Motivation through Compensation and Working Environment

in Banking Sector of India

MOTIVATION
through
Compensation and Working Environment
in
Banking Sector of India
Submitted to:
Prof. LAXMANA RAO

Submitted by:

Devajit Barman
International Business (1st sem )
Sap Id-500011878
Enrolment No-09

University Of Petroleum & Energy Studies, Dehradun 1

Motivation through Compensation and Working Environment
in Banking Sector of India

CONTENTS

Abstract………………………………………………………. 3

Literature Review …………………………………………….4

Findings ……………………………………………………….8

Conclusion ……………………………………………………9

Reference ……………………………………………..………9

University Of Petroleum & Energy Studies, Dehradun 2

Motivation through Compensation and Working Environment
in Banking Sector of India

ABSTRACT
In any organization employee motivation is the key factor for
organizational performance. Previous studies have shown positive impact
of Working Environment and Compensation on employee’s motivation. In
this study a sample of few bank officers was taken by adopting, to
investigate the relationship between Motivation & Working Environment
and Employee Motivation. Bank employees found not highly motivated as
a result of working environment and compensation.

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Motivation through Compensation and Working Environment
in Banking Sector of India

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

RESEARCHERS VIEW

Figure: Compensation and Work environment effect on

Employee Satisfaction and Performance.
(Emmert and Tamer)
Compensation
Basically compensation refers to all forms of financial returns and tangible
services and benefits employees receive as part of an employment
relationship (Milkovich & Newman).

Many researchers describe the importance of compensation in motivating

employees.

Compensation benefits (Pay, rewards, medical & transportation) are a

major consideration in human resource management because it provides
employees with a tangible reward for their services (Bohlander, Snell, and
Sherman, 2001)

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Motivation through Compensation and Working Environment
in Banking Sector of India

Sansone and Hareckiewicz (2000) identify that compensation benefits

energize and guide behaviors toward reaching a particular goal (Milkovich
and Newman, 2002).

Stone (1982) indicated that people are motivated by money for many
different reasons. The need to provide the basic necessities of life motivates
most people (Kovach, 1987).
Benefits, both financial and otherwise, send a powerful message to
employees of an organization as to what kind of organization management
seeks to create and maintain, and what kind of behavior and attitudes
management seeks from its employees (Beer, et al 1988).

I- Pay or Salaries
Cotton and Tuttle say that employee satisfaction with pay level is important
because it has been found to have an effect on levels of absenteeism and
turnover (Jerald, 1997).

Pay can be a factor in decision to stay or leave, it is clear that

dissatisfaction with pay can be a key factor in turnovers (R. Heneman and
T. Judge: 1999).

Linkage between pay and behaviors of employees results in better

individual and organizational performance (W. N. Cooke: 1987).

The process by which the organization creates and administers incentive

pay can help, it use incentives to achieve the goal of motivating employee
(R. T. Kaufman: 1992).

Level of pay and pay system characteristics influence a job candidate’s

decision to join a firm (E. E. Lawler: 1971).

II- Rewards & Incentives

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

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Motivation through Compensation and Working Environment
in Banking Sector of India

According to a report by the American Compensation Associations, August

1996.
“When it comes to reinforcing team behavior, the reward system is one of
the most effective and influential tools available to the organization” (IRS
1996).

Rewards may enhance the employees’ financial well-being through wages,

bonuses, or profit sharing, or indirectly, through employer-subsidized
benefits such as retirement plans, paid vacations, paid sick leaves, and
purchase discounts (Sue Shellenbarger, 19999).

In Cheung and Scherling (1999:563), Martin and Touch identifies that

employee job satisfaction is a function of extrinsic (pay, promotion and
good relationship in the work place) and intrinsic (achievement of tasks)
rewards offered by a job.

Rewards that are proportional to the value of suggestions will facilitate

intrinsic motivations (Amabile, 1996).
Rewards promote efforts, performance and there is lot of evidence that they
often do (Gibbons, 1997; Lazear, 2000,).

D. M. Cable & T. A. Judge (1994) suggest that job candidates look for
organizations with reward systems that fit their personalities.

Therefore the reward issue can not be ignored, as it will create a “situation
in which the expectation or the actual goal-directed behavior of one person
or group are blocked or are about to be blocked (Steers and Black 1994).

III- Health Benefits

Wellness programs for healthy working environment, may help
organization to cut employer health costs and to lower absenteeism and
turnover of employees (Carolyn Petersen).

Family Health benefits often have spillover effects in the form of loyalty
because employees see the benefits as evidence that the organization care
about its employees. (S. L. Grover and K. J. Crooker: 1995).

IV- Working Environment

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

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Motivation through Compensation and Working Environment
in Banking Sector of India

Good working environment such as work relationships, adequate

equipment, space, heating, lighting and ventilation motivated employees
(Gerhart).

Green (2001) says managers can motivate employees by setting in motion

the conditions required for motivation such as working environment,
confidence, trust and satisfaction that enforce employees to improve their
performances.

Herzberg and Miller (1968) states that compensation including pay,

rewards, communication and working conditions are four common
incentives, which motivate employees.

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Motivation through Compensation and Working Environment
in Banking Sector of India

FINDINGS

The study shows that the people working in banking sector of India feel
that there is need to update the working environment of the banks. They are
of a view that working environment in banking sector of India has some
flaws in it which needs to be removed. In nutshell, bank employees are not
found highly satisfied and motivated with their current working
environment of the banks in India.

This again reveals that most of the people are not satisfied
with the fully satisfied with their compensation structure. The bank
employees feel that they are not paid according to the services they are
giving to bank. They are not getting the true fruit of their hard work. There
is a need to update the compensation structure according to the services
provided by employees.

We find with the help of this analysis that the motivation level
of bank employees is not very high. They are somehow dissatisfied or not
motivated in terms of working environment and compensation.

If the Working Environment is conducive and cooperating

which give the employees a feeling of self accomplishment, hen they will
be more motivated and loyal to their organization.

Many of other researchers previously found similar results from their

research and analysis. Sansone and Hareckiewicz (2000) identify that
compensation benefits energize and guide behaviors toward reaching a
particular goal (Milkovich and Newman, 2002).

Stone (1982) indicated that people are motivated by money for many
different reasons. The need to provide the basic necessities of life motivates
most people (Kovach, 1987).

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Motivation through Compensation and Working Environment
in Banking Sector of India

CONCLUSION

Motivation is linked with good working environment and high level of

compensation.

The organization should must understand that what type of work

environment can motivate their employees and they can become loyal
employees of the organization which benefit the organization in the long
run. Moreover the organizations should develop such a compensation
structure that fulfill the needs of the employees in a best possible way and
that they don’t look around to meet their needs.

REFERENCES

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

2. David A. Decenzo and Stephen P. Robbins. 2002, Human Resource
Management, 7th ed. John Wiley and Sons, Inc.
3. Evans M. G., 1986. Organizational behavior: The central role of motivation.
Journal of Management.

“Thank you very much Sir for your support”

University Of Petroleum & Energy Studies, Dehradun 9