriate. Case studies can be defined as ‘‘a
strategy for doing research which involves an empirical investigation of particular
contemporary phenomenon within its real-life context using multiple sources of
evidence’’ (Saunders et al. 2009). As a research method, case studies have numerous
benefits. For example, case studies are able to assist the researcher in obtaining an
in-depth understanding of the company through analysing various secondary and
primary data (Yin 2009).
Generally, five methods can be used to carry out a social science or business
research and they are case study, experiment, survey, history and archival
analysis. Different methods have their own features, advantages and disadvan-
tages. Different situations require different methods. The form of the research
questions, the focus on contemporary events and the control of behaviour events
are three factors that require consideration when choosing a method (Yin 2009).
It is believed that case study research is a very useful and important tool to

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analyse and understand very detailed situations and trends especially in some
scientific and business situations. Case study research can be used in social
science, psychology, ecology and anthropology and case study is effective when
it comes to understanding and testing some theoretical models. There are
different types of case study including single-case embedded designs, single-case
holistic designs, multiple-case embedded designs and multiple-case holistic
designs (Yin 2009).
The research framework is illustrated in detail. This research uses the case study
method so that all sources of information from both secondary and primary sources
are used. The secondary data will be collected from various sources and the
collected data will be analysed using the content analysis method. This analysis will
be supported by semi-structured interviews. However, it is in no doubt that primary
data is more reliable and valuable and can help the researcher to get a better insight
into the research problem and phenomena (Creswell 2014).

3.4 Data Collection and Analysis

Both primary and secondary data can be used for data analysis. This research will
collect both secondary and primary data. Secondary data will be collected from
resources such as academic literatures, newspapers, magazines, social media
platforms, company profiles and so on, whilst primary data will be gathered via
qualitative semi-structured interviews. Secondary data is the data that already exists.
Secondary data is easier and more convenient to get, and collecting secondary data
is time and money saving (Bryman and Bell 2011). Primary data is new data that is
collected from first-hand experiences. Sampling is an important step in data
collection. Bryman and Bell (2011) suggest that there are probability and non-
probability sampling methods. For probability sampling methods, there exists
simple random sampling, stratified random sampling, systematic random sampling
and systematic random sampling (Hill et al. 1992). For non-probability sampling,
there exists convenience sampling, judgement sampling and quota sampling. As a
case study, this research chooses the case according to several standards so it is
judgement sampling. Facebook is chosen as the case and the reasons are twofold.
Firstly, Facebook is a highly developed company which shows continuing potential
and has become one of the best technology companies in the world. Secondly,
Facebook is famous for its great human resource practices including great employee
benefits and perks, a flexible and comfortable working environment, great
democracy and so on. Thirdly and most importantly, Facebook is an ‘‘extreme
case’’ because it has extremely highly motivated employees. Gerring (2007)
highlighted that when selecting a case, extreme cases are very important and
popular. Facebook can be seen as an ‘‘extreme case’’ since it is famous for great
employee motivation and extremely high employee satisfaction and happiness.
Therefore, Facebook is an appropriate case for this study.
The secondary data were accompanied by semi-structured interviews that were
conducted with ten employees who currently work or have previously worked for

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Facebook. They were designed to understand their views about the motivation,
employee satisfaction and performance appraisal system in Facebook. The choice of
interviews used the convenience sampling method, accessed via a friend who knows
an employee. This employee introduced a few of their colleagues, which is the
snowball sampling method. The data collected from secondary sources was
analysed using the content analysis method, in order to get valuable findings and
answer the research questions. All interviews are transcribed and according to the
transcriptions and secondary data collected, some codes were generated. According
to the coding system, the themes of this research were developed and these data was
discussed in detail. Research ethics are the appropriate behaviours of the researchers
when they carry out researches, and it is very important that in every research these
behaviours are maintained (Saunders et al. 2009). Appropriate ethical procedures
were followed in this research. Reliability and validity are high because all
procedures and method are used appropriately.

4 Findings and Discussion

4.1 Company Introduction

Facebook is an American organisation and an online social media and social

networking site, which was built by Mark Zuckerberg on 4 February 2004. The
company has experienced rapid growth during the last decade. The mission of
Facebook is to give people the power to share and make the world more open and
connected (Facebook 2016). The priority of Facebook is to develop engaging
products that can help people to relate and share with each other via personal
computers, mobile devices and other devices. Also, Facebook aims to help people to
learn and discover things going on in the world around them, giving individuals an
opportunity to share ideas, photos and other activities. Facebook can be classified as
a rapid change, innovative and disruptive technology. It has numerous competitors
such as companies who sell advertising, who offer communication and social
products and services that aim to engage users. Facebook gets most of its revenue
from advertising and it generally has a lower click through rate (CTR) for
advertisings than other major websites (Womack 2011). Competitors can be
organisations that help marketers to show advertisements; companies that offer
development platforms, firms that facilitate communications and so on (Facebook
2016). Therefore, Facebook faces significant competition and the company needs to
put in a lot of effort to survive and develop in such a highly competitive
environment. Employees are important assets for every company. Good and
motivated employees will be more productive and contribute more for the
organisation, so it is important for companies to concentrate on employee
motivation, employee loyalty and performance appraisal. It is indicated that
Facebook has the most satisfied and least stressed employees.

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4.2 Company’s Motivation

The majority employees are very happy about their job. It is indicated in one
research that 96% of Facebook employees have very high job satisfaction, which
beat other high technology companies such as Google, Apple and eBay (Hoefflinger
2017). Also, employees in Facebook are the most relaxed, and their pressure level is
at around 44% (Konstantinides 2016). Facebook provides its employees with lots of
benefits and rewards. Firstly, Facebook offers employees competitive pay and
various different benefits and rewards. To be more specific, Facebook provides their
employees with generous holidays, with 21 days paid annual leave and unlimited
sick days. Facebook also helps employees by paying 100% of their health insurance.
Facebook offers new-parent benefits for its employees. New parents can take time
off to spend time with their new child. When the baby is born, the employee can get
up to $4000 in baby expenses and $3000 a year to cover any babysitting costs.

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Furthermore, the employee can get 4 months paid holiday at any time during the
baby’s first year (Crum 2015). Secondly, Facebook offers employees a great
working environment. Facebook has one of the world’s largest open offices in
Building 20 and this can make communication easier, increases the spread of ideas
and increases cooperation and bonding amongst colleagues (Christensen 2016).
Also in their office, Facebook offers its employees a variety of different food, giving
employees more dietary options. Thirdly, Facebook gives employees a lot of
flexibility. Mark Zuckerberg does not use traditional hierarchies and top managers
meet with entry-level employees (Lashinsky 2016). For instance, one employee
worked on a secret project called ‘‘graph search’’. After a few months, he attended
meetings with Mark to discuss and review the project. Fourthly, Facebook gives
employees truly meaningful work. For instance, the company allows their new
engineers to choose their own team and to make their own decisions. Facebook also
encourages true authenticity because the company encourages its employees to
share their own authentic selves. Facebook encourages employees to use their
talents and advantages and let them design their own roles. The company
encourages its employees to have lifelong learning as continuous growth is very
important (Murphy 2015). Facebook applies the motivation theory in practice. For
example, by conducting Maslow’s hierarchy theory, Facebook firstly satisfies
employees’ basic needs, providing them with good pay and benefits. Then the
company satisfies employees with higher requirements including recognition and
achievement in the working environment.
One interviewee illustrated this point: ‘‘there is a very open culture, open
environment and better collaboration. When I just joined the company, I collected a
laptop from the company and all data of the company is available in the computer.
This open culture gives employees a very high level of trust, so we feel we are
valued by the company. We want to contribute to this company to achieve the
success together. The most important thing is that there is Zuck Review in
Facebook. When there are some significant products or projects, Zuck will review
the project or product himself no matter how busy he is. Therefore, even the new
employees have the opportunity to communicate with the CEO, which makes the
employees in Facebook believe that they are valued and important in the company,
so we are highly motivated and very enjoy working in the company’’. Another
interviewee who worked for Facebook talked about the benefits and rewards of
working for the company: ‘‘I know the average salary in internet companies are
relatively high, but the Facebook provides with very competitive salary, free lunch,
snacks, gaming room, gym and so on. Also, in order to reduce our pressure, the firm
offers us free health insurance, paid annual leave, and other benefits. Thus, most of
my colleagues are very satisfied with our job and feel that we are very motivated to
finish out tasks in a good quality’’. This is consistent with the literature that
motivation plays a very important role in every organisation (Nohria et al. 2008). If
companies can keep their employees satisfied and happy with their work and
company, their motivation and productivity can be increased to a large extent, and
they will be more loyal to the company, which is beneficial for the company’s
development.

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Interviewees show their loyalty to Facebook is due thanks to the highly

rewarding motivation system. For instance one interviewee, a former employee who
has been working for Facebook for over 5 years said: ‘‘Facebook was really a great
place to work and I could get everything I want such as good pay, self-achievement,
and happiness from this job. The great motivation both financially and non-
financially gave me no reason to leave the company. I left the company because I
came back China from the US, but I really love the company and the experience I
had there will always be the most important in my career and life’’.

4.3 Facebook’s Appraisal System

Performance is very important, and it is the value of workers’ contributions to the

company. Companies and managers need this information to make decisions about
pay and promotions (Goler et al. 2016). Facebook has a complete appraisal system
and uses many different methods to avoid bias such as peer reviews, making
decisions according to different people, and using outside analysts in order to make
sure that bias is not built in. Also, it uses traditional performance reviews (one every
6 months) rather than changing to ‘‘real-time’’ reviews (Moody 2016). To be more
specific, Facebook conducts performance reviews every half of the year in order to
collect ideas and insights formally from the employee’s managers and colleagues.
These reviews are not investigative and they are checkpoints. Lori Goler, the
Facebook’s VP explained ‘‘we do it twice a year because the business moves very
quickly and our product moves very quickly, and if you wait a whole year, a lot of
things have changed’’. The results obtained from the reviews can help the company
to determine new responsibilities for the staff (Crum 2015). Moreover, there are
about 12,000 employees all over the world and all these employees can access an
internal proprietary software that enables all workers to access the same page. The
company trains every single manager, asking them to avoid micromanagement, and
provides real-time feedback and help. Staff can also use this software to give their
colleagues feedback. Through this system, managers also send analysis requests to
their team members in order to find out how they behave as teammates (Feloni
2016). Specifically for software engineers at Facebook, performance appraisal
includes a code review as well because this is a very efficient method to make sure
that the logics of the codes are clear. Also, these can be recorded so that other
engineers can learn or check, which is beneficial for communication and interaction
between software engineers and employees (Sohu 2015).
Generally, for every employee, managers consider three to five peer reviews
average, which has been proven to be the most effective number. The system also
asks employees to evaluate themselves in order to complete a holistic review. After
data is collected from the software, managers work together to discuss their findings
and to validate the information. In addition, supervisors and managers conclude the
process by showing new opportunities for their team members. In general, it takes a
few weeks to complete the whole process (Feloni 2016). It cannot be denied that the
performance appraisal system is very expensive but it does have a lot of advantages
for both the company and employees. This complete and effective performance
appraisal system has many benefits for Facebook. Specifically, it makes things equal

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and fair. It cannot be denied that there are cases when employees are not happy
about their pay and position in the company, but staff are more willing to accept the
results when the process is clear and fair (Goler et al. 2016). Facebook uses its
appraisal system to reduce the bias because all processes are transparent. All
managers gather together to discuss the results face-to-face. Therefore, the company
can minimise the idiosyncratic rather effect, which can ensure employees will not be
rewarded or punished when they come across easy or hard graders.
During interview, some interviewees introduced and expressed their feelings
about the appraisal system in Facebook and they stated its effectiveness. For
example, an interviewee said: ‘‘generally the whole appraisal system is the objects
and key results (OKR system), which means that every 6 months or every 1 year,
employees need to set a personal goal, team goal and the company goal, and all
employees need to put efforts to achieve these objectives. Then, every year, at the
end of June and December, the company will conduct a 360 degree personal
performance appraisal. After a month, the result of the appraisal will come out and
the result will determine every individual’s bonus, whether you can be promoted
and how many shares the company can give you. The employee’s bonus is between
10 and 25%. Therefore, the appraisal system is very fair and can motivate
employees to improve their performance’’. This is supported by the literature and
secondary data. The appraisal system can enhance employees’ motivation and the
OKR system is effective for the company (Crum 2015).
When asking the interviewees what the most important factors are for them
regarding the appraisal system, an interviewee suggested: ‘‘no one can ignore the
effectiveness of performance evaluations and it is necessary in any company. In
Facebook, we want to keep the performance ratings. I think three factors are
important in employee appraisal system and they are development, fairness and
transparency. I hope the appraisal system is a fair system that can recognize and
value the employees who work hard for the company. Also, I hope the evaluation
process can be transparent we can understand how our job and contributes can
influence the company. On the other hand, the company can understand this as well.
Moreover, I hope the appraisal system can help to develop employees. I believe the
good appraisal system can help us to identity our strengths and weaknesses. We can
keep our strengths and develop our weaknesses, which is good and helpful for the
future career’’. This is consistent with the literature and secondary data collected
that the ratings system in Facebook is very clear and serves as a punctuation mark.
And it is also indicated that the appraisal system serves as a ‘‘Forcing function to
make sure that tough feedback is delivered rather than swept under the rug’’
(Eskildsen and Nussler 2010). The unique finding from the interviews is that
employees want to keep the rating systems and think that it is very important. In the
following interviews, another five Facebook ex-employees or current employees
were interviewed. An ex-employee said: ‘‘There are many other factors can
influence us to stay or leave in the company. I left the company because I think as a
huge successful technology company, Facebook still tries to act like a new startup,
which makes me feel very awkward. But I have to admit Facebook’s appraisal
system is very effective, which can increase the employees’ loyalty. I know a few
employees who were worked in Google before, they left Google and came to

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Facebook, and worked longer years in Facebook, because they very value
Facebook’s appraisal system’’.

4.4 Generality of Facebook’s Findings

On the one hand, some findings in Facebook can be generalised to other companies,
especially high-tech companies, because human resource practices are similar
across the sector. Specifically, according to the findings and discussion above, many
factors such as competitive salary, generous benefits and a relaxed working
environment contribute to Facebook employees’ high motivation and productivity.
Many companies from various industries and especially high-tech companies
provide employees with different types of rewards, both financially and non-
financially. For example, Google has offered its employees various rewards to
improve their motivation, keeping their employees productive and satisfied (Martin
2014). The bottom line of Google is to make sure employees are completely and
fully satisfied, in order to maximise their productivity and thus benefit the company
(Majumder 2016). The importance of motivation has been illustrated by numerous
scholars and practitioners, and companies from different industries make efforts to
improve their employees’ motivation and satisfaction. Therefore, most companies
offer employees many benefits to increase their motivation. According to
motivation theory, companies know they need to satisfy employees’ different
needs at different levels. Only providing employees with a competitive salary and
other remunerations is not always sufficient, companies also need to provide new
employees with recognition, meaningful work and so on. Overall, the majority of
companies have many different types of motivation methods to improve the
employees’ productivity and morale.
On the other hand, some findings in Facebook are not applicable to other
companies because Facebook has specific unique features, values and organisational
culture, which cannot be imitated by other organisations. To be more specific,
Facebook has special motivation methods. For instance, it offers employees a very
comfortable, stress-free and relaxing working environment. Also, it contributes a lot
to the company’s equipment and environment, which needs a large amount of
investment. Not every company has the ability to invest so much in the working
environment. Moreover, Facebook is a high-tech company built because of high
technology development and its founder and CEO Mark Zuckerberg has a unique
management and leadership style, so Facebook’s motivation strategies and appraisal
systems are unique. Other companies are different. In addition, the findings cannot
be generalised across internet companies in other countries. Every country has a
specific macro environment. Political situations, economic situations, culture,
technology, legal and environmental situations are all different in different
countries, so the findings in Facebook can possibly be generalised in other similar
internet companies in a Western context, but they are not applicable for companies
in Eastern or developing countries.

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5 Conclusion

5.1 Summary and Recommendations

In conclusion, due to the importance of employee motivation, employee satisfac-

tion, performance appraisal and employee loyalty, the research on the situation of
employee motivation and performance appraisal in Facebook is important and worth
to be conducted. Employee motivation, satisfaction and loyalty have become more
and more important in organisations because employees are huge assets for a
company. People can make a company to succeed but can also ruin the company.
Now, therefore, employee motivation, loyalty, satisfaction and performance
appraisal have drawn a lot attention from both academics and practitioners.
Facebook has a lot of employee benefits that can motivate staff (Crum 2015). Zetlin
(2017) indicates that Facebook has many secrets for attracting so many loyal
employees to the organisation. Therefore, it is valuable to analyse and discover how
Facebook motivates their employees and uses effective appraisal system to increase
their employees’ loyalty.
This paper aims to understand what factors can influence employee loyalty,
drawing staff motivation and appraisal as the most two important components at
Facebook. Overall, this research used a case study qualitative research method to
look at the relationship between motivation, employee satisfaction, performance
appraisal and employee loyalty. According to the research, Facebook has many
benefits and perks to motivate its employees in order to improve their employee
satisfaction, which means the employees have higher productivity and loyalty. The
company has different kinds of motivations including competitive salary and
benefits, a flexible and relaxed working environment and high recognition towards
all their employees. Therefore, these motivation efforts improve its employees’
productivity and satisfaction, which makes its employees the happiest and least
stressed employees amongst all the high technology companies. Moreover, there is a
positive relationship between Facebook’s appropriate and complete performance
appraisal system and its employees’ loyalty. The appraisal system in Facebook is
well designed and can contribute to the company’s employee satisfaction and
loyalty. The system is fair, transparent and developing, which is beneficial for both
the company and employees. Furthermore, although Facebook has already
performed well in motivating its employees, improving their satisfaction and
loyalty, Facebook still needs to pay more attention to its human resource practices in
order to increase its competitive advantages. Specifically, with the development of
the company, Facebook may experience ‘‘big company’s problems’’. This occurs
when a company becomes bigger and bigger, where employees may scheme against
each other, which can harm the company. Therefore, Facebook should prevent
things like this happening and should always try to keep its original aims and
organisational culture. Currently, Facebook offers new employees a 6–8 weeks
training session which encourages new employees to try and experience new things
(Sohu 2015). In the future, Facebook should increase opportunities like this, giving
all employees opportunities to experience new things, new projects, and learn new

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knowledge. By doing so, it will invoke employees’ curiosity and motivation and
they will not feel bored by repeating the same task all the time, which will motivate
employees and increase their loyalty to a large extent. In addition, Facebook should
do more research in terms of their turnover rate. The company should understand
that the turnover rate is still high, even when their employees have the least working
pressure and most happiness amongst all the high-tech companies. There is scope
for the employee tenure time to be increased.

5.2 Research Limitations

This research still has some limitations that can be avoided in future research.
Firstly, this research is a qualitative case study research collecting data from
secondary sources including company information, magazines and so on. Primary
data has been collected as well but the research only conducted ten interviews in
total. Bryman and Bell (2011) indicate that the larger the sample size, the more
valuable of the research. Due to the time limitations for this research, the researcher
only carried out ten interviews, so the small sample size causes some limitations. In
addition, this research only collected data from Facebook so the data collected
cannot be adapted to all other companies. Furthermore, when the researcher
conducted the semi-structured interviews, three interviews were conducted in
Chinese for convenience as the subjects were Chinese. Thus, these three were
translated from Chinese into English. Consequently, the language may not be
precise and could cause limitations and errors.

5.3 Research Implications

This research has both academic and practical implications. From the theoretical
perspective, employee satisfaction, motivation, employee loyalty, appraisal system
and retention are always important. This research fills the gap connecting employee
satisfaction, motivation, appraisal system and employee loyalty. Also, there are a
few researches using qualitative case study research method analysing the specific
situations in Facebook. From the practical perspective, this research can give
companies, especially high technology companies, more advice when they conduct
their human resource practices. High technology companies will learn about the
importance of motivation, employee satisfaction, appraisal system and employee
loyalty. In particular, organisations may know more about how to apply motivation
theories into practice, motivating their employees in order to increase employees’
productivity and morale, which can improve staff loyalty to the company. Also,
organisations will learn about the significance of an appraisal system and how to use
appropriate appraisal systems to improve employees’ loyalty. Specifically, if other
companies want to succeed in their human resource practices such, they can learn
from Facebook. It is very important for companies to create and maintain a specific
organisational culture. In addition, the management team should welcome
challenges and review all important work and projects because this makes
employees feel that they are valued and that their work is meaningful. Even for
companies in other industries and countries, there is much to learn from Facebook’s

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570 Y. Pan

motivation and appraisal system, which will help to enhance employees’

motivation, employee satisfaction and loyalty. In conclusion, this research has a
significant contribution to both academics and practitioners.

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Yifei Pan was born on March 5th in China. She was graduated in Waseda University in Tokyo, Japan in
2011. Now she is a Ph.D student in Durham University, and her research direction is human resource
management.

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