Chapter TwoIntroductionThe main purpose of this project is to discover the factors responsible for causing a 36% decrease in employee satisfaction with the EHS department over a period of 5 years (2005 -2010) reported in the 2010 EHS Employee Satisfaction Survey (EHS, 2005; EHS, 2010). With over 64,000 full-time employees comprising the State of Colorado workforce, it is imperative to determine how best to improve employee satisfaction and morale as these directly impact job performance and workplace safety (Barling, Kelloway and Iverson, 2003; STAR, 2009). . The objective of the second chapter is to provide information related to employee satisfaction and examination of the theoretical framework of the capstone project. Having a clear understanding of employee motivation is extremely important for both managers and supervisors, particularly in today's industries where limited budgets make it challenging to monetarily reward workers. In order to analyze the effect of long-term reductions in employee compensation, benefits, and incentives that directly impact the motivation, job satisfaction, and morale of workers in the State of Colorado, it is important to include the two motivational theories well known, namely Herzberg's Two Factor Theory (1959) and Adam's Equity Theory (1963), in the theoretical framework of the project (Gibson, et al., 2009). Definition of Terms In the context of this study , the following definitions are provided for understanding: Absenteeism : is failure to show up due to duty or obligation or a habitual pattern of absences (Robbins & Coulter, 2007). Conventionally, the word absenteeism has been seen as an indicator of poor individual performance (“Absenteeism,” n.d.). Effectiveness: Rank to… middle of document… servant (Adams, 1963). Summary Chapter two provided an overview of the current EHS problem and provided a literature review of two traditional theories of employee motivation i.e. Herzberg's two-factor theory and Adam's equity theory. Herzberg's two-factor theory is known as content theory, which focuses on motivational factors within a person, while Adam's equity theory is known as process theory, which focuses on external factors to provide motivation (Gibson, et al., 2009). Motivation, job satisfaction, and reward systems are all key elements of employee motivation models and are essential for encouraging an individual to achieve a specific goal (Aguinis 2009; Gibson, et al., 2009; Robbins & Coulter, 2007; Robbins & Judge, 2010). The third chapter briefly describes the methodology of the Capstones project, including how the data was analyzed and compared.