Issues Of Convergence In Intrinsic Compensation Commerce Essay

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This research paper will help us to analyze the issues of convergence in intrinsic compensation, in the context of the similarities and differences amongst the Multinational Corporation (MNCs).The purpose of research is to investigate the affect of rewards and recognition, relationship of employee and employer and job satisfaction that is achieved by intrinsic motivation.

Human resources play a vital role in any institution. Throughout the globe human resources are the corner stone of any corporate place. The retention of competent employees and maintaining high quality teams of any organization lies in its ability to manage the staff as well as recognize the participation of each individual. The factor of motivation acts as a driving force on the tasks, duties, responsibilities (TDR's) that are performed by the employees. Once the employees would be motivated they would definitely help in attaining the organization goals and it is mandatory to align the goals strategically in order to gain a competitive edge in the market. Motivated employees have high morale and their level of enthusiasm is much higher as compared to the rest. So ultimately this leads to increase in productivity of the organization and increased employee engagement. Compensation management highlights the ability to effectively compensate the employees to recognize their performance at work place. By analyzing the difference between local and multinational companies in reference to the intrinsic compensation we will be able to have a better understanding whether a multinational corporation or a local organization is effectively carrying out its intrinsic compensation practices.

Metro-Habib Cash & Carry Pakistan (Pvt.) Ltd

Metro Cash & Carry an international wholesale retailer provides self service to its customers worldwide. In 1964 Metro cash & carry started its operations and the first outlet was opened in Germany. Its operations are around 2378 locations and 600 outlets in 29 countries, and the numbers of employees are over 263,000. After the foundation of METRO SB-Großmärkte GmbH & Co. KG in the year 1964, the self-service wholesale trade came to Europe. It started its operation in Asia by opening its first outlet store in China in the year of 1966. In 1967 Metro Cash & Carry which was a new venture did partnership with Franz Haniel & Cie. and the one third shares were held by Schmidt-Ruthen Beck family each. The concept of self-service whole sale was extended beyond German Territory and the business was hence shared with the new partner of Dutch company named Steenkolen Handels Vereeniging N.V. (SHV)   the original group of partners held 40 percent of the shares in this expansion. After this first big expansion drive METRO/MAKRO Cash & Carry captured the market of nine Western European countries by the year 1972. As a result Metro group was founded after the July 1996 merger of Metro Cash & Carry with two more companies Kaufhof Holding AG and Asko Deutsche Kaufhaus  AG. The only retail stock that has been listed in the German blue-chip index "DAX 30" is The Metro stock. Now their main focus is going to be Eastern Europe and Asian countries for the further expansion of its business. According to the year 2007, Metro Cash & Carry has its operations in approximately 29 countries which are Austria, Belgium , Bulgaria , China, Czech Republic, Croatia, Denmark, Egypt ,France, Germany , Greece ,Hungary, India, Italy, Japan, Kazakhstan, Moldova, Morocco, Netherlands, Portugal, Poland, Pakistan, Russia, Romania, Spain, Slovakia, Serbia, Turkey, United kingdom, Ukraine, Turkey, Vietnam.

German trade and retail giant METRO AG has one of the largest sales divisions. It is listed as the 3rd largest business (trade) in the world. The concept of Metro Cash & Carry is based on bulk buying and self-service. Only registered customers are served by Metro Cash & Carry. Their main focus is on the customer groups which are caterers, hotels, traders, restaurants and other business professionals. Metro Cash & Carry has proved to be a potential leader in the entire market since it has started its operation.

METRO Cash & Carry's is also providing social services by donating funds in the natural disasters such as earthquakes. The organization donated â‚¬100 000 towards President's Earthquake Relief Fund in January 2006. Metro is carrying out these fund development activities in association with German Investment and Development Company. Along with Pakistan all such activities have successfully been carried out in other countries where Metro Cash & Carry is providing its services. Metro-Habib Cash & Carry Pakistan (Pvt.) Ltd is foreseeing for further investment in Pakistan in the years to come. By generating almost 50percent of the total sales in the year 2007 the company achieved revenue of € 31.7 billion. On October 31, 2007 the first wholesale centre of Metro-Habib Cash & Carry Pakistan (Pvt.) Ltd was opened in the city Lahore. Its Second branch started its operation in Pakistan's capital Islamabad on April 3, 2008. By the year 2009 there was an opening of three more Metro-Habib Cash & Carry Pakistan (Pvt.) Ltd outlets in the cities of Lahore, Faisalabad and Karachi making the total number of stores at 5. They still plan to open 10 more stores in different cities located in Pakistan. The head office of Metro-Habib Cash & Carry Pakistan (Pvt.) Ltd is located in Lahore at Thokar Niaz Baig where as the vice-head office is situated in Karachi. Metro Cash & Carry has a unique business-to-business model which targets only towards professional customers like hotels and restaurants and long with these small and mid-sized institutions retailers. A high level of assortment is being offered to these special groups both in the form of food and nonfood as well as they have attractive wholesale prices. Today, 80% of Metro Cash & Carry employees are providing services outside the home country that is Germany.

Al-Fatah Mall

In 1941, Al-Hamra departmental store was established in Toligton Market at Mall road Lahore. Later its name was changed to Al-Fatah store. Its second branch was established in 1974 in liberty market, Lahore. Later the branch at the Tolington Market was shifted to Shadman Lahore in 1990 due to renovation process of historical places of Lahore by the government of Punjab. The period from 1985 to 1998 is very significant in the history of Al-Fatah, there has been made a lot of changes in the Al-Fatah store to meet the requirements of new age. In 2009 two more branches were established in DHA and Faisalabad and the name was changed to Al-Fatah Mall. This was welcomed by their valuable customers and they encouraged them in terms of appreciating by visiting their branches again and again. This thing encouraged them and that is why they are planning to establish more branches of Al-Fatah Mall across Pakistan. For this they have already started their research and planning to open new branches very soon. Al-Fatah mega store is the mega project and it is in its final stages. This mega store meets all the requirements of an international mega store. But this is just a beginning. They have plans to make a chain of their stores in the entire Pakistan, so that they can play an important role in the development of Pakistan. Currently Al-Fatah Mall is operating in two cities of Pakistan that are Lahore and Faisalabad. The first retail center was opened in Gulberg III, Liberty Market, Lahore. The other two outlets are located in 126 Y Block, (Commercial) DHA, Lahore. Centre Point Plaza, Kohinoor City, Jaranwala Road, Faisalabad. Al-Fatah Mall is one of the best departmental stores of Lahore, Pakistan. The founder of Al-Fatah Mall is Sheikh Irfan. Al-Fatah Mall was established as a retail store providing a wide range of personal and residential goods to the consumers. At the same time Al-Fatah Mall is offering various merchandise lines, in different product categories at a reasonable price. A wide range of products are imported from Malaysia, Thailand and Singapore and from many other countries and that is the reason Al-Fatah Mall is also known as the import Giant of Lahore. They are charging a big amount on the goods that they import from other countries. And because of all these factors Al-Fatah Mall has gained a good customer base and they are still putting efforts to grow. Since then it is offering quality products to its valuable customers. Al-Fatah Mall provides a large range of products like grocery, garments, jewelers, toys and kid's garments, electronics, cosmetics and beauty supply, flowers & gifts, kitchen supplies, luggage, men's and women's clothing, toiletries, basic groceries both imported and local, etc. Al-Fatah Mall provides products of very good and high quality from domestic as well as from international producers. Al- Fatah Mall offers a wide range of services to its customers such as credit card facilities, after sales services, customer care, discounts, holding merchandise for customers until they pick it up, checking with a department manager to see if specific merchandise is in stock, assisting lost children and others looking for each other in the store, making announcements on the public address system, answering phone inquiries regarding store hours or availability of merchandise. For more than seven decades Al-Fatah Mall is satisfying their customers through its high quality services and become the number one choice of their trust worthy shopping. Al-Fatah Mall is currently providing their services to its customers through three branches in Lahore and Faisalabad. Al-Fatah Mall is also working on its mega project which is going to be complete in near future very soon. Al-Fatah Mall is also planning to establish their branches in other cities of Pakistan including Islamabad, Karachi and Peshawar.

Al-Fatah's Motto

Al-Fatah Mall is very committed to provide best possible services to their customers on daily basis. This is the reason Al-Fatah Mall has now become a family store and this valuable relation is transferring from one generation to another generation very successfully. It has been their motto that they are nothing without their customers and if they have achieved this status of one of the leading departmental store of Lahore is only because of their customers. That is why they give their 100 percent to provide best quality products to their customers in a very economical price.

"Al-Fatah - uploading the horizons of customer care, quality, and variety".


Al-Fatah Mall never compromise on the quality of its products. Same is the case with the services they provide at the stores. They always try to provide products to their customers on very reasonable prices. But they never allow decaying quality of the products. The habit of providing quality products and services is the main advantage which they have earned in the last seven decades.


At Al-Fatah Mall with providing the best quality products, they also provide a large range of variety of products, so that their valuable customers can get the things under one roof. This is their advantage in the market of providing variety in the products so that they can attract more and different kind of customers.


Al-Fatah Mall being a trend setter in the market and for its devotion in social services has earned a lot of awards which is the acknowledgement of Al-Fatah's dedication. These kinds of acknowledgements give them motivation and boost their energy to do their best. There are some details of the acknowledgements which they have earned during the journey to success. LCCI Achievement Award 2006 (Remained businessman of the year by securing Gold Medal), Citizen Excellence Award (For excellent public services and entrepreneurship), Best Business Performance 2009 by Philips Consumer Lifestyle, BIPAP Award (Business Industry Promotion Associate of Pakistan Award)

Literature Review:

Extrinsic factors are not the only motivators but Intrinsic factors also have importance towards motivating employees which means that employees are not only motivated by the monetary factors like money they also need non monetary factors to enhance their motivation level which than would lead to job satisfaction. As we know that money motivate employees but a stage comes when non monetary factors, simply just giving a tap on the back or saying thank you, would play a vital role to motivate employees. Now there are different tools and techniques which can be used to motivate employees under the non monetary factors like friendly work environment, organizing training and development programs, giving awards to employee of the year, promotions, employee's performance appraisal etc. Lawler (1973) in the study says that money act as a motivator, but some other studies have shown that money may not be a motivator in some cases. So this is clear from these studies that money is not always the only factor to motivate employees, some other organizational factors also do provide motivation to the employees, and job satisfaction is one which is studied and found to influence employee's behavior and work outcomes. When people are motivated by monetary factors like their pay or any other bonuses offered by the organization they are said to be motivated by extrinsic factors. On the other hand intrinsic motivators include (autonomy, competence and relatedness) these positively affect work attitudes and motivation level of the employees.

It is clear that pay on performance compensation is considered as a motivation tool. From an organizational point of view, compensation is used to attract, motivate, and retain employees which encourage effective employees to stay longer in the organization. Organizations provide benefit to employees who are effective, committed and loyal. A good and effective compensation design has always attracted, motivated, and retained employees which has helped to increase their efforts and outputs for the achievement of organizational goals. Thus, designing a reward system is very beneficial for the organization, as it helps to motivate people and at the same time it also contributes to the organizational effectiveness. Employees preferred some other kind of rewards such as recognition more than their pay, 'they behave as if they value money highly' (Opsahl and Dunnet (1996). According to the researches that has been conducted, it is observed that intrinsic compensation affect intrinsic need satisfaction and recent studies have found that intrinsic rewards such as verbal words of interest, use of words like thanks, pleasures, you are welcome, appreciation of work and approval from supervisor. These appreciations positively affect motivation and intrinsic need satisfaction of the employees. In the psychology literature, intrinsically motivated behavior is stated to arise from innate psychological needs, such as needs for competence and autonomy (Deci & Ryan, 1985; Kasser & Ryan, 1996). Maslow's theory also says that a person first of all go for the basic needs which are at the bottom, later these are followed by security needs, social needs, esteem needs and self actualization needs. Up to the level of esteem needs, employee motivation or satisfaction can be fulfilled by factors such as salary, benefits, job security, and company policy etc while on other hand when the level of a person comes to the level of self actualization than the factors known as motivators would be needed. These motivators would include employee achievement, employee recognition and employee growth.

There are number of tools to compensate people and compensation management leads to develop a positive employment relationship which means a healthy relation between employer and employee it also focus on psychological contract (Armstrong) Intrinsic rewards focuses more on the process of learning and development of employees with regard to their work experience. There are number of examples of rewarding an employee in companies. One of which is known as Land's End, in which the rewarding system include whole of the employment relationship from financial rewards to pride, appreciation, challenging work and fun, leader relations and involvement. Some other Intrinsic rewards such as job allocation are used, like one by the name of 'job and knock' - a common practice that allows the employee to leave early if their job is complete, flexibility is given around meal breaks and job security is provided. Another reward usually offered in the organizations is that employees are given the reward of time (which means that employees can work from home or have some time away from normal duties), access to training, and recognition, this would help develop a sense of job security. Some other small-scale rewards which are mainly symbolic in value but are also provided by the employer for the line managers to use, these include mini awards such as a team lunch or picnic with the group of employees, or a bottle of champagne or a gift box is given to them (Armstrong and Brown 2006). An organization's strategy can be discussed here as an example, the organization used a variety of incentives to encourage the attendance of their employees during the Football World Cup 2006, as many football fans miss their work to support their team. The incentives include spot prizes, raffles, money, and TV screens to watch the matches. After implementation of this practice it was noted that absence dropped to its lowest level (ARMSTRONG, M. and BROWN, D. 2006) Managers can also show recognition to their staff just by listening to staff and praising their good work; they can do this by giving verbal praise such as 'well done' or 'thank you', or just a simple pat on the back. On the other hand, International compensation systems are becoming more and more challenging issues for HR managers as MNCs become increasingly global. Intrinsic rewards come to the worker directly from the work they perform. People who are motivated intrinsically will never quit their job easily. People feel motivated when they find interest, satisfaction, and challenge of the work themselves and not because of external pressures or incentives. Intrinsic rewards are internal to the individual and are in many ways less tangible. In fact they are highly subjective, in that they represent how the individual perceives and feels about work and its value. Five types of intrinsic rewards that have been summarized includes healthy relationship, meaningful work, competence, choice and progress (Manion, 2005)

Psychological states help employees to enhance high work motivation and work satisfaction, they depend upon job characteristics. Employees have a sense of achievement when performing a task that is recognized by others to be a contribution to the goals or mission of the organization. The perception of fairness has significant weight in this type of reward. According to job characteristic theory if there is lack of skill, task, autonomy, and feedback than they will not provide intrinsic compensation which in return, would harm the desired work behaviors such as attendance of employees and their desire to remain in the organization which means low turnover. Pay-for-knowledge strategies can help organizations to design some motivating works like skill variety, task identity, task significance, autonomy, and feedback. To manage successful intrinsic reward plans the performance of employees is checked with performance appraisals which also lead to appropriate compensation. Job characteristic has an impact on individual's attitudes. So far the studies suggest that pay-for-knowledge program lead to increased affective organizational commitment and enhanced work motivation, these result are probably due to pay- for-knowledge plans which promote skill variety and autonomy.


The term motivation is basically derived from a word "motive" which gives a sense of reason for action. It has been defined by so many scholars and professionals that motivation has an instant and long lasting effect on the behaviors and actions of an individual. Motivation is an internal drive which satisfies the desired need (Baron, 1983). Another author defines motivation as a process that directs an individual decision making among different forms of activities (Jones, 1955).The definitions mentioned above tell us about some specific behaviors of human beings regarding motivation. It is all about internal drivers which compel an individual to behave in a specific way and it varies from person to person. Every individual has some personal interests and some specific goals which compel them to behave in a certain manner. Motivation basically is a process which starts with a need and that need creates a goal oriented behavior and this kind of behavior lead towards satisfaction. In simple words we can say that motivation is a very important factor which creates a sense of achieving something more than ordinary. Employee motivation is deeply connected through incentives, rewards and recognition. It is very difficult to draw differentiation between these things and to tell which thing creates more motivation among the employees. These are usually separated into two categories monetary rewards and non-monetary rewards. Monetary rewards include the rewards which are given by the employer to his employees in terms of money. While non-monetary rewards do not include direct payment of money and this is the core area which we are focusing in this report. These types of incentives include so many things like, employee encouragement through giving them autonomy in their job, through giving them challenging tasks, providing the employees with best working conditions, recognition at the time of completion of a task, appreciating employees through written recognition(certificates), encouraging socialization at the work place, etc. These kinds of intrinsic rewards create a sense of responsibility and encourage the employees to work hard and boast the employee's commitment towards work. Recognition is very important in this regard because it creates sense of satisfaction and enhances their spirits to give more effort. Especially in some kind of tasks this type of high motivation is specially needed such as in case of expatriates. Through these intrinsic rewards a sense of ownership in the mind of employees is created and this helps the organization to realize that the employees are an asset of any institution and are a valuable part of their team. There are basically three types of characteristics which affect the motivation of the employees at the work place. It includes individual characteristics, job characteristics and work environment characteristics. Individual characteristics include interests, attitudes and needs. Attitudes include attitude towards self, attitude towards job and attitude towards work situation. Job characteristics basically include the intrinsic rewards such as degree of autonomy, direct feedback of the performance, variety of tasks, etc. Work environment characteristics include the behaviors of the supervisors and the behavior of the peers and the actions taken by the organization in terms of rewards given to the employees. If the top management of the organization really wants to see their employees working in a better way for the development of an organization then they would have to adopt several strategies in terms of intrinsic compensation to boost up the motivational level of their employee's. Basically we are making this report to understand and emphasize how intrinsic compensation can be helpful to enhance the level of motivation of the employees, for this we have to look from individual to individual perspective. And these variations depend on the values, beliefs, family background, education and work experience. Some people do their job to earn money but some do for enhancing their creativity and professional skills. Non monetary incentives directly hit the behaviors which are more effective in creating motivation among the employees. Non monetary rewards are directly related to job characteristic theory that includes giving the employees autonomy; some challenging work to get recognition and such things creates a sense of responsibility which also creates motivation. Working environment can be a source of providing non monetary rewards through different ways, such as providing the employees direct feedback, by appreciating the employees, by involving the employees in decision making, encourages good social activities among the employees at work place and helping them in this regard. All these things which are given in the form of non monetary rewards are closely related to the factors which create motivation among the employees so we should focus on these intrinsic compensating factors. Intrinsic motivation basically comes from inside and it compels a person to go in a specific way to achieve something more than ordinary. This type of motivation creates more sense of responsibility give them sense of realization of their work and its importance. For example, if an employee is putting more extra effort in a task which he/she feels is very challenging and wants to complete it to see the output. These kinds of behaviors are inherited among the people and these kinds of people can be motivated easily by non monetary incentives as compare to monetary incentives.

For example, the variable we have mentioned in the start were related to individual's different needs and interest, it was because of the fact that every individual have different approaches regarding recognition. Intrinsic compensation can be given in the form of good working conditions, socialization at the work place, by giving challenging tasks to the employees etc. By focusing on these types of non monetary rewards we can enhance the level of motivation among the individuals and can fulfill their needs.

According to the researchers it has been observed that reward and recognition has a drastic impact on job satisfaction and motivation. There is no doubt about it that rewards play an integral role in determining the performance in job and it is directly and also positively linked with the motivation process. There are two important factors that help in determining the extent to which a reward is attractive, first is the quantity or the amount of reward that is provided and the second is the ranking (weightage)an individual gives to that specific reward (Lawler 2003)

The discrimination between the fortune hundred companies and the other companies is the recognition which the fortune best companies think is the most important factor of their reward system. There is a term that is the conditional recognition which is basically the kind of recognition that is earned by his or her own efforts and is also gained by the sense of an achievement (Wilson 1994). By facilitating the employees with proper rewards and recognition programs at their job employees feel closer to their organization. And this is how their job can become the major satisfaction for their lives. Effective rewards and recognition programs can be fruitful for the organization as it enhances the level of productivity and performance at job whether it's a first time performance or repeated activity at the job in a progressive manner. According to a consistent research it is found that intrinsic motivation helps in producing creative work, where as extrinsic motivation proves to be unfavorable in the production of creative tasks, duties and responsibilities (Eastman 2009). Reward and recognition & also motivation and satisfaction built a significant relationship between each other respectively (Ali and Ahmed 2009)

Increasing Job Performance through Intrinsic Motivation

Performance management is regarded as a systematic process of improving organizational performance by improving individual performance in a team framework through goal setting, coaching, feedback, rewards or praise and positive reinforcement Kreitner and Kinicki (2007). Motivation is an essential tool through which job performance could be accelerated. It is very important to retain efficient and experienced workforce to enhance the overall performance of an organization. Employees who are continuously motivated are able to help the organization in gaining value added and competitive position in the market.

There are various dimensions of motivation and satisfaction which are inter-related with the reward and recognition and hence have a great impact on employee's motivation.

It is clear that motivation is a set of systematic processes that influences and gives direction to an individual in order to attain the organizational objectives. Highly motivated employees are satisfied employees and hence they prove to be the most productive employees' as well which is beneficial for any organization/institution in terms of Organizational Development. Motivation is dependent on two main factors that are intrinsic and extrinsic, Praise, Incentives, bonuses, autonomy, rewards and recognitions, are the prime factors that has a significant impact on the motivation of employees. The most contingent factor for maintaining employee's self-esteem and efficiency are reward and recognition programs. It is observed that employee's performance at workplace is an outcome of his/her ability to work and motivation provided to them. Ability has an effect on performance directly that comes from knowledge/education and motivation also has an effect on employee's performance which is the outcome of compensation that is provided to the employees working in the organization (La Motta 1995).The process of performance management is one among the key elements of total reward system (Wilson 1994).Performance management is a tool that helps in rewarding the employees of the organization in the form of feedback. Employee commitment or employee engagement can be increased by providing employees with various rewards and recognition programs. The level of productivity and motivation can be raised by providing recognition which built confidence in employees that ultimately add to their contribution at workplace (Deeprose 1994).There is a primary component of the Job Characteristics Theory which further consists of five job characteristics (skill variety, task identity, task significance, autonomy, job feedback) that can help to determine the satisfaction level of employees with their jobs. The job characteristics model is designed by Hackman and Oldham, and gives the concept that the task itself provides motivation to the employees. For instance, a boring and monotonous job decreases the level of motivation which in turn results in the decrease of performance level of employees as compared to a challenging job that enhances the motivational level of employees and hence increasing the performance level. The factors that make a job more challenging are variety, autonomy, decision authority, job rotation, job enrichment. As noted, Herzberg's theory suggests that opportunities for promotions and actual promotions are more likely to motivate higher performance than regular pay structures. According to the above statement pay structures do not have a significant impact on motivation as compared to other promotional activities that may include appreciation, job rotation, job enlargement, employee recognition, certifications or awards and regular feedback (praise). It is seen that promotions usually results in increased pay, but motivation rises from increased responsibility, recognition, challenging work and a sense of achievement and above mentioned factors are the motivating factors for employees. Herzberg even notes "opportunities for advancement" specifically as a motivator. Today's employees are more career conscious than ever so they are demanding more in terms of personal growth and development therefore organizations that emphasizes career development are more likely to retain employees with valuable knowledge and skills which is beneficial for the growth and development of the organization as well. Thus by defining their career paths and providing them with career opportunities organizations can help in raising the motivational level of employees. It is very important to retain efficient and experienced workforce to enhance the overall performance of an organization. Employees who are continuously motivated are able to help the organization in gaining value added and competitive position in the market. There are various dimensions of motivation and satisfaction which are inter-related with the reward and recognition and hence have a great impact on employee's motivation. Workplace performance can be accelerated by providing employees with a good work environment and this would make employees feel happy and satisfied. At workplace the manager's job is to get the things done through employees and in order to get things done his way a manager must be able to motivate employees more often. The level of motivation can be measured by observing what he/she says or does in a particular situation. Motivation is a driving force that enables an individual to select the desired outcomes according to what he/she thinks is appropriate to them. Motivation is basically an intrinsic desire that exists within a person to attain the goals, objectives, and aims by performing certain activities. According the model by Herzberg we have derived that the two main factors that influence motivation are maintenance and motivation factors. Motivation factors such as the achievement, responsibility, development, advancement, growth, work itself and recognition. These are the primary motivators that are listed above. Employee motivation has become a great challenge for organizations these days. The organizations are facing such challenges because of the continuous changes in the operating environment. Employees are more attracted to those workplaces where they provide them with good motivational packages. Motivation and competition has compelled the managers to think of new ideas to motivate employees so that their employees become more productive. In short motivation is mandatory if the organization wants to excel in this global era.


A stage of psychological contract is created between employees and employers due to good employee relations. This is all due to the healthy relations between both the employee and employer; it can be created by many different ways like informal meetings between them and better understandings with each other. The more the person is social, the better the relationship is amongst the employee and the employer. The level of job satisfaction can be enhanced by creating an effective psychological contract which in return would help reduce the turnover rate and gain retention. Through retention the organization can keep their best people close to the organization's core competencies, the organization must identify and retain people who are essential for the achievement of the organizations goal. The organizations believe that they must retain the employees who can perform well and have skills that match their business's core needs whether in good economic conditions or bad economic conditions.

The relationships between employees can be harmed because of scramble of rewards. This is one of an issue faced in the organizations these days as everyone is only focusing on the system of individual gains whereas no one is focusing and improving the system of collective gains. As there is only one person who wins on the other hand it de-motivates the rest of employees and no one focuses on them, these employees carry the feeling of lost with them. Like when employees compete for a reward 'employee of the month' there is only one winner. So to avoid these situations the managers must understand what caused them and these issues should be sorted out to create healthy employee relations. If the organizations goal is excellence than no other incentive can compete with the power of intrinsic motivation. Employees who do marvelous work may be glad to be paid and even more glad to be paid well, these kind of employees do not work to get a handsome cash but they work because they love what they do. The higher the manager get stressed for what an employee can earn for his work, the less interested the employee would be regarding his work. In today's highly complex business world the success of any organization lies in a sound relationship between employee and employer. Flexible working condition and environment could result in to a positive exchange of services among employer and employee. Once the employees are happy and satisfied they'll put extra efforts in making the customers happy. To maintain and improve a sound relationship between the employer and employee there are number of ways through which an employer can motivate the employees to raise their performance level such as public praise, flexible working hours, personal growth and development opportunities, positive feedback should be provided on their achievement, regard them by making them feel they are valuable for the organization, top notch info systems and providing the employees with full comfort zone. Organizations must have the ability to align an intrinsic compensation system with the type of employment relationship that they want to build. Effective rewards can be a source of encouragement for employees to develop and improve the skills that would help them as well as the organization to grow.

Impact of Intrinsic Compensation on Employee Retention:

Employees would love to stay in the organization when they will have high job satisfaction. Employee satisfaction has been found to be positively related to the intent to remain with the company (Light, 2004)

The acquisition and maintenance of an efficient workforce can be done by identifying and providing them with training and development opportunities and by developing an effective reward system for them. Every new incumbent that joins the organization should be trained enough during induction process so that they could properly understand their tasks, duties and responsibilities in order to accomplish organizational objectives. Such type of training costs the organization a big amount of resources in the form of time and money. Thus resignation of an employee could turn out to be a big loss for the organization. Maintaining a talented workforce is very crucial in order to minimize the employment cost. Intrinsic reward is one of the most significant factors that could affect an individual's behavior to quit a job. Along with other factors related to job context, working conditions in an organization, communication (which can be with employees and some sharing of information within organization) and social relations at the workplace also enhance job satisfaction. Different studies have shown that overall satisfaction, tenure, age, job content and willingness to stay on the job all are negatively related to turnover. As an employee with a long time spent in the organization is less likely to leave the organization because of his emotional attachment with the workplace. Many organizations before focus on the employee turnover but now days they are focusing more on employee retention. Organizations could use various type of intrinsic compensation to make their employees feel satisfied and motivated that would ultimately decrease the rate of employee's turnover. Elements of Intrinsic rewards could make a sound relationship between employer and employee as it helps in building trust and commitment that could induce employees to work with the organization for a long period of time. Employee retention could be enhanced by providing employees opportunities to excel in their field and by giving them autonomy at their workplace. Other key areas of intrinsic compensation that affect the rate of employment turnover are involving employees in organizational activities, providing employees performance feedback, allowing them to set their own goals, give them the authority to control their work, provide them with challenging tasks instead of difficult tasks, and build a competitive environment within workplace as most of the employees feel satisfied when their work is compared with other subordinates.

Employee development plan that is one of the most effective tools of intrinsic compensation can help organizations to retain competent workforce. The intrinsic forms of compensation depict how important employee performance is for the growth and development of an organization. Intrinsic rewards like employee of the year award, spot rewards, security, trust, freedom at workplace provides employees with frequent recognition when leaders of the company observes their employees performing at their best. The key to employee performance and retention is appreciation. Therefore intrinsic compensation has a drastic impact on employee's retention. As there is a rapids change in the work force the organizations are facing the problem to retain their competent employees .Intrinsic compensation has multiple impact on employee's performance and behavior which in turn helps in the employee retention. If the organization fails to set up a proper reward system for their employees it can result into loss of skilled workforce which could create a bad rapport in the market. Employees feel stressed out and become unproductive, if they are not satisfied with their job. Although monetary benefits are important but along with this people prefer non-monetary benefits (reward and recognition programs) on top of money, thus, it is mandatory to develop an effective intrinsic compensation program for the motivation and retention of employees. Organizations can improve the motivational level of employees by involving them in decision making process and by making them participate and giving those opportunities organizations can raise loyalty of employees as this would make them feel that their ideas and suggestions are valued by the organization. And in this way employees will enthusiastically take part in the activities of the organization. Intrinsic rewards thus helps in eliminating the monotony and boredom from every day work life and it ultimately increases the probability of employee retention. Organizations need to understand the approaches of intrinsic compensation to achieve employee retention. In order to create a strong bottom line, organizations need to put intrinsic efforts. So intangible rewards (like autonomy, feedback, recognition, task significance), could make a difference when pay structures of organizations are comparable.

Relationship between Rewards and Job Satisfaction

Now it is important for the organizations to determine what makes their workers happy. Every individual wishes for job security and satisfaction, thus a successful organization is the one which fulfills the expectations of the employees. In other words we can say that once an employee would be satisfied with his/her job, he/she would be more motivated to perform the tasks and this would result in more productive employees.

The combination of job characteristics includes (working hours, salary, promotion opportunities, difficulty of a job, hazardous, monotonous work; whether job is challenging or interesting)

The combination of workplace characteristics includes (working environment and the

likelihood of job security)

Literature revealed that employee's motivational preferences vary from situation to situation. In addition to these researches also shows that factors that could be greatly influenced by intrinsic compensation are employee motivation, job satisfaction, employee performance, retention and employee relation. Despite the literature it has been concluded that extrinsic rewards are not the only motivator for employees but intrinsic rewards also play an integral role towards motivating employees. More over employee motivation is deeply connected through incentives, rewards and recognition. Compensation management leads to develop a positive employment relationship which means a healthy relation between employer and employee.