(With in today’s worldwide economy, human capital need

 

(With special reference to DSI company)

 

 

 

 

Dissertation
Proposal

V.M.Warkus

MF/2013/3564

 

 

 

 

 

 

Department
of Management and Entrepreneurship

Faculty
of Management and Finance

University
of Ruhuna

 

 

Contents
1     Introduction/Research Background. 3
1.1      Research Problem.. 5
1.2      Research Questions. 6
1.2.1       General question. 6
1.2.2       Specific question. 6
1.3      Research objectives. 6
1.3.1       General objective. 6
1.3.2       Specific objective. 6
1.4      Significance of the study. 7
2     Related Literature. 8
2.1      Introduction. 8
2.2      Definition of the study. 8
2.2.1       Employee retention. 8
2.2.2       Reward. 8
2.3      Theories on study variables. 9
2.4      Prior research on study variables. 10
3     Methodology. 11
4     Conceptual framework. 11
5     Hypothesis development 12
6     Limitations of the study. 12
References. 13
 

1          
Introduction/Research Background

Employee
retention one of the main challenge faced by organisations in the competitive
environment(sharon ruvimbo terera, 2014). Frost (2001) states
that many organisations are in a problem as a result of the competition that is
present in attracting and retaining highly skilled workers because they fail to
match the salaries being offered by their competitors or to offer more than
their competitors. The challenge for many organisations today is therefore is
to come up with an efficient reward strategy for retaining these core employees
for the success of the organisation. (sharon ruvimbo terera, 2014)

Many
organizations employee retention is a strategic intention. Retention of
critical skills is a prerequisite to the success of an organization in the
medium to long term. Acquisition of key skills and talent work force an
important aspect of organization success and provides a key competitive
advantage. Organizations develop various reward strategies and practices to
ensure that critical human capital resources are not only attracted but also
retained and fully exploited for the benefit of the organization. (Mark okiny oyoo, 2016)

To
compete successfully in today’s worldwide economy, human capital need to be
motivated by their organisations. As such, certain organisations are employing
an extensive range of monetary and non-monetary reward programmes to surge
employee retention and motivation, thereby enhancing organisational
productivity and shareholder value. (narsee, 2012)

Based
on these reward is exerting considerable influence on employee motivation and
retention. “Rewards are all of the employer’s available tools that may be used
to attract, retain, motivate and satisfy employees”. (Armstrong, Human resource
management prctice, 2009)

“The
reward   is the combination of financial
and non-financial rewards available to employees”. Rewards which involve any
direct payments called financial benefit. For example Basic and various
payment, Pension, Low interest loan, Insurance, Leave, Allowances. Rewards
which do not involve any direct payments and often arise from the work itself,
called non-financial benefit. For example, achievement, autonomy, recognition,
scope to use and develop skills, training, career development opportunities and
leadership. (Armstrong, Human resource
management prctice, 2009)

 

Every
organization develops and implements reward strategies that motivate staff to
remain in the organization. Organizations should adopt the all-encompassing
approach of total reward, as this is likely to provide a greater attraction and
retention to a greater number of employees. Reward is a critical motivator
towards an employee’s choice to remain in an organization. (Mark okiny oyoo, 2016)

Based
on these rewards is one of the major tools available to the employee intention
to retention. The organization will not be able to offer better reward
(financial and non-financial) lead to the employee demotivation and increased
employee turnover. In this study mainly focused “the impact of reward on
employee motivation and retention with reference to D Samson Industries (Pvt) Ltd in Sri Lanka”.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.1        
Research Problem

According
to (farrisGF) in a competitive
business world, more employers are looking at developments in excellence and
increase productivity while decreasing costs. An employee reward program is one
method of motivating employees to change work routines and key behaviours to benefit
an organization. Reward programs are frequently used by organization to try to
retain their employees.

Employee
retention one of the main challenge faced by organisations in the competitive
environment(sharon ruvimbo terera, 2014). Frost (2001) states
that many organisations are in a problem as a result of the competition that is
present in attracting and retaining highly skilled workers because they fail to
match the salaries being offered by their competitors or to offer more than
their competitors. The challenge for many organisations today is therefore is
to come up with an efficient reward strategy for retaining these core employees
for the success of the organisation. (sharon ruvimbo terera, 2014)

Managing
turnover is huge challenge to be a many organizations. Organizations incur very
high costs as a result of voluntary turnover. According to Gering and Conner
(2002) retaining good workers is critical to any organization. If an
organization is not able to retain its employees, it will not be able to
capitalize on human assets developed within the organization.(Gering and conner(2002) in
sharon ruvimbo terera, 2014)

Based
on these any organization, rewards can be used as solution for managing
employee turnover and motivate their workforce.

When consider
the rubber industry in Sri Lanka, DSI has become the major manufacturing
company. It was established in 1962 by Mr. D.S. Rajapaksa. Its principal
business activities are producing and distributing footwear, tyres and other
rubber products. According to DSI annual report (2015/2016) 456 employees are
working in DSI Company (male employees 360, female employees 96) as well as the
employee turnover rate 1.8(2015/2016) and 1.6(2014/015).

As a result
of researches were studies about these type phenomena as an important topic in
past and present scenario. But most findings are done in developed countries
and that are difficult to generalize for developing countries manufacturing
industry. Further those findings include true different context according to
various environmental factors such as size and culture of the company,
economic, social, geographical and technological factors etc. also those
findings are done under the various methods and sample so that those findings
have inconsistence.

By this
research, researcher tries to find how 
impact of reward on employee motivation and retention with reference to
D Samson Industries (Pvt) Ltd in Sri Lanka.

 

 

1.2        
Research Questions

 

1.2.1       
General question

·        
What
is the impact of financial and non-financial rewards on employee’s motivation
and retention?

 

1.2.2       
Specific
question

·        
What
is the impact of financial rewards on employee’s motivation and retention?

·        
What
is the impact of non-financial rewards on employee’s motivation and retention?

·        
What
is the impact of financial rewards on employee’s retention?

·        
What
is the impact of non-financial rewards on employee’s retention?

 

1.3        
Research objectives

 

1.3.1       
General
objective

·        
To
examine the impact of financial and non-financial reward on employee’s
motivation and retention.

 

1.3.2       
Specific
objective

·        
To
examine the impact of financial reward on employee’s motivation and retention.

·        
To
examine the impact of non-financial reward on employee’s motivation and
retention.

·        
To
examine the impact of financial reward on employee’s retention.

·        
To
examine the impact of non-financial reward on employee’s retention.

 

 

 

 

 

 

1.4        
Significance of the study

This
research is expected to explore the impactof reward on employee motivation and
retention of operational level workers.This study wills Significanceto the
researcher, to the organization, to the country as well as to the future
researches.

This
study researcher can enhance knowledge through reading, analysing, learning
about reward employee motivation and retention and find whether the impact of
reward on employee motivation and retention or not.

This
study will be valuable to the management of the organization to identify how
impact of reward on employee motivation and retention. Organization can
identify which type of reward affect to the employee motivation and retention.
These studies will also making a support to adjustment of reward policies and strategies
of the organization.This study wills also being useful to other organizations
that may be facing similar challenges. In this research finding, conclusions
and recommendations will provide useful information to the organization and helps
policy makers and planners to ensure that organizationsenhanced output through
integration of the reward in their operations and successfully face the
competition and employee turnover.

Future
researcher will benefit from this study as reference for similar studies and
research in future. This study supportive for future researchers to improving
knowledge and research information can be used when conducting their researches
in future.

 

 

 

 

 

 

 

 

 

 

2          
Related Literature

2.1        
Introduction

In
this chapter researcher describes about literature part of this research. This
chapter review the existing literature related to the independent and dependent
variables of this study.Independent variable is concerned reward and dependent
variable is employee retention. In here includeselectedauthors and researchers
have proposed theories and concepts of reward, employee retention. Literature
review includes the Definition of the study,Theories on study variables,and
prior research on study variables.

 

2.2        
Definition of the study

2.2.1       
Employee
retention

Encouraging
employees to remain in the organization for a long period of time can be termed
as employee retention.(Bidisha Lahkar
Das, 2013)

Employee
retention is a process in which the employees are encouraged to remain with the
organization for the maximum period of time or until the completion of the
project.(Mark okiny oyoo, 2016)

Parkinson
(1990) defines employee retention as the efforts by which employers attempt to
retain employees in their workforce.(Parkinson (1990) in Mark okiny oyoo, 2016)

 

2.2.2       
Reward

Rewards
are all of the employer’s available tools that may be used to attract, retain,
motivate and satisfy employees. (Armstrong, Human resource management practice, 2009)

Total
reward is the combination of financial and non-financial rewards available to
employees.(Armstrong, Human
resource management prctice, 2009).

2.2.2.1      
Financial
Rewards

Rewards
which involve any direct payments called financial benefit. For example Basic
and various payment, Pension, Low interest loan, Insurance, Leave, Allowances.(Armstrong, Human
resource management prctice, 2009)

The
financial rewards are pay, bonuses, fringe benefits, transportation facility,
medical facility, health and life insurance and benefits like vacation with pay
meal facilities.(Saira Yousaf,
2014)

2.2.2.2      
Non-financial
Rewards

Rewards
which do not involve any direct payments and often arise from the work itself,
called non-financial benefit. For example, achievement, autonomy, recognition,
training, career development opportunities and leadership. (Armstrong, Human resource
management prctice, 2009)

Non-financial
rewards are those that focus on the needs people have to varying degrees
forrecognition, achievement, responsibility, autonomy, influence and personal
growth.(Armstrong, Reward Management Practice, 2010)

 

2.3        
Theories on study variables

Efficiency wage theory

Firms
will pay more than the market rate because they believe that high levels of pay
will contribute to increases in productivity by motivating superior
performance, attracting better candidates, reducing labour turnover and
persuading workers that they are being treated fairly. (Armstrong, Human resource
management prctice, 2009)

Frederick Herzberg’s Two-Factor theory

Hygiene
factors

Hygiene
factors are those job factors which are essential for existence of motivation
at workplace. These do not lead to positive satisfaction for long-term. But if
these factors are absent if these factors are non-existent at workplace, then
they lead to dissatisfaction. These factors are extrinsic to work. Hygiene
factors are also called as dissatisfies or maintenance factors as they are
required to avoid dissatisfaction. These factors describe the job environment scenario.
The hygiene factors symbolized the physiological needs which the individuals
wanted and expected to be fulfilled. Hygiene factors include: Pay, Company
Policies and administrative policies, Fringe benefits, Physical Working
conditions Status, Interpersonalrelations, Job Security.(Armstrong, Human resource
management prctice, 2009)

 

Maslow’s hierarchy of needs

The
most famous classification of needs is the one formulated by Maslow (1954).His theory is one popular and extensively cited
theory of human motivation.Maslow’s theory is based on Hierarchy of Human
Needs. (Armstrong, Human resource
management prctice, 2009)

Physiological needs: Provide lunch breaks, rest breaks, and wages that
are sufficient to purchase the essential goods for human life.

Safety Needs: safe working environment, retirement benefits, and
the job security.

Social
Needs: Create a sense of community via team-based projects and social events.

Esteem Needs: Recognize achievements to make employees feel
appreciated and valued.

Self-Actualization: Provide employees a challenge and the opportunity to
reach their full career potential and achieve top positions in their life.

2.4        
Prior research on study
variables

In
this study is to investigate the influence of reward systems on retention of
employees in faith based health organizations in Kenya.The study found out that
there was a strong and positive correlation between employee retention and
intrinsic rewards. There was also a strong and positive correlation between the
Employees’ retention and extrinsic rewards which was an indication that
extrinsic rewards has positive influence on employee retention.The study
concluded that majority of the respondents indicated that intrinsic, extrinsic
as well as career development are important components of employee retention. (Mark okiny oyoo, 2016)

This
study explored the impact of rewards on job satisfaction and employee retention
among nurses.The study revealed that employee rewards lead to employeeretention
but however, they do not result in job satisfaction.(sharon ruvimbo terera, 2014)

This
study was to examine the effect of compensation packages on employee’s job
performance and retention in a selected privateUniversity in Ogun State,
South-West Nigeria.The results showed strongrelationship between compensation
packages and employees’ performanceand retention. (Omotayo A.osibanjo, 2014)

These
research two studies involving data collect from 583 participants in Hong Kong
and 121 participants in china. Result suggested that in Hong Kong, base salary,
merit pay, year-end bonus, annual leave, mortgage loan and profit sharing were
the most important factor to retain and motivate employees. In china, base
salary, merit pay, year-end bonus, housing provision, cash allowance, overtime
allowance and individual bonus were the most important factor to retain and
motivate employees.(Randy K. Chiu,
2002)

 

 

3          
Methodology

This
research comprise under descriptive research. This study purposes to examine
impactof reward on employee motivation and retention of operational level
workers. The population of study is both permanent male and female operational
level workers who are working at D Samson Industries (Pvt) Ltd.
Self-administered questionnaire used as main data collection methods. In here
independent variables are financial reward and non-financial reward. Dependant
variable is employee retention. Multiple regression analysis used to prove the
hypothesis of the study.

 

4          
Conceptual framework

Under
the Conceptual framework examined impact of rewards (financial and
non-financial) on employee motivation and retention.Conceptual framework has
developed following figure.

The
dependent variable is the variable of primary interest to the researcher.
According to the study dependant variable was employee retention.

Theindependent
variable is one that influences the dependent variable in either apositive or
negative way. The financial rewards and non-financial rewards were independent variable
of the study.

A
mediating variable (or intervening variable) is one that surfaces between the
time the independent variablesstart operating to influence the dependent
variable and the time their impact is felt on it.The employee motivation was mediating
variable of the study.

 

 

Financial rewards

Non-financial rewards

Employee Retention

Employee Motivation

 

 

 

 

 

 

 

 

5          
Hypothesis development

According to the research hypothesis
are,

·        
+H1:
Financialrewards are positively impact to the employee’s motivation and
retention.

·        
+H2:Non-financial
rewards are positively impact to the employee’s motivation and retention.

·        
+H3:
Financial rewards are positively impact to theemployee’s retention.

·        
+H4:
Non-financial rewards are positively impact to the employee’s retention.

 

 

6          
Limitations of the study

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

Armstrong, M. (2009). Human
resource management practice.
Armstrong, M. (2010). Reward
Management Practice.
Bidisha Lahkar Das, D. M. (2013).
Employee Retention. Business and Management.
farrisGF, i. B. (n.d.). motivational
factors of employee retention and engagement in organization. Advances in
management and economics.
frost in sharon ruvimbo terera, H. n. (2014).
The impact of rewards on job satisfactionand employee retention. Mediterranean
journal of social sciences.
Gering and conner(2002) in sharon ruvimbo
terera, H. n. (2014). The impact of rewards on job satisfaction and employee
retention . Mediterranean journal of social sciences.
Mark okiny oyoo, N. k. (2016). Influence
of reward sysstem on employee retention in faith based health organizations
in kenya. commerce and managment research.
narsee, B. a. (2012). comparing the
impact of monetary and non -monetary reward programmes towards employee and
organization motivation.
Omotayo A.osibanjo, A. A. (2014).
Compensation packages: a strategic tool for employees’ performance and. Journal
of Sciences.
Parkinson
(1990) in Mark okiny oyoo, N. k. (2016). Influence of reward sysstem on
employee retention in faith based health organizations in kenya. commerce
and managment research.
Randy K. Chiu, V. W.?M.?P. (2002). Retaining and motivating
employees: Compensation preferences in Hong Kong and China.
Saira Yousaf, M. L. (2014). Impact of
Financial and non Financial Rewards on Employee Motivation. Middle-East
Journal of Scientific Research.
sharon ruvimbo terera, H. n. (2014). The
impact of rewards on job satisfactionand employee retention. Mediterranean
journal of social sciences.