Motivation through Compensation and Working Environment

in Banking Sector of Pakistan

MOTIVATION
through
Compensation and Working Environment
in
Banking Sector of Pakistan
Submitted to:
Mr. Rana Tariq

Submitted by:
The Challengers

Zahoor Ahmad.

Ready for Challenge

The Challengers 1
IIHE, Karachi.
Motivation through Compensation and Working Environment
in Banking Sector 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

The Challengers 2
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Motivation through Compensation and Working Environment
in Banking Sector 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 employee’s motivation. In
this study a sample of 150 bank officer was taken by adopting non
probability convenient sampling, to investigate the relationship between
Motivation & Working Environment and Employee Motivation. Bank
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 Banking Sector 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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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 candidate’s

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 employee’s
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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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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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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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 the Challengers by consulting a number of
research papers.

Sample:
Total 150 questionnaires were got duly filled by the employees of the
different banks of Pakistan (e.g. ABL, HBL, MCB, UBL, FBL, ABN
Amro, BAL etc.) These respondents were included Regional Heads,
Operation Managers, Branch Managers, Cashiers and other middle level
managers and first line managers.

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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STATISTICAL DATA
Male 74%
Gender Female 26%
Above 20 years
Age 21-30 years 53%
31-40 years 28%
41-50 years 11%

Above 50 years 5%
Ph.D 1%
Master Degree 60%
Education Bechlore Degree 31%
Intermediat 8%
Others
Income (monthly) Rs.10,000-Rs.20,000 28%
Rs.21,000-Rs.30,000 38%
Rs.31,000-Rs.40,000 11%
Rs.41,000-Rs.50,000 17%

Above 50,000 6%
Work Experience Less than 6 month 5%
6 month to 1 year 32%
1 to 2 years 22%
3 to 5 years 23%

More than 5 years 18%

S. No. Demographics Working Environment Compensation Motivation

IV 1 IV2 DV
1 2.6 2.0 2.25 2.00
2 2.2 2.0 2.125 2.00
3 2.2 2.6 3.375 2.00
4 2.4 2.4 3.375 3.00
5 2.8 1.9 3 2.00
6 2 2.4 3.375 2.50
7 3 1.7 2.625 2.00
8 2.2 2.5 3 3.00
9 2.6 2.3 2.25 2.00
10 1.8 2.2 3.5 2.00
11 2.6 2.3 3.125 2.50
12 2.4 2.3 3.25 2.50
13 1.4 2.3 2.875 2.00
14 2.6 2.6 3.125 3.00
15 1.8 1.9 2.875 2.00
16 1.8 2.0 2.375 2.00
17 2 2.0 2.5 2.00
18 1.8 2.3 3.25 2.50
19 2 2.3 2.625 2.50
20 2 1.8 3 1.00
21 2.2 1.6 1.75 1.50
22 1.8 2.1 3 2.00

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23 1.8 2.0 3 2.00

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24 1.4 1.9 4.25 2.50
25 2.4 2.2 2.125 2.00
26 3.4 2.0 2.375 1.50
27 3.8 2.0 2.125 2.00
28 3 2.3 2.25 2.00
29 1.8 3.0 3 3.00
30 2.4 2.2 1.75 2.50
31 2.4 2.6 3.5 3.00
32 1.8 2.5 2.625 2.00
33 2.2 2.0 2.375 2.00
34 2.4 1.8 2.25 2.50
35 1.8 2.4 3.625 3.00
36 2.6 1.8 2 1.50
37 2.8 3.8 4.5 2.00
38 2.8 2.3 2.375 2.00
39 2 2.2 2.125 2.50
40 2 2.0 2.375 2.00
41 2.2 2.2 2.5 2.00
42 3 1.8 1.625 2.50
43 2.2 2.3 3.25 2.00
44 3.4 2.0 2.5 2.00
45 1.8 1.6 3.75 2.00
46 2.6 2.4 3 1.50
47 3.2 2.5 3.25 3.00
48 2.2 2.0 3.875 2.50
49 3.8 2.2 2.25 2.50
50 2.4 2.3 2.75 3.00
51 3 2.2 2.5 2.50
52 3.4 2.2 2.125 2.00
53 3.2 2.3 2.25 2.00
54 3.4 2.8 2.875 3.50
55 2.8 2.7 2 3.00
56 3.2 2.2 2.25 2.50
57 3 2.2 3 3.00
58 3 2.3 2.125 2.50
59 1.6 2.0 1.75 2.50
60 2.6 2.2 1.875 2.00
61 2.4 2.2 1.75 1.50
62 2 2.0 3 2.50
63 1.6 2.4 2.625 2.00
64 1.8 2.4 2.5 2.00
65 3.2 1.9 3.875 3.50
66 2.2 2.1 3.5 3.00
67 2.6 2.7 3.625 2.50
68 2.6 3.2 3.5 4.00
69 3.4 1.3 1.75 1.50
70 1.8 3.0 3.75 3.00
71 2.4 1.8 1.25 1.50
72 2.2 1.8 2.875 2.00
73 3 2.0 3.375 3.50

74 3.2 2.3 1.625 2.50

75 2.6 2.2 2.875 1.50
76 2.2 2.1 3.5 2.50

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77 3.8 1.7 1.5 1.50
78 2 1.5 2 2.00
79 2.4 2.1 2.25 3.00
80 2.8 2.0 2.625 2.00
81 2.2 2.8 1.75 3.00
82 2.8 2.3 1.75 2.00
83 2.2 1.6 1.375 2.00
84 2.8 1.8 1.625 1.50
85 2.2 2.1 1.25 3.00
86 4 2.5 2.875 3.00
87 2.6 1.9 2 1.50
88 3 1.7 1.75 1.00
89 3 2.3 1.75 3.50
90 2.8 1.9 1 2.00
91 3.4 2.5 4.5 2.50
92 3.6 1.6 1.25 2.00
93 2.8 2.1 2 2.00
94 2 2.3 3.25 2.50
95 2.4 2.3 1.75 2.50
96 2.4 1.8 2.5 2.50
97 2.4 2.4 2.875 2.50
98 3 1.7 2.375 2.00
99 2.8 2.2 3.125 2.50
100 2.6 2.1 2.125 2.00
101 2 2.6 5 4.50
102 2 2.8 4.25 3.00
103 1.8 3.4 4.25 4.50
104 3 3.4 4.5 2.00
105 2 3.4 4.75 5.00
106 2.2 3.0 3.25 3.00
107 1.6 2.1 2.375 2.00
108 2.4 1.7 2.375 2.00
109 2.6 2.8 3.25 2.50
110 2.2 2.3 2.625 3.00
111 2.4 1.9 2.625 3.00
112 1.8 1.8 2.5 2.00
113 2.6 1.6 3.125 1.50
114 2.4 2.0 3.125 3.50
115 2.2 1.3 2.25 1.50
116 1.4 1.8 2.25 2.00
117 3 2.7 4.25 3.50
118 2.4 2.0 2.75 2.00
119 2.2 2.2 3.375 2.50
120 2.2 2.5 3.625 2.50
121 2.8 2.1 3.375 2.50
122 3.2 1.7 2.5 2.00
123 3.2 3.3 2.875 3.00
124 3.2 3.3 3.125 3.00

125 1.8 2.4 3.625 2.50

126 2 2.7 2.625 3.00
127 3.4 2.3 2.625 1.50
128 2.4 2.3 2.625 3.00
129 3 2.3 2.5 3.00

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130 2.6 4.2 3.625 4.50
131 3.6 1.7 2 2.50
132 3.2 2.7 3.375 3.00
133 2.4 2.2 4 2.50
134 2 1.8 3.625 1.50
135 3.8 4.3 3.875 4.00
136 2.8 1.7 2 2.00
137 3 2.5 1.5 2.00
138 2.6 2.3 2 2.00
139 1.8 2.7 2.625 1.50
140 2 1.9 2.5 2.50
141 2.6 2.0 1.375 2.00
142 3 2.5 3 2.50
143 3.2 2.5 2.75 4.00
144 3.8 1.6 2.5 1.50
145 1.8 3.1 4.375 4.50
146 2.4 3.0 3 3.00
147 2 3.2 4.625 4.50
148 2.8 1.8 2.25 2.00
149 2 2.0 2.125 1.50
150 2.8 3.1 3.75 3.50

Working Compensation Motivation

Environment
Mean 2.256666667 2.784166667 2.436666667
Median 2.2 2.6 2.5
Mode 2.0 2.3 2.0
Standard Deviation 0.5 1.0 0.7
Sample Variance 0.3 0.9 0.5
Minimum 1.3 1.0 1.0
Maximum 4.3 5.0 5.0

Correlation b/w Motivation Correlation b/w Motivation

and king Environment and Compensation
0.646238187 0.530625915

Regression Lines b/w Motivation Regression Lines b/w Motivation

(X) and Working Environment (Y) (X) and Compensation (Z)
X = 0.30 + 0.95Y X = 1.11 + 0.48Z

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Motivation and Working Environment

Working Environment IV 1 Motivation DV

10.0
9.0
8.0
7.0
6.0
5.0
4.0
3.0
n
a M
o
tiv

2.0
1.0
0.0
1 12 23 34 45 56 67 78 89 100 111 122 133 144
Working Environment

Motivation and Compensation

Compensation IV2 Motivation DV

3
M

2
n
a o
tiv

0
1 11 21 31 41 51 61 71 81 91 101 111 121 131 141
Compensation

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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 bank 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
banking sector of Pakistan feel that there is need to update the working
environment of the banks. They are of a view that working environment in
banking sector of Pakistan has some flaws in it which needs to be removed.
In nutshell, bank employees are not found highly satisfied and motivated
with their current working environment of the banks 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
bank employees feel that they are not paid according to the services they
are giving to bank. 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
bank 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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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 Regression Lines b/w

Motivation (X) and Working Motivation (X) and
Environment (Y) Compensation (Z)
X = 0.30 + 0.95Y X = 1.11 + 0.48Z

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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 don’t look around to meet their needs.

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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.

We can also do comparative study of employee’s motivation between

public and private banks and also between national and international banks.
Difference between the motivational level of male and female employees
can also be analyzed thorough this research.

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

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23. Steers, R. and Black, J. 1994,”Organization Behavior”, 5th ed, Harper Collins.

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24. S. L. Grover and K. J. Crooker, 1995, “Who Appreciates Family Responsive
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Motivation of Employees in Banking 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. Gender
Male Female
2. Age

a) Above 20
b) 21 – 30
c) 31 – 40
d) 41 – 50
e) Above 50
3. 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 Bank)

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?
________________________________________________

6. What is your pay level?

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

The Challengers 22
IIHE, Karachi.
Motivation through Compensation and Working Environment
in Banking Sector of Pakistan

17 We can exchange our views

. freely in the work place.
18 Work environment is overall
. very comfortable, friendly and
cooperative.
COMPENSATION Strongly Agree Neutral Disagree Strongly
Agree Disagree
19 Overall, the employee benefits I
. receive meet my needs.
20 I understand the value of the
. total compensation
(compensation + benefits)
package that Bank delivers to
me.
21 Bank pays for performance.
.
22 I receive good medical
. allowances.
23 Bank is providing me with
. transport allowances/facility.
24 The overall benefits given to me
. by Bank, provide good security
for me and my family.
25 Compared to other banks in the
. industry my Bank has an
excellent compensation and
benefits package.
26 How would you rate the quality Very Good Average Poor Very Poor
. of service you receive when you Good
have a benefits issue, question or
claim?
MOTIVATION Strongly Agree Neutral Disagree Strongly
Agree Disagree
27 I am highly motivated with the
. current working environment of
my Bank.
28 I am satisfied with my
. compensation & benefits
package.

“Thank you very much for your support”

The Challengers 23
IIHE, Karachi.