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Background of the study:
Intro: The concept of the supermarket originated in the USA when Clarence Saunders decreed that "shoppers should serve themselves and...opened the world's first selfservice store [Piggly Wiggly] in 1916" (Bevan, 2005, p8). The supermarket is a more recent notion in the UK, dating back to 1950 when Sainsbury's opened its first self service shop. Supermarkets have expanded and gained power, they are increasingly resented by some people as people feel too dependent upon them. The supermarket sector changed vastly in the 1960s -the so-called 'golden age' of supermarkets. The four UK 'supermarket giants' - Tesco, Asda, Sainsbury's and Morrisons - control almost 75 per cent of the £120 billion UK grocery market. This shows the sheer scale and amount of money involved in the UK supermarket sector and highlights the power. The big supermarkets in the UK in respective order are Tesco, Asda, Sainsbury's, Morrison, Waitrose, Somerfield and Marks and Spencer, Lidl etc. Corresponding with the boom in supermarket sales and profits over recent years - in April 2005 Tesco became the first British retailer to report annual profits of over £2 billion and in April 2007, profits of £2.55 billion showing the scale on which British supermarkets are now competing - there is an exceptional and increasing interest in the supermarket sector as a whole. This recent movement increases the pressure placed on managers and companies alike to acknowledge their responsibilities towards society and to act in ways that benefit society as a whole. This trend could be leading to a new battle within the supermarket sector; the battle to become a socially responsible supermarket in order to gain competitive advantage.
Significance of study: This report relies principally on the contributions of the Supermarket employees in UK. The research indicates the various financial factors like base pay, annual bonuses, long term incentives, shares, profit-sharing, pensions, holidays, perks and flexibility which affect job satisfaction as well as there are also some other factors which are related with the financial reward like work experience, age and sex, which the study takes into consideration. Specifically, the expansion of the supermarket business, along with great services, has created a severe implied competition in this sector. This has brought higher employment opportunities, increases in income level and consequently there emerges a competitive environment in the country. This competition has made the service gap wider as supermarket businesses offer better services to the customers. So, it has become an important issue to retain the best employee to make the organisation more productive which has created an urge to the policy makers and HR experts to identify the underlying reasons and brought them into consideration the job satisfaction issue. Moreover, it has been imagined that employee in the supermarket sector play the key role in manipulating their services that has appeal to their customers. In such situation, job satisfaction of the employee becomes an important issue that has to be taken care of in order to achieve ultimate goals of the supermarket sector in UK.
Organisations are increasingly focusing on corporately aligned performance and trying to ensure that employees are accountable and rewarded for their contribution to make them satisfied. Rather than consisting of largely technical and administrative work, Lawler advocated that the employers should adopt compensation and benefit staffs through an integrated reward approach which should be linked with company strategy, pay system and employee behaviour. For communicating and reinforcing the business goals of the organisation, pay system thus become an important thing. This does not mean that it represents an important cost for the business, but also it will make employee encourage to pursue and achieve these business goals and to develop and apply the essential capabilities supporting them. According to US Business strategy guru Michael Porter believes that 'having the right reward in place helps people to make the right choices to support your strategy'. (Cited on the book of Armstrong and Brown-1999, p-59). From the quotation of Michael Porter, it can be deduced that reward is a key tool in this aspect of managing performance and engaging the people who are key to organisational success.
Research Objectives and Aims:
Job satisfaction is an issue of substantial importance for both employers and employees. As many studies suggest, employers benefit from satisfied employees as they are more likely to profit from lower staff turnover and higher productivity if their employees experience a high level of job satisfaction. The main aim and objective of this research is to find out the level of job satisfaction through financial reward which affects the retail sector (Supermarket) in UK.
To examine the broader perspective of job satisfaction and its benefits to employees and employer.
To find out various types of financial reward which influence and encourage job satisfaction level.
To evaluate the impact of these financial factors on employee productivity.
To investigate how the non-financial rewards besides the financial rewards keep employee satisfied which lead to maximise the organisational profit.
This research topic aims to assess job satisfaction level and the various financial factors, which affect job satisfaction. The investigation will be justified over the leading supermarket giant employees in UK. The research on the employees of supermarket has been chosen for many reasons. Firstly, the supermarket is consider as one of the most successful and profitable sector in UK. For the rising up the market share and even in the time of recession, a remarkable change has been seen in the last few decades, which helps to create job opportunities and a significant increase in income level and as a result there emerges a competitive atmosphere is growing in the country. Secondly, in the changing era technology is a ongoing process where successful organisation must have retained these employees who are able to work productively and in a team. It has been proved by many researchers that who are satisfied with their jobs are likely to be co-operative, productive and efficient (Crany and et.al, 1992). The research focuses on revealing following questions:
What are the financial rewards that affect job satisfaction in the supermarket in UK?
How successful the present financial rewards method to identify the job satisfaction level?
What can HR department do to improve the job satisfaction for the employees?
Job satisfaction has already been studied by many discipline such as sociology, economics, psychology as well as management science frequently in work and organisational literature. The reason behind that many specialists believe that job satisfaction has huge impact on work productivity and labour market behaviour. Moreover, job satisfaction is counted as a well-built forecaster of individual welfare. Gazioglu and Tansel quote in 2002 (Measuring job satisfaction surveys-comparative analytical report, 2006) that job satisfaction is also important intentions or judgments of employees to stay or leave a job. Many organisations now define reward as including financial and non-financial elements. Financial rewards might include pay, 'perks', paid holiday, etc. Non-financial rewards might include opportunities for learning and development, as well as 'voice' and quality of working life. According to Brown and Armstrong (1999), financial reward consists of base pay, annual bonuses, long term incentives, shares, profit-sharing, pensions, holidays, perks and flexibility which represents transactional rewards and also necessary to recruit and retain.Today, the idea of reward strategy which is now widely accepted in companies and HR departments. The elements of financial reward discuss below briefly:
Base or Basic pay
The base rate is the amount of pay that constitutes the rate for the job. It may be varied according to the grade of the job or for manual workers, the level of skill required. Base pay will be influenced by internal and external relativities.
Internal relativities may be measured by some sort of job evaluation which is a systematic process for defining the relative worth or size of jobs within organisation in order to established internal relativities and provide the basis for designing an equitable grade structure, grading jobs in the structures and managing relativities. External relativities are assessed by tracking market rate analysis which is the process of identifying the rates of pay in the labour market for comparable jobs to inform decisions on levels of pay within the organisation. Jobs may be also placed in the grade structure according to their relative size. Pay levels in the structure are influenced by market rates. The pay structure may consist of pay ranges attached to grades which provide scope for pay progression based on performance, competence, contribution or service.
Base pay may be expressed as an annual, weekly or hourly rate. For manual workers this may be an hourly rate which is known as a time rate. Allowance for overtime, shift working, unsocial hours or increased cost of living in London or elsewhere may be added to base pay. When determining rates of pay, employers must meet the requirements of the national minimum wage (NMW). The national minimum wage (NMW) was established on 1 April and applies to all workers age 16 and over. The NMW rates are expressed as national hourly rates. There are no variations by region, occupation, industry or employer size. Employees cannot agree to accept a rate lower than the NMW.(Armstrong-2009)
Many people see pay related to performance, competency, contribution or skill as the best way to motivate people. Contingent pay is used to described any formal pay scheme that provides for payments on top of the base rate, which are linked to the performance, competency, contribution or skill of people. This system is apply to individual or teams, or it can operate on an organisation wide basis. A distinction should be made between financial incentives and rewards while considering contingent pay as a motivator. For giving direct motivation to employee, organisation apply financial incentives which tell people how much money they will get in the future if they perform well like- 'do this and you will get that'. A best example of financial incentive is sales representative's commission where as financial reward act as indirect motivators because they provide a actual means of recognizing achievements, as long as people expects that what they do in the future will produce something worthwhile.
Performance related pay
Performance-related pay (PRP) is a method of remuneration that links pay progression to an assessment of individual performance, usually measured against pre-agreed objectives. PRP also known as individual PRP or merit pay. Pay increases awarded through PRP are normally consolidated into basic pay although sometimes they involve the payment of non-consolidated cash lump sums. While the focus of this fact sheet is individual, consolidated PRP as a means of pay progression, PRP can be defined more broadly to include many differing systems that link individual and group performance to pay, for example bonus schemes.0
Competency related pay
People receive financial rewards in the shape of increases to their base pay by reference to the level of competence they demonstrate in carrying out their roles. It is a method of paying people for the ability to perform now and in the future. Competency-related pay is attractive in theory because it can be part of an integrated competency-based approach to HRM. Competency pay sound like a good idea but it has never been taken up to a great extent because of the problem like bias.
Contribution related pay
Contribution related pay is a process for making pay decisions based on assessments of both the outcomes of the work carried out by individuals and the inputs in term of levels of competency that influence those outcomes. It focuses on what people in organisations are there to do, that is, to contribute by their skill and efforts to the achievement of the purpose of their organisation or team. (Brown and Armstrong 1999). Contribution-related pay rewards people for both their performance and their competency.
Skill-based pay provides employee with a direct link between their pay progression and the skills they have acquired and can use effectively. It focuses on what skills the business wants to pay for and what employee must do to demonstrate them. It is therefore a people based rather than a job based approach to pay. Rewards are related to the employee's ability to apply a wider range or a higher level of skills to different jobs or tasks.
Service based pay
Service-related pay provides fixed increments that are usually paid annually to people on the basis of continued service either in a job or a grade in a pay spine structure. Increments may be withheld for unacceptable performance and some structure have a merit bar that limits increments unless a defined level of merit has been achieved. This is the traditional form of contingent pay and is still common in many organisation.
Bonuses and cash incentives
The payment of bonuses or cash incentives may be linked either to the quality or quantity of work, on an individual or collective basis, or to some measure of company performance such as profit levels.
Payment of the bonus or incentive is determined by some measure of individual performance. An advantage of such schemes is that individuals should be able to directly influence their own bonus payments by attaining the desired performance levels, hence there should be a considerable incentivisation effect. Sales commission could be included within this category. Individual bonuses might also be used in the situation where employees at the top of their pay scale would receive a non-consolidated bonus payment rather than a consolidated pay rise.
These schemes often use company profit levels as a measure to help determine bonuses, with other measures including company turnover, revenue, sales and cash flow. Under cash-based profit sharing, for example, the level of payout might be determined by means of a formula linking the levels of profit to individual payments across the workforce. Business results also tend to be a key indicator for executive schemes designed to incentive or reward high-level executives.
Such schemes link the bonus with some measure of team performance, often with the aim of fostering effective team working.
Department or site-based
A variation on the collective bonus theme, payments could be pitched to reward, for instance, production workers who attain productivity improvements in one particular plant in a manufacturing firm.
An approach based on the idea that employees should be able to share in financial gains achieved through improved performance.
Moreover, a wide range of perks and benefits offer to employees, from the traditional such as paid leave, occupational sick pay, occupational pensions and healthcare benefits etc. Some benefits, such as work-based pensions, are tax-efficient methods of remuneration. There are various reasons for why employers offer employees benefits. For some, it is to match market practice, for others it is to provide employees with some measure of security, such as occupational sick pay, while others use them to retain employees, such as occupational pension schemes. Voluntary benefits (where employers provide third-party goods and services at a discount) excite most interest. Flexible benefits schemes are formalised systems that allow employees to vary their pay and benefits package in order to satisfy their personal requirements.
While pay and benefits are important, and getting them wrong can have dire consequences for the organisation, they are not the only rewards that employers should consider. Research shows that non-financial rewards can be just as important. Employers need to consider what they are rewarding and try and align what employees want with the needs of the business. There are various elements to reward from the financial to the non-financial and it's important that employers chose the appropriate mix of base to variable pay, fixed to flexible benefits, and pay to non-pay rewards.
These include: opportunities for personal and career development flexible working (such as working from home or flexitime) being involved in decisions that affect how and when employees do their work a pleasant working environment. good performance management and appraisals. recognition, such as through an employee of a month award or team-based events.
Both new and old-economy companies currently have to rethink their reward strategies to give the satisfaction to their employees. Newer companies, particularly those in the hi-tech sectors rewarded employees with exciting and challenging surroundings, but with no guarantee of job security. They also offered significant financial rewards, in the form of stock options. Now that the stock options have to be expensed on the profit and loss account, and the traditional companies have stopped providing a job for life, both have to look at new ways of attracting and retaining key personnel. As Smith(1957) stated, "The study of job satisfaction should be able to contribute to the general psychology to motivation, preferences and attitudes". Job satisfaction refers one's believe or attitude about the nature of their occupation. The primary aims of job design are to enrich job satisfaction and performance takes into processes includes job enlargement, job rotation and job enrichment (www.managementhelp.org). It can be seen from the recent studies that satisfied employees are likely to be more creative, dynamic and committed to their employers and HR practitioners have shown a straight relationship between staff satisfaction and tolerant satisfaction. Moreover, by creating a positive workplace for employees, employer can increase their own satisfaction. (Syptak and et al., 2009). People work because they gain an income to spend on their individual, family and community needs. Some needs are the essentials of life, what humans needs to survive physiologically. what humans needs to survive physiologically. Maslow defined the hierarchy of needs with fundamental physiological needs at the base and rising through safety, social needs and culminating in the need for self-fulfilment. Herzberg distinguished between firstly 'hygiene' extrinsic factors such as pay and organisation policy and procedures that will cause dissatisfaction in the workplace if absent or insufficient. Secondly, 'satisfiers' which are intrinsic factors such as the 'value' of the work, achievement, recognition, responsibility and potential for growth which will positively motivate people. (Adair, 1996).
Since Maslow and Herzberg were published, other theories of motivation have been developed. These tend to centre on cognitive theories - how people think about their 'reward'. Expectancy theory identifies two factors of value and probability. People value reward in terms of how well it satisfies their needs of security, social esteem, fulfilment and autonomy. Inevitably people value different elements differently, which suggests reward must include a mix. Expectancy is the probability that reward depends on effort - the more effort, the higher the reward. For that effort to be helpful to the organisation, individuals needs to have the appropriate ability and the correct perception of their role . This emphasises the need for clear role definitions and understanding, effective learning and development interventions and a link between performance and reward . The Equity Theory which suggests that people are more motivated when they are treated equitably and demotivated if they receive or perceive inequitable treatment. This connects to the 'felt-fair' concept that pay systems are fair if they are felt to be fair. (Noe and et al., 2003). Job satisfaction is linked with the life satisfaction. This relation is people who are basically satisfied with their life have a tendency to be satisfied with their job as well as people who are satisfied with their job have also a tendency to be satisfied with life.(Rain, Steiner and Lane, 1991).
Clark (1998) summarises the importance of job satisfaction for both employers and their workers that job satisfaction is important in its own right as a part of social welfare, and this taxonomy (of a good job) allows a start to be made on such questions as 'In what respects are older workers' jobs better than those of younger workers?' (and vice versa), 'Who has the good jobs?' and 'Are good jobs being replaced by bad jobs?' In addition, measures of job quality seem to be useful predictors of future labour market behaviour. Workers' decisions about whether to work or not, what kind of job to accept or stay in, and how hard to work are all likely to depend in part upon the worker's subjective evaluation of their work, in other words on their job satisfaction. UK researchers found that part-time workers do not appear to be more or less satisfied 'with their jobs' than full-time workers. However, female part-time workers are on average more satisfied with 'pay' and 'hours' than female full-time workers, but are less satisfied with 'the work itself'. The same research also found that men in mini-jobs (involving between one and 15 hours of work per week) were generally more satisfied with their work than men working 30-48 hours per week (except for satisfaction with 'hours worked' but this result was statistically insignificant). However, Rose (2003) analysed a number of possible influences on job satisfaction including individual well-being, working hours, work orientation, financial variables, the employment contract, and market and job mobility. His findings provide having the 'right package' - contractually assured promotion opportunities, annual pay increments, bonuses and, above all, a job that was regarded as permanent - significantly boosted the job satisfaction score, with a marginal increment for not having to work unpaid overtime. There was also little support for the view that job satisfaction rises in a closely linear association with earnings; rather, jobs enabling financial expectations - at whatever level these were set - to be met, were more important. Having a recognised career path was also a highly significant factor relating to job satisfaction.
Research Approach: Quantitative approach.
In this research, Quantitative approach are chosen because quantitative research is used to make measurements or counts of satisfaction, loyalty, profiles with particular attitudes or preferences etc., rather than to discuss in detail the reasons behind responses mainly the role of qualitative research. This type of research methodology involves the creation of a structured questionnaire with a fixed number of questions, each usually with a fixed number of responses from which the respondents can choose. However, to a certain extent, qualitative-like data can be collected via open-ended questions in a structured questionnaire e.g. 'why do you say that?' as opposed to a closed question e.g. on a scale of 1 to 5 where 1 is very satisfied and 5 is very dissatisfied, how satisfied would you say you are with the service?' (Bryman and Bell, 2007)
It requires following data collection tools for conducting the quantitative research, which are helpful for this research.
There are two major importance of collecting secondary research which are time saving and cost saving. Secondary research was used as source of addressing the key subjective of the research and proving essential background of existing practice, thus developing a link between theory an practice. The secondary data will be used in this research as the literature review and analysis of job satisfaction through financial rewards. Moreover, some government institution conducted different researches about employee satisfaction, turn over rate, minimal wages etc. which can be used to make analysis. During this research, sources are including relevant books, related field of journal, articles and data of some institutions.
Face to Face interview
It is important to explain to the personnel about the purpose of the research, any important factors to consider, sample layout, incentives, quotas etc. It is also useful to take the interviewers through the questionnaire in a face-to-face briefing session, so that any obscure questions can be discussed.
Quantitative questionnaires are also often produced to recruit respondents to a qualitative group discussion or one-to-one depth interview. A questionnaire should contain simple, 'to the point' questions. Objectives should be remembered at all times and leading questions should be re-phrased. Enough information should be provided to the respondent so they can answer the question. There are 5-types of questionnaires such as on-line, postal, delivery and collection, telephone and interview. In this dissertation research, the quantitative data will be obtained by formulating survey questionnaire with closed questions in order to data collect from Employees, Supervisors and Managers.
Sampling is a small proportion of population. Main sample of this dissertation research will be supervisors, Employees and Managers of the leading supermarkets in UK. The principles of quantitative research involve separating the whole 'population' into smaller components to be used for analysis and interpretation. It is impractical to obtain information about everyone in a given population.
Data analysis and interpretation
There are several data analysis techniques such as, Multiple Regression Analysis, Factor Analysis and Statistical Package for the Social Science (SPSS) will be used to determine the level of job satisfaction. Furthermore, this will also be expressive in character with coding that makes the analysis simpler, save time and allow comparisons of outcome with other surveys. (Saunders, Lewis and Thornhill, 2003).
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