Motivation through Compensation and Working

Environment in Pharma Industry of Pakistan

MOTIVATION
throug
h
Compensation and Working
Environment

in
Pharma Industry of Pakistan
Submitted
to:

Submitted
by:

Motivation through Compensation and Working Environment

in Pharma Industry of Pakistan

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

Motivation through Compensation and Working Environment

in Pharma Industry of Pakistan

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

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Motivation through Compensation and Working Environment

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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

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Sansone and Hareckiewicz (2000) identify that compensation benefits

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

II- Rewards & Incentives

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

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Motivation through Compensation and Working Environment

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According to a report by the American Compensation Associations, August

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

III- Health Benefits

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

IVEnvironment

Working

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

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Good working environment such as work relationships, adequate

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

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Motivation through Compensation and Working Environment

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

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

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

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

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

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Motivation through Compensation and Working Environment

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STATISTICAL DATA
Gender
Age

Education

Male

74%

Female

26%

Above 20 years
21-30 years

53%

31-40 years

28%

41-50 years

11%

Above 50 years

5%

Ph.D

1%

Master Degree

60%

Bechlore Degree

31%

Intermediat

8%

Others

Income (monthly)

Work Experience

S. No.

Demographics

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22

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

Rs.10,000-Rs.20,000

28%

Rs.21,000-Rs.30,000

38%

Rs.31,000-Rs.40,000

11%

Rs.41,000-Rs.50,000

17%

Above 50,000

6%

Less than 6 month

5%

6 month to 1 year

32%

1 to 2 years

22%

3 to 5 years

23%

More than 5 years

18%

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

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

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

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Motivation through Compensation and Working Environment

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23
24
25
26
27
28
29
30
31
32

1.8
1.4
2.4
3.4
3.8
3
1.8
2.4
2.4
1.8

2.0
1.9
2.2
2.0
2.0
2.3
3.0
2.2
2.6
2.5

3
4.25
2.125
2.375
2.125
2.25
3
1.75
3.5
2.625

2.00
2.50
2.00
1.50
2.00
2.00
3.00
2.50
3.00
2.00

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Motivation through Compensation and Working Environment

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33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73

2.2
2.4
1.8
2.6
2.8
2.8
2
2
2.2
3
2.2
3.4
1.8
2.6
3.2
2.2
3.8
2.4
3
3.4
3.2
3.4
2.8
3.2
3
3
1.6
2.6
2.4
2
1.6
1.8
3.2
2.2
2.6
2.6
3.4
1.8
2.4
2.2
3

2.0
1.8
2.4
1.8
3.8
2.3
2.2
2.0
2.2
1.8
2.3
2.0
1.6
2.4
2.5
2.0
2.2
2.3
2.2
2.2
2.3
2.8
2.7
2.2
2.2
2.3
2.0
2.2
2.2
2.0
2.4
2.4
1.9
2.1
2.7
3.2
1.3
3.0
1.8
1.8
2.0

2.375
2.25
3.625
2
4.5
2.375
2.125
2.375
2.5
1.625
3.25
2.5
3.75
3
3.25
3.875
2.25
2.75
2.5
2.125
2.25
2.875
2
2.25
3
2.125
1.75
1.875
1.75
3
2.625
2.5
3.875
3.5
3.625
3.5
1.75
3.75
1.25
2.875
3.375

2.00
2.50
3.00
1.50
2.00
2.00
2.50
2.00
2.00
2.50
2.00
2.00
2.00
1.50
3.00
2.50
2.50
3.00
2.50
2.00
2.00
3.50
3.00
2.50
3.00
2.50
2.50
2.00
1.50
2.50
2.00
2.00
3.50
3.00
2.50
4.00
1.50
3.00
1.50
2.00
3.50

74
75
76
77
78
79
80
81
82
83
84
85

3.2
2.6
2.2
3.8
2
2.4
2.8
2.2
2.8
2.2
2.8
2.2

2.3
2.2
2.1
1.7
1.5
2.1
2.0
2.8
2.3
1.6
1.8
2.1

1.625
2.875
3.5
1.5
2
2.25
2.625
1.75
1.75
1.375
1.625
1.25

2.50
1.50
2.50
1.50
2.00
3.00
2.00
3.00
2.00
2.00
1.50
3.00

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Motivation through Compensation and Working Environment

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86
87
88
89
90
91
92
93
94
95
96
97
98
99

4
2.6
3
3
2.8
3.4
3.6
2.8
2
2.4
2.4
2.4
3
2.8

2.5
1.9
1.7
2.3
1.9
2.5
1.6
2.1
2.3
2.3
1.8
2.4
1.7
2.2

2.875
2
1.75
1.75
1
4.5
1.25
2
3.25
1.75
2.5
2.875
2.375
3.125

3.00
1.50
1.00
3.50
2.00
2.50
2.00
2.00
2.50
2.50
2.50
2.50
2.00
2.50

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Motivation through Compensation and Working Environment

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Mean
Median
Mode
Standard Deviation
Sample Variance
Minimum
Maximum

Working
Environment
2.256666667
2.2
2.0
0.5
0.3
1.3
4.3

Compensation

Motivation

2.784166667
2.6
2.3
1.0
0.9
1.0
5.0

2.436666667
2.5
2.0
0.7
0.5
1.0
5.0

Correlation b/w Motivation Correlation b/w Motivation

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

X = 1.11 + 0.48Z

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Motivation through Compensation and Working Environment

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Motivation through Compensation and Working Environment

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

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

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Motivation through Compensation and Working Environment

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If the Working Environment is conducive and cooperating which give the

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

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

Regression Lines b/w

Motivation (X) and
Compensation (Z)
X = 1.11 + 0.48Z

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Motivation through Compensation and Working Environment

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

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DIRECTION FOR FUTURE RESEARCH

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

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

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REFERENCES

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

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

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Motivation of Employees in Pharma Industry of Pakistan

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

DEMOGRAPHICS
1.

Gender
Male

2.

Female

Age
a) Above 20
b) 21 30
c) 31 40
d) 41 50

3.

e) Above 50
Education Level
a) PhD
b) Post Graduate Level
c) Graduate Level
d) Intermediate Level
e) Other

4.

How long have you been working at

(Name of Organizarion)

a) Less than 6 months

b) 6 months 1 year
c) 1 2 years
d) 2 3 years
e) 3 5 years
f) More than 5 years
5.

6.

What is your management level?

What is your pay level?

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Motivation through Compensation and Working Environment

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a) 10,000 20,000
b) 20,000 30,000
c) 30,000 40,000
d) 40,000 50,000
e) Above 50,000

WORK ENVIRONMENT
7.
8.
9.

10

11.

12
13
14

15
16

Strongly Agree
Agree

Neutral

Disagree Strongly
Disagree

I am treated with dignity and

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

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Motivation through Compensation and Working Environment

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17
18

We can exchange our views

freely in the work place.
Work environment is overall
very comfortable, friendly and
cooperative.

COMPENSATION
19
20

21
22
23
24
25

26

Overall, the employee benefits I

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

MOTIVATION
27
28

Strongly Agree
Agree

Good

Strongly Agree
Agree

Neutral

Average

Neutral

Disagree Strongly
Disagree

Poor

Very Poor

Disagree Strongly
Disagree

I am highly motivated with the

current working environment of
my Organization.
I am satisfied with my
compensation & benefits
package.

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