HUMAN RESOURCE

MANAGEMENT
FINAL TERM REPORT
FALL 2015
15th December 2015

Submitted To:
Miss Nyla Aleem Ansari

Submitted By:
Gul - e - Syeda - 06911
Hammad Muniem - 06924
Maheen Khalid - 07168
Maliha Riaz Dalal - 07165

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Acknowledgement

First of all, we would like to thank Almighty Allah for the timely completion of our
report.
We wish to extend our appreciation to our instructor Miss Nyla Ansari, who patiently
helped us throughout, guided us and answered all our queries until we knew what we had
to do exactly.
We would also like to thank Human Resource department and employees of Coca Cola
for allowing us to conduct the research and participate in the research by giving us their
valuable responses.
Last but not the least, we wish to express our gratitude to our parents for their never
ending blessings and prayers.

Thank you,
Group Members:
Gul-e-Syeda
Hammad Muniem
Maheen Khalid
Maliha Riaz Dalal

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Executive Summary

Human Resource Management is the most important function of an

organization. The success of an organization depends on the successful
operations of its HR. One of the biggest challenges faced by HR is that
of employee motivation and retention. Since employees are the most
important assets of any company it is essential to give them
importance. The satisfaction of the employees makes the company
successful.

Our motive behind this study was to find out how employee motivation through bonuses
and incentives affect their job performance and for this purpose we chose Coca Cola to
understand how much their employee value monetary benefits and how much it motivates
them to perform better.

Initial research on the topic on the basis of various studies previously conducted and
written from different perspectives helped us to identify how monetary benefits can affect
employee performance at work. In addition to non-monetary incentives and how it plays
a great role in making employees feel valued, is was found that employees in a public
sector, having the job security, requires something more to drive them to perform better
and give their best. Maslows theory can be best defined as social, self esteem and self
actualization stage employees have inquisitiveness to take intrinsic rewards while
physiological and safety needs employees are more attracted by cash rewards of any kind.

In order to conduct our research, we prepared a detailed questionnaire

and included questions from both employee and employers'
perspective.

Through research we have met our research objectives i.e. to assess the
impact of how factors like bonus pay and long term incentives motivate the employees to
perform and to analyze the dimensions of relationship between the motivation of

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employees and their performance at work.The following report contains detailed
analysis, conclusion and recommendations for our company, Coca
Cola.

As our research was about the effects of monetary incentives on the

job performance of the employees, our questionnaire was designed
that way. We sent 20 questionnaire but only got 16 responses, which
includes two from senior mangement. The analysis of these responses
was done with the help of weighted average. This analysis has been
provided later in this document.

There were certain limitations in our research, which are also mentioned in this
document. We got mied responses regarding the monetary incentives. After analysing the
data, we collected through these surveys and interviews, we saw a pattern in terms of age
groups. A monetary incentive wanted by a young employee was different to that of a
middle aged empployee. So monetary incentives affect job performance, but keepin age
group as one of the deciding factor. This is explained further in our conclusion and
recommendation part.

The relationship between monetary incentives and job performance was understood more
clearly; as this age pattern was something that we weren't epecting. This opened doors to
other factors as well such as job positon.

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About The Company

Coca Cola is an American beverage multinational company. In 1930, the company started
moving globally and came to Pakistan in 1953, where a franchise was responsible for
bottling the beverage. In 1996, all the rights were transferred to Coca Cola Beverage
Private Limited (CCBPL) and now, Coca-Cola beverages are produced and sold in
Pakistan via the companys own bottling plants which are operating in full swing.1
Interestingly enough, Coca Cola initially started out as a means to cure headache, later
becoming a beverage company. Currently, Coca Cola sells a range of the following 8
products in Pakistan:

Sprite

Sprite Zero

Coca Cola

Diet Coke

Fanta Orange

Fanta Citrus

Minute Maid Pulpy

Kinley

In Pakistan, it employs over 4,000 employees directly and another 6,000 employees
indirectly and serves a huge, loyal customer base and so the Pakistani market is highly
profitable for Coca Cola International.

Coca Cola works on the following mission statement:

1 (http://www.coca-colajourney.com.pk/our-company/coca-cola-starts-operations-in-pakistan, 2014)

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 To inspire moments of optimism and happiness

To create value and make a difference

To refresh the world

Coca Cola has the following vision:

To become a market leader in ready to drink segment while adding best-in-class value
to all stakeholders.

People: Be a great place to work where people are inspired to be the best they can be.

Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and
satisfy peoples desires and needs.

Partners: Nurture a winning network of customers and suppliers, together we create

mutual, enduring values.

Planet: Be responsible citizens that make a difference by helping build and support
sustainable communities.

Profit: Maximize long-term returns to shareholders while being mindful of our overall
responsibilities.

Productivity: Be a highly effective, lean and fast-moving organization.

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Beverage Industry in Pakistan

In Pakistan, the biggest share of market goes to the tea industry as tea is the most widely
consumed beverage in the country. If, however, we consider the soft drinks industry only,
Pepsi Co. International and Coca Cola Beverage Private Limited emerge as the biggest
market players in the country with other local and international brands taking up a small
percentage of market shares; such players include Amrat Cola, Gourmet cola, etc.

The following pie-chart shows the break-up of market shares in the soft drinks industry:

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HR System

Employees

Coca Cola Beverages Pakistan Limited (CCPBPL) has a total of 4000 employees, who
are employed directly. In addition to these, 6000 employees are employed indirectly. The
total workforce is of 10,000 employees. 3000 employees are permanent, 3000 are on
contractual basis while 4000 employees are temporary. The approximate number of
employees in HR department is 200, while 6 are in the head office located in Lahore.

Salary system

According to the HR management, employees are mostly motivated by money. Monetary

incentives have a positive effect on job performance of employees. The pay system at
Coca Cola is based on performance. Coca Cola has a policy of considering performance
as the major criterion of pay. The performance of employees is evaluated and salary is
given accordingly, this makes sure that everyone is doing what they were hired for. The
entire salary system is based on performance rather than positions. This creates a friendly
competitive environment at Coca Cola. Even though intrinsic incentives are preferred by
the HR manager; he believes that it is actually bonuses that keep employees motivated.

Bonus System

Aamir Faisal, HR manager of CCBPL, told us that bonus and cash performance reward
are considered the most effective in motivating employees and improving their job
performance. Bonuses, like salaries, are given according to employees performance.
Performance is measure through performance appraisal system annually. The appraisal
system of CCBPL is such that the objectives are established at the beginning of the year,
performance of employees is tracked at mid-year and final evaluation is completed at
year end after which performance ratings are assigned. The positive feature of bonus

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plans is that t is absolutely based on performance. This creates a friendly competition
amongst the workforce.

Methodology

16 employees form different departments were asked to fill the questionnaire. The
questionnaire is attached in the appendix section. We visited the head office of the
company in order to debrief the employees about our questionnaire for a better
understanding. We conducted one in-depth interview with the HR manager of CCBPL,
Mr. Aamir Faisal Hashmi. He was asked about the effects of monetary incentives on the
job performance of employees. Weve transcribed the interview in the appendix section.

Topic
"How employee motivation through bonuses and incentives affect their job
performance?"

Purpose
Our main purpose in selecting this topic was to see whether bonuses actually have an
effect on motivation of employees. According to theory, we can see that this is true to a
great extent but it also depends on various other factors. Coco cola is an international
brand; however not much of the data is available with respect to Pakistan. Overall the
data available on this topic, motivation and job performance, is little when it comes to
Pakistan.

We have been learning new theories about motivation and job performance, but they are
mostly based on western based employees. Our aim in this research is to keep other
factors constant and to test the effect of monetary rewards on job performance. We want
to assess the impact of how factors like bonus pay and long term incentives motivate the
employees to perform. In addition, we will also analyze the dimensions of relationship
between the motivation of employees and their performance at work.

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LIMITATIONS

The research was conducted in the head office of the company and so it does not
include the performance of the labor employed in the production and bottling
plants.
Only four departments were observed and a sample of 3 employees (1 senior
manager, 2 middle managers) was used so the generalizations may not be a
perfect depiction of the whole department.
CCBPL has branches all over the country and we merely observed the branch in
Karachi therefore the generalizations may not hold true for the branches in other
cities.

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Monetary Incentives

This chart on the right shows the monetary incentives (Pattanayak, 2005) which were
taken into consideration when designing our questionnaire, and
also shaped our interview questions. The results gathered from
surveying 16 employees of CCBPL about their opinions of
different monetary incentives are summarized and analyzed
below.

We surveyed 16 employees of CCBPL for our research, working

across several different departments and at different levels of
hierarchy within the company. The employees were asked how
significant they regarded certain monetary incentives to be in
terms of influencing performance. The rating scale used a score
of 1 to 5 (with 1 being not significant, 3 being significant,
and 5 being very significant) and respondents could also
choose a not applicable option. In addition to this, we also
conducted an in depth interviews with the HR manager of the
company in order to gauge about the performance of employees.

Analysis

We calculated the weighted average of the results for every monetary incentive included
in the survey. In the survey, for every monetary incentive the respondents were supposed
to choose any number on a scale of 1-5. The number 5 representing significant effect of
that monetary incentive (something the employees consider really important) and the
number 1 representing an insignificant effect on their motivation.
We received 5 responses from the human resource department, 4 responses from the
marketing department, 4 responses from the finance department while only 3 responses
from the technical department.

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The results were mixed therefore they were classified later on according to the job
hierarchy.

All respondents (16 surveys)

Type Of Incentives Weighted Average
Salary Increment 4.56 (modal response= 5)
Cash bonus 3.94 (modal response= 4)
Profit sharing plan 3.50 (modal response= 3 and 4)
Tangible items (e.g. cars, 4.50 (modal response= 5)
motorcycles, etc.)
Retirement benefits 4.06 (modal response= 4)
Insurance policies 3.94 (modal response= 3)
Educational Reimbursement 3.81 (modal response=5)

Upon analyzing the results, we noticed that there was a certain pattern to how monetary
incentives were considered important. This was then compared to how things actually
work at Coca Cola and according to that we wrote a few possible recommendations to
further polish the already successful policies managing the human resource at the
company.

Salary increment:

What we observed:

Almost all of the employees considered an increment in salary as the most important
factor in increasing their motivation towards the job. This is why it has the highest
weighted average of 4.56/5 with only one respondent assigning it neutral in our survey.
This response had no significant difference across all the hierarchy levels in the company.

What happens at Coca Cola?

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Coca Cola is one of the biggest beverage companies in Pakistan. In order to maintain a
high level of employee motivation and retention they already pay much more than the
industry average across all grades.

Possible recommendations:

The company is already paying above the industry average therefore it is suggested that
they keep the salary as it is (above industry average) and keep a more diverse monetary
incentive package.

Cash bonus:

What we observed:

Response for cash bonuses was not as good as salary increment with only 3 respondents
rating it as really significant for employee motivation. It had a weighted average of 3.94/5
with most employees rating it at 4.

What happens at Coca Cola?

Coca Cola has a set formula for calculating how much bonus employees would receive.
Bonuses are paid only to employees who are seen as permanent (have served the
company for a fixed time) as at this company bonus is seen as an incentive. Once the
employee qualifies for that bonus, then the amount of bonus is decided on the basis of his
performance, general attitude and position in the company.
Recommendations:

Bonuses can prove to be really helpful in boosting employee motivation at Coca Cola if
used properly. The company has observes procedural justice as it has a set formula for the
amount of bonus however bonus is not being paid to the newly recruited employees. We

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recommend that Coca Cola gives bonus to even the new employees to promote a sense of
commitment and improve their motivation.

Profit sharing plan:

What we observed:

Profit sharing plan was considered the least effective measure of increasing employee
motivation with the lowest average of 3.50/5. A possible explanation for this trend could
be employees just not willing to take the risks involved with a variable pay system.

What happens at Coca Cola?

Salary is paid according to the position the employee holds within the company. The
system of variable pay isnt followed.

Recommendations:

It would be ideal if coca cola develops a performance based pay system so that all
employees are given salary according to their performance just so they would be willing
to go the extra mile. The idea of following a variable pay scale on companys
performance isnt a good idea at the time given the data.

Tangible items

What we observed:

Tangible items like cars and motorcycles had the second highest weighted average
amongst all incentives; 4.5/5, indicating that the employees viewed it as rather important

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for motivation levels. Items like these facilitate the employees greatly since it makes
mobility rather easy for them.

What happens at Coca Cola?

A lot of fringe benefits like these are given, specially to those employees at higher posts.
Honda and Toyota cars have mostly been given to the higher post employees. Almost all
employees at the lower levels have motorcycles. They feel that it really boosts up their
motivation level and increases their commitment level at the organization since they
consider it as a great facility for themselves.

Recommendations:

Coca Cola should continue with this trend of facilitating employees with tangible items
since it is going well in their favour; as it increases their commitment level to the
organization.

Retirement benefits

What we observed:

This incentive is also observed to be a significant one with a weighted average of 4.06/5,
with only one respondent rendering it as relatively insignificant. Most employees rated it
at 4, further confirming its significance.

What happens at Coca Cola?

At Coca Cola, they have their own scheme of giving out retirement benefits. But then
again, permanent employees are given more preference over the others, like the relatively
newer ones or ones with slightly lesser experience.

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Recommendations:

Upgrading their retirement benefits plan would prove to be a step up for Coca Cola.
Those employees with slightly lesser experience should also be incorporated in the
scheme since it would help make them permanent employees and would help them retain
them.

Insurance policies

What we observed:

This is given a weighted average of 3.94/5; thus it is ranked at the same level as cash
bonuses which werent seen to be as effective as the other incentives. This is because its
effects are not seen on a short term, immediate basis, unlike salary increments.

What happens at Coca Cola?

They do have their own insurance plan for the employees but then again it isnt at a
uniform level. Just like retirement benefits, the older/permanent/more experienced
employees are given preference over the rest.

Recommendations:

Coca Cola could use this as a retention tactic by uniformally giving insurance benefits.
Those employees at lower levels of the hierarchical ladder should also be brought into
consideration when giving insurance benefits.

Educational reimbursement

What we observed:
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This is the incentive with the lowest weighted average; 3.81/5. The reason for this might
be that in Pakistani society, education as it is, is given lesser importance than it should be
given. It isnt seen as important as it is.

What happens at Coca Cola?

At Coca Cola, educational reimbursement is rarely practiced, that too, for extremely
genius employees; those with extremely high GPAs, and those who are graduates of
leading business schools in the country like LUMS and IBA.

Recommendations:

The company should focus more on educational reimbursements since it would increase
the ratio of highly qualified people from leading institutions in the countries to apply to
Coca Cola for jobs. It would also boost up motivation levels, and thus performance.

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Conclusion

From all the observations, it seems that the Coca Cola Pakistan Beverage Limited
Company is a great company to work with, because they provide a very healthy,
productive and loving environment for the employees. Above all, the employees are
treated as the main backbone of the company and are viewed as valued assets for the
company. Their needs are the top priority of the company; which is why on the whole the
employees of the company seemed quite satisfied and happy with their job.

Various monetary means of motivating employees at Coca Cola include bonuses, rewards
and salary incentives. In the company, they work on the merit system. No nepotism is
practiced. All of these benefits are given to employees on merit basis to increase positive
competition within the company but at the same time they try to increase the feeling of
cohesiveness and built team morale so that the employees are motivated to perform well
for each others sake. One of the main ways of motivating their employees is through
bonus incentives. These are both short and long term depending on the employee in
discussion and the kind of incentive that fits.

They have their own system of giving out bonuses and rewards, based on their own
equation designed on their own preferences. For example they give bonus cash depending
on the job grade and performance, it could be a bonus of 10% of the salary given
annually when they are considering short-term incentives and as high as 4-5 years when
considering long-term investments. Before giving a bonus, they first ensure that the
employee that they are giving it to is a permanent employee. They make sure that the
person actually deserves it. There is a formula which includes employees performance,
job grade and overall business performance. They make certain that the employees know

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that this is the criteria for the bonus so that they know what they have to do in order to
achieve it.

Also, their performance appraisal system is specifically designed to make sure the
deserving employees get their due share. They make sure objectives are established at the
beginning of the year, performance of employees is tracked at mid-year and final
evaluation is completed at year end after which performance ratings are assigned. A very
impressive practice that the company has is that of the bottom up feedback approach. The
employees get to effectively communicate any problems that they are facing in the
company to upper levels of management who then address all issues promptly; as
mentioned earlier, employees are the most important assets of this company, whose needs
are first priority for the company. They ask for their feedback on the incentive
distribution programme during Employee Insight Surveys which are conducted every 2 to
3 years. But still sometimes an employee comes along whos not happy with his/her
compensation plan. Here employee is given full chance to discuss the performance
ratings with his/her manager and reach to a consensus.

Most senior level employees at the company believe that monetary incentives are the
most important motivation drivers at Coca Cola, specially keeping Pakistani society in
mind. But then again there are always deviations, although there are no observed
differences in how incentives are viewed between the two sexes. Coca-Cola Pakistan also
likes to be innovative in production and policies and so to make the incentives more
effective they use a combination of the above mentioned techniques and not just one.
They believe a mix of different techniques could be more fruitful. Although they do shy
away from offering leadership positions and decision making authority as incentives,
they, however, do pride on the fact that their performance appraisal and compensation
system is highly transparent, clear guidelines are available and are shared with all
employees. They have a flexible budget that varies year to year when deciding what to

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spend on incentives. Overall, the employees as well as the HR department believe giving
incentives is directly related to the promotion of an organization Incentives promote a
healthy competition among organization and employees focus on meeting their personal
as well as organizational objectives. And when performance is linked to rewards, it
increases efficiency as well as effectiveness of employees. The effect of incentives is
significant.

Recommendations

Although such a flourishing company like Coca Cola does not mend any specific
measures with regard to monetary incentives for employee motivation but we have still
come up with some recommendations that can further push up motivation in the
company.

1. Only permanent employees shouldn't be the only ones in consideration for

bonuses. By giving the new ones incentives will give them all the more
attachment to the organization which in turn might make them permanent
employees in the future. Retaining employees by incentives is an added plus for
any company.

2. Speaking about monetary benefits, the second most important motivators for
employees are retirement plans and benefits. They attract the employees to stay
with the company as they oversee a comfortable future.

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 3. Any compensation policy targeting promotions, should not only be based on the
time spent with company. This delays the opportunities for employment mobility
within a company and values time more than skills and qualifications. Hence, it
demotivates younger employees.

Appendix
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 Interview with HR Manager
Name: Amir Faisal Hashmi

Faisal Hashmi joined the Coca-Cola system in 2000. During his 15 years experience
with the Company, Faisal has spearheaded the HR
function both at the bottling side as well as the
Company. Faisal's diverse role includes talent
development, creating a conducive and stimulating
workplace environment for Coca-Cola associates and
building a long term plan for sustainable engagement.

Following are the questions we asked to the HR

Manager, Mr. Amir Faisal, in order to gauge the impact of monetary incentives on
employee performance.

1) How employees are motivated at CCBPL?

Employee motivation is given a very high consideration at CCBPL. At CCBPL we have

the policy of promotion from within policy. Promotions are bestowed on the
performance basis. This performance base motivates employees to work hard and
achieve the goals, which are very objective and are perceived achievable by most of the
employees. Employees are motivated through various means e.g.: incentive trips,
company events, team building activities, bonus, rewards, salary raises.

2) Do you prefer intrinsic incentives or extrinsic incentives?

Intrinsic incentives like cash depending on the job grade and performance are preferred in
the organization, however, it was seen the cash bonuses and monetary incentives are
more preferred by the employees. Moreover, compensation plan is also a motivating

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factor as CCBPL is paying more than the industry averages. Not only this, different
campaigns and competitions between the employees itself are also used to motivate the
employees.

3) What is the criteria to be eligible for a bonus incentive?

One has to be a permanent employee. There is a formula which includes employees

performance, job grade and overall business performance.

4) Do you disclose these criteria to your employees?

Yes. The criteria is disclosed to all of our employees, so that everyone is aware about it
and can evaluate their individual performance accordingly,

5) Please describe your appraisal system.

Objectives are established at the beginning of the year, performance of employees is

tracked at mid-year and final evaluation is completed at year end after which
performance ratings are assigned.

6) Do you believe monetary incentives are the most effective?

Yes. Employees are best motivated when they are provided with monetary incentives like
salary increment.

7) What incentives do you think work the best?

Bonus & cash performance rewards.

8) How much of your budget is allocated to incentives? Do you believe this is

reasonable?

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It varies from year to year and depends upon business performance.

9) How do you think giving incentives is linked to the promotion of your

organization culture?

Incentives promote a healthy competition among organization and employees focus on

meeting their personal as well as organizational objectives.

10) Would you say your performance appraisal and compensation system is
transparent and clearly defined? How so?

Yes. Clear guidelines are available and same are shared with all employees.

11) In your view, how much of an effect do incentives really have on employee
productivity?

When performance is linked to rewards, it increases efficiency as well as effectiveness of

employees. The effect is significant. It was seen that employees started to work with
more willingness after they had been awarded monetary benefits. This was because they
were assured that their performance is valued as they were given incentives along with
appreciation.

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Questionnaire for Employees

Directions: Please select the option that best describes you.

1) Gender

--------- Female --------- Male

2) Age

--------- Less than 25 --------- 25 35 --------- 36 45 --------- 46 55---------

More than 55

3) What is your highest level of education?

------- High School (O-Level/A-Level) ------- Diploma

------- Bachelors Degree ------- Masters Degree

4) What is your position level?

-------- Employee -------- Supervisor ------------ Manager

5) How long have you worked in this organization?

--------- Less than 1 year ----------- 1 3+ years -------------- 4 6+ years

--------- 7 9+ years ---------- More than 10 years
6) What department do you work in?

--------- Human Resource ---------- Marketing ---------- Supply-chain

-------- Finance -------- Others (Please Specify)

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 7) How important are incentives in influencing your willingness to exert more
effort in your job?2

Totally Fairly Average Fairly Very important

unimportant unimportant important

8) How effective do you think each of the following monetary incentives

would be in affecting your motivation at work?

1 = Not at all effective | 2 = Not very effective | 3 = Satisfactory | 4 =Moderately

effective| 5= Very effective

Type of Recognition/Reward Strength of effectiveness

Salary increment 1 2 3 4 5
Cash bonus 1 2 3 4 5
Profit-sharing or stock ownership plan 1 2 3 4 5
Tangible items (e.g. electronics, appliances, garments, accessories, 1 2 3 4 5
etc.)
Retirement benefits 1 2 3 4 5
Insurance policies 1 2 3 4 5

2 All of the above questions are directly copied from (Lai, 2009)
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