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INCENTIVES AT OPERATIVE LEVEL EMPLOYEES AND ITS REFLECTION ON ORGANIZATIONAL EFFECTIVENESS
( A CASE STUDY OF THREE SELECTED PHARMACEUTICAL UNITS IN THANE – BELAPUR INDUSTRIAL AREA, DURING THE PERIOD
2006-07, 2007-08 AND 2008-09)
THESIS SUBMITTED TO THE PADMASHREE DR. D. Y. PATIL UNIVERSITY,
DEPARTMENT OF BUSINESS MANAGEMENTIN PARTIAL FULFILLMENT OF THE REQUIREMENTS
FOR THE AWARD OF THE DEGREE OF
DOCTOR OF PHILOSOPHYIN
BUSINESS MANAGEMENT
SUBMITTED BY
MAKARAND VITTHALRAO NANDANWAR(ENROLLMENT NO. DYP-PHD 066100023)
RESEARCH GUIDE
DR. S.V. SURNIS (MA, M. PHIL, PH.D.)
PRINCIPAL
PADMASHREE DR. D. Y. PATIL UNIVERSITY,DEPARTMENT OF BUSINESS MANAGEMENT,
SECTOR 4, PLOT NO. 10,CBD BELAPUR, NAVI MUMBAI – 400 614
OCTOBER 2011
INCENTIVES AT OPERATIVE LEVEL EMPLOYEES AND ITS REFLECTION ON ORGANIZATIONAL
EFFECTIVENESS
( A CASE STUDY OF THREE SELECTED PHARMACEUTICAL UNITS IN
THANE – BELAPUR INDUSTRIAL AREA, DURING THE PERIOD 2006-07, 2007-08 AND 2008-09)
DECLARATION
I hereby declare that the thesis entitled “Incentives at Operative Level Employees
and Its Reflection on Organizational Effectiveness ( A case study of three
selected pharmaceutical units in Thane – Belapur Industrial Area, during the period
2006-07, 2007-08 and 2008-09)” Submitted for the award of Doctor of Philosophy in
Business Management at Padmashree Dr. D.Y. Patil University Department of
Business Management is my original work and the thesis has not formed the basis
for the award of any degree, associateship, fellowship or any other similar titles.
Place: Navi Mumbai.
Date:
Signature of the Guide Signature of the Signature of the student Head of the dept
CERTIFICATE
This is to certify that the thesis entitled “Incentives at Operative Level Employees
and Its Reflection on Organizational Effectiveness ( A case study of three
selected pharmaceutical units in Thane – Belapur Industrial area, during the period
2006-07, 2007-08 and 2008-09)” submitted by Mr. Makarand Vitthalrao
Nandanwar is a bonafide research work for the award of the Doctor of Philosophy in
Business Management at the Padmashree Dr. D. Y. Patil University Department of
Business Management in partial fulfilment of the requirements for the award of the
Degree of Doctor of Philosophy in Business Management and that the thesis has
not formed the basis for the award previously of any degree, diploma, associate ship,
fellowship or any other similar title of any University or Institution.
Also certified that the thesis represent an independent work on the part of the
candidate.
Place:
Date:
Signature of the Signature of the Guide
Head of the Department
ACKNOWLEDGEMENT
It is with pleasure and deep sense of indebtness that I acknowledge here the
invaluable help of many colleagues, teachers and fellow workers who contributed to
the completion of this thesis. Although thanked below, no words can adequately
express the depth of my gratitude and the significance to me of their graciously
offered support and help.
I am grateful to the Padmashree Dr. D.Y. Patil University, Department of Business
Management which has accepting and providing opportunity to me for the Doctoral
Program.
I endorse my deep feelings of gratitude and appreciation to my guide Dr. S. V. Surnis
Principal, Chetna’s H.S. College of commerce and economics and Smt. Kusumtai
Chaudhary college of arts, Mumbai, who was the source of inspiration and
encouragement. This work would have been impossible without his able guidance
and motivation.
Prof.(Dr.) James Thomas, Vice chancellor and Dr. F. A Fernandis former Registrar,
Dr. D.Y. Patil University for their invaluable support. My sincere thanks are due to Dr.
R Gopal, Dean & Director, Department of Business Management, Navi Mumbai
whose active assistance at various stages of this work. My thanks are due to my
respondents and the library staff of IIT Kharagpur, IIT Mumbai, TISS and IIM (A).
I express many thanks to my mother the sole inspiration for carrying out this work
and my sisters Aruna and Smita for their moral boosting throughout this work. My
brother Sandeep for the invaluable support and guidance, my wife Leena and my
sons Tanay and Nakshatra for bearing with me during this period. My sincere thanks
is also due to Mr. Kaustubh Prasad for helping me in compilation of this work.
Makarand V. Nandanwar
TABLE OF CONTENTS
LIST OF TABLES (i) LIST OF FIGURES (ii)
LIST OF ABBREVIATIONS (iii)
EXECUTIVE SUMMARY (iv)
Page
No.
CHAPTER I INTRODUCTION
1.1 Introduction to study 1
1.2 Indian industrial scenario 2
1.3 Challenges in Indian manufacturing units 3
1.4 Pharmaceutical industrial trends and emerging issues
5
1.5 Role of incentive 13
1.6 Organizations under study 14
1.7 Reasons for selecting the problem 23
CHAPTER II LITERATURE REVIEW
2.1 Organizational Effectiveness 26
2.2 Motivation 40
2.3 Job Satisfaction 49
2.4 Industrial Accidents 53
2.5 Employee Absenteeism 58
2.6 Production Wastage 62
2.7 Role of monetary and non-monetary incentives 67
2.8 Relationship between different variables 97
2.9 Gap analysis 102
CHAPTER IIIOBJECTIVES AND RESEARCH METHODOLOGY-
DATA COLLECTION, CLASSIFICATION AND TABULATION
3.1 Objectives and Hypotheses 105
3.2 Data Collection Methods 110
3.2.1 Primary data collection 112
3.2.2 Secondary data collection 113
3.3 Size and the design of sample 114
3.4Instrument of data collection - Structured
Questionnaire114
3.5 Processing of data: Editing, Coding, Classification and Tabulation
118
3.6 Statistical tools used for data analysis 120
3.7 Limitations of study 121
CHAPTER IVDATA PROCESSING : PART I
FINDINGS OF TANGIBLE DATA- OBSERVED EFFECTS
4.1 Comparative study of incentives in three organizations
123
4.1.1 Comparison of mean score and standard deviation
126
4.1.2 Monetary incentives - Analysis of Variance 127
4.1.3 Non-monetary incentives - Analysis of Variance 128
4.2 Observed (tangible) effect of monetary and non-monetary incentives
129
4.2.1 Simple statistical analysis of secondary data 130
4.2.2 Absenteeism in man days per hundred employees 132
4.2.3 Accident rate per hundred employees 132
4.2.4 Percentage Wastage per employee 134
4.3 Trend analysis in Small, Medium and LargeOrganizations
134
CHAPTER V
DATA PROCESSING – PART II
FINDINGS OF NON- TANGIBLE DATA- PERCEIVED
EFFECTS
5.1 Comparison of demographic data - sample homogeneity
146
5.2 Employees’ attitude towards incentives 151
5.3 Percentage analysis: employees’ perception ofincentive schemes
153
5.4 Study of variables - simple correlation analysis 178
5.4.1 Correlation between dependent variables:motivation and job satisfaction
180
5.4.2Correlation between independent variables attitude towards monetary and non-monetary incentives
180
5.4.3 Correlation between motivation and non-monetary incentives
180
5.4.4 Correlation between job satisfaction and non-monetary incentives
181
5.4.5 Correlation between motivation and monetary incentives
181
5.4.6 Correlation between job satisfaction and monetary incentives
181
5.5 Regression analysis 200
5.5.1 Regression model for motivation 201
5.5.2 Regression model for job satisfaction 202
5.6 Testing of hypotheses 205
CHAPTER VI OBSERVATIONS AND CONCLUSIONS
6.1 Observations and findings 215
6.2 Specific observation and discussion 220
6.3 Cause effect relationship 227
6.4 The differentiating factors of the study 228
6.5 Conclusions 235
6.6 Suggestions and recommendations 237
6.7 Scope for future research studies 240
Bibliography
Annexure I : Questionnaire
Annexure II : Organizational data sheet
Annexure III : Working Definitions
Annexure IV : Statistical Average scores of variables
LIST OF TABLES
Table No.
Table title Page No.
1.1 Incentives offered in three organizations 15
3.1 Detail of population and sample size 114
3.2 Reliability Coefficient of questionnaire 117
4.1 Comparison of monetary and non-monetary incentives 124-125
4.2 Comparison of means - monetary incentives 126
4.3 (a) Descriptive analysis- Total monetary incentives 128
4.3 (b) Analysis of Variance – Total monetary incentives 128
4.4 (a) Descriptive analysis- Total non- monetary incentives 129
4.4 (b) Analysis of variance – Total non- monetary incentives 129
4.5 Simple statistics- Absenteeism, Accidents and Wastage 131
4.6 Organization wise comparative data on absenteeism, accidents
and wastage for three years133
4.7 (a) Absenteeism man days/100 employees- small organization –
Regression Model Summary135
4.7 (b)Absenteeism man Days/100 employees-small organization -
coefficients135
4.8 (a)No. of Minor near-miss accidents /100 employees: small
organization–Regression135
4.8 (b)No. of Minor near-miss accidents /100 employees: small
organization–Coefficient136
4.9 (a)No. of Major accidents /100 employees: small organization–
Regression 136
4.9 (b)No. of Major accidents /100 employees: small organization–
Coefficient136
4.10 (a)Production wastage% /100 employees in small organization –
Regression137
4.10 (b)Production wastage%/100 employees in small organization –
Coefficient137
4.11 (a)Absenteeism man days/100 employees in medium
organization- Regression137
4.11 (b)Absenteeism man days/100 employees in medium
organization- Coefficients138
4.12 (a)No. of Minor near miss accidents /100 employees: medium
organization–Regression 138
4.12 (b)No. of Minor near miss accidents /100 employees: medium
organization–Coefficient138
4.13 (a)No. of Major accidents /100 employees: medium organization–
Regression 139
4.13 (b) No. of Major accidents /100 employees: medium organization–
Coefficient139
4.14 (a)Production wastage/100 employees in medium organization –
Regression139
4.14 (b)Production wastage/100 employees in medium organization –
Coefficient139
4.15 (a)Absenteeism man days/100 employees in large organization-
Regression140
4.15 (b) Absenteeism man days/100 employees in large organization-
Coefficients140
4.16 (a) No. of Minor near miss accidents /100 employees: large
organization–Regression 141
4.16 (b) No. of Minor near miss accidents /100 employees: large
organization –Coefficient141
4.17 (a)No. of major accidents /100 employees: large organization –
Regression 141
4.17 (b)No. of major accidents /100 employees: large organization –
Coefficient141
4.18 (a)Production wastage% /100 employees: large organization –
Regression142
4.18 (b)Production wastage% /100 employees: large organization –
Coefficient142
4.19 Percentage and trend analysis of absenteeism, accidents and wastage per 100 employees
143
5.1 (a) Sample by size of organization 146
5.1 (b) Sample by gender of respondents 146
5.1 (c) Sample by marital status of respondents 147
5.1 (d) Sample by rural urban background of respondents 147
5.1 (e) Sample by designation of respondents 147
5.1 (f) Sample by qualifications of respondents 147
5.1 (g) Sample by age of respondents 147
5.2 (a) Descriptive statistics on demographic data 148
5.2 (b) Demographic data 149
5.3 (a) Reason for taking long leaves * size of organization 150
5.3 (b) Reason for taking long leaves :Chi-Square test 151
5.4 (a) Employees attitude towards incentives: Descriptive 152
5.4 (b) Employees attitude towards incentives: ANOVA 152
5.5 Employees perception of company policies 154
5.6 Employees perception about salary 155
5.7 Employees satisfaction towards incentives and benefit plans 156
5.8 Employee’s perception regarding future promotion 157
5.9 Employee’s perception towards changing job 158
5.10Employee’s perception on kind of company they would prefer
to work with.160
5.11 Employee’s perception on recognizing employees efforts 161
5.12Employee’s perception in contribution of monetary incentives in
increasing employee’s income162
5.13Employee’s perception on Monetary incentives as a cause for
absenteeism164
5.14Employee’s perception towards increase in wastage of time
and material because of monetary incentives schemes165
5.15Employee’s perception on appreciation and less accidents
rates166
5.16Employee’s perception that monetary incentives are important
than higher responsibilities168
5.17Employee’s perception on non-monetary incentives and
production wastage.170
5.18Employee’s perception on motivation and job satisfaction by
superior’s appreciation.171
5.19 Employee’s perception regarding effective work through
constant pressure of goal attainment 173
5.20 Incentives and accidents on shop floor 174
5.21 Non-monetary incentives and absenteeism 175
5.22 Employee’s perception on en-cashing non-monetary incentives 176
5.23Employee’s perception on en-cashing LTC than availing family
holidays178
5.24 Overall Correlations 179
5.25 Correlations small organization 182
5.26 Correlations medium organization 183
5.27 Correlations large organization 184
5.28 Correlations age group 21 to 33 years. 185
5.29 Correlations age group 34 to 46 years 185
5.30 Correlations age group 47 to 59 years. 185
5.31 Correlations gender: male 186
5.32 Correlations gender: female 188
5.33 Correlations of married employees 189
5.34 Correlations of unmarried employees 191
5.35 Correlations background : Rural 192
5.36 Correlations background : Urban 194
5.37 Correlations designation: Manager 196
5.38 Correlations designation: Supervisor 197
5.39 Correlations designation: Workmen 199
5.40 Regression model For motivation 201-202
5.41 Regression model For job satisfaction 202-203
LIST OF FIGURES
Figure No. Figure title Page No.Fig. 1 Trends of absenteeism 143
Fig. 2 Trends of wastage 143
Fig. 3 Trends major accident 144
Fig. 4 Trends minor accident 144
LIST OF ABBREVIATIONS
Sl. No. Abbreviation Full form
1 ASEAN Association of South East Asian Nation
2 BoDD Burden of Disease Database
3 BMI Business Monitor International (Ltd.)
4 CAGR Compound Annual Growth Rate
5 DALYs Disability Adjusted Llife Years
6 FDA Food and Drug Administration
7 FERA Foreign Exchange Regulatory Act
8 FMCG Fast Moving Consumer Goods
9 FTA Foreign Trade Agreement
10 GMP Good Manufacturing Practices
11 LTA Loss Time Accident
12 LTC Leave Travel Concession
13 MON Monetary incentives
14 MRTP Monopolistic Restrictive trade practices
15 MIS Monetary Incentive Scheme
16 NON MON Non Monetary Incentives
17 OE Organizational Effectiveness
18 OTC Over The Counter
19 PPE Personal Protective Equipments
20 SWOT Strength, Weakness ,Opportunity, Threat
21 SOP Standard Operating Procedures
22 WHO World Health Organization
EXECUTIVE SUMMARY
In Indian economy, industries in production sector play a predominant role. Today,
with rapidly changing global political scenario and free market economies, every
industrial unit is open to international competition. Effective and efficient working of
the manufacturing units is the serious and major challenge for any organization.
In any manufacturing unit involved in standard repetitive production process, shop
floor employees are the main moving force in the success of that organization.
Various motivational studies have shown that the human beings have endless needs
and the same is true with the employees in an organization. Salary can help to
retain the employee but may not be able to generate compelling urge in the
individual to give his/ her best output willingly and here the role of incentives became
highly important. This study is intended to analyze the impact of some of the
monetary and non-monetary incentives on selected aspects of Organizational
Effectiveness (OE) at individual level and to find out measures for improving their
effectiveness.
A study of Organizational Effectiveness was difficult because of the multiplicity of
goals and the apparent incompatibility of some of them which poses a great problem
in developing a right criterion of effectiveness. After profound literature review in the
field of Organizational Effectiveness and Incentives it was observed that an
integrated study considering variables like perceived as well as observed aspect of
the Organizational Effectiveness, effects of both monetary and non-monetary
incentives and various demographic data has not been carried out.
The intended objectives of the study were:
To study and compare the existing incentive and compensation packages like
monetary, non monetary incentives in the three organizations covered under
this study.
To study and understand the reflection of observed (tangible) and perceived
(non-tangible) effects of these incentive schemes on selected determinants of
Organizational Effectiveness at individual level.
To evaluate and identify the relationship between monetary, non-monetary
incentives and the selected determinants of Organizational Effectiveness at
individual level.
To study and suggest measures for formulating a better and progressive
incentive schemes packages to make it more effective and meaningful for
future.
Theoretical conceptualization of study:
In this study the employee’s attitude towards monetary incentives and non-monetary
incentives were considered as two independent variables. The monetary incentives
were represented by annual increment, productivity bonus and medical
reimbursement as a cash incentive and subsidies canteen, transport facilities,
children education assistance as benefits. The non-monetary incentives were
represented by an appreciation letters, display of name and awards as appreciation
and higher job responsibilities, opportunity to learn and advance training etc. as a
reward.
The Organizational Effectiveness at individual level was represented by five
determinants. In this, motivation and job satisfaction were two positive determinants
whereas employee absenteeism, accidents rate and percentage wastage were three
negative determinants of Organizational Effectiveness. The selection of these
determinants of Organizational Effectiveness was done on the basis of availability of
data, type of organizations under study and previous researches in this field. These
determinants mostly cover other aspects of Organizational Effectiveness as well.
Three pharmaceutical organizations were selected for this study, which includes one
large, one medium and one small scale organization. The characterization was done
on the basis of financial turn over, size of the unit and number of permanent
employees presently working in the unit. Similar types of monetary and non-
monetary incentives were offered in all the three organizations, however they
differed in intensity, measurement parameters and periodicity.
Data Collection:
The data collection was done in two stages, in the first stage a pilot survey was
conducted to ascertain the research parameters and testing the reliability of the
instruments used in the study.
In second stage, the primary data on non-tangible aspects (perceived effects) were
collected through three main methods: 1. Questionnaires, 2. Interviews, 3.
Observations through ‘walk-through-survey’. The method of observation has been
resorted to only as a means to supplement the other two forms of primary data
collection.
The tangible data required to measure the tangible aspects was collected from the
official data records for three years 2006-07, 2007-08 and 2008-09 of the three
organizations. The secondary data was collected through desk research including
literature survey, referring e-libraries etc.
Size and the design of the sample:
The study was conducted on shop floor employees in three selected pharmaceutical
manufacturing units. Only permanent employees working in these organizations
were taken in this study. Employees in all the categories i.e. workers, supervisors
and managers (up to senior manager level), who were the actual beneficiary of the
incentive schemes were considered. The sampling was done by stratified random
sampling. The final size of the sample was 165 respondents. In all there were 66, 61
and 38 respondents from large, medium and small organization respectively across
three different categories of designation namely managers, supervisors and workers.
The selected sample was 41.5% of total available universe of 398 employees
following under the selection criterion of permanent shop-floor employees.
Instrument of data collection: Questionnaire
The collection of primary data on perceived effect was primarily done by the method
of questionnaire. In the first part of the questionnaire, the nature and the purpose of
the work were explained and the assurance of complete secrecy of identity of
respondent and responses were given. Also some background information of
respondents was collected. In the second part there were 36 questions distributed in
three different sections on motivation, job satisfaction and attitude towards monetary
and non monetary incentives. The reliability coefficient of the questionnaire for above
mentioned three different sections i.e. for motivation, job satisfaction and attitude
towards incentives, by Kuder – Richardson’s formula, was 0.8042, 0.7617 and
0.8235 respectively, which indicates the high reliability of questionnaire.
Data processing:
The data collected with the help of the questionnaire was coded, classifies and after
that a master table was prepared. Help of Statistical package SPSS was taken for
analysis of data. Then for each individual behavioral characteristic mean score was
obtained. These mean scores were subjected to various statistical analyses by
employing the various statistical tools like comparison of mean scores and Standard
Deviations, ANOVAs, Percentage Analysis, Simple Co-relation Test, Chi-square
Test. Further Correlation Analysis, Multiple Regression Analysis and Trend analysis
were carried out for testing of research hypotheses.
Findings and Conclusions:
On the basis of analysis of data, it can be said with reasonable degree of confidence
that well designed monetary and non-monetary incentive schemes increased
employee’s motivation and job satisfaction. Also these incentive schemes were able
to reduce employee absenteeism, production wastage and accidents on shop floor
thereby increasing the overall Organizational Effectiveness.
In this study it was observed that, in spite of the fact that organizations offered
similar types of monetary and non-monetary incentives, the schemes differed
significantly in the three organizations. This difference was due to difference in
quantum, measurement parameters and frequency of the incentives offered to the
employees.
The employee’s attitudes towards these incentives also differed significantly. There
existed significant negative correlations between employees’ attitude towards
monetary and non-monetary incentives. When monetary incentives were offered less
than employees’ expectations, it resulted in reduction in employees’ motivation and
job satisfaction, thereby defeating their own purpose. When the monetary incentives
were offered in higher quantum and frequencies, it showed positive reflection on
Organizational Effectiveness.
Unlike monetary incentives, non-monetary incentives did not have much negative
reflection even when they were offered less in quantum. Hence non-monetary
incentives turn out to be the most cost effective method and demonstrated a positive
reflection on Organizational Effectiveness. Overall, employees preferred monetary
incentives over non- monetary incentives.
A positive correlation between monetary incentives and employee motivation was
observed which was not statistically significant. On the other hand there was
negative correlation between job satisfaction and monetary incentives. The
correlation between non-monetary incentives with both motivation and job
satisfaction was positive and significant. This was due to the fact that the correlation
was dependent on quantum of incentives as perceived sufficient or insufficient by the
employees. The employees’ tendency to take more leaves, inclination towards
alcoholism, gambling etc., were some of the negative impact on employee’s
performance resulting from the extra income earned from high monetary incentives
offered to them.
The study also reveals that employees perceived monetary and non monetary
incentives as important and necessary aspect of job towards achieving
Organizations Effectiveness. Employees also perceived incentives as a
compensation of their additional efforts that were required for achieveing
organizational goals. The incentives should be discriminative.
The regression analysis revealed that the unique and differentiating factor of this
research is that the incentive scheme should not be design solely on the basis of
employee designation alone and due regards needs to be given to demographic
characteristics like age, gender and qualification of the employees’, as they had
different inclinations and priorities. This was the major reason for failure or success
of any incentive program. It was also observed that female respondents preferred
monetary incentives over higher responsibility and promotions due to domestic
responsibilities. The second finding was that all non-monetary incentives were
valued by the employees of all age groups. As the age of employee increases, the
preference shifts from self growth to self actualization needs.
In monetary incentives bonus and increment were the most effective tools. The
monthly productivity incentives were important for increasing productivity and
achieving organization’s targets but this scheme also had negative impact on
employee health and performance. Better food and transport facilities were found
important in improving employees’ attitude, but they do not necessarily increased
employees motivation and job satisfaction. The absence of hygiene factors can leads
to demotivation and dissatisfaction.
No system can be made full proof, so are the incentive schemes, but their adverse
effect can be minimized by taking proper care while designing them and involving
employees of all the levels. Regular feedback and corrections in the scheme helped
in reducing the negative impact of the monetary and non-monetary incentive
schemes.
Though the study was conducted on shop floor employees of selected
pharmaceutical organizations the results of the study are universal and can be
applied to any type of organization where shop floor or assemble line operations are
performed.
This research indicated that non-monetary incentives were more effective in
increasing employee motivation, job satisfaction and had lesser negative impact
compared to monetary incentive schemes. Overall, depending upon the intensity,
incentive schemes were able to proportionately reduce absenteeism in employee,
accident rates and production wastage on shop floor and thus were very effective in
increasing Organizational Effectiveness in the organizations under the study.
Suggestions and Recommendations
1. Incentive scheme designing should be done on the basis of employee’s age, gender
and qualification and not only on the basis of the designation alone.
2. More emphasis should be given to non-monetary incentives supported by good
monetary incentives to have synergistic effect in increasing overall Organizational
Effectiveness.
3. The monetary incentives should be inclusive of quantitative as well as qualitative
aspects like number of days employee was present, percentage yield and nil Loss
Time Accident (LTA) to minimize the negative determinants of Organizational
Effectiveness like absenteeism, wastage and accidents respectively.
4. The emphasis should be given in formulating and percolating good non-monetary
incentives as they have very profound and sustained effect on all the employees
within the organisation. These awards should be presented on the occasion of
family get together and other social functions.
5. To encourage good team work, team awards and group incentives should be
encouraged.
6. In case of Monthly Monetary Incentives, its quantum should be in line with
performance targets. On the lower side employees should feel it worth to go for it
and higher quantum should not lead to absenteeism, accidents and bad habits.
7. The periodic feedback in the system will help to sustain the effectiveness and also
take care of negative aspect like increased stress level, employee becoming more
targets oriented than creative and innovative in their approach.
8. The incentives should be differentiating at individual as well as group levels to
generate competitiveness amongst the employees.
9. To minimise the subjectivity, the performance targets should be well spelled at all
the level. The KRA’s and measures should be well defined and quantifiable. The
scheme should be easy to understand by all and there should be choice for
employee to choose their incentive package from the available incentive basket.
On the basis of the findings of the study a theoretical model was summarised to
explain the overall reflection of monetary and non-monetary incentive schemes on
Organizational Effectiveness at individual level.
The study revealed that both monetary and non-monetary incentives were felt
necessary to achieve Organizational Effectiveness. Incentives were the fastest and
reliable mode to reach desired targets, growth and stability.
The study also opened new doors for future research on different aspect of
organizational success with respect to incentives and more data from various other
organizations to come up with new upgraded versions of incentive packages in
future.
1
Chapter – I
INTRODUCTION
1.1 Introduction to study
Economic and political situations in the world have changed rapidly. Both
developed and developing nation, even the erstwhile socialist countries like
Republic of China increasingly opted for the “Market economy”. As a result
competition in international market has become cutthroat day by day.
The recent economic slowdown world over in 2007 and crashing of world’s
largest economies like United States of America has changed the thinking of
policy makers. The stimulus package has proved to be a fire fighting
measures to minimize the damage.
When the wind of change is blowing all over the world, India cannot keep her
economy in isolation. So, by bidding good-bye to the Nehruvian policy of
centralized planning control at right time India opted for decentralization and
decontrol policy. The fundamentally protective and secured moves have
helped India to sustain in world economic slowdown.
Two decades back India also started progressing towards Free Market
economy; the country has also increasingly opened her economy to both
domestic and foreign private capitalists. India’s changed economic and
industrial policy in favour of de-licensing, decontrol, progressive relaxation of
FERA and MRTP Acts, labour laws etc. encouraged Foreign Direct
Investment and also liberalized the foreign exchange with full convertibility of
rupee as the ultimate objective.
2
As the country took these measures to achieve external stability, India is also
trying hard to limit its budgetary deficits and reduce government expenditures
particularly the expenses on export subsidies and other subsidies to a
minimum.
The economy is in the state of transition and there were very strong market
forces influencing the growth of industrial sector. The above policies have not
only brought in a lot of private direct investment but also a lot of competition
into domestic industrial manufacturing sectors in India. The benchmark of
quality of goods and services has been raised. There are lots of options for
customers to choose from and prices are very much competitive.
So, time has come where no industry or organization could withstand this
competition with obsolete technology, underutilized capacity, isteful energy
consumption, underutilized resources, de-motivated workforce and low
productivity.
1.2 Indian Industrial Scenario
India has a strong potential to grow into a modern nation within a decade or
so. It is reasonably well endowed with natural resources and is the third
largest nation in term of scientific and technically skilled manpower. Nearly
after more than sixty years of intensive efforts India has developed the ability
to produce a wide range of products and some of them are highly
sophisticated. Today Indian industries can produce from FMCG products like
soaps and toothpaste to most modern technologies like satellite launching
vehicles and robotics instruments. Not many countries in the world can boast
3
such a wide spectrum of manufacturing facilities. Despite these
developments, India has not made a significant impact on the rest of the world
as an industrial country in international market. This is mainly because of the
overall high cost of production and poor quality standards of Indian product.
1.3 Challenges in Indian Manufacturing Units
In view of changing economic situations the Indian manufacturing units are
facing various threats. External challenges like cheap products from countries
like China, Hong Kong, Korea, Taiwan and high quality products from Japan,
Germany, France, USA are like two blades of scissors. Indian customers on
the other hand are highly price sensitive and are becoming highly quality and
brand conscious.
Some other external challenges are increasing environmental concerns and
stringent pollution control norms, governmental control, procedural delays,
and local political interferences etc. Secondly, internal organizational factors
like obsolete technology, low quality potential, higher accident rates due to
lack of safety awareness, higher percentage of wastage of resources and
unionization of labor staff pose their own threats.
At individual level, low employee motivation and commitment, monotonous
nature of jobs, low job satisfaction, lack of teamwork, absenteeism, lower
wages and lack of facilities are some of the common problems that Indian
Manufacturing Sector faces today.
4
In the given situation, the topic of effective operation and survival of Indian
manufacturing organizations is receiving growing attention in the present day
competitive industrial world.
The effectiveness of an organization is mostly an internal process. In every
manufacturing organization the shop-floor is the main moving spirit. In labour
intensive country like India a worker operating the machine has a unique
importance in the success of the organization.
One of the most important reasons for stated affairs is the failure of the
country to mobilize its human resources. Till now this has not received
required attention, resulting into lack of motivation and productivity. It is,
beyond any doubt, difficult to answer the question as to which resource is
more important, capital, technology or people? All are vital. However, over the
years, Indian policy makers have applied their mind predominantly towards
more efficient management of physical resources. Little thoughts have gone
to the management of the people and that too only as a secondary effort.
Every other resource like technology, money and material becomes most
productive only if human “will” is there. Some of the experiences in India,
which were based on enhancing productivity through people, has yielded
amazing results.
Looking at the experiences of some the countries, there is a trend to place
greater emphasis on the productivity through people world over.
Now it has become increasingly clear that no organization and in turn country
can progress with its unsatisfied and less motivated manpower. This problem
5
of lack of human motivation has a pervasive influence over the entire Indian
economy and more prominently on the manufacturing sectors.
Researchers have established that recognition and acknowledgement of
human efforts is one of the best ways to motivate human resource.
With this focal understanding, the research is carried out in selected
pharmaceutical units involved in manufacturing standardized repetitive
products located in Navi Mumbai.
It is pertinent to have an overview of the pharmaceutical sector to understand
the problems closely and reasons behind selecting this sector.
1.4 Pharmaceutical Industrial Trends and Emerging Issues
In the Global Scenario, Pharmaceutical sector is one of the fastest and
steadily growing sectors in the world. It is becoming one of the core sectors of
any economy. In the present overview of global industries the pharmaceutical
market is projected to grow at the rate 4 to 6 percent exceeding $ 825 billion
in coming years (source: India Pharmaceuticals & Healthcare Report Quarter
2 of 2010). The global pharmaceutical manufacturing production needs to
grow at Compound Annual Growth Rate (CAGR) of 4 to 7 percent to cater the
increasing market demand. The rider in this industry growth is that the
industries are driven by strong near term growth in US market, based on
global macro economy. The Global Pharmaceutical market value is expected
to increase up to $ 975 billion by 2013 (source: Business Monitor International
Ltd., 2010). The changing combination of innovative and matured products,
6
more investment in research and development sector in the different regions
of the world would impact the pharmaceutical industries growth and decide
the future trends.
The Asia Pacific Trends: The Asia pacific region is emerging as a big
Pharmaceutical potential market and gaining significance in global arena. This
is the world’s fastest growing pharmaceutical market. The reasons for this
shift were attributed to low cost of production, recent improvement in
infrastructure and favorable regulatory policy changes in the region. The Asia
Pacific region has gained importance in contract manufacturing of both
Generic and APIs. More and more investment in R&D activities and
development of many new molecules has helped the industries in this region
to expand the market size to US$186 Billion in first quarter of 2009. In fact this
market is going to be the main global production hub in the next decade and
expected to grow at CAGR of around 12.6% in the next 3 to 4 years period
(source Business Monitor International Ltd., 2010).
On the other hand, pharmaceutical drug demands has grown at a faster rate
in India, China, Malaysia, South Korea and Indonesia due to the sharp rise in
disposable income and health awareness in people. They are opting for
several health insurance schemes (that ensures the sales of branded drugs)
to reduce the burden on governmental expenses on healthcare, which has led
to intense competition among top pharmaceutical manufacturing companies in
the region, which has boosted the availability of low cost drugs. China’s
pharmaceutical market will continue to grow at a 20+ % annually, and will
7
contribute 21% of overall global growth through 2013. India will be 3rd largest
producer of pharmaceuticals across the world. The Indian pharmaceutical
industry is further expected to grow by 10% in the year 2011 (source:
Business Monitor International Ltd., 2010).
Indian Pharmaceutical Industry: India’s US$14.7 billon pharmaceutical market
is reforming and is in a state of transition. As the country’s economy is
growing and has not been affected much by the global economic slump,
foreign firms are looking for increasing their presence in the Indian market.
Indian government is spending more on healthcare. The local firms are also
looking abroad for new growth opportunities in production sector. With this
trend it has been forecasted that by year 2019, a compound annual growth
rate (CAGR) of 13.77% for medicine sales in India would be achieved.
(source: Business Monitor International Ltd., 2010).
India’s attractiveness to multinational pharmaceutical has increased over the
past few quarters. The country’s score on Pharmaceutical Business
Environment Ratings has risen from 48.2 in the fourth quarter of 2009 to 52.8
in the first quarter of 2010. This has also resulted in India moving up to 9th
position in the proprietary rankings system. The main driver of this
improvement is a re-assessment of both the size and growth of the
pharmaceutical market. (source: Business Monitor International Ltd., 2010).
In recent years India’s rural market has emerged as an enormous opportunity
for drug makers and medical device firms. Although anticipated margins are
slim, volumes of units sold would be large. In an effort to become the leading
pharmaceutical firm in the domestic market, Ranbaxy revealed its intention in
8
December 2010, to penetrate the challenging rural market. Other companies
with a similar strategy include Fortis Healthcare, Novartis, Elder
Pharmaceutical and GE Healthcare.
With all these positive developments India also shared some negative
reputation for producing sub-standard drugs. In October 2009, senior
management from reputed pharmaceutical company faced prison terms for
selling a dangerous medicine in the domestic market and many such cases
are pending in the court of law. Hence, India’s manufacturing standards must
improve drastically or demand for Indian-made pharmaceuticals would
decrease.
The other major challenge is of pricing and governmental control. Price
controls cover approximately 40% of India’s pharmaceutical market. In
October 2010, it is revealed that the committee on price negotiations for
patented drugs, which is established in 2007 by India’s Chemicals Ministry,
has not yet submitted its report. The committee is formed to advice on issues
surrounding the fixing of prices of imported drugs through negotiations. It has
been unable to gather enough support for its formula due to insufficient
information on the prices of imported drugs. The ministry recently proposed
some ‘model’ for price negotiation of patented drugs, which is considered by
many stakeholders to be unrealistic.
It is also important to note that, the disease trends as per India
Pharmaceuticals & Healthcare Report (Q1, 2010), Business Monitor
International Ltd (2010) and Burden of Disease Database (BoDD) revealed
that non-communicable diseases – such as diabetes and cancer – have a
9
slightly greater burden in India than communicable diseases – such as
tuberculosis and HIV/AIDS.
In 2008, a total of 99,892,742 Diability-Adjusted Life Years (DALYs) were lost
to communicable diseases, while 116,772,455 DALYs were lost to non-
communicable diseases. This information would decide the future trends and
direction of pharmaceutical markets. (source: Business Monitor International
Ltd., 2010).
The above data shows that there are lots of challenges as well as
opportunities for Indian pharmaceutical industry to survive and grow in the
future. It is also seen that Indian pharmaceutical markets have lots of
strengths and there are some major weak links as well. First of all, before
taking a leap ahead it is important to clearly understand and analyze the
strength, weaknesses, opportunities and threats (SWOT) analysis of the
pharmaceutical sector scenario in India.
The SWOT analysis gives us an idea about strength and weakness related to
the internal environment of pharmaceutical industry, whereas opportunities
and threats are related to external environment.
Strengths of Indian pharmaceutical market are:
massive pharmaceutical market growth potential
highly reliant on modernization and reform
strong local manufacturing sector with leading domestic players
establishing a notable international presence
low-cost and skilled English-speaking labour force
10
long-established trade patterns with Western Europe and the US; and
swift market approval times
Weaknesses which are constrains for Indian pharmaceutical market:
it is among the least-developed pharmaceutical markets in Asia with
extremely low per capita consumption
opaque and biased government drug pricing and reimbursement policy
highly price driven market
underdeveloped healthcare infrastructure
vast regional disparities in healthcare coverage
lack of comprehensive drug reimbursement
movement away from original drug research would lower future
margins
many multinationals already selling their products at reduced prices
multiple taxation, reducing the profit margins
lack of good manufacturing practices
poor quality and safety standards compared to other countries
Opportunities in pharmaceutical market are:
robust generic and OTC drug market growth, with the latter benefiting
from expected liberalization of sales channels
large and growing population boosting pharmaceutical and medical
demand, underdeveloped market for chronic illnesses and diagnostics,
the recognition of pharmaceutical patents from January 2005
rising demand for generic drugs in its Asian neighbors, and globally
11
ongoing Free Trade Agreement (FTA) negotiations with the Association
of South East Asian Nations (ASEAN) group of countries
increased demand for Active Pharmaceutical Ingredients (APIs)
production in India
increasing Research and Development (R&D) activity by domestic
firms
global expansion of local manufacturing companies by improving
quality and safety standards
increased public funding for disease eradication programs.
political changes in the US to promote use of Indian generic drugs and
its demand.
Threats faced by the pharmaceutical market included:
failure to properly enforce World Trade Organization (WTO)-compliant
patent legislation for drugs
drugs manufacturing standards and high cost
government failure to revise its opaque and discriminatory pricing and
reimbursement policy
need for overhaul of healthcare delivery structures hampering better
access to medicines
government plans to impose further price controls on essential
medicines
India’s patent laws threatened by litigation
considerable counterfeit drug industry and low quality.
12
manufacturing problems pose threat to Indian generic exports,
especially to the US.
The above analysis of Business Monitor International Ltd., (2010) has clearly
stated that apart from the environmental and external changes which Indian
drug manufacturing companies not has much control. They needed to focus
more on internal processes to make it more effective in terms of quality and
cost to match the world standards i.e. quality of US and European countries
and price of Asia Pacific countries like China, Malaysia, South Korea and
Indonesia.
As discussed earlier the need of the hour is to increase Organizational
Effectiveness by enhancing employee motivation, reducing production
wastage and nil accidents on shop floor are the foremost important steps for
all the Pharmaceutical Industries in manufacturing sector. Incentives play an
important role in achieving the organizational goals.
Emerging issues in Indian Pharmaceutical Manufacturing Sector: While
going through the literature review and discussion with experts in HR and
operations some serious issues and concerns have emerged. These are lack
of interest and attachments of employees towards their organization resulting
into high attrition rate in pharmaceutical sector. Use of obsolete technology,
poor quality standards, lack of safety awareness leading to increase in
accidents on shop, production wastage cutting down the productivity and
profit margins, lack of personal values, involvement at individual level,
repetitive and monotonous type of work, lack of encouragement for innovation
and creativity at shop floor.
13
All above mentioned issues if not resolved in time, the future of
pharmaceutical manufacturing units would be tough and difficult to manage.
1.5 Role of Incentive
The above discussion shows that the organization need to improve its
manufacturing standards to increase its effectiveness and the incentives could
be reliable time tested solution. It could lead to win - win situation for both
employer and employees. In a debate of Monetary versus Non Monetary
incentive scheme researchers have given conflicting views. The non-
monetary incentives in the form of rewards and recognition like better
facilities, certificates, awards, trophies, learning opportunity and added
responsibilities have great impact on employees moral and performance.
Some researchers found that the performance if linked with monetary
incentives like – gain sharing, company shares or other monetary incentive
schemes directly benefits all sections of the employees and it has a powerful
and sustained effect. The debate over advantages of monetary incentive and
non-monetary incentives schemes is sometimes biased towards monetary
incentives. Some of the points have been discussed as under:
In non-monetary incentive schemes, out of many aspirants of the particular
award only one, two or few are awarded and others whose work may be
almost equally good may miss it. So there is always a possibility that they
might get a feeling of discrimination or even victimization. But in the case of
MIS more of less everybody gets his share of reward for hard work. So the
chances of people getting de-motivated are very less. At the same time as
14
rewards are directly related to performance, everybody tries to improve
his\her own performance.
Also the effects of the MIS are more direct and tangible i.e. quantifiable than
non-MIS. The motivating effect of the MIS likely to be more sustained, and
better performance is expected from the employees in future because
monetary incentives are totally related to job performance and are more result
oriented. But in the case of non-MIS like- awards, prizes or promotion, there is
no guarantee that employee will maintain or improve his performance after
award or promotion and in this case the organization cannot take away the
award, facilities or promotion already given to the employee. The non –
monetary incentives are very cost effective and have a high social and
psychological acceptance in the society.
As the views are conflicting hence, in the present work we propose to study
the impact of monetary incentive and non–monetary incentives in the
pharmaceutical sector especially in production unit.
1.6 Organizations under study
This study is conducted in three pharmaceutical organizations located in Navi
Mumbai industrial area. The Manufacturing Facilities are conveniently located
at Thane Belapur MIDC zones. Thane Belapur MIDC zones is a prime
location and one of Asia's biggest industrial areas which has also been
declared as Special Chemical Zone (SCZ). This area is very close to India's
Economic Capital Mumbai. It is well connected by Road, Sea and Air (Sahar
International Airport & Jawaharlal Nehru Sea Port). This area is located out of
Octroi limits of Mumbai.
15
Three pharmaceutical organizations were selected including one large, one
medium and one small scale organizations each. The characterization is
done on the basis of financial turn over, size and number of permanent
employees presently working in the unit. As this research deals with highly
sensitive and confidential data like wage structure and incentives offered,
accident rates of the organizations, a written assurance of complete secrecy
i.e., non disclosure of names of manufacturing unit while sharing the data is
given to these industries.
TABLE 1.1: Incentives offered in three organisations
Type Incentive descriptionOrganization
Large Medium SmallMonetary Annual Increment Incentives Annual Bonus
Medical Reimbursement XLTC Subsidized Transport Subsidized Canteen (% Subsidy) Monthly Productivity Bonus Children Education allowance X
Non-Monetary Best Worker of the month award Incentives Award for cleanest Department
Nil LTA award Name on notice board Higher certification training Long service emblem X Department Picnic X Children felicitation ( Achievement) X Family get together X Million man hour award XPresenteeism reward X Production target Quality production (yield)
Means scheme is present and X means scheme is absent (Source : Own data Collection)
16
The selection of the organizations is a very critical aspect of the study. The
organizations selected have similar types of incentive schemes and in line
with prevailing schemes in the region. The incentive schemes available in the
three organizations is given in table no. 1.1
The “Small Organization” selected under this study is a private limited
company manufacturing pharmaceutical formulation. It is a family run
Business personally looked after by the proprietor.
The pharmaceutical company has a mission to improve quality of life and
increased life expectancy of patients by combating disease for complete cure.
To become the world’s most valued company to patients, partner, customers,
business associates and investors for being an ethical company. The
company has WHO-GMP Certified manufacturing facility.
The business of manufacturing and marketing of pharmaceutical formulations
of Liquid Orals, External Preparation like Ointment / Creams / Gels / Lotions,
Herbal / Ayurvedic and Veterinary preparations in Liquid, Powder, Tablet,
Capsules and Injection form.
The company started its commercial operation from 2000 with capital
investment of INR 10 Crores is now worth INR 90 Crores Company.
The sole manufacturing unit operating in the MIDC has set up facilities to
manufacture 24 million units of Liquid Orals and 12 million units of Ointments
per month.
Quality is not a departmental obligation. It is significant to everything and
everyone in the organization. To ensure Total Quality Management, the
17
Quality Assurance (QA) department in the factory is autonomous in its
functioning. The concept of quality adopts a wider view of quality, and is not
only confined to compliance with specifications. The principles of quality
assurance are applied to all activities and systems with continuous evolution
and improvement so as to generate customer confidence. The highest
standards of quality are consistently achieved every time.
The strong and modern HR management ensures that, everyone, in all
aspects of business, is committed to achieving the quality and safety
requirements.
Company's quality policy incorporates the concept of in process quality
assurance, GMP, Quality Control of production and release of the finished
products.
The company has a business tie-up with five ‘Fortune 500’ pharmaceutical
multinational companies. The company has an Export Tie-Up internationally
with companies in Nigeria, Mexico, Sri Lanka, Mauritius (Ministry of Health -
Government of Mauritius), Maldives and Bangladesh.
The owner of the company takes personal interest in day to day activities.
There exists a strong appreciative culture and team work in the organization.
The employees are never laid off during economical crisis and they are
offered alternate jobs. The employees are flexible enough to shift to cattle
feed manufacturing for small period at the time of economic crisis. The
employee turnover is very low and the employees who left the company in
want of better pay came back and rejoined at the previous pays. Most of the
18
employees are old and from the time of formation of the company, the
company has very committed workforce.
No Workers Unions exist in this organization and workers can directly
communicate with the management and their needs are taken care.
Employee turnover is very low in this company.
For an employee, working in the company means prospect for ample learning
and growth. It offers avenues to work freely across the company in very
friendly and family atmosphere with best culture. They are offered challenging
assignment, good working environment, professional management,
competitively lower salaries than their counterparts in other industries along
with exponential rewards with the growth of the company in the form of direct
monetary and non- monetary incentives in both group and individual
excellence and target achievement. The company targets to double its profits
by 2013 and to grow its worth by INR 200 Crores by 2015. Company is
planning to put one more unit in tax exempted states by 2012.
The “Medium Organization” under the study is a private limited company.
Biopharmaceutical manufacturing unit is the flagship company of the Group of
companies, formed to facilitate quality healthcare through its highly
specialized range of pharmaceutical products / formulations in the domestic
and export market. The company excels in animal and human insulin and
other dosage forms such as tablets, capsules and other injectable ampoules
and vials in different specialty segments such as Diabetology, Cardiology,
Anti-inflammatory, Anti-biotic etc.
19
Prime among these are the human Insulin formulation, manufactured in
collaboration with multi-national giant. The company, along with its London
based associate company is aiming for a higher stake in the global
pharmaceutical market, especially in human Insulin formulations. The
products are registered in over twenty countries and are in the process of
registration in more than 60 countries worldwide.
This medium organization selected in the study is having annual financial
turnover of INR 100 Crores of the particular unit in the study and having a
group turnover of INR 500 Crores. The group is enlisted in the top five
hundred pharmaceutical industries of India. The manufacturing includes
tablets, Solid orals, Liquid Injections, Dry Powder Injections. The unit is
basically formulation plant operational from last twelve years. At present there
is no expansion plan in pipeline. The capacity utilization is 95% of the rated
capacity. The company has WHO –GMP approved facility and ISO
certification.
The company has very strong Workers Unions with local political influence.
Salary revision negotiation is done every four years and the communication
with the management is only through unions.
Very high employee turnover is observed especially in managerial and
supervisory cadre.
For an employee, working in company means prospect for learning with the
company. It offers avenues to work in specific departments. The company has
very disciplined atmosphere with formal culture. They are offered challenging
assignment, good working environment and professional management,
20
competitively moderate salaries than their counterparts in other industries
along traditional routine rewards in the form of direct monetary and non
monetary incentives in both group and individual level on target achievement.
The “Large Organization” selected in the study is a public limited company
enlisted in the top thirty pharmaceutical industries of India. The manufacturing
unit is more than 20 years old and product includes tablets (general tablet,
exports, coatings, granulations) Ointments, Liquids, capsules and bulk drugs.
The capacity utilization is 98% of the rated capacity.
This Organization commenced operations in 1988, and is engaged in
manufacturing of drug formulations in the therapeutic areas of woman
healthcare and wound management. It also manufactures APIs and generic
drugs in small quantities. Pharmaceutical company is a large-sized player
following the non-infringing business model of either in-licensing products of
innovator companies or manufacturing off-patented drugs. It has entered into
marketing and manufacturing alliances with 28 international companies to
launch their research-based products in India. The company is successful in
building its brands in niche categories. This pharmaceutical company is the
market leader in calcium supplements, wound healing and injection B12
vitamin. The company’s top five brands contribute 44% of its total sales. Over
95% of its revenues are generated from the domestic market. While it is
aggressively marketing its existing products to new markets, it is also
enlarging its presence in more therapeutic areas by launching new products.
In year 2007, the company acquired 20% in UK-based Health Care Company,
giving it access to the latter’s multiple brands. The company is also
21
completing the acquisition of Bulgaria-based Company, which would enable it
to increase its revenues by around INR 120 Crores per year from the present
fiscal. It has recently in year 2008 added new manufacturing facilities and
plans to commission new units. It is also focusing on contract manufacturing,
primarily through its alliance partners. Exports currently account for just 4-5%
of its total revenues. The company expects to maintain its payouts at 20-25%
of its profits in future. On the back of its capacity expansion, increased
product profile and expanding global footprint, it plans to grow 30% yearly to
achieve a turnover of INR 1,200 Crores by 2015.
This robust healthcare company has accelerated the growth of fast moving
health goods (FMHG) in India. And the companies having such a product
bunch of offerings and is cashing in on the good times. The company has just
the right mix of drug formulations, FMHG and Active Pharmaceutical
Ingredients (APIs). This pharmaceutical company is increasing its focus on
the rural market. The Mumbai-based company that largely makes active
pharmaceutical ingredients plans to increase its sales by 8-9% mainly from
rural areas and has allocated INR 40 Crores to strengthen the sales force for
this segment. Mid-sized drug maker, which has mainly been an urban-centric
company, has seen an increase in prescriptions from smaller cities, a trend
that prompted their entry into this segment. It has set up a rural marketing
division to tap this segment. The company plans to tap the market via
“Vehicle tours” where vehicles stocked with medicines visits doctors in rural
areas to enable them to re-stock their in-house pharmacies and improving
skills of rural doctors by arranging for visits by city doctors in interior areas for
22
training. It is targeting categories such as anti-peptic ulcerates anti-malaria,
anti-infective and coughs medication. It has proposed to market its big brands
as well as niche brands in rural segment. The company has a large basket of
products for women’s healthcare, pain management and lifestyle diseases,
which it plans to market in rural areas by 2012. It is expected to contribute
about 15% of total revenue by 2012. The company adheres to many
international quality and GMP and safety standards.
The organization is having very strong HR Polices in practice they treat
employees as an equal partner in the process of Business of the Organization
and facilitate the growth of the Organization through value added HR
initiatives.
The HR strategy identifies its key objectives: “To get the best people on the
board, retain the best people and to develop them.” Company strongly
believes in human resources, organization and respect for people, empathy,
empowerment, quality and professional excellence - "quality staff delivering a
quality service"
Expected key behaviors for an employee are: Work as a team, Encourage
creativity, View change as positive and act for the long term benefits, accept
personal accountability and display a "can-do" attitude and commitment to get
the job done, accept responsibility for individual actions and results, focus on
being part of the solutions, seek out opportunities to grow by asking for ideas
and input from others, admit mistakes and learn from them and appreciate
and acknowledge the strengths of others, communicate openly, value
23
diversity of ideas, encourage others to express their views, act consistently
with our words listen for understanding and communicate clearly and
honestly.
This organization is having strong workers Unions with political affiliation;
salary revision negotiation is done every four years. The communication with
the management is only through unions.
Low employee turnover has been notice especially in managerial, supervisory
and workmen cadre. The employees are working since inception of the unit.
Recently major recruitment was done for expansion projects in 2005-06.
For an employee, working in company means high prospect for learning &
development. It offers avenues to work across the globe alongside the finest
minds. They were offered challenging assignments, world class working
environment, professional management, competitive salaries along with
exceptional rewards in the form of direct monetary and non monetary
incentives in both groups and as individual on production target achievement,
good quality product, cleanliness and new ideas implementation. (Source:
Officially published records and interaction with officials)
1.7 Reasons for selecting the problems
The topic of effectiveness of incentive package is routine but very
fundamental in nature. New management principles will come but the topic of
changing human needs and its gratification has always fascinated the
researchers.
24
Various studies on incentives have given interesting as well as conflicting
results. As per these studies, the employees do not work only for money to
satisfy their basic safety security needs but “a pat of appreciation” on their
shoulders can work wonders in enhancing employees’ performance. Better
compensation and benefit packages, performance-linked reward schemes,
employee stock ownership options, interactive communication, recognition
and acknowledgement of human efforts, providing better and safe working
conditions, fair performance evaluation etc. are the some of the ways towards
Organizational Effectiveness through employee’s motivation. It has been
observed that incentives played a vital role in organizational successes. It
has also been observed that these studies have not answered the basic
questions that is “ Why the same incentive scheme in same organization has
evoked different responses from its employees?”, Secondly, “Why the scheme
that performed excellent in one unit of organization failed to evoke similar
response in another unit of same organization?”
Organizations today are offering various incentives to their employees due to
various reasons like market competition, legal obligations, union demands
and old practices. So, in the present situation it has become very important to
study the effectiveness of these incentives packages offered and its present
relevance as a tool towards improving Organizational Effectiveness. This
study intends to analyze the impact of some of the incentives on selected
aspects of Organizational Effectiveness at individual level and find out
measures to improve their effectiveness in the organizations.
25
Does employee’s age, gender, designation, type of organization, individual’s
aspirations, and attitude towards monetary and non – monetary benefits has
reflection on performance of any incentive package? The motivational tool,
which was most effective till yesterday, may not motivate today. A need is felt
to study and validate the efficacy of present day incentives with data and
analysis at the present times.
View above, this research is aimed at understanding the underlying principles,
trends and might help in upgrading and come up with new versions incentive
packages to make it more relevant and futuristic in pharmaceutical
manufacturing industry. The reasons for selecting pharmaceutical sector
were: a) It is well established and organized sector. b) Industries are growing
steadily and have less impact of global economic slump. c) There are many
international players in this sector which make it highly competitive and the
findings of the study would be of international standards which would be
universally applicable globally d) The employee turnover is high compared to
other manufacturing sector and incentives in real sense inevitable and plays a
very significant role in attracting, retaining and exploiting the best talent in the
employees willingly. e) Researcher’s 16 years close experience in shop floor
operation and graduate level study in pharmaceutical sciences.
The present work is a modest attempt to find answers to the questions raised
earlier in this section and to fulfill the objectives of the study. The limitations of
the study are mentioned in next section.
26
Chapter – II
LITERATURE REVIEW
ORGANIZATIONAL EFFECTIVENESS AND ITS DETERMINANTS
In this chapter an attempt has been made to conceptualize the notion of
Organizational Effectiveness and to understand the evolution of concept by
analyzing the available older literature and the present researches. Relevant
literature review has been undertaken on important constituents of
organization effectiveness like motivation, job satisfaction, accidents and
absenteeism. Some light has also been thrown on incentives and their types.
An overview of the interrelationships among these concepts has been
presented. These components form the basis of the present study on
Organizational Effectiveness.
2.1 Organizational Effectiveness (OE)
Most of the organizational analysts thought that pursuit of Organizational
Effectiveness is the basic managerial responsibility, but there is a notable lack
of consensus on what the concept itself means. A study of OE is difficult
because of several reasons some of them are:
a) The multiplicity of goals and the apparent incompatibility of some of
them pose a great problem in developing a right criterion of effectiveness.
b) All organizational goals are not always tangible; hence there is difficulty
in measurement of these intangible goals.
27
c) There is no way to estimate the degree to which good variables other
than organizational elements might have contributed to achievement of
certain objectives.
d) Another problem is that of the frame of reference. Often people try to
apply their own yardstick to assess the organizational failure and success and
there is no standard frame.
e) The criterion used to measure organizational efficiency may not be
sufficiently stable. The instability in environment precludes the possibility of a
long lasting general set of performance indicators on which managers,
administrators and researcher can rely (Sharma, 1982).
Some of the organizational analysts have tried to identify relevant facets of
effectiveness that could serve as useful evaluating criterion.
Steers (1976) has reviewed 17 difficult approaches to assess OE, but found
general absence of agreement among these factors. The criterion used in his
17 factors model is the criterion of “Adaptability – Flexibility – Productivity.”
Schein (1989) has tried to resolve the dilemma by acknowledging that every
system has multiple functions and also exist in an environment that provides
unpredictable inputs. A system’s effectiveness can be defined as its capacity
to survive, adapt, maintain itself and grow regardless of the particular function
it fulfills.
Karls and Kann (1978) explained OE as maximization OE returns to
organization by all means. Maximization in the economic and technical sense
has something to do with efficiency. On the other hand, maximization by non-
28
economic or political means (Tariffs, union busting, monopoly, etc) increases
the effectiveness without adding to the efficiency. The increase in
effectiveness by both the means is typically seen as organizational growth,
organizational endurance and survival and organizational control over the
surrounding environment, conservation and storage of energy. Rice (1958,
1963) and Trist (1963) have also argued for this concept. Georgopolus,
Mahoney and Jone (1957) have defined OE in terms of goals as well as the
path to reach the goal.
Etzioni, A., (1960) has stated the systems model of effectiveness as a “pattern
of inter-relationship among the elements of the system which would make it
most effective in the service of a given goal”. This concept refers to
recruitment of means, maintenance of tools and the social integration of the
unit.
Georgopolus & Tonnenbaum (1957) revealed that effectiveness can also be
interpreted in terms of a) Productivity, b) Intra-organizational strain as
indicated by the incidence of tension and conflicts among organizational
subgroups and c) Organizational flexibility.
Selznick (1948) has also suggested multidimensional approach, which, in
addition to achievement of its objectives, includes the internal system as well
as its relationship to the environment.
Argyris (1964) has also given a similar concept defining organizational
commitment. He has put forward three core activities to increase
effectiveness. These are the activities of achieving the objectives of the
29
organization, maintaining itself internally and constant or increasing level of
effectiveness with the same or decreasing inputs of energy.
Bennis (1962) has given the clearest statement of the effectiveness criterion.
He has introduced these ideas in relation to the traditional approaches of
measuring outputs and satisfaction at a given point of time and he introduced
more general concept of “Health” which included criteria like adaptability, a
sense of identity, capacity to test reality and integration.
Integrating all these concepts of Organizational Effectiveness as propounded
by the various organizational and behavioral theorists, it is possible to
emphasize some of the behavioral characteristics of Organizational
Effectiveness, such as, a favorable or functioning in a particular unit. The
adaptation of organization to the internal and external need, i.e. motivation
through need satisfaction, psychological commitment to the goals and values
of the organization, safe operating practices and increased productivity by
curtailing in stages are some of the traits required for the effectiveness of the
organization.
The analysis of present day literature has been carried as below:
Aubrey L. Mendelow (1983) argued that the organizations would require being
effective in more than just the shareholder dimension. For an organization to
achieve effectiveness, its management has to know who would be judging
effectiveness, and the criteria on which this judgment will be based. The
article suggests that an analysis of the needs of an organization's
stakeholders fulfills this requirement. The stakeholder needs, and the power
30
bases from which they derived these needs, were useful inputs to the
strategic planning process and those organizations aligned its strategies in
the direction of stakeholder needs both internal and external to business
environment.
Kim Cameron,(1986), discussed ‘arguments and conflicts’ in concepts of
Organizational Effectiveness. Researcher has summarized the consensual
characteristics of effectiveness which is mainly an ‘agreement to disagree’.
Conflicts are centered mainly on the incompatibility and inappropriateness of
commonly selected criteria. The main theme of the paper is a discussion of an
inherent, but largely ignored, characteristic of effectiveness in organizations -
the paradoxical nature of effectiveness criteria. This discussion illustrates that
the most effective organizations are also those characterized by paradoxes-
i.e., contradictions, simultaneous opposites, and incompatibilities.
William M. Evan (1997) identified four dimensions of organizational hierarchy
as inequality of skills and knowledge, inequality of rewards, inequality of
authority, and inequality of information distribution. Instead of the prevailing
and largely untested hypothesis that hierarchical structure is positively related
to Organizational Effectiveness, an alternative hypothesis is formulated, viz.,
that it is negatively related. This hypothesis is linked to a causal model
interrelating hierarchical structure with work alienation, organizational
commitment, and Organizational Effectiveness. The four-dimensional concept
has then been used to assess the burgeoning literature on industrial
democracy. The phenomenon of "shop-floor democracy" has been
conceptualized as involving a process of de-stratification with respect to all
31
four dimensions of hierarchy. In view of environmental pressures for the
rationalization of organizations as well as the secular trend in this direction, a
destratification-rationalization hypothesis is formulated: As the positive slope
of the relationship between these two clusters of variables increases,
Organizational Effectiveness will increase and work alienation will decreases.
Researcher further said that to test this hypothesis via an experimental
approach, whether in the laboratory or in the field, is essential.
Robert J. Vandenberg, Hettie A. Richardson, Lorrina J. Eastman, (1999),
approached 3,570 participants across 49 organizations and examined the
impact of work processes upon Organizational Effectiveness. The analyses of
the study supported that the collection of organizational practices positively
influenced work processes. The study also concluded that the high
involvement processes (like work incentives, process reengineering)
influenced Organizational Effectiveness, which has been defined through
return on equity [ROE] and turnover, both directly and indirectly through
positive influence on employee morale.
Kai-Alexander Schlevogt (2001) uncovered the geo-economics of successful
strategic management in sub- culturally diverse countries. The study
examined geographical differences between two cities in the North and South
of mainland China with respect to key factors leading to Organizational
Effectiveness. Survey data from 124 enterprises in the two most important
cities of China, Beijing and Shanghai were analyzed. Significant differences
were found in the impact of government support (more important in the North)
and company size (more important in the South). To achieve high
32
performance in China, practitioners must develop regionally adapted
strategies, management techniques and performance benchmarks which fully
consider and leverage the varying success factors in different subcultures.
More generally, the results highlighted the importance for researchers of
strategy and organization to analyze regional differences that might get
hidden at the aggregate data level.
Eric J. Walton, Sarah Dawson (2001) explored managerial perceptions of
Organizational Effectiveness and whether they have similarities with
perceptions of academics. The results suggest that the same values organize
the patterning of effectiveness criteria in managers and academics. It is
established that since managers play any part in influencing effectiveness in
organizations, hence incorporating their views into models of Organizational
Effectiveness is likely to improve the understanding of organizational
functioning.
Dean Elmuti (2002), in his article spoke about supply chain management and
enhanced competitive performance by closely integrating the internal
operations within a company and effectively linking them with the external
functions of suppliers and channel members. This study is undertaken to
evaluate the impact of supply chain management on overall Organizational
Effectiveness and to identify problems that affect supply chain management
success. The results show that organizations generally consider themselves
successful at managing their supply chains. However, while they have
achieved significant improvement in organizational performance, they have
not reached the order of magnitude of improvements ascribed to supply chain
33
management. The article emphasized that the supply chain management in
internal operations like purchase of raw material and delivery of finished
product needs integration with external environment like customer demand,
time schedule that can lead to better Organizational Effectiveness.
Gedaliahu Harel, Shay Tzafrir & Yehuda Baruch (2003) conducted survey
among 102 Israeli organizations to evaluate the impact of promotion of
women employees into managerial positions on OE. The literature of three
streams of management which were i) human resource management (HRM),
ii) women in management and iii) Organizational Effectiveness – after that
model is developed bringing these perspectives together into a single
comprehensive framework. The model suggested positive associations
between HRM practices and fairness in promotion of women in an
organization. The findings indicated a significant and positive association
between high-quality HRM and fairness in the promotion of women in
organizations. Fairness in the promotion of women into managerial ranks is
also found to be associated with higher Organizational Effectiveness. The
study indicated the importance of women employees in managerial rank that
improved quality of HRM and in turn Organizational Effectiveness.
Joseph McCann (2004), in his research paper ‘ Organizational Effectiveness:
Changing Concepts for Changing Environments’ explained the role of
environments in driving organizational performance, the dramatically
increasing levels of complexity and rates of environmental change creating
major new demands for organizations. These demands require equally new
capabilities and skills and hence, the concepts of organizational agility and
34
organizational resiliency are becoming the focus of Organizational
Effectiveness studies. The researcher further found out that the organizations
that achieve the closest fit or alignment between its larger environment, its
overall strategy, and its organizational design has outperformed all its
competitors.
Joseph McCann, (2004) said that Organizational Effectiveness has always
measured how successfully organizations achieve their missions through their
core strategies. Organizational Effectiveness studies are concerned with the
unique capabilities that organizations develop to assure the success. In given
increasingly complex environments in which all organizations operating, the
capabilities that supported past performance may not work as well in the
future. HR professionals and senior executives must understand the
implications of this gap between current practice and emerging needs.
Organizations can continue to achieve superior performance by developing
more adaptive capabilities and skills if they understand what is happening in
organizational environments and boundaries.
Jessica E. Sowa, Sally Coleman Selden, Jodi R. Sandfort, (2004), introduced
a Multidimensional and Integrated Model of Nonprofit Organizational
Effectiveness (MIMNOE). The model captures two prominent dimensions of
Organizational Effectiveness, i.e. Management Effectiveness and Program
Effectiveness. This framework can be used empirically; the article proposes
the interrelationships between the multiple dimensions in the model important
for overall Organizational Effectiveness. The models developed by the
authors is useful for both scholars and practitioners because it requires
35
attention not only to program outcomes (Program effectiveness), but also
equally to the factors that influence those outcomes (Organizational
Effectiveness).
Jean-François Henri, (2004), attempted to bridge the gap between the
Organizational Effectiveness (OE) models developed in the field of
organizational theory and the performance measurement models presented
within the management accounting literature. The specific evolution of these
two complementary streams of research stemming from two different fields of
research were reconciled and integrated by analyzing their convergences and
divergences. Researcher further said that as a response to theoretical and
practical pressures, the evolution of OE models reflects a construct
perspective, while the evolution of performance measurement models mirrors
a process perspective. Performance measurement models have moved from
a cybernetic view whereby performance measurement is based mainly on
financial measures and considered as a component of the planning and
control to a holistic view based on multiple non-financial measures, where
performance measurement acts as an independent process included in a
broader set of activities. The study contributed to the development of
performance measurement models that can be used of judging overall OE
and opens large unexplored fertile areas for future research.
The introductory paper by Francisco Gil Carlos-Marı´a Alcover, Jose´-Marı´a
Peiro´ (2005) aimed to provide a contextualization of recent research and
applications on work team effectiveness in organizational contexts carried out
in Spain and Portugal that were the main trends in the international scene.
36
Reviewing this work, four major trends are identified that synthesize the key
concerns of researches in both countries: work teams and new
information/communication technologies; intra- and inter-group conflicts in
organizational contexts; definition, dimensions and measurement criteria for
work team effectiveness; and teams in innovation and change processes.
Kim Cameron (2005) in the working paper series of “Organizational
Effectiveness: Its Demise and Re-emergence through Positive Organizational
Scholarship” introduced one of the most recent and intriguing substitutes for
effectiveness research, which researcher said has come from a new
movement in the organizational sciences referred as Positive Organizational
Scholarship. Positive Organizational Scholarship (POS) is concerned primarily
with the study of especially positive outcomes, processes, and attributes of
organizations. POS did not represent a single theory, but it focuses on
dynamics that were typically described by words such as excellence, thriving,
flourishing, abundance, resilience, or virtuousness. POS represents a
perspective that includes instrumental concerns and puts an increased
emphasis on ideas of “goodness” and positive human potential. It
encompassed attention to the enablers (e.g., processes, capabilities,
structures, methods), the motivations (e.g., unselfishness, altruism,
contribution without regard to self), and the outcomes or effects (e.g., vitality,
meaningfulness, exhilaration and high quality relationships) associated with
positive performance. POS is distinguished from traditional Organizational
Effectiveness studies in that it seeks to understand what represents the best
of the human condition.
37
Matthew H. Roy, Sanjiv S. Dugal, (2005) Developed a conceptual model
which is used by many organizations in an attempt to use gain-sharing as a
means to increase organizational effectiveness. A review of the empirical
literature provided support for the model presented. Findings of the study
were Gain-sharing can be an important and successful intervention for many
organizations. The key to success has been involving all stakeholders in the
development of the plan, developing an easy to understand formula for
sharing gains, maintaining transparency, and ensuring that the plan's goals
are in line with the organization's goals is found to be very important.
Kingma (2006) said effective performance measurement is a complex subject.
It has been established that performance measurement can influence
decision-making and behavior of the employee largely. However, unless there
is clarity and transparency about the way performance is assessed and a high
level of confidence among workers that the measures are both fair and valid,
their introduction of any incentives may act as a disincentive, or worse, a
perverse incentive and can reduce the Organizational Effectiveness.
Sanjay K. Pandey, David H. Coursey, Donald P. Moynihan, (2007) in their
academic work evaluated the implications of red tape on organizational
performance. This article proposed and tested the model of Organizational
Effectiveness that explicitly accounts for red tape and the mitigating effect of
organizational culture. This multi method study used both quantitative data
from questionnaires and qualitative data from in-depth interviews. Findings of
the study suggested that red tape in human resource systems and information
systems has a negative effect on Organizational Effectiveness. However, a
38
dimension of organizational culture mitigates the negative effects of
bureaucratic red tape.
Holtmann, M. and Grammling, M. (2008), in their study on “Organizational
Effectiveness: A New Reality” uncovered the ways to create Organizational
Effectiveness and ensure sustainability. Study said business leaders needed
to focus their attention on aligning their people, the systems, the structure and
roles with the organization’s strategy, while engaging their employees with
their jobs and with the organization. Every organization, regardless of industry
or country, seeks to be more effective and achieve superior results. Business
strategy needs to be developed enough to achieve through incentives. It
amounts to nothing, if it remains on the drawing board and is never executed.
Execution occurs when structure, roles, capability, leadership, systems, and
culture are all pulled together and aligned with the strategy reflecting in
incentive plans. One without the other will create misalignment and success
would not be realized. This challenge brings a substantial benefit that ensures
survival in a downturn and creates a competitive advantage when economic
upturns arrive. Business can’t afford not to get it right.
Robert D. Herman, David O. Renz, (2008) analyzed researches in the field in
OE and reported nine conclusions, about the effectiveness of public benefit
charitable, nonprofit organizations (NPOs). The article concluded by stating
implications of some of the important determinants towards achieving
Organizational Effectiveness were organizational practice, boards and
governance practices, program evaluation, including program outcomes
assessment, capacity building and capacity builders.
39
Nicholas Andreadis (2009) said that to create and develop the capability of
their organization is the challenge for leaders. Leaders must perceive and
manage their organization as a dynamic, open system where learning is the
core competence underlying innovation, growth, and sustainability. The first
work of leadership is creating a culture of learning and competition to improve
organizational effectiveness in any organization.
Greenberg, Ralph H, Greenberg, Penelope Sue, Mahenthiran, Sakthi, (1993),
researchers studied the impact of Computer-Mediated Communication
(CMC) on decision-making. They said that CMC has the potential in
interaction with the organization's management control system and has just
recently received attention. A laboratory experiment was used to examine the
interactions between two treatments: face-to-face negotiations versus virtual
(computer-mediated) negotiations. Results indicated that while virtual
negotiations were more efficient in terms of time than face-to-face
negotiations. However, results also indicate that virtual negotiations were less
effective in terms of optimal quantity (organizational efficiency) than face-to-
face. Virtual negotiations have the unintended consequence of reducing the
effectiveness (organizational profitability) of the negotiations. The author
upheld the direct interaction with individuals for better Organizational
Effectiveness.
Wei Zheng, Baiyin Yang and Gary N. McLean (2010) carried out a survey of
301 organizations with the basic understanding that the practices of
knowledge management are context-specific and they can influence
40
Organizational Effectiveness. The study examined the possible mediating role
of knowledge management in the relationship between organizational culture,
structure, strategy and Organizational Effectiveness. The results suggested
that knowledge management fully mediates the impact of organizational
culture on Organizational Effectiveness, and partially mediates the impact of
organizational structure and strategy on organizational effectiveness.
Job satisfaction and involvement were other important behavioural
characteristics of effectiveness, because without these, there will be apathy,
absenteeism and turnover. The important constituents of Organizational
Effectiveness like motivation, job satisfaction, absenteeism, accidents and
wastage have been explained in coming sections which were used in the
present study of Organizational Effectiveness.
2.2 Motivation
Employee motivation was found to be one of the very effective tools towards
organizational success. The content theories of work motivation attempted to
determine the factors that motivate people at work. The content theorists were
concerned with identifying the needs/drives that people have and how these
needs/drives could be prioritized. They depended on the type of goals that
people strived to attain in order to be satisfied and perform well. Incentives
play a major role in motivation of the people. Incentives include working
condition, security and perhaps a democratic style of supervision. The school
“human relations” focuses this aspect. Money also formed a significant
component of incentives. The scientific management school gives this
41
thought. More recently, the contents of motivation has been somewhat
widened to include parameters such as “higher level” need, self-esteem
satisfaction and self-actualization (Maslow), responsibility, recognition,
achievement and advancement (F. Herzberg), growth and personal
development, etc. (Alderfer).
Abraham Maslow (1943) outlined the element of an overall theory of
motivation. Conclusions have been drawn chiefly on his clinical experiences.
He thought that a person’s motivational needs could be arranged in
hierarchical manner. In essence, he believed that there were five need
hierarchies starting from most basic physiological needs like hunger, thirst,
sleep and sex etc. which is followed by the safety needs. In this connection he
stressed the emotional as well as physical safety factors. After these needs
gets satisfied what came next in series is “love” or “belongingness needs” or
“social needs”. He said that the next or higher level needs like power
achievement and the status were considered as self esteem needs that form
the fourth level. The next and the last level of need is “need for self
actualization”. This level represents the culmination of all the lower,
intermediate and higher needs of human being. People who had become self-
actualized were self-fulfilled and have realized all their inner potential. In such
people motivation comes from within and they work for betterment of an
organization.
Frederick Herzberg’s(1957) theory is closely related to Maslow hierarchy of
needs, he has given a two factor “content theory”. The first “hygiene factors”
were preventive and environmental in nature and they were roughly
42
equivalent to Maslow lower level needs. He said that these hygiene factors (or
job content) factors like company policies and administration, supervision,
salary, interpersonal relation and working condition prevented dissatisfaction
but they did not lead to satisfaction. In effect, they bring motivation up to a
theoretical ‘zero’ level and are necessary to prevent dissatisfaction only. The
motivators i.e. achievement, recognition, work responsibility, advancement or
job context factors were roughly equivalent to Maslow’s higher level needs.
According to Herzberg’s theory an individual must have job with challenging
content in order be truly motivated.
Intrinsic motivation referred to motivation that is driven by an interest or
enjoyment in the task itself, and exists within the individual rather than relying
on any external pressure. Intrinsic motivation has been studied by social
psychologists since the early 1970s. Researches have found out that it is
usually associated with high achievement and enjoyment. Explanations of
intrinsic motivation has been given in the context of Fritz Heider’s attribution
theory Bandura’s work on self – efficacy model and Deci and Ryan's cognitive
evaluation theory. Individuals are likely to be intrinsically motivated if they: a)
attribute their output results to internal factors that they can control (e.g. the
amount of effort they put in), b) believed that they can be effective agents in
reaching desired goals (i.e. the results were not determined by luck) and c)
were interested in mastering a job, rather than just to achieve good grades.
Extrinsic motivation believed to be coming from outside of the individual.
Common extrinsic motivations were rewards like money and grades, coercion
and threat of punishment. Competition is in general extrinsic because it
43
encouraged the performer to win and beat others, not to enjoy the intrinsic
rewards of the activity. A crowd cheering on the individual and trophies are
also extrinsic incentives.
Social psychological research has indicated that extrinsic rewards can lead to
over-justification and subsequent reduction in intrinsic motivation. In one study
demonstrated this effect, children who expected to be (and were) rewarded
with a ribbon and a gold star for drawing pictures and wasted less time
playing with the drawing materials in subsequent observations than children
who were assigned to an unexpected reward condition and to children who
received no extrinsic reward. Self-determination theory of motivation proposed
that extrinsic motivation can be internalized by the individual if the task fits
with their values and beliefs and therefore helps to fulfill their basic
psychological needs. The self-control of motivation is increasingly understood
as a subset of emotional intelligence; a person may be highly intelligent
according to a more conservative definition (as measured by many
intelligence tests), yet unmotivated to dedicate this intelligence to certain
tasks. Yale school of Management professor Victor Vroom’s “Expectancy
Theory” provided an account of when people will decide whether to exert self-
control to pursue a particular goal.
‘Drives’ and ‘desires’ were described as a deficiency or need that activates
behavior that is aimed at a goal or an incentive. These were thought to
originate within the individual and may not require external stimuli to
encourage the behavior. Basic drives could be sparked by deficiencies such
as hunger, which motivates a person to seek food; whereas more subtle
44
drives might be the desire for praise and approval, which motivates a person
to behave in a manner pleasing to others.
By contrast, the role of extrinsic rewards and stimuli can be seen in the
example of training animals by giving them treats when they perform a trick
correctly. The treat motivated the animals to perform the trick consistently,
even later when the treat was removed from the process. The incentives can
act in similar ways in the employees in the organization.
Teresa M. Amabile, (1993) in the paper on the foundation for a model of
motivational synergy, suggested a model outlines in which intrinsic motivation
might interact with extrinsic motivation. The intrinsic motivation which arises
from the intrinsic value of the work for the individual, interact with extrinsic
motivation which arises from the desire to obtain outcomes that were different
from the work itself. In a modification of the prevailing psychological view that
extrinsic motivation undermines intrinsic motivation, this conceptualization
proposed that certain types of extrinsic motivation can combine synergistically
with intrinsic motivation, particularly when initial level of intrinsic motivation
was high. Such synergistic motivational combinations should lead to high
levels of employee satisfaction and performance.
Laura Leete, (2000) in the research on wage equity and employee motivation
in nonprofit and for-profit organizations, at Public Policy Research Center,
Willamette University, USA argued that because nonprofit organizations rely
disproportionately on intrinsically motivated employees, they provide a
particularly interesting job context. In examining the relationship between
45
wage dispersion and employee motivation it was revealed that wage
dispersion was less apparent in the nonprofit sector than in the for-profit
sector. Further it was established that, in nonprofit and for-profit organizations
a strong positive correlation existed between wage equity and motivation in
both the sectors. This finding supported the view that wage equity was
correlated to worker motivation.
Thorpe and Homan (2000) gave importance of various complex factors while
understanding motivation. According to the author if the perception of a direct
link between pay and productivity is valid, then it would be doubtful that it
would remain unaffected by the influence of workplace pressures, social,
economic and political.
Brenda L. Mak, Hy Sockel (2001), studied the relationships between
organizations, their Information System workers and the productivity of
Information System operations. The study also examined IS employees’
motivation and intent to remain in the organization. A survey was conducted
amongst existing IS employees and the data thus obtained was analyzed.
Results showed that motivation has an impact on retention. Job satisfaction
and perceptions of employees were found to be important indicators variables
for the Motivation. While burnout, loyalty, turnover, intent to stay were found
out to be important indicators variables for the employee retention.
Eugene F. Stone-Romero, Dianna L. Stone, (2002) talked about how
employees take negative feedback. Researchers said that an appropriate
(functional) responses to negative feedback could be vital to both the short-
46
and long-run performance of individuals in organizations, and, therefore, for
their work groups and organizations. Regrettably, research showed that
individuals may not respond appropriately to negative feedback when they
were motivated by self-enhancement. Moreover, it showed that self-
enhancement tendencies were far more common among people in
individualistic cultures than among people in collectivistic cultures. Finally,
researchers said propagating collectivistic culture through non-monetary
incentives for motivating people in individualistic cultures is better motivational
strategy in respond to negative feedback in functional ways.
The GMP institute (2002), study suggested that the use of non-monetary
rewards is often overlooked by organizations. Non-monetary rewards could be
used more frequently as they tend to have longer lasting effects than
monetary rewards. Further these rewards can be given ‘on the spot’ where an
employee found doing an especially a good job, which reinforces good
performance, provides recognition of the employee thereby encouraging
everyone to strive for the best, these are internal rewards for the employee,
which satisfy their internal needs such as self-esteem, recognition and
fulfillment. Superiors approaching employee at the work place and extending
a word of appreciation or thanks or well done pat can be the best motivator for
the next task and give highest job satisfaction.
Kraig S. Stovall, (2003), in his research paper titled “Increasing employee
participation in fire safety education program using non-monetary rewards”,
evaluated various non-monetary motivational means of increasing employee
47
participation in fire safety education activities. The research revealed that an
effective reward program has significant impact on the accomplishment of
organizational objectives and influence employee behaviour. The research
identified that non-monetary rewards effectively motivate employees in long
term.
Dalita Balassanian (2006) in the research study on incentive system said that
it is possible to distinguish factors that have motivational effects from other
negative elements. Some of these factors were internal, others were external
to or “in the environment” of any given system. Incentive measures, such as
salaries, secondary benefits, and intangible rewards, recognition or sanctions
have traditionally been used to motivate employees to increase performance.
Motivators could be positive and/or negative. This study made an important
point that reducing dis-incentives or perverse incentives that favour non-
conducive behaviour, could often be more important than inventing new
incentives. The study also showed that incentive systems reside within
organizations, their structure, rules, human resource management,
opportunities, internal benefits, rewards and sanctions, etc. Further it is
established that the attitude of employees towards organizational incentives,
whether based on perception or reality, has a significant influence on the
performance of individuals and thus the organization overall success.
DeGieter et al. (2006) found that younger nurses in Belgium valued
promotional opportunities more highly than older and more senior nurses. The
latter group valued job security and the reputation of their employing hospital
48
more highly. Issues to be considered in designing the nature of the incentive
include whether it will assist in advancing long-term strategic objectives as
well as short-term goals.
Vitagliano, Bob; McDonald, Tom, (2009), in their research said that motivation
is an internal affair and the scope of incentive efforts has been changing.
Researchers said that professionals will now have to become "Masters of
Motivation." The important finding of the research was that people motivate
themselves when they are given the opportunity to accomplish something
meaningful and then get recognized and rewarded in different ways.
Kyriacou, Andreas P, (2010) integrated the notion of intrinsic motivation and
applied it to economics and the logic of individual contributions toward
collective goods or incentives. Researcher suggested that the crowding-out
effect increases the cost to organization and argued in favor of designing
selective incentives that are more effective in motivating employee than large
collection of incentives.
Boly, Amadou (2011) carried out several experimental studies and showed
that the crowding-out effect of monitoring may outweigh its effect through
intrinsic motivation destruction, thereby reducing effort. However, most of
these experiments use numeric effort tasks that subjects may not be
intrinsically motivated to complete. The study analyzed the monitoring using a
real-effort task for which intrinsic motivation was more likely to exist.
Researchers conducted two similar experiments, in the lab in Montreal and in
the field in Ouagadougou. In contrast to the lab, subjects in the field were
49
unaware that they were taking part in an experiment. The following results
were observed both in the lab and in the field groups. Relative to the baseline
treatment, it was found that monitoring treatments significantly increase effort.
Finally, increase in the subjects wage was found to have no effect on effort.
Din, Muhammad Naseer Ud; Khan, Faridullah; Murtaza, Ali. (2011) explored
the role of motivational factors in the professional development career choice
in the academic institutions of Rawalpindi. Study is aimed to identify the
motivational factors in selecting profession as career of choice. The data was
collected through the questionnaires. On the basis of analysis it was
concluded that the opinions of majority respondents to adopted their career,
the underlined behaviors were important. These were: attractive job, prestige
in profession, reward, incentive, expressing expectations, achievement,
advancement, recognition, status, performance opportunity, real satisfaction
by enhancement of knowledge and opportunity to continue studies,
professional development, growth and good conducive working environment.
2.3 Job Satisfaction
Job satisfaction has been termed as a pleasurable emotional state resulting
from the appraisal of one’s job; an affective reaction and an attitude towards
one’s job. Weiss (2002) has argued that job satisfaction is an attitude but
points out that researchers should clearly distinguish the objects of cognitive
evaluation, which were emotion, beliefs and behaviors. This definition
suggests that individual form attitudes towards his/her jobs by taking into
account feelings, own beliefs, and behaviors.
50
One of the biggest preludes to the study of job satisfaction is the Hawthorne
studies. These studies (1924–1933), primarily credited to Elton Mayo of the
Harvard Business School, sought to find the effects of various conditions
(most notably illumination) on workers’ productivity. These studies ultimately
showed that novel changes in work conditions temporarily increase
productivity (called the Hawthorne Effect). It was later found that this increase
resulted, not from the new conditions, but from the knowledge of being
observed. This finding provided strong evidence that people work for
purposes other than pay, which paved the way for researchers to investigate
other factors in job satisfaction.
Scientific management also has a significant impact on the study of job
satisfaction. Frederick Winslow Taylor’s (1911) in his book, Principles of
Scientific Management, argued that there could be a single best way to
perform any given work task. This book contributed to a change in industrial
production philosophies, causing a shift from skilled labor and piecework to
the more modern of assembly lines and hourly wages. The initial use of
scientific management by industries greatly increased productivity because
workers were forced to work at a faster pace. However, workers became
exhausted and dissatisfied, thus leaving researchers with new questions to
answer regarding job satisfaction.
Some argue that Maslow’s hierarchy of needs theory, a motivation theory, laid
the foundation for job satisfaction theory. This theory explained that people
seek to satisfy five specific needs in life – physiological needs, safety needs,
social needs, self-esteem needs, and self-actualization. This model served as
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a good basis from which early researchers could develop job satisfaction
theories.
Job satisfaction can also be seen within the broader context of the range of
issues that affect an individual's experience of work and their quality of
working life. Job satisfaction can be understood in terms of its relationships
with other key factors, such as general well-being, stress at work, control at
work, home-work interface, and working conditions.
Various psychologists have tried to define job satisfaction in different terms.
According to Porter (1961) the job satisfaction can be operationalized as
some kind of goal attainment and need fulfillment on the job.
Vroom (1964) has proposed a model for job satisfaction. According to him,
overall job satisfaction corresponds to two aspects “valance for the job” and
“valance for job outcome” and their satisfaction.
Locke (1976) gave the comprehensive definition of job satisfaction as “a
pleasurable or positive emotional state resulting from the appraisal of one’s
job or job experience”. Job satisfaction is the result of employees’ perception
of how well their job provided those things that they consider as important.
Smith Kendal l and Hulin (1969) have suggested five factors that lead to job
satisfaction. 1. Work itself: interesting nature of work, opportunities, learning
and responsibilities. 2. Pay: Equitable monetary remuneration. 3. Promotion
opportunity: change of advancement. 4. Supervision: Technical and
behavioural support from supervisors. 5. Supportive co-workers.
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Mathauer & Imhoff (2006) said that heavy and unmanageable workloads are a
common concern among professionals. They contributed to poor
performance, low Job satisfaction and burnout; ultimately, they may result in
professionals leaving their current employer or abandoning that sector of
employment altogether.
Hongoro and Normand (2006), in their study pointed out that labour market
adhere to economic theory in that “a worker will accept a job if the benefits of
doing so outweigh the opportunity cost”. The benefits are the incentives,
financial and nonfinancial, that make a professional want to continue to
participate in the workforce. The findings of the study stated that, risks,
frustrations and opportunity costs provided the disincentives and very low job
satisfaction leading to high intent to quit the job.
Caldwell & Kingma (2007), in a paper presented at an international
symposium on health workforce, Lisbon, Portugal talked about unsatisfactory
working conditions. The unsatisfactory working conditions were characterized
by: heavy workloads; lack of professional autonomy; poor supervision and
support; long working hours; unsafe workplaces; inadequate career
structures; poor remuneration/unfair pay; poor access to needed supplies,
tools and information; limited or no access to professional development
opportunities and lack of team work. The above findings were the basis of
lack job satisfaction leading to high employee turnover.
These factors were considered while designing the job satisfaction
questionnaire in this study.
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\2.4 Industrial Accidents
Industrial accidents were always a major cause of concern for industrial nation
and industries as well. There are plethoras of examples where one single
accident has lead to closure of the entire industrial unit forever.
An accident can be referred as a specific, unpredictable, unusual and
unintended external action that occurs in a particular time and place, with no
apparent and deliberate cause but with marked effects. It implies a generally
negative outcome which might have been avoided or prevented had the
circumstances leading up to the accident been recognized, and acted upon,
prior to its occurrence, as defined by F. I., Abbasi, S. A. (1999).
Experts in the field of injury prevention avoided use of the term 'accident' to
describe the events that cause injury in an attempt to highlight the predictable
and preventable nature of most injuries. Such incidents were viewed from the
perspective of epidemiology - predictable and preventable. Preferred words
were more descriptive of the event itself, rather than of its unintended nature
(e.g., collision, drowning, fall, etc.)
Accidents of particularly common types (auto, fire, etc.) were investigated to
identify how to avoid them in the future. This is sometimes called root cause
analysis, but does not generally apply to accidents that cannot be
deterministically predicted. A root cause of an uncommon and purely random
accident may never be identified, and thus future similar accidents remain
"accidental" as per DiBerardinis (1999).
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Khan, F. I., Abbasi S. A. (2001) said that there were just as many causes of
industrial accidents as the types of industrial accidents. The broad category of
industrial accidents covered anything from small cuts and bruises to huge
disasters that affect a large population of people. As per the data presented
by researcher approximately 120 million industrial accidents occur in the work
place worldwide each year. Approximately 210,000 of these accidents
resulted in fatality. The industries that have the highest rate of accidents are
the mining, construction, transportation, and agricultural industries.
Construction accidents account for 15 % of all accidents and 30 % of all
fatalities in industrial work environments.
As per Casal (2008), a cascade of events, in which the consequences of a
previous accident increase both specially and temporarily and lead to a major
accident, is defined as the “domino effect”.
As per the researcher causes of industrial accidents can be broken down into
two broad categories: unsafe conditions and unsafe acts. The causes of
industrial accidents that pertain to unsafe conditions can include insufficient
workspace lighting, excessive noise, slippery or unsafe flooring, extreme
temperature exposure, inadequate protection when working with machinery or
hazardous materials, unstable structures, electrical problems, machine
malfunction or failure, and more. The causes of industrial accidents that
involve unsafe acts can include actions or failures to act which result in injury.
This can be a result of employee negligence non-adherence of SOPs, safety
norms but employers, organizations, and product manufacturers can also be
liable for the causes of industrial accidents.
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The causes of industrial accidents can occur in the environment around the
workplace or within the work environment. External causes of industrial
accidents may include fires, chemical spills, toxic gas emission or radiation.
The causes of industrial accidents in these cases might include organizational
errors, human factors, abnormal operational conditions, natural forces,
software or component failures, and outside interference. Internal causes of
industrial accidents can involve equipment or other work related tangibles,
harmful materials, toxic chemicals, human error and failure of safety
equipment or PPEs (Personal Protective Equipments).
There are several ways by which a worker can be injured in the work
environment. Injuries that result from the causes of industrial accidents can
include any one or combination of the following occurrences: falls, being
struck by objects in motion, slides and caving, structure collapse, being
trapped equipments in or by an object, overexertion or strenuous physical
actions, exposure to temperature extremes, electrical accidents, radiation
exposure and the inhalation, ingestion, or absorption of harmful substances.
These industrial accidents can result in a number of injuries including
superficial injury, fractures, sprains and strains, amputation, concussion,
internal injury, poisoning, infection and even death. The causes of industrial
accidents are numerous. There are several cases where employee
negligence is a factor in industrial accidents. As a general rule, worker’s
compensation laws protect employers from lawsuits brought by injured
employees. There are cases where an employer can be held liable for worker
injuries if they have knowledge of unsafe conditions and failed to act in order
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to prevent injury. Injured workers may also be able to seek compensation for
their injuries from the makers of faulty or dangerous industrial products.
Therefore it is the responsibility of employees to provide safe working
condition and motivate employees to obey the safety norms to avoid any
accident or injury. Accidents also cause loss of productive hours, LTA and
financial losses.
As per Greenfield Michael A. (1998) normal accident theory suggests that in
complex, tightly coupled systems, accidents are inevitable. There are many
activities underway to strengthen our safety posture. NASA’s new thrust in the
analysis of close-calls provides insight into the unplanned and unimaginable.
Accident investigators generally focus on: Operator error, Faulty system
design, Mechanical Failure, Procedures (SOP’s), Inadequate training,
Environment (including management organization).
Many times there has been a tendency to cite “operator error” alone as the
cause of an accident which may not be a case in all the accidents. 1. It is
necessary to collect and analyze data on “close-call” near miss incidents.
Major accidents can be avoided by understanding near misses and
eliminating the root cause. 2. Develop corrective actions against the identified
root causes by applying human factors engineering. 3. Implement a system
to provide human performance audits of critical processes. 4. Organizational
surveys for operator feedback. 5. Stress designs that limit system complexity
and coupling.
Industrial Accident Prevention: Industrial accidents refer to any accident
that occurs on an industrial site. Causes can range from workers' negligence
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or fatigue to faulty machinery, improper supervision of the work site,
inadequate safety precautions and unknown safety hazards. NASA nominally
works with the theory that accidents can be prevented through good
organizational design coupled with reward system and management.
When industrial accidents were the result of workers' negligence or fatigue,
the injured party can seek workers' compensation- a portion of pay to
compensate for disability and medical expenses due to the accident. When a
third party- such as a site supervisor or equipment manufacturer- is
responsible for inadequate safety training, enforcement of safety regulations
or design and production of faulty products, the injured party may be entitled
to additional damages gained through an industrial accident lawsuit. Hence, it
is needed that organizations must provide ample training and invest in
motivation to avoid accidents.
In most cases, industrial accident prevention revolved around the safety of the
industrial site and enhancing safety culture by way of intensive training
implementing SOP’s and incentive reward system. On manufacturing unit, for
example, shop floor managers are required to inspect the site with safety
engineers and to warn employees of possible danger zones. Workers, in turn,
must comply with the safety requirements set forth by their supervisors in
order to maximize industrial accident prevention. If contractors or
subcontractors fail to enforce safety rules or take safety precautions on their
industrial site, they can be held liable for legal actions.
Industrial accident prevention also lies on the shoulders of the manufacturing
companies of equipment frequently used on industrial sites. Such equipment
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consists of, but is not limited to: scaffolding (many industrial accidents were
caused by falls from heights or faulty scaffolds), motorized vehicles (tractors,
forklifts), gas pressure machinery, electricity conductors and heavy
machinery. When industrial accident prevention fails an incident occurs.
The industrial accidents is considered as one of the highly important aspect of
Organizational Effectiveness as accidents not only cause injury to employee,
loss of productive time, financial losses but also leads to loss of reputation,
legal hassles and even closer of the unit and catastrophic effects on nearby
industries and human beings and environment as a whole.
2.5 Employee Absenteeism
Another important aspect of Organizational Effectiveness is employee
absenteeism. Absenteeism can be defined as a habitual pattern of absence
from a duty or obligation. Traditionally, absenteeism has been viewed as an
indicator of poor individual performance, as well as a breach of an implicit
contract between employee and employer, it is seen as a management
problem, and framed in economic or quasi-economic terms. More recent
scholars seek to understand absenteeism as an indicator of psychological,
medical, or social adjustment to work (Johns Gary, 2007).
Values & norms which were developing among the work force, as a result of
technological development work and leisure are now cherished by the worker
and thus they wants to enjoy along with the monetary benefits they got for
their services. The economic consideration therefore decided whether
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employee would like to be absent from the work. High absenteeism among
labour is due to rural orientation & their frequent urge for rural exodus.
Absenteeism is high in industries due to the fact that the labour wanted some
rest from daily routine of work. The incidence of industries fatigue, trying
climate, universal malnutrition and the appallingly bad working condition
aggravate the feeling for change among industrial workers & sometimes impel
them to visit their village labour frequently for rest & relaxation.
The absenteeism is also observed due to the internal administration of on
organization the work milieu is very important since a large part of the workers
daily life is spent there the atmosphere obtaining in a plant, therefore, affects
employee’s attitude towards their work, and either persuades them to attend
regularly or keeps them away. The attitude & practice of the management
also contributed to the absenteeism resulted in irritating uncertainty,
irregularity and confusion in the factory,
A traditional management treats workers as hireling while an enlightened
management treats them as human being. This difference in behaviour leads,
in the former situation, to light absenteeism and in the situation to a close
affinity with the organization, the result being lower absenteeism. In one
survey by Ghosh A. (2009) it was found that the major cause of absenteeism
in Reliance Infocomm is festival carnal. In this survey the major conclusion
was that in festivals seasons employees take more leaves. Another major
cause of absenteeism was family reasons.
a. The worker may take leave due to some family/ personal reasons that may
include of illness of wife/ children/ other family member.
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b. Construction of building house etc.
c. Guests
d. Parents meeting or call of father in children school
e. Marriage, Death of family members
Since any one of this can come in an individual’s life at any time, the
employees take leaves to help their family member during illness, death,
marriage etc. The problem of absenteeism is more when the employees have
big family, they have to take care of a large section of member and they take
leave for arrangement and for purchasing of goods. The other major important
reason for absenteeism is illness and infections. The employees may fall ill
due to various reasons and accordingly take leaves to take some rest. In
certain cases even though the workers were medically fit they take extra leave
to take some rest from routine job by showing that they were ill and unable to
work on that particular day.
The worker may fall ill due to various reasons like; a. Change of season, b.
Bad working condition, c. No balance diet and unhygienic canteen facilities, d.
Food poisoning, e. Wine, alcohol, tobacco i.e. addictions, f. Genetic,
hereditary dieses. In the survey, it was found out that the next major reason
for absenteeism in private undertaking inboard from routine and repetitive
nature of job. The employee might feel bored of their routine job and took
leave for the freshness of their mind. The employee sometimes wanted to do
newer jobs when they cannot get it for a fairly long period of time they took
leave for enjoyment. The other important reason cited for absenteeism is
reprimand from boss.
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It was also found that the organization have already improved the working
condition for its employees by providing various types of facilities such as:
light facility, xerox machine, air conditioners, phone, hygienic canteen, pick up
and drop facility etc. The bad working condition (which might include non-
conducive climate for work) was yet another factor of absenteeism. Non-
availability of transport and other reasons were also responsible for high rate
of absenteeism. The management of both the private and government sector
companies has provided a lot of facility to its workers and adopted new
managerial technique like attendance incentives, appreciation letter for non-
absence etc. to have healthy relationship between management and workers
and thereby ensuring win-win situation for both.
Leonard, Bill, (1994) argued that employers tend to equate absenteeism
problems with a flawed leave policy. A high sick leave and absenteeism rate
is often the sign of a sick organization, not sick employees. Researcher said
that M/s W.R. Grace Co. (USA), actually had trouble convincing employees to
stay home when they or family members were sick. It always has the policy
that if employees need to take time off from work, then they were encouraged
to do so. One of the more recent trends in employee leave programs is a
move toward comprehensive leave. These policies have set a certain amount
of paid time off for each year. Most employees valued it highly as their most
precious benefit. Employees then take the time as they wish, for vacations,
sick days and so on. Absenteeism could be largely controlled by open culture
and flexible leave options.
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2.6 Production Wastage
On any shop floor production wastage could be the most unwanted
phenomenon for employees as well as for the industry. Production wastage
could be defined as a part of production output lost by wears, rework, market
recall or irrecoverable portion of solvents leading loss of production time,
money and material.
The pharmaceutical industries were feeling intense pressure to transform their
operations and using the way they do business around the world. Institutions
that have manufactured products in the same age old ways for decades are
now being forced to reduce costs, add value and turn production into a
competitive advantage. To survive, drug companies have to look at innovative
ways to become more efficient and agile at manufacturing by reducing
wastage, and by embracing the change that is permeating the industry. Patent
expiration, generic competition, counterfeiting, and supply chain challenges
are all having an enormous impact on wastage in manufacturing, and
companies must look at the ways to improve this situation.
As per BMI (2006) reports, the Pharmaceutical Research Manufacturing
Project estimated that manufacturing wastage in the industry exceeds $50
billion. Many pharmaceutical plants operated with efficiencies around 30%. A
world-class pharmaceutical operation might operate close to 70%, but they
were very few. When compared with world-class manufacturing operations in
other industries that have efficiencies over 90%, the need for improvement is
apparent.
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The challenging environment in the life sciences industry today is forcing
companies to adapt and innovate. Organizations need to find new ways to
manufacture drugs and to turn their production into a competitive advantage.
An effectively deployed solution like reduction in production wastage to the
unique needs of the pharmaceutical industry can deliver rapid results aligned
with the business goals of the organization.
Delivered results included elimination of basic errors, reduced inventory
levels, reduced cycle time, reduction in work in process inventory, reduced
finished goods inventory, improved operational predictability and improved
accuracy of delivery schedule. With these changes in the process, reduction
in production wastage and higher productivity can be achieved.
Wastage reduction is the key to productivity, success and growth in every
sector of economic activity. Higher productivity benefits each and every
individual irrespective of works, which in turn would usher in national
prosperity. Patil Rajkumar (2011) has suggested ways to reduce wastage in
production:
Doing right things – Provide products which meet functional reliability,
aesthetic need of customers and generate less wastage, pollute less in use,
meet quality needs, are easy to maintain.
Doing things rightly – Manufacture products in a manner which optimizes
use of all resources, use clean and low wastage techniques, improves quality
of work life, reduces wastage and maximizes value addition.
Factor leading to the production wastage: Factors affecting wastages
were classified into two categories –
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External Factors – Included infrastructure, availability of funds, power, water,
means of transport and communication, raw and packing materials, regulatory
authority’s policies and social and economic conditions.
Internal Factors – The internal factors were further classified into –
(a) Static Factors – Difficult to change; which included plant and equipments,
raw and packing materials, energy, products, technology, etc.
(b) Dynamic Factors – Included men, management practices, work methods,
systems, standard operating procedures, organization structure and work
culture.
High wastage of an organization was primarily concerned with Internal
Factors. Efficiency of the entire organization depends upon the efficiency of
each Internal Factor.
Improvement in the manufacturing process – Efficiency and effectiveness
of production planning, maintenance of plants and machinery, purchasing and
material control, stock control, inventory control, etc. are vital for the smooth
and economical operation of production systems. Poor organization of the
production process was evident by frequent disruptions, delayed schedule,
wastage of time, energy and materials, poor quality of products and escalation
of costs. The few points were to be considered in manufacturing process
improvement.
One of the ways to improve manufacturing process is wastage reduction and
Utilization – Every employee should develop an attitude towards cost
reduction and productivity improvement. Wastage of material can be
eliminated by consuming them carefully, economically and optimally.
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Material Handling – Improved methods of material handling has increased
output and reduced cost of production, improved safety by using personnel
protective equipments (PPE’s) while handling hazardous materials and
working conditions. To increase productivity and to reduce cost of handling
following principles must be followed – time & distance of each move should
be minimized, materials should be pre-positioned for use, route should be
planned and controlled, gravity should be used whenever possible as it is the
cheapest source of motive force.
Human techniques used in reducing wastage in manufacturing units.
To develop productivity conscious human resources, it is necessary for the
organization to develop a culture and climate in which every member of the
organization is motivated to ensure that an employee is productive and makes
other members of their work group productive too. The requirements were
identified as -
(a) Organization Goals – Each department/division within the firm should be
given specific goals that must be met in order to attain overall organizational
goals. Goals should be set appropriately so that everyone in the organization
gets motivated to accomplish.
(b) Creativity – Increase the motivation and create effective responses in
people by recognition of moral values and sensitive in human work settings.
(c) Interpersonal Relations – Authentic interpersonal relationship is a crucial
factor in work situation. It rules out behavior that is exploitative, manipulative
and irresponsive.
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(d) Two-way Communication – Involves communicating organizational goals
and policies to all employees, listening to subordinates and identifying
problems tends to enhance understanding and co-operation and influence
behavior in a desired direction.
(e) Reorganization of the Sources of Intrinsic Motivation – intrinsically
motivated is a kind of behavior done for one’s own sake. Intrinsic motivation
can be generated through enhanced awareness towards wastage reduction
and its implications on organization and the society.
(f) Employee Involvement and Participation– Workers involvement and
participation in planning, decision making, implementing programs and
techniques of reducing wastage strengthen their motivation to give their best
to the organization. The individual’s commitment to reduce wastage must be
created through mental and emotional involvement in a group situation and
their desire to share in the goals and responsibilities.
(g) Financial Incentives – Incentives may be given to an employee for
motivating them towards better performance.
(h) Promotion – is widely regarded as an important technique for motivating
employees towards better performance. It is meant to recognize an
employee’s skills, proficiency, knowledge and efforts in work performance.
(i) Training and Counseling – Training of employees seeks to improve their
skills and reduce wastage by increasing the level of their activity and work
competence. Counseling involves influencing outlook of employees towards
reducing production wastage.
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Belanger, Jaques, Ewards, Paul, Wright, Martyn, (1999), discussed best HR
practice in the multinational company. Researchers said tiredness with
continuous change might be tackled by allowing workers space to develop
their own agendas. Some plants, which have involved shop-floor staff, have
re-enthused the staff. The tasks were jobs that were already known or fairly
simple tasks such as managing holiday duty rotas but that made workers
more responsible and involved in shop-floor activities.
Glover, Jenny, (2004) Identified “Waste on the shop-floor” is slightly different
from others as it relates to work culture rather than a particular technique.
Researcher defined wastage as "any activity that adds cost or time, but did
not add value," this showed the huge range of the subject and that it is
important to remember emergency or stopgap improvements can easily
become institutionalized so they are part of the way work is always done in
the past. The overriding finding was to continually question established
methods and look for ways of improving them.
Working on the shop floor and tackling wastage can be fun in that if it provides
individual empowerment and makes the job more interesting. Of course, the
company also gets benefited through cutting the hidden costs of production
and increasing customer satisfaction and competitive advantage.
2.7 Role of Monetary and Non-Monetary Incentives
The present study intended to understand the reflections of monetary and
non-monetary incentives on various determinants of Organizational
Effectiveness as studied in earlier section of this chapter. The
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conceptualization of incentives and study of results of previous researches
has been done in this section.
Incentives can be any factor (financial, non-financial or emotional) over and
above normal pay that enables or motivates a particular course of action. In
other words it is a reason for preferring one choice to the alternatives.
Incentives can be classified according to the different ways in which they
motivate agents to take a particular course of action. A common and useful
taxonomy divides incentives into three broad classes:
1. Remunerative incentives (or monetary incentives) were said to exist where
an agent can expect some form of material reward - especially money - in
exchange for acting in a particular way.
2. Moral incentives were said to exist where a particular choice is widely
regarded as the right thing to do, or as particularly admirable, or where the
failure to act in a certain way is condemned as indecent. A person acted on a
moral incentive can expect a sense of self-esteem, and approval or even
admiration from his community; a person acted against a moral incentive can
expect a sense of guilt, and condemnation or even ostracism from the
community.
3. Coercive incentives were said to exist where a person can expect that the
failure to act in a particular way would result in physical force being used
against them (or their loved ones) by others in the community - for example,
by inflicting pain in punishment, or by imprisonment, or by confiscating or
destroying their possessions.
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There is another common usage in which incentive is contrasted with
coercion, as when economic moralists contrast incentive-driven work—such
as entrepreneurship, self employment or volunteering motivated by
remunerative, moral, or personal incentives—with coerced work—such as
slavery or serfdom, where work is motivated by the threat or use of violence.
In this study, the category of "coercive incentives" has been excluded. For the
purposes of this work, however, "incentive" was used in the broader sense
defined above.
Social pressure: It's also worth noting that these categories were not
necessarily exclusive; one and the same situation may, in its different
aspects, carry incentives that came under any or all of these categories. In
modern society, for example, economic prosperity and social esteem were
often closely intertwined; when the people tend to admire those who were
economically successful, or to view those who were not with a certain amount
of contempt, the prospect of getting or losing a job carries not only the
obvious remunerative incentives but also substantial moral incentives such as
honor and respect from others for those who hold down steady work and
disapproval or even humiliation for those who don't.
Incentive structures, however, are notoriously trickier than they might appear
to people who set them up. Human beings are both finite and creative; which
means that the people offering incentives were often unable to predict all of
the ways that people would respond to them. Thus, imperfect knowledge and
unintended consequences could often make incentives much more complex
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than the people offering them originally expected, and can lead either to
unexpected windfalls or to disasters produced by unintentionally perverse
incentives. For example, decision-makers in profit making firms often must
decide what incentives they would offer to employees and managers to
encourage them to act in ways beneficial to the firm. But many corporate
policies- especially of the "extreme incentive" variant popular during the
1990s- that aimed to encourage productivity have, in some cases, led to
spectacular failures as a result of unintended consequences. For example,
stock options were intended to boost CEO productivity by offering a
remunerative incentive (profits from soaring stock prices) for CEOs to improve
company performance. But CEOs could get profits from soaring stock prices
either (1) by making sound decisions and reaping the rewards of a long-term
price increase, or (2) by fudging or fabricating accounting information to give
the illusion of economic success, and reaping profits from the short-term price
increase by selling before the truth came out and prices tanked. The perverse
incentive created by the availability of option (2) has been blamed for many of
the falsified earnings reports and public statements in the late 1990s and early
2000s.
Though a bonus makes an integral component of free market practices,
continuing to pay them to executives by companies benefiting from US
Government financial help as planned and as contracted was facing great
criticism and opposition from politicians and media. The case of American
Insurance Group is an obvious example of how refused normal bonus
incentives have become after the capital market meltdown.
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Gupta (1975), in his study of labour incentive in Indian Iron and Steel Industry,
found that monetary incentives were best motivators which lead to better
motivation and a higher labour productivity lowering absenteeism and
wastage. Workers specially when involved in designing the incentive scheme
perceive it as equitable and fair.
Nair and Rao (1990) thought that concept of overtime many times make
reward schemes like incentives redundant and ineffective. Also for
effectiveness, incentives scheme should be simple to understand, linked with
performance and quality, should penalize unauthorized absenteeism. Further,
payment should be immediate and direct and group incentives best develop
the feeling of teamwork and co-ordination.
Matthew (1986) said that direct monetary benefits coupled with greater
responsibility and autonomy in decision making were good motivators than
other perks. He also says high risk taking should have been more rewarding.
However, the non-monetary incentives were perhaps more important in the
case of executives, particularly those in higher position.
Sharma (1991) states, referring to the report of the National Commission of
Labour, “under our condition incentive is concerned with effective utilization of
manpower which is quickest, cheapest and surest means of increasing
productivity and only practicable and self sustaining means of improving
manpower utilization and stimulate human efforts to provide positive
motivation to greater output.”
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Performance-related pay was paid to someone relating to how well he or she
works at the workplace. Car salesmen, production line workers, for example,
may be paid in this way, or through commission.
Business theorist Frederick Winslow Taylor (1911) is a great supporter of this
method of payment, which is often referred to as PRP. He believed money
was the main incentive for increased productivity and introducing the widely
used concept of 'piece work'.
This standards-based system was used for evaluating employees and setting
salaries by many employers. Standards-based methods have been in de facto
use for centuries among commission-based sales staff: They were paid more
for selling more, and low performers do not earn enough to make keeping the
job worthwhile.
In addition to motivating the rewarded behavior, standards-based methods
can provide a level of standardization in employee evaluations, which can
reduce fears of favoritism and make the employer's expectations clear. For
example, an employer might set a minimum standard of 12,000 keystrokes
per hour in a simple data-entry job, and reassign or replace employees who
could not perform at that level. Employees would be secure in knowing that
their performance is evaluated objectively according to the standard of their
work instead of the whims of a supervisor, or against an ever-climbing
average of their group.
Andrew Ballentine, Nora McKenzie Allen Wysocki, Karl Kepner (2003), carried
out a study on “The role of monetary and non-monetary incentives in
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workplace as influence by carrier stages University of Florida” publication of
department of food and recourse economics Florida, Institute of food and
agricultural sciences. In this paper the author said that depending on the
career stage of the employee have the different needs. These days, to attract
young associates the traditional incentive packages are replaced with
alternatives. In this study it is studied that how monetary and non-monetary
incentives are influenced by career stages and problems associated with
those incentives.
Kepner (2001) in his work said that monetary incentives were the reward for
excellent job performance in the form of money, traditionally these incentives
have helped to maintain positive motivational environment. The non-monetary
incentives on other hand are the reward in the form of opportunities like
sabbaticals, training, flexible working hours, etc. The study divides workers in
four life stages “Mature Worker”, “Baby Boomers”, Generation X’ers” and
“Generation Y’ers”
Arfic Kohn (1993) argued that as most monetary incentives were based on
performance it encourages complaisance and discourages being creative at
workplace. It also circumvented problems that the employees were just driven
by monetary benefits and not because it is right thing to do. The monetary
rewards were extrinsic rather than intrinsic. The monetary rewards could
terminate good working relations amongst the employees as worker get
transformed from workers to competitors. He also found out that, workers
were more inclined towards non-monetary incentives towards their retirement
age.
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Monetary and non-monetary incentives vary in their role, appropriateness
depending upon their types and career stages of the employees. View above
it should be tailor made rather than “One Size Fit All” approach.
Kohn (1993) also argued on the basis of his research findings that incentives
many a times hampers companies and employees by decreasing employee
motivation, interest and job satisfaction which is just opposite of what
incentives were created to do. He also suggested that to create a balance
sheet of incentives on one side i.e. all incentives monetary and non-monetary
and on the other hand the outcomes ( desired or undesired) that could be
attributed to those incentives for evaluating any incentive program.
Scott Jefferey (2003), in his research paper on “The benefits of tangible and
non-monetary incentives”, executive white paper, University of Waterloo, talks
about four psychological processes that influence participant’s perceptions of
tangible non-monetary incentives to be of more value than cash incentives of
equal market value. The participants always judge the award on the basis of
expectancy theory dynamics that is also known as expected utility of awards.
This theory talks about insight into decision making process of participants
which holds that efforts put in pursuit of an award are positively related to the
value of the reward offered for performance.
Several principles in social and cognitive psychology said that an employee
might perceive non-monetary incentives to be more valuable than the retail
value of the award in the cash. The non-monetary incentives could increase
motivation because they were earned rather than purchased via psychological
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processes of justifiability and social reinforcement that is frequently referred
as ‘trophy value’. The four psychological processes that influence the decision
making process are:
A) Evaluability: Non-cash rewards were more difficult to attach a monetary
value to it, hence when a participant focuses its thought on more positive
value of it, it ascribes a higher value.
B) Separability: A cash incentive tends to be aggregative with overall
compensation. Non-cash compensation rewards were stand out and
separated from monetary rewards.
C) Justifiability: Non-cash awards were such that a participant would not
purchase on its own so he could justify the awards. Being able to justify the
awards has more motivational value.
D) Social reinforcement: These incentives have trophy value and were
better acknowledged by others then cash rewards. Social taboos were
associated with discussing cash so cash has less social reinforcement.
In the term paper on non-monetary rewards at work place researcher said
profitable and successful management of business operations is the sole and
fundamental objective of any commercial business enterprise and productive
workforce is the key tool of any Organizational Effectiveness as well as to
meet financial and productivity objectives.
Ballentine et. al. (2003) and Merchant (1989), in their research found that the
cash incentives constituted primary motivators, essential to fulfill needs and
wants of the workforce. But non-monetary incentives have gained more
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significance in the industries to enhance employee performance in present
tight scenario and were more efficient in motivating the workforce.
According to survey conducted by Watson Wyatt (2000), more and more
employees were found to opt for non-monetary incentives than previous year
i.e. 1999. For example career advancement opportunity 76% of employees
compared to 60% in 1999, flexible working hours 73% as against 64% in
preceding year, opportunities to gain new skills 68% compared to 62% in
1999. Particularly while recruiting and retaining young generation employees
it was observed that the young employee at the start of career values
recognition and career advancement, opportunities over the monetary
benefits like better pay package.
Jain KK, Jabeen Fauzia, Mishra Vinita and Gupta Naveen (2007) conducted a
study on job satisfaction as an effect of organizational climate and
organizational stress on 158 employees of managerial category in Indian Oil
Corporation Ltd. The significant findings were that the high income managers
were more satisfied than the lower income managers the reason to this trend
is attributed to universal truth that the monetary compensation was one of the
important motivators for employees that largely affects their performance and
satisfaction level. The study also revealed that age of the managers’ didn’t
play significant role as far as motivation and job satisfaction was concerned.
The other important findings were the attitude feeling and emotions of the
employee towards organization play a vital role in determining their
performance and behaviours. These in turn determine the success and
growth of the organization.
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Dale S. Rose, Stuart D. Sidle and Kristin H. Griffith (2007) in their study of
monetary incentives found out that there was a significant improvement in
employees response rate with increased incentives but there were no
significant effects for incentive size or novelty.
Andreas Ortmenn, Ralph Hertwig (Sept 2006), in their study “Monetary
incentives usually neither necessary nor sufficient?” had talked about how the
earlier studies on usefulness of monetary incentives per experimental work
were misrepresented their analysis and continues the unfortunate ritual of
opportunistic sampling of evidences.
Marsden and French (1998) found in various parts of the public sector, for
only a minority of employees to be performance- related pay an incentive
worked. For the rest, it has not motivated them and it has damaged
relationships between colleagues and hindered team working. Specific
attention has also been drawn to the difficulties in objective setting for many
jobs.
Marsden and French (2002) explained that there is not a simple
principal/agent relationship that economic theory expects. Employees often do
not have the same clear goals with too many conflicting priorities and trying to
serve too many masters.
Garman, E.T. (1999) in his research paper talks about new perspectives of
managing extra income from incentives, Researcher also talked about
educating employees on their own financial aspects. Members of every
employer’s workforce would have severe financial problems that can affect
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productivity. In addition, many employees have either saved very little or feel
that they couldn’t afford to save any money toward retirement. In such cases
employers could provide incentives for employees to attain good financial
health, just as they do for physical health.
The paper suggested that employers could also set up financial education
programs that are more comprehensive than the usual retirement planning
programs and address issues at every stage of employees’ lives. The often
neglected needs of lower income employees should be included in program
planning. Advantages of such programs to employers include lower stress for
employees, less time lost on the job due to handling financial problems, and a
more loyal work force. Researcher further said that for the employers when
employees are healthy, long-term operational costs are reduced, primarily
though lower medical claims and fewer hours lost to illness. Thus, employers
find it in their interest to promote employee health. Employers were offered
workers incentives to help them become more health conscious.
Health is related to money matters, too. For that reason, smart employers
considered the idea to offer workers incentives to improve their financial
lifestyles. The logic was that as the personal financial wellness of workers
increases, the employer’s cost of operations would decline. This is a totally
new perspective in offering incentives.
Steven H. Appelbaum, Rammie Kamal (2000) conducted a research to
determine what variables would give small businesses (defined as any firm
with less than 100 employees) an advantage over larger businesses in
attracting and maintaining employees. Authors concluded with sufficient
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evidences that income is the least moderating factor with regard to the
success of non-monetary incentives. The variables studied were most
effective when supplemented with an income that allows employees to meet
physiological and security needs for themselves and their families. The study
also revealed that by increasing job satisfaction via job enrichment, employee
recognition, internal pay equity and the use of skilled managers, smaller firms
could increase productivity and attractiveness to existing and potential
employees.
Michael Brostek, (2000), verified the fact based upon a review of previous
human capital and incentives studies that the key elements of good incentive
schemes include the following: Top leader must be involved for using
incentives to manage performance, incentive programs should have clearly
defined, transparent criteria that are explicitly linked to organizational mission
and goals. Organizations used multiple, meaningful awards to recognize
individuals as well as teams and organizational units. Organizations targeted
only high-performing teams and employees for awards. Organizations
publicized incentive awards to the extent possible. Organizations regularly
monitor, evaluate, and update their programs as needed.
Chaix-Couturier et al. (2000), in their review of financial incentives in medical
practice, suggest that schemes should be suited to the structure and financing
mechanisms of the organization in question. Schemes should also adjust for
quality, productivity and severity of patients treated, and importantly for both
implementation and administration, they should be “simple, transparent and
direct”.
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Chaix-Couturier et al. (2000), Mathauer & Imhoff (2006), found out that the
schemes should be contextually appropriate. According to authors, whether
financial or non-financial, an incentive scheme as far as possible must be
appropriate to the local factors. This includes the role, function and
infrastructure of the organization, the local population’s needs, habits and
priorities. Researcher said that this was particularly true in case of training
and development activities, which must be adapted to local realities, such as
the prevailing functioning mechanisms, actual conditions and infrastructure
within which the staff are working.
Platten (2001) reported that employees identified the follow five important
reward factors as these were rated highest by the top performers under 30
years of age: Opportunity to develop skill, Opportunity for promotion,
Compensation, Vacations and Culture of organization. As per him employees
below 30 years of age values non- monetary incentives more.
Holtmann, Martin (2001) in the study on topic “Designing Financial Incentives
to Increase Loan Officer Productivity: Handle With Care!” said that
microfinance practitioners have long realized the importance of appropriate
products, policies, and incentives. Hence, proper incentives and mechanisms
also needed to be devised to ensure optimal performance of the employees of
microfinance institutions (MFIs). The study showed that employees, credit
officers in particular, can have a critical effect on the performance of an MFI,
accounting for as much as half of an MFI’s costs (in the form of salaries) and
almost all of the “output” (promotion, screening, processing, monitoring, and
enforcement of loans). Furthermore, it is often difficult for managers to directly
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monitor credit officers because they can spend up to 75% of their time outside
of the office. Both of these factors indicate a great need for effective employee
incentive mechanisms. The research further showed that the activity
performance and output could be better controlled by offering financial
incentives than any other traditional means.
“Money might talk”, says Clark (2002), in his research concluded that once
you‘ve asked employees what they want, be sure to gear incentives towards
those desires. Clark also argued that a simple applause and appreciation
could be what employee wants most.
According to Jonathan D. Day, Paul Y. Mang, Ansgar Richter, and John
Roberts (2002), the secret of persuading people to focus simultaneously on
developing new businesses and managing current operations has been relyed
less on pay for performance. In this research many companies, employees
felt that if their interests and those of the business are much the same, an
employee always tried to do best for its current and long-term welfare of the
company. Contradicting the other theories of incentives the researcher
argued that if individuals and organizational aspirations are aligned, the
individual tried to perform regardless of incentives being paid or not.
Kingma (2003), in his research findings said that, there is a great deal of
interest among practitioners to study whether incentive schemes succeed in
improving motivation and productivity. There also existed concerns among
many practitioners about potential negative effects of incentives. Respondents
were asked to rate the effect of their incentive schemes on a variety of
subjects. Readers were cautioned that these were perceived effects and do
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not necessarily reflect actual effects. The majority of respondents perceived
high or very high effect of incentives on overall financial performance and staff
motivation. However, there is relatively little perceived effect on improving
client satisfaction, staff turnover, and staff loyalty. It is also interesting to note
that there were relatively few negative reports of reducing employees’ intrinsic
motivation. Despite a generally positive perception of the effects of incentives,
several respondents reported some negative effects. By design, the
incentives were meant to reward high performing employees. However, some
studies reported that their incentives resulted in a decrease in motivation
among the officers who do not qualify for incentives, as they did not meet the
minimum performance criteria. Several respondents also pointed out the
tension arising between departments that have incentive schemes in place
and those that did not. Some employees either became jealous of the
coworkers or were upset that they were not rewarded though they have
indirectly contributed to the other officer’s productivity. There is shift of the
focus of employees towards wealthier clients and not on clients in rural areas
in order to increase their incentives. Another negative effect is erosion in the
quality, reduction in teamwork; incentives did not reward overachievement,
decrease in intrinsic motivation, and high costs of operation.
The researcher advised that in most cases, these negative effects reflect
technical deficiencies in the incentive scheme’s design and could be mitigated
through adjustments such as: lowering minimum requirements, changing
weights allocated to performance indicators, and better communication with
staff about the incentive schemes.
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Rigoli and Dussault’s (2003), study of health sector reforms, including the
introduction of incentive schemes, illustrated the risks inherent in poor design.
They found that the “failure to achieve the expected results, and in many
cases, the production of effect quite different from those foreseen by the
planners of incentive schemes”.
Other important design considerations were whether the incentive programs
were gaming and manipulation, and whether mechanisms for monitoring and
evaluation can be incorporated into the scheme.
Soeters and Griffiths (2003), said that the feasibility of any reform proposal
would increase when it is adapted to what acceptable to society at large. On
the other hand the researcher said that the need for different issues to be
considered in designing the nature of the incentive must included whether it
would assist in advancing long term strategic objectives as well as short term
goals of organization.
Kingma (2003) has pointed out that the design of the incentives should be and
also appear to be fair, equitable and transparent. Inequities or perceived
inequities in the way incentive schemes were designed and implemented was
repeatedly cited as a source of demotivation. As the author has noted,
“although salary is reported to be unimportant once basic financial needs
were met and relative salary generates a much more emotional reaction”.
Inequities might arise from selective access to bonuses and other secondary
facilities those available to senior managers only. Similarly if any new
programs or salary incentives is being introduced for new staff without existing
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staff being able to access the same benefits, or lack of transparency and
accountability in the allocation of opportunity and reward.
Kingma (2003), in his research findings further said that, although usually
framed in terms of organizations or individuals, incentive schemes might also
be applied at the team level. Here, members share in rewards when achieving
outcomes for which they are jointly responsible. Because all parties have a
shared interest in improving overall performance, this approach has a number
of potential advantages. It promoted systematic improvement in the way
teams work, creating positive relationships of mutual support. For this reason,
some employees have expressed less distrust of team-based approaches to
incentives. Some groups of workers, citing an environment characterized by
‘envy’, has suggested that “individual efforts were futile and team efforts were
necessary to reach further”. This led the authors of the study to conclude “it
might be necessary to build performance management schemes on group
identities”
According to Reilly (2003) it is not easy to incentivize the police to catch more
criminals, customs and excise officers to increase their detection rate, or
ambulances to get to incidents more quickly. A target can be set, but care
needs to be taken over the process of reaching the goal. The public might
complain about over-enthusiastic police, customs officers, or ambulance
drivers.
Similarly, researcher said that trade unions has consistently supported
employee doubts about performance-related pay and resisted its introduction.
They have also been quick to point to evidence of inequalities in performance
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assessment by gender or ethnicity, where these have been linked to reward.
Apart from financial incentives, there were also non-financial incentives, which
may be relevant to the employees. In Locke’s (1968) goal setting theory, four
of such non-financial incentives were brought to the fore. These are feedback,
time limits to achieve set goals, subordinate’s participation in goal setting, and
praise or reproof.
Gilson et al. (2004) said that a cycle whereby staff shortages lead to
worsening conditions for remaining staff. In other cases, it could simply be a
matter of increased local demand or increased customer and community
expectations. If heavy workloads remain unaddressed or were perceived to be
unreasonable, staff could feel exploited and de-motivated and would be more
likely to seek alternative employment. The workload of employees remained
an issue of concern to professional organizations worldwide. As a result, it
was frequently raised in the context of industrial relations negotiations and
agreements. Characteristics of an effective incentive scheme needed to be
worked out.
Gilson et al. (2004), talked about the realistic and deliverable incentive
package. The design of the incentive package must be realistic and
achievable. An incentive package that is not delivered is no incentive at all.
Employees will quickly become demoralized and demotivated if promised
wage increases do not appear, if the relative increases or allowances
discriminate against certain categories of personnel or if other changes in the
broader environment negate or undermine them. Incentives should reflect
needs and preferences of the employees.
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The key role of an incentive is to influence behaviour, for better or worse. An
incentive scheme that employees or professionals regard as irrelevant to
them, counter to their personal or professional values or actively destructive to
either their own well-being or that of their clients will failed in its purpose. At
worst, it would actively create a disincentive for continued effective work. In
designing an effective incentive scheme, therefore, the values, preferences
and aspirations of relevant employees must be primary considerations.
Historical and cultural context of employees is also important. Individual
professionals may have differing interpretations of what ‘incentives’ mean
(Mathauer & Imhoff 2006) and differing experiences of them – both positive
and negative. Considering this in the design and implementation of an
incentive program would maximize its effectiveness.
Authors findings indicated the attitude of employees towards the incentive
packages is very important characteristics of any incentive scheme. Attitude
of employees would decide the success or failure of any incentive plan.
Buchan J. (2005), referring to various other studies made the list of good
incentive schemes he divided the financial and non – financial incentives
under various subsets as listed below:
A) Types of incentives: Financial were based on
i) Terms and conditions of employment are Salary/wage, Pension, Insurance
(e.g. health), Allowances (e.g. housing, clothing, child care, transportation,
parking), Paid leave, ii) Based on performance payments are Achievement
of performance targets, Length of service, Location or type of work (eg.
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Remote locations) and iii) Other financial support Like Fellowships, Loans:
approval, and discounting
B) Types of incentives: Non-financial were
i) Positive work environment like Work autonomy and clarity of roles and
responsibilities, Sufficient resources, Recognition of work and achievement,
Supportive management and peer structures, Manageable workload and
effective workload management, Effective management of occupational
health and safety risks including a safe and clean workplace, Effective
employee representation and communication, Enforced equal opportunity
policy, Maternity/paternity leave, Sustainable employment, ii) Flexibility in
employment arrangements like Flexible work hours, Planned career breaks,
Support for career and professional development, Effective supervision,
Coaching and mentoring structures, Access to/support for training and
education, Sabbatical and study leave, iii) Access to services such as Health,
Child care and schools, Recreational facilities, Housing and Transport and iv)
Intrinsic rewards in the form of Job satisfaction, Personal achievement,
Commitment to shared values, Respect of colleagues and community,
Membership of team and belonging.
(Source: Adapted from Buchan J. et al. 2005, Adams & Hicks 2001, Caldwell
& Kingma 2007 and Dambisya 2007.)
Andrew McKim and Matthew Hughart, (2005), in their research paper on
‘Institutions Staff Incentive Schemes in Practice: Findings from a Global
Survey of Microfinance’ published the primary findings of a large-scale
research project on the utilization and design of staff incentive schemes
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among 147 microfinance institutions. The aim of this paper was to provide
microfinance practitioners with a better understanding of the use of staff
incentive schemes, including their perceived effects and limitations.
The paper emphasized that benefits would outweigh the costs in
implementing staff incentive schemes. The study also made an attempt to
identify the major reasons for not adopting a staff incentive scheme. The most
common reason, cited by half of the institutions, was the lack of financial
resources. The paper concluded that the adoption of an incentive scheme
requires financial resources both for the implementation of the scheme and to
pay for the actual incentives. Also, it was politically, and often legally, difficult
to reduce fixed salaries to pay for the incentive compensation. In fact by
inducting good monetary incentive schemes a sufficient surplus could be
generated even after distributing incentives and the vicious circle of “no
money to pay incentives leading to lower performance” needs to be broken.
Kruger & Tennant (2005), in their study said that the incentive mechanism has
been employed extensively wherever there is ‘market failure’ in engaging the
good workers. Commonly, bonuses were a means to attract workers to
practice in rural areas, where lack of organizational and community
infrastructure, high demand for services and lack of professional opportunities
and supports could act as disincentives for workers to work there. A study of
oral health professionals in rural and remote Western Australia found, that the
most common reason for leaving rural practice was to access children’s
educational facilities.
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Kingma (2006) cited that, satisfactory salary and allowance and perception
that salaries were fair when compared to other colleagues and peers at the
local level supported the retention of workers and reduce the pull of
international employment opportunities. Offering a basic level of adequate
remuneration has become a key element to securing a workforce in a number
of countries across the world.
Mathauer & Imhoff (2006) said that the historical and cultural context of the
group under study is also important. Individual professionals might have
differing interpretations of what ‘incentives’ mean and differing experiences of
them–both positive and negative. Considering that in the design and
implementation of an incentive program would maximize its effectiveness. It is
also important to recognize that employees, professionals were not a
homogeneous group. They have different needs, preferences and aspirations
depending on their personal and professional backgrounds.
DeGieter et al. (2006) in their study said that it is overwhelming evident from
the literature examining incentive schemes in industrialized countries and in
those with limited resources, that financial incentives were not sufficient in
themselves to fully motivate a workforce or make them feel valued and
recognized for its contribution. The author quoted that, “when establishing the
most appropriate and cost-effective reward strategy, managers should
therefore not rely only on their limited number of formalized financial reward
possibilities, but should also acknowledge the value of nonfinancial and
psychological rewards.” The study suggested that effective incentive schemes
must be included both these elements.
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Mathauer & Imhoff (2006), in their research on measuring incentive
performance raised a number of issues that must be considered. They said
that the measuring the performance of any incentive scheme is the most
complex issue. The measure point to harp upon were weather the scheme:
measures a process or an outcome, seeks to promote a minimum
performance standard or to continuously improve performance, needed to
incorporate adjustments for differences in infrastructure, access to drugs and
therapies, and morbidity of the target population, and if so, how; and has a set
of indicators that appropriately captured key elements of service, including
effectiveness, efficiency and throughput, quality and safety, equity and
access.
Petersen et al. (2006) suggested that incentive schemes should have clear
objectives. The incentives may be targeted at achieving a particular outcome,
such as increased production rate or a particular behavior among staff (e.g.
improved record keeping, reduced absenteeism, improved retention rates).
Banjoko (2006), in his scientific research said that generally, incentives were
regarded as variable payments made to employees or a group of employees
on the basis of the amount of output or results achieved. Alternatively, it could
be payments made with the aim of pushing employees’ performance towards
higher targets.
Record & Mohiddin (2006), in their study pointed out that the level of wages
paid to workers is a crucial element of attracting people to consider a career in
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particular job. It also provided a key means of competing with other potential
employers in domestic and international labour markets.
Stephen H. Wagner, Christopher P. Parker, Neil D. Chirstiansen (2006)
developed a model of the psychological experience of employee ownership in
work groups to investigate antecedents (a climate of self-determination) and
consequences (employee attitudes and financial performance) of
psychological ownership. Based on data from a large retail organization, their
results showed that working in a climate supporting self-determination and
participation is positively correlated to the level of ownership beliefs in the 204
work groups studied by the researcher. Ownership beliefs were positively
related to ownership behaviors and employee’s attitudes toward the
organization, whereas ownership behaviors were positively related to financial
performance.
Kilgore, Joe E, (2007) considered factors affecting retention of highly trained
and specialized personnel in the military service. The need to retain highly
qualified leaders in low density military skill sets is required in the uncertain
security environment of the 21st century. Researcher said that organizations
struggle with the challenge of retaining highly skilled individuals. The cost of
training of seasoned professionals increases their value to other
organizations. The replacement of these personnel requires significant
organizational assets and time to develop the experience and maturity
required for specialized, low-density skill sets. Low-density skill sets were
identified by the organizations and defined as smaller populations within the
organization that required specialized training. Comparison of the data
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between the control group and the test groups provided indicators as to what
factors influenced an individual to stay or depart the service. The control
group consists of the personnel, who were retention eligible between the
completion of the earlier studies in 1998 and 11 September 2001. The test
groups consist of the data post 9/11/01 and are sorted into groups based on
changes in personnel policies. Frequencies and ratio comparisons provided
insight into which measures most affected the decision to stay or leave the
service. This study concludes that effectiveness of monetary incentives in
retaining individuals in the test group is very high and significant.
Phipps, Steven; Bazley, Julian; Povey, Graham, (2007) suggested that the
real task at hand is to change the behavior and aspirations of the middle-
achieving core of one's business. Researchers said, before selecting an
incentive scheme, one would need to get the staff group to take ownership of
it. Considering the usage of rewards that has several levels and hierarchy of
values. Keeping a structure that works over successive quarters saves time
and money. The key thing to remember is that it is not effective to run an
incentive scheme solely aimed at managers, since the risk of de-motivating
other employees is simply too high.
The researcher concluded that to overcome this, various options were
available; one was to run an incentive for all employees in parallel with the
managers' incentive. The second option was to introduce a team reward for
the best performing team, in which all winning members can participate in an
event such as a dinner or activity day.
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Brüggen, Alexander, Moers, Frank, (2007) in their paper, investigated the role
of financial incentives and social incentives in multi-task settings where the
employee made an effort-level choice and an effort-allocation choice. The
study was focused on a setting where these choices were not independent
and an active trade-off between effort level and effort allocation exists. Social
incentives played a crucial role in this trade-off. While financial incentives
increase the effort level, social incentives congruent with the principal's
interest mitigate the distortions in effort allocation associated with financial
incentives, which improves the effectiveness of financial incentives.
Researcher concluded that the participants who receive distorting financial
incentives provided more efforts than participants who receive a fixed wage.
Pomeroy, Ann (2008), author and professor of Organizational Behavior at
Stanford Graduate School of Business said that the return on incentive pay
depends on what the employer wanted to gain by paying for performance.
Author maintained that the current management practice of setting up an
incentive compensation program could have unintended, undesirable
consequences, particularly if incentives were offered mainly to influence
employee behavior.
Kretschmer, Tobias, Puranam, Phanish (2008), in the study titled “Integration
through Incentives within Differentiated Organizations” confronted the post
merger problems of the organizations. The concepts of organizational
differentiation and integration was presented and a formal analysis is
presented on how these two consequences of specialization, shape the
effectiveness of collaborative incentives in complex organizations. The
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research showed that ignoring the coordination challenges created by
differentiation didn’t merely impede the achievement of gains from integration
through incentives, but could lower organizational performance below the
levels achieved when such gains are simply ignored. Thus, treating inter unit
collaboration purely as a problem of motivating cooperation could be
counterproductive in and post-merger integration.
Aime, Federico, Meyer, Christopher J, Humphrey, Stephen E (2010),
analyzed legitimacy as a condition for the effectiveness of team incentive
designs. This study illustrated how the legitimacy of pay and evaluation
processes in teams affect the effectiveness of team-based incentive designs
in organizational work teams. The study presented a theoretical model of the
development of legitimacy in team-based incentive designs and proposed that
the development of legitimacy for both pay dispersion in teams i.e., difference
in allocations of incentives among team members and the use of
interdependent evaluations of performance to promote team effectiveness.
The study concluded that well crafted team rewards could lead to significant
team effectiveness.
According to Martin, Kyle J, CPA, CITP, CIA (2010), when a company
reduced or eliminated financial incentives to employees due to a general
downturn in the economy or the company's own misfortune, the
consequences were not good, the results included increased turnover. Author
considered motivating employees and increasing productivity by using non-
monetary incentives. Managers still need to motivate and drive performance,
so it makes sense to take advantage of inexpensive incentives that has some
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positive effect. Compensation plans that only link annual pay raises to
performance reviews might has unintended consequences, and actually
reduce employee motivation and morale. Author recommended that
companies must design reward systems to meet employees' needs and
desires and enhance Organizational Effectiveness. Management should
develop incentive plans that motivate employees using a combination of
monetary and non-monetary incentives that reduce costs and provide short-
and long-term benefits. Existing incentives programs of the study too often
used only monetary incentives and the criterion for rewarding employees is
based on the success of the company, not individual performance.
Adam Grant and Jitendra Singh (2011) in their research paper studied the
problem of financial incentives as a motivating factor and the ethical and
unethical behavioral outcomes. They revealed in their study that bonuses and
stock options often improve performance. But they could also lead to
unethical behavior, fuel turnover and foster envy and discontent. Researcher
also argued that it is time to cut back on money as a chief motivational force
in business. Instead, they said, employers should pay greater attention to
intrinsic motivation. That means designing jobs that provide opportunities to
make choices, develop skills, do work that matters and build meaningful
interpersonal connections.
The literature on compensation also has related the use of incentives for
attracting and retaining risk- taking employees, or employees who possess a
high degree of openness to new ideas and creativity in solving daily problems
(Mohrman and Mohrman, 1993; and Montemayor, 1996).
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Incentives can therefore boost an organization’s learning capability if it is used
for recompensing attitudes oriented towards flexibility and constant
improvement. (Lei, et al, 1999; O’ Dell and Grayson, 1998; and Stata, 1989)
In a similar vein, Leonard- Barton’s (1992) viewed the organization as a
learning laboratory. She noted that employees found incentive systems
symbolically important, for example, they made employees felt they were
contributing to the organization’s success.
According to Reilly (2003), in evaluating the success of incentives in the
public service (where it has been most widely tried), it would be hard to
establish whether it has aided recruitment or retention, but more attention has
been given to whether or not it has improved employee motivation. The
problem with the use of incentives in the public sector is that many employees
have doubted whether their managers have the skills to exercise their
judgment in a fair and consistent manner. This largely demotivated the
employees and reduced effectiveness of public services.
Researchers Holtmann, M. and Grammling, M. (2008), in their study on
microfinance, consistently substantiated the effectiveness of financial
incentives on job performance, although companies needed to consider the
issue of job quantity versus quality and also be aware of the limitations of
financial incentives. Employees could have vastly different motives for
acquiring wealth – including using money to fulfill psychological needs.
According to authors money alone is less effective motivator for employees
than when it is used in conjunction with non-financial reinforcements.
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Holtmann, M. and Grammling, M. (2008), in the research paper
“Organizational Effectiveness: A New Reality”, discussed that the fairness and
effectiveness of incentives has helped to improve overall Organizational
Effectiveness.
Fairness: targets must be perceived as fair and achievable by staff those who
were trained and equipped accordingly. Better performance should lead to
recognition, higher pay and promotion potential.
Incentives have to be adequate for the job function and hierarchy level of
staff. For example, incentives needed to be calibrated differently to take into
account rural or urban conditions, officers in group and individual etc.
Effectiveness: Staff should be able to achieve financial reward and recognition
a by working harder to help the organization achieve its financial and social
goals; the incentives needed to be significant enough to motivate staff and
make a difference.
This briefing has emphasized the importance of integrating social goals and
financial goals staff incentive systems. The balance of indicators used for
incentive systems must be carefully weighed to ensure that the desired results
are achieved and to minimize any unintended negative consequences.
2.8 Relationship between Different Variables
Having defined the different concepts and on the basis of study of related
literatures this section consolidated the relationship amongst them.
Job Satisfaction and Performance: “Are satisfied workers more
productive?” This “Satisfaction-performance controversy” has raged over the
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years. For examples, the comprehensive Meta-analysis of research literature
found only a 0.17 avg. correlation between job satisfaction and productivity.
The satisfied worker might not be necessarily the highest producer. There
were many possible mediating variables, the most important of which seemed
to be reward. If people receive rewards that they consider to be equitable,
then they would be satisfied and that is most likely to result in better
performance. Also there is considerable debate on this “chick and egg”
problem whether satisfaction leads to performance or performance lead to
satisfaction (Iffuldona & Muchinsky. 1985)
Satisfaction, Absenteeism and Turnover: Job Satisfaction could be an
important indicator of how employees feel about their jobs and a predictor of
work behaviours such as organizational citizenship, absenteeism, and
turnover. Researchers showed moderate relationship between satisfaction
and turnover. High satisfaction might not necessarily keep turnover low. But in
the case of job dissatisfaction there is possibility of high turnover.
Studies conducted by Kim, Roderick and Shea (1973) and also the research
by Scott and Taylor found strong negative associations between job
satisfaction and absenteeism i.e. when job satisfaction is high absenteeism
tends to lower down.
Effectiveness, Motivation, Job Satisfaction and Accident Rates: In
addition to above, high job satisfaction leads to better mental and physical
health and fever job accidents. It also gives more motivation to do the job, and
thus add to Organizational Effectiveness.
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Incentives and motivation: As per the incentive theory of motivation, drives
and desires could be described as a deficiency or need that activates
behavior that is aimed at a goal or an incentive. These were thought to
originate within the individual and may not require external stimuli to
encourage the behavior. Basic drives could be sparked by deficiencies such
as hunger, which motivates a person to seek food; whereas more subtle
drives might be the desire for praise and approval, which motivates a person
to behave in a manner pleasing to others.
By contrast, the role of extrinsic rewards and stimuli can be seen in the
example of training animals by giving them treats when they perform a trick
correctly. The treat motivated the animals to perform the trick consistently,
even later when the treat is removed from the process.
According to this theory the habits of absenteeism, accident due to
carelessness and production wastage can be reduced by incentives over the
period of time and those habits could be incorporated in the behaviors of the
employee.
Drive theory: There are a number of drive theories. The Drive Reduction
Theory grows out of the concept that we have certain biological drives, such
as hunger. As time passes, the strength of the drive increases if it is not
satisfied (in this case by eating). Upon satisfying a drive the drive's strength is
reduced. The theory is based on diverse ideas from the theories of Freud to
the ideas of feedback control systems, such as a thermostat.
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Incentive theory distinguished itself from other motivation theories, such as
drive theory, in the direction of the motivation. In incentive theory, stimuli
"attract", a person towards them, as opposed to the body seeking to re-
establish homeostasis pushing it towards the stimulus. In terms of
behaviorism, incentive theory involves positive reinforcement: the stimulus
has been conditioned to make the person happier. For instance, a person
knows that eating food, drinking water, or gaining social capital will make
them happier. As opposed to in drive theory, which involves negative
reinforcement: a stimulus has been associated with the removal of the
punishment-- the lack of homeostasis in the body? For example, a person has
came to know that if they eat when hungry, it would eliminate that negative
feeling of hunger, or if they drink when thirsty, it would eliminate that negative
feeling of thirst.
Cognitive dissonance: As suggested by Leon Festinger (1959), this occurred
when an individual experienced some degree of discomfort resulting from an
incompatibility between two cognitions. For example, a consumer may seek to
reassure himself regarding a purchase, feeling, in retrospect, that another
decision may have been preferable.
Another example of cognitive dissonance is when a belief and a behavior are
in conflict. A person may wish to be healthy, believed smoking is bad for one's
health, and yet continues to smoke.
Frederick Herzberg Motivation and job satisfaction theory: Frederick
Herzberg's two-factor theory, a.k.a. intrinsic/extrinsic motivation, concludes
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that certain factors in the workplace result in job satisfaction, but if absent,
they don't lead to dissatisfaction.
The factors that could motivate people might change over their lifetime, but
"respect for me as a person" is one of the top motivating factors at any stage
of life.
If all above studies are critically analyzed it can be concluded that in early
years the researches showed that the monetary incentives are better. The
reason behind it is that it satisfies the basic needs that all employees have.
The research findings inferred that the monetary incentives are more
immediate and direct, paid on the basis of employees’ performance and so
the employees experience less subjectivity. Monetary incentives were found
more effective towards improving employees’ performance.
Some researchers found out that the monetary incentive may generate
response just opposite to what they are intended to. Employees became more
target oriented than being creative at workplace, employees turned out to be
competitors than coworkers and they became complacent after achieving the
highest level of targets.
Regarding the non-monetary incentives it was found out that it is the cheapest
way to enhance employee performance in tight economic situation. Non-
monetary incentives were effective in early career stages and for employees
approaching retirement age.
As per Gupta (1975) though the incentive schemes in general and monetary
incentive schemes in particular have a lot of potentiality in improving
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motivation, productivity and other aspects of the Organizational Effectiveness,
to the best our knowledge not much empirical work has been done in India in
this area. The limited studies, which have been carried out so far, are in most
cases purely behavioral in nature.
Martocchio (2006), researcher introduced the concept of relative productivity
in place of rated production or capacity utilization. Effective incentive pay
systems were based on three assumptions: individual employees and work
teams differ in how much they contributed to the organization, not only in what
they do but also in how well they do it; the organization’s overall performance
depends to a large degree on the productivity of individuals and groups within
the organization; to attract, retain, and motivate highly productive workers and
to be fair to all employees, an organization needed to reward employees on
the basis of their relative productivity. As per their study, only 28 percent of
British organizations were reported to carry out any formal evaluation of the
effectiveness of their individual incentive schemes. However, certain
“significant and serious problems” were individual incentive schemes are too
small to act as a motivator and concerns about the accuracy of management
perception of direct link between pay and individual productivity motivated
employees to higher levels of performance.
2.9 Gap Analysis:
The answers to five basic questions helped to identify the Gap in this study.
1. Management dilemma: Can incentives really increase OE?
2. Management question: Whether or not to offer incentives?
3. Research question: Is increase in OE is due to incentives?
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4. Investigative question: What makes incentives perform and its
relationship with OE?
5. Measurement question: How to measure OE and reflection of
incentives on OE?
Literature review has shown that individual have endless need and they work
constantly towards the gratification of these needs. Salary is definitely
important to attract talent in the organization but might not be sufficient to
retain it or to get best out of them willingly. The monetary and non-monetary
incentives are important to get desired output from employees.
Some researchers like Methews (1986), Taylor, Kepner (2001), Andrew
Bellentine et. al. (2003), Dale S Rose (2007), Gupta (1995), Nair an Rao
(1990), Sharma(1991), Jain KK et. al. (2007) have given emphasis on
monetary incentives. These researchers found that monetary incentives were
more direct objective in nature and linked with performance, hence it is
quickest and surest way of motivating employees and leads to win-win
situation.
Some researchers like Arfic Kohn (1993), Scott Jeffery, Merchant (1989),
Andreas Ortmenn (2006), Watson Wyatt (2000) had emphasized on
importance on non-monetary incentives as they were more socially and
physiologically acceptable. It is also cheapest mean for motivation and helps
to satisfy higher level needs like self-esteem and self-actualization. These
studies have upheld one kind of incentive over others. As discussed earlier
these studies have not answered the question why the similar incentive
schemes in the same organization have evoked different attitudinal responses
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and performance? Schemes that failed in one organization are highly
successful in other? What were the factors that governs the success or failure
of incentive plan in the organization? Some attempts were made by
segregating employees in different categories to understand the effectiveness
of the incentive plans but were of preliminary nature. In India researches in
incentive packages were more done on sales, marketing and service staffs.
Not much empirical work has been done in pharmaceutical sectors especially
in manufacturing unit. In previous studies effect of incentives on motivation or
attrition rate kind of studies made but holistic study on Organizational
Effectiveness considering the multiple factors were not done. This is the gap
identified in present research work.
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Chapter – III
OBJECTIVES AND RESEARCH METHODOLOGY
DATA COLLECTION, CLASSIFICATION AND TABULATION
This chapter specifically dealt with conceptualization, objectives and
hypothesis of the study and the data processing that is the basic aspect of
any research methodology. Data collection, classification, tabulation and
statistical techniques used for analysis of the research data have also been
covered under this chapter.
After analyzing related literatures the conceptualization of study with research
objectives the hypotheses building had been done.
3.1 Objectives and hypothesis
Conceptualization of study: In this study, the reflection of monetary and
non-monetary incentives schemes on Organizational Effectiveness is studied
through two main aspects, first the perceived effects and second the
observed effects of monetary and non-monetary incentives on Organizational
Effectiveness.
The perceived effects covered the individual attitudinal or behavioral aspects
like motivation and job satisfaction of the employees. These aspects were
mostly non-tangible in nature.
The observed effects covered the data of individual organization like accident
rates, absenteeism and percentage wastage in production that are tangible in
nature.
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Above two aspects represent health of the organization. The financial aspects
like profitability, turnover or aspects like production targets were not included
in this study due to reasons like instability, lack of uniform scale of
measurement, world economic conditions, market demand and supply,
technologies used and sensitivity of data.
In all on the basis of approach around sixteen to seventeen parameters were
available to assess the OE which were applicable depending on the nature of
the organizations. The determinants of OE in this research have good
coverage of all these aspects.
The basic nature of the study is causal in which effect of variables like
monetary and non-monetary incentives had been studied on determinants of
OE. The attitude of employees acted as independent variables and
determinants of OE were dependent variables.
In this study the employee’s attitude towards monetary incentives and non-
monetary incentives were considered as two independent variables. The
monetary incentives were represented by annual increment, productivity
bonus, medical reimbursement as a cash incentive and canteen, transport
facilities, children education assistance as benefits. The non-monetary
incentives were represented by appreciation letter, display of name on notice
board as a reward, higher job responsibility, opportunity to learn and training
etc. as recognition of employee’s efforts.
The determinants of Organizational Effectiveness were dependent variables.
In this study tangible and non-tangible aspects of Organizational
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Effectiveness have been studied. The behavioral aspects were mostly non-
tangible. The Organizational Effectiveness at individual level has been
represented by its five determinants. In this motivation and job satisfaction
were positive determinants. These determinants were non-tangible aspects of
Organizational Effectiveness whereas absenteeism, accidents rate and
percentage wastage were the three negative determinants. The selection of
this determinant on Organizational Effectiveness was done on the basis of
availability of data, type of organizations under study and previous researches
in this field. With these focal points the research objectives and hypotheses
were designed.
Objectives of the study
The intended objectives of the study are:
1. To study and compare the existing incentive and compensation
packages like monetary, non-monetary incentives in the three
organizations covered under this study.
2. To study and understand the reflection of observed (tangible) and
perceived (non-tangible) effects of these incentive schemes on
selected determinants of Organizational Effectiveness at individual
level.
3. To evaluate and identify the relationship between monetary, non-
monetary incentives and the selected determinants of Organizational
Effectiveness at individual level.
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4. To study and suggest measures to formulate a better and progressive
incentive scheme packages to make it more effective and meaningful
for future.
With these objectives following hypotheses were framed:
Hypotheses
1. H01 = The monetary and non-monetary incentive packages do not differ
significantly across the three organisations.
H11 = The monetary and non-monetary incentive packages differ
significantly across the three organisation.
2. H02 = Employees in three organisations do not differ significantly in
their attitude towards monetary and non-monetary incentives.
H12 = Employees in three organisations differ significantly in their
attitude towards monetary and non-monetary incentives.
3. H03 = The present incentive schemes does not reduce wastage,
absenteeism and accident rate in the organization.
H13 = The present incentive schemes reduces wastage, absenteeism
and accident rate in the organization.
4. H04 = There is no correlation between motivation and job satisfaction
with each other.
H14 = There is a correlation between motivation and job satisfaction
with each other.
5. H05 = There is no correlation between motivation with attitude towards
monetary incentive schemes.
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H15 = There is a correlation between motivation with attitude towards
monetary incentive schemes.
6. H06 = There is no correlation between motivation with attitude towards
non - monetary incentive schemes.
H16 = There is a correlation between motivation with attitude towards
non monetary incentive schemes.
7. H07 = There is no correlation between job satisfaction with attitude
towards monetary incentive schemes.
H17 = There is a correlation between job satisfaction with attitude
towards monetary incentive schemes
8. H08 = There is no correlation between job satisfaction with attitude
towards non-monetary incentive schemes.
H18 = There is a correlation between job satisfaction with attitude
towards non-monetary incentive schemes.
9. H09 = Age of the employees does not have any reflection on
Organisational Effectiveness.
H19 = Age of the employees has a reflection on Organisational
Effectiveness.
10. H010 = Gender of the employees does not have any reflection on
Organisational Effectiveness.
H110 = Gender of the employees has a reflection on Organisational
Effectiveness.
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11. H011 = Designation of the employees do not have any reflection on
Organisational Effectiveness.
H111 = Designation of the employees has a reflection on Organisational
Effectiveness.
12. H012 = Background of the employees does not have any reflection on
Organisational Effectiveness.
H112 = Background of the employees has a reflection on Organisational
Effectiveness.
13. H013 = Employees perceived incentives are not effective in increasing
Organisational Effectiveness at individual level.
H113 = Employees perceived incentives are effective in increasing
Organisational Effectiveness at individual level.
3.2 Data Collection Methods
This study is an exploratory research to evaluate the effectiveness of various
incentives towards Organizational Effectiveness and to suggest more applied
and meaningful incentives for the future. The steps followed in data
collections are as follows:
Pre Study: After conceptualization of broad topic of research work, various
literatures on the related topics from newspapers, periodicals, journal and
magazines were referred to, to understand the recent operations and
concepts about the pharmaceutical industries. Informal discussions were held
with the various operation and HR persons in the field. Visits to Thane
Belapur Industrial Association (TBIA) office were made to know about the
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various industries in the area and the contact person. Officials from FDA office
in Thane, Department of Labour, Industrial Health and Safety i.e. Factories
Office were consulted. More than 15 pharmaceutical industries were visited to
study nature of industries, scale of operations, products, number of
employees, key contact persons and the incentive packages in the industry.
The data of industries was cross tabulated and industries fulfilling the
preliminary criterion were selected. The key persons were again contacted by
visiting various industries, manufacturing plants and corporate offices. After
the visits, on the basis of information collected on nature incentive packages
the details of the employees, willingness to share data etc. A pilot survey
before actual data collection was done from June 2008 to October 2008. The
majority of time was spent in selecting the right organizations in given
criterion. Selection of manufacturing organization having comparable
incentive packages and the willingness of management to share the data for
the research was the basic challenge.
The three organizations were selected suitable to the research criterion in
consultation with guiding teacher. A letter of non-disclosure of secret
information signed by the guiding teacher was handed over to the key person
before starting the research work.
Field Work: This study was conducted on shop floor employees in three
pharmaceutical organizations involved in repetitive manufacturing processes,
located in Navi Mumbai industrial area. The workers, supervisors and
managers up to senior manager’s level were considered under this study.
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The secondary data for three financial years 2006-07, 2007-08 and 2008-09
was collected.
Three pharmaceutical organizations were selected including one large,
medium and small-scale organizations each. The characterization was done
on the basis of financial turn over, size and number of permanent employees
presently working in the unit.
The similar types of monetary and non-monetary incentives were offered in all
the three organizations but they differed on intensity, measure and periodicity.
Two types of data were collected for the study i.e. primary data and
secondary data.
3.2.1 Primary Data Collection
This data collection was done in two stages, in the first stage a pilot study
was conducted to ascertain the research parameters and testing the reliability
of the instruments used in the study.
Pilot Study: In the first phase pilot study was done to carry out a pilot
analysis to test the reliability of the questionnaire. In this phase the
questionnaires were distributed to 40 employees in the three industries.
Responses were received from 38 employees out of which two were
incomplete. So, on the basis of remaining 36 responses some primary
analysis was carried out. On the basis of pilot study, some minor
modifications were made like simplification of language of two questions in the
questionnaire. Reliability test of the questionnaire was also conducted.
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Second stage primary data: In second stage, the primary data on non-
tangible aspects (perceived effects) was collected through three main
methods: 1. Questionnaires, 2. Interviews, 3. Observations through ‘walk-
through-survey’. The method of observation has been resorted to only as a
means to supplement the other two forms of primary data collection.
In the second phase, around 265 questionnaires were distributed and
responses from 168 employees were obtained, however data collected from
the 3 respondents was not used for the final analysis, as they failed to provide
complete information. Hence the final analysis was done with the data
provided by 165 respondents.
The respondents were earlier intimated about the study. Care was taken while
forming the questionnaire that an employee with at least high school
education could fill in the questionnaire in about 30 minutes. Respondents
had access to any information necessary for giving the correct responses.
In the present study the tangible data required to measure the observed
effects was collected from the official data records and files of the various
departments of the organizations under the study such as Industrial health
and safety, Human Resource Department and Time Office. The standard
‘Organizational Data Sheet’ (Annexure- II) was framed to have uniformity in
data collection from all the three organizations.
3.2.2 Secondary Data Collection
The secondary data is collected through desk research including literature
survey, referring e-libraries etc. The secondary data has been also collected
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from the office records and the annual reports of years 2006-07, 2007-08 and
2008-09. Moreover, a number of relevant reference books, periodicals and
articles were also referred for developing the present research study.
3.3 Size and the Design of Sample
This study intended to analyze the shop floor employees in three selected
pharmaceutical manufacturing organization. To draw out a representative
sample considering different demographic parameters the Stratified Random
Sampling technique was used.
Table No. 3.1: Detail of population and sample size
Organization Total Population No. of people selected (Sample size)
Small 114 38
Medium 128 61
Large 156 66
Total 398 165
The final finite universe of predefine population was 398 employees falling
under permanent shop floor employee category in three organizations taken
together. As per the statistical formula for representative sample size of
population 398 employees at 95% confidence level and confidence interval of
6, the sample size came out to be 160. The detail of the sample selected is
given in table no. 3.1. The final size of the sample was 165 respondents. The
drawn out sample size was 41.5% size of total available universe.
3.4 Instrument of data collection - Questionnaire
The collection of primary data on perceived effect was done by the method of
questionnaire. In the first part of the questionnaire, the nature and the purpose
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of the work were explained and the assurances of complete secrecy of
identity of respondent and responses were given to the respondents. Also
some background information such as age, marital status, designation, period
of employment, monthly take-home income, rural and urban background etc.
was collected.
In the second part 36 questions were distributed in three different sections i.e.
motivation, job satisfaction and attitude towards monetary and non-monetary
incentives were framed. For each question respondent were asked to answer
by selecting only one response on Likert’s five-point scale. There were two
additional questions, on the type of organization the employee would like to
work and the other open ended question for suggestion or remarks was asked
towards the end of the questionnaire with thanks note.
The design of the questionnaire is presented in Annexure – I.
Section I: In this part, relating to motivation 15 questions representing
Maslow’s five need categories were asked. Three job factors like salary, fringe
benefit and physical working condition represent “physiological needs”. The
“safety needs” category was represented by two job factors security, and
management policies and practices. The “Social need” category included
three job factors. Finally the “self actualization needs” category was
represented by three factors, interesting nature of work, opportunity for
advancement and achievement. This measure was originally developed by
Kanungo, Gorn A. Dauderis (1976) and has been used in many earlier
researches with creditable findings. In this section, the respondents were
asked to indicate their level of satisfaction or dissatisfaction in respect of the
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above needs. Ordinal weights were assigned ranging from extremely
dissatisfied (1) to extremely satisfied (5). So the response score range in this
section was minimum 15 points to maximum 75 points.
Section II: This section consisted of eight items developed at the Michigan
University to measure job satisfaction. Theoretical model suggested rationale
for combining “importance” and “satisfaction” rating on related concepts
(Vroom, 1864: Porter, 1962). In this questionnaire, best efforts for combining
ratings was done. All the items represent statements to which subject
responses were taken on Likert’s type five point scale. The ordinal weights
were similar to section one with minimum score of 8 points and maximum of
40 points.
Section III: This part of questionnaire measures the attitude of the
respondents towards the present incentive schemes making use of 13
questions. These questions relate to the attitude of the respondents towards
eligibility, coverage and gains from the present incentives and achievability of
targets in respect of quantity and quality of output. The questionnaire has
been framed by the present author on Likert’s type five-point scale on the
basis of available information of the incentive schemes running in three
organizations, literature survey and other related questionnaires. Reliability
coefficients of this part of questionnaire were also found to be very high. The
ordinal weight was minimum score of 13 points to maximum of 65 points.
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Reliability of Questionnaire
Reliability of the test means “the degree to which a test measures
consistently, whatever it is intended to measure”. For the present
investigation, the method used to determine the reliability of these scales was
the “Kuder- Richardson’s modified formula”.
This gives the coefficients of internal consistency of the subject’s responses
on all the items in the test. Such a reliability coefficient provides both
equivalence and homogeneity.
To obtain the data for determining reliability of the scales, data of pilot study
was used.
The Kuder – Richardson’s formula for estimating test reliability (r) of this type
of score is:
2
2
11 t
i
K
Kr
where, K represents the number of separately scored test items, 2
1i
k
i
is the
sum of the question variances for all the questions and 2t is the variance total
test scores for a section from all raters. The reliability coefficients calculated
on the basis of the above formula have been represented in table 3.2.
Table 3.2: Reliability Coefficient of questionnaire
Dimension Nos. of items
Reliability coeff. (r)
Motivation 15 0.8042Job satisfaction 8 0.7617Attitude towards monetary and non monetary incentives
13 0.8235
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3.5 Processing of data: Editing, Coding, Classification and
Tabulation
Editing of data: At this stage checking of data was carried out to correct the
errors and omissions in it.
First stage of editing was done at the time of recording of data for
inconsistency, missing values and proper labeling.
In second stage, editing was done at the time of data analysis for coding,
completeness, accuracy and uniformity.
Coding of data: In coding process, numerical and alphanumeric symbols
were assigned to the responses in the data. The recording of the data in the
spread sheet was done on the basis of coding scheme.
Each question in the questionnaire was numbered on the basis of section and
serial no. like S2.4 indicated fourth question in section two. Similar codes
were also given to various demographic characteristics of respondents like in
gender category ‘1’ for male, ‘2’ for female etc., and selection of organization
the respondent will like to work ‘A’ or ‘B’. The coding is numeric, alphabetical
and zero code for no response.
Classification of data: In case of open ended questions like qualification,
age, net salary, reasons for taking leave etc. Classification of data in various
finite groups was done.
Like age group 21 years to 33 years – as a group one, 34 years to 46 years
as group two and 47 years to 59 years as a group three.
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The rules followed for classification was linked and done as per the
conceptual framework of the research. Secondly, the scheme of classification
was exhaustive i.e. there was a category for every response. Thirdly, the
categories were mutually exclusive and there was no overlapping. The
classification was done in optimum categories in anticipation with the
statistical analysis.
Sample classification as per size and the design: This study analyzed the
shop floor employees in three selected pharmaceutical manufacturing
organization. To draw out a representative sample considering different
demographic parameters Stratified Random Sampling technique was used.
The sample classification as per the various demographic characterization
was done like on age group, gender, background, qualifications and type of
organization. The data classification helped to understand the reflection of
incentives in the three organization and different strata of respondents.
Tabulation of Data: From the data collected with the help of the
questionnaire, a master table was prepared. Tabulation process was adopted
to summarize raw data and displaying them on compact statistical table in the
form of “Excel Worksheet”.
The collected data was tabulated by coding the questions and subsequently
subjected to various statistical analysis. The tabulation in software package
was done in computer in Statistical Package for Social Sciences (SPSS), it is
integrated sets of program suitable for wide range of operations and analysis
such as handling missing data, recoding, variable information, simple
descriptive analysis and multivariate analyses.
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After tabulation of data the mean score for each behavioral characteristic was
obtained.
These mean scores were subjected to various statistical analyses by
employing the following techniques. (Annexure IV)
3.6 Statistical Tools Used for Data Analysis
Comparison of mean scores: Means and standard deviation were
calculated for the scores of the different behavioural aspects on various
demographic characteristics such as age groups, organizational level, place
of origin (rural/urban) for managers, supervisors and workers. To ascertain
whether the mean score differs significantly among these classifications, one-
way analysis of variance test such as ‘t’ and ‘F’ test were also carried out.
Simple co-relation test: To study the relationship between different pairs of
variables such as motivation, job satisfaction and attitude towards monetary
and non-monetary incentives. Simple correlation coefficient was computed
and their statistical significance was tested.
Multiple regression analysis: In order to predict the dependent variables by
considering other variables as independent variable the regression
coefficients were determined. Partial R2, the coefficient, which determines the
amount of variance that is contributed by each predictor variable, was also
compared. Also the ‘F’ test to test the significance of total variance in
dependent variable has been tested.
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Percentage analysis: In addition for questions like understanding the
perception of respondents on specific questions related to monetary and non-
monetary incentives the percentage analysis was carried out to know how
much percent of the population in each category understands it perfectly.
Percentage analysis was also done on some particular questions in the
questionnaire like on absenteeism and satisfaction with incentive schemes.
Trend analysis: This was done to see the trend in secondary data like
absenteeism, accident rate and percentage wastage over three years.
3.7 Limitation of study
The study has following limitations:
This study was conducted in Thane- Belapur industrial area of Navi Mumbai
only. Some of the concerns in data collection were time constraint, selection
of organizations having functional incentive schemes and their willingness to
share these sensitive and confidential data.
The study was conducted in one large, medium and small organization
engaged in production activities. The study has limited its scope to operative
level employee from workers, supervisors and managers up to middle level
management level. Pre determined Universe, sample size, statistical
techniques used and significance level were some of the other limitation of the
study. The limitation of standard questionnaire and random responses of
respondents can pose its own limitations.
The secondary data of three consecutive financial years i.e. 2006-07, 2007-08
and 2008-09 for all the employees on shop floor was analyzed. The selected
122
determinants of OE at individual level in the study such as motivation, Job
satisfaction, absenteeism rate, accident rate and percentage wastage can
posed their own limitation as they did not cover directly aspects like
profitability, adaptability and turnover.
123
Chapter - IVDATA PROCESSING: PART – I
FINDINGS OF TANGIBLE DATA - OBSERVED EFFECTS
This chapter deals with analysis of secondary data (observed effect) that was
tangible in nature. In this chapter data has been analyzed in two parts. In first
part the comparative analysis of the monetary and non-monetary incentives in
the three organizations was carried out. The second part of data analysis
dealt with data on absenteeism, accident rates and production wastage in the
three organizations.
4.1 Comparative study of incentives in three organizations
To make comparative analysis of incentives offered in the three organizations,
the incentives schemes were tabulated under two aspects:
i) Monetary incentives: In this, cash incentives and benefits have been
tabulated. Actual percentage of basic pay and DA were taken to calculate
various other incentives offered in the three organizations.
ii) Non-monetary incentives: In this, various appreciation awards and
recognition schemes operating in these organizations have been tabulated.
The weight of 1 has been given if the scheme was available and 0 if scheme
was not available. The annual frequency was also added to weight like, if the
scheme was given quarterly, then weight of 4 (1 for each quarter) was added.
Table no. 4.1 shows different monetary and non - monetary incentives exists
in three different organizations.
124
Table 4.1: Comparison of Monetary and Non- monetary Incentives
Type Particulars Designation
Large Organizati
on
Medium Organization
Small Organization
Annual Increment Mgr 20% 10% 20%MonetaryIncentives
Supervisor 15% 14% 15%worker 10% 17% 6%
Annual Bonus Mgr 16.66% 10.00% 8.33%Supervisor 8.33% 8.33% 8.33%worker 8.33% 20% 8.33%
Medical ReimbursementMgr 16.66% 8.33% 4%(insurance)Supervisor 10% 8.33% 3%(insurance)
worker 8.33% 8.33% 2%(insurance)
LTC Mgr 16.66% 8.33% 6%Supervisor 8.33% 8.33% 2%worker 8.33% 8.33% 2%
Subsidized Transport Mgr 6% 1.50% 2%
Supervisor 3% 1% 2%worker 2% 1% 2%
Subsidized Canteen (% subsidy) Mgr 100% 40% 20%
Supervisor 100% 40% 20%
worker 100% 40% 20%
Monthly Productivity Bonus Mgr 100% 30% 60%
Supervisor 80% 20% 50%worker 75% 25% 40%
Children Education Allowance Mgr 4% 1.50% 0%
Supervisor 2% 1% 0%
Worker 2% 1% 0%
125
TypeParticulars Designa-
tionLarge
Organization
Medium Organization
Small Organization
Best worker of the month award
Mgr 0 0 1
Supervisor 1 0 2
Non –Monetary incentives
worker 12 1 12Award for cleanest department
Mgr 2 1 12
Supervisor 2 1 12worker 2 1 12
Nil LTA award Mgr 4 4 4
Supervisor 4 4 4worker 4 4 4
Name on notice board Mgr 0 0 1Supervisor 1 1 1worker 1 1 1
Higher certification training Mgr 1 0 1
Supervisor 1 1 1worker 0 0 0
Long service Emblem Mgr 1 0 1Supervisor 1 0 1worker 1 0 1
Department picnic Mgr 1 0 2Supervisor 1 0 1worker 1 0 1
Production Target Mgr 12 2 4Supervisor 12 2 4worker 12 2 4
Children felicitation Mgr. 1 0 1(Education/achievements) Supervisor 1 0 1
worker 1 0 1Family get together Mgr 4 0 2
Supervisor 1 0 1worker 1 0 1
Safety award Mgr 1 1 0Supervisor 1 1 0worker 1 1 0
Presenteeism Mgr 0 1 1Supervisor 0 1 1worker 0 1 1
Quality production Mgr 1 1 1Supervisor 1 1 1worker 1 1 1
126
4.1.1 Comparison of mean score and standard deviation
The statistical analysis of incentives are as given in table no. 4.2.
Table 4.2: Comparison of Means - Monetary Incentives
Incentives (as percentage of basic) N Mean
Std. Deviation
Std. Error
95% Confidence Interval for Mean Minimum Maximum
Lower Bound
Upper Bound
Annual Increment Small 3 13.67 7.095 4.096 -3.96 31.29 6 20
Medium 3 13.67 3.512 2.028 4.94 22.39 10 17
Large 3 15.00 5.000 2.887 2.58 27.42 10 20
Total 9 14.11 4.729 1.576 10.48 17.75 6 20
Annual Bonus Small 3 8.3300 .00000 .00000 8.3300 8.3300 8.33 8.33
Medium 3 12.7767 6.31107 3.64370 -2.9009 28.4542 8.33 20.00
Large 3 11.6633 4.40707 2.54442 .7156 22.6111 8.33 16.66
Total 9 10.9233 4.33917 1.44639 7.5880 14.2587 8.33 20.00
Medical Reimbursement
Small3 3.00 1.000 .577 .52 5.48 2 4
Medium 3 8.33 .000 .000 8.33 8.33 8 8
Large 3 11.11 4.809 2.777 -.84 23.05 8 17
Total 9 7.48 4.332 1.444 4.15 10.81 2 17
LTC Small 3 3.33 2.309 1.333 -2.40 9.07 2 6
Medium 3 8.33 .000 .000 8.33 8.33 8 8
Large 3 11.11 4.809 2.777 -.84 23.05 8 17
Total 9 7.59 4.331 1.444 4.26 10.92 2 17
Subsidized Transport
Small3 2.000 .0000 .0000 2.000 2.000 2.0 2.0
Medium 3 1.167 .2887 .1667 .450 1.884 1.0 1.5
Large 3 3.667 2.0817 1.2019 -1.504 8.838 2.0 6.0
Total 9 2.278 1.5230 .5077 1.107 3.448 1.0 6.0
SubsidizedCanteen(%subsidies )
Small3 20.00 .000 .000 20.00 20.00 20 20
Medium 3 40.00 .000 .000 40.00 40.00 40 40
Large 3 100.00 .000 .000 100.00 100.00 100 100
Total 9 53.33 36.056 12.019 25.62 81.05 20 100
Monthly Productivity Bonus
Small3 50.00 10.000 5.774 25.16 74.84 40 60
Medium 3 25.00 5.000 2.887 12.58 37.42 20 30
Large 3 85.00 13.229 7.638 52.14 117.86 75 100
Total 9 53.33 27.500 9.167 32.19 74.47 20 100
Children Education Allowance
Small 3 .000 .0000 .0000 .000 .000 .0 .0
Medium 3 1.167 .2887 .1667 .450 1.884 1.0 1.5
Large 3 2.667 1.1547 .6667 -.202 5.535 2.0 4.0
Total 9 1.278 1.3017 .4339 .277 2.278 .0 4.0
127
From the tables 4.1 and on comparing the mean scores in Table 4.2 following
observations can be drawn. These observations are also supplemented by
interview and walkthrough observations:
i. All the three organization overall offer similar types of incentive
packages but they differ in intensity and periodicity.
ii. The comparative analysis of incentive schemes in all the three
organizations shows that organizations differ in amount of
incentives offered. In case of monetary incentives large
organization is best followed by medium organization and then
comes the small organization.
iii. The non-monetary incentives are non-tangible in nature. These
incentives are best in small organization followed by large
organization and then the medium organization.
In all the organizations monetary and non-monetary incentives offered to take
care of determinate of Organizational Effectiveness were considered in this
study like Motivation, Job Satisfaction, Employee Absenteeism, Wastage and
Accident Rates.
4.1.2 Monetary incentives - Analysis of variance
To check whether the monetary incentive schemes in three organizations
differ significantly analysis of variance was carried out.
To compare monetary incentive packages in all the three organization the
quantum of the incentive paid was converted to the percentage of basic pay.
The comparative mean scores are given in table no. 4.3(a) and 4.3(b)
128
Table 4.3(a): descriptive analysis-Total Monetary Incentives
Size N MeanStd.
Deviation Std. Error
95% Confidence Interval for Mean
Minimum MaximumLower Bound
Upper Bound
Small 3 82.3300 20.00000 11.54701 32.6472 132.0128 62.33 102.33Medium 3 74.4367 9.85797 5.69150 49.9481 98.9252 64.99 84.66Large 3 150.2100 35.01959 20.21857 63.2165 237.2035 123.99 189.98Total 9 102.3256 41.62136 13.87379 70.3325 134.3186 62.33 189.98
Table 4.3(b): Analysis of Variance-Total Monetary Incentives
Sum of Squares Df Mean Square F Sig.Between Groups 10411.597 2 5205.799 9.061 .015Within Groups 3447.103 6 574.517Total 13858.700 8
F (2, 6) = 9.061, p< .05 as p is less than alpha( level of significance i.e. 0.05),
the groups differ significantly
From the table no. 4.3(b), on the basis of observed F and p values it can be
said that overall the monetary incentives schemes differ significantly in the
three organizations under study. Though all the three organizations offer
similar kind of incentive schemes to take care of absenteeism, accidents,
wastage, motivation and job satisfaction above results shows they differ in
quantum.
4.1.3 Non-monetary Incentives - Analysis of variance
The means scores obtained for non-monetary schemes in all the three
organizations was compared to check the variation in the schemes the results
are explained in following paragraphs.
In case of non monetary incentives from table no. 4.4(a), 4.4(b) and equation
of ANOVA, it can be concluded that the non-monetary incentives also differ
significantly across the three organizations.
129
Table 4.4(a): descriptive analysis-Total Non-monetary Incentives
Size N MeanStd.
DeviationStd. Error
95% Confidence Interval for Mean
Minimum MaximumLower Bound
Upper Bound
Small 3 34.0000 5.19615 3.00000 21.0920 46.9080 31.00 40.00Medium 3 11.0000 1.00000 .57735 8.5159 13.4841 10.00 12.00Large 3 32.0000 6.08276 3.51188 16.8896 47.1104 28.00 39.00Total 9 25.6667 11.74734 3.91578 16.6369 34.6965 10.00 40.00
Table 4.4(b) : Analysis of Variance -Total Non-monetary Incentives
Sum of Squares df Mean Square F Sig.Between Groups 974.000 2 487.000 22.477 .002Within Groups 130.000 6 21.667Total 1104.000 8
F (2, 6) = 22.477, p< .05 as p is less than alpha (level of significance
i.e. 0.05), the groups differ significantly
So it can be said that overall monetary and non-monetary incentive schemes
differ significantly in all the three organization under study. The above test
results reject the first null hypothesis and alternate hypothesis gets accepted.
This indicates aptness sensitivity of design issues of incentive schemes in any
organization. Though the similar types of monetary and non-monetary
incentives were offered in the three organizations the incentives differ in
quantum and frequency. This indicates that on face value the incentives may
appear similar but schemes may differ. The large organization has good
monetary and non – monetary incentives. Small organization has good non-
monetary incentives while Medium organization have minimum of both types
of incentives.
4.2 Observed (tangible) effect of Monetary and Non-
monetary Incentives
The secondary data on absenteeism, accidents and wastage is collected on
monthly basis from each organization. The variables for the data collection
130
were employee absenteeism in terms of man-days, number of accidents
occurred on shop floor and production wastage in terms of yield achieved,
rework and recovery of solvents.
4.2.1 Simple statistical analysis of secondary data
The secondary data collected from time office, safety, health and production
planning departments from April 2006 to March 2009 for three consecutive
years was analyzed with simple statistical tools like mean, mode and median.
This analysis helped to understand the central tendency and to compare the
amount of change over the three years of the study. Data is presented in
Table No. 4.5
The table of sample means, mode and median shows that there is an overall
reduction in average absenteeism, accident rates and percentage wastage
over the period of three years in all the three organizations.
Further to establish the equality and for the purpose of comparability of the
results, the scores were converted to per hundred employees in all the
organization. This is done by dividing each score by number of employees
and multiplying it by hundred.
Formula used is as under:
Obtained score
Score = ______________ X 100
No. of employees
131
Table 4.5: Simple Statistics – Absenteeism, Accidents and Wastage
Organization Period Tool
Employees
Absenteeism : total No. of Accidents
% wastage
Present Man-hours Minor Major(+Loss,-Gain)
Large Year mean 138 70.75 3 0.75 2.052006 -07 mode 133 76 1 0 *
median 136 76 3 0 1.88
2007 -08 mean 155 42.58 2.33 0.42 1.63mode 154 * 2 0 *median 156 41 2 0 1.48
2008 - 09 mean 156 38.08 1.83 0.25 1.38mode 156 32 0 0 *median 156 40 1 0 1.10
Medium Year mean 106 25.08 2.17 0.25 2.052006 -07 mode 107 14 2 0 *
median 107 21 2 0 1.9
2007 -08 mean 112 24.58 0.58 1.25 0.25mode 111 29 0 0 *median 112 24.5 0 1 0.125
2008 - 09 mean 115 25.42 0.42 1.42 -0.02mode 114 21 0 0 *median 114 22 0 1.5 0.16
Small Year mean 47 1 0.92 0.42 0.082006 -07 mode 47 0 0 0 *
median 47 0 0 0 0.7
2007 -08 mean 56 3.58 1.08 0.25 -0.38mode 57 0 0 0 *median 57 0 0 0 -0.115
2008 - 09 mean 71 0.58 1 0.25 -0.40mode 70 0 0 0 0.89median 70 0 0 0 -1.02
* Calculation of mode is not possible.
132
On comparing mean scores of accidents rate, absenteeism rate and
percentage wastage per hundred employees the findings are given in Table
No.4.6.
4.2.2 Absenteeism in man-days per hundred employees
Over the three years absenteeism has reduced in all the three organizations.
As per the table 4.6, the initial absenteeism is highest in large organization
followed by medium organization and least in the small organization.
Over the period of three years, absenteeism in the large organization was
reduced to 52.51%, medium organization 18.10% and in small 62.12%
respectively.
In medium organization the reduction in absenteeism was very less significant
also the initial level of absenteeism in medium organization was less as
compared to large organization.
4.2.3 Accident Rate per hundred employees
In the large organization minor and major accidents were reduced by 48.88%
and 73.48% respectively. In medium organization minor accidents reduced by
83.66% and major accidents and increased by 43.0% . In small organization,
minor and major accidents reduced by 26.89% and 58.78% respectively. In
small organization in second year one of the manager met with major accident
on road while going from office to factory that has affected the absenteeism
and accident profile of that organization.
133
Table 4.6 : Organization wise Comparative Data on Absenteeism, accidents and wastage for three years
Size of Organization Year
Statistical Test
Absenteeism man-
days/100
No. of Minor Accidents
(Near Miss)/100
No. of Major Accidents/100
ProductionWastage% (+ loss / -gain)/100
Small First Year Mean 2.19 1.92 .88 .22
N 12 12 12 12
Std. Deviation 2.82 2.56 1.65 3.58
Second Year Mean 6.13 1.90 .44 -.71
N 12 12 12 12
Std. Deviation 16.89 2.54 .79 2.51
Third Year Mean .85 1.41 .36 -.55
N 12 12 12 12
Std. Deviation 1.12 2.09 .93 1.60
Medium First Year Mean 23.84 2.048 .23 1.90
N 12 12 12 12
Std. Deviation 13.15 1.51 .57 1.30
Second Year Mean 21.95 .52 1.12 .22
N 12 12 12 12
Std. Deviation 9.14 .71 1.22 1.39
Third Year Mean 22.18 .37 1.24 -.015
N 12 12 12 12
Std. Deviation 10.58 .59 1.09 .74
Large First Year Mean 51.83 2.17 .55 1.46
N 12 12 12 12
Std. Deviation 24.54 1.15 .79 .98
Second Year Mean 27.42 1.50 .27 1.05
N 12 12 12 12
Std. Deviation 15.03 1.01 .43 .721
Third Year Mean 24.38 1.17 .16 .89
N 12 12 12 12
Std. Deviation 12.95 1.44 .40 .76
Total First Year Mean 25.96 2.05 .56 1.20
N 36 36 36 36
Std. Deviation 25.89942 1.78783 1.10919 2.31860
Second Year Mean 18.5012 1.3094 .6105 .1868
N 36 36 36 36
Std. Deviation 16.45309 1.68728 .93048 1.81397
Third Year Mean 15.7977 .9818 .5892 .1086
N 36 36 36 36
Std. Deviation 14.29319 1.52614 .96147 1.23218
Total Mean 20.0849 1.4457 .5853 .4968
N 108 108 108 108
Std. Deviation 19.83461 1.71421 .99425 1.89166
134
In the case of accidents (minor and major) there was a notable reduction in
number of accident in small and large organization, but there was little
reduction in overall number of accidents in the medium organization. It was
observed that the number of major accidents have increased over the period
of three years in medium organization.
4.2.4 Percentage Wastage per employee
Positive reduction in percentage wastage was observed in all the three
organizations when the production yields, rework, recall and recovery of
solvents were compared.
The small organization has moved from production loss to production gain in
terms of yield. Over the three years production yield has increased by 0.76%.
Similarly medium organization showed production gain of 1.88% in the last
year. The large organization has shown 0.7% reduction in wastage over three
years.
4.3 Trend Analysis in Small, Medium and Large Organization
To supplement and conform the above test results the trend analysis was
carried out. In this section an attempt was made to identify the trends in
absenteeism, accidents and wastage over the three years. For this purpose
regression coefficient “R” is calculated to understand the trends and linear
equation between the variables over the period of three years. The results are
tabulated below for three organizations i.e. small, medium and large
organizations respectively. There were four equations for each organizations,
135
one for absenteeism, two equations for accidents (minor and major) and one
for percentage wastage which are discussed as under-
Trend analysis of Small Organization
Small organization: Absenteeism trend
Table 4.7 (a): Absenteeism man-days/100 employeesSmall Organization–Regression
Model R R SquareAdjusted R
SquareStd. Error of the Estimate F Sig.
1 .057(a) .003 -.026 10.01304 .111 .741(a)
a Predictors: (Constant), Year
Table 4.7 (b): Small Organization– Absenteeism- Coefficients
ModelUn-standardized
CoefficientsStandardized Coefficients t Sig.
B Std. Error Beta1 (Constant) 4.412 4.415 .999 .325
Year -.681 2.044 -.057 -.333 .741
a Dependent Variable: Absenteeism man-days/100
Equation: Absenteeism (r) =4.412 - .681(year), p >.05
In case of small organization absenteeism is showing negative trend that
indicates there is reduction in absenteeism by 0.6821 per year the p value is
not significant.
Small organization: Accident trends
Table 4.8 (a): No. of Minor Near Miss Accidents/100 employeesSmall Organization–Regression
Model Summary
Model R R SquareAdjusted R
SquareStd. Error of the Estimate F Sig.
1 .091(a) .008 -.021 2.36980 .285 .597(a)
a Predictors: (Constant), Year
136
Table 4.8 (b): No. of Minor Near Miss Accidents/100 employeesSmall Organization– Coefficients
ModelUn-standardized
CoefficientsStandardized Coefficients t Sig.
B Std. Error Beta1 (Constant) 2.259 1.045 2.162 .038
Year -.258 .484 -.091 -.534 .597
a Dependent Variable: No. of Minor Accidents (Near Miss)/100
Accidents Minor (r) = 2.259 - .258 (year), p <.05
In case of small organization accidents minor is showing negative trend that
indicates there is reduction in accidents by 0.258 per year. From the p value F
and t are highly significant.
Table 4.9 (a): No. of Major Accidents/100 employeesSmall Organization– Regression
Model R R SquareAdjusted R
SquareStd. Error of the Estimate F Sig.
1 .182(a) .033 .005 1.17301 1.170 .287(a)
a Predictors: (Constant), Year
Table 4.9 (b): No. of Major Accidents/100 employeesSmall Organization– Coefficients
ModelUn-standardized
CoefficientsStandardized Coefficients t Sig.
B Std. Error Beta1 (Constant) 1.079 .517 2.086 .045
Year -.259 .239 -.182 -1.082 .287
a Dependent Variable: No. of Major Accidents/100
Accidents Major (r) = 1.079 - .259 (year), p <.05
In case of small organization accidents major is showing negative trend that
indicates reduction in accidents by 0.259 per year. From The p value F and t
are highly significant. Accidents were reduced after introduction of incentives
in the small organization.
137
Small organization: Production wastage trends
Table 4.10 (a): Production Wastage% /100 employees Small Organization – Regression
Model Summary
Model R R SquareAdjusted R
SquareStd. Error of the Estimate F Sig.
1 .120(a) .014 -.015 2.66020 .493 .487(a)
a Predictors: (Constant), Year
Table 4.10 (b): Production Wastage% /100 employeesSmall Organization –Coefficients
ModelUn-standardized
CoefficientsStandardized Coefficients t Sig.
B Std. Error Beta1 (Constant) .417 1.173 .355 .725
Year -.381 .543 -.120 -.702 .487
a Dependent Variable: Production Wastage% (+ loss / - gain)/100
Wastage (r) = 0.417 - .381 (year), p>.05
In case of small organization production wastage% is showing negative trend
that indicates a reduction in wastage by 0.381 per year. From The p value t is
not significant.
Trend Analysis of Medium Organization
The results of trend analysis in medium organizations are discussed below
Medium organization: Absenteeism trends
Table 4.11 (a): Absenteeism man-days/100 employeesMedium Organization- Regression Model Summary
Model R R SquareAdjusted R
SquareStd. Error of the Estimate F Sig.
1 .064(a) .004 -.025 10.92641 .139 .712(a)
a Predictors: (Constant), Year
138
Table 4.11 (b): Absenteeism man-days/100 employeesMedium Organization-Coefficients
ModelUn-standardized
CoefficientsStandardized Coefficients t Sig.
B Std. Error Beta1 (Constant) 24.319 4.818 5.048 .000
Year -.830 2.230 -.064 -.372 .712
a Dependent Variable: Absenteeism man-days/100
Absenteeism (r) = 24.319 - .830(year), p<.01
In case of medium organization absenteeism is showing negative trend which
indicates there is reduction in absenteeism by 0.830 per year the p value is
highly significant.
Medium organization: Accidents trends
Table 4.12 (a): No. of Minor Near Miss Accidents/100 employees Medium Organization- Regression
Model R R SquareAdjusted R
SquareStd. Error of the Estimate F Sig.
1 .554(a) .307 .287 1.06099 15.078 .000(a)
a Predictors: (Constant), Year
Table 4.12 (b): No. of Minor Near Miss Accidents/100 employeesMedium Organization – Coefficients
ModelUn-standardized
CoefficientsStandardized Coefficients t Sig.
B Std. Error Beta1 (Constant) 2.661 .468 5.687 .000
Year -.841 .217 -.554 -3.883 .000
a Dependent Variable: No. of Minor Accidents (Near Miss)/100 employees
Accidents Minor (r) = 2.661 - .841 (year), p <.01
Over the three years, in case of medium organization accidents minor is
showing negative trend which indicates there is reduction in accidents by
139
0.841 per year. From the p value F and t are highly significant.
Table 4.13 (a): No. of Major Accidents/100 employees Medium Organization- Regression
Model R R SquareAdjusted R
SquareStd. Error of the Estimate F Sig.
1 .389(a) .152 .127 1.00454 6.072 .019(a)
a Predictors: (Constant), Year
Table 4.13 (b): No. of Major Accidents/100 employeesMedium Organization- Coefficients
ModelUn-standardized
CoefficientsStandardized Coefficients T Sig.
B Std. Error Beta1 (Constant) -.143 .443 -.323 .749
Year .505 .205 .389 2.464 .019
a Dependent Variable: No. of Major Accidents/100 employees
Accidents Major (r) = -.143 + .505 (year), p <.01
In case of medium organization accidents major is showing positive trend that
indicates there is increase in major accidents by 0.505 per year. From the p
value t it is not significant.
Medium organization: Production Wastage trends
Table 4.14 (a): Production Wastage% /100 employees Medium Organization- Regression Model Summary
Model R R SquareAdjusted R
SquareStd. Error of the Estimate F Sig.
1 .553(a) .306 .285 1.21525 14.957 .000(a)
a Predictors: (Constant), Year
Table 4.14 (b): Production Wastage% /100 employees Medium Organization- Coefficients
Model
Un-standardized Coefficients
Standardized Coefficients
T Sig.B Std. Error Beta1 (Constant
)2.623 .536 4.895 .000
Year -.959 .248 -.553 -3.867 .000
a Dependent Variable: Production Wastage% (+ loss / - gain)/100 employees
Wastage (r) = 2.623 - .959 (year), p<.01
140
In case of medium organization production wastage% is showing negative
trend which indicates there is reduction in wastage by 0.959 per year. From
the p value t are highly significant. In medium organization there is significant
reduction in production wastage.
Trend Analysis of Large Organization
Large organization: Absenteeism trends
Table 4.15 (a): Absenteeism man-days/100 employeesLarge Organization- Regression
Model Summary
Model R R SquareAdjusted R
SquareStd. Error of the Estimate F Sig.
1 .525(a) .276 .255 18.67986 12.957 .001(a)
a Predictors: (Constant), Year
Table 4.15 (b): Absenteeism man-days/100 employeesLarge Organization- Coefficients
ModelUn-standardized
CoefficientsStandardized Coefficients T Sig.
B Std. Error Beta1 (Constant) 61.997 8.237 7.527 .000
Year -13.725 3.813 -.525 -3.600 .001
a Dependent Variable: Absenteeism man-days/100 employees
Absenteeism (r) = 61.997 – 13.725(year), p <.01
In case of large organization absenteeism is showing negative trend which
indicates there is reduction in absenteeism by 13.725 per year from the p
value t is highly significant.
Large organization: Accidents trends
The table 4.16(a) and 4.16(b) of large organization accidents minor is showing
negative trend which indicates there is reduction in accidents by 0.497 per
year. From the p value, F and t are highly significant.
141
Table 4.16 (a): No. of Minor Near Miss Accidents /100 employeesLarge Organization – Regression
Model R R SquareAdjusted R
SquareStd. Error of the Estimate F Sig.
1 .330(a) .109 .082 1.19598 4.144 .050(a)
a Predictors: (Constant), Year
Table 4.16 (b): No. of Minor Near Miss Accidents /100 employeesLarge Organization – Coefficients
ModelUn-standardized
CoefficientsStandardized Coefficients T Sig.
B Std. Error Beta1 (Constant) 2.610 .527 4.949 .000
Year -.497 .244 -.330 -2.036 .050
a Dependent Variable: No. of Minor Accidents (Near Miss)/100 employees
Accidents minor (r) = 2.610 - .497 (year), p <.01
Table 4.17 (a): No. of Major Accidents /100 employees Large Organization – Regression
Model R R SquareAdjusted R
SquareStd. Error of the Estimate F Sig.
1 .282(a) .079 .052 .56191 2.933 .096(a)
a Predictors: (Constant), Year
Table 4.17 (b) : No. of Major Accidents /100 employees Large Organization – Coefficients
ModelUn-standardized
CoefficientsStandardized Coefficients t Sig.
B Std. Error Beta1 (Constant) .720 .248 2.906 .006
Year -.196 .115 -.282 -1.713 .096
a Dependent Variable: No. of Major Accidents/100 employees
Accidents major (r) =0.720 - .196 (year), p <.01
In case of large organization accidents major is showing negative trend which
indicates there is reduction in accidents by 0.196 per year. From the p value,
F and t are highly significant
142
Large organization: Production Wastage trends
Table 4.18 (a): Production Wastage% /100 employeesLarge Organization – Regression
Model R R SquareAdjusted R
SquareStd. Error of the Estimate F Sig.
1 .284(a) .080 .053 .81915 2.975 .094(a)
a Predictors: (Constant), Year
Table 4.18 (b): Production Wastage% /100 employeesLarge Organization – Coefficients
ModelUn-standardized
CoefficientsStandardized Coefficients t Sig.
B Std. Error Beta1 (Constant) 1.709 .361 4.731 .000
Year -.288 .167 -.284 -1.725 .094
a Dependent Variable: Production Wastage% (+ loss / - gain)/100 employees
Wastage (r) = 1.709 - .288 (year), p<.05.
The obtained trend equation showed that there is negative trend production
wastage% /100 employees in large Organization.
On all the three parameters, the large organization has outperformed and
showed best results followed by medium and small organization.
When the overall reflection of incentive schemes on accident rates on shop
floor, employees, employee absenteeism and production wastage were
tabulated together, following results were obtained which are summarized in
table no. 4.19.
143
Table 4.19: Percentage and trend analysis of absenteeism, accidents and wastage per 100 employees
Organization
Absenteeism
Percentage----------------
Trend
Minor accidentsPercentage----------------
trend
Major accidentsPercentage----------------
Trend
Production WastagePercentage----------------
Trend
Large52.51%-13.725 **
48.88%-0.497 **
73.48%-0.196 **
0.7%-0.288 *
Medium18.10%-0.83 **
83.66%-0.841 **
43.0%+ 0.505
1.88%-0.595 **
Small62.12%-0.681
26.89%-0.258 *
58.78%-0.259 *
0.76%-0.381
*significant at .05 level **significant at .01 level { indicates reduction in % and indicates increase in %}
In the Figure 1,2,3 and 4 these results are represented graphically with the
values for the three consecutive years data. The trend lines were also shown
in the graph which can be differentiated by same colour shadows.
Fig. 1 : Trends of Absenteeism Fig. 2 : Trends of Wastage (Man hours / 100 employees) (% Loss- Gain / 100 employees)
144
Fig. 3 : Trends Major Accident Fig. 4 : Trends Minor Accident (Accidents / 100 employees) (Accidents / 100 employees)
1. As per table no. 4.19, the results were read and interpreted as; in large
organization there is reduction in production wastage percentage by
0.7% in three years. Results also showed negative trend, which
indicates there is significant reduction in wastage by 0.288 per year,
which is significant at.05 level.
2. After in-depth discussions with the concerned officials of the three
organizations, about the wastage data and the factors contributing to
the wastage were equipment and technology overall 43%,
approximately 51% by human factor which is controllable and 6% were
by other reasons like high cost of recovery, rework, over production, no
use of recovered products and quality of raw material used. These
51% controllable factors could largely be reduced by incentives.
3. When the accidents were studied by causes around 89% of accidents
were seen due to human error, negligence, not following of safety and
operating procedures and lack of supervision. Approximately 9%
145
percent accidents occurred due to equipment malfunctioning, over
current or lack of standard safety and personal protective equipments.
The remaining 2% of accidents were due to other reasons which were
outside the scope of organizations.
146
Chapter - V
DATA PROCESSING - PART II
FINDINGS OF PRIMARY DATA - PERCEIVED EFFECTS
Perceived (Non tangible) effect of Monetary and Non- Monetary Incentive
In this chapter the analysis of the primary data collected through
questionnaire, observation and walk through surveys was carried out to
understand the reflection of monetary and non – monetary incentives on
Organizational Effectiveness. This was termed as “Perceived Effects” in this
study. The respondents from all the three organizations were studied on the
basis of demographic characterization. The findings were as under:
5.1 Comparison of demographic data - Sample homogeneity
Sample was classified on the basis of organization and different demographic
characters, the details of the sample are as under:
Table 5.1 (a): Sample by Size of Organization
Frequency Percent
Valid Small 38 23.0Medium 61 37.0Large 66 40.0Total 165 100.0
Table 5.1 (b): Sample by Gender of respondents
Frequency PercentValid Male 93 56.4
Female 72 43.6Total 165 100.0
147
Table 5.1 (c): Sample by Marital Status of respondents
Frequency PercentValid Married 118 71.5
Single 47 28.5Total 165 100.0
Table 5.1 (d): Sample by Rural Urban Background of respondents
Frequency PercentValid Rural 77 46.7
Urban 88 53.3Total 165 100.0
Table 5.1 (e): Sample by Designation of respondents
Frequency PercentValid Manager 25 15.2
Supervisor 55 33.3Workman 85 51.5Total 165 100.0
Table 5.1 (f): Sample design by Qualifications of respondents
Frequency PercentValid HSC 21 12.7
<=12th 30 18.2Graduate 79 47.9P.G. 35 21.2Total 165 100.0
Table 5.1 (g): Sample by Age of respondents
Frequency PercentValid 21-33 63 38.1
34-4647-59
5745
34.627.3
Total 165 100.0The sampling technique selected for study was stratified random sampling
and is very much demographically homogeneous in nature across the
148
organizations. This was also evident from descriptive statistics after
comparing the sample mean and standard deviation in Table no:- 5.2 (a) and
5.2 (b).
Table 5.2 (a): Descriptive Statistics on Demographic Data
StrataOrganization N Mean
Std. Deviation Std. Error
95% Confidence Interval for Mean
Minimum
Maximum
Lower Bound
Upper Bound
Age Small 38 37.76 10.244 1.662 34.40 41.13 23 57
Medium 61 35.33 10.465 1.340 32.65 38.01 22 53
Large 66 38.14 10.214 1.257 35.63 40.65 21 58
Total 165 37.01 10.334 .805 35.42 38.60 21 58
Work Experience in Years
Small38 11.49 6.880 1.116 9.23 13.75 4 27
Medium 61 11.99 9.592 1.228 9.54 14.45 1 34
Large 66 15.17 8.732 1.075 13.03 17.32 2 30
Total 165 13.15 8.795 .685 11.80 14.50 1 34
Take homeSalary
Small38 11831.58 5268.730 854.701 10099.79 13563.37 6500 36000
Medium 61 11448.03 5126.514 656.383 12135.07 14760.99 7000 32000
Large 66 18831.82 14372.850 1769.176 15298.53 22365.11 3500 68000
Total 165 15229.27 10335.940 804.652 13640.46 16818.09 3500 68000
Distance Home-Office Kms.
Small
38 14.39 9.111 1.478 11.40 17.39 3 40
Medium 61 14.56 11.266 1.442 11.67 17.44 2 40
Large 66 14.14 8.786 1.082 11.98 16.30 3 40
Total 165 14.35 9.787 .762 12.85 15.86 2 40
Travel Time Hrs.
Small38 1.61 .790 .128 1.35 1.86 1 3
Medium 61 1.52 .766 .098 1.33 1.72 1 3
Large 66 1.56 .747 .092 1.38 1.74 1 3
Total 165 1.56 .760 .059 1.44 1.67 1 3
Leave Days
Small38 14.58 6.293 1.021 12.51 16.65 0 23
Medium 61 13.70 7.060 .904 11.90 15.51 0 30
Large 66 13.88 22.308 2.746 8.39 19.36 0 172
Total 165 13.98 14.984 1.167 11.67 16.28 0 172
The comparison of mean scores shows that the respondents differ
significantly on salary i.e., organizational factor, age, gender, marital status,
distance from home and work experience across the three organizations
149
under study did not differ significantly. The homogeneous nature of sample
on demographic characterization was very important and made comparison
more effective and meaningful.
Salary: The employees in the three organizations differ significantly only on
monthly gross salary. The average monthly take- home salary of the
employees in large organization was nearly double than the monthly salaries
of their counterparts in small and medium organization. The difference was
mainly due to monthly monetary incentives paid in the three organizations.
Table 5.2 (b): Demographic Data: ANOVA
Strata Sum of Squares dfMean
Square F Sig.Age Between
Groups277.892 2 138.946 1.306 .274
Within Groups
17236.084 162 106.39
Total 17513.976 164Work Experience in Years
Between Groups
457.377 2 228.69 3.030 .059
Within Groups
12227.736 162 75.48
Total 12685.112 164
Take Home Salary Between Groups
1488796061.712 2 744398030.8 7.522 .001
Within Groups
16031593851.016 162 98960455.87
Total 17520389912.727 164
Distance Home-Office Kms.
Between Groups
5.711 2 2.856 .029 .971
Within Groups
15703.901 162 96.938
Total 15709.612 164
Travel Time Hrs. Between Groups
.153 2 .077 .131 .877
Within Groups
94.550 162 .584
Total 94.703 164
Leave Days Between Groups
18.921 2 9.461 .042 .959
Within Groups
36802.982 162 227.179
Total 36821.903 164
150
Leaves: From the background information collected, the reasons for taking
long leave were analyzed. Table 5.3 (a) shows data on percentage wise
distribution of respondents on reasons for taking leaves. The reasons for
taking leave were very important indicator of organizational culture, health,
stress levels and effects of incentive schemes. The respondents differ
significantly across the three organizations on the reasons for taking leave.
Respondents taking leave for “Sight Seeing” and “Medical Reason” were
maximum in small organization.
In “Social Obligations” category maximum percentage is from employees of
large organization.
Table 5.3 (a): Reason for taking long leaves * Size of organization
Leave Reasons
Size of Organization
TotalSmall Medium Large
Reason for taking Leave
No Long Leave Count 2 8 20 30
% within Size of Organization
5.3% 13.1% 30.8% 18.3%
Sight Seeing Count 12 9 5 26
% within Size of Organization
31.6% 14.8% 7.7% 15.9%
Medical Reasons
Count 20 14 19 53
% within Size of Organization
52.6% 23.0% 27.7% 31.7%
Social Obligations
Count 1 9 20 30
% within Size of Organization
2.6% 14.8% 30.8% 18.3%
Work-load Count 0 13 2 15
% within Size of Organization
.0% 21.3% 3.1% 9.1%
Others Count 3 8 0 11
% within Size of Organization
7.9% 13.1% .0% 6.7%
Total Count 38 61 66 165
% within Size of Organization
100.0% 100.0% 100.0% 100.0%
151
In “High Workload” category the maximum respondents were from medium
organizations, while other two organizations has nearly nil score. In the
category of “Other Reasons” the employees from the medium organization
were highest in number.
The sample also differs significantly when compared between the
organizations on reasons for taking leave by the employees, as indicated by
Chi- Square value in table below 5.3(b)
Table 5.3 (b): Reason for taking long leaves- Size of organization:Chi-Square Tests
Particulars Value DfAsymp. Sig.
(2-sided)Pearson Chi-Square 60.890(a) 10 .000
Likelihood Ratio 67.248 10 .000Linear-by-Linear Association
1.289 1 .256
N of Valid Cases 165 a 4 cells (22.2%) have expected count less than 5. The minimum expected count is 2.55.
5.2 Employees’ Attitude towards incentives
In previous findings it was observed that, overall the similar types of
incentives were offered to the employees in all the three organizations. The
monetary as well as non-monetary incentive schemes significantly vary in the
three organizations. This difference was due to difference in frequency and
quantum. To find out whether this variation affects employees attitude towards
incentive schemes Analysis of Variance Test was done the results are shown
in table 5.4(a) and 5.4(b).
On the basis of ‘One- way ANOVA’ table, it was observed that the
respondents from all the three organizations differ significantly on their
152
attitude towards monetary and non-monetary incentives.
Table 5.4 (a): Employees attitude towards incentives: Descriptive
Incentives
Org. type N Mean
Std. Deviatio
nStd.
Error95% Confidence Interval for Mean
Minimum
Maximum
Lower Bound
Upper Bound
Monetary Incentives
Small38
22.2105
3.44186.5583
421.079
223.341
815.00 32.00
Medium
6125.180
35.07447
.64972
23.8807
26.4800
17.00 34.00
Large66
28.4394
3.37013.4148
327.610
929.267
919.00 35.00
Total 165
25.8000
4.74624.3694
925.070
426.529
615.00 35.00
Non-Monetary Incentives
Small
3823.921
14.74417
.76961
22.3617
25.4804
14.00 30.00
Medium
6119.475
45.99891
.76808
17.9390
21.0118
8.00 28.00
Large66
21.8788
3.20344.3943
221.091
322.666
313.00 29.00
Total 165
21.4606
5.02493.3911
920.688
222.233
08.00 30.00
Table 5.4 (b): Employees attitude towards incentives - ANOVA
IncentivesSum of Squares df
Mean Square F Sig.
Monetary Incentives Between Groups
972.810 2 486.405 28.953 .000
Within Groups 2721.590 163 16.800
Total 3694.400 165
Non-Monetary Incentives
Between Groups
481.987 2 240.994 10.670 .000
Within Groups 3659.007 163 22.586
Total 4140.994 165
F (2, 163) = 28.953, p<.05 as p is less than alpha, the groups differ significantly
The results indicated that little variations like quantum and periodicity in
similar types of incentives could evoke different attitudinal responses towards
incentives.
153
5.3 Percentage Analysis: Employee perception of incentive
schemes
To understand the exact difference in responses reflection of incentives on
Organizational Effectiveness at individual level the percentage analysis of
responses to selected questions in the questionnaire was carried out. For
clear attitudinal picture the respondents falling in ‘highly satisfied’ and
‘moderately satisfied’ categories were clubbed together, similarly the
respondents who were ‘dissatisfied’ and ‘moderately dissatisfied’ were
clubbed together. Overall percentage analysis on selected questions was
carried out and further in-depth analysis at organizational level was also
studied. The section and question number in questionnaire are given as, S1.2
indicates second question in section one.
A) Question S1.2 on perception of employee towards company policies.
The overall analysis of responses shows that 12.7 % of the respondents were
dissatisfied, 31.5% of respondents were neither satisfied nor dissatisfied, 55.8
% of respondents were satisfied with their respective overall company’s
policies.
On analyzing the data with respect to the size of organization, in a small
organization, none of the respondent is dissatisfied with their respective
company’s policies, 10.5 % of respondents were neither satisfied nor
dissatisfied, 89.5 % of respondents were satisfied.
In medium organization 34.4 % of the respondent were dissatisfied, 42.6 % of
respondents were neither satisfied nor dissatisfied, 28 % of respondents were
satisfied with their respective company’s policies.
154
Table 5.5: Employees perception towards company policies
Size of Organization
TotalSmall Medium Large
S1.2 With the kind of company
policies, I am
Extremely dissatisfied Count 0 2 0 2
% within Size of
Organization .0% 3.3% .0% 1.2%
Moderately dissatisfied Count 0 19 0 19
% within Size of
Organization .0% 31.1% .0% 11.5%
Neither dissatisfied nor
satisfied
Count 4 26 22 52
% within Size of
Organization 10.5% 42.6% 33.3% 31.5%
Moderately satisfied Count 23 13 25 61
% within Size of
Organization 60.5% 21.3% 37.9% 37.0%
Strongly satisfied Count 11 1 19 31
% within Size of
Organization 28.9% 1.6% 28.8% 18.8%
Total
Count 38 61 66 165
% within Size of
Organization 100.0% 100.0% 100.0% 100.0%
In large organization none of the respondent is dissatisfied, 33.3 % of
respondents were neither satisfied nor dissatisfied, 66.7% of respondents
were satisfied with their respective company’s policies.
B) Question S1.3 on perception of employee towards their salary
The overall analysis of respondent shows that 26.7 % of the respondents
were dissatisfied, 29 % of respondents were neither satisfied nor dissatisfied,
44.3 % of respondents were satisfied with the salary they received.
On analyzing the data with respect to the size of organization, in a small
organization, 5.3 % of the respondents were dissatisfied, 26.3 % of
respondents were neither satisfied nor dissatisfied, 68.4 % of respondents
were satisfied with the salary they received.
155
Table 5.6: S1.3 Employees perception towards their salary
Size of Organization
TotalSmall Medium LargeS1.3 With the amount of salary that I receive I am
Extremely dissatisfied
Count 0 1 1 2
% within Size of Organization .0% 1.6% 1.5% 1.2%
Moderately dissatisfied
Count 2 36 4 42
% within Size of Organization 5.3% 59.0% 6.1% 25.5%
Neither dissatisfied nor satisfied
Count 10 20 18 48
% within Size of Organization 26.3% 32.8% 27.3% 29.1%
Moderately satisfied
Count 17 4 27 48
% within Size of Organization 44.7% 6.6% 40.9% 29.1%
Strongly satisfied
Count 9 0 16 25
% within Size of Organization 23.7% .0% 24.2% 15.2%
Total Count 38 61 66 165
% within Size of Organization 100.0% 100.0% 100.0% 100.0%
In medium organization 60.6 % of the respondent were dissatisfied, 32.8 % of
respondents were neither satisfied nor dissatisfied, 6.6 % of respondents
were satisfied with salary they received.
In large organization 7.6 % of the respondent were dissatisfied, 27.3 % of
respondents were neither satisfied nor dissatisfied, 65.1 % of respondents
were satisfied with the salary they received.
C) Question S1.4 on satisfaction of employee towards incentives and
benefit plans
The overall analysis of respondent shows that 16.9 % of the respondents
were dissatisfied with their respective incentive plans, 29.1 % of respondents
were neither satisfied nor dissatisfied, 54 % of respondents were satisfied with
the kind of incentives and benefit plans.
156
Table 5.7: S1.4 Employees satisfaction towards incentives and benefit plans
Size of Organization
TotalSmall Medium Large
S1.4 With the kind of incentives &benefit plans
Extremely dissatisfied
Count 0 6 0 6
% within Size of Organization
.0% 9.8% .0% 3.6%
Moderately dissatisfied
Count 2 18 2 22
% within Size of Organization
5.3% 29.5% 3.0% 13.3%
Neither dissatisfied nor satisfied
Count 17 23 8 48
% within Size of Organization
44.7% 37.8% 12.1% 29.1%
Moderately satisfied
Count 15 11 35 61
% within Size of Organization
39.5% 18.0% 53.0% 37.0%
Strongly satisfied
Count 4 3 21 28
% within Size of Organization
10.5% 4.9% 31.8% 17.0%
Total Count 38 61 66 165
% within Size of Organization
100.0% 100.0% 100.0% 100.0%
On analyzing the data with respect to the size of organization, in a small
organization, 5.3 % of the respondents were dissatisfied, 44.7 % of
respondents were neither satisfied nor dissatisfied, and 50 % of respondents
were satisfied with the kind of incentives and benefit plans.
In medium organization 39.3 % of the respondents were dissatisfied, 37.8 %
of respondents were neither satisfied nor dissatisfied, 22.9 % of respondents
were satisfied with the kind of incentives and benefit plans.
In large organization 3 % of the respondent were dissatisfied, 12.1 % of
respondents were neither satisfied nor dissatisfied, 84.8 % of respondents
were satisfied with the kind of incentives and benefit plans.
157
D) Question S1.5 employees perception on chance of future promotion
The overall analysis of respondent shows that 18.8 % of the respondent were
dissatisfied, 18.2 % of respondents were neither satisfied nor dissatisfied 63
% of respondents were satisfied with the chances of future promotion.
Table 5.8: S1.5 on employee’s perception regarding chance of future promotion
Size of Organization
TotalSmall Medium Large
S1.5 With the chance of future promotion
Extremely dissatisfied
Count 0 5 0 5
% within Size of Organization
.0% 8.2% .0% 3.0%
Moderately dissatisfied
Count 0 12 14 26
% within Size of Organization
.0% 19.7% 21.2% 15.8%
Neither dissatisfied nor satisfied
Count 0 21 9 30
% within Size of Organization
.0% 34.4% 13.6% 18.2%
Moderately satisfied
Count 13 20 33 66
% within Size of Organization
34.2% 32.8% 50.0% 40.0%
Strongly satisfied
Count 25 3 10 38
% within Size of Organization
65.8% 4.9% 15.2% 23.0%
Total Count 38 61 66 165
% within Size of Organization
100.0% 100.0% 100.0% 100.0%
On analyzing the data with respect to the size of organization, in a small
organization, none of the respondent is dissatisfied, none of respondent was
neither satisfied nor dissatisfied, and 100 % of respondents were satisfied
with the chances of future promotion.
In medium organization 27.9 % of the respondent were dissatisfied, 34.4 % of
respondents were neither satisfied nor dissatisfied, 37.7 % of respondents
were satisfied with the chance of future promotion.
158
In large organization 21.2 % of the respondent were dissatisfied, 13.6 % of
respondents were neither satisfied nor dissatisfied, 65.8 % of respondents
were satisfied with the chance of future promotion.
E) Question S2.6 employee’s perception on changing job
The overall analysis of respondents shows that 60.6 % of the respondents
would make genuine efforts to change their job. 16.4 % of respondents would
make average efforts and 23 % of respondents were satisfied with their job
and would not put efforts for changing their job.
On analyzing the data with respect to the size of organization, in a small
organization, 55.2 % of the respondent would not make genuine efforts to
change their job, 36.8 % of respondents would make average efforts, and 7.9
% of respondents were not satisfied and would try for job change.
Table 5.9: S2.6 employee’s perception on changing job
Size of Organization
TotalSmall Medium Large
S2.6 Taking everything into consideration, how likely is it that you will make a genuineeffort to change your job.
Very Low
Count 11 18 30 59
% within Size of Organization
28.9% 29.5% 45.5% 35.8%
Low Count 10 9 22 41
% within Size of Organization
26.3% 14.8% 33.3% 24.8%
Average Count 14 4 9 27
% within Size of Organization
36.8% 6.6% 13.6% 16.4%
High Count 3 14 5 22
% within Size of Organization
7.9% 23.0% 7.6% 13.3%
Very High
Count 0 16 0 16
% within Size of Organization
.0% 26.2% .0% 9.7%
Total Count 38 61 66 165
% within Size of Organization
100.0% 100.0% 100.0% 100.0%
159
In medium organization 44.3 % of the respondent would not make genuine
efforts to change their job, 6.6 % of respondents would make average efforts,
49.2 % of respondents were not satisfied with their job and would take efforts
to change their present job.
In large organization 78.8 % of the respondent would not take genuine efforts
to change their job, 13.6 % of respondents would make average efforts, 7.6 %
of respondents were not satisfied with their job and would take efforts for job
change.
E) Question on employee’s perception on kind of company they would prefer to work with.
The company you would like to work - company providing best pay package
or company with good learning possibilities, growth and better facilities but
less salary. This is done to differentiate the employees in two either side and
to avoid the central tendency of reply.
The overall analysis of respondent shows that 44.2 % of the respondents
preferred company which provided best pay package and 55.2 % of
respondents preferred the company with good learning possibilities, growth
and better facilities even if it offers less salary. Whereas 0.6 % respondents
were not sure about the choice they would make.
In medium organization 44.3 % of the respondent would not make genuine
efforts to change their job, 6.6 % of respondents would make average efforts,
49.2 % of respondents were not satisfied with their job and would take efforts
to change their present job.
160
Table 5.10: Employee’s perception on kind of company they would prefer to work with.
Size of Organization
TotalSmall Medium LargeTick one of the companies you will like to work for from below A and B
A Count 4 21 48 73
% within Size of Organization
10.5% 34.4% 72.7% 44.2%
B Count 33 40 18 91
% within Size of Organization
86.9% 65.6% 27.3% 55.2%
3 Count 1 0 0 1
% within Size of Organization
2.6% .0% .0% .6%
Total Count 38 61 66 165
% within Size of Organization
100.0% 100.0% 100.0% 100.0%
In medium organization 34.4 % of the respondents preferred company
providing best pay package and 65.6 % of respondents preferred the
company with good learning possibilities, growth and better facilities even if it
offer less salary.
In large organization 72.7 % of the respondents preferred company providing
best pay package and 27.3 % of respondents preferred the company with
good learning possibilities, growth and better facilities even if they were
offered less salary.
G) Question S3.1 on employee’s perception on recognizing employee
efforts.
The overall analysis of respondent shows that respondents agreed that
company made efforts to recognize employee’s efforts and 13.9 % of the
respondent disagreed that company made efforts to recognize and reward
employee’s effort, 15.8 % of respondents neither agreed nor disagreed, 70.3
161
% of respondents were satisfied and agreed that their company reward
employee’s effort.
Table 5.11: S3.1 employee’s perception on recognizing employee efforts
Size of Organization
TotalSmall Medium Large
S3.1 My organization makes efforts to recognize or reward employees efforts
StronglyDisagree
Count 1 1 1 3
% within Size of Organization
2.6% 1.6% 1.5% 1.8%
Disagree Count 3 16 1 20
% within Size of Organization
7.9% 26.2% 1.5% 12.1%
Neither Agree nor Disagree
Count 1 22 3 26
% within Size of Organization
2.6% 36.1% 4.5% 15.8%
Agree Count 16 12 37 65
% within Size of Organization
42.1% 19.7% 56.1% 39.4%
Strongly Agree
Count 17 10 24 51
% within Size of Organization
44.7% 16.4% 36.4% 30.9%
Total Count 38 61 66 165
% within Size of Organization
100.0% 100.0% 100.0% 100.0%
On analyzing the data with respect to the size of organization, In a small
organization, 10.4 % of the respondent disagreed that company made efforts
to recognize and rewarded employees effort, 2.6 % of respondents neither
agreed nor disagreed, 86.8 % of respondents were satisfied and agreed that
their company reward employees effort.
In medium organization 27.8 % of the respondent disagreed that company
made efforts to recognized and reward employees effort, 36.1 % of
respondents neither agreed nor disagreed, 36.1 % of respondents were
satisfied and agreed that their company reward employees effort. In large
organization, 3.0 % of the respondent disagreed that company made efforts to
162
recognize and reward employees effort, 4.5 % of respondents neither agreed
nor disagreed, 92.5 % of respondents were satisfied and agreed that their
company reward employee’s effort.
H) Question S3.2 Contribution of monetary incentives in increasing
employee’s income
In response to the question whether “the monetary incentives have helped to
increase employee’s income?” following results were obtained.
The overall analysis of respondent said that 10.3 % of the respondents did not
agree that the monetary incentives has helped to increase employee’s
income, 19.4 % of respondents said at moderate extent, 70.3 % of
respondents were satisfied and agreed that the monetary incentives has
helped to increase employee’s income.
Table 5.12: S3.2 Employees perception in contribution of monetary incentives in increasing employee’s income
Size of Organization
TotalSmall Medium Large
S3.2 The monetary incentive schemes have helped me to increase my real income
Not at all Count 2 1 0 3
% within Size of Organization
5.3% 1.6% .0% 1.8%
To a little extent
Count 5 8 1 14
% within Size of Organization
13.2% 13.1% 1.5% 8.5%
To moderate extent
Count 12 9 11 32
% within Size of Organization
31.6% 14.8% 16.7% 19.4%
To great extent
Count 14 18 30 62
% within Size of Organization
36.8% 29.5% 45.5% 37.6%
To very great extent
Count 5 25 24 54
% within Size of Organization
13.2% 41.0% 36.4% 32.7%
Total Count 38 61 66 165
% within Size of Organization
100.0% 100.0% 100.0% 100.0%
163
On analyzing the data with respect to the size of organization, in a small
organization, 18.5 % of the respondents did not agree that the monetary
incentives has helped to increase employee’s income, 31.5 % of respondents
said at moderate extent, 50.0 & of respondents were satisfied and agreed that
the monetary incentives has helped to increase employee’s income.
In medium organization, 14.7 % of the respondents did not agree that the
monetary incentives has helped to increase employee’s income, 14.8 % of
respondents said at moderate extent, 70.5 % of respondents were satisfied
and agreed that the monetary incentives has helped to increase employee’s
income.
In large organization, 1.5 percent of the respondents did not agree that the
monetary incentives has helped to increase employee’s income, 16.7 Percent
of respondents said at moderate extent, 82.9 percent of respondents were
satisfied and agreed that the monetary incentives has helped to increase
employee’s income.
I) Question S3.3 on employees perception on monetary incentives as a
cause for absenteeism
The overall analysis of respondent shows that 69.1 % of the respondents felt
that monetary incentives lead to more absenteeism and agreed with the
statement, 7.9 % of respondents said at moderate extent, 23 % of
respondents did not agree with this statement.
164
Table 5.13: S3.3 on employee’s perception on monetary incentives as a cause for absenteeism
On analyzing the data with respect to the size of organization, in a small
organization, 29.0 % of the respondents agreed with the statement, 10.5 % of
respondents said at moderate extent, 60.6 % of respondents did not agree
that monetary incentives lead to more absenteeism.
In medium organization, 75.4 % of the respondents felt monetary incentives
lead to more absenteeism and agreed with the statement, 11.5 % of
respondents say at moderate extent, 13.1 % of respondents did not agree
with the statement.
In large organization, 86.4 % of the respondents felt monetary incentives lead
to more absenteeism and agreed with the statement, 3 % of respondents said
at moderate extent, 10.6 % of respondents did not agree with statement.
Size of Organization
TotalSmall Medium Large
S3.3 The monetary incentive scheme puts pressure to perform leading to more absenteeism
StronglyDisagree
Count 3 20 31 54
% within Size of Organization
7.9% 32.8% 47.0% 32.7%
Disagree Count 8 26 26 60
% within Size of Organization
21.1% 42.6% 39.4% 36.4%
Neither Agree nor Disagree
Count 4 7 2 13
% within Size of Organization
10.5% 11.5% 3.0% 7.9%
Agree Count 15 8 7 30
% within Size of Organization
39.5% 13.1% 10.6% 18.2%
Strongly Agree
Count 8 0 0 8
% within Size of Organization
21.1% .0% .0% 4.8%
Total Count 38 61 66 165
% within Size of Organization
100.0% 100.0% 100.0% 100.0%
165
J) Question S3.4 on employee’s perception towards increase in wastage
of time and material because of monetary incentives schemes.
In response to the statement that the monetary schemes has increased
wastage of time and material following responses were obtained.
The overall analysis of respondent shows that 74 % of the respondents not
felt so and did not agree with this, 15.8 % of respondents neither agreed nor
disagreed, 10.3 % of respondents agreed with this statement.
Table 5.14: S3.4 on employee’s perception towards increase in wastageof time and material because of monetary incentives schemes
Size of Organization
TotalSmall Medium LargeS3.4 The monetary incentive scheme has led to increased wastageof time and material
StronglyDisagree
Count 15 24 21 60
% within Size of Organization 39.5% 39.3% 31.8% 36.4%
Disagree Count 10 21 31 62
% within Size of Organization 26.3% 34.4% 47.0% 37.6%
Neither Agree nor Disagree
Count 9 8 9 26
% within Size of Organization 23.7% 13.1% 13.6% 15.8%
Agree Count 4 7 5 16
% within Size of Organization 10.5% 11.5% 7.6% 9.7%
Strongly Agree
Count 0 1 0 1
% within Size of Organization .0% 1.6% .0% .6%
Total Count 38 61 66 165
% within Size of Organization 100.0% 100.0% 100.0% 100.0%
On analyzing the data with respect to the size of organization, in a small
organization, 66.8 % of the respondents did not feel so and they did not agree
with this, 23.7 % of respondents neither agreed nor disagreed, 10.5 % of
respondents agreed with this.
166
In medium organization, 73.8 % of the respondents did not feel so and they
not agreed with this, 13.1 % of respondents said at moderate extent, 13.1 %
of respondents agreed with this.
In large organization, the overall analysis of respondents show that 78.8 % of
the respondents did not feel so and not agreed with this 13.6 % of
respondents said at moderate extent, 7.6 % of respondents agreed with this
statement.
K) Question S3.5 on employee’s perception on Appreciation and less
accidents rates
In response to question “The appreciation and rewards has increased safety
awareness leading to lesser accidents in the organization?” Following
responses were collected.
Table 5.15: S3.5 Employee’s perception on Appreciation and less accidents rates
Size of Organization
TotalSmall Medium Large
S3.5 Appreciation and rewards has increased safety awareness leading to lesser accidents in my organization
Not at all Count 1 3 1 5
% within Size of Organization
2.6% 4.9% 1.5% 3.0%
To a little extent
Count 0 18 8 26
% within Size of Organization
.0% 29.5% 12.1% 15.8%
To moderate extent
Count 7 4 16 27
% within Size of Organization
18.4% 6.6% 24.2% 16.4%
To great extent
Count 7 17 31 55
% within Size of Organization
18.4% 27.9% 47.0% 33.3%
To very great extent
Count 23 19 10 52
% within Size of Organization
60.5% 31.1% 15.2% 31.5%
Total Count 38 61 66 165
% within Size of Organization
100.0% 100.0% 100.0% 100.0%
167
Overall respondents in all three organization taken together 18.8 %
respondents felt that at a very little extent the non monetary incentives were
able to reduce the accident, 16.4 % respondents replied at moderate extent
while 64.8 % of employees felt that non- monetary rewards were helped to
reduce the accidents at great extent.
On analyzing the data with respect to the size of organization, in a small
organization, 2.6 % respondents felt that at a very little extent the non-
monetary incentives were able to reduce the accident, 18.4 % respondents
replied at moderate extent while 78.9 % of employees felt that non- monetary
rewards were helped to reduce the accidents at great extent.
In medium organization 34.4 % respondents felt that at a very little extent the
non monetary incentives were able to reduce the accident, 6.6 % respondents
replied at moderate extent while 59 % of employees felt that non-monetary
rewards were helped to reduce the accidents at great extent.
In large organization 13.6 % respondents felt that at a very little extent the non
monetary incentives were able to reduced the accident, 24.2 % respondents
replied at moderate extent while 62.2 % of employees felt that non-monetary
rewards were helped to reduce the accidents at great extent.
L) Question S3.6on employee’s perception that monetary incentives are
important than higher responsibilities.
In response to question that employee believe that annual increment and
bonus were more important than higher responsible position and opportunity
to learn new things.
168
The overall analysis of respondent shows that 26.7 % strongly disagreed with
this, 3 % of the neither agreed nor disagreed while 70.3 % agreed that annual
increment and bonus were more important than higher responsible position
and opportunity to learn new things.
Table 5.16: S3.6 on employee’s perception that monetary incentives are important than higher responsibilities
Size of Organization
TotalSmall Medium Large
S3.6 I believe that higher annual increments and bonus are more important for me than higher responsible position and opportunity to learn new things
StronglyDisagree
Count 14 13 5 32
% within Size of Organization
36.8% 21.3% 7.6% 19.4%
Disagree Count 7 4 1 12
% within Size of Organization
18.4% 6.6% 1.5% 7.3%
Neither Agree nor Disagree
Count 1 2 2 5
% within Size of Organization
2.6% 3.3% 3.0% 3.0%
Agree Count 5 3 36 44
% within Size of Organization
13.3% 4.9% 54.6% 26.7%
Strongly Agree
Count 11 39 22 72
% within Size of Organization
28.9% 63.9% 33.3% 43.6%
Total Count 38 61 66 165
% within Size of Organization
100.0% 100.0% 100.0% 100.0%
On analyzing the data with respect to the size of organization, in a small
organization, 55.2 % strongly disagreed with this statement, 2.6 % of the
neither agreed nor disagreed while 42.2 % agreed that annual increment and
bonus were more important than higher responsible position and opportunity
to learn new things.
169
In medium organization 27.9 % strongly disagreed with this, 3.3 % neither
agreed nor disagreed while 68.8 % agreed that annual increment and bonus
were more important than higher responsible position and opportunity to learn
new things.
In large organization 9.1 % strongly disagreed with this, 3 % of the neither
agreed nor disagreed while 87.9 % agreed that annual increment and bonus
were more important than higher responsible position and opportunity to learn
new things.
M) Question S3.7 Employee’s perception on use of non-monetary
incentives makes them feel more responsible towards production and
minimizing production wastage.
Appreciation letters, display of names on notice board made employees feel
more responsible towards production quality and reduce wastage.
The overall analysis of respondent said that 12.1 % of the respondent
disagreed that wastage has been reduced by non-monetary incentives, 17.6
% of respondents neither agreed nor disagreed, 70.3 % of respondents were
strongly agreed with this.
On analyzing the data with respect to the size of organization, in a small
organization 13.1 % of the respondents disagreed that wastage has been
reduced by non-monetary incentives, 7.9 % of respondents neither agreed nor
disagreed, 78.9 percent of respondents strongly agreed with the statement.
170
Table 5.17:S3.7 employee’s perception on use of non-monetary incentives feel more responsible towards production and minimizing
production wastage.
Size of Organization
TotalSmall Medium Large
S3.7 Appreciation letters, display of names on notice boards makes employee feel more responsible towards production & quality and reduce wastage
Strongly Disagree
Count 1 1 0 2
% within Size of Organization
2.6% 1.6% .0% 1.2%
Disagree Count 4 13 1 18
% within Size of Organization
10.5% 21.3% 1.5% 10.9%
Neither Agree nor Disagree
Count 3 14 12 29
% within Size of Organization
7.9% 23.0% 18.2% 17.6%
Agree Count 19 16 43 78
% within Size of Organization
50.0% 26.2% 65.2% 47.3%
Strongly Agree
Count 11 17 10 38
% within Size of Organization
28.9% 27.9% 15.2% 23.0%
Total Count 38 61 66 165
% within Size of Organization
100.0% 100.0% 100.0% 100.0%
In medium organization, 22.9 % of the respondents agreed that wastage has
been reduced by non-monetary incentives, 23.0 % of respondents neither
agreed nor disagreed, 54.1 % of respondents strongly agreed.
In large organization 1.5 % of the respondents agreed that wastage has been
reduced by non monetary incentives, 18.2 % of respondents neither agreed
nor disagreed, 80.4 % of respondents were strongly agreed with the
statement.
171
N) Question S3.8 on motivation and job satisfaction by superiors
appreciation.
The overall analysis of respondent shows that 4.2 % of the respondent
disagreed that appreciation from superiors leads to motivation and higher
satisfaction in job, 22.4 % of respondents neither agreed nor disagreed, 73.4
% of respondents strongly agreed with this.
On analyzing the data with respect to the size of organization, in a small
organization, none the respondent has disagreed that appreciation from
superiors leads to motivation and higher satisfaction in job, 23.7 % of
respondents neither agreed nor disagreed, 76.3 % of respondents strongly
agreed with this statement.
Table 5.18: S3.8 on employee’s perception motivation and job satisfaction in job by superior’s appreciation
Size of Organization
TotalSmall Medium Large
S3.8 Appreciation from superior gives me more motivation satisfaction in my job
Strongly Disagree
Count 0 6 0 6
% within Size of Organization
.0% 9.8% .0% 3.6%
Disagree Count 0 1 0 1
% within Size of Organization
.0% 1.6% .0% .6%
Neither Agree nor Disagree
Count 9 18 10 37
% within Size of Organization
23.7% 29.5% 15.2% 22.4%
Agree Count 7 20 29 56
% within Size of Organization
18.4% 32.8% 43.9% 33.9%
Strongly Agree
Count 22 16 27 65
% within Size of Organization
57.9% 26.3% 40.9% 39.4%
Total Count 38 61 66 165
% within Size of Organization
100.0% 100.0% 100.0% 100.0%
172
In medium organization 11.4 % of the respondent disagreed that appreciation
from superiors lead to motivation and higher satisfaction in job, 29.5 % of
respondents neither agreed nor disagreed, 59.1 % of respondents strongly
agreed with this.
In large organization none of the respondent is disagreed that appreciation
from superiors lead to motivation and higher satisfaction in job, 15.2 % of
respondents neither agreed nor disagreed, 84.8 % of respondents strongly
agreed with this.
O) Question S3.9 on employee’s perception regarding Monetary
incentives increase effective work through constant pressure of goal
attainment.
The overall analysis of respondent shows that 18.3 % of the respondent
strongly disagreed, 17.6 % of respondents neither agreed nor disagreed, 64.1
% of respondents agreed with this.
On analyzing the data with respect to the size of organization, in a small
organization, 18.4 % of the respondent strongly disagreed, 39.5 % of
respondents neither agreed nor disagreed, 42.1 % of respondents agreed
with this.
In medium organization 36.1 % of the respondent strongly disagreed, 13.1 %
of respondents neither agreed nor disagreed, 50.8 % of respondents agreed
with this.
173
Table 5.19: S3.9 on employee’s perception regarding effective work through constant pressure of goal attainment
Size of Organization
TotalSmall Medium Large
S3.9 Monetary incentive scheme motivates people to work effectively through constant
StronglyDisagree
Count 0 10 0 10
% within Size of Organization
.0% 16.4% .0% 6.1%
Disagree Count 7 12 1 20
% within Size of Organization
18.4% 19.7% 1.5% 12.1%
Neither Agree nor Disagree
Count 15 8 6 29
% within Size of Organization
39.5% 13.1% 9.1% 17.6%
Agree Count 10 15 31 56
% within Size of Organization
26.3% 24.6% 47.0% 33.9%
Strongly Agree
Count 6 16 28 50
% within Size of Organization
15.8% 26.2% 42.4% 30.3%
Total Count 38 61 66 165
% within Size of Organization
100.0% 100.0% 100.0% 100.0%
In large organization 1.5 % of the respondent strongly disagreed, 9.1 % of
respondents neither agreed nor disagreed, 89.4 % of respondents agreed
with this statement.
P) Question S3.10 on incentives and accidents on shop floor.
“Zero Accident” incentive has reduced number of Accidents on the shop floor.
The overall analysis of respondent showed that 20.2 % of the respondent
strongly disagreed, 10.3 % of respondents neither agreed nor disagreed, 68.5
% of respondents agreed with this.
On analyzing the data with respect to the size of organization, in a small
organization, 21.1 % of the respondent strongly disagreed, 7.9 % of
174
respondents neither agreed nor disagreed, 71 % of respondents agreed with
this.
Table 5.20: S3.10 on incentives and accidents on shop floor.
Size of Organization
TotalSmall Medium Large
S3.10 "Zero Accident" Incentives has reduced number of accidents on my shop floor
StronglyDisagree
Count 1 11 0 12
% within Size of Organization
2.7% 18.0% .0% 7.3%
Disagree Count 7 16 0 23
% within Size of Organization
18.4% 26.2% .0% 13.9%
Neither Agree nor Disagree
Count 3 12 2 17
% within Size of Organization
7.9% 19.7% 3.0% 10.3%
Agree Count 16 15 28 59
% within Size of Organization
42.1% 24.6% 42.4% 35.8%
Strongly Agree
Count 11 7 36 54
% within Size of Organization
28.9% 11.5% 54.5% 32.7%
Total Count 38 61 66 165
% within Size of Organization
100.0% 100.0% 100.0% 100.0%
In medium organization 44.2 % of the respondent strongly disagreed, 19.7 %
of respondents neither agreed nor disagreed, 36.1 % of respondents agreed
with this.
In large organization none of the respondent strongly disagreed, 3 % of
respondents neither agreed nor disagreed, 97 % of respondents agreed with
this.
Q) Question S3.11 on non-monetary incentives and absenteeism
In response to question on whether attendance award scheme has reduced
employee’s absenteeism.
175
The overall analysis of respondent shows that 20 % of the respondent
strongly disagreed, 16.4 % of respondents neither agreed nor disagreed, 63.6
% of respondents agreed with this.
On analyzing the data with respect to the size of organization, in a small
organization, 2.6 % of the respondent strongly disagreed, 28.9 % of
respondents neither agreed nor disagreed, 68.4 % of respondents agreed
with this.
In medium organization 32.7 % of the respondent strongly disagreed, 13.1 %
of respondents neither agreed nor disagreed, 49.1 % of respondents agreed
with this.
Table 5.21: Non-monetary incentives and absenteeismSize of Organization
TotalSmall Medium Large
S3.11 Attendance awards scheme has reduced my absenteeism
Never True Count 0 4 1 5
% within Size of Organization
.0% 6.6% 1.5% 3.0%
Rarely True Count 1 19 8 28
% within Size of Organization
2.6% 31.1% 12.1% 17.0%
Sometimes True
Count 11 8 8 27
% within Size of Organization
28.9% 13.1% 12.1% 16.4%
Often True Count 16 11 31 58
% within Size of Organization
42.1% 18.0% 47.0% 35.2%
Always True Count 10 19 18 47
% within Size of Organization
26.3% 31.1% 27.3% 28.5%
Total Count 38 61 66 165
% within Size of Organization
100.0% 100.0% 100.0% 100.0%
176
In large organization, 13.8 % of the respondent strongly disagreed, 12.1 % of
respondents neither agreed nor disagreed, 74.3 % of respondents agreed
with this.
R) Question S3.12 on en-cashing non-monetary incentives
To know the employees perception on rather than providing subsidized food,
transport facility should company make payment of these allowances.
The overall analysis of respondent shows that 54.6 % of the respondent
strongly disagreed, 4.8 % of respondents neither agreed nor disagreed, 40.6
% of respondents agreed with this.
On analyzing the data with respect to the size of organization, in a small
organization, 73.7 % of the respondent strongly disagreed, 7.9 % of
respondents neither agreed nor disagreed, 18.4 % of respondents agreed
with this.
Table 5.22: S3.12 On employee’s perception on en-cashing non-monetary incentives
Size of Organization
TotalSmall Medium Large
S3.12 I believe that rather than providing subsidized food, transport facility, company should make payment of these allowances and facilities
Not at all Count 18 14 26 58
% within Size of Organization
47.4% 23.0% 39.4% 35.2%
To a little extent
Count 10 15 7 32
% within Size of Organization
26.3% 24.6% 10.6% 19.4%
To moderate extent
Count 3 3 2 8
% within Size of Organization
7.9% 4.9% 3.0% 4.8%
To great extent
Count 0 2 12 14
% within Size of Organization
.0% 3.3% 18.2% 8.5%
To very great extent
Count 7 27 19 53
% within Size of Organization
18.4% 44.3% 28.8% 32.1%
Total Count 38 61 66 165
% within Size of Organization
100.0% 100.0% 100.0% 100.0%
177
In medium organization 47.6 % of the respondent strongly disagreed, 4.9 % of
respondents neither agreed nor disagreed, 47.6 % of respondents agreed
with this.
In large 49 % of the respondent strongly disagreed, 3 % of respondents
neither agreed nor disagreed, 47 % of respondents agreed with this.
S) Question S3.13 on employee’s perception encashment of LTC
The overall analysis of respondent showed that 21.8 % of the respondent
strongly disagreed, 4.8 % of respondents were neither agreed nor disagreed,
73.4 % of respondents agreed with this.
On analyzing the data with respect to the size of organization, in a small
organization, 44.7 % of the respondent strongly disagreed, 5.3 % of
respondents neither agreed nor disagreed, 50 % of respondents agreed with
this.
In medium organization 22.9 % of the respondent strongly disagreed, 3.3 % of
respondents neither agreed nor disagreed, 73.8 % of respondents agreed
with this.
In large organization 7.6 % of the respondent strongly disagreed, 6.1 % of
respondents neither agreed nor disagreed, 86.4 % of respondents agreed
with this.
The under mentioned percentage analysis has given fair reflections of
monetary and non-monetary incentives. A step ahead, data required to be
178
analyzed to understand the relationship between different variables under the
study.
Table 5.23: S3.13 on employee’s perception encashment of LTC amount rather than availing family holiday facility
Size of Organization
TotalSmall Medium Large
S3.13 If given, I will prefer to take encashment of LTC amount rather than availing family holiday facility
Never True Count 14 13 4 31
% within Size of Organization
36.8% 21.3% 6.1% 18.8%
Rarely True Count 3 1 1 5
% within Size of Organization
7.9% 1.6% 1.5% 3.0%
Sometimes True
Count 2 2 4 8
% within Size of Organization
5.3% 3.3% 6.1% 4.8%
Often True Count 7 3 17 27
% within Size of Organization
18.4% 4.9% 25.8% 16.4%
Always True
Count 12 42 40 94
% within Size of Organization
31.6% 68.9% 60.6% 57.0%
Total Count 38 61 66 165
% within Size of Organization
100.0% 100.0% 100.0% 100.0%
Hence the advanced statistical tools like correlation analysis and regression
analysis was carried out to establish relationship in terms of strength and
direction between variables under the study. The details of these statistical
analyses with respect to study are mentioned below.
5.4 Study of Variables - Simple correlation analysis
The correlation was carried out to find out the strengths of bi-variate
relationship between different pairs of behavioral characteristics and attitude
towards incentives. The correlation matrix in relation to the different variable
has been obtained.
179
Correlation was calculated considering the attitude towards the monetary and
non-monetary incentives as two independent variables and motivation, job
satisfaction as dependent variable.
As per the construction of the scale, correlation score on attitude towards the
monetary incentives and non-monetary incentives implies the “necessity felt”
and “importance” attached by respondents to these benefits.
The score on dependent variable motivation denotes the motivation derived
out of “needs gratification”. The Job Satisfaction score indicates “importance”
and “satisfaction” rating i.e. the importance given and satisfaction derived by
the respondent from his job. The level of significance (alpha Value) study was
checked on both .01 and .05 level. In this study level of significant was
consider as .05 level. In case p value was close to alpha, but slightly exceeds
it, it was taken as marginally significant i.e. up to 0.059 level.
Table 5.24: Overall Correlations
MotivationJob
SatisfactionMonetary Incentives
Non-Monetary Incentives
Motivation Pearson Correlation
1 .603(**) .147 .534(**)
Sig. (1-tailed) . .000 .061 .000
N 165 165 165 165
Job Satisfaction Pearson Correlation
.603(**) 1 -.113(*) .537(**)
Sig. (1-tailed) .000 . .048 .000
N 165 165 165 165
Monetary Incentives
Pearson Correlation
.147 -.113(*) 1 -.378(**)
Sig. (1-tailed) .061 .0489 . .000
N 165 165 165 165
Non-Monetary Incentives
Pearson Correlation
.534(**) .537(**) -.378(**) 1
Sig. (1-tailed) .000 .000 .000 .
N 165 165 165 165
* Correlation is significant at the 0.05 level (1-tailed).** Correlation is significant at the 0.01 level (1-tailed).
180
Overall, taking all organizations together correlation table was calculated
between dependent and independent variables. The correlation results are
presented in table no. 5.24.
5.4.1 Correlation between dependent variables - Motivation and Job
Satisfaction
From the values in the table no. 5.24, the equation for correlation coefficient
‘r’ between the variables was represented in the equation.
Equation: r (165) = .603, p =.000 (i.e. p < .05)
as p- value is less than alpha it is statistically highly significant , hence the
statistical Null hypothesis i.e. there exists no correlation between the variables
gets rejected. It can be concluded that there exist a strong positive correlation
between independent variables i.e. motivation and job satisfaction. This
relationship is highly significant.
5.4.2 Correlation between independent variables attitude towards
monetary and Non – Monetary incentives
Equation: r (165) = - .378, p =.000 (i.e. p <.05)
Similarly in this case also, as p- value is less than alpha value it is statistically
highly significant. As correlation value is negative it can be conclude that there
exist a strong negative correlation between attitudes towards monetary and
non-monetary incentives. The relationship is highly significant.
5.4.3 Correlation between Motivation and Non -Monetary incentives
Equation: r (165) = .534, p =.000 (i.e. p < .05)
As given in the correlation equation p- value is less than alpha it is statistically
181
highly significant, thus we fail to accept statistical Null hypothesis, and
alternate is accepted. Hence it can be conclude that there exist a strong
positive correlation between motivation and attitude towards non-monetary
incentives. The relationship is significant at 0.05 level.
5.4.4 Correlation between Job Satisfaction and Non – Monetary
incentives
Equation: r (165) = .537, p =.000 (i.e. p <.05)
As p- value is less than alpha it is statistically highly significant, hence it can
be conclude that there exist a strong positive correlation between job
satisfaction and attitude towards non-monetary Incentives. The relationship is
highly significant.
5.4.5 Correlation between Motivation and Monetary Incentives
Equation: r (165) = .147, p = .061 (i.e. p >.05)
In Above equation p- value is exceeds alpha at 0.05 level, it can be conclude
that there is positive correlation between motivation and attitude towards
monetary incentives which is not significant.
5.4.6 Correlation between Job Satisfaction and Monetary incentives
Equation : r (165) = - .113, p =.048 (i.e. p <.05)
As p- value is less than alpha it is statistically significant, thus we failed to
accept Null, and alternate is accepted hence it can be conclude that there
exist a strong negative correlation between job satisfaction and attitude
towards monetary incentives.
After understanding the overall correlations between variables and their
interrelationship it was intended to carry out deeper analysis to understand
182
this relationship under different situations and segregating sample on various
demographic characterizations. In the next part of the chapter, the relationship
between the variables in the three organizations and on the basis of
demographic characteristics has been analyzed.
Correlation in Small Organization
Table no. 5.25 gives the correlation values in small organization. From r and p
values it can be said that monetary and non-monetary incentives have
significant negative correlation.
Monetary incentives were negatively correlated with Motivation and job
satisfaction. In case of job satisfaction the negative correlation is highly
significant. While in case of motivation the correlation is moderately
significant.
Table 5.25: Correlations Small Organization
Monetary Incentive
s
Non-Monetary Incentives
Motivation Score
Job Satisfactio
n ScoreMonetary Incentives
Pearson Correlation 1 -.267(*) -.231 -.391(**)
Sig. (1-tailed) . .048 .076 .006
N 38 38 38 38
Non-Monetary Incentives
Pearson Correlation -.267(*) 1 .600(**) .263
Sig. (1-tailed) .048 . .000 .051
N 38 38 38 38
Motivation Score Pearson Correlation -.231 .600(**) 1 .178
Sig. (1-tailed) .076 .000 . .137
N 38 38 38 38
Job Satisfaction Score
Pearson Correlation -.391(**) .263 .178 1
Sig. (1-tailed) .006 .051 .137 .
N 38 38 38 38
* Correlation is significant at the 0.05 level (1-tailed).** Correlation is significant at the 0.01 level (1-tailed).
The non-monetary incentives were positively correlated with motivation and
job satisfaction. In case of motivation the correlation is highly significant
183
Correlation in Medium organization
In medium organization (Table no.5.26) from r and p values it can be inferred
that monetary and non–monetary incentives has significant negative
correlation.
Monetary incentives were negatively correlated with motivation and job
satisfaction. In case of job satisfaction the negative correlation is highly
significant.
In the medium organization, the non-monetary incentives were positively
correlated with motivation and job satisfaction which is highly significant.
Table 5.26 : Correlations Medium Organization
Monetary Incentive
s
Non-Monetary Incentives
Motivation Score
Job Satisfaction
ScoreMonetary Incentives
Pearson Correlation1 -.669(**) -.188 -.245(*)
Sig. (1-tailed) . .000 .077 .031N 61 61 61 61
Non-Monetary Incentives
Pearson Correlation-.669(**) 1 .465(**) .533(**)
Sig. (1-tailed) .000 . .000 .000N 59 59 59 59
Motivation Score Pearson Correlation -.188 .465(**) 1 .585(**)Sig. (1-tailed) .077 .000 . .000
N 61 61 61 61
Job Satisfaction Score
Pearson Correlation-.245(*) .533(**) .585(**) 1
Sig. (1-tailed) .031 .000 .000 .N 61 61 61 61
** Correlation is significant at the 0.01 level (1-tailed).* Correlation is significant at the 0.05 level (1-tailed).
Correlation in Large Organization
In large organization (Table no. 5.27) from r and p values it can be inferred
that monetary and non-monetary incentives has positive but not significant.
184
Monetary incentives were positively correlated with motivation and job
satisfaction and the correlation is highly significant.
Table 5.27: Correlations Large Organization
Monetary Incentive
s
Non-Monetary Incentives
Motivation Score
Job Satisfactio
n ScoreMonetary Incentives
Pearson Correlation 1 .109 .388(**) .211(*)
Sig. (1-tailed) . .194 .001 .045
N 66 66 66 66
Non-Monetary Incentives
Pearson Correlation .109 1 .414(**) .379(**)
Sig. (1-tailed) .194 . .000 .001
N 66 66 66 66
Motivation Score Pearson Correlation .388(**) .414(**) 1 .266(*)
Sig. (1-tailed) .001 .000 . .016
N 66 66 66 66
Job Satisfaction Score
Pearson Correlation .211(*) .379(**) .266(*) 1
Sig. (1-tailed) .045 .001 .016 .
N 66 66 66 66
** Correlation is significant at the 0.01 level (1-tailed).* Correlation is significant at the 0.05 level (1-tailed).
The non-monetary incentives were positively correlated with motivation and
job satisfaction which is highly significant.
Across the three organizations the correlation between motivation and job
satisfaction of the employees is always positive and significant.
Correlation by Age Group
For this, the respondents were divided in three age groups. The age groups
were formed after checking frequency distribution of employees by age in the
three organizations. The correlation between the variables was calculated to
understand the reflection of monetary and non-monetary incentives on
employee motivation and job satisfaction at different age groups. The results
are shown in table no 5.28, 5.29 and 5.30.
185
The results show a linear correlation exists between the variables in all the
age groups.
Table 5.28 : Correlations : Age group 21 to 33 years.
Monetary Incentives
Non-Monetary Incentives
Motivation Pearson Correlation .510(**) .307(**)Sig. (1-tailed) .000 .007N 63 63
Job Satisfaction
Pearson Correlation.089 .428(**)
Sig. (1-tailed) .244 .000
N 63 63
** Correlation is significant at the 0.01 level (1-tailed).
From above results it can be concluded that at the early stages of career
employee looked forward for more of non-monetary incentives in the form of
new learning opportunity,
Table 5.29 : Correlations : Age group 34 to 46 years.
Monetary Incentives
Non-Monetary Incentives
Motivation Pearson Correlation -.200 .580(**)Sig. (1-tailed) .068 .000N 57 57
Job Satisfaction
Pearson Correlation-.217 .591(**)
Sig. (1-tailed) .052 .000
N 57 57** Correlation is significant at the 0.01 level (1-tailed).
Table 5.30: Correlations : Age group 47 to 59 years.
Monetary Incentives
Non-Monetary Incentives
Motivation Pearson Correlation -.348(*) .793(**)Sig. (1-tailed) .010 .000N 45 45
Job Satisfaction Pearson Correlation -.264(*) .586(**)
Sig. (1-tailed) .042 .000
N 45 45* Correlation is significant at the 0.05 level (1-tailed).** Correlation is significant at the 0.01 level (1-tailed).
Higher responsibilities and derived more job satisfaction and motivation from
186
non-monetary incentives. On the other hand monetary incentives gives more
motivation like jump starts in the career. At young age employees also value
monetary incentives and derived direct motivation from it.
In the middle age employees seek more of non-monetary incentives
employees were more settled in their career path and seek maximum growth
in the form of higher responsibility. Non-monetary incentives like recognition in
the field gave more job satisfaction and motivation to perform in their jobs.
Employees grew monetarily while reaching to this career stage and more
monetary incentive shows negative impact on motivation and job satisfaction.
At the last stage of career employees drew motivation and job satisfaction
only from non-monetary incentives. The monetary incentive showed highly
significant negative impact on motivation and job satisfaction. There is clear
differentiation in employees in the correlation among the variables.
Correlation by gender
To see whether employees differed in their attitude on the basis of their
gender, the gender wise correlation is calculated.
Correlation with gender as male
Table 5.31: Correlations Gender: male
Monetary Incentives
Non-Monetary Incentives
Motivation Pearson Correlation
.031 .537(**)
Sig. (1-tailed) .386 .000N 93 93
Job Satisfaction Pearson Correlation
-.258(**) .729(**)
Sig. (1-tailed) .006 .000N 93 93
** Correlation is significant at the 0.01 level (1-tailed).
187
Overall in males, correlation Motivation and Non -Monetary incentives
Equation: r (93) = .537, p =.000 (i.e. p <.05)
As p- value is less than alpha it is statistically highly significant, hence it can
be conclude that in males there existed a strong and significant correlation
between motivation and attitude towards non-monetary Incentives.
Overall in males, correlation between Job Satisfaction and Non –
Monetary incentives
Equation: r (93) = .729, p =.000 (i.e. p <.05)
In the above correlation, as p- value is less than alpha it is statistically highly
significant, hence it can be conclude that in males there existed a strong and
significant correlation between job satisfaction and non-monetary incentives.
Overall in males, correlation between Motivation and Non -Monetary
Incentives
Equation: r (93) = .031, p = .386 (i.e. p >.05)
As p- value exceeds alpha at 0.05 level it is statistically significant, hence it
can be concluded that in males there is no correlation between motivation and
attitude towards monetary incentives.
Overall in males, correlation between Job Satisfaction and Monetary
Incentives
Equation: r (93) = .-258, p =.000 (i.e. p <.05)
As p- value is less than alpha it is statistically highly significant, hence it can
be concluded that in males there existed a strong and significant negative
correlation between Job satisfaction and attitude towards monetary
incentives.
188
Correlation with gender as Female
Table 5.32: Correlations Gender: female
Monetary Incentives
Non-Monetary Incentives
Motivation Pearson Correlation
.272(*) .435(**)
Sig. (1-tailed) .011 .000N 72 72
Job Satisfaction Pearson Correlation
.056 .253(*)
Sig. (1-tailed) .319 .016N 72 72
* Correlation is significant at the 0.05 level (1-tailed).** Correlation is significant at the 0.01 level (1-tailed).
Overall in females, correlation between Motivation and Non -Monetary
Incentives
If Gender = Female, r (72) = .435, p =.000 (i.e. p <.05)
In above equation, as p- value is less than alpha it is statistically highly
significant, hence it can be concluded that in female employees there existed
a strong and significant correlation between motivation and attitude towards
non–monetary incentives.
Overall correlation in females, between Job Satisfaction and Non –
Monetary Incentives
Equation: r (72) = .253, p =.016 (i.e. p <.05)
In above equation also, as p- value is less than alpha it is statistically highly
significant, hence it can be concluded that in if gender is female there existed
a strong and significant correlation between job satisfaction and attitude
towards non–monetary incentives in female employees.
Overall in females, correlation between Motivation and Monetary
Incentives
189
Equation: r (72) = .272, p = .011 (i.e. p <.05)
As p- value is less than alpha at 0.05 level it is statistically significant, hence it
can be concluded that in female employees there is positive correlation
between motivation and attitude towards monetary incentives.
Overall in female employees correlation between Job Satisfaction and
Monetary Incentives
Equation: r (72) = .056, p =.319 (i.e. p >.01 or .05)
In this equation as p- value exceeds alpha, hence it can be concluded that in
female employees there existed no correlation between job satisfaction and
attitude towards monetary incentives.
In case of gender, employees differed in response to momentary incentives
unlike male employees’ female employees’ valued monetary incentives more
and correlation between motivation and monetary incentives in positive and
significant.
Correlation by marital status
Table 5.33 : Correlations in married employees
Monetary Incentives
Non-Monetary Incentives
Motivation Pearson Correlation
-.283(**) .682(**)
Sig. (1-tailed) .001 .000N 118 118
Job Satisfaction Pearson Correlation
-.348(**) .702(**)
Sig. (1-tailed) .000 .000N 118 118
** Correlation is significant at the 0.01 level (1-tailed).
Correlation in married employees, between Motivation and Non -
Monetary Incentives
Equation: r (118) = .682, p =.000 (i.e. p <.01)
190
Since p- value is less than alpha, it is statistically highly significant, Hence it
can be concluded that the employees who were married, there exist a strong
and significant correlation between motivation and attitude towards non–
monetary incentives.
Overall in married employees, correlation between Job Satisfaction and
Non – Monetary Incentives
Equation: r (118) = .702, p =.000 (i.e. p <.01)
As p- value is less than alpha is statistically highly significant, hence it can be
concluded that the employees who were married there exist a strong and
significant positive correlation between job satisfaction and attitude towards
non–monetary incentives.
Overall in married employees, correlation between Motivation and
Monetary incentives
Equation: r (118) = - .283, p = .001 (i.e. p <.05)
In this case, as p- value is less than alpha value at 0.05 level it is statistically
significant hence it can be concluded that in married employees there is
stronger negative correlation between motivation and attitude towards
monetary incentives.
Overall in married employees, correlation between Job Satisfaction and
Monetary Incentives:
Equation: r (118) = -.348, p =.000 (i.e. p <.05)
As p- value is less than alpha it is statistically highly significant, thus it can be
concluded that in married employees, there exist a strong and significant
191
negative correlation between job satisfaction and attitude towards monetary
incentives.
Overall correlation in unmarried employees, between Motivation and
Non -Monetary Incentives
Equation: r (47) = .219, p =.0689 (i.e. p >.05)
In the table no. 5.34, an equation p- value exceeds alpha, It can be conclude
that in unmarried employees there existed positive correlation between
motivation and attitude towards non–monetary incentives, but correlation is
not significant.
Table 5.34: Correlations in unmarried employees
Monetary Incentives
Non-Monetary Incentives
Motivation Pearson Correlation
.739(**) .219
Sig. (1-tailed) .000 .069
N 47 47
Job Satisfaction Pearson Correlation
.423(**) .070
Sig. (1-tailed) .002 .320
N 47 47
** Correlation is significant at the 0.01 level (1-tailed).
Overall correlation in unmarried employees between Job Satisfaction
and Non – Monetary Incentives
Equation: r (47) = .070, p =.320 (i.e. p >.05)
In above equation p- value exceeds alpha, thus it can be conclude that in
unmarried employees there existed no correlation between Job satisfaction
and attitude towards non–monetary incentives.
192
Overall correlation in unmarried employees between Motivation and
Monetary Incentives
Equation: r (47) = .739, p = .000 (i.e. p <.05)
As shown in the above equation p- value is less than alpha at 0.05 level it is
statistically significant, thus it can be conclude that in unmarried employees
there is a positive correlation between motivation and attitude towards
monetary incentives.
Correlation in unmarried employees, between Job Satisfaction and
Monetary Incentives
Equation: r (47) = .423, p =.002 (i.e. p <.05)
As p- value is less than alpha, thus it can be concluded that in unmarried
employees there existed strong positive correlation between job satisfaction
and attitude towards monetary incentives.
Correlation as per background of an employee
Table 5.35 : Correlations - background : Rural
Monetary Incentives
Non-Monetary Incentives
Motivation Pearson Correlation
-.258(*) .599(**)
Sig. (1-tailed) .012 .000
N 77 77
Job Satisfaction Pearson Correlation
-.421(**) .572(**)
Sig. (1-tailed) .000 .000
N 77 77
* Correlation is significant at the 0.05 level (1-tailed).
** Correlation is significant at the 0.01 level (1-tailed).
193
Correlation in employees with rural background, between Motivation and
Non -Monetary incentives
Equation: r (77) = .599, p =.000 (i.e. p <.05)
With reference to Table no.5.57 in above equation, p- value is less than alpha
it is statistically highly significant, thus it can be concluded that in employees
with rural background, there existed a strong and significant positive
correlation between motivation and attitude towards non-monetary incentives.
Correlation between rural background, Job Satisfaction and Non –
Monetary Incentives
Equation: r (77) = .572, p =.000 (i.e. p <.05)
In employees with rural background, p- value is less than alpha it is
statistically highly significant, hence it can be concluded that there existed a
strong and significant correlation between Job satisfaction and attitude
towards non–monetary incentives.
Correlation in employees with rural background, between Motivation and
Monetary Incentives
Equation: r (77) = -.258, p = .012 (i.e. p <.05)
As p- value is lower than alpha at 0.05 level it is statistically significant, thus it
can be concluded that in employees with rural background there is negative
correlation between motivation and attitude towards monetary incentives.
Correlation in employees with rural background, between Job
Satisfaction and Monetary Incentives
Equation : r (77) = -.421, p =.000 (i.e. p <.05)
194
In the above equation as p- value is less than alpha it is statistically highly
significant, thus it can be concluded that in rural background employees there
existed a strong and significant negative correlation between job satisfaction
and attitude towards monetary incentives.
Correlation in employees with Urban background
Table 5.36 : Correlations background : Urban
Monetary Incentives
Non-Monetary Incentives
Motivation Pearson Correlation
.267(**) .474(**)
Sig. (1-tailed) .006 .000
N 88 88
Job Satisfaction Pearson Correlation
.112 .502(**)
Sig. (1-tailed) .150 .000
N 88 88
** Correlation is significant at the 0.01 level (1-tailed).
Overall in urban employees, correlation between Motivation and Non -
Monetary Incentives
Equation : r (88) = .474, p =.000 (i.e. p <.05)
In the Urban Employees, p- value is statistically highly significant, hence it can
be concluded that in urban employees there existed a strong and significant
positive correlation between motivation and attitude towards non–monetary
incentives.
Correlation in employees with urban background, between Job
Satisfaction and Non–Monetary Incentives
Equation: r (88) = .502, p =.000 (i.e. p <.05)
As p- value is statistically highly significant, thus it can be conclude that in
195
employees with urban background there existed a positive and significant
correlation between Job satisfaction and attitude towards non–monetary
incentives.
Correlation in employees with urban background, between Motivation
and Monetary Incentives
Equation: r (88) = .267, p = .006 (i.e. p <.05)
As p- value is statistically significant, thus it can be concluded that in
employees with urban background there is positive correlation between
motivation and attitude towards monetary incentives.
Correlation in employees with urban background, between Job
Satisfaction and Monetary Incentives
Equation: r (88) = .112, p =.150 (i.e. p > .05)
As p- value exceeds alpha, thus it can be concluded that in urban there
existed no correlation between Job satisfaction and attitude towards monetary
incentives.
Correlation as per designations of the employees
The correlation is studied segregating the employees as per their designation
table no. 5.37, 5.38 and 5.39 gives the details of correlation in managers,
supervisors and workers respectively.
196
Correlation in Manager
Table 5.37 : Correlations by designation - Manager
Monetary Incentives
Non-Monetary Incentives
Motivation Pearson Correlation
.085 .436(*)
Sig. (1-tailed) .343 .015
N 25 25
Job Satisfaction Pearson Correlation
-.063 .609(**)
Sig. (1-tailed) .383 .001
N 25 25
* Correlation is significant at the 0.05 level (1-tailed). ** Correlation is significant at the 0.01 level (1-tailed).
Correlation in manager, between Motivation and Non-Monetary
Incentives
Equation: r (25) = .436, p =.015 (i.e. p <.05)
In above equation p- value is statistically significant at .05 level, hence it can
be concluded that in manager there existed a significant positive correlation
between motivation and attitude towards non–monetary incentives.
Correlation in Manager, between job satisfaction and Non–Monetary
Incentives
Equation : r (25) = .609, p =.001 (i.e. p <.05)
As p- value is less than alpha it is statistically highly significant, hence it can
be concluded that in Manager there existed a positive and significant
correlation between job satisfaction and attitude towards Non–monetary
incentives.
Correlation between Manager, Motivation and Monetary Incentives
Equation: r (25) = .085, p = .343 (i.e. p >.05)
197
As p- value exceeds alpha at 0.05 level, it can be concluded that in manager
there is no correlation between motivation and attitude towards monetary
incentives.
Correlation in Manager, between Job Satisfaction and Monetary
Incentives
Equation: r (25) = -.0.63, p =.383 (i.e. p >.05)
In above correlation equation p- value exceeds alpha it is statistically highly
insignificant, hence it can be concluded that in manager there existrd a
negative correlation between job satisfaction and attitude towards monetary
incentives which is not significant from p- value.
Correlation in Supervisors
Table 5.38: Correlations by designation: Supervisor
Monetary Incentives
Non-Monetary Incentives
Motivation Pearson Correlation
.001 .483(**)
Sig. (1-tailed) .496 .000
N 55 55
Job Satisfaction Pearson Correlation
-.364(**) .642(**)
Sig. (1-tailed) .003 .000
N 55 55
** Correlation is significant at the 0.01 level (1-tailed)
Correlation in supervisors, between Motivation and Non-Monetary
Incentives
Equation: r (55) = .483, p =.000 (i.e. p <.05)
The table no. 5.50 as p- value is less than alpha it is statistically highly
significant, hence it can be concluded that in supervisors there exists a strong
and significant positive correlation between motivation and attitude towards
non–monetary incentives.
198
Correlation in supervisors, between Job Satisfaction and Non–Monetary
incentives
Equation: r (55) = .642, p =.000 (i.e. p <.05)
In above equation p- value is less than alpha it is statistically highly significant
hence it can be concluded that in supervisors there existed a strong and
significant positive correlation between job satisfaction and attitude towards
non–monetary incentives.
Correlation in supervisors, between Motivation and Monetary Incentives
Equation: r (55) = .001, p = .496 (i.e. p >.05)
As p- value exceeds alpha at 0.05 level it is statistically not significant, hence
it can be concluded that in supervisors there is no correlation between
motivation and attitude towards monetary incentives.
Correlation in supervisors, between Job Satisfaction and Monetary
Incentives
Equation: r (55) = -.364, p =.003 (i.e. p <.05)
As p- value is less than alpha, it can be concluded that in supervisors there
exists strong negative correlation between job satisfaction and attitude
towards monetary incentives.
199
Correlation in Workmen
Table 5.39: Correlations by designation: Workmen
Monetary Incentives
Non-Monetary Incentives
Motivation Pearson Correlation
.059 .573(**)
Sig. (1-tailed) .296 .000
N 85 85
Job Satisfaction Pearson Correlation
.050 .401(**)
Sig. (1-tailed) .323 .000
N 85 85
** Correlation is significant at the 0.01 level (1-tailed).
Correlation in workmen category, between Motivation and Non-Monetary
Incentives
Equation: r (85) = .573, p =.000 (i.e. p <.01)
As per values in table no. 5.51 p- value is less than alpha it is statistically
highly significant, thus it can be concluded that in workmen category there
exists a strong and significant positive correlation between motivation and
attitude towards non–monetary incentives.
Correlation in workmen, between Job Satisfaction and Non – Monetary
Incentives
Equation: r (85) = .401, p =.000 (i.e. p <.01)
The equation shows p- value is statistically highly significant, thus it can be
concluded that in workmen category there existed a strong and significant
positive correlation between job satisfaction and attitude towards non–
monetary incentives.
200
Correlation in workmen category, between Motivation and Monetary
Incentives
Equation : r (85) = .059, p = .296 (i.e. p >.05)
As p- value is statistically not significant, thus it can be conclude that in
workmen category there is no correlation between motivation and attitude
towards monetary incentives.
Correlation in workmen, between Job Satisfaction and Monetary
Incentives
Equation: r (85) = .050, p =.323 (i.e. p > .05)
In above equation p- value exceeds alpha, hence it can be concluded that in
workmen category there existed no correlation between job satisfaction and
attitude towards monetary incentives.
5.5 Regression Analysis
Further to correlation in this part the analysis of the relationships amongst the
different behavioural variables by the method of stepwise multiple regression
was adopted to isolate the influence of different other explanatory variables on
the explained variables. The following linear model has been obtained. To
verify the influence of each explanatory variables, in each case ‘t’ test has
been used. F test has been employed to assess the significance of the
multiple correlation of the determinant that indicates the overall predictive
value of the equation. The simultaneous effect of several independent
variables like attitude towards monetary and non-monetary incentives, age
201
and gender on dependent variables like motivation and job satisfaction were
assessed by constructing a Stepwise Multiple Regression Equations.
Following type of linear equations is formed.
Equation :Y= α + β1 X 1+β2 X 2+β3 X 3+β4 X 4 ..+µ
Y = Explained variable
α = Constant
X 1 , X2, X3, X4 ...are explanatory variables like attitudes towards Non
Monetary Incentives, attitudes towards Monetary Incentives, Age,
Gender etc.
β1, β2, β3, β4 …are respective coefficients which indicates incremental
change in explanatory variables X to bring unit change in explained
variable Y.
µ = Random error
The regression models for organizations under study are:
5.5.1 Regression Model For Motivation
Table 5.40 : Regression Model For Motivation
Model Summary
Model R R SquareAdjusted R
SquareStd. Error of the Estimate
1 .645(d) .416 .402 6.671 Dependent Variable: Motivation d Predictors: (Constant), Non-Monetary Incentives, Monetary Incentives, Age, Gender Dummy
(Male=1)
ANOVA(e)
Model Sum of Squares df Mean Square F Sig.1 Regression 5082.520 4 1270.630 28.551 .000(d)
Residual 7120.692 160 44.504
Total 12203.212 164
d Predictors: (Constant), Non-Monetary Incentives, Monetary Incentives, Age, Gender Dummy (Male=1)e Dependent Variable: Motivation
202
Coefficients(a)
ModelUn-standardized
CoefficientsStandardized Coefficients T Sig.
B Std. Error Beta1 (Constant) 10.270 5.079 2.022 .045
Non-Mon. Incentives 1.118 .116 .651 9.661 .000
Monetary Incentives .561 .121 .309 4.624 .000
Age .161 .052 .192 3.098 .002
Gender Dummy (Male=1)
-2.738 1.109 -.158-
2.468.015
Dependent Variable: Motivation
Excluded Variables (e)
Model Beta In T Sig.Partial
CorrelationCollinearity Statistics
Tolerance1 Work Experience in
Years-
.232(d)-
1.509.133 -.119 .154
Gross Salary .091(d) 1.392 .166 .110 .841
Distance Home-Office Km.
.009(d) .130 .896 .010 .836
Background Dummy .096(d) 1.471 .143 .116 .848Education HSC Dummy .051(d) .760 .448 .060 .803Education 12th Dummy -
.058(d)-.950 .344 -.075 .967
Education Graduate Dummy
.062(d) 1.020 .309 .081 .980
d Predictors in the Model: (Constant), Non-Monetary Incentives, Monetary Incentives, Age, Gender Dummy (Male=1)Dependent Variable: Motivation
5.5.2 Regression Model for Job Satisfaction
Table 5.41 : Regression Model for Job Satisfaction
Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate1 .609(c) .371 .359 3.366
Dependent Variable: Job Satisfaction Predictors: (Constant), Non-Monetary Incentives, Gender Dummy (Male=1), Education HSC Dummy
ANOVA(d)
Model Sum of Squares df Mean Square F Sig.1 Regression 1074.263 3 358.088 31.597 .000(c)
Residual 1824.585 161 11.333Total 2898.848 164
Predictors: (Constant), Non-Monetary Incentives, Gender Dummy (Male=1), Education HSC Dummy Dependent Variable: Job Satisfaction
203
Coefficients(a)
ModelUn-standardized
CoefficientsStandardized Coefficients t Sig.
B Std. Error Beta1 (Constant) 15.883 1.312 12.109 .000
Non-Monetary Incentives
.491 .054 .586 9.042 .000
Gender Dummy (Male=1)
2.199 .559 .260 3.936 .000
Education HSC Dummy
2.485 .806 .198 3.085 .002
Dependent Variable: Job Satisfaction
Excluded Variables(d)
Model Beta In T Sig.Partial
CorrelationCollinearity Statistics
Tolerance1 Age -
.085(c)-
1.226.222 -.096 .802
Monetary Incentives .049(c) .715 .475 .056 .820
Work Experience in Years
-.052(c)
-.762 .447 -.060 .831
Gross Salary -.052(c)
-.774 .440 -.061 .882
Distance Home-Office Kms.
.081(c) 1.208 .229 .095 .865
Background Dummy .005(c) .083 .934 .007 .988Education 12th Dummy .028(c) .439 .661 .035 .938Education Graduate Dummy
.069(c) 1.033 .303 .081 .866
Predictors in the Model: (Constant), Non-Monetary Incentives, Gender Dummy (Male=1), Education HSC DummyDependent Variable: Job Satisfaction
Overall regression equations from above tables are:
Motivation = 10.270 + 1.118 (Non Mon incentives) + 0.561
(Monetary incentives) + 0.161 (Age) - 2.738 (if male)
Job satisfaction = 15.883 + 0.491 (Non- Mon. Incentives) + 2.119 (if male)
+ 2.485 (Educational qualification=HSC)
The estimated equations gave reasonably good fit of the observed data. The
overall multiple correlation coefficient ‘R’ being much more higher in
magnitude than the pair wise simple correlation coefficient across the
repressors and also the standard error not being very high. There is no
204
serious problem of the multi co-linearity in the model. All the repressors have
a significant effect.
Motivation can be explained by explanatory variables like monetary and non-
monetary incentives, age and employee gender. While monetary and non-
monetary incentives and employee age contributed positively, gender (if male)
has negative contribution to employee motivation. The other factors that did
not have significant contribution towards motivation were work experience,
gross salary, distance from home to office, background (rural/urban) and
educational qualification which are shown in table indicating excluded
variable.
The job satisfaction equation shows that the job satisfaction is contributed by
explanatory variables like non-monetary incentives, male gender and
educational qualification if HSC. This shows that moderately qualified person
has contributed towards the job satisfaction. Both the factors contribute
positively towards job satisfaction. The other factors which did not have
significant contribution towards job satisfaction were age, monetary
incentives, work experience, gross salary, distance from home to office,
background (rural/urban) and educational qualification other than HSC which
were shown in table indicating excluded variable.
It can be said that the attitude towards non-monetary incentives is an
important predictable variable in case of motivation and job satisfaction and
monetary incentives only in the case of motivation.
205
Age and the gender of the respondents, in this case also play a significant
role towards the motivation and job satisfaction. They were taken as
intermediate variables.
Overall it can be said with reasonable degree of confidence that monetary and
non-monetary incentives were highly valued by the employees. These
incentives also helped to increase motivation and job satisfaction in the
employees. This in turn improves overall effectiveness of the organization at
individual level.
In the next section, hypotheses testing has been done on the basis of
statistical tests conducted in chapter no IV and previous part of chapter V.
5.6 Testing of Hypotheses
Hypothesis 1
H01 = The monetary and non-monetary incentive packages do not differ
significantly across the three organizations.
H11 =The monetary and non-monetary incentive packages differ
significantly across the three organizations.
From comparative analysis of incentives schemes and the values observed
section no. 4.1 and point no. 4.1.2 and 4.1.3 in chapter four i.e. analysis of
variance between the means in the three organization, it is evident that both
monetary and non monetary incentives differs significantly at 0.05 level of
confidence. It can be concluded that though similar types of incentive
packages are offered across the organization, both the monetary and non-
monetary incentives differ significantly across the three organisations.
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Thus the first Null hypothesis gets rejected and alternate is accepted.
Hypothesis 2
H02 = Employees in three organisations do not differ significantly in their
attitude towards monetary and non-monetary incentives.
H12 = Employees in three organisations differ significantly in their
attitude towards monetary and non-monetary incentives.
The results of percentage analysis carried out on specific question i.e. “With
the kind of Incentives and benefit plans”, whether the respondents were
satisfied or not, the test result (table no 5.7) showed that employees differed
in their attitude towards incentive schemes operating in their organisations.
The test results of ANOVA as per the table no. 5.4 (a) and 5.4 (b) shows
equations as F (2, 162) = 28.816, p<.05 as p value is less than alpha the Null
hypothesis gets rejected and the alternate got selected that is groups differed
significantly. It can be said on the basis of above results, that the attitude of
employees towards monetary and non-monetary incentive packages differed
significantly across the three organizations.
Hypothesis 3
H03 = The present incentive schemes does not reduce wastage,
absenteeism and accident rate in the organization.
H13 = The present incentive schemes reduced wastage, absenteeism
and accident rate in the organization.
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As per the findings of simple statistical analysis in section no. 4.2 and analysis
in sub section 4.2.2, 4.2.3 and 4.2.4 along with advance statistical tests in
section 4.3, the corresponding table no. 4.6 showed the details of no. of
accidents, absenteeism and wastage per hundred employees. The monthly
data for three consecutive years was compared. On comparing the mean and
standard deviation it was observed that:
There is 26.89, 83.66 and 48.88 % reduction in minor accidents in small,
medium and large organizations respectively.
It has been observed that 58.87 % and 73.48 % reduction in major accidents
in small and large organizations respectively. The major accidents were
increased by 43 % in medium organization. There is overall reduction in total
accidents in medium organization also by 77.4% as compare to 63.21% in
small organization and 48.89% in large organizations.
There is 62.12, 18.10 and 52.51 % reduction in employee absenteeism in
small, medium and large organizations respectively, and there is 0.76, 1.88
and 0.7 % reduction in wastage in small, medium and large organizations
respectively.
These results were also supported by the perception analysis of respondents
to related questions in section 5.3. 69.1%, 74% and 68.5% respondents
expressed that monetary incentives were able to reduce absenteeism,
wastage and accidents respectively.
Whereas 64.8%, 70.3% and 63.6% of respondents express that non-
monetary incentives were able to reduce accidents, wastage and
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absenteeism respectively. The respondents from the three organizations differ
in their responses but overall majority of respondents agreed that there is
reduction in accident rates, absenteeism and wastage due to monetary and
non-monetary schemes operational in their respective organizations. Hence
the null hypothesis got rejected and alternate hypothesis got accepted.
Hypothesis 4
H04 = There is no correlation between motivation and job satisfaction
with each other.
H14 = There is a correlation between motivation and job satisfaction
with each other.
The Section 5.4.1 and table no. 5.24, the equation of correlation coefficient
were represented in the equation.
Equation: r (165) = .603, p =.000 (i.e. p < .05)
as p- value is less than alpha it is statistically highly significant, hence the
statistical Null hypothesis got rejected. It can be concluded that there existed
a strong positive correlation between motivation and job satisfaction. This
relationship is highly significant.
Hypothesis 5
H05 = There is no correlation between motivation with attitude towards
monetary incentive schemes.
H15 = There is a correlation between motivation with attitude towards
monetary incentive schemes.
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The Section 5.4.5 and table no. 5.24, the equation of correlation coefficient
were represented in the equation.
Equation: r (165) = .147, p = .061 (i.e. p >.05)
In Above equation p- value is exceeds alpha at 0.05 level, it can be concluded
that there is positive correlation between motivation and attitude towards
monetary incentives which is not significant. Thus null hypothesis is accepted
i.e., there is no relationship between motivation and attitude towards monetary
incentives.
Hypothesis 6
H06 = There is no correlation between motivation with attitude towards
non-monetary incentive schemes.
H16 = There is a correlation between motivation with attitude towards
non monetary incentive schemes
The Section 5.4.3 and table no. 5.24, the equation of correlation coefficient
were represented in the following equation,
Equation: r (165) = .534, p =.000 (i.e. p < .05)
As given in the correlation equation p- value is less than alpha it is statistically
highly significant, thus we failed to accept statistical Null hypothesis, and
alternate is accepted. Hence it can be concluded that there existed a strong
positive correlation between motivation and attitude towards non-monetary
incentives. The relationship is significant at 0.05 level.
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Hypothesis 7
H07 = There is no correlation between job satisfaction with attitude
towards monetary incentive schemes.
H17 = There is a correlation between job satisfaction with attitude
towards monetary incentive schemes
The Section 5.4.6 and table no. 5.24, the equation of correlation coefficient
were represented in the equation,
Equation : r (165) = - .113, p =.048 (i.e. p <.05)
As p- value is less than alpha it is statistically significant, thus we failed to
accept Null hypothesis and alternate is accepted hence it can be concluded
that there exist a strong negative correlation between job satisfaction and
attitude towards monetary incentives.
Hypothesis 8
H08 = There is no correlation between job satisfaction with attitude
towards non-monetary incentive schemes.
H18 = There is a correlation between job satisfaction with attitude
towards non-monetary incentive schemes
The Section 5.4.4 and table no. 5.24, the equation of correlation coefficient
were represented in the equation:
Equation: r (165) = .537, p =.000 (i.e. p <.05)
As p- value is less than alpha it is statistically highly significant, hence it can
be concluded that there existed a strong positive correlation between job
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satisfaction and attitude towards Non–Monetary Incentives. The relationship is
highly significant.
Hypothesis 9, 10, 11 and 12
H09 = Age of the employees do not have any reflection on
organizational effectiveness.
H19 = Age of the employees has a reflection on organizational
effectiveness.
H010= Gender of the employees do not have any reflection on
organizational effectiveness.
H110= Gender of the employees has a reflection on organizational
effectiveness.
H011 = Designation of the employees do not have any reflection on
organizational effectiveness.
H111 = Designation of the employees has a reflection on organizational
effectiveness.
H012 = Background of the employees do not have any reflection on
organizational effectiveness.
H112 = Background of the employees has a reflection on organizational
effectiveness.
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As per the regression analysis in section 5.5 the model summary of
regression equation for motivation indicated that non-monetary incentives,
age and gender of respondents were most important factors to predict the
value of motivation.
Model summary of regression analysis of job satisfaction indicated that non-
monetary incentives and gender of respondent were the most important
factors for determining job satisfaction level. The above results showed age
and gender of an employee played a significant role towards Organizational
Effectiveness. Designation and background of employee did not intervene
directly and significantly. Thus eleventh and twelfth null hypotheses got
accepted and alternate hypotheses were rejected. Similarly the ninth and
tenth null hypothesis got rejected and alternate hypotheses were accepted.
Hypothesis 13
H013 = Employees perceived incentives are not effective in Increasing
organizational effectiveness at individual level.
H113 = Employees perceived incentives are effective in increasing
organizational effectiveness at individual level.
For testing of this hypothesis results of percentage analysis were utilised.
In the overall percentage analysis from section 5.3, as per the points given in
section 5.3:
Point no. H) Shown that 70.3% employees agreed that the monetary
incentives has increased their real income.
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Point no. G) Shown that 70.3% employees felt that their companies are
recognising their efforts.
Point no. I) has shown that 69.1% employees felt that monetary incentives
has reduced absenteeism.
Point no. J) Shown that 74% of employees felt that monetary incentive has
reduced wastage in production, time and material.
Point no. K) Shown that 64.8% employees felt that the non monetary
incentives like appreciation have lead to lesser accidents on shop floor.
Point no. M) Shown that 70.3% employees felt that the non-monetary
incentives has reduced production wastage.
Point no. N) Shows that 73.4% employees felt that the non-monetary
incentives like appreciation from superiors lead to more job satisfaction and
motivation in their jobs.
Point no. O) Shown that 64.1% employees felt that the monetary incentives
motivated people towards goal attainment of their company.
Point no. P) Shown that 68.5% employees felt that the non-monetary
incentives has helped them to reduce accidents on shop floor.
Point no. Q) shown that 63.6% employees felt that the non-monetary
incentives rewards has reduced absenteeism in them.
Overall majority of respondents has agreed that incentives were effective in
reducing accidents, absenteeism and percentage wastage and increase
motivation and job satisfaction in the organizations.
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Hence, thirteenth null hypothesis got rejected and alternate is accepted that
employees perceived that the incentives schemes were able to increase
Organizational Effectiveness in their organization.
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Chapter – VI
OBSERVATION AND CONLUSION
The aim of this study was to understand the reflection of Monetary and Non
Monetary schemes on Organizational Effectiveness at individual level. For this
purpose the data analysis was done in two parts, viz., observed effects and
perceived effects of incentive schemes on OE.
The findings in the Chapter IV and V have been discussed in this section. The
findings of the walk through survey and interview, informal discussions with
various authority and respondents have also been collated for understanding
the results.
6.1 Observations and discussions in general
1. On the basis of analysis of data, it was inferred with reasonable degree of
confidence that well designed monetary and non-monetary incentive schemes
have increased employee’s motivation and job satisfaction. Also these
incentive schemes were able to reduce employee absenteeism, production
wastage and accidents on shop floor, thereby increasing the overall
Organizational Effectiveness.
2. This study has shown that the three organizations under study have similar
types of monetary and non–monetary incentive packages. The determinants
of Organizational Effectiveness are the integral parts of these incentive
packages.
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3. In this study it was observed that, apparently organizations offered similar
types of monetary and non-monetary incentives but the schemes differed
significantly in the three organizations. This difference was due to the
difference in quantum and frequency of the incentives offered.
4. The respondent in all the three organization also differed significantly in
their attitude towards monetary and non-monetary incentives. This indicates
that designing of incentives is very important and sensitive factor, any change
in intensity or volume of incentives directly affected employees’ attitudinal
response towards those incentive packages.
5. In all the three organization the monetary and non – monetary incentive
packages were offered to employee differentiating them on the basis of their
designation.
6. Over all, the large organization offered best of monetary incentives and
very good non-monetary incentives to its employees in both quantum and
frequency. In the large organization, monthly monetary incentives were
inclusive of quantitative as well as qualitative aspects like number of days
employee is present, percentage yield and nil Loss Time Accident (LTA)
which took care of the negative determinants of Organizational Effectiveness
like absenteeism, wastage and accidents respectively. The works committee,
safety committee, union representatives were involved in formulating the
incentive schemes. Incentives were reviewed annually.
7. The medium organization offered more routine or statutory types of
monetary incentives that were traditional type, in some sectors coercive
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incentives were found hidden in the system like strict disciplinary actions in
case of absenteeism and production losses. The non - monetary incentives
were offered less in quantum and no innovative types of incentives were
offered. Incentives offered by management and workers unions were involved
in the finalization of schemes, it is more of negotiation than involvement. Not
many suggestions or changes were made in the scheme. The schemes were
reviewed only at the time of four yearly wage negotiations.
8. In the small organization, the communication was found very strong with
the proprietors of the company and all employees. Financial incentives were
offered to keep the employees motivated. The quantum of monetary
incentives were directly related to quantum of output, new quality parameters
achieved, new orders received and profits earned by the organization. More
emphasis has been given on non – monetary incentives on regular basis to
keep the motivation level high. Appreciation, group rewards were given on
regular basis on achieving new milestone. Ample learning opportunities and
responsibilities were available for employees. No specific schedule to revise
the incentive package was available but they were based on the targets. The
incentives were offered by management in line with workers expectations and
finalized with mutual consent. Very strong works committee, safety
committee, cultural and sports committee exists with quarterly meeting. No
unions existed in the organization.
9. Over all, it was observed that in large and small organizations employees
were involved in designing of incentives that also reflected ownership towards
the scheme. The incentive schemes in such cases were better accepted by
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the employees that made them more responsible and the success rate of the
incentive schemes were found very high.
10. Monetary and non –monetary incentives were found important for smooth
functioning of the organization. Incentives helped to improve employees’
performance at shop floor.
11. Organizations were fair enough and transparent in giving monetary and
non-monetary incentives to their employees.
12. Due considerations was given to employees position (designation), nature
of job, skills, knowledge, work experience and number of years in the
organization while offering incentives.
13. Employees in general mostly have very positive attitude towards monetary
incentives and they needed it strongly.
14. Every employee must understand value of money otherwise the schemes
are ineffective.
15. Attitude of employees towards the incentives schemes was very important
factor towards the success of the organization.
16. Attitude of the employees differed in different age group, among male and
female gender and at different qualification levels.
17. Employees with rural and urban background have different attitudinal
makeup belief and value system that reflects in their liking of incentive
system.
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18. Attitude of employees belonging to financially weaker strata, urban
background, in young age group, female employees have great inclination for
monetary incentives and can be best motivated by money.
19. Urge for non-monetary incentives was seen in every strata, age group,
gender, background, qualification level and designation. It gave better sense
of achievement and job satisfaction to employees. It activated intrinsic
motivation and also generated sense of pride and teamwork among the
employees. Non-monetary incentives were cheap and effective tool towards
long term improving organizational effectiveness.
20. The advantages of monetary incentives were instant impact, direct effect,
distributed amongst all employees of the group, easy to understand by all and
with high objectivity. Attitude of employees was found very important in case
of monetary incentives if, employees did not find incentives as sufficient or
worth putting efforts they would not attempt for it.
21. Monetary incentives suffered from some drawbacks like its quantum was
too high, employees over exerted themselves that might have affected the
health adversely. In the respondents’ opinion fatigue, strain lead to lack of
concentration that might result in accidents at shop floor. Employee tend to
bypass safe operating practices, take short cuts, accept lower quality product,
job done were more mechanically with reduction in creativity and innovation at
work. High earning from monetary benefits and tough working conditions
tempted some employees to remain absent from work. In severe case
employees also tend to move towards bad habits like gambling, addiction and
even prostitution.
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6.2 Specific Observations and discussions
1. In all the four parameters i.e. trends of absenteeism rate, minor
accident rate, major accident rate and percentage wastage, reduction
in the three organizations when analyzed separately, all the three
organization showed negative trend over the three years, except in
case of major accident where the medium organization has shown a
positive trend.
2. In case of medium organization, overall decreasing trend was observed
when minor and major accidents were taken together. The
absenteeism trend in small organization suffered due to one major
accident of its employee outside the factory premises. The accident
occurred while one of the managers was travelling from warehouse to
factory carrying some intermediate ingredients which also lead to
rejection of whole batch under production and absenteeism due to
hospitalization of employee for three months.
3. The percentage analysis of specific questions in the questionnaire by
respondents revealed that the employee valued both monetary and
non-monetary incentives.
4. Employee showed more need for monetary incentives but they were
also of the opinion that non-monetary incentives has more positive
reflection in determinants of organizational Effectiveness.
5. The employees in the three organizations differed significantly only on
monthly gross salary. The variation in salaries was due to extent of
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monthly monetary incentive offered in these three organizations. The
monthly monetary incentives were highest in large organization
followed by small organization and lowest in medium organization.
6. In all, the three organizations respondents taking leave for “Sight
seeing” and “Medical reason” were maximum in small organization. In
the small organization there was a lack of good transportation facilities,
poor canteen facilities, working conditions, increased health
consciousness and employees going for health check-ups after the
accident of one of the employees were the reasons cited for more
leaves for medical reasons.
7. In small organization, employees prefered taking long leaves for
excursion and site seeing, this also reflected the appreciative and open
working atmosphere, culture and better monthly monetary incentives in
the organization. Small organization also gave incentives in the form of
family get together and picnics.
8. Employees of large organization have taken maximum leave for “Social
Obligations” reason. Employees prefer to take long leave for marriages
and other social functions, visiting parents and home town.
9. In the large organization the weekly offs were on Friday and Sunday a
high tendency of absenteeism was seen on Saturdays in the large
organization under the study.
10. In large organization, best of working facilities like transport, canteen
and working conditions were provided; best of monetary and good non-
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monetary incentives were offered to its employees.
11. In “High Workload” category the maximum respondents were from
medium organizations, while other two organizations have nearly nil
score. In the category of “Other Reasons” the maximum employees
were from the medium organization.
12. In medium organization there was a negative coercive incentive for
absenteeism and wastage, a stringent management control on leaves
and fear of losing monthly incentives for absenteeism was also
experienced. Still the lowest reduction of absenteeism was observed in
medium organization.
13. In medium organization, the lack of good incentives, reasonable
transport facility, canteen, lack of good appreciation reward system has
lead to lack of interest of employee towards work. Employees
experienced work stress and they tend to remain absent from work
giving some other reasons.
14.Employees in the medium organization availed and exhausted their
legitimate leaves every year and did not carry forward the leaves for
next year. This kind of behaviour was due to fact that employees
wanted to change their job whenever better opportunity was there.
15.The “Other Reasons” category also included leaves by employees to
attend job interviews, preparation for competitive exams and outside
training. These results were also supported by the high attrition rate of
the skilled employees in the medium organization.
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16.The overall correlation matrix showed that there is a negative
correlation between attitude towards monetary and non-monetary
incentives. This means the employee who values monetary incentives
more have little attraction for non-monetary incentives and vice - versa.
17.A positive and significant correlation between non-monetary incentives
with both motivation and job satisfaction was observed.
18.There is a positive correlation between monetary incentives with
motivation but negative correlation between monetary incentives with
job satisfaction which is moderately significant.
19.The three organizations represented three different situations like in
small organization best of Non – Monetary incentives were given. In
medium organization bare minimum of both the incentives were given
and in large organization best of the monetary as well as good non-
monetary incentives were offered.
20.There existed negative correlation between monetary incentives and
motivation which is not very significant and there exist a very strong
negative correlation between monetary incentives and job satisfaction.
21.The monetary incentives were highest in large organization. Their
monetary incentives has increased motivation and job satisfaction.
22. In case of non-monetary incentives irrespective of the quantum of non–
monetary incentives offered, the non-monetary incentives have
increased motivation and job satisfaction. This also indicated that non-
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–monetary incentives were perceived more effective in increasing
Organization Effectiveness and also did not have any negative
reflection unlike monetary incentives.
23. In all the three age groups non-monetary incentives were perceived as
important and effective in increasing motivation and job satisfaction.
24.Young employees preferred self development, sabbatical advance
training and learning opportunity as non-monetary incentives whereas
the senior employees liked rewards and recognition in their field and
higher responsibilities to satisfy their self-esteem and actualization
needs.
25. In case of monetary incentives, the employees in younger age groups
seek some motivation with monetary incentives. With increase in age
the need for monetary incentives reduces. Monetary incentives lead to
very strong reduction in motivation and job satisfaction as age
increases.
26. In male employees non–monetary incentives had increased their
motivation and job satisfaction. It implies that male employees can be
motivated with non-monetary incentives like appreciation recognition,
higher responsibility and growth.
27. In case of female employees also non-monetary incentives lead to
increase in motivation and job satisfaction. But unlike males in case of
female employees there is positive and significant correlation between
monetary incentives and motivation.
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28.Female respondent also valued non-monetary rewards like promotion,
higher responsibility but, lesser than their male counter parts. On
further investigation it was revealed that female respondents who were
married have time as a main constrain to devote for the higher
responsibility. They also shared dual responsibility of job and domestic
work pressure.
29.The unmarried employees strongly seek motivation and job satisfaction
from monetary incentive which was shown by the strong positive
correlation. In case of non-monetary incentives a moderate positive
correlation with motivation and job satisfaction was observed.
30.The outcome of this research showed that monetary incentive did not
lead to motivation or job satisfaction in married employees.
31.Employees with rural background seek motivation and job satisfaction
from non-monetary incentives. Monetary incentives lead to more
negative motivation and job satisfaction in employees with rural origin.
32.Employees with urban background also derived motivation and job
satisfaction from non-monetary incentives. But in case of urban
employees, they also seek motivation from monetary incentives unlike
rural employees.
33.Employees as per the designation show that the managers,
supervisors and workmen seek motivation and job satisfaction from
non-monetary incentives.
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34. In case of workmen the monetary incentives also has positive
correlation with motivation and job satisfaction.
35.Motivation contributed positively by monetary and non-monetary
incentives both.
36.Employee age was also found to be an important positive contributory
variable but male gender has negative impact in employee motivation.
37. In case of job satisfaction non-monetary incentives and male gender
has positively contributed. Job satisfaction tends to be more in
employees with moderate qualification.
38.Monthly productivity linked incentive schemes were found best in
achieving production targets and organization goals but these
incentives suffered from factors like negative motivation if offered in
less quantum and problems like addiction, absenteeism when offered
in higher quantity. Lack of innovativeness, non adherence to safe
operating practices and hostility amongst the group were some of the
observed effects.
39.Monetary incentives like increments, annual bonus, medical
reimbursement and LTC were perceived as necessary and highly
important motivator by the employees.
40.Majority of employees felt that their organization was making efforts to
recognize and reward their efforts by the means of non monetary
incentives; this has also helped to reduce absenteeism, accidents and
wastage.
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41.The reward system has also helped to increase the safety awareness
and quality consciousness in the employees.
42.Though incentives were given differentiating employees on their
designation this study revealed that designation wise employees did
not have any reflection on success of incentives in the Organizational
Effectiveness. The most important factors were the age and gender of
the employees, also qualification of employee plays leading role.
Hence these factors should be given more emphasis while designing
any incentive scheme.
43.The choice between monetary and non-monetary incentives was like
choice between tasty food and healthy food.
The above result showed conclusively that monetary and non-monetary
incentives have a great impact in increasing the Organizational Effectiveness.
6.3 Cause Effect Relationship
On the basis of perceived effects and observed effects explained above, a
theoretical ‘causal model’ was developed to explain the reflection of monetary
and non-monetary incentives on the determinants of Organizational
Effectiveness.
In perceived effects, attitude towards monetary and non-monetary
incentives were independent variables and motivation and job satisfaction
were the dependent variables. The age, gender and qualification of
employees were emerged as important mediating variables. These three were
thus termed as “Intervening” or “Interfering” variables to define the relationship
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between incentives as independent variables and Organizational
Effectiveness as dependent variable.
In the observed effects the three organizations represented three different
situations like large organization with best of monetary incentives and better
non-monetary incentives, medium organization where bare minimum of both
the incentives were offered and small organization represented organization
with best of non-monetary incentives. Three situations indicated that when
best of monetary and non-monetary incentives were offered the observed OE
was maximum with some negative impact of monetary incentives. When only
non-monetary incentives were offered, it resulted into better outcomes with
less negative impacts. When only minimum of the monetary incentives and
non-monetary incentives were offered very less Organizational Effectiveness
was observed with higher negative reflections like higher rates of accidents
lesser motivation and job satisfaction, high tendencies of absenteeism,
attrition etc.
6.4 The differentiating factors of this study
The current holistic micro level study, identifies and analyzes the major
determinants of Organizational Effectiveness and incentives. Both qualitative
and quantitative analyses were carried out. The current study was carried out
on very confidential and sensitive aspects of Pharmaceutical industry like pay
packages, bonus, incentives offered. The final findings and recommendations
can be universally applicable in similar type of industries where shop floor
operations are carried out.
229
This study found out that the employees preferred monetary incentives over
non-monetary incentives in the organizations. Employees also perceived that
the monetary incentives did not lead to increased absenteeism, accidents or
percentage wastage in the organization. This study inferred that overall, there
is not a significant relationship between monetary incentives and employee
motivation and negative significant relationship with job satisfaction. This
relationship becomes more negative when fewer incentives are offered.
However, when the quantum of incentives was in line with the employee
expectation the correlation became positive and employees did not feel the
intensity of its negative aspects as the feeling that their efforts are better
compensated. The attitude of employees towards incentives is one of the
most important aspects of Organizational Effectiveness
Present study verses previous studies presented in literature review:
Some authors like Taylor F.W., (1911), Gupta, B. (1975), Sharma A.M.,
(1991), Dale S. Rose, Stuart D. Sidle, Kristin H. Griffith (2008), Kilgore, Joe
E.,(2007), Jain K.K., Jabeen Fauzia, Mishra Vinita, Gupta Naveen (2007)
advocated importance of only monetary incentives stating that they are direct,
immediate, less subjective and all are benefitted in equal capacities and
hence is the best system of motivating employees as compared to non-
monetary incentives.
On the other hand researchers like Alfie Kohn, (1993), Marsden, D. and
French, S., (2002) devaluated the monetary incentives by putting forward the
negative aspects of monetary incentives as they bring in ugly competition,
230
hostility between individual and groups, employee turns to be competitor from
team players, they become more target oriented than being innovative
creative. Monetary incentives leads to overwork, fatigue, stress and diseased
and increase employee absenteeism and reduces production in long run.
Employees may tend towards absenteeism or bad habits with the extra
income they earn.
Some scientists argued that Non – monetary incentives are the best which is
the cheapest and surest way of employee motivation like Eugene F. Stone-
Romero, Dianna L. Stone, (2002), Kraig S. Stovall (2003), Vitagliano, Bob;
McDonald, Tom, (2009), Din, Muhammad Naseer Ud; Khan, Faridullah;
Murtaza, Ali., (2011), Elton Mayo (1971), Scott A. Jeffrey, Victoria Shaffer
(2007), Ballentine Andrew, Nora McKenzie, Allen Wysocki, and Karl Kepner,
(2003), Reilly P., (2003). Watson Wyatt (2010). These researchers stated that
employee do not work for money only and they need appreciation, better
facilities, status, rewards and recognition.
Teresa M. Amabile, (1993), first time proved that intrinsic and extrinsic
motivators can complement each other and can bring in “Synergistic effect” in
overall motivation of an individual.
Authors and scientists like Mathew, H.,(1983), Michael Brostek (2000),
DeGieter et al. (2006), Bru¨ggen Alexander and Frank Moers, (2007),
Holtmann, M. and Grammling, M., (2008) have come up with the concept of
Combination of monetary with non monetary incentives can yield better
effects.
231
This study neither contradicts nor fully agrees with above statements. The
outcome of this study shows that employee largely wants monetary incentives
even though they were largely aware of its bad effects but they need more of
non monetary incentives to make it a better workplace and to make job
enjoyable and interesting. Organization should basically insist on more non-
monetary incentives supported by good monetary incentives which will add
synergy in overall organizational effectiveness with lesser side effects.
Designing of incentives should be realistic says Michael Brostek (2000),
Kingma M (2003), Rigoli F & Dussault G., (2003), Gilson et al. (2004),
Mathauer I & Imhoff I (2006). Petersen et al., (2006) also stated the
importance of good design in success of incentive scheme.
Focusing on characteristics of good incentive schemes researchers like
Chaix-Couturier et al. (2000) said that it should be easy to understand ,
consider local realities. Incentives should have inbuilt qualitative as well as
quantitative parameters says Mathauer I & Imhoff I (2006).
Group incentives were found to be very important towards organizational
team work and success as per Nair M.R.R., and Rao, T.V., (1990), Kingma M
(2003),Aime, Federico, Meyer, Christopher J., Humphrey, Stephen E. (Jan
2010), Phipps, Steven; Bazley, Julian; Povey, Graham (2007), Martin, Kyle J,
CPA, CITP, CIA. ( 2010), Adam Grant and Jitendra Singh,(2011).
Employees participation in incentives designing will bring ownership and team
building among all team members is argued by Deci, E., Ryan. R.M. (1985),
Locke, E., (1968), Gilson et al. (2004), Stephen H. Wagner, Christopher P.
232
Parker, Neil D. Chirstiansen (2006), Phipps, Steven; Bazley, Julian; Povey,
Graham (2007)and Belanger, Jaques; Ewards, Paul; Wright, Martyn, (1999),
A high correlation between motivation, Job Satisfaction and employee
turnover was found out by Brenda L. Mak, Hy Sockel, (2001).
Most importantly incentives should align individual goals with Organizational
goals says Clark (2002) and Soeters R & Griffiths F (2003),
Attitude and perception of employees towards incentives was found out to be
most important by Locke, E.A.,(1976), Brenda L. Mak, Hy Sockel, (2001),
Dalita Balassanian (2006), Mathauer I & Imhoff I (2006)., The results of
current study compliments with above findings.
Wage equity is the important factor as per researcher Laura Leete,(2000),
while others advocated opposite of the researchers opinion. Gilson et al.
(2004), Banjoko, S. (2006) stated that the employees should be paid as per
the efforts put in by them, amount of risk taken and designation.
This study put forwards the argument that wages should be perceived as
sufficient the incentives should not discriminate employees but it should make
distinction between the good, not so good performer rationally for induction of
healthy competition among the employees.
Carrier stages are important and monetary and non- monetary incentives
were felt important at various carrier stages by employees as stated by writes
DeGieter et al. (2006). At early ages employee values self development and
at at older ages growth and pride of the organization, Ballentine Andrew,
233
Nora McKenzie, Allen Wysocki, and Karl Kepner, (2003), Alfie Kohn, (1994)
also highlighted the similar issues.
Platten Paul E, Thomas P. Flannery, David A. Hofrichter, (2003) found out
that high performers below 30 years of age values Non- monetary incentives
more. Whereas, Jain K.K., Jabeen Fauzia , Mishra Vinita, Gupta Naveen
(2007), Gupta, B. (1975), says age has no effect which is strongly negated by
the present study
Present research showed that rather than carrier stages or designation the
age of the employee pays a vital role in the success of incentive schemes and
employees in all the age group. They values non- monetary incentives more
at all the carrier stages.
Different types, causes and remedies of Industrial accidents as described by
researchers like Khan, F. I., Abbasi S. A. (2001), Casal, J. et.al (2008) and
Greenfield Michael A,(1998). The findings of current study go with these
previous researcher’s findings.
Employee absenteeism problems, their routes causes identified as per Johns,
Gary.(2007), Ghosh, A., (1984), Leonard, Bill, (1994), were found true more
prominently with medium organization and in other two organizations also in
current study.
In case of production wastage reports in Business Monitor International (BMI),
Country Risk, Industry Intelligence and Company Research(2010), finding of
Patil Rajkumar (2011) and Glover, Jenny,(2004) on various reasons of shop
floor production wastages were also complemented in this study.
234
In small Organization Non- monetary incentives are important as per Steven
H. Appelbaum, Rammie Kamal, (2000), same conclusions are also drawn in
present study.
Some of the previous findings match with the findings in medium organization
where less incentives were paid and higher work pressures were felt and
employee turnover was higher, these were:
Mathauer I & Imhoff I (2006) argued that heavy work load leads to higher
stress, absenteeism, poor performance, low Job satisfaction and burnout
leading to higher employee turnover. Going further on same lines Gilson et al.
(2004) and Caldwell P & Kingma M., (2007) said factors like heavy workload,
lack of professional autonomy, poor supervision and support, lack of team
work, unfair pay leads to lower job satisfaction and higher employee turnover.
Hongoro C & Normand C (2006) stated that, if the remuneration is less and
employee feels that his opportunity cost is not met then it acts as a
disincentives leading to low job satisfaction and high intent to leave the
organization.
Record R & Mohiddin A (2006), stated that wages paid is very important factor
to retain good talent in international market and avoid employees attrition rate.
Current study put forward the similar reasons in case of medium organization
and various other stages of the study.
Regarding the non-monetary incentives, it was found that it is the cheapest
way to enhance employee performance in tight economic situation. Non-
235
monetary incentives are effective in early career stages and in case
employees approaching retirement age.
In large organization as stated by Kyriacou, Andreas P., (2010), too many
incentives causes crowding effect and thus leading to overall reduction in
organizational effectiveness was observed. Patil Rajkumar (2011) stated
static factors affecting production, which were observed in the form of less
advanced machinery in small organization and space constraints in large
organizations affecting production output.
This study compliments various previous studies at the same time
contradicted and presented its own unique differentiating factors. The study
should help to design better incentive packages in future.
6.5 Conclusions
On the basis of qualitative and quantitative analysis of data, it can be said with
reasonable degree of confidence that a well designed non-monetary
supported by good monetary incentive schemes can increase employee’s
motivation. As a result, employees remained more job satisfied. The incentive
schemes were able to induce reduction in employee absenteeism and
production wastage and accidents on shop floor leading to increase the
overall Organizational Effectiveness.
There existed a significant negative correlation between attitude towards
monetary and non-monetary incentives. Monetary incentives when offered
less than employee expectations defeat its own purpose and show negative
236
impact on Organizational Effectiveness. When the monetary incentives were
offered in higher quantum and frequencies, it showed a positive reflection on
Organizational Effectiveness. Unlike monetary incentives, non-monetary
incentives did not give any negative reflection even it is offered less in
quantum. Hence, it is the most cost effective method and always shows
positive reflection towards Organizational Effectiveness.
There existed a positive and significant correlation between non-monetary
incentives and employee motivation and job satisfaction. Their existed no
correlation between monetary incentives with motivation. Monetary incentives
has negative relationship with job satisfaction which is significant. This is due
to the fact that the correlation is dependent of quantum of incentives
perceived as sufficient or insufficient by the employees. If the monetary
incentives offered were too high that also started showing negative impact on
employee’s performance. The employee tends to take more leaves and more
inclined towards bad behaviour like alcoholism, gambling with this extra
income.
Employees perceived monetary and non-monetary incentives as important
and necessary aspect towards achieving Organizations Effectiveness and
compensation of their additional efforts that they need to put, in achieving
organizational goals.
The unique and differentiating finding of this study suggests that the incentive
scheme design should not be done only on the basis of employee designation
alone and due regards needs to be given to demographic characteristics of
the employees like age, gender and qualification of the employees in the
237
organization as they have different inclinations and priorities. It is also
observed that female respondents have preferred monetary incentives over
higher responsibility and promotions due to higher devoted time requirements
at work and they also have additional domestic responsibilities.
No system can be made full proof, so are the incentive schemes, but their
adverse effect can be minimized by taking proper care while designing them
and involving employees of all the levels. Regular feedback and corrections in
the scheme helps in reducing the negative impact of the monetary and non-
monetary incentive schemes over long run.
Though the study is conducted on shop floor employees of selected
pharmaceutical organizations, the results of the study are can be applied to
any other types of organization where shop floor or assemble line operations
are performed.
Overall, this research indicates that non-monetary incentives were more
effective in increasing employee motivation, job satisfaction and have lesser
negative impact compared to monetary incentive schemes. The non-monetary
incentives must to be complimented with good monetary incentives to have
synergistic effect.
6.6 Suggestions and Recommendation
1. Emphasis should be given to good non-monetary incentives in the
organizations supported by good monetary incentive packages to have
synergistic effect.
238
2. Designing of incentive schemes should also be done considering age
of employees, gender and qualifications and not on the basis of the
designation alone.
3. The monetary incentives should be inclusive of quantitative as well as
qualitative aspects like number of days employee is present,
percentage yield and nil loss time accident (LTA) to take care of
negative determinants of Organizational Effectiveness like
absenteeism, wastage and accidents respectively.
4. The emphasis should be given in formulating and percolating good
non-monetary incentives as they have very profound and sustained
effect on all the employees on the organisation. These awards should
be presented on the occasion of family get together and other social
functions.
5. To encourage the good team work, team awards and group incentives
should be encouraged.
6. The periodic feedback in the system will help to sustain the
effectiveness and also take care of negative aspect like increased
stress level, employee becoming more targets oriented than creative
and innovative in their approach.
7. The incentives should be able to differentiate individual as well as
groups level performances to generate competitiveness amongst the
employees.
239
8. To minimise the subjectivity, the performance targets should be well
spelled at all the levels of KRA’s and measures should be well defined
and quantifiable, the scheme should be easy to understand by all.
9. Industries should come forward and share these information, data and
results for future faster development of other industries and economy
as a whole.
10.Large organisation should try to change their weekly off from Friday
and Sunday to Saturday and Sunday in order to reduce absenteeism
and overtime working.
11.The medium organization needs to improve employees’ involvement in
designing, implementation and review of incentive packages. Better
non monetary incentives and improvement in quantum of monthly
incentive schemes at the average level in the industry needs to be
devised. Separate incentives at group levels needs to be devised
which will help to increase motivation and job satisfaction by improving
team work, altruism, belongingness, and attitude and also by reducing
attrition in the employees.
12.The small organization in the study needs to provide better hygiene
factors like proper transport facilities, canteen and medical facilities like
cashless medical insurance facilities in accredited hospitals. By rough
and reasonable estimates this will increase the overhead cost by 3 to 4
percentage for the organization.
240
6.7 Scope for Future Research Studies
Employee needs and incentives to satisfy these individual needs and
achieving Organizational Effectiveness is a very dynamic issue. Though the
basic relationship between monetary and non-monetary incentives on
determinants of organization will not undergo drastic change in near future but
continuous research and analysis in the field is needed.
Upgraded versions of incentive packages need to be introduced taking care of
changing needs of employees. Further research can be done taking bigger
sample size from the same sectors and also incorporating various other
sectors of the industries like electronics, engineering and automobiles.
There is a scope to conduct vertical and lateral studies on demographic
characters and its impact can be studied. Further detailed study on single
aspect of demographic characters like age, gender and qualification needs to
be done.
Employees in operations, marketing research and development, services and
support functions can also be incorporated for more comprehensive study.
Other determinants of Organization Effectiveness like profitability, productivity,
adaptability and customer satisfaction with respect to corresponding
incentives offered to employees needs to be studied by the organization.
241
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Annexure - I
“QUESTIONNAIRE TO STUDY THE EFFECTS OF INCENTIVE SCHEME
ON ORGANIZATIONAL EFFECTIVENESS”
This is part of research meant for Ph. D. Degree in “BUSINESS MANAGEMENT”.You are requested to carefully read the instructions and respond to the questionnaire. Authenticity and accuracy in you responses would be very helpful to my research. The information supplied will be used solely for the purpose of research. Absolute secrecy of your identity and responses is assured. MAKARAND V. NANDANWAR
BACKGROUND INFORMATION
NAME (Optional) :
Age : years
Gender : Male / female
Marital status : Married / Single.
Background : Rural / Urban
Present Designation :
Department. :
Educational Qualification :
Work experience (in Years) :
Take homes salary per month(in Rupees) :
Distance of office from your home : Kms
Time taken by you to reach your office : hrs.
Have you gone for a long leave last year : Yes / No.
If yes, number of days : ____________
reasons for leave in short : _______________________________
276
SECTION - I
INSTRUCTIONS
In this part are listed some job characteristics or qualities that people look for in their jobs. We would like to know the degree of your satisfaction or dissatisfaction with each of the job qualities as they relate to your present job. For each job quality listed below, you will find five answers. Please indicate your feelings by circling the appropriate alphabet representing your answer. Make sure that you indicate your feelings for each item.
a. Extremely dissatisfied, b. Moderately dissatisfied,c. Neither dissatisfied nor satisfied, d. Moderately satisfied,e. Strongly satisfied.
1. With the amount of security, I have on my job, I feel a b c d e
2. With the kind of company policies and practices that govern my job, I fill a b c d e
3. With the amount of salary that I receive to maintain a reasonable good living, I feel a b c d e
4. With the kind of benefit plans ( Bonus, medical reimbursement and the Annual increments ) that go with my job, I feel a b c d e
5. With the chance of future promotion I have in my job, I feel a b c d e
6. With the kind of working conditions (lighting, noise, office space and so on ) surrounding my job, I feel a b c d e
7. With the interesting or enjoying nature of the work in my job, I feel a b c d e
8. With the amount of recognition and respect that I receive for my work, I feel a b c d e
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9. With the opportunity I have in my job to work with people I like, I feel a b c d e
10. With the technical competence of my immediate supervisor, I feel a b c d e
11. With the opportunity that I have in my job to achieve excellence in my work, I feel a b c d e
12. With the kind of responsibility and independence that I have in my job, I feel a b c d e
13. With considerate and sympathetic nature of my immediate superior, I feel a b c d e
14. With the opportunity for acquiring higher skill & knowledge, I feel a b c d e
15. With the kind of job I am doing at present, my relatives and friends are a b c d e
SECTION II
Kindly read each statement carefully and indicate your response to the statement by circling the appropriate number.
1. All in all, how satisfied are you with your job?
Not at all not too Neither satisfied Somewhat Satisfied________ satisfied nor dissatisfied satisfied _______
1 2 3 4 5
2. How often do you get so wrapped up in your work that you lose track of the time.
Never Rarely Sometimes Often Always 1 2 3 4 5
3. If a good friend of yours told you that he is interested in a job like yours, you would do one of the following.
Strongly advise Moderately advise About recommending ithim against it him against it ____________________ 1 2 3
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Moderately advice him Strongly advise him inin favour of it favour of it
4 5
4. Knowing what you now know about your job, if you has to decide all over again whether to take the job you now have, what you decide.
Decide definitely not Decide not to take Have secondto take the same job the same job thought
1 2 3Decide to take Decide without hesitationthe same job to take the same job
4 5
5. How often do you leave work with a good feeling that you have done something Particularly well.
Never Rarely Sometimes Often Always 1 2 3 4 5
6. Taking everything into consideration, how likely is it that you will make a genuine effort to find a new job with another employer within the next year.
Very low Low Average High Very high1 2 3 4 5
7. In general, how well would you say that your job measures up to the type of job you wanted when you took it up ?Not at Not very I can’t Somewhat Very muchall like much like say like life 1 2 3 4 5
8. If you were to get enough money to live as comfortably as you would like for the rest of your life, would you continue to work.
Never Rarely Sometimes Often Always 1 2 3 4 5
Tick one of the companies you will like to work for from below A and B .(A) Offers you best of the CTC ( take home salary) in the pharmaceuticals
industries. Professional working relationship with other employees, adequate working facilities, cash incentives and bonus on completion of the targets, experience certificates on leaving the company.
(B) Offers good working conditions but less salary and benefits in form of better facilities, opportunities to handle higher responsibilities, opportunities to learn advance technologies and new skills which will give you the recognition.
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SECTION III
In this part are listed some statements related to monetary incentives like annual increment and bonus, reimbursements of medical expenses, children education allowance, subsidized canteen and transport facility in your organizing. It also includes questions on non monetary incentives like recognition, award and appreciation we would like to know your feelings about these scheme.Kindly read each statement carefully and indicate your response to the statement by circling the appropriate number.
1. My organization makes efforts to recognize or reward employees efforts.
Strongly Disagree Neither agree Agree StronglyDisagree _______ nor disagree _____ agree 1 2 3 4 5
2. The monetary incentive schemes have helped me to increase my real income. Not at To a little To moderate To a great To a very all extent extent extent great extent 1 2 3 4 5
3. The monetary incentive scheme puts pressure to perform leading to more accidents.
Strongly Disagree Neither agree Agree StronglyDisagree _______ nor disagree _____ agree 1 2 3 4 5
4. The monetary incentive scheme has led to increased wastage of time and material.
Strongly Disagree Neither agree Agree StronglyDisagre _______ nor disagree _____ agree 1 2 3 4 5
5. Appreciation and rewards has increased safety awareness leading to lesser accidents in my organization.
Not at To a little To moderate To a great To a very all extent extent extent great extent 1 2 3 4 5
6. I believe that higher annual increments and bonus are more important for me than higher responsible position and opportunity to learn new things.
Strongly Disagree Neither agree Agree StronglyDisagree _______ nor disagree _____ agree 1 2 3 4 5
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7. Appreciation letters, display of names on notice boards makes employee feelmore responsible towards production & quality and reduce wastage.
Strongly Disagree Neither agree Agree StronglyDisagree _______ nor disagree _____ agree 1 2 3 4 5
8. Appreciation from superior gives me more motivation satisfaction in my job.
Strongly Disagree Neither agree Agree StronglyDisagree _______ nor disagree _____ agree 1 2 3 4 5
9. Monetary incentive scheme motivates people to work effectively through constant pressure of goal attainment.
Strongly Disagree Neither agree Agree StronglyDisagree _______ nor disagree _____ agree 1 2 3 4 5
10. “Zero Accident” Incentives has reduced number of accidents on my shop floor.
Strongly Disagree Neither agree Agree StronglyDisagree _______ nor disagree _____ agree 1 2 3 4 5
11. Attendance awards scheme has reduced my absenteeism.
Never Rarely Sometimes Often Alwaystrue true true true true 1 2 3 4 5
12. I believe that rather than providing subsidized food, transport facility, company should make payment of these allowances and facilities. Not at To a little To moderate To a great To a very all extent extent extent great extent 1 2 3 4 5
13. If given, I will prefer to take encashment of LTC amount rather than availing family holiday facility.
Never Rarely Sometimes Often Alwaystrue true true true true 1 2 3 4 5
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Thank you, we appreciate your sparing valuable time for us.Over all anything you want to add or say about this study or your replies. Please feel free to share you feelings--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Ends
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Annexure II
“ORGANIZANAL DATA SHEET TO STUDY THE EFFECTS OF INCENTIVE SCHEME ON ORGANIZATIONAL EFFECTIVENESS”
This is a part of research meant for Ph. D in Management Studies. You are requested to provide data details below. Accuracy in your respond would be very helpful to my research. The information supplied will be used solely for the purpose of research. Absolute secrecy of your identity of your organization is assured. It is intended to study effects of various monetary and non monetary incentive schemes present in the organization and its reflection on organizational effectiveness at individual level.
MAKARAND.V.NANDANWAR(Contact no. 9969005969)
No. of Departments
Name of Department ___________________ Management Supervisors Non managementTotal no of employees _______ _________ __________Employees in production: _______ _________ __________No. of lady Employees _______ _________ __________
You are request to give briefs of the schemes in its present form in your organization .
Monetary incentives Management Supervisors Non management
1. Annual Increments _______ _________ __________ (in percentage)
2. Bonus _______ _________ __________
3. Reimbursement of _______ _________ __________ Medical Expenses
4. Leave Travel Concession _______ _________ __________
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5. Subsidized Transport facility _______ _________ __________
6. Subsidized Canteen Facility _______ _________ __________
Non monetary incentives Management Supervisors Non management
1. Recognition scheme _______ _________ __________
2. Award Scheme _______ _________ __________
3. Appreciation _______ _________ __________
You are request to give briefs of these schemes in its present form in your organization.You are also requested to give the details of any other Incentive Scheme you have in your organization.
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ORGANIZATIONAL DATA SHEET TO STUDY THE EFFECT OF
INCENTIVE SCHEME ON ORGANIZATIONAL EFFECTIVENESS”
(For the period2006-07, 2007-08,2008-09 in separate sheets )
For the period 2006-07
Month No. of
production
Employee
Absenteei
sm
(in days )
Accidents Wastage
% of total
production
Any other
information
April 06
May 06
June 06
July 06
Aug. 06
Sept.06
Oct. 06
Nov. 06
Dec. 06
Jan. 07
Feb. 07
March 07
You are requested to kindly mention Effect of any other reasons beyond the normal
circumstances for the significant variation in any of the data mentioned above.
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For the period 2007-08
Month No. of
production
Employee
Absenteei
sm
(in days )
Accidents Wastage
% of total
production
Any other
informatio
n
April 07
May 07
June 07
July 07
Aug. 07
Sept. 07
Oct. 07
Nov. 07
Dec. 07
Jan. 08
Feb. 08
March 08
You are requested to kindly mention Effect of any other reasons beyond the normal
circumstances for the significant variation in any of the data mentioned above.
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For the period 2008-09
Month No. of
production
Employee
Absenteei
sm
(in days )
Accidents Wastage
% of total
production
Any other
information
April 08
May 08
June 08
July 08
Aug. 08
Sept. 08
Oct. 08
Nov. 08
Dec. 08
Jan. 08
Feb. 08
March 08
You are requested to kindly mention Effect of any other reasons beyond the normal
circumstances for the significant variation in any of the data mentioned above.
THANK YOU FOR YOUR KIND COORPORATION
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Annexure III
Working Definitions
Allowance : It is an amount of money kept aside and paid to employee for a
designated purpose.
Annual increment : It is an increase in salary by some amount, either fixed
or variable percentage of its current value.
Accident is a specific, unpredictable, unusual and unintended external action
which occurs in a particular time and place, with no apparent and deliberate
cause but with marked effects which is generally negative outcome which may
have been avoided or prevented.
Attitude The combination of beliefs, assessed feelings, and behavioral
intentions towards an object.
Minor Accident: is event of an accident where no property or irrecovarable
injury to any person or loss of production time.
Major Accident : it involves loss to property, major human injury loss of life
or earning capacity or productive time.
Absenteeism is a habitual or pattern of absence from a duty or obligation.
Traditionally, absenteeism is an indicator of poor individual performance, as
well as a breach of an implicit contract between employee and employer as
an indicator of psychological, medical, or social adjustment to work.
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Coercion: Threat of punishment to compel individual to carry out some
action against employees will.
Causal – Effect Relationship: It is the relationship between an event (the
cause) and a second event (the effect), where the second event is understood
as a consequence of the first The causes and effects are typically related to
changes in events.
Effectiveness: means the capability of producing an effect, and is used in
connection with the degree to which something is capable of producing a
specific, desired effect or change.
Organizational effectiveness: is the concept of how effective organization is
in achieving the outcomes organization intends to produce. The idea of
organizational effectiveness is interested in knowing whether the organization
is effective in accomplishing its goals by more efficient or effective operations
and other internal or external measures other than those simply associated
with economic valuation.
Incentive: It is an expectation or motive that encourages people to behave in
a certain way. Any factor (financial, non-financial, or emotional ) over and
above normal pay that enables or motivates a particular course of action, or a
reason for preferring one choice to the alternatives.
Job Satisfaction : Pleasurable emotional state resulting from contentment of
an individual with his or her job. The happier people are within their job, the
more satisfied they are said to be. It is measured in the form of “Importance”
attached and “satisfaction” derived by employee from his job.
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Loss Time Accident (LTA) : A man-hours lost by an organization due to
absence of employee from work due to accident on shop floor during working
hours or A accident resulting to equipment resulting in production time loss.
Motivation : It is the driving force (external or internal) or compelling
tendency or a cause which induces individual to achieve desired predefined
output /goals or perform action. It is measured in the form of satisfaction
derived out of needs accomplishments.
Performance- linked incentives is the compensation / payment in cash or
concessions paid in the proportion relating to how well individual has achieved
the predefined targets at the workplace.
Monetary incentive: It is a paid in the form of money or concessions to
encourage individual to achieve goal. A material reward — especially money
— in exchange for acting in a particular way.
Non Monetary incentives : It is reward, appreciation, recognition of efforts
not in the form of hard cash but extending certain benefits or facilities or
physical gift which have much more emotional or social value than its actual
cost price of material, in exchange for acting in desired way.
Production Wastage a part of production output lost by wear, rework, market
recall or irrecoverable portion of solvents leading loss of production time,
money and material.
Reflection : it is referred as consequence or effect of one thing on another.
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Satisfaction : it can be defined as sense of fulfillment of ones needs or
desire.
Shop Floor : The Shop floor is an area or the floor of a factory (machine
shop) where people work on machines, or the space or production area in a
establishment where raw material is converted into finished or intermediate
goods, checked and packed in ready to dispatch condition.
Shop Floor Employees : The managerial and non managerial employees
who are required to be physically present and are responsible for the
supervision and operation activities like storage of material, operations,
maintenance of machines, quality assurance, loading unloading of goods,
packing and transportation of material on shop floor are termed as Shop Floor
Employees.
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Annexure – IV
Statistical Average scores of variables
S.no StrataMotivati
onJob
SatisfactionTotal
Incentives
Non-monetary incentives
monetary incentives
1 Total 3.54 3.496 3.63 3.57 3.69
2 Large 3.75 3.64 3.87 3.65 4.06
3 Medium 3.039 3.122 3.41 3.19 3.59
4 Small 3.901 3.89 3.57 4.01 3.21
5 Male 3.42 3.53 3.63 3.85 3.38
6 Female 3.70 3.46 3.63 3.47 3.83
7 Age(21-33) 3.52 3.57 3.66 3.64 3.68
8 Age(34-46) 3.53 3.45 3.67 3.68 3.65
9 Age(47-59) 3.62 3.45 3.56 3.29 3.8
10 Rural 3.56 3.55 3.80 3.82 3.79
11 Urban 3.49 3.35 3.53 3.51 3.56
12 Manager 3.51 3.34 3.55 3.44 3.64
13 Supervisor 3.43 3.44 3.56 3.42 3.68
14 Workmen 3.51 3.58 3.71 3.71 3.68
15 Married 3.57 3.52 3.62 3.43 3.79
16 Unmarried 3.47 3.43 3.65 3.92 3.42