Motivation through Compensation and Working Environment in Pharma Industry of Pakistan

MOTIVATION through
Compensation and Working Environment

in
Pharma Industry of Pakistan
Submitted to: Mr. Nabeel Arif

Submitted by:

M. Amir Mushtaq (Leader) M.Zeeshan Munir Rehan Baber Mehroze Arshad

EXMBAFAL12058 EMBAFAL12019 EXMBAFAL12062 EMBAFAL12008

Motivation through Compensation and Working Environment in Pharma Industry of Pakistan

CONTENTS
Abstract. 3 Literature Review .4 Research Methodology 8 Statistical Data . 9 Findings 14 Conclusion 16 Guidance for Further Research 17 Reference .... 18 Questionnaire 20

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Motivation through Compensation and Working Environment in Pharma Industry of Pakistan

ABSTRACT
In any organization employee motivation is the key factor for organizational performance. Previous studies have shown positive impact of Working Environment and Compensation on employees motivation. In this study a sample of 100 Pharma Employees was taken by adopting non probability convenient sampling, to investigate the relationship between Motivation & Working Environment and Employee Motivation. Pharma Employees found not highly motivated as a result of working environment and compensation. Result showed there is a highly positive relationship of independent variable over dependent variable.

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Motivation through Compensation and Working Environment in Pharma Industry of Pakistan

LITERATURE REVIEW
Introduction
A literature review is a clear and logical presentation of the relevant research work done before in the same area of investigation. Over and over again studies (Bacon et al, 1996; Deshpande and Golhar, 1994 and Julien, 1998) have emphasized that employees are key to maintaining a competitive edge by a business. To be successful in a global market, a firm needs a highly motivated, skilled and satisfied workforce that can produce quality goods at low costs (Wagar, 1998). RESEARCHERS VIEW

Figure: Compensation and Work environment effect on Employee Satisfaction and Performance. (Emmert and Tamer) Compensation Basically compensation refers to all forms of financial returns and tangible services and benefits employees receive as part of an employment relationship (Milkovich & Newman). Many researchers describe the importance of compensation in motivating employees. Compensation benefits (Pay, rewards, medical & transportation) are a major consideration in human resource management because it provides employees with a tangible reward for their services (Bohlander, Snell, and Sherman, 2001)

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Motivation through Compensation and Working Environment in Pharma Industry of Pakistan

Sansone and Hareckiewicz (2000) identify that compensation benefits energize and guide behaviors toward reaching a particular goal (Milkovich and Newman, 2002). Stone (1982) indicated that people are motivated by money for many different reasons. The need to provide the basic necessities of life motivates most people (Kovach, 1987). Benefits, both financial and otherwise, send a powerful message to employees of an organization as to what kind of organization management seeks to create and maintain, and what kind of behavior and attitudes management seeks from its employees (Beer, et al 1988). I- Pay or Salaries Cotton and Tuttle say that employee satisfaction with pay level is important because it has been found to have an effect on levels of absenteeism and turnover (Jerald, 1997). Pay can be a factor in decision to stay or leave, it is clear that dissatisfaction with pay can be a key factor in turnovers (R. Heneman and T. Judge: 1999). Linkage between pay and behaviors of employees results in better individual and organizational performance (W. N. Cooke: 1987). The process by which the organization creates and administers incentive pay can help, it use incentives to achieve the goal of motivating employee (R. T. Kaufman: 1992). Level of pay and pay system characteristics influence a job candidates decision to join a firm (E. E. Lawler: 1971).

II- Rewards & Incentives

In motivation, rewards and incentives directly effect on the behaviors of employees. Human Resource Professionals are continuously searching for fresh and innovative ideas to drive positive results through employees incentive, recognition and reward programs. According to Daniel and Metcalf, High-performance companies understand the importance of offering awards and incentives that recognize, validate and value outstanding work. They keep employees motivated and are effective methods of reinforcing company expectations and goals, especially in times when promotion is rare, health premiums are on rise and overall job satisfaction is low (Evans, 1986).

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Motivation through Compensation and Working Environment in Pharma Industry of Pakistan

According to a report by the American Compensation Associations, August 1996. When it comes to reinforcing team behavior, the reward system is one of the most effective and influential tools available to the organization (IRS 1996). Rewards may enhance the employees financial well-being through wages, bonuses, or profit sharing, or indirectly, through employer-subsidized benefits such as retirement plans, paid vacations, paid sick leaves, and purchase discounts (Sue Shellenbarger, 19999). In Cheung and Scherling (1999:563), Martin and Touch identifies that employee job satisfaction is a function of extrinsic (pay, promotion and good relationship in the work place) and intrinsic (achievement of tasks) rewards offered by a job. Rewards that are proportional to the value of suggestions will facilitate intrinsic motivations (Amabile, 1996). Rewards promote efforts, performance and there is lot of evidence that they often do (Gibbons, 1997; Lazear, 2000,). D. M. Cable & T. A. Judge (1994) suggest that job candidates look for organizations with reward systems that fit their personalities. Therefore the reward issue can not be ignored, as it will create a situation in which the expectation or the actual goal-directed behavior of one person or group are blocked or are about to be blocked (Steers and Black 1994).

III- Health Benefits

Wellness programs for healthy working environment, may help organization to cut employer health costs and to lower absenteeism and turnover of employees (Carolyn Petersen). Family Health benefits often have spillover effects in the form of loyalty because employees see the benefits as evidence that the organization care about its employees. (S. L. Grover and K. J. Crooker: 1995).

IV- Working Environment

Organization officials have a legal responsibility, if not a moral one, to ensure that the workplace is free from unnecessary hazards and that conditions surrounding the workplace are not hazardous to employees physical or mental health (Decenzo).

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Motivation through Compensation and Working Environment in Pharma Industry of Pakistan

Good working environment such as work relationships, adequate equipment, space, heating, lighting and ventilation motivated employees (Gerhart). Green (2001) says managers can motivate employees by setting in motion the conditions required for motivation such as working environment, confidence, trust and satisfaction that enforce employees to improve their performances. Herzberg and Miller (1968) states that compensation including pay, rewards, communication and working conditions are four common incentives, which motivate employees.

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Motivation through Compensation and Working Environment in Pharma Industry of Pakistan

Research Methodology
Objectives / Aims of the research study
It was an attempt to determine the impact of Working Environment and Compensation on employee motivation. The main objectives were: To investigate the impact of Working Environment and Compensation on employees motivation. To investigate the relationship between Independent variables (Working Environment & Compensation) with dependent variable (employees motivation). To recognize the degree of association between Independent variables and dependent variables.

Instrument:
Primary data was collected thorough questionnaires. This questionnaire was initially developed by us by consulting a number of research papers.

Sample:
Total 100 questionnaires were got duly filled by the employees of the different Pharmas in Pakistan.

Questionnaire:
For this purpose a questionnaire was designed and items were scored on a five point Likert Scale with end points of Disagree and Strongly Disagree.

Procedure:
Two of the independent and one of the dependent variable relationships was tried to found. As we have to establish the relationship between independent variables and dependant variable so we used the correlation to find the relation of the independent variables with the dependent variable. To check the impact of independent variables over the dependent variable we used regression analysis.

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Motivation through Compensation and Working Environment in Pharma Industry of Pakistan

STATISTICAL DATA
Male 74% 26%

Gender Age

Female Above 20 years 21-30 years 31-40 years 41-50 years Above 50 years Ph.D

53% 28% 11% 5% 1% 60% 31% 8% 28% 38% 11% 17% 6% 5% 32% 22% 23% 18%

Education Income (monthly)

Master Degree Bechlore Degree Intermediat Others Rs.10,000-Rs.20,000 Rs.21,000-Rs.30,000 Rs.31,000-Rs.40,000 Rs.41,000-Rs.50,000 Above 50,000

Work Experience

Less than 6 month 6 month to 1 year 1 to 2 years 3 to 5 years More than 5 years

S. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

Demographics 2.6 2.2 2.2 2.4 2.8 2 3 2.2 2.6 1.8 2.6 2.4 1.4 2.6 1.8 1.8 2 1.8 2 2 2.2 1.8

Working Environment IV 1 2.0 2.0 2.6 2.4 1.9 2.4 1.7 2.5 2.3 2.2 2.3 2.3 2.3 2.6 1.9 2.0 2.0 2.3 2.3 1.8 1.6 2.1

Compensation IV2 2.25 2.125 3.375 3.375 3 3.375 2.625 3 2.25 3.5 3.125 3.25 2.875 3.125 2.875 2.375 2.5 3.25 2.625 3 1.75 3

Motivation DV 2.00 2.00 2.00 3.00 2.00 2.50 2.00 3.00 2.00 2.00 2.50 2.50 2.00 3.00 2.00 2.00 2.00 2.50 2.50 1.00 1.50 2.00

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Motivation through Compensation and Working Environment in Pharma Industry of Pakistan

23 24 25 26 27 28 29 30 31 32 1.8 1.4 2.4 3.4 3.8 3 1.8 2.4 2.4 1.8 2.0 1.9 2.2 2.0 2.0 2.3 3.0 2.2 2.6 2.5 3 4.25 2.125 2.375 2.125 2.25 3 1.75 3.5 2.625 2.00 2.50 2.00 1.50 2.00 2.00 3.00 2.50 3.00 2.00

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Motivation through Compensation and Working Environment in Pharma Industry of Pakistan

33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 2.2 2.4 1.8 2.6 2.8 2.8 2 2 2.2 3 2.2 3.4 1.8 2.6 3.2 2.2 3.8 2.4 3 3.4 3.2 3.4 2.8 3.2 3 3 1.6 2.6 2.4 2 1.6 1.8 3.2 2.2 2.6 2.6 3.4 1.8 2.4 2.2 3 3.2 2.6 2.2 3.8 2 2.4 2.8 2.2 2.8 2.2 2.8 2.2 2.0 1.8 2.4 1.8 3.8 2.3 2.2 2.0 2.2 1.8 2.3 2.0 1.6 2.4 2.5 2.0 2.2 2.3 2.2 2.2 2.3 2.8 2.7 2.2 2.2 2.3 2.0 2.2 2.2 2.0 2.4 2.4 1.9 2.1 2.7 3.2 1.3 3.0 1.8 1.8 2.0 2.3 2.2 2.1 1.7 1.5 2.1 2.0 2.8 2.3 1.6 1.8 2.1 2.375 2.25 3.625 2 4.5 2.375 2.125 2.375 2.5 1.625 3.25 2.5 3.75 3 3.25 3.875 2.25 2.75 2.5 2.125 2.25 2.875 2 2.25 3 2.125 1.75 1.875 1.75 3 2.625 2.5 3.875 3.5 3.625 3.5 1.75 3.75 1.25 2.875 3.375 1.625 2.875 3.5 1.5 2 2.25 2.625 1.75 1.75 1.375 1.625 1.25 2.00 2.50 3.00 1.50 2.00 2.00 2.50 2.00 2.00 2.50 2.00 2.00 2.00 1.50 3.00 2.50 2.50 3.00 2.50 2.00 2.00 3.50 3.00 2.50 3.00 2.50 2.50 2.00 1.50 2.50 2.00 2.00 3.50 3.00 2.50 4.00 1.50 3.00 1.50 2.00 3.50 2.50 1.50 2.50 1.50 2.00 3.00 2.00 3.00 2.00 2.00 1.50 3.00

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Motivation through Compensation and Working Environment in Pharma Industry of Pakistan

86 87 88 89 90 91 92 93 94 95 96 97 98 99 4 2.6 3 3 2.8 3.4 3.6 2.8 2 2.4 2.4 2.4 3 2.8 2.5 1.9 1.7 2.3 1.9 2.5 1.6 2.1 2.3 2.3 1.8 2.4 1.7 2.2 2.875 2 1.75 1.75 1 4.5 1.25 2 3.25 1.75 2.5 2.875 2.375 3.125 3.00 1.50 1.00 3.50 2.00 2.50 2.00 2.00 2.50 2.50 2.50 2.50 2.00 2.50

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Motivation through Compensation and Working Environment in Pharma Industry of Pakistan

Mean Median Mode Standard Deviation Sample Variance Minimum Maximum

Working Environment 2.256666667 2.2 2.0 0.5 0.3 1.3 4.3

Compensation 2.784166667 2.6 2.3 1.0 0.9 1.0 5.0

Motivation 2.436666667 2.5 2.0 0.7 0.5 1.0 5.0

Correlation b/w Motivation Correlation b/w Motivation and king Environment and Compensation 0.646238187 0.530625915 Regression Lines b/w Motivation (X) and Working Environment (Y) X = 0.30 + 0.95Y Regression Lines b/w Motivation (X) and Compensation (Z) X = 1.11 + 0.48Z

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Motivation through Compensation and Working Environment in Pharma Industry of Pakistan

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Motivation through Compensation and Working Environment in Pharma Industry of Pakistan

FINDINGS
Descriptive results revealed positive trend of variables i.e. Working Environment & Motivation and Compensation and Motivation. Likert scale helped to explain the feelings of pharma officers towards Compensation, Working Environment and motivation. The aggregate mean of 1st independent variable (Working Environment) is calculated as (2.26), median (2.2), mode (2) with (0.50) standard deviation and (0.30) sample variance, which shows that the people working in pharma industry of Pakistan feel that there is need to update the working environment of the pharma. They are of a view that working environment in pharma industry of Pakistan has some flaws in it which needs to be removed. In nutshell, Pharma employees are not found highly satisfied and motivated with their current working environment of the pharma industry in Pakistan. The aggregate mean of 2nd independent variable (Compensation) is calculated as (2.78), median (2.6), mode (2.3) with (1.0) standard deviation and (0.90) sample variance. This again reveals that most of the people are not satisfied with the fully satisfied with their compensation structure. The pharma employees feel that they are not paid according to the services they are giving to pharma. They are not getting the true fruit of their hard work. There is a need to update the compensation structure according to the services provided by employees. Aggregate mean of dependent variable (motivation) is found as (2.44), median (2.5), mode (2.0) with (0.7) standard deviation and (0.5) sample variance. We find with the help of this analysis that the motivation level of Pharma employees is not very high. They are somehow dissatisfied or not motivated in terms of working environment and compensation.

Co Relational Analysis
Correlation b/w Motivation Correlation b/w Motivation and Working Environment and Compensation 0.646238187 0.530625915 According to the research we found that there is a high positive correlation between Motivation and Working Environment as well as Motivation and Compensation.

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Motivation through Compensation and Working Environment in Pharma Industry of Pakistan

If the Working Environment is conducive and cooperating which give the employees a feeling of self accomplishment, hen they will be more motivated and loyal to their organization. Many of other researchers previously found similar results from their research and analysis. Sansone and Hareckiewicz (2000) identify that compensation benefits energize and guide behaviors toward reaching a particular goal (Milkovich and Newman, 2002). Stone (1982) indicated that people are motivated by money for many different reasons. The need to provide the basic necessities of life motivates most people (Kovach, 1987).

Regression Results
The regression line expresses the best prediction of the dependent variable (X, Motivation), on the independent variables (Y, Working Environment) and (Z, Compensation). The regression lines equations for these variables are as follows: Regression Lines b/w Motivation (X) and Working Environment (Y) X = 0.30 + 0.95Y Regression Lines b/w Motivation (X) and Compensation (Z) X = 1.11 + 0.48Z

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Motivation through Compensation and Working Environment in Pharma Industry of Pakistan

CONCLUSION
Motivation is linked with good working environment and high level of compensation. The organization should must understand that what type of work environment can motivate their employees and they can become loyal employees of the organization which benefit the organization in the long run. Moreover the organizations should develop such a compensation structure that fulfill the needs of the employees in a best possible way and that they dont look around to meet their needs.

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Motivation through Compensation and Working Environment in Pharma Industry of Pakistan

DIRECTION FOR FUTURE RESEARCH

We can further carry on this research by adding certain other variables to check their relationship with motivation and these factors might be Quality Supervision, Empowerment, Career Development, Growth Opportunities, Qualification, and Participation etc.

Acknowledgements
The authors gratefully acknowledge many helpful comments on this research.

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Motivation through Compensation and Working Environment in Pharma Industry of Pakistan

REFERENCES
1. Amabile, T. M. 1996, creativity in context, 2nd ed, Boulder, co, West view press. 2. Beer, M. and Walton, E. R. 1990 Reward Systems and the Role of Compensation Manage People, Not Personnel: Motivation and performance Appraisal. A Harvard Business Review Book, Chapter 2, pp.15-30. 3. Bohlander, G., Snell, S. and Sherman A., 2001, Managing Human Resources. Cincinnati, OH: South-Western College Publishing 4. Carolyn Petersen, 2000, Value of Complementary Care Rises, But Poses Challenges, Managed Healthcare. 5. Colvin, G. (1998). What money makes you do? Fortune 138 (4), 213-214. 6. David A. Decenzo and Stephen P. Robbins. 2002, Human Resource Management, 7th ed. John Wiley and Sons, Inc. 7. D. M. Cable & T. A. Judge, 1994, Pay Preferences and Job Search Decisions: A Person-Organization Fit Perspective, Personal Psychology 47, pp.317-48. 8. E. E. Lawler, 1971, Pay & Organizational Effectiveness: A Psychological View, New York, McGrew-Hill, Inc. 9. Emmert, M. and Tamer W. A., 1992. Public Sector Professionals: The effect of Public Sector Job on Motivation, Satisfaction and Work involvement. American Review of Public Administration, Vol. 22, pp.37-48. 10. Evans M. G., 1986. Organizational behavior: The central role of motivation. Journal of Management. 11. F. Herzberg, B. Mausner, B. Snyderman.1959, The motivation to work. New York, Johnwiely. 12. Green Berg J, 2001. Organizational Justice as Probation and reactions: Implications for research `and application. In Cropanzano R (ed.), Justice in work place: form theory to practice (Vol. 2, pp. 271-302). 13. Gerhart B. (ed.), compensation in organization: Current Research and Practice, pp. 32-60. San Francisco: Jossey-Bass. 14. Gibbons R., 1997, incentives and careers in organizations. In advances in Economic theory and Econometrics, Vol. II, Kreps D. and Wallis K, ed. Cambridge University press, U.K. 15. Herzberg. F. 1968, One more time: How do you motivate employees? Harward business review, Vol. 46, ISS. 1, pp, 53-62 16. IRS Employment Review, 1996, Selecting team rewards. London , Internet 17. Jerald, G. and Robert, A. B., 1997. Behavior in Organizations: Understanding and Managing the Human Side of Work, Upper Saddle River, NJ: Prentice-Hall, Inc. 18. Kovach, K., 1987. What Motivates Employees? Workers and Supervisors Give Different Answers. Business Horizons. 19. Martin, J. and Hanson, S., 1985. Sex, family wage earning status and satisfaction with work and occupations, 12, 91-109. 20. Milkovich & Newman, 2002. Compensation, 7th ed, The McGrew-Hill Companies, Inc. 21. R. T. Kaufman, 1992, The Effects of Improshare on Productivity, Industrial and Labour Relations Review 45, pp. 311-22. 22. R. Heneman and T. Judge, 1999, Compensation Attitudes: A Review and Recommendations for Future Research, in Compensation in Organization: Progress and Prospects, S.L. Rynes and B. Gerhart, eds. New Lexington Press, San Francisco. 23. Steers, R. and Black, J. 1994,Organization Behavior, 5th ed, Harper Collins. Page 19 of 23

Motivation through Compensation and Working Environment in Pharma Industry of Pakistan 24. S. L. Grover and K. J. Crooker, 1995, Who Appreciates Family Responsive Human Resource Policies: The Impact of Family-Friendly Policies on the Organizational Attachment of Parents and Non-parents, Personnel Psychology 48, pp. 271-88. 25. Sue Shellenbarger, 1999, Employees who value time as much as money Now get their Reward, Wall street journal, p. B-1. 26. Wagar, Terry H., 1998, "Determinants of Human Resource Management Practices in Small Firms: some Evidence from Atlantic Canada," Journal of Small Business Management, pp.13-23. 27. W. N. Cooke, 1994, Employee Participation Programs, Group based Incentives & company Performance, Industrial and Labour Relations Review 47, pp. 60336.

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Motivation through Compensation and Working Environment in Pharma Industry of Pakistan

Motivation of Employees in Pharma Industry of Pakistan

Questionnaire
This research is confidential. No responder will be disclosed individually. We request that you provide your honest views, avoiding overly positive and overly negative feedback.

DEMOGRAPHICS
1. 2. Gender Male Age a) Above 20 b) 21 30 c) 31 40 d) 41 50 3. e) Above 50 Education Level a) PhD b) Post Graduate Level c) Graduate Level d) Intermediate Level e) Other ________________________________________________________________ 4. How long have you been working at _________________(Name of Organizarion) a) Less than 6 months b) 6 months 1 year c) 1 2 years d) 2 3 years e) 3 5 years f) More than 5 years 5. What is your management level? Female

________________________________________________ 6. What is your pay level?

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Motivation through Compensation and Working Environment in Pharma Industry of Pakistan a) 10,000 20,000 b) 20,000 30,000 c) 30,000 40,000 d) 40,000 50,000 e) Above 50,000

WORK ENVIRONMENT
7. 8. 9. I am treated with dignity and respect by management I fully utilize my skills and abilities in the Organization. Work assigned to me is interesting, rewarding and challenging and give me a feeling of personal accomplishment. Organization provides an environment where diverse individuals can work together effectively and happily. Organization is responsive to change and encourages change within the organization in order to stay effective in a changing environment. Organization place a great emphasis on honestly, integrity and ethical behavior. The amount of work expected to do in my job is reasonable. Employees have the support and authority to make the decision necessary for accomplishing their assigned tasks. Employees have the resources (personnel, finances, tools) necessary to do quality work. All employees at ____________ are treated fairly regardless of age, race, gender, family status, veteran status, national origin, disability, personality, thinking style or sexual orientation.

Strongly Agree Agree

Neutral

Disagree Strongly Disagree

10

11.

12 13 14

15 16

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Motivation through Compensation and Working Environment in Pharma Industry of Pakistan

17 18

We can exchange our views freely in the work place. Work environment is overall very comfortable, friendly and cooperative.

COMPENSATION
19 20 Overall, the employee benefits I receive meet my needs. I understand the value of the total compensation (compensation + benefits) package that Organization delivers to me. Organization pays for performance. I receive good medical allowances. Organization is providing me with transport facility. The overall benefits given to me by Organization, provide good security for me and my family. As Compared to other in the industry my Organization has an excellent compensation and benefits package. How would you rate the quality of service you receive when you have a benefits issue, question or claim?

Strongly Agree Agree

Neutral

Disagree Strongly Disagree

21 22 23 24 25

26

Very Good

Good

Average

Poor

Very Poor

MOTIVATION
27 28 I am highly motivated with the current working environment of my Organization. I am satisfied with my compensation & benefits package.

Strongly Agree Agree

Neutral

Disagree Strongly Disagree

Thank you very much for your support

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