EFFECT OF REMUNERATION AND REWARDS ON EMPLOYEE …€¦ · NSHM School of Hotel Management Arrah, Shibtala, Muchipara Durgapur, West Bengal – 713212, India. ***Ph.D Research Scholar

ZENITH International Journal of Business Economics & Management Research

Vol.2 Issue 4, April 2012, ISSN 2249 8826

Online available at http://zenithresearch.org.in/

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EFFECT OF REMUNERATION AND REWARDS ON EMPLOYEE

MOTIVATION- A STUDY OF SELECTED HOTELS IN WEST BENGAL

P.R.SANDILYAN*; MOUSUMI MUKHERJEE**;

AMITABH DEY***; MANOJIT MITRA****

*Ph D Research Scholar (IGNOU),

Professor,

NSHM School of Hotel Management,

Arrah, Shibtala, Muchipara, Durgapur,

West Bengal – 713212. India.

**Assistant Professor,

NSHM School of Hotel Management

Arrah, Shibtala, Muchipara Durgapur,

West Bengal – 713212, India.

***Ph.D Research Scholar (IGNOU),

Principal,




****Research Scholar/ HOD- Examinations and University Affairs




ABSTRACT

It has always been accepted and agreed upon that quality comes at a cost. This is true for service

quality also and applicable to the hospitality industry likewise. In modern days, Human Resource

Managers have recognized the need to keep well motivated employees to maintain quality

standards in service delivery. The best way to keep employees well motivated is by means of

Remuneration and Rewards and most organizations understand and apply this to get the best

from their employees. The nature of Human Resource practices in the catering and Hospitality

Industry is reviewed and how remuneration and rewards affect the performance of employees

and service quality is studied. The literature concerning Human Resource Management and

performance is briefly reviewed, and its relevance to Hotel Industry and service quality and

performance is addressed. The need for additional research is identified. The aim of this study is

to describe the relationship between Remuneration and rewards with employee motivation which

directly affects the quality of service delivered. Satisfaction levels of employees and workplace

attitudes are examined to pave the way for further study and research.

KEYWORDS: Employee Motivation, Human Resource Management, Hospitality,

Remuneration, Rewards.

______________________________________________________________________________




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1.0 INTRODUCTION

Human Resource has been identified by most Human Resource Managers and Employers

globally as the most essential ingredient necessary for the success of any business. This belief

holds good for the Hospitality Establishments also. Hospitality organizations thrive on the

customer‟s perception of value for money in terms of amenities and service. Service being a

perishable and intangible commodity it goes without saying that it is more difficult to measure

and track. This challenge is unique to service product organizations worldwide and each one has

developed a yardstick to study and track the performance of their employees in accordance to the

location and market where they operate. In eastern India also the HR managers face a similar

challenge and strive to meet the ever increasing demands of the modern day traveler and

customers. India being a labor market and Eastern India being one of the slower developing

areas, the challenge before the HR managers in this area is huge. They have to match the

available talent pool with the cost structure permitted by the organization and thus ensure to

strike a balance between the two. This study is mainly to ascertain how far the efforts of these

employers and HR managers in this region have been successful in achieving the expectations. A

total of twelve establishments falling across various category cities in the region have been

examined for this study. There were some essential hypotheses that were examined for the

purpose of this study. Firstly it was taken that the rewards and remuneration packages in metro

cities would be higher and more suited to meet the expectations of the employees because the

employees had plenty of options to switch jobs. Secondly it was taken that rewards and

remuneration had a direct bearing on employee performance and service quality. Thirdly it was

expected that service quality standards and expectations of customers in metros would be much

more as compared to the customers of smaller cities and towns. Lastly it was assumed that

employer expectations in terms of delivery in metros would also be higher as compared with the

smaller cities.

2.0 REVIEW OF LITERATURE

Kovach (1987) observed in his study on factors that motivates employees, as an employee‟s

income increases, money becomes less of a motivator and that as an employee gets older,

interesting work becomes more of a motivator.

The factor that motivates employees keeps on changing depending on a composite number of

intrinsic or extrinsic factors. Bowen and Radhakrishna (1991)

Rewards can be verbal, physical or tangible. Organizations usually use pay, promotion, bonuses

and other types of reward to engender staff to increase productivity. These are management tools

which when used appropriately, contribute to an organization‟s effectiveness by influencing

individual or group behavior (Cameron and Pierce, 1977; Gomez-Mejia and Balkin, 1992).

Smith(1994) writes motivating employees is more fruitful in a workplace, so there is a

requirement to study what motivates employees is vital for the survival of an organization and

challenging for a manager.

According to Petcharak (2002), one of the main functions of the human resource manager is to

keep the employees satisfied with their jobs and ensure continued motivation of employees.




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When the work environment is not satisfactory to the employee, his performance is poor and this

ultimately leads to poor performance of the organization.

Ballentine (2003) stated that the purpose of rewarding employees is to recognize excellent job

performance, provide feedback, make it easier to get work done, encourage employees to be

more productive and help management achieve their goal. Therefore, in order to ensure that the

National Library of Nigeria attains its stated goals in an efficient and effective manner, it is

pertinent that the employee reward policy is deployed in a way that engenders a motivated

workforce. All things being equal, the motivated workforce will perform better on the job and

deliver better quality service.

According to Wilson (2010) reward can be defined as “an external agent administered when a

desired act or task is performed, that has controlling and informational properties”. He went

further to explain that rewards are usually administered to increase the probability of a pre-

determined response although rewards can increase or decrease the probability of an event

occurring, depending on the saliency and direction of the controlling and informational aspects

of the reward

Khan et. al. (2010) put forward that organizational goals are directly comparative to the personal

goals of an individual and that organizational productivity can be increased if employees are self-

motivated towards their work rather than being directed. Therefore, managers play an important

role in the motivation of employees. This is particularly true of service organizations such as

libraries.

P Joshi & D. N. Venkatesh, (2006) (H. R Management Pg 325, Remuneration centers around

factors such as job complexity, the company‟s ability to pay, and executive human capital.

Zeithaml, Bitner and Gremler, 2006, Services are characterized by intangibility, heterogeneity,

inseparability and perishability.

Hurley and Estelami, 2007, Owing to this unique nature, hospitality employees‟ performance

upon service delivery is an important determinant for customer satisfaction and loyalty, as the

quality of service encounters between employee and customer determines the level of customer

satisfaction. Furthermore, studies have shown that customer satisfaction is correlated with

employees‟ satisfaction, as satisfied employees are likely to perform better on the job. In other

words, employee satisfaction could lead to customer satisfaction; consequently it increases

customer loyalty and benefits the organization with improved profitability.

Biswajeet Pattanayak, (2005)(Human Resource Management 3rd Edition Pg 259) The use of

incentives assumes that people‟s actions are related to their skills and ability to achieve important

long term goals. Even though many organizations, by choice or tradition or contact, allocate

rewards on non performance criteria, rewards should be regarded as a „pay off‟ performance.

Dean R. Spitzer, (2007) (Super Motivation pg- 165) the most important component of in any

reward system is the relationship that exists between rewards and performance. While a few

employees are rewarded generously for their performance, most employees receive few, if any,

performance-based-reward-not even for exceptional performance.




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Robert L. Mathis & John H. Jackson, (2004), (H R Management 10th

edition Pg-84) Pay and

benefit must be competitive, which means they must be close to what other employers are

providing and what individuals believe to be consistent with their capabilities, experience, and

performance.

B. Mamoria & S.V. Gankar, (2001), (H.R management 6th

edition pg- 303) A reward can be

anything that attracts a employees attention and stimulates him to work. There can be monetary

reward or non monetary reward.

David A. DeCenzo, 1998, Personnel Human Resource Management reward that is not visible to

the employees may fail to get the desired motivating effect from the employee. On the other

hand, a truly visible reward gets the attention not only of individuals but also of their peers. This

latter quality means visible rewards can contribute to satisfying an employee‟s esteem and

recognition needs. An effective reward would be flexible in terms of the amount given and

whether it is given to everyone in the organization. The annual performance bonus, for instance

of a high flexibility. It can be adjusted upward or downward or eliminated, each year depending

on some measure of performance. Additionally it can be given selectively to those employees

who have done a superior job.

Burack and Boldsmith, Human Resource Management, Pg 259, “An incentive scheme is a plan

or programmes to motivate individual or group performance. An incentive programme is most

frequently built on monetary reward (incentive pay or monetary bonus), but may also include a

variety of non monetary rewards or prizes”.

K Aswathappa, 1997, Human Resource Management, 5th

edition, Pg- 285, Remuneration is the

compensation an employee receives in return for his contribution to the organization.

Remuneration occupies an important place in the life of an employee. His standard of living,

status in the society, motivation, loyalty, and productivity depend upon the remuneration he

receives. For the employer too, employee remuneration is significant because of its contribution

to the cost of production. Besides, many battles (in the form of strike and lock outs) are fought

between the employer and the employees on issue relating to wages or bonus.

T.V. Rao, 1991, Reading in Human Resource Development, pg-118, Performance Rewarding is

involved only when an employee is rewarded for high performance in his job over a period of

time, usually a year or two) and this should be differentiated from other forms of reward and

awards such as those for bravery, social services, best employee and sportsmanship. Performance

awards are generally given to individuals for doing consistently outstanding work in their jobs

although group performance rewarding is also not uncommon.

3.0 METHODOLOGY

A well structured questionnaire was framed and administered to employees of the service

industry from select hotels in West Bengal to collect their responses on remuneration and

rewards of their organization. The data so collected was initially scanned and verified. Further

statistical and mathematical tools were used to establish the level of motivation and satisfaction

of the employees, which has a direct bearing on their performance and hence the quality of

service. The outcome of the analysis was studied and elaborated to draw appropriate conclusions.




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Factor analysis of the data showed that all the variables had equal significance and hence no

factorization was possible in this work.

4.0 DATA ANALYSIS

Here the average of the responses collected from about hundred employees on their views on

rewards and remunerations was first calculated and analyzed using various parameters of age,

income group, qualification, gender and location. The output of the analysis is as follows:

CROSSTABS

/TABLES=age BY income

/FORMAT=AVALUE TABLES

/STATISTICS=CHISQ

/CELLS=COUNT

/COUNT ROUND CELL.

age group * income segment Crosstabulation

Count

income segment

Total 0-1 lakh/yr 1-2 lakh/yr 2-3 lakh/yr 3-5 lakh/yr above 5 lakhs

age group below 25 yrs 25 5 0 3 0 33

25-30 yrs 8 6 2 3 5 24

31-35 yrs 1 4 7 4 0 16

36-40yrs 2 7 0 7 3 19

above 40 yrs 0 0 2 3 2 7

Total 36 22 11 20 10 99




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CHI-SQUARE TESTS

Value df Asymp. Sig. (2-sided)

Pearson Chi-Square 69.583a 16 .000

Likelihood Ratio 75.280 16 .000

Linear-by-Linear

Association 28.086 1 .000

N of Valid Cases 99

a. 18 cells (72.0%) have expected count less than 5. The minimum expected count is .71.

Firstly the data was tested for interdependency amongst the attributes chosen. Chi-Square tests

proved that some of the attributes were dependent.

According to the thumb rule as the value of the 4th

column is less than 0.05 we can conclude that

the attributes are dependent on each other. Hence it is justified to do a two way ANOVA to make

further calculations.

#(For full reference please refer to appendix 1 & 2.)

UNIANOVA average BY income age

/METHOD=SSTYPE(3)

/INTERCEPT=INCLUDE

/POSTHOC=income age(BTUKEY)

/PLOT=PROFILE(income*age)

/EMMEANS=TABLES(income*age)

/PRINT=HOMOGENEITY

/CRITERIA=ALPHA(.05)

/DESIGN=income age income*age.




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UNIVARIATE ANALYSIS OF VARIANCE

BETWEEN-SUBJECTS FACTORS

Value Label N

income segment 1 0-1 lakh/yr 36

2 1-2 lakh/yr 22

3 2-3 lakh/yr 11

4 3-5 lakh/yr 20

5 above 5 lakhs 10

age group 1 below 25 yrs 33

2 25-30 yrs 24

3 31-35 yrs 16

4 36-40yrs 19

5 above 40 yrs 7

TESTS OF BETWEEN-SUBJECTS EFFECTS

Dependent Variable:average

Source

Type III Sum of

Squares df Mean Square F Sig.

Corrected Model 61.568a 18 3.420 11.583 .000

Intercept 52.033 1 52.033 176.205 .000

Income 22.013 4 5.503 18.636 .000

Age 2.301 4 .575 1.948 .111




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income * age 5.409 10 .541 1.832 .068

Error 23.624 80 .295

Total 124.248 99

Corrected Total 85.192 98

a. R Squared = .723 (Adjusted R Squared = .660)

POST HOC TESTS

INCOME SEGMENT

HOMOGENEOUS SUBSETS

AVERAGE

TUKEY B

income segment N

Subset

1 2 3

0-1 lakh/yr 36 -.2146

1-2 lakh/yr 22 .5124

2-3 lakh/yr 11 1.2562

above 5 lakhs 10 1.4909

3-5 lakh/yr 20 1.4955

Means for groups in homogeneous subsets are displayed.

Based on observed means.

The error term is Mean Square(Error) = .295.

AGE GROUP

HOMOGENEOUS SUBSETS




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AVERAGE

TUKEY B

age group N

Subset

1 2 3

below 25 yrs 33 .1322

25-30 yrs 24 .3598

31-35 yrs 16 1.0057

36-40yrs 19 1.1483 1.1483

above 40 yrs 7 1.6104




PROFILE PLOTS




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5.0 RESULTS AND INFERENCES

On analysis of the data the following points emerged.

Age group, income, education were proven to be interdependent.

There was no relation between gender and income segment.

There were similarity in the views between the age groups of below 30, 30 to 40 and

those above 40 years or in other words there emerged three categories of responses.

Income groupings also had three segments.

The responses of employees with 2-3lakhs/annum were closer to those with a higher

income. There was negligible difference between the responses of employees in the

higher income bracket.

Qualification had a very unique response pattern. Graduates and professionals were very

similar in their responses, where as much differences existed between the under graduates

and post graduates.

Employee category showed that junior employees differed in their views with middle and

senior employees.

Gender had no or negligible influence on the employee category or the income group.

Location did have a bearing on the income of employees.

6.0 CONCLUSION & RECOMMENDATIONS

On analysis of the collected data various interesting results were visible. The interdependence of

age group, income segment and education was established by means of Chi-Square tests and

ratified the existing hypotheses on the same, which could be useful for further research work in

the area. Further the two-way ANOVA helped to group the employees in various sub groups.

Another hypothesis that was verified was that there was no effect of gender on the income or

employee category. So it was established that both genders had equal scope for performance and

growth. However the gender ratio of employees still is far different and also signifies that there

are more men than women in employment at all levels. Senior and middle category employees

were more inclined to agree with the reward and remuneration policies of the organization where

as there was marked difference in the views of lower category employees. Here one can also

perceive that a lot of undergraduates were employed and who probably never got any benefits in

terms of rewards and recognition as well as career growth. Organizations must look at making

some policies to help these employees to get educated or trained and provide them with

opportunity to grow. Graduates and professionals on the other hand showed that even though

they belonged to a lower income group, there were plenty in the middle and higher category also.

This showed that they had the potential to grow based on their education. Similar was the status

of post graduates and higher. As the junior employees had more interaction with the customers at




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various establishments studied, it is imperative that the organizations look at these employees

carefully and increase the satisfaction levels of this segment. Location of the establishment had

some effect on the satisfaction of the employees as employees in metro cities were provided with

better remuneration as compared to the employees of smaller towns. Further it is necessary for

organizations to invest more on the employees at the junior levels and plan for them as this

would help them in their efforts to deliver service quality. Also we can justly state that

employees must also try and upgrade themselves if they wish to have career growth and better

remuneration. Organizations using unskilled and inefficient employees as cheap labor would lose

their standards and ultimately suffer as the customer would not like to pay for poor service

quality and shift his loyalty to other business units.

7.0 REFERENCES

Bowen, B.E. and Radhakrishna, R.B. (1991). Job satisfaction of agricultural education

faculty: a constant phenomena. Journal of Agricultural Education, Vol.32, No. 2,

pp.16-22

Biswajeet Pattanayak, (2005), Human Resource Management 3rd Edition

B. Mamoria & S.V. Gankar, (2001), Human Resource management 6th

edition Burack

and Boldsmith, Human Resource Management,

Ballentine, A. (2003) Non-monetary rewards in the workplace. Available at

www.mightystudents.com/.../non.monetary.rewards.workplace.9716? United States.

(Accessed 8 Nov., 2010).

Cameron, J. and Pierce, W. D. (1994). Reinforcement, reward and intrinsic motivation: a

meta-analysis. Review of Educational Research, Vol. 64, pp. 363-423.

Gomez-Mejia, L.R. and Balkin, D. B. (1992). Determinants of faculty pay I an agency

theory perspective. The Academy of Management Journal, Vol. 35, No. 5, pp. 921-955.

http://www.jstor.org/stable/256535.

Human Resource Management, 2nd

edition, V S P Rao

Human Resource Management 12th

edition, (1997), Dr. Anjali Ghanekar

Human Resource Management 10th

edition, 2004, Robert L. Mathis & John H. Jackson

Human Resources Management, 2008, 11th

edition, Gary Dessler

Hurley, R. F. and Estelami, H. (2007) An exploratory study of employee turnover

indicators as predictors of customer satisfaction, Journal of Services Marketing. Vol.

21, No.3

Kovach, K.A. (1987). What motivates employees? Workers and supervisors give

different answers. Business Horizons, vol. 30. Pp. 58-65.

http://www.jstor.org/stable/256535




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Khan, K. U., Farooq, S. U. and Ullah, M. I. (2010). “The relationship between rewards

and employee motivation in commercial banks of Pakistan” Research Journal of

International Studies-Issue 14. Available at http://www. eurojournals.com/rjis_14_06.pdf.

(Accessed 25 Oct., 2010).

Petcharak, P. (2002). The assessment of motivation in the Saint Paul Hotel employees.

Ms. Thesis, UW-Stout. Available at

http://minds.wisconsin.edu/handle/1793/40589?show=full

P Joshi & D. N. Venkatesh, (2006), Human Resource Management Pg 325,Dean R.

Spitzer, (2007), Super Motivation

Philips, J. J. (1996) Accountability in human resource management. Houston, Texas:

Robert L. Mathis & John H. Jackson, (2004), Human Resource Management 10th

edition

K Aswathappa, 1997, Human Resource Management, 5th

edition

Rollinson, D., Breadfield, A. and Edwards, D. J. (1998) Organizational behavior and

analysis. Harlow: Addison-Wesley.

Silva, P. (2006) Effects of disposition on hospitality employee job satisfaction and

commitment, International Journal of Contemporary Hospitality Management. Vol. 18.

Saari, L. M. and Judge, T. A. (2004) Employee Attitudes and Job Satisfaction. Human

Resource Management, Winter 2004, Vol. 43

Smith, G.P. (1994). Motivation. In W. Tracey (ed.), Human resources management and

development handbook. 2nd ed.

Wilson, G. (2010), the effects of external rewards on intrinsic motivation. Available at

http:// www.abcbodybuilding.com/rewards.pdf. (Accessed on 8 Nov., 2010).

APPENDIX 1

CHI- SQUARE TESTS

CROSSTABS

http://minds.wisconsin.edu/handle/1793/40589?show=full




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AGE GROUP * QUALIFICATIONS CROSSTABULATION

Count

qualifications

Total UG G PG Professional

age group below 25 yrs 17 9 3 4 33

25-30 yrs 8 5 6 5 24

31-35 yrs 1 1 7 7 16

36-40yrs 2 0 6 11 19

above 40 yrs 0 0 3 4 7

Total 28 15 25 31 99

CHI-SQUARE TESTS




Linear-by-Linear Association 27.759 1 .000

N of Valid Cases 99

a. 10 cells (50.0%) have expected count less than 5. The minimum expected count is 1.06.

CROSSTABS

INCOME SEGMENT * QUALIFICATIONS CROSSTABULATION




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Count

qualifications

Total UG G PG Professional

income segment 0-1 lakh/yr 28 7 0 1 36

1-2 lakh/yr 0 4 5 13 22

2-3 lakh/yr 0 2 3 6 11

3-5 lakh/yr 0 1 13 6 20

above 5 lakhs 0 1 4 5 10

Total 28 15 25 31 99

CHI-SQUARE TESTS




Linear-by-Linear

Association 30.689 1 .000

N of Valid Cases 99

a. 10 cells (50.0%) have expected count less than 5. The minimum expected count is 1.52.

APPENDIX 2

ANOVA RESULTS






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Value Label N

income segment 1 0-1 lakh/yr 36

2 1-2 lakh/yr 22

3 2-3 lakh/yr 11

4 3-5 lakh/yr 20

5 above 5 lakhs 10

Qualifications 1 UG 28

2 G 15

3 PG 25

5 Professional 31


DEPENDENT

VARIABLE:AVERAGE

Source

Type III Sum of



Intercept 41.739 1 41.739 124.335 .000

Income 8.136 4 2.034 6.059 .000

Education 1.738 3 .579 1.726 .168

income * education 1.324 7 .189 .563 .784

Error 28.199 84 .336




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Total 124.248 99



Post Hoc Tests income segment Homogeneous Subsets

AVERAGE

TUKEY B

income segment N

Subset

1 2 3

0-1 lakh/yr 36 -.2146

1-2 lakh/yr 22 .5124

2-3 lakh/yr 11 1.2562

above 5 lakhs 10 1.4909

3-5 lakh/yr 20 1.4955




Qualifications Homogeneous Subsets

AVERAGE




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TUKEY B

qualifications N

Subset

1 2 3

UG 28 -.3409

G 15 .7152

Professional 31 .8710

PG 25 1.3600




PROFILE PLOTS





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Value Label N

qualifications 1 UG 28

2 G 15

3 PG 25

5 Professional 31

employee category (junior, middle or

senior)

1 JUNIOR 54

2 MIDDLE 32

3 SENIOR 13


DEPENDENT

VARIABLE:AVERAGE

Source

Type III Sum of



Intercept 31.300 1 31.300 97.619 .000

education 10.664 3 3.555 11.087 .000

ec 10.074 2 5.037 15.710 .000

education * ec 1.134 5 .227 .707 .620

Error 28.216 88 .321

Total 124.248 99




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DEPENDENT

VARIABLE:AVERAGE

Source

Type III Sum of



Intercept 31.300 1 31.300 97.619 .000

education 10.664 3 3.555 11.087 .000

ec 10.074 2 5.037 15.710 .000

education * ec 1.134 5 .227 .707 .620

Error 28.216 88 .321

Total 124.248 99



Post Hoc Tests qualifications Homogeneous Subsets

AVERAGE

TUKEY B

qualifications N

Subset

1 2 3

UG 28 -.3409

G 15 .7152

Professional 31 .8710




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PG 25 1.3600




Employee category (junior, middle or senior)

Homogeneous Subsets

AVERAGE

TUKEY B

employee category

(junior, middle or

senior) N

Subset

1 2

JUNIOR 54 .0354

MIDDLE 32 1.2670

SENIOR 13 1.5175




PROFILE PLOTS




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Documents

EFFECT OF REMUNERATION AND REWARDS ON EMPLOYEE …€¦ · NSHM School of Hotel Management Arrah, Shibtala, Muchipara Durgapur, West Bengal – 713212, India. ***Ph.D Research Scholar