How Employee Compensation Works As Motivational Factors Commerce Essay


There are huge competition is going on in job market. At present recession is affecting the global market. We can also see the global market some company already closed their business branches and some are cutting down jobs due to the recession, which means they reducing employee/staff for minimize their cost to survive in the competitive market. That was badly affected the global job market not only UK, USA or EU countries but also the developed or developing countries like India, Pakistan and Bangladesh etc.

Bangladesh is a developing country. According to UNDP's Human Development Report 2007/2008 Bangladesh's rank is 140th out of 177 countries. In Bangladesh, 40% of total population lives below the poverty line. In other report of Bangladesh Garments Manufacturer and Exporters Association (BGMEA) it shows that garments sector provides maximum export (76%) of total export in Bangladesh and 1.7% of total population of Bangladesh is working in Garments industries. Ready made garments exports mainly are doing in the European market & US market. The ratios of exports are 49% to European Market, 33% to the US market & rest (18%) to other countries. In a report shows that due to a strong demand for skilled labour combined with insufficient wage and discontinuity of payment, dissatisfaction of job, bad attitude in job etc. there is high level of migration of workers between factory to factory, and the average turnover is around 20% and absenteeism ratio also increasing.

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Literature Review: "The reason why pay is a crucial issue for managers is that managers decide what employees should be paid, so they influence all these factors. Managers mediate between customer and the worker as a supplier of goods and services, for this reason trade unions are created and pay review bodies are formed." (Torrington, Hall & Taylor 2005, p. 594) Pay is crucial issue for an employee. S/He has to survive for his life. In a time period before for the payment increase and other payment issue the whole responsibility were giving manager. So, sometimes due to partiality a skill worker is not getting proffer salary or wages for his service and he is not getting in time wages then he becomes frustrated then absenteeism ratio is increasing.

However, in a study about RMD garments (Absar, S. 2001) shows that nominal wages of RMG workers increased at a rate of 6 percent per annum during the 1990s, somewhat slower than the country-wide unskilled wage in manufacturing, which grew at 7.6 percent per annum. Survey data shows that between 1990 and 1997, the regular pay (excluding overtime and bonuses) of male workers increased at a rate of 7.7 per annum, while the regular pay of female workers increased at a lower rate of 5.1 percent per annum. Not only are female workers paid less, but also, the rate of growth of regular wages was considerably lower than that for male workers. In my point of view there is some discrimination going on between male and female worker although they both are doing same standard job, efficiency and productivity are equal but they are not getting equal pay. Male always get paid more then female. It is making contradiction and not maintains the equal pay act 1963. As because most of the workers working in garments are poor and illiterate they are not able to protest against these law. They badly need the job. So in my observation in previous work it can easily find out that pay discrimination is one of the factors for employee absenteeism and turnover. In other report of BGMEA in "Bangladesh labour rights in the supply chain and corporate social responsibility report of an FIDH mission to Bangladesh" shows that 80% of garments worker are female. So it is badly effecting to the organization. Due to discrimination of pay between male and female the female absenteeism and turnover ratio is increasing.

Herzberg's main theory of Motivation and Hygiene factors: Satisfaction and dissatisfaction at work comes from various factor of organization that introduce by Herzberg's. Job satisfiers are those who are interested to do the job intentionally, but the job dissatisfiers are nor willing to work and they identify the job circumstance. First able Herzberg specified the factors which are the cause of job satisfaction and job dissatisfaction and later on it's included in the part of the theory. The job satisfaction has five factors which is strongly connected with theoretically and empirically that factors are success, acknowledgment or oral, the work itself or challenging, responsibility and improvement or encouragement. The combination of all of these factors basic needs of the employee will be satisfied and they got positive feeling that resulted performance improvement. The basic needs particularly related to individual development and self-actualization is the five fundamental characteristic of the work itself. The inter relation of work itself, responsibility, growth and advancement are choosing as a motivational factors that is the key to job improvement (Miner, 2007, Adair, 1990).

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On the other hand, job dissatisfaction arisen from different unusual factors which is caused to the situation to the work is performed. And job dissatisfaction depends on different company policy and managerial practice, administration, inter-relation which is related to the administration, working situation (hard labour), security of job, remuneration and payment. If dissatisfaction is happen then it is impossible to get high performance from the employee in that case management should put finger on to motivate the employee (Miner, 2007, Adair, 1990).

Money as a Motivator: Herzberg (2004) said about salary that salary is shows to employee as a high sequence which is refers to them high or low attitude feelings based on how much they paid and turn up in to low sequence. In a study he found that employees attitude changing from long-term to short-term attitude due to salary caused factor.

However, Payment is one of the factors of employee for developing country. In a report it found that there was 40% of the population are living the below the poverty line and adult literacy, at 47.5% is among the lowest in the world. So, most of the employee who is working in the garments industry is working survival for there fittest. They fully depend on the compensation for there survive. I'm giving some data about the compensation system in Bangladesh in below (see appendix: I). Herzberg (2004) finalized salary as: "Viewed within the context of the sequences of events, salary as a factor belongs more in the group that defines the job situation and is primarily a dissatisfier."

Moreover, due to unfairness of salary system it is create dissatisfaction to the employee within the organization. Salary works as psychological view to employee. They think salary as achievement and recognition of good job and finally evaluation of there work (Herzberg & et al, 2004).

Job Attitude Factor: Job attitude factor depends on two levels of factors, first level factor defined as an objective element of the situation which is look for source of good or bad feelings about the job. In this factor they are giving importance about the emergence which depends on some other factor: 1. Recognition 2. Achievement 3. Possibility of growth 4. Advancement 5. Salary 6. Interpersonal relations 7. Supervision-technical 8. Responsibility 9. Working policy and administration 10. Working conditions 11. Factor itself 12. Factors in personal life 13. Status and 14 Job security. Every section of this factor is inter-related each other which are lead to motivate employee and change the attitude. And second level factors is based to identify own personal requirement. For job attitude factor it important to find out own requirement other with it will cause dissatisfaction of job which are guide to bad job attitude. Here salary is playing hidden role to change job attitude. Therefore, employee job attitude is important in an organization otherwise it will cause to increase absenteeism and turn over ratio by that company will affected means company efficiency and productivity definitely will decrease (Herzberg & et al 2004).

Maslow's theory of Motivation: Abraham Maslow's (1943, 1954, and 1971) cited on Huczynski & Buchanan (2007) theory of motivation aims to fulfill personal needs at particular needs that describe by seven intrinsic factors 1. Physiological needs 2. Safety needs 3. Social needs 4. Esteem needs 5. Cognitive needs 6. Aesthetic needs and 7. Self-actualization needs. First aim of a person tries to fulfill the most important needs after reach the most important need then he attempt to fulfill there second most important need and it will continue one by one priority based of his requirement. This theory also called Mashlow's hierarchy of needs theory. So according to this theory money is the main and most important need for the employee in an organization (Kotler & et al 2008).

HR practice to motivate worker: Moreover, according to Delery and Doty (1996) cited on Huang (1999) an organizational strategy necessitates specific behavioural requirements for success. A firm implementing HRM practices that encourage employee behaviour consistent with its business strategy is able to achieve superior performance. It was proved that because HRM practices main aim is get high performance by motivating employee. One of the HR duties is to find out the reason why employee absenteeism and turnover is increasing and take the necessary steps to solve the problem. They are arranging employee survey to find out the reason of job dissatisfaction and what are the factor works to increase the absenteeism and turn over as usual. HR responsibility is to decrease absenteeism ratio and minimize the turnover ratio which is helpful for increasing company efficiency and productivity. Now a day's there are other department who is simultaneously helping to HR function, working to maximum utilization of the resources by using low manpower. There responsibility also is to motivate the employee to get high performance.

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Furthermore, Bird and Beechler (1995) established in cited Briscoe & Schuller (2008) that employee performance (e.g. morale and turnover rate) in firms that successfully adopted the strategic fit concept was significantly better than in firms that did not do so. Although managerial performance (e.g. profit margin and sales) was also better, the difference was not significant. The concept of ``fit'' refers mainly to the close linkage of HRM strategies and business strategies in ways that will help retain and motivate employees. Yes it is very good point retain and motivation of employee, as because every organisation aim is finding way to keep there employees. Motivation is one of them; it can be two type's money and appraising employee. In most of the case money is main motivational factor for the employee especially in Bangladesh. The reason why money is the main factor then we can see from table 1 about the monthly income of average employee is low and there life status is not much standard based on there income and expenses. So they always looking for better opportunity when ever they got good offer from other company they migrate or switch the company.

Different company policy to motivate employee: Different company have own policy to retain and motivate employee. When a skill worker is not paid satisfactory label and other reward or benefit from the company then he will look for other company for better facility. For example I know a few number of company located in EPZ area they providing lunch, giving production bonuses, provident fund, Eid bonus, annual leave and so on facility for the employee. In this sense I am agree with Braton and Gold (2005) that a skills based pay system will only be cost effective if it results in productivity increases which are sufficient to cover the considerable costs associated with its introduction and maintenance. Definitely if you pay employee based on his skills then productivity automatically increases. In my point of view job satisfaction depend on payment and working environment. If payment is good and s/he is getting other facility from the employer then he plan to stay in the company otherwise he quit from one company and join to other company. Always keep looking better opportunity absenteeism ratio is increasing and finally it end with employee turnover. And it can see in Table 2 and table 3 by comparing and analysing and how it badly effecting to the company efficiency and productivity.

Case study: How employee motivation improving efficiency and productivity of the Organisation?

Efficiency and productivity depends on input, output and manpower. When an organisation is using less manpower to get high production their efficiency is going high and productivity also becoming high. We should spend our limited resources to improve the productivity of our labour, as was advocated by Tanzanian President J.K. Nyerere (1973) cited on Ahamed & Ehsan (2005): "If poor countries have little capital and an abundance of labour, why not use whatever capital is available to make the most abundant resource, labour, more productive- rather than use labour, often wastefully and certainly with poor remuneration, to make the resource they had least of, capital, particularly foreigners' capital, more productive?" I am giving one example below how operator & helper are involving to improve the efficiency.

Table 2: Daily Production Efficiency and Performance Report.

Note: In table 2: Production * S.M.V = Work out Minutes, Working minutes = no of Workers *Plan working minutes. Performance= Work out Minutes*100/(Working minutes-Idle Time). Efficiency %= out put * S.M.V.*100/ working minutes, Productivity = output /input

Source: collect from pacific jeans Ltd. Daily production efficiency report.

Here SMV means standard minute's value that represents how time required making a garment. Then based on SMV we know the 100% target/day. For example in table 2 it show that it was a semi-critical jeans pants where making time is 38.68, normally for the basic jeans pants SMV is 22.00-25.00

100% target/day = No. of Machine operator*No. of working hours*60/SMV.

And earned S.A.H calculated by using following formula

Earned S.A.H = SMV*total output/60

Form the above example it can show that organisation's efficiency and performance depends on the number of working hours and total production. And normally in garments industry there are tolerance of 5% absent or leave for some reasonable issue its included maternity leave, paternity leave, family issue, sick leave and other relevant acceptance cause. Although having few tolerance of absenteeism organization is plan to achieve 80% production efficiency. Another reason for this is that company led time. Led means in a production line there are gap between one style outputs end to another style output start due to line feeding, machine adjustment and other technical issue. In that case if employees are not motivated by considering all motivational factors especially about the payment and other factors which already discussed in above is lead to dissatisfaction. If employee dissatisfaction is increase then absenteeism and turn over ratio is increases (in a report it is found 15-20% absenteeism) ultimately it is affecting to no of working hour which is lead to decreasing daily organizational efficiency and performance. Absenteeism and turn over ratio may increase several reason for example unfair payment system, stress in job, more production pressure, not getting benefit like bonus, incentive etc., worst working environment and all are factors the lead to employee dissatisfaction. Therefore management should think about this issue and find out the way to motivate employee and deal with the motivation by reducing dissatisfaction turn it into satisfy with the job.

Conclusion: There is a proverb that money is sweater than honey. Every body in any organization is work for survival for the fittest especially in the developing country or poor country. Herzberg' theory of motivation and Mashlow's theory of motivation both theories are support that money work as motivational factor and it is main cause which lead employee through satisfaction and dissatisfaction in an organization. And money encouraging employee to change job attitude might good or bad. Human Resource Management is playing a vital role in an organization to change all the factors by taking some necessary steps about employee motivation. Finally it can say that compensation systems of employee works as motivational factors in an organization.


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