RELATIONSHIP BETWEEN COMPENSATION SYSTEMS AND JOB
PERFROMANCE AMONG EMPLOYEES
HONG HUA TIMA
This project is submitted in partial fulfilment ofthe requirements for a
Bachelor of Science with Honours
Human Resources Development
Faculty of Cognitive Sciences and Human Development
UNIVERSITI MALAYSIA SARA W AK
2011
ACKNOWLEDGEMENT First of all, I want to express my highest gratitude to my supervisor, Mr.
Abang Ekhsan bin Abang Othman for his invaluable guidance and help throughout all
the way of completion of this Final Year Project. Never forget to express my
thankfulness to my supervisor that he was willing to spend his time in order to
explain and discuss the problem which facing in my research. I appreciate his
guidance and advice that facilitated me in completing this Final Year Project. Other
than that, I would like to thank Ms. Agatha and Profesor Madya Dr. Rusli who are
my evaluators in my FYP 1 and FYP 2. They have given me the constructive advice
and valuable comment to my study which allows me to correct the problem of the
study and also improve the quality of my study.
In addition, million thanks for two hotel industry in Kuching that allowed me
to conduct the questionnaires survey for pilot test and actual test in the hotel. Thank
specially for the staffs in both hotels for helping me to distribute the questionnaires in
hotels and informed me to collect back the questionnaires. Apart from that, I would
like to express my sincere thanks to all the respondents who were willing to
participate in the survey questionnaires and also provided the truthful information for
me.
For my beloved family, I would like to thank their spiritual, moral and
financial support throughout this research. Last but not least, thank you to all my
friends for their assistance, companionship, encouragement as well as sharing their
knowledge and ideas with me regarding this project whenever I was faced the
problem in doing this study.
Once again, I would like to convey my deepest thanks to all of you.
ABSTRACT RELATIONSHIP BETWEEN COMPENSATION SYSTEMS AND JOB PERFORMANCE AMONG EMPLOYEES Hong Hua Tima
The main purpose of this study is to detennine the relationship between
compensation system and job perfonnance among employees in the hotel industry.
The components of compensation that examined in this study included base salary,
perfonnance-based pay, recognition, and working condition. A total number of 65
employees in the hotel were selected as the sample in this study. Questionnaires were
used as an instrument in this study to collect the related data. Descriptive statistic was
used to explain the demographic characteristics of respondents by measuring its
frequency and percentages. Hypotheses were measured using statistical analysis
which included Independent T -Test, Pearson Correlation, and Multiple Regression.
The result has shown that there have significant relationships between four selected
components of compensations and employees' job perfonnance. Apart from that, the
discussion and past researchers regarding this study was also discussed. Lastly, the
summary of all chapters, recommendation for organization, human resources
practitioners, and future research, and limitations that encountered in this study will
be discussed.
11
ABSTRAK HUBUNGAN ANTARA SISTEM PAMPASAN DAN PRESTASI KERJA PEKERJA Hong Hua Tima
.
Kajtan ini bertujuan untuk mengenalpasti hubungan antara sistem pampasan
dan prestasi kerja pekerja di industri hotel. Komponen pampasan yang dikajikan
dalam kajian ini termasuk gajt pokok, gajl berasaskan prestasi, pengiktirafan,
keadaan kerja. Sebanyak 65 pekelja di hotel lelah dipilih sebagai sampel dalam
kajian into Soal selidik dtgunakan sebagai instrumen dalam kajtan tnt unluk
mengllmplll data yang berkaitan. Statistik deskript~f lelah digllnakan untuk
menjelaskan ciri-ciri demografi responden dengan mengukur frekuensi dan
peratusan.
Hipotesis diukur dengan menggunakan analisis statistik yang
merangkumi Test-t Berdikari, Korelasi Pearson, dan Regresi Berganda. Keputusan
telah menunjukkan bahawa empat komponen pampasan yang dipilih mempunyai
hubungan yang signifikan dengan prestasi kerja pekerja. Selain itu, perbincangan
dan penyelidikan yang lepas ten tang kajian ini juga dibincangkan. Akhirnya,
ringkasan zmtuk semua bab, cadangan untuk organisasi, pengamal sumber manusia,
dan bakal penyelidik, serla halangan yang dihadapi dalam kajian ini juga
dibincangkan.
111
TABLE OF CONTENTS
Acknowledgement
Abstract
Abstrak
Table of Contents
List of Tables
List of Figures
11
III
IV
Vll
IX
CHAPTER 1 - INTRODUCTION
1.0
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
CHAPTER 2
2.0
2.1
2.2
Introduction
Background of the Study
Problem Statement
Research Objective
1.3.1 General Objective
1.3.2 Specific Objective
Research Hypotheses
Conceptual Framework
Significance of Study
Definisi of Terms
1. 7.1 Financial Compensation
1.7.2 Non-Financial Compensation
1.7.3 Base Salary
1.7.4 Performance-based Pay
1.7.5 Recognition
1.7.6 Working Conditions
1.7.7 Job Performance
Summary
1
2
5
7
7
7
8
9
10
11
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12
12
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13
13
14
LITERATURE REVIEW
Introduction
Context for the topic
2.1.1 Job Performance
2.1.2 Base Salary
2.1.3 Performance-based Pay
2.1.4 Recognition
2.1.5 Working Conditions
Basis for formulating conceptual! theoretical framework
IV
15
16
16
18
19
19
20
20
2.3 2.4 2.2.1 Maslow Hierarchy of Needs Theory 2.2.2 Expectancy Theory 2.2.3 Equity Theory Past Review
2.3.1 Gender 2.3.2 Base Salary 2.3.3 Performance-Based Pay 2.3.4 Recognition 2.3.5 Working Conditions Summary
20 22 24 25 25 26 27 29 30 32 CHAPTER 3- RESEARCH METHODOLOGY
3.0 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 Introduction
Research Design
Population and Sample under Study
Data Collection Method and Procedures
Instrument of the Study
Pilot Test
3.5.1 Reliability and Validity of the Study Data Analysis Procedures
3.6.1 Descriptive Statistics 3.6.2 Inferential Statistics 3.6.3 Independent T-Test 3.6.4 Pearson Correlation 3.6.5 Multiple Linear Regression Summary of Statistical Method used to test Hypotheses
Summary
33 34 34 35 35 37 38 39 39
39
39
40 41 41
42
4.2
Introduction
Descriptive Satatistic
4.1.1 Respondents' Demographic Factors 4.l.l(a) Gender
4.1.1 (b) Age 4.1.1 (c) Educational Level 4.1.1 (d) Length of Services 4.1.2 Employee Job Performance 4.1.3 Base Salary 4.1.4 Performance-based Pay 4.1.5 Recognition 4.1.6 Working Conditions Validity Test for the Actual Test
I
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CHAPTER 4- FINDINGS AND DISCUSSION
4.0 4.1 I
43 44 44 44 45 47 48 49 51 53 55 57 59 i
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4.3
4.4
4.5
4.6
Reliability Test for the Actual Test
Findings and discussion based on Hypothesis Testing
4.4.1 Independent Sample T-test (HoI)
4.4.2 Pearson Correlation (Ho2)
Pearson Correlation (Ho3)
Pearson Correlation (Ho4)
Pearson Correlation (Ho5)
4.4.3 Multiple Regression (Ho6)
Summary of the fmding
Summary
61
62
62
64
67
69
71
74
77
77
CHAPTER 5-SUMMARY, RECOMMENDATION, AND CONCLUSION
5.0
5.1
5.2
5.3
5.4
5.5
Introduction
Summary of the study
Recommendation
5.2.1 Recommendation for Organization
5.2.2 Recommendation for Human Resources Practitioners
5.2.3 Recommendation for Future Researchers
Limitations of Study
Conclusion
Summary
78
79
81
81
82
83
84
84
85
REFERENCES
86
APPENDIX
92
,
111\
VI
LIST OF TABLES
Table 3.1 Total of Questionnaires distribution and collected
35 Table 3.2 Four-point Likert Scale
36 Table 3.3 Alpha coefficient of Pilot Test basedon 20 respondents
37 Table 3.4 Strength of Relationship between Independent and Dependent Variables
40 Table 3.5 Hypotheses Testing Method for Each Variable
41 Table 4.1.1 (a) Distribution of respondents based on gender
44 Table 4.1.1 (b) Distribution of respondents based on age
46 Table 4.1.1. (c) Distribution of respondents based on educational level
47 i
~
'~
~
Table 4.1.1 (d) Distribution of respondents based on length of services
48 Table 4.2 Employees' Job Performance based on influences of compensations
49 Table 4.3 Influences of base salary towards employees' job performance
51 Table 4.4 Influences of performance-based pay towards employees'job performance
53 Table 4.5
Influences ofrecognition towards employees' job performance
55
VB
Table 4.6
Influences of working conditions towards employees' job performance
57
Table 4.7
Goodness of data
59
Table 4.8
Alpha coefficient of Actual Test based on 65 respondents
61
Table 4.9
Independent Sample T -test
62
Table 4.10
Coefficient of Base Salary and employees' job performance
64
Table 4.11
Coefficient ofPerformanc-based pay and employees' job performance
67
Table 4.12
Coefficient of Recognition and employees' job performance
69
Table 4.13
Coefficient of Working Conditions and employees' job performance
71
Table 4.14
Stepwise Multiple Regression Analysis: Result of ANOVA
74
Table 4.15
Stepwise Multiple Regression Analysis: Result of Model Summary
74
Table 4.16
Stepwise Multiple Regression Analysis: Result of Coefficient
75
Vlll
It
1
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LIST OF FIGURES
Figure 1.1
The relationship between demographic factor and compensation systems
with employees' performance
9
Figure 2.1
What is Performance?
16
Figure 2.2
Maslow Hierarchy of Needs Theory
21
Figure 2.3
Expectancy Theory
23
Figure 2.4
Equity Theory
24
Figure 4.1.1 (a)
Distribution of respondents based on gender
45
Figure 4.1.1 (b)
Distribution of respondents based on age
46
Figure 4.1.1 (c)
Distribution of respondents based on educational level
47
Figure 4.1.1 (d)
Distribution of respondents based on length of services
48
ix
F
,...
CHAPTER 1
INTRODUCTION
1.0 Introduction
This research is to study the relationship between compensation systems and
employees' job performance. This chapter also includes the background of the
study regarding how the compensation system will affect employees'
performance, statement of the problem, the objectives of the study, research
hypothesis, conceptual framework, significance of the study, and definition of
terms that used in this study.
.
!
1
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t,
r:
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1.1 Background of the Study
Employees is an important asset in an organization because whatever decision
or behavior of the employees will affect the successful or failure of the
organization. To ensure the best performance of the employees, organizational
leaders should motivate the employees by giving the rewards to them. Bergmann
and Scarpello (2001) said that compensation systems are conducted to motivate
and encourage the worker to work harder in order to attain the organizational
expectations (cited in Philips & Fox, 2003). According to Mondy (2008), "pay
and performance are directly related to achieving organizational goals. Workers
who best achieve their parts of organization goals are rewarded." (pg.21 0). This
shows that compensation as a motivator or reinforcement to encourage the
employees improves their performance and increases their commitment towards
the organizational goals (Nalini Govindarajulu & Daily, 2004).
Libby and Lipe (1992) also stated that performance incentives are able to
motivate the worker to perform well and they are more willing to contribute extra
efforts and times towards their job (cited in Zuraidah Mohd-Sanusi & Takiah
Mohd- Iskandar, 2007). Compensation systems can view as an important element
in retaining and improving the level of workers' performance in the organizations.
It is due to most worker views that compensations is their income, they need it to
survival and also to implement their responsibility towards family's expenses.
Therefore, they are willing to perform well in order to get the desired rewards.
Besides, compensation will also motivate some of the workers to improve their
performance in order to fulfill their self-actualization such as get the promotion
in an organization.
According to Legge (1995, cited in Baptiste, 2008), rewards will increase
employees' commitment towards organizational goals and they are more willing
to put more effort in their jobs and always develop themselves in order to provide
the desired performance. Besides, satisfaction of the employees towards their
rewards will also influence their performance (Fisher et aL, 2004, cited in
Baptiste, 2008). The consequences of increasing employees' satisfaction is
similar with
increasing employees'
2
commitment which
is the higher
r
.
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1
compensation that employees get, the more willing employees to exert their
effort and improve their performance.
According to Smith and Rupp (2004), high compensation is one of the central
points to attract and retain the knowledge workers who able to produce
outstanding performance which is required by many organization. Within this,
knowledge workers seem as an vital resources for the organizations, if they are
satisfied with their compensations, they will be more willing to exert their total
knowledge towards the job performance and also work more diligently by
producing excellent performance.
According to Chiu et al. (2002, cited in Ghebregiorgis & Karsten, 2007), "pay
have a sign~ficant impact on employees behavior, performance, and effectiveness
in an organizations", thus top management should provide the desired
compensation to the employees in order to maintain or improve their
performance. However, different employees have different needs and desires.
Some of the employees are more attractive and motivated by acquiring the
financial compensations (salary, performance based pay and allowance) whereas
some are more attractive by the non-financial compensations (recognition,
working conditions, and opportunity development) (Lawler,1973; Miller,1991;
Kohn,1993, cited in Nalini Govindarajulu & Daily, 2004). As a result, top
management should clearly identify the needs of employees.
Furthermore, employees' wellbeing and workplace health and wellness
policies as the nonfinancial rewards for the employees and bring significant
effects to their performance and also organizational effective and profitable.
(Department for Work and Pensions, 2006; Tehrani et al., 2007 cited in Baptiste,
2008) For example, the employees who are working at the place where there are
stress-free and physically safe environment will be more capable to produce good
performance rather than those who working at the poor working condition.
,
Convenient workplace environment also helps to decrease the rate of
absenteeism and turnover.
In addition, Jong and Hartog (2007) research demonstrate that some of the
respondents suggested that financial rewards are helpful to motivate employees
3
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provide extra efforts when implementing new servIces or introduce new
technology within an organization. However, Amabile (1988) research suggest
different ideas which intrinsic motivation is important than extrinsic rewards
(cited in Jong & Hartog). Based on two statement in above, no matter the
rewards system is in form of financial or non-financial is essential to motivate
and encourage the employee to contribute their effort or improving their
performance.
Nevertheless, the compensation system which is fairness and equity are more
required and attractive by employees. Goncharuk and Monat (2009) mentioned
that reward is one of the factors to improve employees' performance but the
rewards must be equity and provided immediately after the desired behaviors.
This is because the employees who received the equity compensation will be more
willing to exert the inputs and more likely to perform well due to their
contribution is appreciated and rewarded by the employers. Besides, the
employees are able to make improvement or change by notice the desired
behavior which is rewarded by the employers. This can also helps to improve the
productivity and reputation of the organization.
In addition, Morris et al. (2004) also stated that organization must provide
equality pay for the employees to encourage them to make the improvement (cited
in Ghebregiorgis & karsten, 2007). Equality pay is important issues in an
organization because most of the employees will compare their inputs with
outcomes (Morris et aI., 2004, cited in Ghebregiorgis & karsten, 2007). If they are
satisfied with the rewards system, they will be more motivated to work harder and
willing to create excellent performance. In conversely, they will leave the
company or produce poor performance intentionally if they are dissatisfied with
the rewards system.
,
4
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1.2 Problem Statement
Employees' perfonnance is an important element to build the good reputation
for the outsider towards the image of the organization and also can prove the
prominent capabilities of the employees within an organization. This good
perfonnance can be maintained by rewarding the employees because "the
behaviors you reward are the behaviors you get" (Mondy, 2008). However, some
of the organization emphasizes more in the profit until they ignore the rewards of
the employees. If the employees are not satisfied with the compensation systems
provided by the organization, they will reduce their effort in perfonning their jobs
or less committed to the organizational goals. (Morris,Yaacob & Wood, 2004).
Furthennore, some of the top management utilizes "one program fits all"
approach to implement the compensation system in an organization (Nalini
Govindarajulu & Daily, 2004). This will reduce employees' satisfaction and also
produce poor perfonnance due to every individual employees have different needs
with others and they also pursue different compensations return by their efforts
and contributions. As a result, top management has to tailor the compensation
systems that are more suitable to the employees' needs in order to motivate them
and improve their perfonnance.
Although compensation systems seem to be crucial role in improving the
employees' perfonnance but it is difficult to implement effectively in an
organization (Bunning, 2004). Sometimes, unfair and inappropriate compensation
system will occurs due to different perception of employees towards the
compensation system and the managers may be bias in gender and race. The
manager might gives the higher compensation to the employees who are same
race or gender with them but give lower compensation to the employees who are
difference race and gender with them. Unfair compensation system can frustrated
the employees and some of them might leave the company if seriously. Therefore,
organizational must give equality rewards for their employees in order to maintain
their perfonnances and remunerate employees' contributions.
5
Non-financial compensation is also important to increase or maintain the
employees' performance such as recognition, opportunity development, working
condition, and so on (Pfeffer et aI., 1995 cited in Smith & Rupp, 2004). Some of
the employees who work with the organization is because want to gain the
experiences and new knowledge rather than earn the money. Nevertheless, many
organizations are unrealized about it and only emphasizes in the financial rewards
(base pay and salary). Most of the manager are prefer to order their employees
rather than give them recognition and support. This will frustrate the employees
and reduce their motivation to improve their performance because they will think
that their performances are not appreciated by their employers. Besides, worse
working condition will also influence the cognition and emotion of the employees
and produce the low quality of performance.
In addition, sufficient funding is important for organization to provide the
attractive and expected compensation for the employees in order to motivate them
to perform well. Some of the companies are less ability to provide highest or
comparable compensation system will reduce the motivation of the employees and
reduce their efforts towards their performance indirectly. Besides, lack of
sufficient fund in providing the rewards for the employees will increase the rate of
turnover in an organization due to employees look for another company which is
more capable to pay highest and desirable rewards to them.
6
1.3 Research Objectives
,. 1.3.1
General Objectives
I
The general objective of this study is to investigate the relationship between
compensation systems (financial and non-financial) and job performance among
the employees.
1.3.2
Specific Objectives
• To determine the difference between gender
III
employees' job
performance
• To determine the relationships between base salary with employees' job
performance.
• To determine the relationships between performance-based pay with
employees' job performance.
• To determine the relationships between recognition with employees' job
performance.
• To determine the relationships between working conditions with
employees' job performance.
• To determine the dominant component of compensations that affects
employees' job performance.
7
1.4 Research Hypotheses
HoI: There is no significant difference between gender in employees' job
Performance
Ho2: There is no significant relationship between base salary and employees' job
performance.
Ho3: There is no significant relationship between performance-based pay and
employees' job performance.
Ho4: There is no significant relationship between recognition and employees' job
performance.
Ho5: There is no significant relationship between working conditions and
employees' job performance.
Ho6: There is no dominant component of compensations that affects employees'
job performance.
8
1.5 Conceptual Framework
Demographic Characteristic
•
Gender
(Yahaya, n.d.)
~
Dependent Variables
Independent Variables
Financial Compensation
Employees' Job Performance • Base Salary
(Torrington, Hall &Taylor, 2008)
• Perfonnance-Based Pay
(Gerhart, 2000, cited in Shields,
2007)
Non Financial Compensation
• Recognition
•
(Jeffries, 1997, cited in Nalini
Govindarajulu & Daily, 2004)
Working conditions (Baptiste, 2008) Figure 1.1: The relationship between demographic factor and compensation
Systems with employees' performance
The conceptual framework in above show that the dependent variable and
independent variables of this study. The dependent variable which known as
outcome variable is the employees' job perfonnance. In other hands, independent
variables in this study which assume can bring effect on the dependent variable
are financial compensations (base salary, perfonnance-based pay) and non­
financial compensations (recognition and working conditions).
Besides, the employee's demographic characteristic which is gender also
be examined in this study to identify the difference between male and female in
employees' job perfonnance.
9
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.,..
1.6 Significance of The Study
This study helps top management to understand the relationships between
compensation system and employees' performance within an organization.
Besides, top management can be realized that which types of compensation bring
more attraction for employees and motivate them to improve their performance.
Through this, top management is able to tailor the most suitable compensation
systems of the organization in order to satisfy employees' needs. This is essential
due to employees are the main resources for the organization, their behavior and
contribution will affect the performance and reputation of the organizations.
Therefore, if they are satisfied with their rewards, they will be more willing to
exert their effort and contributions towards their job performance.
On the other hand, the employees will notices that their contributions and
performances are actually appreciated by the employers but it might compensate
in different ways. Some of them may get the financial rewards whereas some of
them may compensate in non-financial rewards. Apart from that, the employees
are able to distinguish the fairness or bias of the compensation system which
implement in the organization.
Lastly, the researcher can gains more knowledge about the components of
compensation system within an organization and its implications towards
employees' performance.
10
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1.7 Deimition of Terms
1.7.1
Financial Compensation
Conceptual Definition
Financial compensation includes direct financial compensation and
indirect financial compensation (Henderson, 1995 & Mondy, 2008). Direct
financial compensation refers to "the pay that a person receives in the
form of wages, salaries, commissions, and bonuses" (Mondy, 2008, p.242).
Indirect financial compensation also called benefits and it "consists of all
financial rewards that are not included in direct financial compensation"
(Mondy, 2008, p.242).
Operational Definition
In this research study, financial compensation refers to the reward which
perceives by employees in form of money in the specific time and the
amount of money which is provided depends on performance of
employees.
1.7.2
Non-financial Compensation
Conceptual Definition
Non-financial compensation is defined as "the satisfaction that a person
receives from the job User! or from the psychological and physical
environment in which the person works" (Mondy, 2008, p.242).
Operational Definition
Non-financial compensation
III
this study is the kind of compensation
which can satisfy the psychological and physical needs of employees in
the workplace.
11 ,.. 1.7.3 Base Salary
Conceptual Definition
According to Heathfield (2010), "base salary is a fixed amount ofmoney
which excludes benefits, bonuses, or any other potential compensation
paid to an employee."
Operational Definition
Base salary in this study refers to initial monetary rewards which obtain by
employees at the end of every month and it does not include other
compensations.
1.7.4 Performance-Based Pay
Conceptual Definition
According to Shields (2007), performance-based pay is "any remuneration
practice in which part or all ofremuneration is based directly and
explicitly on employees' assessed work behavior and/ or measured results"
(p.348).
Operational Definition
In this research study, performance based pay is defined as certain amount
of money received by employees based on their level of performance or
their productivity.
1.7.5 Recognition Conceptual Definition "Recognition includes giving praise (compliments), awards (certificates of
t
achievement, private budgets, increased autonomy), and ceremonies
(public speeches and celebration) (YukI, 2002, cited in Jong & Hartog,
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2007)."
12
Operational Definition
Recognition in this study refers to awards or praIse given by top
management to employees. This compensation shows that employers are
appreciated employees' contributions and performances.
1.7.6 Working Conditions
Conceptual Definition
According to Mondy (2008), working condition can defined as the
workplace environment which is comfortable, safe and healthy.
Operational Definition
In this study, working conditions refers to the workplace environment
which is convenient, harmony, and safety provided to employees in order
to improve their performances.
1.7.7 Job Performance
Conceptual Definition
Job performance can be referring as output measures such as productivity,
product and service quality, and employee turnover. (Dyer & Reeves, 1995;
Boselie & Dietz, 2003, cited in Baptiste, 2008)
Operational Definition
In this study, job performance is defined as the output and the productivity
which produce by employees in the specific times, quantity, quality and
areas.
13 1.8 Summary
The overall of this chapter discuss about the main aspects of research
which includes background of the study, statement of the problem, research
objective, research hypotheses, conceptual framework, significance of the
study, and definitions of tenns for this study. This will be continued by more
comprehensive literature review for this study in the next chapter.
14 CHAPTER 2
LITERATURE REVIEW
2.0 Introduction
This chapter explains more on the literature research that done by the previous
researcher in compensation and job performance field. First part of this chapter is
about the context for the topic. Next, the theories which are related to this study will
be discussed. Besides, overview of job performance and the chosen components of
compensations which are investigate in this study discussed in the last part of this
chapter.
15 2.1 Context for the topic 2.1.1 Job performance Figure 2.1 What is Performance? Inputs
(Competencies)
Processes
(Behavior)
Outcomes
(results)
Individual Performance
Personal
competencies
(Knowledge, skills,
abilities attitudes)
D
Work group performance
or group
performance
Personal behavior
(efIort,
citizenship)
D
Work group behavior
(collective know
ow
(team-working)
D
D
Organizational Performance
rgamzatIOna
Competencies
(core competencies, people Organizational
behaviour
(customer-focus,
cooperation,
creativity)
Personal results
(quantity, quality)
D
Group results
(productivity,
quality)
D
Organizational
results
(profitability,
customer
satisfaction,
market shar~)
(Sources: From Managing Employee Performance and Reward by Shields.©2007.
Reprinted with Cambridge University Press. P .21)
According to Jamal (1984), job performance is an accomplishment of the duties
or tasks which are allocated by the employer (cited in Yahaya, n.d.). However,
Shields (2007) was stated that the meaning of job performance is defined differently
for the different purposes and job performance can also produce by different ways.
Besides, Wright and McMahan (1992) defined job performance as a system which
16 consists of three elements and arranged in a linear sequences which are inputs,
process, and outputs (cited in Shields, 2007).
The figure 2.1 show that the description of the job performance defined by
individuals, work group, and organization. Within the chart flow in above, individual
performance can be attained by utilize the knowledge, skills, abilities and attitudes of
the individuals and put more efforts in the works. In addition, work group
performance can produce with the corporation between the team members. Last, the
combination of the individuals' efforts, skills, and knowledge and work group's
cooperation is a prerequisite to create the organizational performance. However, the
researcher is only emphasizes and investigates the individual performances in this
study. Individual performance can be defined as employee's performance in this
study. Employees have to use their competencies and learned knowledge and skills as
well as pay more effort to achieve the objectives or improve their performance.
Good performance of employees is often required by the organization because it
can enhance the reputation of the organization and as a return on investment of the
organization. However, what is the "good" and "bad" performance meant by
organization? According to Shields (2007), well functioned of performance
management system is the good ideas and required in an organization to identify and
measure the "good" and "bad" performance. Well functioned of performance
management should have a four-fold purpose which are strategic communication,
relationships building, employee development, and employer evaluations.
First purpose for setting the well functioned of the performance management
system is to reveals the expectation of the organization and assists every single
employee in maintaining the role clarity by telling them their role and responsibility.
Besides, well functioned performance management system helps to strength the
relationships between organizational members by review the performance and
exchange the opinion with each others. Third purpose of the performance
management system is facilitating the employees to develop them by providing the
17 feedback on recent perfonnance and several guiding to avoid retrogress of the
employees' perfonnance.
Lastly, perfonnance management system is also
responsible to evaluate the perfonnance of the individuals and organizations as well
as assists in providing the rewards for good perfonnance.
Furthennore, four elements are required to design effective perfonnance
management systems which are validity, reliability, cost-effectiveness and felt­
fairness (Shields, 2007). Validity of the system means that the criteria measure by
the system must be the related to the perfonnance of the jobs. Reliability means that
system must be implemented consistently and accuracy. This is to ensure the precise
feedback of the perfonnance. Besides, cost-effectiveness must be considered when
implementing the perfonnance management system in order to ensure the validity and
reliability of the system and also avoid wasting the resources of the organization. Last,
felt-fairness of the system can be implementing by making the fairness decision
during measuring and appraise the perfonnance and delivering the fairness feedback
towards the perfonnance of the employees.
2.1.2 Base salary
Base salary is one of the components of base pay and also the fundamental
pay for the return of employees' perfonnance. According to Mondy (2008), base
salary is important as a basic mechanism and commonly used by the employer to
decide the merit pay and variable pay of the employees. Even though base salary and
base wage are included as a base pay but both of the tenn provide different meaning
and pay in different fonn and for different target (Milkovich & Newman, 2008). For
example, employees commonly obtain base salary at the end of the month but the
base wage is given by hourly or daily. Most of the pennanent employees will
received the base salary but part-time workers will gain the base wage based on their
working hours or days.
18 2.1.3 Performance-based pay
According to Mondy (2008), perfonnance-based pay provide by the top
management to encourage high productivity among the employees within an
organization. There have various kind included in perfonnance-based pay which are
merit pay, variable pay, and piecework.
Merit pay is given to all the employees based on their past year's
perfonnance (Jackson, Schuler & Werner, 2009). Some of the organization will
increase the percentage of merit pay in every year regardless of the employees'
perfonnance and it is able to increase employees' base pay. However, variable pay is
different with the merit pay, it does not included in base pay and given to employees
based on their current achievement (Mondy, 2008). Past research showed that many
organization prefer to provide the variable pay for the employees because it can
control the cash flow of the organization since variable pay is given quarterly to
yearly (Jackson, Schuler & Werner, 2009). Nevertheless, excellent perfonner will
earn more variable pay than poor perfonner. Piecework is commonly received by the
employees who work in manufacture industries. Piecework is given for the
employees based on the unit of product that they are produced (Mondy, 2008).
2.1.4 Recognition
Recognition
IS
the non-financial reward that shows the respect and
appreciated of the employer towards the employees' effort, contributions, and
excellent perfonnance (McAdams, 1999, cited in Shields, 2007). There have different
ways of recognition provided by employer such as giving praise to the good
perfonners and giving the opportunity and empowennent to employees in making the
decision or sharing the ideas (YukI, 2002, cited in long & Hartog, 2007). Recognition
brings a lot of advantage for the organization such as create a positive work
environment, motivate high perfonnance, reinforce desired behavior, create
19 recognition culture, increase morale, support firm values, increase retention,
encourage loyalty, and support cultural change (Jackson, Schuler, Werner, 2009).
2.1.5 Working conditions
According to Mondy (2008), working condition refers to the workplace which
IS
provided to the employees and under the comfortable, safety, and healthy
conditions. Besides, Burton et al. (2005) found that poor working conditions is one of
the factors to influences the job performance of the individuals and productivity of
the organization (cited in Edington & Schultz, 2008). Poor working conditions such
as high stress, sound pollution, lack of facilities support as well as full of conflict
between colleagues will decrease the motivation and interest of the employees to
continue work at that particular company or contribute the excellent performance. In
conversely, they may leave the particular company and look for others workplace
which can provide them the safety and healthy as well as comfortable working
conditions.
2.2 Basis for formulating conceptual/theoretical framework
2.2.1. Maslow Hierarchy of Needs Theory
Maslow's Hierarchy of Needs Theory shows a sequence of five human's
needs in the order of their important which are physiological needs, safety needs,
social needs, self-esteem needs, and self-actualization needs (Pride, Hughes, &
kapoor, 2008). Therefore, organization have to understand their employees' needs
before motivate them to improve their performance (Robbins & Coulter, 2007).
20 Figure2.2 Maslow Hierarchy of Needs Theory
Self-esteem
Social
Safety
Physiological
(Sources: Robbins & Coulter, 2007, pA84)
In this study, Maslow Hierarchy Theory helps to explain different needs of the
employees, thus different types of the compensation system are required to satisfy
employees' need in order to motivate them to improve their performance. Firstly,
physiological needs which always refer to the basic things required by people to
continuous survival but in the employment context, physiological needs refer to the
adequate and equity base salary or wages given to employees to satisfy and motivate
them improve their performance and maintain contribution to organization (Pride,
Hughes, & kapoor, 2008).
21 Next, safety needs which stated by Maslow Theory required by people for
physical and emotional security (Pride, Hughes, & kapoor, 2008). In this study, safety
needs can be defined as the working condition which are safety, healthy, and
convenient provided for employees. Employees who are working at the free
hazardous place will perceive it is a best reward for them to continue work with the
organization and improve the productivity.
Third, social needs include the affection, belongingness, acceptance and
friendships received by the individuals (Robbins & Coulter, 2007). In this study, the
support and helps from top manager and peer are needed and important for the
employees to make advance and improvement towards the job performance.
In the workplace, self-esteem needs of the employees can be satisfied through
provide the recognitions or promotion by the top management towards individual
achievement and accomplishment (Pride, Hughes, & kapoor, 2008). Within the
recognition and appreciation of the top management, employees will be more willing
to learn and make change in order to achieve the targets of the organization.
Lastly, the highest need in this theory is self-actualization needs. The
employee will seek the opportunities to grow and develop in order to become what he
or she is capable of becoming (Robbins & Coulter, 2007). In other words, the
employees are able to produce desired job performance after their first four needs are
satisfied. The outstanding performance which produce by the employees brings the
meaning that the employees are achieved the highest need which is self-actualization.
2.2.2 Expectancy Theory
Besides, Vroom's Expectancy Theory stated that individuals' behaviours are
influence by their expectations and their perceptions towards the outcomes (Robbins
& Coulter, 2007).This theory involve three variables which are expectancy,
instrumentality, and valence.
22 Figure 2.3. Expectancy Theory
Individual
Effort
GL
v
Individual
Perfonnance
rsJ
v
Organizational
Rewards
~
'-./
Individual
Goals
A- Effort- perfonnance linkage (expectancy)
B- Perfonnance-reward linkage (instrumentality)
C- Attractiveness of reward (valence)
(Sources: Robbms & Coulter, 2007, p.496)
According to the description in above, employees are able to produce desired
perfonnance through their effort and expectation as well as the rewards given by
employer. In the stage A (expectancy), employees believe that their effort will bring
about the expected perfonnance but this requires strong self-confidence from the
employees to achieve the desired perfonnance (Shields, 2007).
According to Shields (2007), stage B (instrumentality) is the "line of sight"
between perfonnance and rewards. This means that employees' perfonnance is
interrelated with the rewards they get. Robbins and Coulter (2007) also stated that in
the stage B, employees perceived that if they are able to achieve the desired
perfonnance, they will obtain the desired compensation from employers.
Lastly, in the stage C (Valence) shows that employees will place on the value
of the rewards they are obtained (Robbins and Coulter, 2007). For example, lower
level employees will perceived that financial rewards is the valence of the return of
their effort and contribution whereas promotion and opportunity advancement seem
as the valence for the high level of employees.
Expectancy theory gives the reflection for this study, it support the
relationships between the compensations system and employees' perfonnance. If the
employees' expectation is low, they will pay less effort to attain the perfonnance and
23 this will also decrease the valence of the outcome. In conversely, if the employees
have the high ambition and expectancy, they will exert more effort to achieve the
performance and get the rewards which are fulfill their needs and desired.
2.2.3. Equity Theory
Adams' Equity Theory is relevant to the compensation system. This theory
declared that the rewards which are being received by the employees must be
commensurate with the inputs they are provided (Pride, Hughes, & kapoor, 2008).
This is due to the employees always compare their efforts (inputs) to the rewards
(outcomes) they are received as well as compare the input-outcomes ratio with other
employees who are same positions or do same task with them. If the employees
realized that the ratio is inequitable, "underrewarded" or" overrewarded" will be
occurred.
Figure 2.4. Equity Theory
Employee's Assessment
Perceived Ratio comparison
Outcomes A
Inputs A
Outcomes A
Inputs A
Outcomes A
Inputs A
<
Outcomes B
Inequity (underrewarded)
Inputs B
Outcomes B
--
Equity
Inputs B
>
Outcomes B
Inequity (overrewarded)
Inputs B
*Person A is the employee, Person B is the relevant other
(Sources: Robbms and Coulter, 2007, p.494 )
According to Shields (2007), the employees who are feeling inequity towards
their compensation, they might decrease their inputs or require more outputs, some
might leave the current jobs and look for alternative employment. This will also
24
indireclty influence the perfonnance and productivity of the employees. Therefore,
organization should equally distributed the rewards for the employees based on their
inputs.
2.3 Past Review
2.3.1 Gender
According to Yahaya (n.d.), job can bring a lot of benefits for the individuals,
organization and society. However, different people have different perceptions
towards the contributions of a job based on their gender, age, length of services, and
educational level.
Some of the employers believed that male workers are more
qualified and competence than female worker. Therefore, they often denied the
potentials and contributions of the women workers and also consider women as
fragile character who compare with the male workers (Umar, 1996, cited in Yahaya,
n.d.). For instances, Hartman (1988) studied also found that most of the excellent
perfonners are male workers (cited in Yahaya, n.d.).
However, some of the previous researches showed that there have no
significant differences between male and females workers in perfonning their job as
long as they are giving the equal training and opportunity to express themselves
(Knudson, 1982; Uwe, 1999; Yahaya, n.d.). Besides, Wiggins' studied also stated that
female workers who are actually able to perfonn their works equally with men
workers but only limited by their low position due to discrimination by their
employers (1994, cited in Wiggins & Peterson, 2004).Upon this, the female workers
are unable to express their existing competencies and experiences and the employers
will also continue to perceive that women workers are the weak perfonner if compare
with the male workers.
In addition, perfonnance of female and male workers is different due to the
effect of working conditions and work-life balance issues. For example, the working
conditions which are being experiences by female worker such as sexual harassment
and discriminations will lead to low perfonnance of the female workers (MacLean's,
25 2000, cited in Wiggins & Peterson, 2004). Besides, Wiggins also found that female
workers' performance will also be influence by their mother's role and responsibility
but this will not affect the male workers' performance. Therefore, male workers are
often being views as an excellent performer rather than female workers.
2.3.2 Base Salary
According to Lawler (1973, cited in N alini Govindarajulu & Daily, 2004),
monetary rewards bring major effect towards employees' satisfaction and motivation.
However, there are various kind of compensations include in monetary rewards and
base salary is a most important financial compensation as well as the basic need for
many employees work in the organization (Henderson, 1995). The increasing amount
of base salary for the employees will enable them to increase their cost-of -living.
However, there is no such things as a free lunch, the employees must be perform well
or provide significant contributions for the organization before requires the increment
of base salary.
Besides, Torrington, Hall and Taylor (2008) also supported that base salary is the
important reward package for most of the employees. The employers must fairly
provide the base salary for the employees because the employees will seek for others
organization if the employers fail to do so. Unfair base salary also decreases the
loyalty and commitment of the employees towards the organization and the
employees will reduce their efforts and produce the poor performance indirectly.
Although base salary is important and as a fundamental reward for the employees,
but some of the researchers proposed that base salary has no relationships with
employees' performance. According to Shields (2007), base salary is a fixed amount
of rewards and does not related to the increasing and decreasing of the performance,
thus it is unable to motivate the task behavior. Besides, Goncharuk and Monat (2009)
research stated that both of the company which gains highest productivity and lowest
26
productivity had provided base salary to their employees. This means that base salary
is unable to influences the performance of the employees.
In addition, Pride, Hughes, and kapoor (2008) said that salaried employees will
not lose the salary even though he or she is absent from work. Luke (2009) also
mention that the manager is unable and less opportunity to decrease the base salary of
the employees even though the employees are not performed welL Based on the two
statement in above, base salary views as a compensation which cannot motivate
employees perform well and employees' performance may retrogress in gradually.
Luke (2009) also claimed that base salary does not have relationships with employees'
job performance because base salary is only the investment of the organization to
retent the worker but not the payment for the employees' performance.
2.3.3 Performance-Based Pay
Although base salary seem like the most important compensations to the working
person, top management also have to provide additional rewards such as performance
based pay for the employees who perform well (Nalini Govindarajulu & Daily, 2004).
According to Shields (2007), performance-based pay is now implementing in
developed and developing countries as well as in both public and private sector.
However, there are differences pay plans in different countries and sectors due to
diverse cultural and institutional factors. In addition, Shields (2007) also claimed that
performance-based pay given to organizational members with three purposes which
are increase task motivation of the employees, redesign the performance standards,
and enhance employees' cost flexibility. Based on the first purpose, performance­
based pay is able to motivate the employees to pay more effort in increasing the
productivities.
In addition, Gerhart (2000, cited in Shields, 2007) was also supposed that
performance-based pay have positive relationships with the employees' performance.
Research done by the Beer and Cannon (2004) give further support that the
27 companies which using performance-based pay are gain the double results and profit
than those companies which do not provide performance-based pay plans (cited in
Shields, 2007). Nevertheless, Dessler (2008) was found that performance based-pay
is failing to implement and motivate workers' performance in United Stated which
the research shows that the employer perceives that they are not motivated by the
performance based-pay which provides by the employers.
Although performance-based pay is able to motivate the employees to improve
the productivity and performance, but it also lead to some disadvantages. Shields
(2007) was proved that performance based pay such as piece rates or sales
commissions may encourage the employees to struggle in order achieve the targets
but it also the cause of the conflict and negative competition between team members.
Besides, Dessler (2008) was stated that performance-based pay will also lead to poor
performance. This is because the employees only emphasizes in the outcomes but
ignore the quality and production's process due to they understand more outcomes
will brings about high piece rates. Therefore, they are willing to produce the product
which is high quantity but low quality. In addition, Dessler (2008) was also
mentioned that merit pay can motivate and demotivate the employees. Increment of
merit pay will also increase base salary of the employees, thus employees will
improve their performance in order obtained high salary. However, low leverage of
merit pay increase will demotivate those who perceived that they are an above­
average performer.
Furthermore, Herry ( 1996) was also argued that performance-based pay is a threat
for employees 'wellbeing. It is because the employees will work under the stress
condition due to pursue the higher income (cited in Shield, 2007). Based on the
finding in above, performance-based pay also shows negative relationships with
employees' performance. The employees who work under the stress condition will
indirectly reduce their efforts in performing the tasks and low commitment towards
the organizations.
28
2.3.4 Recognition
According to Nalini Govindarajulu & Daily (2004), employees are not only
attracting by financial rewards, some of them might prefer nonfinancial rewards.
Recognition is one of the components of nonfinancial rewards and it is needed by the
employees to become more motivated towards their jobs (Jeffries, 1997, cited in
Nalini Govindarajulu & Daily, 2004). Employees will become more loyalty towards
the organizations as well as more willing to improve their performance if they are
perceived that their efforts and contributions are appreciated by their employers
Besides, Hay (1998) was stated that recognition awards is the simple and low-cost
alternative ways to robust the compensation system (cited in Shields, 2007). The
simple word "Thank you" saying by the supervisor can bring significant effect for the
employees. Employees will feel happy and more motivated because their efforts and
contributions are appreciated by the supervisor. Moreover, they will more willing to
perform well in the future because they belief their efforts have value and important
for the organization.
In addition, McAdams( 1999) was defined that recognition is the ways to
respect or appreciate the others' outstanding performance (cited in Shields, 2007).
However, the recognition is not only given by the supervisor in an organization. Peer
nomination also bring effects for employees to work harder and more willing to
corporate with other team members in order to produce good performance mutually.
Besides, recognition by the customers is most widely provided in service industry
when employee is satisfied the customers' needs and requirements. Within the
recognition from the customers, employees will realize the right behavior and attitude
to help them gain sales, thus they will repeat the right behavior and attitude in order
to satisfy customers needs in the future.
Furthermore, long and Hartog (2007) stated that recognition should be given for
the employees in order to contribute more innovative ideas. This will also convince
the employees to actively provide the new ideas in the future and indirectlly develop
29 and improve their performance. If the employers are always critic the ideas and
opinion of the employees, employees will fear or less confident to provide their own
ideas and opinion. This will decrease their effort and may bring poor performance in
gradually.
Recognitions can be include social reinforces and symbolic awards
(McAdams, 1999, cited in Shields, 2007). Social reinforces means that the employees
have the opportunity to engage in the planning and decision-making process within
an organization. This opportunity allows the employees to exchange the knowledge
and ideas with top management. This helps them to gain the extra knowledge
compare with the others employees who do not have this opportunity. This priority
indirectly increases their competitive advantage and improves their performance. On
the other hand, symbolic awards such as the plaques and "thank you" notes given by
the employers able to increase the motivation of the employees due to their effort are
recognized by the employers. The symbolic awards are able to mention the
employees to work harder and perform well in anytime and anywhere. As a result,
recognition acts like the non-financial rewards to motivate the employees in
improving their performance.
2.3.5 Working Conditions
Working conditions which is convenient and safety are important. According to
Baptiste (2008), employees who are enjoying safer, healthier and happier working life
will increase their commitment and satisfaction, thus they will tend to produce best
performance or high productivity.
Another research showed that healthy of the employees is important and must be
considered by the employers. Edington and Schultz (2008) were stated that the
number of health risks increase will reduce the ability of the employees to achieve the
productivity standard and increase the rate of absenteeism. Burton et al. (2005)
research was found that there have ten health risks which are associated to lower
30
productivity (cited in Edington & Schultz, 2008). High stress and poor working
conditions are two of the health risks occur in many US organizations. Therefore, the
employers can prepare health care center in the organization or counseling program
for the employees who are needed in order to assist them always in the health
condition when performing their jobs.
In addition, working environment which is full of noise will increase the level of
stress (Pitt, 2008). It is because the sound pollution will influence the cognition and
emotion of the employees. Employees will also produce poor performance when
sound pollution occurs at the workplace. Therefore, employers should control the
sound of noise and also isolate the noisy working area.
Furthermore, workplace boredom will also influence the performance of the
employees (Game, 2007). This is because the employees who are always working at
the similar place or area are more easily to feel tired and tend to increase the number
of mistake on their jobs due to lack of attention. The increasing number of mistake
will lead to poor performance.
Based on all the research
In
above, employers are encourage to provide the
positive working conditions for the employees in order to make them feel
comfortable and fresh minded to accomplish their task. For example, workers who
work in office must provide fan or air-conditioned whereas the suitable facilities
should prepare for the builder or architect such as safety helmet, safety goggles, face
mask, waistcoat, and safety boot. Within the safety facilities support, employees are
able to become more effective in doing their jobs and providing outstanding
performance.
Besides, the harmony working situation also required for the employees. For
example, the employees may more prefer the supportive manager rather than the
manager who are always give command and limited opportunity for employees to
31 express their own ideas and opinions. In addition, employees will be more motivated
ifpeer's support is provided in the workplace.
2.4. Summary
In a nutshell, this chapter discussed the overview of the job performance, the
previous literature of the variables and related theories. On the next chapter, it will
discuss on methodologies that are being using through conducting the studies starting
from the data collection until data analysis.
32 CHAPTER 3
RESEARCH METHODOLOGY
3.0 Introduction
This chapter explains the design of the study, population under the study,
sample and sampling procedures, instrument of the study, data collection method, and
data analysis procedure. Besides, this chapter also covers the pilot test and followed
by discussing the reliability and validity of the data.
33
3.1 Research Design
Research Design is the plan used to obtain desired information for the purpose to
assess and evaluate the results of the study (Anonymous, 2009). There have different
types of research such as correlation research, survey research, cross-sectional
research and so on. A survey research was chosen and used in this study since it is
the way to allow the researcher collect requires information from the particular
sample by distributes the questionnaires.
This study was used the quantitative method of research. The main reason for the
researcher using the questionnaires survey (quantitative) was because it is the faster
and cheaper way to collect the data (Anonymous, 2008). Besides, the data which
were collected can be used to draw a conclusion about the studied population and also
can be a reference for the future use. Furthermore, open-ended survey questionnaires
by using written questionnaires through email were also sent to 10 informants to
gather more accurate information in order to further support the survey findings.
3.2 Population and Sample under Study
The population of this study was comprised entire employees who are
working in one of the five star hotel in Kuching (XYZ Hotel), it was around 200
employees. As shown in Table 3.1, the questionnaires were distributed to 100
samples in that particular hotel but it was managed to collect back with 70 sets of
questionnaires and there were only 65 set of questionnaires was completed and used
to be analyzed in this study.
The convenience sampling is used in this study because it is easier and
convenient for researcher to collect the related information. According to Sapsford &
Jupp (2006), convenient sampling is a kind of nonprobability sampling methods
wherein it makes no pretense in identifying a representative of the sample in the
population. Besides, convenience sampling was chosen in this study because it is the
34
method which less expensive and less time consuming in collecting the data (Faizah
Omar, Kya, Ngor, & Zainudin Awang, 2010). Table 3.1: Total of Questionnaires distribution and collected Questionnaire
Questionnaires
Questionnaires
Questionnaires
Distribution
successfully collected
completed Filled
Neglected
up
100 sets
65
70
5
3.3 Data Collection Method and Procedures
The questionnaires was conducted in this study is to collect the require data.
Firstly, the researcher prepared the consent letter for XYZ Hotel. After getting the
pennission from that particular hotel industry, the questionnaires were hand deliver to
the person who is in charge. After a week, the questionnaires was collected and
converted into the data. Furthennore, open-ended survey questionnaires were sent to
Hotel XXX which located in Miri through email and managed to receive the feedback
from 10 respondents after a week. Apart from that, secondary data also gained
through searching the journal article from internet and found the other resources from
books.
3.4 Instrument of the study
In this study, survey questionnaire was prepared by researcher to collect the
data from the respondents. The questionnaires were designed in Bi-Ianguage version
and consisted of closed-ended questions in three section which are Section A, Section
B, and Section C. The questions in the questionnaires were adopted and modified
from past literature reviews and senior theses as well as based on the book entitled,
"Managing Employee Perfonnance and Reward: Concepts, Practices, Strategies" by
Shields (2007).
35
Section A: Demographic characteristic of the respondents
This section was designed to obtain the background information from the
respondents. This section includes four items which consist of age, gender,
educational level, and length of service.
Section B: Employees' job performance
This section was comprised of the questions which regard to the employees' job
performance. It was designed to evaluate the reaction of the respondents on their job
performances towards compensation systems. The four-point Likert Scale (Table 3.1)
was prepared by researcher to acquire the direct response from the respondents and
avoid the unnecessary feedback (neutral) which brings difficulty for researcher in
analyzing the data.
Section C: Types of compensation systems that influences employees' job
performance
This section was prepared the questions which regarding the types of
compensation systems that consider will brings effect for the employees' job
performance. Types of compensation systems which used in this study were base
salary, performance-based pay, recognition, and working condition. This section was
also using the four-point Likert Scale which is shown in Table 3.2.
Table 3.2 Four-point Likert Scale
36 3.5 Pilot Test (Pre-Test)
Pilot test defined as the pre-test of the research instrument which helps the
researcher to identify the problem which are likely be encountered in the actual test in
order to reduce the errors occurs in the questionnaires before the actual test was
conducted (Teijlingen & Hundley, 2001). Besides, pilot test enable the researcher to
discard all unnecessarily or ambiguous questions in the questionnaires and helps to
ensure the validity and reliability of the questionnaires. Therefore, pilot test is
important to conduct before the actual questionnaires were distributed to the
respondents in order to obtain the accuracy of the feedback in the actual test.
In this study, the pilot test was conducted in one of the hotel industry in
Kuching (ABC Hotel). There were 20 employees randomly selected as the
respondents to fill up the questionnaires in this pilot test. After a week, the
questionnaires were collected and analyzed by using Reliability test with Cronbach
Alpha Model to test the reliability of the statement of questionnaires.
Table 3.3 Alpha coefficient of Pilot Test based on 20 respondents
Variables
Number of Items
Cronbach's Alpha
10
0.714
5
0.717
5
0.704
5
0.829
5
0.790
Dependent Variable
-Employees Job Performance
Independent Variables
Base Salary
- Performance based pay
Recognition
- Working Conditions
37
Based on Table 3.3, pilot test for the questionnaire was consisted of 30
statements which divided into employees' job performance with 10 statements, base
salary with 5 statements, performance-based pay with 5 statements, recognition with
5 statements, and working conditions also with 5 statements.
According to Nunnally (1978 cited in Breakwell, Hammond, Schaw & Smith,
2006) and Muhamad Saiful Bahri Yusoff (2010), the good reliability coefficient of
the test should be higher than 0.7. In overall, Table 3.3 illustrated that the pilot test's
statements were shown reliability for five measurement due to the Cronbach Alpha
value were higher than 0.70 which were 0.714 (employees' job performance), 0.717
(base salary), 0.704 (performance-based pay), 0.829 (recognition), and 0.790
(working conditions).
3.5.1 Reliability and Validity of the study
According to Handley (n.d.), reliability of the study refers to the consistency
results obtained from types of instrument (questionnaires or interview).
Besides,
Joppe (2000) also stated that the reliability of the study can be measures by obtain the
same results from different group of respondents and in different times (cited in
Golafshani, 2003) However, there was not an easy task for all researchers to do the
reliability test because some of the variables in the study may change differently over
the time. Therefore, the scales or measurements which set by researchers in before
may be not available to use in recent study.
According to Joppe (2000), validity of the study refers to the result which is
testing or measuring by the researchers is able to reflect what they are intended to
measure in the actual test (cited in Golafshani, 2003).
38
3.6. Data Analysis Procedures
The researcher used Statistical Package for the Social Sciences (SPSS)
version 17.0 to examine the data and convert the data into the conclusion. The
relationships between the independent variables and dependents variables can
determine through descriptive statistics and inferential statistics such as Independent
sample t-test, Pearson Correlation and Multiple Linear Regression. Besides, the
results of the analysis was used to determine whether null hypothesis is accepted
(p>0.05) or rejected (p<0.05).
3.6.1 Descriptive Statistics
Descriptive statistics is often used to test the percentage (%) and frequency (n)
of the demographic factors such as gender, age, length of services and educational
level. Besides, descriptive statistics enable the researcher to identify measure of
central tendency (mean) and measure of dispersion (standard deviation) of the
respondents' demographic characteristics.
3.6.2 Inferential Statistics
Inferential statistics is the complicated technique used to test the differences
or the relationships between dependent variables and independent variables of the
study. As mention above, the researchers are able to measure the accuracy of the
result by testing the acceptance of the null hypothesis. If the significant value (p­
value) is more than 0.05, the null hypothesis will be accepted but the null hypothesis
will be rejected if the significant value is less than 0.05.
3.6.3 Independent Sample T-Test
Independent Sample T -test is used to compare the means of two groups. In this
study, independent Sample t-test used to identifY the difference between genders in
employees' job performance. The reason for using the independent sample t-test is
because gender only consists of two groups which are male and female.
39
3.6.4 Pearson Correlation
Pearson Correlations helps the researcher to analyze the strength of relationships
between independent variables (component of compensation) and dependent variable
(employees' perfonnance) by observe the value of coefficient (r). The "r" values are
range between the positive one and negative one (-1 ::;;r g). If the "r" value is 0.0, it
shows that there have no relationships between independent variables and dependent
variables. Positive "r" values show the positive relationships whereas negative "r"
value indicates negative relationships between two variables. The analyses of the
value "r" are given as Table 3.4 in below:
Table 3.4: Strength of Relationship between Independent and Dependent
Variables
Value "r"
Strength of Relationship
0.80-1.00
V ery Strong Relationship
0.60-0.80
Strong Relationship
0.40-0.60
Moderate Strong Relationship
0.20-0.40
Weak Relationship
0.00-0.20
Very Weak Relationship
(Sources: Miller, 1991 )
40
3.6.4 Multiple Linear Regressions
Multiple linear regressions allow the researcher to test more than one of the
independent variables in predicting the relationship with dependent variables by
looking at its significant value (p<0.05). If the p-value was smaller than 0.05, that
means the null hypotheses has been rejected and also indicates that there was the
dominant factors that influences employees' job performance. Besides, the dominant
component of compensations can be identified through observing its beta value. The
largest beta value of particular component among others will be considered as the
dominant component of compensations. In addition, R Square (R2) value was used to
illustrate the percentage for components of compensations contributed approximately
to the employees' job performance.
3.7. Summary of Statistical Method used to Test Hypotheses
Table 3.5 shows the different statistical methods are used to examine the
hypotheses in this study.
Table 3.5: Hypotheses Testing Method for Each Variable
Hoi
Hypotheses
Statistical Methods
There is no significant difference between genders
Independent sample
in employees' job performance.
t-test
There is no significant relationship between base
H02
salary and employees' job performance.
Pearson Correlation
There is no significant relationship between
H03
performance-based pay and employees' job
Pearson Correlation
performance.
There is no significant relationship between
H04
recognition and employees' job performance. There is no significant relationship between working H05
conditions and employees' job performance.
41 Pearson Correlation
Pearson Correlation
There is no dominant component of compensations
Ho6
that affects employees' job performance.
Multiple Linear
Regression
3.8. Summary
In conclusion, this chapter discusses the method which was used to design this
study, the population and sample of the study, the method used to collect the data,
instruments of the study, the significance of the pilot test and defining the reliability
and validity. Besides, the data obtained through questionnaires were analyzed by
using various type of inferential statistical.
42
CHAPTER 4
FINDING AND DISCUSSION
4.0 Introduction
This chapter covers the analysis and discussion of the findings for this study.
It begins the discussion on the demographic characteristics of the respondents,
frequency and percentage of the variables, validity and reliability test for the actual
study, and ends with the findings of the objectives and hypotheses of this research as
well as the discussions of the findings.
43
4.1 Descriptive Statistics
4.1.1 Respondents' Demographic Factors
There were 65 respondents in this study. Respondents' demographic factors of
interest in this study were gender, age, educational level, and length of service.
However, the demographic characteristic (gender) were only used in hypotheses
testing (independent sample t-test) to identify the significant difference between
genders in employees' job performance. The demographic of the samples were
obtained from the section A (Demography) of the questionnaire and it was
summarized in Table 4.1.1(a) to 4.1.1 (d).
4.1.1 (a) Gender
Based on the results in Table 4.1.1(a) and Figure 4.1.1(a), it consisted of
female respondent (70.8%) than male respondents (29.2%) in this study. Therefore,
the majority of the respondents were female.
Table 4.1.1(a): Distribution of respondents based on gender
Demographic
Items
Frequency Percentage
(n)
(%)
Male
19
29.2
Female
46
70.8
TOTAL
65
100 Characteristic
Gender
44
Figure 4.1.1 (a): Distribution of respondents based on gender
>­
u
I::
cu
:::J
C'"
...cu
IL
Gender of respondent
4.1.1 (b) Age
As shown in Table 4.1.1 (b) and Figure 4. 1.1 (b), the age distributions of 65
respondents were in the range of 20 years old and below until 51 and above years old.
Majority respondents come from the 21-30 ranges of age which comprises 41.5% of
the total sample. However the least group respondents were 51 years old and above
which only cover 1.5% of the sample population. On the other hand, 20 respondents
(30.8%) were in the range of 41-50 years old, 15 respondents (23.1%) were in the
range of 31-40 years old, and 2 respondents (3.1 %) were in the range of 20 years old
and below.
45
Table 4.1.1 (b): Distribution of respondents based on age
Demographic
Frequency
Percentage
(n)
(%)
20 and below
2
3.1
21-30
27
41.5
31-40
15
23.1
41-50
20
30.8
Items
Characteristic
Age
51 and above
1.5
TOTAL
65
100 Figure 4.1.1 (b): Distribution of respondents based on age
>­
u
[:
GI
::J
c­
GI
"­
u..
20 and above
21 -30
31-40
41-50
Age of respondent
46 S1 and above
4.1.1 (c) Educational Level
From the table 4.1.1(c) and Figure 4.1.I(c), there were 58 respondents
samples (89.2%) were at the SPM educational level which dominate the population
sample. However, there was only I (1.5%) of the respondents categorized in diploma
level. Besides, the educational level in the STPM categories and degree and higher
qualification categories consists of the same amounts which were 3 people (4.6%).
Table 4.1.1 (c): Distribution of respondents based on educational level
Demographic
Items
Characteristic
Frequency
Percentage
(n)
(%)
Educational
SPM
58
89.2
Level
STPM
3
4.6
Diploma
1.5
Degree and higher qualification
TOTAL
3
4.6
65
lOa
Figure 4.1.1 (c): Distribution of respondents based on educational level
58
Educational level of respondent
47
4.1.1 (d) Length of services
Table 4.1.1 (d) and Figure 4.1.1 (d) shown that respondents who had length of
service more than 5 years category made up the majority which were 26 (40%) of the
entire sample, followed by 14 (21.5%) respondents served within 1 to 3 years and in
range of 3-5 years. However, there have only 11 (16.9%) of the respondents were
worked within company less than a year.
Table 4.1.1 (d): Distribution of respondents based on length of services
Demographic
Items
Characteristic
Frequency
Percentage
(n)
(%)
Length of
Less than a year
11
16.9
Service
1 to 3 years
14
21.5
3 to 5 years
14
21.5
More than 5 years
26
40.0
TOTAL
65
100 Figure 4.1.1 (d): Distribution of respondents based on length of services
D
Less than a year
years
yel3rs
~ More than 5 yea.-s
ffi 1 -3
fSiJ 3-5
48
4.1.2 Employee Job Performance
Table 4.2 shows the employee's job performance based on the influences of
compensations. The various aspects of the perceived employees' job performance
measures with the questionnaire were shown as frequencies, percentages, mean, and
standard deviation in the Table 4.2.
Table 4.2 Employees' Job Performance based on influences of compensations
Responses
Employees' Job Performance
l. My performance is fairly
accessed by the employer.
2. 1 am clear about the target
performance which set by
2
3
4
SDA
D
A
SA
0
11
45
9
(0.00%)
(16.9%) (69.2%) (13.8%)
0
6
47
(0.00%)
(9.2%)
(72.3%) (18.5%)
0
8
49
(0.00%)
(12.3%) (75.4%) (12.3%)
0
9
(0.00%)
(13.8%) (81.5%) (4.6%)
1
19
(1.5%)
(29.2%) (63.1%) (6.2%)
12
Mean
Std.
Dev
2.9692
0.5582
3.0923
0.5221
3.000
0.5000
2.9077
0.4229
2.7385
0.5936
2.7846
0.6730
organization.
3. I always achieve my
performance targets.
4. There is strong links between
my earnings and my
53
8
3
individual's performance.
5. 1 received compensation
which is commensurate with
41
4
my performance.
20
6. Financial compensation is
49 36
8
more important to influence
(1.5%)
(30.8%) (55.4%) (12.3%)
0
12
35
18
(0.00%)
(18.5%)
(53.8%)
(27.7%)
8
47
10
my performance rather than
non-financial compensation.
7. Increment of base salary will
improve my performance.
8. Pay increment is based on my 0
performance.
9. I received appropriate
recognition for my
(0.00%)
(12.3%) (72.3%) (15.4%)
0
7
49
9
(0.00%)
(10.8%)
(75.4%)
(13.8%)
4
44
16
(6.2%)
(67.7%) (24.6%)
3.0923
0.6783
3.0308
0.5294
3.0308
0.4990
3.1538
0.5924
2.9800
0.3294
performance.
10 Conducive working
conditions motivate me
(1.5%)
perform well.
Overall
Noted: 1=Strongly Disagree, 2=Disagree, 3=Agree, 4= Strongly Agree,
std.dev= Standard deviation
Based on the statistics in above, the respondents felt that their performance
were fairly accessed by their employer (Mean=2.9692, Std. dev= 0.5582). Generally,
respondents were believed that they were clear about the target performance which
set by the organization (Mean=3.0923, Std.dev= 0.5221). Besides, the respondents
were sense that they always achieve their performance targets (Mean=3.000, std.
dev= 0.5000). In addition, the respondents perceived that there was strong links
between their earnings and individuals' performance (Mean=2.9077, std.dev=
50 0.4229). Furthermore, the respondents also disclosed that they were received
compensation which is commensurate with their performance (Mean= 2.7385,
std.dev= 0.5936). Moreover, the respondents felt that financial compensation is more
important to influence their performance rather than non-financial compensation
(Mean= 2.7846, std.dev= 0.6730). The respondents thought that increment of base
salary improves their performance (Mean=3.0923, std. dev= 0.6783). Apart from that,
the respondents who stated that pay increment was based on their performance
(Mean=3.0308, std.dev= 0.5294). The respondents received appropriate recognition
for their performance (Mean= 3.0308, std.dev= 0.4990). In addition, the respondents
felt that conducive working conditions motivate them perform well (Mean= 3.1538,
std.dev= 0.5924).
4.1.3 Base Salary
Table 4.3 discusses employees' perceptions with the influences of base salary
towards their job performance.
Table 4.3: Influences of base salary towards employees' job performance
Response
Base salary
1. Base salary is the
main reward to
SDA
DA
A
Mean
Std.dev
3.0462
0.5709
2.6923
0.6829
SA
0
9
44
(0.00%)
(13.8%)
(67.7%) (18.5%)
25
32
(38.5%)
(49.2%) (10.8%)
12
motivate my work
performance.
2.
My annual salary
increment is
(1.5%)
adequate.
51 7
3.
I felt satisfy with
6
31
25
3
my current base
(9.2%)
(47.7%)
(38.5%)
(4.6%)
I felt I am being
4
23
34
4
fairly paid for
(6.2%)
(35.4%)
(52.3%) (6.2%)
Even though I
0
4
42
19
received low
(0.00%)
(6.2%)
(64.6%)
(29.2%)
2.3846
0.7222
2.5846
0.7047
3.2308
0.5525
2.7877
0.4428
salary.
4.
what I contributed
to this
organization.
5.
salary from my
employer, I would
still try to do my
best at my job.
Overall
Noted: 1= Strongly Disagree, 2= Disagree, 3= Agree, 4= Strongly Agree
Std. dev= Standard deviation
Based on Table 4.3, respondents viewed that base salary is the main reward to
motivate their work performance (Mean=3.0462, std.dev=0.5709).
In generally,
respondents felt that their annual salary increment was adequate (Mean= 2.6923,
std.dev= 0.6829). Besides, the respondents felt satisfy with their current base salary
(Mean=2.3846, std.dev= 0.7222). Furthermore, the respondents felt that they were
being fairly paid for what they contributed to their working organization (Mean=
2.5846, std.dev= 0.7047). The respondents revealed that they would try to do their
52 best in their job even though they received low salary from their employer
(Mean=3.2308, std.dev=0.5525).
4.1.4 Performance-Based Pay
Table 4.4 illustrates employees' perceptions with the influences of performance­
based pay towards their job performance.
Table 4.4 Influences of performance-based pay towards employees' job
performance
Response
Performance-Based
SDA
2
3
4
DA
A
SA
Mean
Std.dev
Pay
1. The amount of pay
that I received able
0
5
43
17
(0.00%)
(7.77%)
(66.2%)
(26.2%)
15
37
13
(23.1%)
(56.9%)
(20.0%)
27
29
7
(41.5%)
(44.6%)
(10.8%)
3.1846
0.5560
2.9692
0.6607
2.6308
0.7196
to increase my
motivation to
perform well.
2.
The amount of pay 0
is given based on
(0.00%)
performance that I
contributed.
3. The amount of pay 2
that I received is
(3.1%)
equitable with my
competencies
towards my jobs.
53 4.
I feel that my
perfonnance is
(1.5%)
4
46
14
(6.2%)
(70.8%)
(21.5%)
18
27
19
(27.7%)
(41.5%)
(29.2%)
3.1231
0.5730
2.9846
0.8002
2.9785
0.4598
reflective of my
abilities.
5.
I will reduce my
efforts if I
(1.5%)
received the
inequitable pay.
Overall
Noted: 1= Strongly Disagree, 2= Disagree, 3= Agree, 4= Strongly Agree
Std. dev= Standard deviation
From Table 4.4, respondents perceived that the amount of perfonnance-based
payable to increase their motivation in order to perfonn well in their job
(Mean=3.1846, std.dev= 0.5560). Besides, the respondents felt that the amount of
perfonnance-based pay was given based on perfonnance that they were contributed
(Mean= 2.9692, std.dev=0.6607). The respondents also revealed that the amount of
perfonnance-based pay that they received was equitable with their competencies
towards their jobs (Mean=2.6308, std.dev=0.7196). In addition, the respondents felt
that
their
perfonnance
was
reflective
of
their
abilities
(Mean=3 .1231,
std.dev=0.5730). Furthennore, the respondents would considered to reduce their
efforts if they received inequitable of perfonnance-based pay (Mean=2.9846,
std.dev=0.4598).
54
4.1.5 Recognition
Table 4.5 states employees' perceptions with the influences of recognition
towards their job performance.
Table 4.5: Influences of recognition towards employees' job performance
Response
Recognition
1.
SDA
2
3
4
DA
A
SA
Outstanding
2
14
44
5
performance is
(3.1%)
(21.5%)
(67.7%)
(7.7%)
I receive praise
4
5
47
9
from my employer
(6.2%)
(7.7%)
(72.3%)
(13.8%)
My employer
2
3
50
10
allows us to
(3.1 %)
(4.6%)
(76.9%)
(15.4%)
I strive for
o
2
50
13
recognition in
(0.00%)
(3.1%)
(76.9%)
(20.0%)
Mean
Std.dev
2.8000
0.6175
2.9385
0.6818
3.0462
0.5709
3.1692
0.4531
appropriately
recognized by my
employer.
2.
or others when I
achieve the targets
of performance.
3.
participate in
performing
various tasks.
4.
doing my work.
55 5.
I feel frustrated if
3
9
32
21
my contributions
(4.6%)
(13.8%)
(49.2%)
(32.3%)
3.0923
0.8047
3.0092
0.4450
does not recognize
by my employer.
Overall
Noted: 1= Strongly Disagree, 2= Disagree, 3= Agree, 4= Strongly Agree
Std. dev= Standard deviation
According to Table 4.5, respondents stated that outstanding performance was
appropriately recognized by their employer (Mean=2.8000, std.dev=0.6175). Moreover,
the respondents perceived that they will receive praise from their employers or other
people when they achieve the targets of performance (Mean=2.9385, std.dev= 0.6818).
Besides, the respondents clarify that their employer allowed them to participate in
performing various tasks (Mean=3.0462, std.dev= 0.5709). In addition, the respondents
strived for recognition in doing their work (Mean=3 .1692, std.dev=0.4531). Furthermore,
the employees reflect that they felt frustrated if their contributions did not recognized by
their employer (Mean=3.0923, std.dev= 0.8047).
56 4.1.6 Working Conditions
Table 4.6 shows employees' perceptions with the influences of working
conditions towards their job performance.
Table 4.6: Influences of working conditions towards employees' job
performance.
Response
Working Conditions
SDA
1. I am very satisfied
2
3
4
DA
A
SA
10
47
7
(15.4%)
(72.3%)
(10.8%)
6
40
18
(1.5%)
(9.2%)
(61.5%)
(27.7%)
A harmonious
0
2
45
18
working
(0.00%)
(3.1%)
(69.2%)
(27.7%)
3
38
23
with my current
(1.5%)
Mean
Std.dev
2.9231
0.5676
3.1538
0.6430
3.2462
0.5010
3.2769
0.6252
working condition.
2.
Sufficient
facilities and
equipment
Increase my
efficiency in
performing the
tasks.
3.
atmosphere will
Increase my
performance.
4.
Safety and healthy
57 (1.5%)
working
(4.6%)
(58.5%)
(35.4%)
2
44
18
(3.1%)
(67.7%)
(27.7%)
environment
reduce my stress
in order to be able
to perform
outstanding
performance.
5.
Supervisor and
peers support
(1.5%)
3.2154
0.5726
3.1631
0.4386
Increase my
performance.
Overall
Noted: 1= Strongly Disagree, 2= Disagree, 3= Agree, 4= Strongly Agree
Std. dev= Standard deviation
Based on Table 4.6, the respondents were very satisfied with their current
working condition (Mean=2.9231, std.dev=0.5676). Besides, the respondents
believed that sufficient facilities and equipment increase their efficiency in
performing the tasks (Mean=3.1538, std.dev=0.6430). Respondents also felt that a
harmonious working atmosphere would increase their performance (Mean= 3.2462,
std.dev=0.501O). Furthermore, respondents perceived that safety and healthy working
environment facilitate to reduce their stress in order to be able to perform outstanding
performance (Mean=3.2769, std.dev=0.6252). In addition, respondents believed that
supervisors
and peers'
support
increase
std.dev=0.5726).
58 their performance
(Mean=3.2154,
I
I
4.2 Validity Test for the Actual Test (Post-Test)
Table 4.7: Goodness of data
Variables
Items Factor
KMO
Loadings
Bartlett's
Eigen
Variance
Test of
values
Explained
sphericity
Employees'
10
0.432­
0.672
0.677
Job
Xl' 217.460
(%)
3.132
31.321
2.373
39.555
2.157
43.135
2.261
45.212
2.412
48.233
p=O.OOO
Performance
Base Salary
5
0.439­
0.700
0.795
Performance-
5
p=O.OOO
0.687
0.889
based Pay
Recognition
0.463­
5
0.591­
Condition
5
0.438­
xl~95.270
p=O.OOO
0.780
0.869
Working
x2' 117.093
x­ 96.892
p=O.OOO
0.809
0.864
xl. 107.312
p=O.OOO
The actual test was consisted of 30 statements which divided into employees'
job performance with 10 statements, base salary with 5 statements, performance­
based pay with 5 statements, recognition with 5 statements, and working conditions
also with 5 statements. An exploratory factor analysis was conducted with the method
of principal axis factoring to examine the validity of the question for each variable in
the research.
Kaiser-Meyer-Olkin (KMO) and Bartlett's test of sphericity were conducted
for each variable to determine the factorability of the matrix (Coakes & Steed, 2003)
and also examine the appropriateness of the data for exploratory factor analysis (Field,
59 "''''\lIil 2005; Munro, 2005). The sample was considered as adequate if KMO value was
greater than 0.5 and Bartlett's test was significant (p-value<0.05) (Field, 2005;
Muhamad Saiful Bahri Yusoff, 2010)
In overall, the outputs of KMO for all variables were greater than 0.5 where
employees job performance was 0.672, base salary was 0.700, performance-based
pay was 0.687, recognition was 0.780, and working condition was 0.809. Moreover,
these variables were significant in Chi-Square of Bartlett's test of sphericity as p­
value was less than 0.05 (p= 0.000). Hence, the factorability was assumed.
Furthermore, the components could be retained to use as the data for
conducted inferential analysis if the Eigenvalues were greater than 1 (Muhamad
Saiful Bahri Yusoff, 2010). As shown in Table 4.7, Eigenvalues for all components
of each variables were greater than 1 where employees' job performance (3.132)
which factor loadings in the range of 0.432-0.677, base salary (2.373) which factor
loadings in the range of 0.439-0.795, performance-based pay (2.157) which factor
loadings in the range of 0.463-0.889, recognition (2.261) which factor loadings in the
range of 0.591-0.869, and working condition (2.412) which factor loadings in the
range of 0.438-0.869. Thus, the values of all the variables were met the acceptable
standard.
60
1
4.3 Reliability Test for the Actual Test (Post-Test)
The reliability of the actual test items or the questionnaire's statements was
tested using the Cronbach's alpha method.
Table 4.8 Alpha coefficient of Actual Test based on 65 respondents
Variables
N umber of Items
Cronbach's Alpha
10
0.788
- Base Salary
5
0.711
- Performance based pay
5
0.722
- Recognition
5
0.739
- Working Conditions
5
0.807
Dependent Variable
-Employees Job Performance
Independent Variables
Based on Table 4.8, it was found that the actual test's statements were shown
reliability with the overall of Cronbach Alpha value were higher than 0.70 where are
0.788 (employees' job performance), 0.711 (Base salary), 0.722 (Performance-based
pay), 0.739 (recognition), and 0.807 (working conditions).
61 I
pAS
,
4.4 Findings and discussion based on Hypothesis Testing
4.4.1. Independent Sample T-test
HoI: There is no significant difference between genders in employees' job
performance.
Table 4.9: Independent Sample T-test
Gender N
Mean
Std.
Sig.
F
t
df
Deviation
Male
19
2.9947
.39787
Female
46
2.9739
.30143
Sig. (2­
tailed)
.836
.364
.230
63
.819
As shown in Table 4.9, there have 19 male respondents and 46 female
respondents. The mean and standard deviation for male was 2.9947 and 0.39787
while the mean and standard deviation for female was 2.9739 and 0.30143. The t
value and dfwas 0.230 and 63 while the two-tail significant (p) was 0.819, p>O.OS.
Therefore, the null hypotheses was failed to reject. This finding indicated that there
was no significant difference between male and female employees in term of their job
performance.
This result was supported by Yahaya (n.d.) which stated that there have no
significant differences between male and female workers in performing their job as
long as they had been given the equal training and opportunities to express
themselves. In addition, Wiggins and Peterson's (2004) studies also proved that male
and female workers can produce same quality of performance if they was received
the same treatment from their employer or do not discriminate by their employer.
However, this result was opposed the statement which mentioned by
MacLean (2000, cited in Wiggins & Peterson, 2004). He stated that there have the
62
differences between male and female workers in performing their tasks due to the
effect of working conditions and work-life balance issues. Women will be influences
by the household and child rearing problem where male workers will not facing this
problem. Furthermore, this result also overthrow the argument of Okpara (2006)
which is male and female workers will shown different performance due to their
various perceptions towards the job satisfaction. Based on the Okpara's finding, the
female workers who received low salary will reduce their job performance if
compared with the male workers who received high salary was enjoyed and perform
more well in their jobs.
Nevertheless, this finding was supported by the informant A who is
Supervisor Front Office and has five years working experiences in one of the hotel
(Hotel XXX) located at Miri. He stated that:
"No, I don't think there is any difference in male and female because
both genders have the same capability. Between, nowadays female
workers they perform well too. "
According to informant A's opinion, male and female workers has same capability to
accomplish their tasks and also able to perform equally. It was also reflected in
nowadays workplace which most of the women were hold the high level of positions
such as supervisor, manager, engineer or CEO in an organization while compare with
only the male workers dominated the high position in previously. Besides, some of
the women workers were able to make a great decision in the planning and strategies
of the organization.
Besides, work-life balance policy which implemented in most of the
organization such as flexible working hours, child care center, maternity and
paternity leave also reduced the problem of women workers in nowadays. Previously,
the women workers might produce weak performance especially when they are
63
I
I,;
i
facing family-work conflict such as their family problems are interferences with their
work (MacLean, 2000, cited in Wiggins & Peterson, 2004). However, within the
work-life balance policy, women can pay full concentration in their works and playa
better role in both family and work. Therefore, this could be the possible reason to
explain there is no difference between male and female workers in terms of their job
performance.
4.4.2. Pearson Correlation
D02: There is no significant relationship between base salary and employees' job
performance.
Table 4.10: Coefficient of Base salary and employees' job performance
Variables
Mean
Std.
N
deviation
Base salary
2.7877
0.4428
65
Sig. (2-
Pearson
tailed)
Correlation
0.000
0.645*
* Correlation is significant at the 0.01 level (2-tailed)
Table 4.10 shows that there was a strong correlation between base salary and
employees' job performance (r=0.645, p=O.OOO, p<O.Ol). It demonstrated that these
two variables were positively related. Meanwhile, base salary received by employees
gives significant influence to their job performance. Therefore, the null hypotheses
which stated there is no significant relationship between base salary and employees'
job performance have been rejected.
The result was corresponds with the arguments of Henderson (1995) which
base salary is the basic need for employees and also will give direct influences
towards employees' job performance. Usually, people worked to earn the salary in
order to support their daily expenses and ensure they can survive in this competitive
world. Therefore, base salary becomes the first prerequisite for people to looking for
64 a job. Without the expected base salary, people might not motivate to work hard and
they will always perform weakly in their jobs.
In addition, MacLean's (2007) supported this result and proposed that
employers should consider base salary is one of the strategies to retain the excellent
perfornlers and also the investment to gain the employees' royalty. However, some of
the employers do not realize about this and often pay less salary to the employees but
required them to do a lot of tasks. This can be shown in Spherion's (2005) studied
which demonstrated there have only 49 percent of the employers emphasize the base
salary as the motivation factors to improve employees' performance while 69 percent
of employees are beliefs that base salary can influences their job performance (cited
in MacLean, 2007). Employers who ignored the important of base salary lead to
increase turnover rate in an organization.
Besides, Torrington, Hall and Taylor (2008) also stated that base salary is the
important compensation and it gives greater impact to the job performance of the
employees. Furthermore, employees who received unfair base salary might reduce
their performance and even leave the organization. There have further supports of this
result from the informant B who is Assistance Banquet Manager and has five years
working experiences in Hotel XXX. He points out that:
"Yes. (He agreed that base salary is the important compensation
to motivate employees performs well.).Due to my current situation,
my boss was increases my base salary and promotes me as the assistance
Banquet Manager. This makes me more motivated to work hard
and cancelled the thought to leave the organization. High salary also
make me love to work even though no overtime been pay. "
Based on the opinion from informant B, there can be concluded that base salary
important to motivate employees perform well and also help to retain the experienced
65 9
workers. In addition, informant C who is Sales! Public Relation (PR) Executive and
has four year working experiences in Hotel XXX were also noted and supported that:
"Yes. (She agreed that base salmy is the important compensation
to motivate employees performs well.). Better offer always motivate
people perform well and more diligent. Because employees jelt
appreciated and therefore they are more willing to take more
responsibility at work. "
According to informant C, there was also shown that base salary brings significant
impacts towards employees' job performance. The better and satisfied base salary
was able to motivate employees work hard and pay more responsibility with their
work. Likewise, unsatisfied base salary increased turnover rate, dissatisfaction of the
employees and poor performances and outputs in an organization.
66 AI g
""
H03: There is no significant relationship between performance-based pay and
employees' job performance.
Table 4.11: Coefficient of Performance-based pay and employees' job
performance
Variables
Mean
Std.
N
deviation
Performance-
2.9785
0.4598
65
Sig. (2-
Pearson
tailed)
Correlation
0.000
0.432*
based pay
* Correlation is significant at the 0.01 level (2-tailed)
Based on Table 4.11, this study had found that there was a moderate strong
correlation between performance-based pay and employees' job performance
(r=0.342, p=O.OOO, p<O.OI). It means that satisfied and fairly performance-based pay
will improve or maintain the best performance whereas unsatisfied or bias
distributions of performance-based pay lead to poor performance. Thus, the null
hypotheses which stated there is no significant relationship between performance­
based pay and employees' job performance have been rejected.
This result has been supported by Gerhart (2000, cited
III
Shields, 2007)
which clarified that performance-based pay has positive relationships with employees'
job performance. For example, sales commissions were attractive ways to motivate
the employees in the marketing department in order to introduce the new package of
services or products to the customers (Shields, 2007). This can help the organization
increase reputation and profit. In conversely, if the employer does not provide this
kind of compensation, employees might not be so motivated to looking for the
customers and even show the poor performance and poor services to the customers.
Furthermore, Dessler (2008) mentioned that merit pay was increased base
salary of the employees, thus employees who seek for the high income were willing
67 jiiiM
aq
to contribute their time and energy to the organization and keep in continue to
produce the desired performances to the organization. This might be one of the
reasons to explain the result of this hypothesis.
For this hypothesis, informant A (Supervisor Front Office) was shared an
opinion that:
"If the individual has done well in their job scope, to have
this (performance-based pay) is good. Because this will keep
the individual motivated in their work. "
Besides, this was also supported by informant D who is Assistant Front Services
Manager with eight month working experiences in Hotel XXX. He stated that:
"Of course the answer is "yes "(performance-based pay influence your performance). The more you get, you should show the best to your company. " Referring to Informant C and D's VIew, it can be demonstrated that people will
contributed and perform the outputs based on the rewards and outcomes they
obtained. If they was received the performance-based pay which commensurate with
their performance, they will be motivated to done well in their future job. However, if
they did not obtain any rewards or received unfair pay, they might reduce their
contribution in performing their work. This was proved that performance-based pay
has a relationship with employees' job performance.
68
jiiiiliQ
q
H04: There is no significant relationship between recognition and employees'
job performance.
Table 4.12: Coefficient of Recognition and employees' job performance
Variables
Mean
Std.
N
deviation
Recognition
3.0092
0.4450
65
Sig. (2 -
Pearson
tailed)
Correlation
0.000
0.556*
* Correlation is significant at the 0.01 level (2-tailed)
According to Table 4.12, the inferential statistic analysis shows that there was
a moderate strong correlation between recognition and employees' job performance
(r=0.556, p=O.OOO, p<O.OI). In other words, the employees did well and produce
desired performance if they were received the recognition. Conversely, they might
perform poor performance when they did not receive any recognition. Hence, the null
hypotheses which stated there is no significant relationship between recognition and
employees' job performance have been rejected.
This result shows that there was not only the financial compensation has a
relationship with employees' job performance but the non-financial compensation
such as recognition also has a significant relationship towards employees' job
performance. First, it can be supported by the statements of Jeffries (1997, cited in
Nalini Govindarajulu & Daily, 2004). Jeffries mentioned that recognition is the non­
financial compensation which is able to motivate the employees and also ensure their
royalty towards the organization. For instances, some of the employees was perform
well when they felt their performance was actually appreciated by their employers.
However, if the employers did not give the recognition to the employees who were
done the good jobs, they will felt frustrated and might decrease their performance.
Overall, the majority of the employees (49.2%) in the XYZ Hotel were said that they
felt frustrated if their contributions did not recognize by their employers.
69 a,;
q
Further support for this result was proved by long and Hartog (2007) where
the employers should give praise to the employees who perform well or contribute
the innovative ideas. This was convincing the employees in sharing the infinite ideas
and expresses their thought and opinion as well as improves their performance.
Besides, recognition such as social reinforces and symbolic awards able to increase
the employees' performance (McAdams, 1999, cited in Shields, 2007). For example,
social reinforces such as the opportunity to participate in decision making process or
planning process allow the employees to enhance their ability in wide range if
compare with others employees. Employees were also capable to cope with the
challenges and more responsibility to their tasks. As a result, they tended to perform
excellently in their jobs.
According to Ryan (n.d.), non-monetary recognition can be a powerful tool to
improve employees' performance and the meaningful rewards to employees. Allen
and Helm (2002) also found that sincere praise and appreciation of manager is the
strategy to improve their employees' performance and encourage them to achieve the
goals (cited in Ryan, n.d.). Furthermore, Nelson's (2004) studied illustrated that 78%
of the employees were looking for the recognition such as recognized by their
employers or supervisor when they are done the good job or achieve the goals which
set by organization (Cited in Ryan, n.d.).
Besides, the result was also supported by informant C (Sales/ PR Executive),
She gives her opinion in below:
"Of course recognition is important, but not only for motivation,
sometimes, it helps to improve self-esteem ofthe personnel, boost
employees' working spirit and dedication to the company. This
will indirectly result in better working performance ofthe personnel. "
Based on her opinion in above, recognition can be considered as the non-financial
compensations which able to satisfy employees' psychological needs and lead to
70 pau:
q
desired performance among employees. Thus, the organization should not ignore this
compensation in order to motivate and encourage employees to improve their
performance.
H05: There is no significant relationship between working conditions and
employees' job performance.
Table 4.13: Coefficient of Working Conditions and employees' job performance
Variables
Mean
Std.
N
deviation
Working
3.1631
0.4386
65
Sig. (2 -
Pearson
tailed)
Correlation
0.000
0.471*
Conditions
* Correlation is significant at the 0.01 level (2-tailed)
From Table 4.13, it shows that there was a moderate strong correlations
between working conditions and employees' job performance (r=0.471 , p=O.OOO,
p<O.Ol). The result illustrated that the comfortable working conditions enable
employees perform well whereas uncomfortable working conditions might lead to
poor performance. Therefore, the null hypotheses which stated there is no significant
relationship between working conditions and employees' job performance have been
rejected.
According to Baptiste (2008), safer, healthier and happier working conditions
increased employees' commitment and job satisfaction. It was also produces best
performance or high productivity. Besides, Pitt (2008) illustrated that employees
might produce poor performance when sound pollution occurs at the workplace.
Sound pollution often disperses the attention and cognition of the individuals and this
might lead to poor performance and low productivity (Vi scher, 2007).
71
"Ii
q
Furthermore, Vischer (2007) mentioned that the working condition was often
links to the satisfaction and performance of the employees. For example, weak
lighting, noisy condition, uncomfortable office furniture, and spatial office will give
impacts to the workers' satisfaction and performance. The employees become stress
and perform badly if they were continuing work under the uncomfortable workplace.
Therefore, most of the employees were looking for the workplace which is
environmental comfort such as safety and hygiene workplace, ergonomic furniture or
ergonomic support for employees' performance of work-related tasks, and feelings of
belonging, ownership and control over workspace.
Further support was demonstrated in the research of Srivastava (2008) which
found that there was the positive relationship between adequate and favorable work
condition and employees' job performance. Srivastave (2008) stated that convenient
workplace and facilities, and safety, security, friendly, and motivating working
climate was pursued by the employees. Conversely, inadequate and unsafe working
condition spends a lot of employees' time to coping or adapting it and this was
influences their performance and productivities of the organization. This was also
supported by informant B (Assistant Banquet Manager) which gives his opinion as
below:
"Good environment working place make them more secure
and minimized turnover and the staffwill work longer
in the department. Uncomfortable working place can create
tension and strike as well as lack of interest to continue
work at the working place. "
From the OpInIOn gIven by informant B in above, it exemplify that comfortable
working condition is important and has a relationship with employees' job
performance in an organization. Without the comfortable or supportive working
72
-
4
condition, employees might difficult to focus in their work and even produces poor
performance. Indirectly, turnover rate increased within an organization.
Generally, supportive working condition is very crucial to motivate the
employees to perform well. Based on the feedback from the collected questionnaires,
most of the respondents in XYZ Hotel were agree that working condition brings
effects to their performance. As shown in Table 4.6, there have 45 (69.2%) of the
respondents think that a harmonious working atmosphere will increase their
performance and 38 (58.5%) of respondents felt that safety and healthy working
environment can reduce their stress in order able to perform well. This is grateful that
XYZ Hotel had prepared good working conditions to the employees where 72.3% of
the respondents were satisfied with their current working condition.
73 p.a,
q
4.4.3 Multiple Regression
H06: There is no dominant component of compensations that affects employees' job
performance.
Table 4.14: Stepwise Multiple Regression Analysis: Result of ANOVA
Model
Sum of
Mean
df
Squares
2
F
Sig
28.588
0.000
Square
3.331
2
1.666
3.613
62
0.058
6.944
64
a. Predictors: (Constant), BS
b. Predictors: (Constant), BS, RC
c. Dependent Variable: JP
As shown in Table 4.14, the significant value (p-value) was 0.000 and it was less
than 0.05. Meanwhile, the null hypotheses has been rejected, thus, there was a
dominant component of compensations that influences employees' job performance.
Table 4.15: Stepwise Multiple Regression Analysis: Result of Model Summary
Model
2
R
0.693
R Square
0.480
Adjusted R
Std. Error of
Square
the Estimate
0.463
0.2414 Furthermore, Table 4.15 shows the R2 value was 0.480. This indicates that 48%
of the independence variables contributed approximately to the employees' job
performance in XYZ Hotel.
74
Table 4.16: Stepwise Multiple Regression Analysis: Result of Coefficient
Model
2
Unstandardized
Standardized
Coefficients
Coefficients
T
Sig.
5.742
0.000
B
Std. Error
(Constant)
1.307
0.228
Base Salary
0.363
0.080
0.488
4.516
0.000
0.080
0.297
2.748
0.000
..
RecogmtIOn
0.220
i
Beta
!
Dependent Variable: Employees' Job Performance
Other than that, Table 4.16 shows that beta coefficient for base salary is 0.488
({3=0.488) and recognition is 0.297 ((3=0.297). This demonstrated that base salary is
the most dominant components of compensations that influence employees' job
performance in XYZ Hotel if compared with others components of compensation
system. Besides, the second highest contributing component of compensation is
recognition. The prediction equation is employees' job performance= 0.488(base
salary) + 0.297(recognition) + 0.228 (constant).
According to Henderson (2006), base salary contributes largest portion
towards employees' total compensation. Hence, it plays an important role in
influencing employees' job performance. If the employees do not receive expected
base salary, they might reduce their efforts in performing the tasks. Besides, the
employees who were only obtained the base salary as the return of their contribution,
they have to work hard and perform the best outcome in order to get the income and
also avoid losing their job. In addition, some of the organization might increase base
salary for its employees within a year or several years. Therefore, the employees who
were desired to get the increased salary; they will work hard and perform well. These
could be the reasons to explain that base salary was a dominant component of
compensations that influence employees' job performance.
Furthermore,
recognition was
the
second
dominant
components
of
compensation that influences employees' job performance. This result can be
75 Q
supported by Ryan (n.d.) where recognition is powerful tool to improve employees'
performance and also the simple and low-cost components of compensation (Hay,
1998, cited in Shields, 2007) implemented by employers. Employers did not spend a
lot of organizational fund but can gained "invaluable profit" such as royalty and
retention of experienced workers as well as excellent performances from employees.
This is because sincere praise and appreciation always pursue and looking by the
employees (Allen & Helm, 2002, cited in Ryan, n.d.).
Appreciation from the
employers often convinces the employees towards their ability and also motivates
them to perform more excellent in the future. As informant D (Assistance Front
Service Manager) stated that:
"Recognition is important to the stajft, privilege for the stajft and nostalgia for the end ofretirement. " From the opinion of informant D in above, it indicated that recognition is the
compensation which given the advantage and opportunity for the employees to
accomplish their tasks and also the honor for employees at the end of their services in
the organization. Therefore, the employees were motivated to achieve the desired
performance in order to gain the recognition from the employers.
76 .... 4.5 Summary of the finding
HoI
Hypotheses
Results
There is no significant difference between genders in
Fail to reject HoI
employees' job perfonnance.
i Ho2
There is no significant relationship between base salary Rejected Ho2
and employees' job perfonnance.
Ho3
There is no significant relationship between
Rejected Ho3
perfonnance-based pay and employees' job
perfonnance.
Ho4
There is no significant relationship between
Rejected Ho4
recognition and employees' job perfomlance.
Ho5
There is no significant relationship between working
Rejected Ho5
conditions and employees' job perfonnance.
Ho6
There is no dominant component of compensations
Rejected Ho6
that affects employees' job perfonnance.
4.6 Summary
This chapter discusses the findings which were analyzed by the SPSS Version
17 for window XP. The components of compensation system such as base salary,
perfonnance-based pay, recognition, and working conditions were significantly
related to the employees' job perfonnance. In addition, present study predicted that
base salary was the dominant factor that affecting employees' job perfonnance in
XYZHoteI.
77
-
CHAPTERS
SUMMARY, RECOMMENDATION, AND CONCLUSION
5.0 Introduction
This chapter discusses the overall summary of the preceding chapters which
included chapter one to chapter four. Besides, the recommendations for the
organization, human resources practitioners, and future researchers were suggested in
this chapter. Limitations of the study and conclusion that related to the study also
included in this chapter.
78 ---
5.1 Summary of the study
This study was conducted to
compensation systems
(financial
investigate
the relationship
and non-financial compensation)
between
and job
performance among employees.
In chapter one, background of the study and problem statements was
presented and followed by the research's objectives, hypotheses and frameworks.
Main objective of this research was to investigate the relationship between
compensation system and employees' job performance. There were four components
of compensation system have been chosen as independent variables such as base
salary, performance-based pay, recognition, and working conditions. In addition,
significance of the study for top management, employees and researchers was
discusses in chapter one. Lastly, conceptual and operational definitions of the terms
that used in this study were also explained in this chapter.
In chapter two, the context for the topic was explained in the first part such as
the concept of job performance, financial compensation (base salary and
performance-based pay), and non-financial compensation (recognition and working
condition). Besides, the related theories such as Maslow Hierarchy of Needs Theory,
Vroom's Expectancy Theory, and Adam's Equity theory were discussed in second
part. Furthermore, the previous literature which was relevant to this study also
elaborated in this chapter.
In chapter three, the research methodology for this study were discussed
which included research design, population and sample under study, data collection
method, instrument of the study, reliability test for the pilot test, and procedures for
data analysis. At last, the summary of the statistical method used to test hypotheses
were shown.
This study was used quantitative method where collect the data through
distributed the questionnaires. A convenience sampling was used in this study and 20
79 respondents from ABC Hotel (pilot test) and 65 respondents from XYZ Hotel (actual
test) were selected. The questionnaires was using the adapted questions or statements
from past literature reviews and a book which entitle "Managing Employee
Performance and Reward: Concepts, Practices, Strategies" and written by Shields
(2007). Besides, open-ended survey questionnaires were sent through email to 10
informants in Hotel XXX which located in Miri to gain further information in order
to accurately support and interpret the findings of this study. Furthermore,
Cronbach's Alpha was used to test the reliability of the pilot test. It was found that
the Cronbach's Alpha value for dependent variable and independent variables were
higher than 0.70. Meanwhile, it shows the reliability of the pilot test.
Other than that, descriptive statistics was used to analyze the respondents'
background. Independent T -test was used to identify the difference between genders
in employees' job performance. The Pearson Correlation Coefficient was used to
determine the linear relationship between selected compensation systems and
employees' job performance. In addition, Multiple Linear Regression was used to
determine the dominant component of the compensation that influences the
employees' job performance.
In chapter four, the data was analyzed and the findings were discussed. The
data was analyzed by using SPSS version 17 for window XP. The demographic
characteristics of respondents were discussed in the first part. Besides, Cronbach's
Alpha was used to test the reliability of actual test and it was found that Cronbach's
Alpha value for all variables were higher than 0.70, thus, it shown the reliability of
the actual test.
In addition, Independent T-test was used to test the significant difference
between genders in employees' job performance (Hypotheses 1). The result was
shown that there was no difference between male and female employees in term of
their job performance (p=0.819). Moreover, Pearson Correlation was used to
determine the relationship between compensation systems (base salary, performance­
80
based pay, recognition, and working condition) and employees' job performance. The
results found that four of the compensations systems were shown the significant
relationship with the employees' job performance (p-value= 0.000). Furthermore,
Multiple Regressions was used to identify the dominant components of compensation
system that affects employees' job performance. The result shown that base salary
was the dominant component of compensation system that gives the greater impacts
to the employees' job performance (tF0.488).
5.2 Recommendation
5.2.1 Recommendation for Organization
Nowadays, employees become an important asset for the organization, thus
the organization must prepare appropriate compensation systems which are able to
retain the current potential workers and also attract the new talented workers. Based
on the results in chapter four, it was found that base salary was the dominant
component of compensation system in affecting the employees' job performance.
Therefore, the organization is encouraged to emphasize more in this financial
compensation in order able to influence employees' job performance.
Besides, the result shows that the second highest contributing component of
compensation system was recognition. Most of the employees in XYZ Hotel were
indicated that recognition and appreciation by their employers or top management
able to motivate them in produce the desired performance. Therefore, the
organization should realize that not only the financial compensation able to influence
the employees' job performance but sometimes non-financial compensation will also
give a greater impact in improving employees' job performance. Actually non­
financial compensation give benefits for organization because it did not need to spend
a lot of money if compare with financial compensation but it might obtain the same
amount of return on investment with financial compensation. Hence, recognition can
be considered as an organizational strategy to improve the employees' performance.
81 pi
AiiiiW
In addition, this study also shows that perfonnance-based pay and working
conditions have moderate strong relationship with employees' job perfonnance. Thus,
organization should also encourage giving the appropriate perfonnance-based pay for
the employees based on their perfonnance or outcomes. Based on the previous study
and also the result of this study, comfortable working conditions was able to improve
employees' job perfonnance through reduces the level of stress in work. As a result,
organization should make sure the comfortable and supportive working condition is
often provided for the employees in order to increase their perfonnance.
5.2.2. Recommendation for Human Resources Practitioners
Based on this study, the researcher would like to provide some suggestion to
human resources practitioners to maintain or improve employees' job perfonnance in
an organization. Firstly, human resources practitioners should ensure that the
compensation system within an organization is designed fairly and accurately in order
to
gain the satisfaction and confidents from the employees towards the management
of the organization and more willing to contribute to the organization.
Besides, Human Resources Practitioners should be more objectives when
giving the salary or recognition for the employees. The compensations should be
given based on the skills, knowledge or perfonnance but do not based on the relatives
or friendship. The fair and free of bias's compensation system not only can motivate
the employees perfonn well, it also gain the royalty from employees. Indirectly, this
will decrease the rate of tum over within an organization.
Apart from that, Human Resources Practitioners are encouraged to have a
communication with employees regarding the issue of pay and the pay policy within
an organization. With the clear understanding of pay policy, the employees will more
understand the measurement of organization in tenn of pay distribution and this will
increase employees' satisfaction towards their compensation and also reduce the
feelings of unfair compensation among employees.
82
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--
..
5.2.3. Recommendation for Future Researchers
This study only examined the relationship between four components of
compensation system and employees' job performance. However, there were others
components of compensation might also influence employees' job performance such
as bonuses, allowances, job design, opportunities development and so on. Thus,
future researchers are suggested to investigate the relationship of others component of
compensation towards employees' job performance.
Besides, this study was only conducted in single hotel industry for the actual
test and the results also based on the related hotel. This result might not accurate or
able to represent the others hotel. Therefore, the future researchers are suggested to
conduct the study in more hotel industries so that the results can be more accurately
and convince the readers. Furthermore, future researchers are recommended to do the
study in different fields and discover the relationship between compensation system
and employees job performance. This helps to broader the knowledge of future
researcher related to this study.
In addition, this study was only conducted in private sector and there might
have the difference between private and public sector in term of implementation the
compensation systems. Therefore, the future researchers can conduct the study in the
government sectors or they can also compare the study in government sectors and
private sectors. This facilitates the future researchers to understand more regarding
the implementation of compensation system in private and public sectors that
influences employees' job performance.
Last but not least, future researchers are encouraged to conduct in-depth
interviews (face-to-face interview) in order to obtain the accurate and timely
information which related to the study. For this study, the survey questionnaire was
only used to collect the data due to the limitation of time and analyzed by the
researcher. However, there cannot show any actual reason that lead to the related
83
result and this might not convince the readers about the accuracy of results because
the feedback from the respondents were very limited due to the short and brief answer.
5.3 Limitations of Study
This research was only investigated two components of financial compensations
and non-financial compensations. There were many components including in two
types of compensations (financial and non-financial) and it was different in diverse
organization. However, the researcher was unable to do the investigation on the
others components due to limitation of time.
Besides, the scope of this study was only limited to a single organization in the
hotel industry and the results also gained from the employees who worked at this
organization. It leads to the result become general and may be incapable to convince
others because different organization implements different types of compensation
system and also different employees hold different perception towards the
measurement of compensation system.
5.4 Conclusion
In conclusion, this research has been achieved its objectives and shown that
there was a significant relationship between compensation systems and employees'
job performance. However, in this study, base salary ({J=0.488) is considered as the
most dominant component of compensations that affect employees' job performance
and have a strong relationship with employees' job performance (r=0.645, p=O.OOO).
The other three components of compensation (performance-based pay, recognition,
working condition) were shown the moderate strong relationship with employees' job
performance which "r" values were 0.432,0.556, and 0.471 whereas p-value for three
components was 0.000. It is hoped that the findings of the study able to facilitate the
organization in design the appropriate compensation system in motivate the
employees improve their performance as well as help the future researchers gaining
the related knowledge in related fields.
84 5.5 Summary
This chapter was included the summary of the prevIOUS chapters,
recommendations for organization, human resources practitioners and future
researchers, limitations related to this study, and conclusion of this study_
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90 RI
liEM,S:
APPENDIX (1) Sample of Open Ended Questionnaires Gender:________________________________________________________
Position! Length of working:_______________________________________
1. Do you think that male and female workers will perform different performance? (Please state
the reason.)
2. Do you think that base salary is the important compensation to motivate the employees in
order to perform well in their job? (Please state the reason)
3. How about the performance-based pay (merit pay, commission)? Do you think it will influence your behavior in performing your tasks or job? (Please state the reason). 4. Do you think that recognition (praise from boss, promotion, awards) given by boss can
motivate you perform well? (Please state the reason)
5. Do you think that working condition will influence your performance? (Please state the
reason)
6. Based on your opinion, please range the components of compensation that you think more
influence to your job performance from strong to weak (1-4)
Range of the components
· Component of compensation
• Base salary
I Performance-based pay
• Recognition
• Working condition
*Please states the reason why you think that the component is give greater influences and le,~s
influence to your job peiformance.
THANK YOU FOR YOUR COOPERATION
92
APPENDIX (2) Sample of Survey Questionnaires UNIVERSITY OF MALAYSIA SARA W AK FACULTY OF COGNITIVE SCIENCE AND HUMAN DEVELOPMENT Title of Research:
Relationship Between Compensation Systems and Job Performance
among Employees
QUESTIONNAIRE
Sir/Madam,
Thank you for becoming my respondents in this research. For my final year project, I am
conducting a survey on the relationships between compensation systems and Job Performance
among employees.
This questionnaire consists of three sections which are demography, employees' job
performance, and four types of compensation systems that influence employees' job
performance. Respondents are required to complete all the questions. Appreciated that all
respondents will answer honestly. All the information given by the respondents will remain
strictly confidential and will be used for the purpose of this study only.
Thank you for your corporation and it is highly appreciated.
Yours faithfully,
Hong Hua Tima
(0168762998)
93
Version BI
Section A: Demography
This section is aimed to obtain information related to your background. Please tick ( .Jj
the most appropriate answer to each question.
1. Gender:
Male
Female
2. Age (year) : 20 and below
•
21-30
31-40
41-50
51 and above
3. Educational level:
SPM
STPM
Diploma
Degree and higher qualification
4. Length of service:
Less than a year
1-3 years
3-5years
More than 5 years
94 .44
VersionBM
Bahagian A: Latar 8eJakang
Bahagian ini bertujuan untuk mendapatkan maklumat yang berkaitan dengan latar
belakang anda. Sila tandakan (.Jj pada j awapan yang paling sesuai untuk setiap soalan.
1. Jantina:
Lelaki
Perempuan
2. Umur (tahun) :
20 dan kebawah
21-30
i
I
31-40
41-50
51 dan keatas
3. Tahap Pendidikan:
I
SPM
STPM
Diploma
I
i
Ijazah smjana muda dan ke atas
4. Tempoh perkhidmatan: Kurang daripada setahun
1-3 tahun
3-5 tahun
Lebih daripada 5 tahun
i
95 -
- - - - _....... ---------------
Version BI
Section B: Employees' Job Performance
This section contains of 10 statements which are related to the employees' job
performance based on the influences of compensations. Kindly tick (..Jj in each of the
numbered boxes which is clearly indicated your agreement with the following statements.
The scale of 1 to 4 represents different state of agreement as shown in below:
Strongly
Agree
1
Agree
Disagree
2
3
Statements
No
Strongly
Disagree
4
1
1.
My performance is fairly assessed by the employer.
2.
. I am clear about the target performance which set by
2 I 3
4
organizations.
3.
I always achieve my performance targets.
4.
There is the strong links between my earnings and my
I
individual's performance.
I received compensation which is commensurate with
5.
my performance.
6.
I
Financial compensation is more important to influences
my performance rather than non-financial compensation.
7.
Increment of base salary will improve my performance.
8.
Pay increment is based on my performance.
9.
I received appropriate recognition for my performance.
I
i
I
i
10.
I
Conducive working conditions motivate me perform
well.
96 ~----
Version BM
Bahagian B: Prestasi Kerja Pekerja
Bahagian ini mengandungi 10 pernayataan yang berkaitan dengan prestasi keIja pekeIja
berdasarkan pengaruh pampasan. Sila tandakan
(..JJ pada peta yang disediakan di bawah
yang jelas wewakili jawapan anda. Skala 1 hingga 4 mewakili jawapan yang berbeza
seperti ditunjukkan di bawah:
Sangat
Setuju
1
I
Setuju
Tidak Setuju
2
3
1
Pernyataan
Bil
Sangat
Tidak Setuju
4
L
Prestasi saya dinilai oleh majikan dengan adil.
2.
Saya jelas tentang target prestasi yang ditetapkan oleh
2
orgamsasl.
3.
Saya selalu mencapai sasaran prestasi saya.
4.
Pendapatan saya mempunyai perkaitan dengan prestasi
individu saya.
I
5.
Saya menerima pampasan yang setimpal dengan prestasi
saya.
6.
Pampasan kewangan lebih mempengaruhi prestasi saya
berbanding dengan pampas an bukan kewangan.
7.
Kenaikan gaji pokok akan meningkatkan prestasi saya.
8.
Peningkatan gaji adalah berdasarkan prestasi saya.
9.
Saya menerima pengiktirafan yang sesuai untuk prestasi
saya.
10.
Keadaan kerja yang selesa memotivasikan saya supaya
menyumbangkan prestasi yang baik.
I
97
3
4
--....
.........
-------
Version BI
Section C: Types of compensation systems that influences employees' job
performance
This section contains of 20 statements which are related to the types of compensation
systems that consider will be influenced employees' job performance. Kindly tick (.JJ in
each ofthe numbered boxes which is clearly indicated your agreement with the following
statements. The scale of 1 to 4 represents different state of agreement as shown in below:
-_...._.
No.
Statements
1
3
2
(i) Base Salary
Base salary is the main reward to motivate my work
1.
performance.
2.
My annual salary increment is adequate.
3.
I felt satisfy with my current base salary.
4.
I feel I am being fairly paid for what I contributed to this
organization.
5.
Even though I received low salary from my employer, I
would still try to do my best at my job.
(ii) Performance- Based Pay
The amount of pay that I received able to increase my
1.
motivation to perform well.
2.
The amount of pay is given based on performance that I
contributed.
I
98 4
-
- _....... _-------------------._­
Version BM
Bahagian C: Jenis sistem pampasan yang mempengaruhi prestasi kerja pekerja
Bahagian ini mengandungi 20 pemyataan yang berkaitan denganjenis sistem pampasan
yang mempertimbangkan akan menjejaskan prestasi keIja pekeIja. Sila tandakan
(..JJ pada
peta yang disediakan di bawah yang jelas wewakili jawapan anda. Skala I hingga 4
mewakili jawapan yang berbeza seperti ditunjukkan di bawah:
Bil.
Pernyataan
1
I
3
2
(i) Gaji Pokok
I
Gaji pokok adalah satu pampasan untuk memotivasikan
l.
prestasi saya.
2.
Kenaikan gaji tahunan saya adalah selari.
3.
Saya merasa puas hati dengan gaji saya sekarang.
4.
Saya rasa saya mendapat gaji yang sepatutnya atas apa
yang telah saya sumbangkan untuk syarikat ini .
5.
I
. Walaupun saya menerima gaji yang rendah daripada
I
majikan saya, saya masih akan cuba untuk melakukan
yang terbaik dalam pekerjaan saya .
(ii) Gaji Berasaskan Prestasi
Gaji berasaskan prestasi yang saya terima dapat
1.
meningkatkan motivasi saya untuk menyumbangkan
I
prestasi yang baik.
2.
Gaji ini diberi berdasarkan prestasi yang saya
menyumbang.
I
99 I
4
Version BI
3.
The amount of pay that I received is equitable with my
competencies towards my jobs.
4.
I feel that my performance is reflective of my abilities.
5.
I will reduce my efforts if I received the inequitable pay.
(iii) Recognition
Outstanding performance is appropriately recognized by
1.
my employer.
2.
I receive praise from my employer or others when I
achieve the targets of performance.
3.
My employer allows us to participate in performing
various tasks.
4.
I strive for recognition in doing my work.
5.
I feel frustrated if my contributions does not recognize
by my employer.
(iv) Working Conditions
1.
2.
I am very satisfied with my current working condition.
Sufficient facilities and equipment increase my
efficiency in performing the tasks.
3.
A harmonious working atmosphere will increase my
performance.
4.
Safety and healthy working environment reduce my
stress in order to be able to perform outstanding
performance.
5.
Supervisors and peers support increase my performance.
*THANK YOU FOR YOUR CO-OPERA TION* 100 ·...
Version BM
­
..........
3.
Gaji yang saya terima adalah setimpal dengan
I
kompetensi pekeIjaan saya .
4.
• Saya merasa bahawa pre stasi saya mencerminkan
I kemampuan saya.
I
5.
I
Saya akan mengurangkan usaha saya sekiranya
menerima gaji yang tidak adil.
(iii) Pengiktirafan
I
• Prestasi yang terbaik diiktiraf oleh majikan saya dengan
1.
tepat
2.
Saya menerima puj ian dari maj ikan saya atau orang lain
ketika saya mencapai sasaran prestasi.
I
3.
Majikan saya memberi peluang kepada kita untuk
I
menyertai dan melaksanakan pelbagai tugas.
4.
Saya berusaha untuk mendapatkan pengiktirafan dalam
melaksanakan keIja.
5.
Saya merasa kecewa jika sumbangan saya tidak diiktiraf
oleh majikan saya.
I
(iv) Keadaan Kerja
1.
2.
Saya merasa puas hati terhadap keadaan keIja sekarang.
I
Kemudahan yang mencukupi dapat meningkatkan
kecekapan saya dalam melaksanakan tugas.
3.
I
saya.
4.
Persekitaran keIja yang selamat dan sihat dapat
mengurangkan tekanan diri saya agar mampu
menyumbangkan prestasi yang terbaik.
5.
I
Sokongan penyelia dan rakan-rakan dapat meningkatkan
prestasi saya.
I
*TERIMA KASIH ATAS KERJASAMA ANDA * 101 I
I
Suasana kerja yang harmoni akan meningkatkan prestasi
Falmlti Sains Kognitif dan Pembangunan Manusia
;ulty of Cognitive Sciences and Human Development
UNIVERSITI MALAYSIA
SARAWAK
94300 Kota Samarahan
UNlMASITNC(AA)-05.03/04-2I101 lLD.5 ( 90)
Sarawak Malaysia
20 Januari 2011
Tel + 60 82 681000
Talent Development Manager
Riverside Majestic Hotel Kuching
Jalan Tunku Abdul Rahman
93756 Kuching
Sarawak
(Attn: Cik Susan Kon)
Tel: 082-247777
Fax: 082-425858
Fax + 60 82 581567
www.unimas.my
Tuan/Puan,
Permobonan Menjalankan Kajianl Soal Selidik Bagi Projek Tahun Akhir
SegaJa hormatnya perkara di atas adalah dirujuk.
Dengan ini disahkan bahawa pelajar Hong Hua Tima (21065) adalah pelajar Program
Pembangunan Sumber Manusia Fakulti Sains Kognltif dan Pembangunan Manusia,
Universiti Malaysia Sarawak (UNlMAS). Beliau sedang menjalankan kajian untuk
menyiapkan Projek Tahun Akhir bagi memenuhi syarat bergraduat program di atas.
Maklumat lanjut tentang pelajar dan kajian adalah seperti berikut:
. k K" IT' "Relationsbip between Compensation System and Job
TaJu
aJlan eSls:
Pensyarah
No. Telefon
Pensyarah
Emel
No. Telefon
Pelajar
Performance among Employees"
: En Abg Ekhsan Abg Othman
: 082-581568
: [email protected]
: 016-8762998
Sehubungan itu,' sukacita kiranya pihak tuan/puan dapat membertkan kerjasama kepada
pelajar berkenaan untuk mendapatkan maklumat yang diperlukan. Segala maklumat yang
diperolehi akan hanya digunakan untuk tujuan akademik semata-mata dan dijamin akan
kerahsiaannya.
Di atas kerjasama yang diberikan oleh pihak tuan/puan, kami dahului dengan ucapan
ribuan terima kasih.
Sekian.
s.k - Penolong Pendaftar, FSKPM
~
A
-Status