The relationship between performance-related pay and employee motivation at Affiliated Computer Services
(ACS), A Xerox Company in Montego Bay, Jamaica
Submitted by:
Sherie A. Brooks
069022403
Subject Area: OB, ER & HRM
Supervisor: Dr. Deborah Price
Submitted: November 23, 2012
Dissertation submitted to the University of Leicester in partial fulfilment of the
requirements of the degree of Master of Business Administration
CONFIDENTIAL
TABLE OF CONTENTS
Acknowledgements....................................................................................................................... 3
Executive Summary....................................................................................................................... 4
Chapter 1: Introduction
1.1 Background................................................................................................................ 5
1.2 Compensation as Strategy.......................................................................................... 6
1.3 Performance Related Pay & Motivation.....................................................................7
1.4 The ACS Link.............................................................................................................7
1.5 The Approach............................................................................................................. 8
Chapter 2: Literature Review
2.0 The Role of PRP......................................................................................................... 10
2.1 PRP Key Success Factors............................................................................................11
2.2 Drawbacks of PRP...................................................................................................... 14
2.3 The Merits of PRP...................................................................................................... 16
2.4 Theories of Motivation............................................................................................... 19
2.4.1 Content Theories............................................................................................... 19
2.4.2 Process Theories............................................................................................... 20
2.4.3 The Final Analysis........................................................................................... 20
Chapter 3: Data and Methods
3.1 Research Method....................................................................................................... 22
3.2 Sample Population..................................................................................................... 22
3.3 Research Instrument.................................................................................................. 22
3.4 Questionnaire Design................................................................................................. 23
3.5 Pilot Test.................................................................................................................... 24
3.6 Ethical Considerations............................................................................................... 25
Chapter 4: Analysis and Results
4.1 Profile of Respondents............................................................................................... 26
4.2 Results for Research Question 1................................................................................ 29
4.3 Results for Research Question 2.................................................................................32
4.4 Results for Research Question 3................................................................................ 40
Chapter 5: Discussion and Conclusions
5.1 Discussion.................................................................................................................. 47
5.2 Conclusions................................................................................................................ 52
5.3 Theoretical Implications............................................................................................. 53
5.4 Recommendations...................................................................................................... 53
5.5 Limitations................................................................................................................. 54
5.6 Reflections................................................................................................................. 54
References..................................................................................................................................... 56
Appendices:
Appendix 1 - Dissertation Proposal..........................................................................
61
Appendix II - Participant Information Sheet.............................................................. 71
Appendix III - Questionnaire...................................................................................
72
2
ACKNOWLEDGEMENTS
I would like to thank several persons who have provided invaluable support that aided in the completion of
this paper. Firstly, to my dear friends Nicholas and Alphanso who have always believed in me and never
stopped encouraging me to try and accomplish what I had started. They have been a constant source of
strength and support from the outset and have always had my best interests at heart. Also to my closest friend
Tracey-Ann who made regular checks on my progress, kept me on a timetable and made sure to encourage
me to follow the guidelines given, I am forever grateful.
To my dissertation tutor, Dr. Deborah Price, I have benefitted tremendously from your feedback, even when I
dreaded the fact that changes might be recommended and I would have to do more work, feedback was
always insightful, thorough and of course added more substance to this paper.
To my big brother who has always been my sounding board, to whom I can turn with every question for
which I had no answer and who proof read whatever I needed him to review in the midst of all his
professional and family obligations - you have always held a special place in my heart and my life and
continue to do so as you have been the father figure I wish I always had in my life.
To my mother, Mrs. G. Brooks who has always been my biggest and loudest cheerleader, though not much of
a talker; who has from day one driven home the fact that education was not a choice but an imperative and
who has been my shoulder to lean on when the going got tough, I am eternally in your debt.
I appreciate and thank you all wholeheartedly.
3
EXECUTIVE SUMMARY
Performance related pay has been a topical issue within organizations for many years, perhaps as long as
businesses have had to compete for limited markets. It has become more of a hot topic in Jamaica recently, as
the Minister of Education proposes performance pay for teachers (McPherson, 2012) sparking much support
as well as controversy (Douglas, 2010) as the country looks at alternatives to traditional modes of operation
to compete globally as well as the prevalence of global companies choosing to set up operations here. With
recent pronouncements about implementing performance pay in the public sector, it seemed timely to explore
its current existence, albeit not in the public sector at this time, as very little is known about its prevalence in
the Jamaican context. This paper will explore the relationship between the practice of performance related
pay and its impact on the levels of employee motivation within ACS Jamaica Ltd., (ACS), a Xerox Company
in Montego Bay, Jamaica.
The literature review looks at the various forms that performance related pay can take to give a
comprehensive appreciation of its existence, prerequisites, challenges and benefits. The review also briefly
looks at the challenges of evaluating performance related pay (PRP) plans and gives an overview of several
theories of motivation to provide some background for the structure of the research instrument. A structured
questionnaire comprising 30 questions was then used to gather data from respondents. It was revealed that a
modest relationship exists between PRP and the level of motivation of employees at ACS which has
impacted how much effort employees are willing to put out in the completion of job functions. Is was also
revealed that this level of motivation has been impacted positively by the fact that the management had done
an admirable job of including employees in the development process and making sure targets and goals are
communicated clearly, impacting morale positively. From the study, it is also apparent that the performance
related pay review and feedback process has also impacted the views and motivation levels in a negative way
in addition to the fact that the pay-performance link is not as clear as it should be.
Further, the paper provides the practical limitations as well as suggesting possible areas of improvements and
actions to be taken by management to address the challenges revealed by the study in this under-researched
field of performance related pay within Jamaican businesses.
4
CHAPTER 1
INTRODUCTION
1.1 Background
As businesses grow and change in order to compete within today’s global environment, many firms have had
to assess the way they operate in order to survive. Production, marketing and human resource strategies have
had to be revamped, re-defined and re-engineered in order to keep abreast of the constantly changing, volatile
environment characterizing the world of trade. Today’s firm must operate so that all its units function
flawlessly based on inter-dependencies and synergies among and within all its functional areas. Even though
there have been question marks about the relative importance of the human resource management (HRM)
function within organizations, (Massey, 1994), there are inherent risks if firms do not effectively manage the
functions that fall under the portfolio. The critical functions of HRM, as seen in figure 1 from (Massey, 1994)
can make the difference between success and failure in responding to continuous changes in the competitive
environment in terms of productivity, quality, efficiency and costs. The organization must therefore equip
itself with the highest quality human resource to have that advantage in responding to critical changes. Its
HRM practices therefore perform the absolutely critical functions of attracting, training and retaining these
assets.
Figure 1 – A Strategic Approach to Human Resource Management
5
1.2 Compensation as Strategy
In recent times, new perspectives have been formed as organizations recognize that their financial
performance depends on the contribution of their employees, (Anon, 2004), and this has led to incentive
schemes, among other things, becoming intertwined with overall business strategy and objectives. It is
crucial that staffing, financial incentives and training systems are enmeshed with the strategic aims of the
firm as when utilized together, (Anon, 2004), these practices can set one company apart from the other.
Compensation, particularly, relating pay to performance, has therefore become a critical part of overall
strategic vision for many organizations, (Appelbaum and Shapiro, 1991) as a company’s human resource can
potentially create for it competitive advantage if the firm can carve out a reputation as being preferred
employer valuing high performance and effectively rewarding same, (Konrad and Deckop, 2001). The
importance of this resonates from 473 respondents to a SHRM Practices survey in 2000 (Konrad and
Deckop, 2001), for whom career opportunities, benefits offered elsewhere and compensation are the most
common reasons for employees leaving a company. Throughout literature, the compensation systems that
encompass any aspect of performance-based pay have been termed performance based or performancerelated (Belfield and Marsden, 2003); throughout this paper, the term performance-related pay or PRP will be
used to denote all instances where performance is linked to pay.
The development of alternative compensation systems has been linked to the existence of foreign ownership
of businesses and imported management practices,( Barth et. al., 2003) as suggested by studies done of
various companies, as multinationals have become important players in the global economy and increasingly
diverse cultures are impacting their HRM practices, (Konrad and Deckop, 2001). Globalization has meant the
free movement of people across the globe and HRM practices geared towards the management of people
across national boundaries, (Anon, 2004). It has also resulted in companies in the USA and other countries
now moving towards pay systems, such as competency-based and variable pay plans, that are flexible and a
better strategic fit for a complex and changing business environment, (Konrad and Deckop, 2001). Variable
pay plans seem to be the most significant trend that has developed recently, (Konrad and Deckop, 2001) and
include bonuses, profit sharing, gain sharing where salary increments are awarded based on individual or
company performance (Lewis, 1991) that are the result of objective or quantitative assessment. So pervasive
is this trend of PRP that it is now considered a standard element in a firm’s competitiveness, (Belfield and
Marsden, 2003) and the explanations behind its growth range from the need to increase employee motivation
and effort (Brough, 1994), to aligning corporate and individual goals.
6
1.3 Performance Related Pay and Motivation
While there is evidence from traditional incentive schemes that suggests that money is an extremely powerful
motivator, (Brough, 1994) and so therefore it makes sense to link pay to performance, there are other writers
who have provided their own evidence to disprove the benefits of PRP though others believed that these pay
systems have been used as tools to motivate high performance in line with motivation theories, (Brody et. al.,
2001) as employees realize the direct relationship between pay and performance. Contradicting Brody,
(Appelbaum and Shapiro, 1991) suggested that basic job satisfaction, a challenging job or recognition by
one’s peers are stronger motivators for higher performance as incentives only motivate employees until the
reward is given, (Hanley and Nguyen, 2005). Complicating the PRP debate are other views that in order to
motivate, incentive amounts must be more than ten percent of base pay (Brough, 1994) and be implemented
under certain conditions only, or that its foundation within the organization must be based on fairness and
equity (Milkovich et. al, 1991) among other things. So much of the research gives conflicting reviews about
PRP that the only consensus appears to be the view that in theory, PRP is a good concept as few would argue
against those who work harder being rewarded for doing so and studies have found that the objective behind
it adoption within organizations is the goal of increasing motivation and rewarding good performance
(Randle, 1997). However, the question of its usefulness and impact has at best been problematic and it has
proven very difficult to determine whether it has achieved the purposes for which it was introduced (Randle,
1997); additionally, so prevalent are arguments both in support of and regaling the disadvantages of PRP and
so lacking are the objective evaluations of its operation to establish if declared objectives are being met
(Lewis, 1991) that they warrant further research about its usefulness and universal applicability.
1.4 ACS Link
Jamaica has long been very attractive to overseas investors based on its proximity to North America, robust
telecommunication system, strong infrastructure as well as incentives for multinationals to invest here. To
capitalize on the opportunities to be had from outside investment the country has created ‘free trade zones’
under the Jamaica Export Free Zones Act of 1986 (www.miic.gov.jm). Initially, these free zones encouraged
businesses involved in textile manufacturing to set up operations mainly in Kingston and Montego Bay.
Recently however, these overseas companies have evolved into Call Centres, Data Processing, Finance and
Accounting, Procurement and even Human Resource Management companies, signalling the growth of the
BPO (Business Process Outsourcing) in Jamaica. ACS has grown through a series of acquisitions since
1988, into one of the largest employers on the island with over four thousand (4000) employees in three
7
different locations, undertaking all of the outsourced functions listed before on behalf of both local and
foreign companies. The company operates in a highly competitive and controversial environment dealing
with confidential matters for its clients across more than 100 countries, (www.acs-inc.com). Its
compensation practices are a part of its competitive strategy and are built on the principle of paying
employees at all levels of the organization based on performance. Further to this, the whole concept of PRP
has been much debated in Jamaica in recent years and these two factors combine to make this company a
prime target for a study on PRP.
1.5 The Approach
Based on the premise from literature that some link appears to exist, though this link seems very elusive,
between the practice of PRP and employee motivation, this research paper seeks to ascertain whether or not
this exists at ACS, Jamaica location and if so, to what extent and what type of relationship this is, whether
positive or negative. Since to the best of the researcher’s knowledge, no study of this nature has been done
locally, the goal is to add to the body of knowledge surrounding this practice, albeit its application may be
limited to similar companies carrying out similar functions. This empirical study walks through what is
known about why companies choose to employ compensation practices that are based on performance,
giving examples of those that have both successfully and unsuccessfully operated PRP plans. To set out the
parameters of this study, the research question and sub-questions have been developed as follows:
Research question:
Is there a relationship between performance-related pay and the level of employee motivation at ACS
Jamaica Ltd?
Sub-questions:
1.
Are employees a part of the process of developing PRP targets?
2. Is there review or evaluation of compensation plans? Are there processes in place to facilitate this
evaluation or review? Are employees familiar with these processes?
3.
To what extent does paying for performance affect the levels of employee motivation within the
organization?
Based on these questions, a review of the existing literature shows in greater detail the plethora of views
surrounding PRP which makes it difficult to form a concrete opinion on the subject and therefore lends itself
8
to more studies; the paper breaks down the arguments in support of and those against the use of PRP across
organizations of various kinds and in different locations. Much of the literature points to the fact that PRP is
now an integral part of many labour market employment relationships but evidence about its effectiveness
are inconclusive.
The questionnaire developed is based on the main elements coming out of the literature review in order to
enable the researcher to draw informed conclusions at the end of the study. A quantitative method was
chosen and these figures from the study are presented in the following chapters with detailed analyses of
what respondents have indicated are their views on the questions asked. The researcher attempts to critically
analyze the findings so that an answer to the sub-questions, leading to a conclusion to the main question, can
be formulated. The paper concludes with discussion of the findings, conclusions, recommendations and an
overview of the entire research process.
9
CHAPTER 2
LITERATURE REVIEW & THEORY
2.0 Role of PRP
This literature review focuses on studies that have been done on this topic over the last twenty years. Much
opinion abounds about PRP with (Wright and Brading, 1992), indicating that there is strong economic case
and that is logical that pay should be linked to those things associated with the success of the organization.
In fact, the very life of the organization may rest upon the company being prepared to link employee pay to
its success, (Wright and Brading, 1992). For many organizations to excel, relating individual performance to
pay is and always will be a sound principle, (Harrington, 1998), as winning organizations need to focus on
and reward individual excellence for its own survival. (Harrington, 1998:2) opined that “there is nothing
wrong with the performance planning, evaluation, and reward concept”, problems arise when there is
ineffective implementation of the concept, as in theory, most persons believe in the PRP philosophy,
(Appelbaum and Shapiro, 1991), but the challenge is in finding the right motivational forces to aid in
accomplishing corporate goals. So critical is finding these forces that (Thompson and Strickland, 2001) felt
that in garnering support and commitment to successfully executing its strategic goals, a company’s most
valuable tool is a properly designed compensation system. Additionally, ambitious employees who love
challenges and thrive in a performance-driven environment are critical to the success of a high performing
organization, (Thompson and Strickland, 2001) and the principal-agent problems in many organizations is
effectively addressed by PRP as a CEO with no personal stake in the success of the organization has no
incentive to maximize shareholder value (Mishra and Nielsen, 1999) and improve the firm’s bottom line
performance (Traichal et. al., 1999).
While PRP systems have now become very popular in their application to the point where few persons
question their validity, (Appelbaum & Shapiro, 1991), this concept is still a relatively new phenomenon but
there has been much growth and interest since the 1980s and this interest is likely to be maintained, (Lewis,
1991) drawing reference to a survey of 450 executives in 11 countries done in 1989 who indicated that PRP
was the most important HR issue to be addressed in their organization in years to come. Further to this,
Lewis explained, is that in order to motivate key employees, many organization have introduced PRP or
amended their current systems in response to changing objectives, citing in particular the Civil Service, local
governments among others, in an attempt to drive home the necessity of holding both managers and other
workers accountable for individual job performance against predetermined criteria. This has become more
10
critical, according to (Lewis, 1991), since the Financial Services and Building Societies Acts of 1986 in the
UK that have led to a highly competitive trading climate which has translated into the need for organizations
to change their internal culture. Complementing these factors is the fact that if employers are asked to name
their most vital resource they would undoubtedly reply that it is their staff (Anon, 2003) and so it is logical
then that attracting and retaining talented employees is a big issue for organizations and they must therefore
discover the types of rewards that will accomplish these twin tasks and inspire loyalty as companies are now
more aware of the exorbitant costs of turnover.
2.1 PRP Key Success Factors
The term performance related pay refers to a variety of compensation systems ranging from merit plans to
variable pay plans which are further broken out into individual and group incentive plans, (Milkovich et.al.,
1991); normally these tie a significant percentage of pay to financial or productivity outcomes of the whole
organization, typically profit-sharing and gain sharing, (Daft, 2006), for which there is a flexible budget for
performance (Appelbaum & Shapiro, 1991). The writers were of the view that group-incentive plans can
stimulate more effectively than merit-pay systems the all important factor of peer recognition. The
differences in these plans are not always clear cut and many appear integrated with each other, (Appelbaum
and Shapiro, 1991) as they are sometimes inextricably intertwined so it is often difficult to clearly
differentiate between them within or across organizations; this raises the question then of which plan should
the organization choose, see figure 2 below for options available to the firm, (Milkovich et.al., 1991).
The objectives, the culture and the environment in which the firm operates, (Appelbaum and Shapiro, 1991)
must all be taken into consideration when deciding on compensation policies. There must be alignment of
individual and group objectives with those of the firm and be supportive of the culture of the company and
the kinds of behaviours required in addition to being relevant and applicable to the micro and
macroeconomic industry forces impacting the firm. Strategic compensation plans, of which PRPs are
oftentimes a part, should complement rather than replace the more traditional forms of compensation as
though they may be different, neither is categorically superior to the other, (Hurwich, 1986) and they work
most effectively when there is a gap between current and future pay practices that the company sees as a
possible avenue for solution. The gains to be had from a properly applied strategic compensation technique,
Hurwich continued, include the ability to more clearly identify business needs which will improve the design
of these plans and overall business performance.
11
Figure 2 – PRP Options Open to Organizations
LEVEL OF PERFORMANCE
Individual
Group
CONTRIBUTION Added to base (a)
TO BASE
Merit plans
SALARY
(b)
Not added
Piece rates
to base
Commissions
Bonuses
(d)
Small group
incentives
(c)
Profit sharing
Gainsharing
Bonuses
Monetary and non-monetary incentives are critical to getting employees sustained commitment, (Thompson
and Strickland, 2001), so rewards have to be creatively used and tied to the achievement of performance
goals for them to be effective as decisions on salary, reward and recognition are potent commitment
generating devices, (Thompson and Strickland, 2001). Critical to the success of PRP plans, is the
performance appraisal process, (Milkovich et.al., 1991), and the development of strategy-driven performance
targets (Thompson and Strickland, 2001). Significant in determining level of individual performance and the
performance of the firm as a whole is the manner in which workers respond to the compensation practices of
the organization, (Belfield and Marsden, 2003) and the performance appraisal and goal-setting functions are
big parts in this response. (Milkovich et.al., 1991) indicated that information on performance influences the
level of motivation in several ways and the effect of PRP is likely to vary across individuals based on several
personal factors. Although, academics differ on those things that motivate, perceived unfairness in the reward
system can have negative effects on morale; these differing views come about as a result of conflicting views
on the nature and determinants of motivation which are discussed later and the challenges of measuring
individual performance, (Marsden & Richardson, 1992), in response to which (Harrington, 1998) has laid out
a list of key factors he feels are critical in making the process of evaluation of individual performance
effective, some of which are listed below:
•
The right things, factors critical to the organization’s success, are measured
•
Performance standards are agreed upon by the employee and the manager
•
Ongoing measurement and feedback gives information to employees and management
12
Added to these are the critical factors of ensuring that plans are not restricted only to management, the payout
should be major, they are administered with fairness and incentives are tightly linked to those performance
goals laid out in the plans (Thompson and Strickland, 2001). The writers also went to on to say that outcomes
that the individual can personally affect are the ones to be included in PRP plans and the time of review and
reward of payment must be short in order not to breed discontent and so employees can identify with cause
and effect of the performance/pay relationship.
As stated by (Thompson and Strickland, 2001) prior, the success of any PRP plan depends on employees
perceiving a link between effort they exert, expected level of performance and a further link of this
performance to their rewards (Appelbaum & Shapiro, 1991) and these must all be clearly established and
communicated for legitimacy and trust between parties. This is necessary as it sends a signal to employees
that their contribution is important and also lays down expectations and improves communication as both
parties must be prepared to listen and take feedback so that the required behaviours can be reinforced.
(Appelbaum & Shapiro, 1991) cited Lawler as postulating that if pay is important to employees and tied to
performance in credible and direct ways, it can be an effective motivator in addition to the fact that an
employee’s display of ownership behaviours depends on his involvement in the decision-making process,
line of sight and PRP which all influence whether or not he is fully engaged on the job, (Smith and Rupp,
2003). The writers also found, as did (Milkovich et.al., 1991) that the performance appraisal process is a
critical element in this and should focus on recognizing achievement, staff development and motivation as it
was originally intended to do. The assumption here is that managers will establish clear performance
standards and goals, (Tulgan, 2001) and that ongoing evaluation, measuring and monitoring takes place
(Lewis, 1991) in order not to make the novelty of PRP just another fad.
(Tulgan, 2001) cautions however, that the evaluation exercise is normally very subjective and this is
typically, debatably, the only fair and accurate way to evaluate performance; further, the writer indicated the
process is time consuming and critically, rewards have to be tied to functions that the employee directly
controls. There is support for the view that ongoing feedback, the process of monitoring and evaluation are
critical as employees want to know where they are at, want to be evaluated and know what the rules are and
how they measure up, (Harrington, 1998) and also how they will be rewarded when they exceed performance
expectations.
13
2.2 The Drawbacks of PRP
PRP is where an individual or the company’s performance is the basis upon increases in salary, bonuses and
similar incentives are awarded. This assumes then, that in PRP schemes, any such increases are driven by
systematic performance appraisal, (Lewis, 1991) and that there is perception by employees of fairness in
remuneration policies. There is the additional assumption that the introduction of this type of compensation is
a well thought out strategy that forms a part of cohesive personnel policies, (Lewis, 1991), but empirical
evidence would be needed to make this no longer a moot factor. These assumptions have the ability to
withdraw legitimate support from concept of PRP especially in the light of the views from the human
relations school, (Harrington, 1998:7), that “money is not a motivator.” While the views on PRP diverge,
according to (Harrington, 1998) money definitely can de-motivate and therefore it warrants action from
managers to manage employee performance and pay.
Lewis (1991) advanced the view that most managers would be happy to reward those employees with high
levels of performance who are helping in the achievement of the objectives of the organization; however, it is
not possible to do this without also creating the impression that a less effective employee is being punished.
He also indicated, in making reference to Barclays Bank that PRP plans may also have the effect of no longer
motivating an employee if she is assessed as being at the top of her scale during a performance appraisal
process. Lewis (1991) continued his arguments on the possible de-motivating effects when he postulated that
some types of PRP make use of a “bucket” from which all monies are paid. His view is that when there is a
large number of high performers, there is the potential that some employees may not benefit. Allegations of
unfairness with subsequent drops in levels of motivation would ensue. While his argument seems plausible, it
lacks any empirical evidence on whether this is a real issue or to what extent it is an issue, although
Appelbaum and Shapiro (1991) did corroborate this point indicating that one disadvantage of these plans is
budget limitations that make it impossible to reward all those employees who deserve these rewards. In fact,
(Marsden and Richardson, 1992) seemed to suggest inherent perceptions of unfairness about PRP and
suggested that if it is to succeed in making employees more motivated, then the amount of money involved
would need to be increased to overcome this perception or an organization runs the risk of it becoming
counter-productive, an issue also alluded to by (Schmidt et. al., 2011) in reference performance-oriented
payouts in German public services, though this was not corroborated.
The introduction of individual PRP, it has been argued by (Lewis ,1991) is contrary to the concept of work
teams and he suggests that managers include objectives to be measured that are based on teamwork as they
14
can violate the cohesiveness of work systems leading to conflict and opposition (Appelbaum & Shapiro,
1991). Additionally, when individual PRP plans are implemented, employees tend not to focus on quality but
rather on quantity and focus narrowly on a task (Appelbaum & Shapiro, 1991) while (Belfield and Marsden,
2003) and (Lagace, 2003) conceded that measuring an individual’s contribution to overall organizational
performance is a often difficult task for managers who will not be able to reward performance running the
risk of overpaying workers or workers withholding effort when they are unsure of being paid for it. With
specific reference to increases in salaries versus bonuses, which is the main feature of the most common
merit pay plans, which are done as a result of an appraisal process, (Appelbaum and Shapiro, 1991) indicate
that managers run the risk of PRP plans not truly being linked to performance and pay reflecting changes in
market rates over time for a particular position, which masks the intended performance/reward link.
The double disadvantage of possible personal bias within the appraisal process and secrecy of pay which may
translate into perceptions of inequity, are also factors which (Appelbaum and Shapiro, 1991) believed are
likely to make the performance/reward relationship very cloudy. Like (Lewis, 1991), (Appelbaum and
Shapiro, 1991) suggest building compensation plans around both individual and group incentive plans which
are designed to promote co-operation among employees and where individual performance is difficult to
measure. These drawbacks of PRP would be addressed as group plans are most times tied to profits or
productivity or both which create that missing link between performance and pay (Appelbaum and Shapiro,
1991), although they made sure to point out that with the use of the gain-sharing type of group plan, there is
less direct connection between the two variables of pay and performance. The allure of PRP is employees’
need of equity to which this link of pay and performance is critical which may also be its weakness (Brough,
1994) as performance is based on evaluation which is a subjective exercise, also supported by (Tulgan, 2001)
above. Employees may view equity and fairness in terms of whether their performance can adequately be
mapped to their reward, (Belfield and Marsden, 2003) and subsequently disincentive effects may follow if
this does not occur. Brough believed there is much to be said about the simplicity of the principle of PRP but
pointed out inherent problems in its operations.
The final nail in PRP’s coffin seems to come from Beer (Lagace, 2003), who puts forth the views that many
managers believe PRP will motivate, attract people and that the benefits of meeting performance standards
will outweigh the costs. Additionally, employees generally want pay-for-performance, thinking it is an
opportunity to make their current pay system more equitable as they can outperform and assume they will
benefit by getting higher pay. Beer (Lagace, 2003), however dismissed these views in referencing a study on
the implementation of PRP done at Hewlett Packard in the early 1990s. While the initial impact of the
15
implementation was good, over time many weaknesses were evident; factors ranging from employees
complaining they were being assessed for work over which they had no control to the lack of mobility within
teams leading to no organizational learning were the results of PRP according to Beer. Added to this was the
fact that managers were faced with the hassle of constantly reviewing plans and questioned whether or not it
was sustainable over time, (Lagace, 2003). According to Beer, (Lagace, 2003:3) the way forward, was not to
treat PRP as a “carrot” but to ensure both management and employees fully understand its implications and
that it be part of a wider strategic plan of “fairness and justice within the organization.” The case of PRP then
appears to be concluded as in yet another example, several issues with PRP presented themselves in studies
carried out in three entities cited in (Marsden, 2009), ranging from the perception that it was divisive and
unfair and depended on subjective assessments to being too difficult to administer as well as results from the
implementation of PRP in Inland Revenue, (Schmidt et. al., 2011) that concluded that PRP effects on
motivation was weak; the results from 678 employees are re-produced below in table 1. From the study at
the Public Agenda Foundation (Harrington, 1998), even though the firm indicated the existence of a PRP
plan, extra effort by employees was not rewarded, more than half of employees wanted to see a clearer
connection between pay and performance and 70% put out less effort because of this.
Table 1 – Motivation Increases through PRP
Cases, by Performance assessment instruments
Case 1: Exclusively TAase 2: exclusively SPACase 3: preferably SPA
8%
5%
850%
30%
34%
42%
63%
61%
49%
298
45
335
Table V.
Applicable
Partly Correct
Inapplicable
n
"Motivation increases
Note: Figures based on responses from 678 employees of three local administrations. Deviation from
through the use of PRP"
normal distributon significant at 5 per cent level (Chi-Quadrat): deviation of mean between the cases
(affirmation by employees) significance at 5% level (One-Way Anova)
2.3 The Merits of PRP
There seems to be no end to the disadvantages many writers have linked to the implementation of PRP within
organizations and there been considerable evidence in the business world that PRP can be counterproductive, (Anon, 2003); but they can be immensely beneficial if a balance can be created with what
16
employees are looking for from employers and employers’ goals and in referencing an article on Microsoft,
(Anon, 2003) showed that in a positive environment, the use of incentives can be quite effective. The
prevalence of incentive schemes, (Safford et. al., 2010), indicate has almost become routine within the health
care industry in the US, citing over 100 different types of programs used by Medicare and 126 of 225
managed care operators using PRPs programs, although some of these are still experimental. There is a large
volume of data pertaining to PRP schemes being introduced across many organizations and countries
including Norway (Barth et. al., 2003) between 1997 to 2003 where many of the different forms of individual
and group plans persist supporting the logical argument that PRP has some benefit or it would not be as
pervasive as it has been. To further cement the benefits of PRP, managers will be more inclined to make
prudent decisions when there is alignment of their pay, firm performance and shareholder goals (Mishra and
Neilsen, 1999) creating greater co-relation between profits and individual financial rewards, consequently
improving the firms competitiveness, (Appelbaum and Shapiro, 1991).
Based on studies done in the education sector, hospital trusts and Inland Revenue in the UK, (Marsden,
2009), 60% of employees were in agreement with the principles of PRP, while a smaller percentage believed
it motivated them and a large proportion reported that it resulted in employees working harder, leading to
increases in productivity and performance giving more credence to the practice of PRP. Even while
acknowledging that there are some drawbacks to this compensation practice as with any other, Makinson in
(Marsden, 2009), indicated that employees are aligned more directly with the goals of the organization in
well-run PRP schemes which results in motivation of employees as compensation is now linked to the
achievement of specific goals and not tenure. The logical culmination of all of these factors is that PRP
fosters organizational cultures based on teamwork, equity (Marsden, 2009) and also creates problem-sharing
and co-operative relationships, a view that contradicts those of (Appelbaum and Shapiro, 1991). The benefits
of PRP are not confined to those previously mentioned, organizations are also utilizing these to reform the
way they manage and this has resulted such organizations outperforming their peers, (Marsden, 2009) a
consequence of management being heavily dependent on the agreement of employees in order to accomplish
goals. In this way, the unintended result has been PRP has now become a channel for employees to speak up
about their issues and make contributions.
Results from studies at a Finnish food manufacturing plant found overwhelming support that PRP increased
productivity, by the use of team incentives, (Jones et. al., 2010) which was a result of involvement of
employees in discussions of targets where feedback was welcome, underscoring the fact that incentive pay
and employee participation go hand in hand. The plan also had the effect of encouraging employee initiative
17
where they began to take a more active role in the performance of their jobs which also brought to light the
documented arguments that gender may sometimes impact the reaction to PRP systems. Further to this is
evidence presented by Lazear in (Podgursky and Springer, 2006), where his case studies found strong support
that PRP has substantial effects on motivation, productivity and overall quality of the workforce. In spite of
the view that monetary incentives may reduce job interest and motivation, (Larkin et. al., 2010), others agree
that money is a strong motivator, especially when it is performance-based and the positive effects on
motivation will increase especially if employees are involved in the design of the system, have a good
relationship with superiors and where incentives are appropriately deployed (Schmidt et.al., 2011). Even in
the midst of detractors, Lazear and Gibbs in (Schmidt, 2011:6) classify incentives as “the essence of
economics” and though much scepticism remain about its effectiveness, few deny its relation to motivation
and the view of general dysfunctionality is shared only by a minority in the view of Pfeffer in (Schmidt,
2011).
In summary, it seems that may persons agree in theory with the concept of PRP, as the survey of the Inland
Revenue in 1988 revealed, (Marsden and Richardson, 1992), and while there was still some minority
resistance to it as no single group of persons will be unanimous in their views, it was found to have some
effect on the level of motivation although the researchers grudgingly admit this. In addition, while (Marsden,
2009) drew on the conclusions of studies conducted at three entities in 1988, and spoke to the ills of PRP, he
did have to indicate that however small, this practice did have an effect on employee motivation. The fact
that based on studies in Norway it was found that PRP generally reduces number of sick leave days and
incidence rates serve to further cement arguments on the benefits of this practice, (Dale-Olsen, 2012), in
addition to its positive effects on motivation leading to employees working smarter and improving
organization effectiveness. Further to this, the implementation of commissions at Ideal Hardware (Tatham,
1998) indicated a classic case of employee involvement, ongoing evaluation and review in order to keep
abreast of changes which tremendously benefitted both employees and the company. The gains to be had
from implementing PRP are further supported based on the results of a study done on R&D employees in 30
Fortune 500 companies; even though the study did not find that rewards had any impact on innovation and
performance, rewards appeared to motivate employees to spend more time on job activities and produce
more, (Markova and Ford, 2011). In the final analysis, the writers felt that the concept of PRP was vindicated
and it was proven that when incentive systems are properly designed, they enhance intrinsic motivation;
indeed, the addition of non-monetary rewards can have many benefits and though their broad application and
scarcity may de-motivate, they feel that any method that recognizes and shows appreciation to employees is
worth the cost of retaining and motivating good employees.
18
2.4 Theories of Motivation
The issue of motivation has been critical to organizations from the beginning; it is imperative therefore for
human resource managers to be cognizant of those factors that affect motivation as few would discount the
absolute power of quality people to make or break an organization. These factors are many and varied and
have been the subject of numerous studies over the years and many theories and definitions have been put
forward in order to examine the subject. The success of an organization depends on the effort of those who
are tasked with carrying out the functions of the firm, (Oyedele, 2010) and the key factor to influencing
people to work is motivation. Motivation has been described by Greenberg and Baron in (Oyedele, 2010) as
the direction of behaviour by a set of processes in achieving some goal and also as the inducement to action
by internal and external factors Locke and Latham in (Oyedele, 2010). The studies of motivation have
identified two schools of thought on motivation – those concerned with the specific things that motivate
people are called content theories and process theories that are concerned with describing how actions are
“...stimulated, directed, sustained and stopped,” (Harris and Kleiner, 1993:2).
2.4.1 Content Theories
Of the content theories, Maslow’s hierarchy of needs, Herzberg’s two factor, McClelland’s achievement and
Alderfer’s ERG theories are widely recognized, (Oyedele, 2010) with Maslow’s and Herzberg’s being the
two most popular ones in use, (Harris and Kleiner, 1993). Maslow believed that a person’s needs are
arranged in a hierarchy of five levels and are based only on those needs that are unsatisfied; once a need at
one level of the hierarchy is satisfied, the individual moves on to the next important need, (Harris and
Kleiner, 1993) which range from lower to higher level needs encompassing physical, safety, social, esteem
and the need to excel at what they do best, (Oyedele, 2010). Herzberg on the other hand, believed that
maintenance and motivational factors affect individual behaviour; those maintenance factors cover those
things that will cause employees dissatisfaction if they are absent, referred to as dissatisfiers, while
motivators or hygiene factors, termed satisfiers, though they may not necessarily have negative consequences
in their absence, will have positive effects if they do exist, (Harris and Kleiner, 1993). Those important
motivators include opportunities for promotion, recognition of achievement, responsibility and advancement,
also indentified as being important on Maslow’s hierarchy, that drive employee job satisfaction while
hygiene or maintenance factors tend to result in job dissatisfaction and include a range of factors from lack of
pay, bad working conditions, weak company policies, non-existence of job security among others, (Oyedele,
19
2010). It is important to note that if the firm has strong policies that address hygiene factors, they will prevent
employee dissatisfaction but not necessarily bring about motivation. Herzberg believed satisfiers, as a result
of the fact that they are part and parcel of the job are intrinsic motivators while dissatisfiers depend on
external rewards that occur after performing the job, (Harris and Kleiner, 1993).
2.4.2 Process Theories
Vroom’s expectancy theory, Adams’ equity theory and Locke and Latham goal theory make up the most
widely known of the process theories. That people are influenced to choose different behaviours and are
motivated by expected results subsequent to those behaviours is at the root of the expectancy theory,
(Oyedele, 2010), and consequently, motivation results from the belief of a direct link between effort and
performance, the likelihood that reward will be linked to that performance and the value the individual places
on the expectation of the reward. Based on the interaction of these factors, he indicated that there are many
things then working together to affect motivation, (Eyal & Roth, 2011). Though the expectancy theory has its
detractors, its usefulness in terms of identifying those things that need to change to increase motivation has
been its strong point, (Jones and Page, 1987). The equity theory postulates that individuals try to maintain a
balance between their effort and rewards to those of others they compare themselves with while the
foundation of the goal setting theory is the view that goals influence the belief of individuals in his own
abilities which then drives that individual to attain those goals (Oyedele, 2010).
2.4.3 The Final Analysis
Though the theories all have their drawbacks, their underpinnings have been valuable in understanding what
drives employee behaviour; the employee who is not motivated will produce low quality work, avoid work
and leave the organization as soon as the opportunity presents itself, (Oyedele, 2010), while the benefits of a
motivated work force can translate into higher quality work, creative, innovative and driven employees
committed to the organization. The strength of belief in the ability to achieve the job functions attempted is
directly proportional to the level of motivation, (Jones and Page, 1987), and according to equity theory, any
perceptions of inequity will be adversely related to effort or performance (Appelbaum and Shapiro, 1991),
though there is evidence that different individuals will react differently to dissatisfaction with rewards.
20
In the final analysis, cognitive evaluation theory believes that an individual’s reaction to PRP is contingent
upon its meaning to the individual or its impact on esteem and perceived self-determination; thus, if this is
seen as positive, it fosters initiative and self-esteem and intrinsic motivation is the natural result,
(McCausland et. al., 2005) and in this scenario, intrinsic motivation results from external factors (extrinsic
motivation). The challenge with PRP however is the value that individuals ascribe to things other than
compensation also affects attitudes towards work which translates into level of motivation, in addition to the
fact that the length of employment seems also to positively affect motivation, (Smith and Rupp, 2003). In the
end, what most of these writers will agree is that in order to maintain or improve the employee’s desire to
perform better, some motivator is required. We will further explore if money is that motivator at ACS in the
following chapters.
21
CHAPTER 3
DATA AND METHODS
3.1 Research Method
A quantitative method of study was decided on to test the probability of a relationship between PRP and
motivation within one Strategic Business Unit (SBU) of the Finance and Accounting arm of ACS. While
both qualitative and quantitative methods have their benefits, quantitative methods are thought to be better
suited in situations where the researcher is trying to explain rather than just to describe a phenomenon,
(Muijs, 2011) as well as when one is collecting cause and effect data from a large number of units as in this
case. Additionally, the need to ensure the findings could be generalized to a larger population and because in
this type of study, the researcher neither influences nor participates (Moutinho and Hutcheson, 2011), makes
this the preferred method for this study; there is also more control and less subjectivity in quantitative
research methods as well, they are said to adhere more closely to scientific methods (Taylor, 2005).
3.2 Sample Population
Initially, the organization to be studied was the western branch of the National Commercial Bank; however
there were issues with access and population size with implications its possible generalizations of the study
and this resulted in the change to the BPO firm. The company has over 4000 employees across differing
locations and functionalities in Jamaica alone. Due to time and resource constraints, it was decided that the
focus would be about 50% of the target population of employees within the Finance and Accounting SBU of
a particular client, a total complement of 250 team members; the sample then turned out to 120 employees
which the researcher believed would yield data being representative of the entire population since they were
randomly selected across several work groups within this SBU, a population that contained good mix of
individuals of varying demographics . Each person in the target population had an equal chance of
participation in this study and the researcher was confident this would eliminate any potential bias in the
selection process and resultant bias in the data collected (Carpenter, 1993).
3.3 Research Instrument
The research instrument used to collect data was a self-administered questionnaire; although questionnaires
have been criticized as being labour intensive in terms of time taken to analyze data and can be difficult to
22
design and interpret, (Wilkinson and Birmingham, 2003) and (Bernhardt and Bradley, 2009), easy analysis
and simple interpretation can be their advantage if they are well constructed; additionally, the fact that
questionnaires require less resources to administer made this option a perfect fit for the researcher since this
project is self-funded. Further, questionnaires can be used to “...collect information to describe, compare and
explain knowledge”, (Bernhardt and Bradley, 2009:13) as well as the fact that respondents can fill them out
anonymously was also taken into consideration as this gives them the added advantage over other methods
such as interviews which can introduce bias into the process depending on how questions are posed and
interpreted (McClelland, 1994). Since it was also crucial to ensure objectivity in the process of gathering the
data and to ensure a higher return rate than a mail questionnaire (Oppenheim, 2005), the researcher engaged
the self-administered questionnaire to employees at ACS to ensure some degree of personal contact and
assurance about the purpose of the study. While the possibility of introducing bias into the process of
collecting the data exists with personal contact, the researcher took every precaution to not provide
interpretations to questions asked, only explanations, (Oppenheim, 2005), and given that questionnaires are
the most widely-used method of gathering feedback and do not require excessive amounts of time to
complete, (McClelland, 1994), this made the decision to use them most prudent. Added to this, is the matter
of the sensitivity of researching a topic having to do with people’s compensation, for which questionnaires
addressed the matter of anonymity and confidentiality of their responses, (Blaxter et. al., 2010).
3.4 Questionnaire Design
A structured questionnaire comprising thirty questions, see appendix I, was constructed to capture relevant
data from the sample population, made up of twenty-nine closed ended and one open-ended question. The
researcher decided on using the open-ended question as while these may be more difficult and time
consuming to interpret, (Muijs, 2011), they allow the discovery of viewpoints that may not have originally
been thought of by the researcher, hence the decision to utilize them but to a limited extent to prevent any
issues in coding and subjective interpretation of a large volume of differing opinions (Babbie, 2012). The
remaining 29 questions were all closed ended, for simplicity, based on Likert scale or dichotomous in nature
requiring respondents to select from listed answers which are easier to tabulate (McClelland, 1994) and also
can affect the rate of return. The researcher debated whether to include a ‘neutral’ option for some of the
questions mainly because they are hard to interpret in terms of what the response is really trying to convey
(Oppenheim, 2005); however, responses to the pilot test indicated this option was important for respondents.
The questions were laid out in order to address the areas being tested in the research sub-questions.
23
Questions 1 to 9 were aimed at exploring whether employees were involved in the process of developing the
targets to which they would be held accountable under a PRP plan. The first two questions sought general
views on PRP and subsequent questions explored any involvement in the process then moved on to explore
what possible impact the involvement or lack thereof may have had on respondents. This was in an effort to
get a holistic view on any relational factors critical to the PRP process as alluded to by (Harrington, 1998)
and others previously. Question 10 then moved on to ask questions the researcher felt were important to
forming an opinion about sub-question 2 which related to the evaluation or review of PRP plans within the
organization. Questions relating to the existence of a process of review and employees familiarity with this
process followed along with questions pertaining to factors which may be important or drive the review
process. Questions 17 to 24 were then aimed at addressing sub-question 3 seeking to examine any possible
links between the payments of pecuniary incentives on the employee level of motivation, a strategy
employed by (Marsden and Richardson, 1992) in their study of Inland Revenue in the UK. Question number
25, the only open-ended question included, then asked respondents to elaborate on any suggestions they may
have on ways the current plans may be improved within the SBU.
Demographic data, sometimes considered sensitive data, was requested in questions 26 to 30 at the end of the
questionnaire. This was in an effort to improve the chances of respondents not being turned off at the very
beginning of the survey and so potentially improving the response rate (Oppenheim, 2005). The researcher
felt that the entire flow of the questionnaire needed to start off with non-threatening questions to put
respondents at ease, (Janes, 1999) and moved gradually to matters pertaining to compensation and then data
about gender, age, tenure, level, education, which can sometimes make respondents uncomfortable.
3.5 Pilot Test
After receiving feedback on the dissertation proposal, see appendix II, the researcher began preparing the
questionnaire and subsequently carried out a pre-test to establish clarity of both questions and possible
answers (Anderson and Morgan, 2008). The pre-test was given to 6 colleagues and members of the target
population who were encouraged to share whether any questions were ambiguous (Bernhardt and Bradley,
2009) or if there were any errors noted, typographical or otherwise in order to establish some credibility and
reliability of the instrument (McClelland, 1994). The pre-test was critical to the researcher in order to ensure
the appropriateness of structure, language and to check if required information could be collected in this
manner, (Reynolds & Diamantopoulos, 1998). The resulting feedback related to some repetition, the flow of
24
the questions and the option of choosing ‘neutral’ for questions utilizing the Likert scale, as these are difficult
to interpret but are recommended if such a response is possible, (Grover and Vriens, 2006). This led to
removal of three questions, taking them down to 30 as well as some re-arrangement for better flow, the
addition of the new category and compilation of the final version in appendix iii.
3.6 Ethical Considerations
In a BPO company dealing with outsourced and offshore business, many issues came up during this study
which were not anticipated when the initial proposal was done, see appendix I. Both managers and
employees were concerned about the purpose for which the data would be collected and to whom it would be
shared. Additionally, since the issue of compensation, even though respondents were not being asked to
disclose their salary, is one that can produce anxiety in persons, the researcher recognized the imperative to
assure both parties on the issues raised. To this end a cover letter as shown in appendix ii, adapted from
(Wilkinson and Birmingham, 2003), was used to address concerns about confidentiality, anonymity and
security of any information provided. Additionally, the researcher had to make a judgement call and remove
3 of questionnaires which had only 2 to 5 of the 30 questions answered; no proper analysis could have been
done and the researcher could not review with respondents since they were filled out anonymously.
The data collection process went smoothly as the majority of responses were received in a very short time
due to the fact that the researcher is a former manager with the organization and had started discussions with
some colleagues about the possibility of this study prior to leaving. This proved very beneficial when, due to
several issues with the original organization proposed, the researcher had to revert to plans laid two years ago
while still employed to ACS. Discussions were held with members of the population during team meetings to
further discuss the purpose of the study to be conducted. 120 questionnaires were then made available along
with a ‘survey box’ which could not be opened and left at the desk of the receptionist of the firm where
respondents could pick up and then drop questionnaires at any time convenient to them to maintain
credibility of the research process.
25
CHAPTER 4
ANALYSIS AND RESULTS
The results and analysis of the findings of the survey will be presented in this section. First will be a profile
of the respondents surveyed; this will be followed by a breakdown of the findings based on the three research
sub questions developed.
4.1 Profile of Respondents
Sixty five (65) employees of the firm completed the questionnaires submitted, a response rate of fifty-nine
percent (59%) overall. Of these sixty five (65) respondents, the majority, forty (40) were females while
twenty five (25) were males. Of the sixty five, fifteen (15) employees fell in the under twenty five years age
group, while the largest number fell within the twenty five (25) to thirty five (35) age group. This represented
twenty three percent (23%) and forty two percent (42%) of the total number of respondents respectively. The
rest of respondents were made up of eleven (11) persons or seventeen percent (17%) in the thirty six (36) to
forty five (45) age group and eight (8) respondents or twelve percent (12%) in the over forty five (45) age
group. A total of six percent (6%) or four of the respondents chose not to respond to this question asking
them to indicate their age. A cross comparison of these two characteristics, gender and age group, revealed
that the employee complement at ACS is made up of mostly females in the twenty five (25) to thirty-five (35)
age group. Additional breakdown is visually depicted in figure 4 below.
Figure 4 – Gender/Age Group Comparison
No. Of Respondents
Cross Tabulation - Gender/Age Group
18
16
14
12
10
8
6
4
2
0
17
11
10
7
4
under 25
yrs
5
4
25 to 35
yrs
36 to 45
yrs
Age Groups
26
Male
3
over 45
yrs
2
2
no
response
Female
With regard to how many years the respondents had been with ACS, twenty nine percent (29%) or nineteen
(19) employees had been at ACS for zero to five years, with one person within this group employed for less
than a year. The majority of employees, forty nine percent (49%) or thirty two (32) employees had been
employed between six and ten years. Seven (7) employees each responded that they had been with the
company eleven to fifteen and over fifteen years respectively, each having eleven percent (11%) of the
overall total. Question number twenty nine asked respondents to indicate what level on the organization’s
chart each employee was. The majority of employees, thirty eight (38) or fifty eight percent (58) fell in the
non-supervisory category or level; next, eighteen (18) or twenty eight percent (28%) was at the supervisory
level while twelve percent (12%) or eight (8) employees fell in the management level. There was one
employee who refused to give a response to this question, leaving this open to interpretation. Both questions
twenty eight and twenty nine are depicted in the pie diagrams, figures 5 and 6 below. The company appears
to have many junior employees with short tenure as well as significant numbers with 6-10 year tenure and
few over that time frame; staff retention, a costly issue as indicated by (Anon, 2003) may be an issue for the
organization.
Figure 5 – Breakdown of Employee Length of Service
Tenure of Employees
11%
29%
11%
0 to 5 yrs
6 to 10 yrs
11 to 15 yrs
49%
Over 15 yrs
27
Figure 6 – Breakout of Employee Level
2%
12%
Non-supervisory
28%
Supervisory
58%
Management
No response
Question thirty sought responses from employees on their level of education. Twenty five percent (25%) or
sixteen employees had secondary level education; most employees indicated they had tertiary level
education; this was thirty three employees of the sixty five respondents or fifty one percent (51%). Fourteen
(14) employees or twenty two percent (22%) had professional certification while three percent or two of the
sixty five respondents chose not to respond to this question, leaving this open to many interpretations
(Oppenheim, 2005). ACS should be aware that its workforce is made up of both relatively new and seasoned,
highly educated workforce so that its HRM practices are relevant to these persons.
Number of Respondents
Figure 7 – Breakout of Education Levels
40
33
30
20
10
0
No. Of Employees
16
14
25%
51%
%age of Total
22%
Level of Education
28
2
3%
4.2 Results for Research Question 1
Research question one sought to gather data on whether or not employees are part of the process in
developing PRP plans. Questions one to nine asked different questions with the aim of finding out if
employees were a part of the development phase of these plans and their subsequent views. Question one of
the questionnaire asked respondents if they support the view that PRP is beneficial to employees, the
company, both company and employees or neither party. A significant majority, seventy four percent (74%)
of respondents believed that PRP benefits both the company and employees; this was forty eight of the sixty
five respondents. A concerning number, fifteen (15) employees were of the view that only the company
benefits while two employees or three percent (3%) of employees surprisingly viewed PRP as benefitting
employees only. Since the perception of fairness is one factor that can affect the success or failure of PRP
plans, as indicated by (Marsden & Richardson, 1992), a comparison of views of who benefits from PRP and
level within the organization was done to bring to light whether this was a view held only by those in a
position to implement these plans. It is interesting to note that none of the respondents at the supervisory or
the management level believed that PRP benefits only employees. The majority of non-supervisory,
supervisory and management respondents viewed PRP as being beneficial to both employees and the
company. Fifteen respondents or twenty three percent (23%) across all three levels believed that PRP is
beneficial only to the company, a possible issue pointed out by (Thompson and Strickland, 2001).
Figure 8 – Cross-Comparison of Employee Level and View of PRP
Cross-Comparison: Employee Level & View of PRP
28
No. Of Respondents
30
25
20
14
15
10
5
0
Non-S
Supervisory
9
4
Company
6
Management
2
2
Both
0
0
Employees
Who Benefits from PRP
29
Question two asked respondents to indicate on whether or not they support the view that tying pay to
performance was a good one. A slim majority of respondents agreed or strongly agreed with this view with
twenty six percent (26%) and thirty two percent (32%) respectively. Of concern to note is the fact that a
combined forty two percent (42%) of those studied were either neutral or disagreed with this view. Fourteen
employees strongly disagreed, five disagreed and eight were neutral; this response possibly indicating an
issue with perception, a critical feature if PRP is to succeed, a factor given support by (Harrington, 1998) and
(Thompson and Strickland, 2001). To ascertain whether there was any perceived relationship between
respondents’ involvement in the process of developing plans, questions three and four were cross compared
with questions two to give a richer picture. Question three asked respondents if performance goals and targets
were discussed with management, the sixteen employees strongly agreed that goals and targets were
discussed while the majority, forty three percent (43%) or twenty eight of those studied agreed that they
were. It would appear that developers of the plan may still have more work to do as fourteen employees
disagreed and four strongly disagreed their goals and targets were discussed, a combined percentage of
twenty eight percent (28%). There appears to be agreement between the results from the cross tabulation; the
fact that twelve percent (12%) more respondents indicated discussion of their goals with management may
account for the positive support for tying pay to performance. However, of note is the forty two percent of
respondents who appear to have a negative view of tying pay to performance; there could be a correlation
between this negative view and the fact that sixteen (16) of respondents reported that their targets and goals
were not discussed with management while three (3) persons were neutral on this question, a combined
twenty nine percent (29%) of respondents, which could signal some disenchantment with the process, an
issue well ventilated by (Harrington, 1998) and (Tulgan, 2001).
Question four then asked respondents to give responses on whether or not their performance goals and targets
were agreed upon with management, critical success factors (Tulgan, 2001) and (Belfield and Marsden,
2003). Fourteen employees strongly agreed, forty five percent (45%) of respondents agreed goals were
discussed, a total of twenty nine employees; eighteen percent (18%) disagreed and three percent (3%)
strongly disagreed. One employee gave a neutral response and there was no response from seven
respondents. These results give credence to the responses seen in questions two and three and also support
the results of those who disagreed. A combined thirty four percent (34%) disagreed, were neutral or gave no
response to question four; again this might impact the results seen in question two where twenty seven (27)
employees had a negative view of tying pay to performance. The cross comparison showed that a total of
twenty respondents did not agree, were neutral or gave no response regarding agreement with management
on goals or targets on which their performance would be assessed. It could be that employees are not buying
30
into tying performance to pay as a result of the fact that their targets were either not discussed or agreed upon
with management.
Questions five and six then sought the views of respondents regarding if they believed the reward system in
the organization was fair and if it resulted in performance targets being clearer for employees. These
questions were relevant to gauge the effect of their involvement in the process of development and
implementation of compensation plans. The overwhelming majority forty three (44) or 66% of the sixty five
respondents, was of the view that the reward system is fair, see figure 9 below; however, equally indicative is
the response of twenty one (21) or 32% of the respondents who disagreed or strongly disagreed that the
reward system was fair. In response to question six, forty three percent (43%) and twenty one percent (21%)
respectively strongly agreed and agreed that PRP made performance targets clearer for employees. A
possible indication of why respondents may not view PRP as being fair maybe the fact that twenty nine
percent (29%) disagreed that targets were clearer while eight (8%) had no response to this question, again
leading to possible interpretation that targets were not clear based results of question 4 with implications for
bad perceptions about PRP, (Thompson and Strickland, 2001).
Figure 9 – Responses on Fairness of Reward System
Reward System is Fair
2%
14%
Strongly Agree
Agree
18%
Neutral
Disagree
0%
66%
Strongly Disagree
To further explore level of involvement and possible impact, questions seven, eight and nine explored cooperation and communication with management and impact of PRP on employee morale whose importance
was ratified by (Harrington, 1998). A telling ninety seven (97%) disagreed with the view that PRP has any
31
effect on their desire to co-operate with management. This could be a function of the fact that the majority
was involved in the discussions and agreements on PRP targets. Only two employees or three percent (3%)
disagreed. In response to the effect of PRP on communication between employees and management however,
a significant majority of sixty percent (60%) of the respondents disagreed, twenty eight percent (28%)
agreed, nine percent (9%) strongly agreed and two or three percent (3%) was neutral. It is logical then to
deduce from the results that ACS possibly has a strong communication structure/culture and so the existence
of PRP has not had an impact on this based on results seen in questions three, four and seven. It may also be
interpreted that this majority of thirty nine (39) employees desired more communication but this
interpretation is not supported by the previous responses. Question nine followed up by asking about the
impact of PRP on staff morale. A surprising thirty percent (30%) of employees believed that PRP has
undermined staff morale, in contrast to the trends seen in results of previous questions. While the majority,
seventy percent (70%) disagreed and strongly disagreed, there are twenty (20) respondents who believe
morale has been undermined and this must be of concern to management of ACS.
4.3 Results for Research Question 2
Research question two asked if there tools in place to evaluate PRP plans, (Lewis, 1991) and if the
employees were familiar with these tools. Questions ten to sixteen explored this question within the context
of the nature of employee plans. Question ten asked whether or not suggestion on changing compensation
plans were welcomed by management, the results of which are displayed in the diagram below.
Figure 10 – Responses to Frequency of Review of PRP Plans
Frequency of Review of Comp. Plans
2%
12%
38%
Never
Periodically
48%
Rarely
Regularly
32
The responses were almost split evenly with forty six percent (46%) agreeing that suggestions were
welcome, fifty one percent (51%) disagreeing and two respondents translating to three percent (3%) of the
sample population opting not to respond. The follow up question, number eleven, asked for responses on
whether the company reviews methods of compensation across the organization and the frequency of these
reviews. While most respondents indicated periodic, forty eight percent (48%), reviews of PRP plans, a
significant percentage (38%) indicated this was rarely done while twelve percent (12%) indicated reviews are
never done. Only one of the sixty five respondents indicated regular reviews of compensation plans. In order
to explore any possible relationship, the view on frequency of review of compensation plans was cross
compared to the level at which the respondent fell within the organization. It was noted that of those who
responded that reviews were never done, six (6) were non-supervisory team members, one (1) at the
supervisory level and one respondent did not indicate which level he/she was at. Of those who believed in
periodic review, twenty (20) were non-supervisory, seven (7) supervisors and four (4) managers. Twelve
(12) non-supervisory staff, ten (10) supervisory and surprisingly three (3) managers rarely saw reviews being
done. Most surprising was the fact that the single one respondent in the sample who indicated that reviews
are never done was at the management level.
Figure 11 – Cross Comparison – Level & Frequency of Reviews
Cross Comparison - Level/Frequency of Reviews
20
20
No, of Respondents
18
16
14
12
12
10
8
6
Periodically
7
6
Rarely
4
4
1
2
0
Never
10
Non-Supervisory
1
0
Supervisory
Regularly
3
Management
Level of Respondents
No Resp.
Question twelve gleaned information whether the sample population was aware of a process to give feedback
on PRP plans. While forty five (45) or sixty nine percent of respondents indicated awareness, twenty (20)
said they knew of no such process. These twenty respondents encompassed employees from all levels of
33
staff, the majority of which had been with the company for between six to ten years, not relatively new
employees. Additionally, six seasoned employees, those with ACS over eleven years also indicated no
knowledge of such a process being in existence. It may be significant to note that most of the persons
indicating no awareness were at the non-supervisory and supervisory levels. Even though the majority of
respondents were aware of a process to give feedback, there could be an indication of some breakdown in
that most of the persons not aware were lower level employees as shown in figure 12. Question thirteen,
based on views of (Harrington, 1998) explored respondents’ familiarity with the process of giving feedback
with almost identical responses to those given in question twelve. Sixty five percent (65%) of respondents,
forty two individuals, were familiar with the process in place with thirty five percent (35%) were not. Again
the cross comparison with different levels and the tenure of staff members indicated the persons not familiar
was not confined to one level; the majority of those not familiar again falling within the non-supervisory
level, thirteen (13) respondents, with five (5) at the supervisory level. Also in line with responses in question
twelve, were the responses that those not familiar with the process of giving feedback had varying levels of
tenure with the company, the majority being with ACS over six years, illustrated in figure 13. Since these
results were not confined to a single level, they suggest an across-the-board issue.
Figure 12 – Cross Comparison of Tenure & Familiarity with Review Process
Cross-Comparison - Tenure & Familiarity with Review Process
No. Of Respondents
25
21
20
15
15
11
Yes
10
4
5
0
0-5 yrs
4
6 to 10 yrs
3
11 to 15 yrs
Tenure of Respondents
34
No
5
2
over 15 yrs
Figure 13 – Cross Comparison of Level & Familiarity with Review Process
Cross-Comparison - Level & Familiarity with Review Process
25
No. Of Respondents
25
20
13
15
13
10
5
7
Yes
1
5
0
1
No
0
Level of Respondents
Respondents were asked if they would change being paid for performance in question fourteen. A slight
advantage was seen by those who said they would, thirty five (35) or fifty four percent (54%) of the
respondents; however, a significant number also said they would not, thirty (30) respondents or forty six
percent (46%), see figure 14 below.
Figure 14 – Would Respondents Change PRP?
Responses on whether respondents would change PRP
No. Of Respondents
35
35
30
30
25
20
Yes
15
No
10
54%
5
0
1
46%
2
Responses/Percentage of Total
The researcher wanted to further explore any possible relation between the responses above and the level of
the respondent, a cross comparison was done. Thirty seven percent (37%) of those who said they would
35
welcome a change from PRP were non-supervisory team members, 12% supervisory and 2 percent (2%)
management. Of those who said no, 22% was non-supervisory, 15% supervisory and nine percent (9%)
management. It was not clear whether those who responded yes meant they wanted more PRP or less PRP; a
follow-up question to this effect would have been helpful; see cross-comparison below in figure 15.
Figure 15 – Comparison of Level & Views about Changing PRP
Comparison of Level & Want to Change PRP?
No. of Respondents
40%
37%
22%
20%
12%
15%
3%
0%
Non
Supervisory
Supervisory
9%
Management
2%
0%
No Response
Yes
No
Respondent Level in the Organization
Question number fifteen then asked respondents in the sample population to indication what proportion of
pay was performance driven. It was revealed that the majority of respondents had twenty one to thirty percent
PRP, translating to forty two percent (42%) of the total responses. A significant percentage, twenty eight
(28%) had 21 to 30% of their pay linked to performance while those who had over 30% and less than 10%
PRP came out at nine percent (9%) and seventeen percent (17%) respectively. Five percent (5%) of
respondents did not indicate a proportion of PRP as shown in figure 16.
36
Figure 16 – Proportion of PRP
Breakout of Porportion of PRP
9%
5%
17%
Less than10%
10 to 20%
28%
21 to 30%
41%
Over 30%
No response
Further analysis was done to look at any noticeable patterns within this data; proportion of PRP was crossreferenced with level as well as tenure of the respondent. It was found that persons at the same level had
varying percentages of their pay linked to performance; at the non-supervisory level, eight (8) respondents
indicated less than 10% of pay was performance related; twenty two (22) reported ten to twenty percent of
total pay was PRP and five (5) indicated twenty one to thirty percent of pay linked to performance. No one
within this category had more than thirty percent of pay linked to goals while three persons at this level gave
no response, which could be significant according to (Brough, 1994). Within the supervisory category, we
once again saw varying levels of PRP with the majority of respondents in the twenty one to thirty percent
grouping. Two, three and two persons had less than ten, ten to twenty and over 30% PRP which could
present issue. In comparing proportion of PRP with the tenure of the respondent, it was also seen that tenure
had very little to do with the level of PRP. Persons employed to the company in each of the four categories,
(0-5 years, 6-10 years, 11-15 and over 15years) all had varying levels of PRP. Tables 2 and 3 below give a
better picture of the cross-tabulations done between percentage of PRP and level as well as proportion of
PRP and tenure of the respondent.
37
Table 2 – Level & Proportion of PRP
Cross-comparison - level and proportion of PRP
Non-S
Super
Mgmt No Resp.
Less than10%
8
2
1
0
10 to 20%
22
3
1
1
21 to 30%
5
11
2
0
Over 30%
0
2
4
0
No response
3
0
0
0
`
Table 3 – Tenure & Proportion of PRP
Cross-comparison - tenure and proportion of PRP
0-5 yrs
6 to 10 yrs 11 to 15 yrs over 15 yrs
5
9
2
2
1
Less than10%
10 to 20%
21 to 30%
Over 30%
No response
5
15
9
1
2
0
1
4
2
0
1
2
3
1
0
Further comparison was done between questions fourteen (would you change this pay method) and question
fifteen (what proportion of pay is performance related). It was seen that the majority of persons who said yes
had 10 to 20% of pay linked to performance. This is not totally surprising as most of the respondents fell into
this PRP percentage category. What could be significant is that thirty five respondents, covering all
categories wanted a change of PRP.
Figure 17 – Cross-Comparison of views about changing PRP & Proportion of PRP
Cross-Comparison of Questions 14 & 15
No. of Respondents
20
16
15
11
10
5
0
5
9
9
Yes
6
2
< 10%
10 to 20% 21 to 30%
> 30 %
Percentage of PRP Pay
38
4
No
3
0
No
response
The last question pertaining to research question two asked respondents to indicate what type of PRP they
were on. The overwhelming majority, eighty five percent (85%) indicated they were on a bonus/incentive
type of plan, followed by nine percent (9%) and six percent (6%) for merit plans and profit sharing plans
respectively pointed out by (Daft, 2006). Although one supervisory employee indicated being on a profit
sharing plan, it was found that the majority of persons on a profit sharing plan were at the management level,
supporting the marrying of individual and corporate goals advocated by (Brough, 1994) and (Mishra and
Nielsen, 1999). Of the population of thirty eight non-supervisory respondents, eighty seven percent (87%)
participated in a bonus/incentive plan while the remainder was on a merit plan. The majority of supervisors
and managers also indicated bonus/incentive PRP; two persons on bonus/incentive plans did not indicate
what level they were at shown in figure 18.
Figure 18 – Different Types of PRP
Types of PRP
9%
6%
Bonus/incentive
Merit
85%
39
Profit sharing
Figure 19 – Employee Level & Type of PRP
Respondent Level vs Type of PRP
No. of Respondents
40
33
30
16
20
10
0
5
0
1 1
5
0
3
2 0
Bonus/incentive
0
Merit
Profit sharing
Respondent Level
4.4 Results for Research Question 3
Questions seventeen through to twenty five were developed to explore the last of the research questions: to
what extent does PRP affect the levels of employee motivation within an organization. Question seventeen
sought responses regarding which of three factors – money, benefits or promotional opportunities – was most
important to respondents. Most respondents within the sample population, twenty eight of the sixty five,
indicated that benefits, for example, a pension scheme or opportunities to further education was most
important to them. The second most important factor was the opportunity for promotion while money seemed
to be the least important, in support of the Human Relations School referenced in (Harrington, 1998). There
was no response from three of the respondents. Interestingly no one in the ‘under 25 years’ category
indicated money was most important to them and no respondent in the ‘over 45 years’ said benefits were at
the top of their list. This may suggest that some persons in the younger grouping may want to be furthering
their education at this stage and those over 45 years old may have already accomplished saving for retirement
or educational goals; this is in keeping with Maslow’s hierarchy of needs, (Harris and Kleiner, 1993) which
speaks to differing individual needs at different stages of life. Further analysis revealed that of the 9
respondents to whom money was most important, the majority was at the non-supervisory level within the
organization. Benefits and promotional opportunities was important to 34 of the 38 non-supervisory staff, 15
of the 18 supervisory and 4 of 8 management respondents respectively. It was found from review, that
respondents to whom each of the factors was most important had varying levels of education; 14 persons
40
with secondary level education indicated benefit and promotional opportunities were most important while a
combined 31 persons in the tertiary level indicated the same. 4 respondents each at the professional level
indicated all three factors were important.
In asking for responses to ‘I want more from my job than just pay’ 65% and 32% of respondents indicated
strong agreement and agreement respectively; 2 respondents, non-supervisory employees in the 25 to 35
years age grouping strongly disagreed however. This 3% once again indicating that most persons are not
motivated by money alone, an issue mentioned by proponents of both content and process theories of
motivation, (Oyedele, 2010) and (Harris and Kleiner, 1993). For those who would welcome the opportunity
to earn more based on PRP, a combine 84% gave strong agreement and agreement; 2% indicated a neutral
position and 14% disagreed with this view; this result in tandem with previous responses relating to those
who would change this compensation practice.
When asked whether PRP affects the decision to remain with the company, there were mixed results coming
from the respondents. While the majority 42%, agreed and 22% strongly assented, a significant 35% strongly
disagreed with this view. If the organization is using compensation as a tool to retain good employees, then
the responses here may indicate some gaps in this strategy as well as possible impacts on rates of turnover. If
64% of respondents take compensation into consideration when thinking about remaining with the company
then this must be planned for at a strategic level, as (Smith and Rupp, 2003) believed in link between tenure
and motivation. These results are somewhat in conflict with results to question about what is most important
where only 9% of respondents indicated money; it could be that some persons are looking at non-financial
benefits as part of their total compensation package. Of importance is the fact that the majority of persons
who agreed (27) and disagreed (23) were respondents who had been with the company 6 to 10 years, see
figure 20, which one could consider to be seasoned employees now very familiar with the compensation
practices and would now be a position to evaluate the relative merits and drawbacks of same. It could be
interpreted to be very important to the decision to stay or not important at all when all other factors are
considered.
41
Figure 20 – Does PRP Affect Tenure?
No. of Respondents
PRP Affects Tenure
15
15
10
6
8
4 3
5
0
14
2 3
1
0-5 yrs
2 3
1
Strongly Agree
6
6 to 10
yrs
3
11 to
15 yrs
2
over
15 yrs
3
Agree
8
15
3
1
Neutral
1
Disagree
4
14
2
3
3
Question 21 asked respondents to indicate if they were driven to perform because they could see a direct link
between pay and performance. The varied responses are displayed in figure 21.
Figure 21 – Clear Link between Pay & Performance?
Link Between Peformance & Pay is Clear
22%
37%
Strongly Agree
Agree
11%
Neutral
No response
1%
29%
0%
Disagree
Strongly Disagree
There is strong disagreement from the majority of respondents about a clear link between their effort and
level of pay. Two thirds of the sixty five respondents are clearly not seeing this link; while a good number,
42
21 respondents, agree that the link is clear, there is apparent room for improvement within the organization
based on these results. When further cross-comparison was done, it was found that the majority of persons
who answered in the negative to this question fell in the non-supervisory and supervisory levels. It would
appear than that these persons at the lower levels of the organization are not seeing clearly how their goals
impact their pay. The spread of responses is displayed in figure 22 below. While some respondents do agree
to a clear link, of import is the fact that the majority, 50%, indicates otherwise.
Figure 22 – Employee Level and Pay/Performance Link Clearly Seen
No. of Respondents
Employee Level & Clear Link Between Pay &
Performance
20
18
16
14
12
10
8
6
4
2
0
20
12
5 5
3
4
1 1 2
7
0 0 1 0 0
00
3
1 0
Agree
Neutral
Disagree
Non-S
Strongly
Agree
5
1
0
12
Strongly
Disagree
20
Super
5
2
1
7
3
Mgmt
3
4
0
0
1
No Resp.
1
0
0
0
0
While there is dispute about a clear link between level and effort and pay, a critical factor supported by
process theorists, fifty five (55%) of respondents however believe that this pay method gives them incentive
to work above and beyond the requirements of the job. The assumption here is that PRP does to some extent
motivate respondents to work harder. However, 38% of respondents did indicate PRP gave them no incentive
to work harder and this corresponds to the results seen in question 21 above; it could be argued that these two
issues may be related to each other, a result of the fact that the pay-performance link is not clear and so does
not spur employee to act differently.
Questions 23 and 24 went on to glean data pertaining to the effects of PRP on initiative and level of
motivation, alluded to by (Lagace, 2003) and (Marsden, 2009). It would appear that while some persons were
encouraged to work harder, PRP however did not reach as far as to spur 52% of respondents to exercise
much initiative on the job. A significant number however did agree, 40%, indicating that all was not lost with
43
the PRP cause. Five of the sample population did not give an opinion on this question, 2 being neutral and 3
giving no response at all. The results of the final question yielded data supporting much of the previous
results. While those who indicated that PRP has raised their level of motivation are not an overwhelming
majority, at 56%, it does indicate that this practice has some effect on respondents. 43% of respondents
disagreed with the PRP/motivation link, once again continuing the response trends seen in the previous two
questions.
A cross-comparison of the tenure/motivation as well as gender/motivation was then done to find any merits
to these arguments as alleged by (Smith and Rupp, 2003) and (Podgursky and Springer, 2006), the results of
which are shown below in figures 23 and 24. The researcher noted no noticeable or positive differences
between these variables upon which to draw any important inferences. According to (Brough, 1994), the
motivation may also be a function of the percentage of pay related to performance; the comparison of these
two factors, shown in figure 25, revealed there may be some merit to this argument as 31% of respondents
who were not motivated had less than 30% of their pay linked to performance.
Figure 23 – Cross Comparison of Gender & If PRP Motivates
14
14
12
12
10
10
10
8
8
6
4
4
3
2
0
1
0
Strongly
Agree
Agree
3
Neutral
Male
Disagree
Female
44
Strongly
Disagree
Figure 24 – Cross Comparison of Tenure & If PRP Motivates
No. of Respondents
Cross Comparison - Tenure & If PRP Motivates
15
16
14
12
10
8
6
4
2
0
8
8
0-5 yrs
6
5
4
4
1
0
6 to 10 yrs
3
1
1
11 to 15 yrs
2
over 15 yrs
Strongly
Agree
Agree
Neutral
Disagree
Strongly
Disagree
Responses
Figure 25 – Cross Comparison of Tenure & If PRP Motivates
Comparison - % of PRP & Those Motivated by PRP
12
No. of Respondents
12
10
10
8
8
6
4
2
0
Strongly Agree
6
3
2
1
Agree
5
4
11
2
Neutral
3
1 111
<10% 10-20% 21-30% >30%
11
Disagree
Strongly Disagree
NR
Percentage of PRP Pay
The final question then asked respondents to indicate any comments they wished to make regarding the
practice of PRP in their organisation; the response rate to this question was a disappointing 7% as only 4
respondents chose to give any opinion, a clear indication that open-ended questions appear to turn off
individuals, (McClelland, 1994). The responses given are listed below:
•
Response 1 – Abandon PRP and implement a set pay package
45
•
Response 2 – Provide a system that manages increases of salary, where increase is determined by
work done over time
•
Response 3 – I want to be able to directly affect my own pay
•
Response 4 – tie pay into things I have 100% control over
The responses indicate no major issues with the concept of PRP itself as put forward by (Harrington, 1998).
As indicated by 75% of the respondents, the issues arise with the administration of the plans, alluded to by
Brough, 1994). In accordance with the literature then, a key success factor in the successful operations of a
PRP plan is missing and should therefore be addressed by management.
The following section of this research paper takes an in-depth look at what these responses mean with respect
to the aims of this exercise.
46
CHAPTER 5
DISCUSSION AND CONCLUSIONS
5.1 Discussion
The results of this research paper point us in several directions. First, it is important to put the profile of the
respondents into some perspective. From previous analysis in chapter 4, it was noted that the majority of
respondents is female in the 25 to 35 age group; the same is true for the males as most of them also fall
within this group and both genders saw most persons being with the organization for 6 to 10 years.
Surprisingly however, even though females outnumber males almost two to one, the number of females
staying with the company 11 to 15 years is almost the same as males and only two females were found to be
in management positions in stark contrast to 6 males even though more females had longer than 15 years of
tenure, which points to possible issues of female turnover which could be the subject of a wider study at the
organization. The levels of education achieved were also compared to the level within the organization that
the respondent was currently at as well as length of service to analyse any possible linkages which would
spell trouble for the implementation of a PRP plan should education or length of service be the basis for
reward or promotion. Naturally, since non-supervisory employees made up the majority of the sample
population, they had the highest numbers within the three categories for level of education and appear to be
well represented across the board, see figure 26. Although those persons who had secondary level education
only were few in number, they had significant representation within the supervisory and management levels.
It was noted however that there was no respondent with secondary level education at the management level
but there was one with professional designation.
Figure 26 – Comparison of Organizational & Education Levels
Comparison of Education & Org. Level
19
No. of Respondents
20
15
12
9
10
5
0
7
Non-sup
6
3
Sec.
Supervisory
1
Tertiary
Prof. Des.
Level of Education
47
Mgmt.
Length of service did not appear to be a significant factor in determining employee level, figure 27 below, as
the figures show, there is a broad mix of persons with differing tenures at all levels of the organization. These
results do not suggest an apparent co-relation between these two factors.
Figure 27 – Comparison of Tenure & Level
Comparison of Tenure/Level
No of Respondents
25
21
20
15
13
5
0
Non-sup.
8
10
4
2
0-5 yrs
2
6 to 10 yrs
Supervisory
1
3
3
11 to 15
yrs
3
3
1
Mgmt.
> 15 yrs
Length of Service
In exploring if the company had employee buy-in in implementing PRP across the organization, it was found
that the view that PRP benefitted both the organization and the employee was not restricted to managers;
importantly, most of the persons who strongly agreed with this view that typing pay to performance was a
good one were at the non-supervisory level and had been with the company for up to 10 years. It may be
indicative of some weakness in the structure or implementation of the plans that those who disagreed, while
in the minority, were also at the non-supervisory and supervisory levels with length of service ranging from 0
to 10 years. Further analysis of employee buy-in and involvement in the process of PRP development was
done through reviews of responses to questions 3 and 4. Again the persons who agreed with the view that
targets were discussed and agreed upon with management are in the majority for questions, 68% and 67%
respectively. The positive responses are not confined to just those at the management level as one might be
inclined to assume since these are the persons who would implement the plans and may be tempted to report
favourably; there was good spread of positive responses from all levels of respondents. 61% and 58 % of
non-supervisory, 89% and 84% for supervisory and 88% and 75% answered in the affirmative respectively
for the two questions. The fact however that one manager disagreed, while not significant in terms of
48
numbers or percentage of the total sample population, this would benefit from further analysis by the
company since this person is likely to be responsible for also selling the PRP concept to lower level staff.
There is generally strong agreement from all levels of employees on the question of whether they believe the
reward system with the organization is fair, a critical factor according to (Thompson and Strickland, 2001).
In keeping with responses to questions 3 & 4, the majority of employees at all levels and with differing
lengths of service appear to view the system is fair. There is no noticeable pattern favoring a particular level
or persons with tenure. Still, management has to be cognizant of the fact that 1/3 or the respondents does not
consider the system fair nor do they agree that their performance goals have been made clear through the
implementation of PRP. There is concordance with the results seen thus far; while there is generally strong
support for most of questions, there is a fraction of employees, while in the minority, that still disagree that
plans were discussed and agreed upon and that targets have not been made clearer. It would follow then that
these persons would answer in the negative that they believe PRP is a fair system; 28% persons indicated
targets were not clearer while 33% believed the reward system was not fair suggesting some co-relation or
inter-relatedness among these factors.
Further to questions 1 to 6, questions 7 to 9 explored whether respondents felt a part of the process and
therefore what impact it had on them. The majority of persons indicated that PRP has not affected cooperation with management nor had it undermined staff morale though 30% of respondents indicated some
effect on morale. On the question of whether communication has improved, 60% disagreed, 37% indicated
improvements. While it appears that the management/employee relationship generally did not seem to suffer
negatively from the implementation of PRP, there are question marks around whether it has had any specific
effect on communication or not.
On the matter of whether the impact of PRP is evaluated and if employees are aware of methods to give
feedback on compensation issues, there were mixed responses coming from all levels of respondents. With
more than 50% of respondents indicating no, this may indicate some inconsistency of responses given to
employees by management regarding PRP and should be a matter of concern and would also benefit from
further review by the company’s agents, especially in light of the fact that 3 managers were included in those
who said no, figure 28. Since there are employees who are not seeing a clear link between their
compensation and their effort, the review of plans and making sure they are aware of how they can give
feedback are issues that need to be addressed as underlined by (Belfield and Marsden, 2003) and (Appelbaum
and Shapiro, 1991).
49
Figure 28 – Comparison of Employee Level & Reception to Feedback on PRP
25
21
No. of Respondents
20
17
15
Yes
9
10
5
0
7
2
Non-S
No
5
No response
3
1
Super
Mgmt
No Resp.
Level of Employee
In addition to the fact that the figures suggest that feedback on PRP is sometimes not welcomed by
management, there is also a suggestion of inconsistency in frequency of reviews of these plans. A significant
number of persons rarely see this being done while 8 have never seen reviews. While 48% of respondents
indicate periodic reviews, depending on how important compensation is to the company, a less than 50%
mark may or may not be an acceptable grade. In addition to this, there was also a good number of persons
who are not familiar with the process to give feedback on compensation plans and this was not limited to new
employees as even persons whose length of service spanned 11 to 15 and over 15 years indicated they were
not aware of a process.
Two other significant sets of results came out of this survey; it was found that the percentage of pay linked to
performance varied among level of employees, see figure 29 below and had no apparent link to tenure even
though the majority of non-supervisory employees saw less than 10% or 10 to 20% PRP. Additionally, the
company operated three different types of PRP plans, two of which seemed to be mostly applicable to nonsupervisory and supervisory level employees. While mostly managers saw 30% of pay being linked to
performance, there were also 2 persons at the supervisory level; this could give the impression of subjectivity
or bias in determining the percentage of PRP. While this could be a result of how prospective employees to
the company negotiate their compensation plans, this differential could possibly be perceived in a negative
light if persons at the same level share and compare pay information. The company may run the risk of losing
critical employee support for PRP and this also could be a challenge for managers to administer plans with
50
such variation. It could be argued that this is potentially why some employees have indicated that suggestions
are not welcome by management and perceptions of unfairness should be avoided at all costs.
Figure 29 – Comparison of Level and Percentage of PRP
Comparison of Level & Percentage of PRP
No. of Respondents
25
22
20
15
10
5
0
Non-S
11
Super
8
2
1
3
0
1
5
1
2
0 0
2
4
Mgmt
3
0
0 0 0
No Resp.
Less
10 to 20% 21 to 30% Over 30%
No
than10%
response
%age of PRP
In order to effectively develop and implement compensation plans, questions 17 and 18 sought responses
regarding which of three factors was most important to them. A telling 14% of respondents confirmed that
money mattered most to them and all but 3% indicated they wanted more than pay from their jobs. These two
factors are strong indicators to management about what employees are looking for. Even though money was
not the most important of the three factors, the results suggest that it has the power to impact employee
performance which sends a strong message to the developers of PRP plans; of importance is the fact that it
can act as a catalyst to higher or lower employee performance, (Marsden, 2009) and does have some impact
on an employee’s decision to remain with the company, a point underlined by 64% of respondents, thus
affecting the company’s ability to retain key personnel and will translate into significant retraining, and
consequently, turnover costs which can be very high, (Anon, 2003).
Since an employee’s perception of a direct link between pay and performance is critical to buy in and also to
accomplishing the organizational goals, (Konrad and Deckop, 2001), the responses given to question 21
represent a call to action for management. The fact that 43 of 65 respondents are not currently able to see a
direct link would deductively affect responses to other questions and general perception of PRP. Even though
this 66% majority does not see a direct link, the fact that 85% would welcome the opportunity to earn more
51
based on their performance indicates that all is not lost and the solution may lie is linking the two indicators.
Additional indicators that the PRP concept is a valid one are the responses given by respondents when asked
if PRP incents them to work harder and show more initiative. 36 respondents are willing to work harder but
only 26 are willing to show more initiative, giving the impression that there may a subtle difference in their
minds about how far they are willing to go in terms of effort as the figures regarding impact on motivation
indicated where a slim majority of 56% indicated a significant increase in motivation.
5.2 Conclusions
There are some patterns emerging from responses that allow several conclusions to be formed. Firstly, it is
clear that the company does involve employees in the development of PRP plans, a critical factor if it is to
produce successful results, a view supported by Harrington (1998). This is evident given the fact that
employees give their support and buy in to the concept of PRP, in that they believe the practice is not unfair
to employees but has the potential to benefit both employees and the organization. A further signal of
employee support is the fact that there is no evidence from the results that PRP has negatively impacted the
general views of employees or their commitment to the organization.
Secondly, there is much room for improvement in the review and evaluation of PRP plans within the
organization. Added to this is the fact that employees have signalled that there is weakness in the feedback
process. While the company does seem to have a solid process at the beginning of the process where there is
involvement of employees and communication of targets and goals, at the end of the process where
employees should be sharing their views about possible areas of improvement, management has dropped the
ball. This has the potential to derail any gains or momentum the company may have garnered in terms of
employee involvement. In light of this, the company should revamp the feedback process and act on the
suggestions given by employees, particularly as a few employees have indicated gaps between how their
performance directly affects pay. It is critical that this link be clearly established as this too has the potential
to affect the credibility of the PRP plan, employee buy in and its overall success or failure.
Finally, there is evidence that there is a relationship between PRP and the level of employee motivation,
though a modest one. Since PRP has the ability to both motivate and de-motivate, it is a powerful tool that
can be used by management to possibly address a host of human resource issues, but should not be used as a
panacea. It is clear that employee involvement in the PRP process affects their level commitment to the
organization and the amount of effort they extend in their jobs. The fact too that there is an apparent
52
relationship between compensation practice and the length of time an employee spends with the company is
also a signal of the importance of effective administration of the PRP plan. In closing, motivation at ACS
may also be a function of the percentage of pay that is variable; employees may respond more positively if a
bigger portion of pay was at risk or may not be responding as anticipated because too much is at risk and
there are weaknesses in the process, a matter for further study.
5.3 Theoretical Implications
This research paper adds to the body of literature on the use of performance-related pay and its impact on
motivation. The results show that while there is merit to some criticisms of PRP, the value to be gained from
proper implementation, communication, monitoring and evaluation can be very beneficial to organizations
that wish to address many of their HRM issues.
5.4 Recommendations
It is suggested that management undertakes a review of the number of plans in existence to reduce the
amount of administrative time to compute employees’ pay. The variety of plans as well as the varying
proportions of PRP percentages should be revised for ease of administration and for business continuity if
new persons need to take over. If in fact, these differences are built in to the recruitment and negotiation
section of the hiring process, then this must be made clear to employees to avoid negative perceptions.
Secondly, management should address the perception that suggestions about improving plans are not
welcome as well as the frequency of the reviews of the plans. A reduction in the number of plans in existence
would aid this process tremendously.
Finally, this research paper did not allow the exploration of whether PRP is part of an overall strategic plan
of the company or simply as part of its motivation practices. Should the latter be true, management may be
advised that in accordance with literature and the findings of this study, employees are looking for more
meaningful rewards in addition to compensation practices and strive to develop same to retain key employees
within the organization.
53
5.5 Limitations
This research investigated the relationship the PRP has had on team members within a single BPO company
within the Jamaican context. Varying legislations determine operational practices including how much of an
employee’s pay can be variable pay. Additionally, in an organization of more than 4000 persons carrying out
substantially different functions, this study is based on the views of only sixty five respondents, even though
a higher number had been targeted. As such, generalizations would be limited to companies of a similar
nature and functions operating within the same legislative structure in Jamaica. A wider study of a larger
percentage of the population would be an interesting project to undertake to give a more comprehensive view
of the relationship between PRP and the level of employee motivation.
Based on the findings, no executive members were present in the respondent population; therefore the impact
of PRP on that level of employee was not studied in this paper. The paper also does not assume that monetary
incentives are the only factors that motivate, only that it is one possible method for HRM practioners to
explore.
5.6 Reflections
The research paper has fulfilled the objectives it set out to achieve. Much insight has been gained on how
PRP can influence employee behaviour amidst a host of other organizational factors and the role it can play
as a part of an overall strategic framework. It was interesting to note that without conscientious effort, a plan
implemented with much thought and preparation can fall short of accomplishing its goals if just one aspect of
the plan is lacking and also pointed out many of the downfalls and benefits to be derived. The survey did
answer the research questions raised but also raised other questions about the wisdom of having several
different PRP plans running concurrently within a single organization which may benefit from further
research.
Having worked in the organization implementing PRP plans, it was certainly beneficial to be studying the
impact of these plans on employees. My previous experience looked solely at the benefit or savings to the
organization of implementing PRP plans. While I was involved in the development and communication of
the plans, there was no ongoing involvement to test impact and feedback was the job of direct managers. It
was therefore a challenge not to fall back into the mode of thinking along the lines of cost savings and
54
allowing past experience to cloud how I approached this study and the subsequent interpretation of the data
collected. The researcher has also learned to have an open mind as views presented in literature as well as
personal experience though they may be different; they can all be relevant at different times and in different
circumstances as the various views on PRP expressed in literature and the results of the survey have proven.
It would appear that challenges and research go hand in hand. First was the fact that the organization to be
studied had to be changed due to several factors outside of my control and other challenges came as I began
the literature review process and had change my sub-questions several times to finally decide on those that
seemed to best fit the research question I was trying to answer in addition to having to go through a large
volume of literature to find applicable information. Much direction was sought and given to help me along
the way as I realized that both research question and sub-questions were not succinct enough. The
questionnaire also had to be revised several times to ensure that the questions were relevant and this was a
time consuming process. Additionally, despite many cautions and advice regarding what to expect during the
study, there was no preparing for the many things that can go wrong or the length of time it takes to analyze
data. Added to this, plans to use SPSS for data coding and analysis did not materialize as a result of financial
and availability constraints so Excel substituted for this which proved very difficult and time consuming.
The research project also came at a time or great personal and professional challenges that affected the
completion of this entire course. While I had no control over the professional challenges, my reaction to them
devoured valuable time; it was sheer willpower, wanting to complete what I started and some tough love that
finally gave the necessary prompting to follow through. In hindsight, much preparation should have been
started well before the dissertation stage and I have also learned that in developing time lines for a project of
this nature, it is best to be overly cautious about how long a process will take rather than too optimistic as
challenges will always be present.
55
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59
APPENDICES
60
APPENDIX I – DISSERTATION PROPOSAL
The Proposal Template
Student Name: Sherie Brooks
Student Registration Number: 069022403
Programme Title: MBA Distance Learning
Module Title: Research Methods (DL) Module Support (The Proposal)
Assignment: Dissertation Proposal
Specialism
No specialization
Dissertation Tutor
The dissertation proposal topic and sub-questions were discussed with supervisor Dr. Deborah Price via
Blackboard support forum starting in April 2012 for relevant guidelines.
Title
Does pay-for-performance motivate non-executive employees in the Savanna-la-mar branch of the National
Commercial Bank, Jamaica?
Abstract
The main purpose of this study is to explore the relationship, or lack thereof, between the level of motivation
of employees and the practice of paying for performance (P4P) within the Savanna-la-Mar (Sav) branch of
the National Commercial Bank (NCB) in western Jamaica. A quantitative exploratory study will be done
utilizing questionnaires distributed randomly to participants within the branch in western Jamaica; this
limitation due to practical constraints of targeting all the employees located in all branches of NCB across
Jamaica. The questionnaires will use a number of open-ended and closed questions to try and illuminate the
true impact of this compensation practice and respondents will be chosen randomly from employees within
this specific branch of NCB with the view that the information gathered will provide useful insights to
managers into the effective use of compensation as reward as well as the possibility of other methods in
driving employee behaviour in the right direction. Additionally, interviews of senior managers to glean
61
information on the general objectives of P4P, the different types plans as well as to whom they are applicable
within NCB will provide further insights. Both the interviews and the questionnaires will facilitate the
exploration of any possible relationship between pay practices and whether or not they impact employee
motivation and how. The method of the study aims to ensure that the results will be applicable to the wider
population of the entire twenty four branches of ACS (www.jncb.com) across Jamaica and may allow
generalisations to be made within or about other financial institutions within Jamaica and the Caribbean
region relating to how effective or ineffective this compensation practice is.
Introduction
The main aim of this paper is to explore the effects of pay being tied to performance on the levels of
employee motivation, specifically among non-executive team members within the Sav branch of NCB. The
central question to be explored is:
Does pay-for-performance motivate non-executive employees in the Savanna-la-mar branch of the
National Commercial Bank, Jamaica?
The following sub-questions seek to drive the exploration of the issues surrounding the central question:
1. To what extent are P4P plans used as motivational tools within organisations? What forms do they
take?
2. What is the relationship between pay and motivation? What insights do theories of motivation
provide?
3. Are P4P plans evaluated or validated? If so, how?
Research Interest
This topic is of interest to me as I have driven the implementation of P4P plans in Call Centre, Data Entry
and other transactional environments and seen where they have had positive results; however, I have
conflicting informal responses from persons in the financial and other sectors as to the benefits of these
plans. Additionally, there has been much publicity in Jamaica in recent times where suggestions have been
62
made by Ministers of Government for teachers to be paid for reducing illiteracy rates and police personnel
for reduction in crime statistics. The concept of paying for performance is very much a topical issue and my
aim is to explore its usefulness or lack thereof in the financial sector.
Relation to previous research
The practice of paying for a job or position that existed in most companies in the past is fast making way for
different methods of rewarding employees for work done. Employers believe that the new paradigm to drive
employee behaviour and achieve organizational goals is to tie employees’ compensation directly to their
performance, illustrated by Keys and Miller (1994) writing in Chang (2011) as they drew reference to the
declining practice in Japan of lifetime employment, seniority evaluation, promotion and compensation. They
further referred to a survey which showed a trend of increased percentages of Japanese companies and
international joint ventures paying employees based on performance. Additionally, this paradigm shift was is
evident, Stajkovic et.al (1997, 2001, 1998, 2003, and 2004) quoted in Chang (2011) as well, in that US
companies are also recognizing that individual P4P plans can motivate although they noted differences exist
in the specifics of the mechanisms of implementing these types of pay for performance plans. While there
appears to be unanimous agreement that there is a shift to new methods of compensation within
organizations, pay for performance being one such change, the challenge with the concept of paying for
performance however, is that any empirical study or evidence of how it affects employee motivational is
lacking (Chang 2011:3929) even though individual pay for performance is regarded as a major motivational
practice.
The literature suggests the benefits to be had from using P4P plans are many, ranging from rewarding
employees for their input to reducing company spending, Robbins (2001). Writers who support P4P plans
such as Strickland and Thompson (2001), have put forth arguments that employees’ commitment to an
63
organization’s strategy can be gained from implementation of P4P plans, and that many critical and
overarching company objectives can be supported by the implementation of these plans Ericson (2011), as
pay as a motivator has its greatest influence when P4P is used (Tanke) 2001. However, Tanke (2001) made
specific mention of these plans within the hospitality industry without any reference to their effectiveness in
other organizations which limits the applicability of these results.
While the above writers support the concept of P4P. Anon (2003), indicated that the evidence of P4P being
counter-productive was considerable as many companies were unable to see the long term effects of these
plans and went further to suggest alternatives to these plans through long term planning and other methods of
rewards. Additionally, Fang and Gerhart (2012) quoted several writers who claimed P4P had serious
implications and pitfalls; additionally, the writers felt that intrinsic motivation would be diminished by
external rewards. Fang and Gerhart, (2012) went on to say that much of the criticisms of P4P plans were
based on CET (Cognitive Evaluation Theory, whose effects has not been extensively tested in the workplace,
in effect rendering the criticisms ineffectual and leaves many questions unanswered. In direct contrast to
these views, and in support of further study on the topic of P4P, Khan (2012) believed that a company’s
human resource performs best when it is motivated and that this motivation comes about when a sense of
ownership is inculcated through the use of quantifiable incentives.
The literature then has several conflicting arguments; some adamantly proposing the benefits of P4P plans as
contributing to decreased rates of turnover, absenteeism and other challenges Robbins (2001) relating to
employee morale and motivation. They also speak to the downfalls of these types of plans making any
concrete stance on the issue somewhat inconclusive and leads me to the belief that an in depth study of the
effect of P4P plans on motivation can provide tremendous benefit to the senior managers at NCB Savanna-laMar.
64
Proposed methods
Information for this study will be obtained from both primary and secondary sources. The primary source
will take the form of structured interviews of at least two senior managers of the Sav Branch of NCB. This
will form the background to study as information of the number of potential respondents will be critical; the
interviews will also aid in giving direction to the types of questions to be included in the questionnaires for
the larger population study which will be used to glean first-hand information from which inferences can be
made about the central question. Questionnaires will also be administered to a target of one hundred and
twenty employees within the branch to provide data needed for the study from which a return rate of eighty
percent is anticipated.
The decision to use both methods will enable the researcher to tackle any gaps that exist in either method as
well; also, it would be more appropriate to explore the decisions behind the implementation of P4P plans
using interviews as this method is more participatory and allow exploration of areas with more spontaneity
and depth (Oppenheim, 1992) that may not be covered by the questionnaires. The questionnaires will be
made up of about approximately eighty percent closed-ended questions and twenty percent open-ended
questions in order to accurately capture information needed and give an opportunity for further clarifications
if necessary. Although, open-ended questions a little bit more difficult to analyze due to the possibility of
subjectivity in their interpretation, (Kothari, 2004) the researcher believes the benefits to be had from this
method outweigh the disadvantage. This quantitative method allows for the possible relationship between
P4P and motivation to be explored (ULE, 2009) and questionnaires allow respondents some level of
anonymity and confidentiality (Mitchell and Jolley, 2010) which can produce more honest responses; the
opportunity to complete documents in their own time and allow responses from large numbers of persons at
the same time, Hillier and Jameson (2003). Closed questions allow easy of collation and analysis while open
65
questions seek more intuitive input from respondents Hillier and Jameson (2003), thereby creating a balanced
and more effective study.
The secondary source information will take the form of the literature review process which is critical as this
helps to show the importance of the study as well as create boundaries for this research paper, Creswell
(2003). This will be done in order to methodically gather critical information on what is known about P4P
plans, (Fink, 2010) within organizations with a view to finding out whether there are gaps or opportunities
for further or other types of studies to be done. Relevant information will be garnered using online academic
journals and books to specifically address subject areas raised in the sub-questions.
Analysis of questionnaire data will be done through the use SPSS software for better accuracy in the collation
of responses. The selection of persons to participate in the study will be done using a probability sampling
method. Although, probability sampling method is the main technique used in quantitative studies, Babbie
(2010) indicated it can be inappropriate in a lot of situations and also may involve the use of complex
statistical techniques outside the scope of this project. However, for the purposes of this study, this method
will ensure the study will be as representative of the population as much as possible, allowing generalizations
to be made; as well as reduce any possible sampling errors in the process (ULE Research Methods, 2009).
This population will constitute those persons in Sav branch of NCB whose compensation fall or is likely to
fall into the P4P category at some point or another.
Reflections
It is anticipated that since this paper seeks to gather data pertaining to compensation, there may be challenges
with gaining access to persons within the branch as well as the possibility of access to an adequate sample
size. Even though not specifically dealing with level of compensation, the researcher must bear in mind that
any issue surrounding compensation may be a sensitive one. Additionally, time constraints will prove
66
challenging as persons in the sector are traditionally known to be time-driven individuals so the
administering of questionnaires and getting the responses will be time consuming.
Another challenge to overcome is the fact that there is little or no research in reference to how these plans
work in the Jamaican scenario, particularly the financial sector so reviews of literature will have to take a
broader view to areas outside of national boundaries. Much reliance will be placed on existing literature on
P4P plans in the general business and financial sector contexts.
Although the use of questionnaires has many benefits, the validity of data provided could be questioned as
there is no way to check the truth of the answers in addition to the fact that there is no control over how many
responses will be sent back, Denscombe (2007). In order to lessen the risk of this, a small proportion of openended questions will be used to allow for follow up information to be given. Additionally, some sensitisation
to the study will be done with members within the branch familiar to the researcher to set the tone and an
initial familiarization with testing of the questionnaires will also be done. The use of interviews also poses
potential problems, Denscombe (2007) indicated that the researcher has to guard against the possibility of
confusing a mere conversation as against an interview seeking definitive or relational answers; a false sense
of security can develop and at the end of an interview, the necessary information may not be gathered. To
guard against this, prepared questions will be formulated and structured to ensure that neither party is
distracted from the aim of the exercise.
Having worked in a position of Project Manager implementing P4P at a large multi-national company, it is
possible that I may have pre-conceived opinions about the benefits or drawbacks of these types of plans. It is
also possible for me to apply potential bias towards to structure of the questionnaires and interview questions.
The approach to be taken is to allow the literature review to drive the questionnaire and interview designs as
well as to take the advice of my dissertation supervisor throughout this exercise. In addition, it is my
67
intention to over-communicate to respondents about the purpose of this research, assure confidentiality of the
data and be open and honest about the results and analysis should they wish to be made privy to the findings.
At the end of this exercise, I hope to have gained considerable knowledge on this and other organizational
matters which will be of interest to me as an academic and a professional.
Conclusion
While I await the response to my proposal from my dissertation supervisor, the plan is to continue the
literature review using the sub-questions to drive the exercise. I will then move on to developing the
questionnaires and interview questions so that they will be ready for dissemination upon approval of the
proposal and feedback on their structure and content. The plan is to move very quickly after this point as
time constraints are my main challenge. In addition to this, I will start exploring the availability and cost of
the SPSS software and begin making telephone calls to key persons in the financial sector to bring awareness
to my proposed study. This way, I will limit the time it will take to familiarize persons once the approval to
go ahead is given. Additionally, I will begin to plan contingencies for this research paper; a backup plan is
needed in case there are issues with number of respondents or difficulty in accessing the intended
organization of study.
Since there is little information on this type of study within the Jamaican context, I am looking forward to
what the study will reveal about this compensation practice as more companies seek to implement it,
specifically as it relates to the impact it has on employee behaviour and performance, feelings toward the
organization and overall possible organizational impact.
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Timetable
1.0
2.0
3.0
4.0
5.0
TIME TABLE FOR COMPLETION OF DISSERATION PAPER
PAY FOR PERFORMANCE (P4P)
DELIVERABLES
APRIL MAY JUNE
SUBMISSION OF PROPOSAL VIA BLACKBOARD
PREPARATORY WORK:
2.1 Begin review of literature
2.2 Write up of literature reviews
2.3 Questionnaire design
2.4 Questionnaire review and feedback
EMPIRICAL STUDY
3.1 Select respondents/participants
3.2 Test/redesign questionnaire
3.3 Questionnaire distribution
3.4 Source, install and train on SPSS
DATA ANALYSIS
4.1 Collection and analysis of questionnaires
4.2 Write up/interpretation of findings
DISSERTAION WRITE UP AND SUBMISSION
5.1 Complete conclusions/recommendations
5.2 Complete references, appendices etc.
5.3 Submit paper via Blackboard and express to ULE
69
JULY
AUGUST SEPTEMBER
References
Anon, (2003) "More to performance than a big pay packet: The big issue", Human Resource Management
International Digest, Vol. 11 Iss: 4, pp.25 - 28
Babbie, Earl (2010) 12th ed. The Practice of Social Research, Wadsworth, Cengage Learning, CA, USA
Chang, Eunmi (2011): Motivational effects of pay for performance: a multilevel analysis of a Korean case,
The International Journal of Human Resource Management, 22:18, 3929-3948
Denscombe, Martyn (2007); The Good Research Guide, For Small-Scale Social Research Projects, Open
University Press, Bershire, England
Ericson, Richard N. (2011) Building a Better Long-Term Incentive Mix, Benefits Quarterly, 2011 Second
Quarter, Vol. 27 Issue 2, p38-42, 5p
Fang, Meiyu & Gerhart, Barry (2012): Does pay for performance diminish intrinsic interest?, The
International Journal of Human Resource Management, 23:6, 1176-1196
Fink, Arlene (2010) 3rd ed. Conducting Research Literature Reviews, From the Internet to Paper, Sage
Publications Inc. CA, USA
Hillier, Yvonne and Jameson, Jill (2003); Empowering Researchers In Further Education, Trentham Books
Limited, Staffordshire, England
Khan, Anas (2012),"Penny-wise, pound-foolish managers: the syndrome affecting productivity and
efficiency", Human Resource Management International Digest, Vol. 20 Iss: 1 pp. 3 - 4
Kothari, C.R. (2004). 2nd ed. Research Methodology, Methods & Techniques, New Age International Ltd.,
New Delhi
Mitchell, Mark L. And Jolley, Janina M. (2010) 7th ed. Research Design Explained, Cengage Learning, CA,
USA
Oppenheim, A. N.(1992), Questionnaire Design, Interviewing and Attitude Measurement, Continuum,
London, ENG
Robbins, Stephen P. (2001). Organizational Behaviour, Prentice-Hall Inc. Upper Saddle River, New Jersey.
Tanke, Mary L. (2001) 2nd ed. Human Resources Management For the Hospitality Industry Edition, Delmar,
a division of Thompson Learning Inc., Albany, NY, USA,
Thompson Jr., Arthur A., Strickland III, A. J. and Gamble, John E. (2007). Crafting and Executing Strategy:
Text and Readings, McGraw-Hill Irwin: NY.
University of Leicester (2009). Research Methods, Learning Resources, Cheltenham, ENG
Anon., (2012)
http://www.jncb.com/
(30 July 2012)
(Word Count = 2,591)
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APPENDIX II – PARTICIPANT INFORMATION SHEET
Dear Participant,
I am undertaking a research project as part of my studies in a Masters of Business Administration (MBA)
course at the University of Leicester, UK. The project seeks to study the relationship between performance
related pay and motivation.
The project seeks to gather the views of a number of employees within your SBU who have been randomly
selected to participate. To do this, a short questionnaire has been developed and this is attached to this
document. I would be extremely grateful if you would answer the following questions and return the
questionnaire.
The questionnaire should take no more than 8 minutes to complete and is anonymous and confidential, so
please do not write your name on the paper.
The information you provide will be used for data analysis only. Once the questionnaire is returned, the
responses will be aggregated with all the other returns. The data will be analysed using appropriate computer
software.
Should you need further information, please feel free to contact me at 881-9148 or at my email address
[email protected]. If you would like to get information about the final results of this study, kindly
contact my course supervisor, Dr. Deborah Price by email at [email protected].
Thank you very much for your time.
Sherie Brooks
MBA Student
University of Leicester
October 10, 2012
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APPENDIX III - QUESTIONNAIRE
QUESTIONNAIRE
Instructions:
Please check the boxes next to your intended response. Please select one answer to each question and provide
a short written response where necessary.
1. Do you support the view that performance-related pay is beneficial to:
Employees
The company
Both
None
2. I support the view that tying pay to performance is a good one.
Strongly Agree
Agree
Neutral
Disagree
Strongly disagree
3. Performance targets/goals were discussed with management.
Strongly Agree
Agree
Neutral
Disagree
Strongly disagree
4. Performance targets/goals were agreed upon with management.
Strongly Agree
Agree
Neutral
Disagree
Strongly disagree
5. I believe the reward system in my organisation is fair.
Strongly Agree
Agree
Neutral
Disagree
Strongly disagree
6. Performance related pay has resulted in performance targets being clearer for employees.
Strongly Agree
Agree
Neutral
Disagree
Strongly disagree
7. Performance pay has reduced my wish to co-operate with management
Strongly Agree
Agree
Neutral
Disagree
Strongly disagree
8. Communication between management and employees has improved as a result of performancerelated pay.
Strongly Agree
Agree
Neutral
Disagree
Strongly disagree
9. Performance-based pay has helped to undermine staff morale.
Strongly Agree
Agree
Neutral
Disagree
72
Strongly disagree
10. Suggestions about improving or changing compensation plans are welcomed by management.
Yes
No
11. The company reviews and evaluates methods of compensation across the organization.
Regularly
Periodically
Rarely
Never
12. Is there a process to give feedback on these plans to HR or senior management?
Yes
No
13. I am familiar with this process.
Yes
No
14. Would you change this method of pay if you could?
Yes
No
15. What portion of your pay is performance driven?
< 10%
10-20%
21-30%
over 30%
16. Please indicate what type of performance pay plan you participate in
Merit
Profit sharing
Bonus/incentive
Gain sharing
17. Which of the following is most important to you?
Money
Benefits (pension, scholarships etc.)
18. I want more from my job than just pay.
Strongly Agree
Agree
Neutral
Promotional opportunities
Disagree
19. I welcome the opportunity to earn more based on my performance.
Strongly Agree
Agree
Neutral
Disagree
Strongly disagree
Strongly disagree
20. The compensation practice in my organization affects my decision to remain with the organization.
Strongly Agree
Agree
Neutral
Disagree
Strongly disagree
21. I am driven to perform because the level of effort I put out directly affects how much I get paid.
Strongly Agree
Agree
Neutral
Disagree
Strongly disagree
22. My method of pay gives me incentive to work above and beyond the requirements of my job.
Strongly Agree
Agree
Neutral
Disagree
Strongly disagree
73
23. The system of performance pay has made me want to show more initiative in my job.
Strongly Agree
Agree
Neutral
Disagree
Strongly disagree
24. The system of performance pay has significantly raised my motivation at work.
Strongly Agree
Agree
Neutral
Disagree
Strongly disagree
25. Please note any suggestions you may have on how to improve the pay plans below.
________________________________________________________________________________
________________________________________________________________________________
To help in the classification of your answers and make statistical comparisons, please provide the following
data:
26. Gender
Female
Male
27. To what age group do you belong?
Under 25
25 to 35 years
36 to 45 years
Over 45 years
28. How long have you been employed to the company?
0-5 years
6-10 years
11-15 years
over 15 years
29. Which level are you currently at?
Non-supervisory
Supervisory
Executive
30. What is your highest level of education?
Secondary
Tertiary
Management
Professional designation
Thank you very much for your time!
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