Impact Of Financial incentives

on Employees Productivity
Group members:
Saima Sajid
Shahril Nadeem
Anousha Memon
Rabiah Shabbir
Rabia Hassan
 Introduction
 Research Questions & Research
Objectives
 Literature Review
 Research Methodology
 Conclusion
 References
Introduction:
 In any organization even it is public organization or
private organization money is a very important issue.
The purpose of the people is being employee because
they get income in the form of wages and salaries.
 There are many scholars who take deep research that
how the financial incentives impact on employees
productivity in the organization ,Luthan (1998).
 Financial incentives are purely link to the employees
productivity. Good wages strategy highly impact on the
organization because it help to retain the skill labour in
the organization.
Con’t..
 We compare the financial incentives and employees
productivity across the employees with different
educational level in banking sectors. In this research we
collected data from banking industry.
 We collected data from 18 branches of different banks
that are Allied bank, Bank al habib , Muslim commercial
bank , JS bank, Sindh bank and Soneari bank about their
perceptions related to financial rewards.
 Financial incentives are directly impact to the employees
towards their work performance. This reward is highly
impact on the effectiveness and efficiency of the
employees.
Research Questions:
• What is the perception of the employees towards
compensation system ?
• What is the significant relationship between the financial
incentives and employees work output ?

Research Objectives:
• To identify the perception of the employees with
regards to wages increments.
• To identify the significant relationship between the
financial incentives and employees work output .
Literature Review
S.no Title of Articles
01 The impact of incentives on the
performance of employees in public
sector
02 Are financial incentives related to
performance? A meta-analytical review of
empirical research
03 Wages and employees performance: The
quality of work life as moderator
04 Variety of performance pay and firm
performance: Effect of financial incentives Nikos Theodoropoulos
on worker absence and productivity
05 Firms, wages and incentives: Incentive
system and their impacts on wages,
productivity and risks
06 Productivity and wage premiums:
evidence from Vietnamese ordinary and
processing exporters
07 The impact of firm provided training on
productivity, wages and transition to
regular employment for workers in
flexible arrangements
08 The effect of training satisfaction,
employee benefits and incentives on part
time employees commitment
Author
Bilal Almomani, Ahmad Al-
Omari
Nina Gupta, AtulMitra, Jason
D.Shaw
HendraGunawan, RezkiAmalia 100 employees in
manufacturing company
KonstantinosPouliakas and
Trond Petersen and
VemundSnartland
Flora Bellone and Marion
Dovis
Hiromi Hara
Caitlin Jaworski,
SwathiRavichandran and
Shweta Singh
Sample
50 employees of public sector
in Jordon
30 Employees of university
staff
Public sector firms
165,000 employees of wide
array of industries from
Norway
Exporters and non-exporters
of manufacturing firms of
Vietnam
Japanese workers
Part time hotel employees
Findings
Incentives affect performance of staff in
the public sector.
The effect financial incentives have been
stronger for extrinsic than intrinsic
tasks.
Wages are moderated by the quality of
work life significant negative effect on
the performance of employees.
Some types of PRP are associated with
the lower absence rated or higher
productivity, however, does not imply
that all firms should employ PRP as an
absence control or productivity-
enhancement tool.
Wages are higher under output-related
than time-rate system for workers in
the same occupation establishment unit,
gives indirect support to claim that such
system increase output.
The relationship between firm
productivity and exports is more
complex in emerging economies than in
industrialized countries.
There is difference in wage structure
between regular and non-regular
workers.
The respondents of higher level of
satisfaction with par for performance
and job recognition incentives, indicated
a strong commitment to their jobs.
09 Employment protection and labor Carl Magnus Bjuggren Swedish firms (limited
productivity companies) excluding
agricultural and government
owned corporations
10 Ageing, productivity and wages in Austria Bernhard Mahlberg, Inga Employees of industrial,
Freund and Alexia Prskawetz construction and service
sector
11 Training, productivity and wages in Italy Gabriella Conti 75000 households are
interviewed every three
months, total of approximately
200,000 individuals
The effect on labor productivity is due
is due largely to increased efficiency.
Lower wages for younger employees
may indeed reflect their lower
productivity.
Training seems to have appositive and
strongly significant effect on
productivity.

12 Impact of effective wages and salary Okeke, Patrick Anene, Nwele, 557 civil servants Low productivity and inefficiency
administration on civil service JmesObasi and Achilike associated with public service can be
productivity in Nigeria removed if the civil servants are
provided with some financial incentives.

13 The impact of remuneration on Abdul Gusau Polytechnic, 83 employees of state college Remuneration is a source of motivation
employees performance Tlata-Mafara of education on employees performance.

14 Do higher wages reflect higher Torbjornhaegeland and Tor Employees in manufacturing The wage premium for workers with
productivity? jakabklette plant of Norway long experience is found to exceed
their relative productivity, while
opposite is true for workers with
medium experience.
15 Do salaries improve worker Alex Bryson Babatunde and Football referee The size of performance gap between
performance? Rob Simmons referees on salaried contracts and
those on match fees is potentially
informative with respect different
mechanisms by which the salary effect
occur.
16 What is the effect of wages and Rebecca Tetteh, Safura 100 Teaching and non- Supervision and wages influence
supervision on productivity? Muhammad and Ayisha teaching employees of Sunyani productivity of employees with
Ahmed Azumah Technical University supervision influencing productivity
more than wages.
17 Relationship between compensation and
employee productivity
18 Does market structure affect labor
productivity and wages?
19 The effect of loyalty on wages
20 Minimum wages and firm productivity
21 Cohesiveness, productivity and wage
dispersion
22 The impact of training on productivity and JozefKonings and
wages: firm level evidence
23 Wages and salaries as a motivational tool Olatunjieniolasule,
for enhancing organizational performance Amunisaratlyabo and Hassan
24 An investigation on the effect of
remuneration on motivation and
performance of employees
25 The provision of incentives in firms
26 The wage effects of high performance
work organization in manufacturing
27 How tight is the link between wages and
productivity?
28 The relation between labor productivity
and wages in Brazil
29 Have jobs and wages stopped rising?
Productivity and structural change in
advanced countries
30 The connection between labor
productivity and wages
Emmanuel Erastus Yamoah Banking industry of Ghana Good compensation remains the most
important motivational strategy.
Michael L. Polemis and Employees of US manufacturing There is a non-linear relationship
ThanasisStengos industries between market structure and labor
productivity/wages.
Oliver Masakure Workplace employment The negative impact of loyalty on wages
relation survey 2011, 6 in the persist.
series
Rebecca Riley, Chiara 250 employees SMEs Labor cost increases amongst low paying
RosazzaBondibene firms may have been met to an extent by
increases in labor productivity.
David I. Levine Employees in firms of California Reducing wage differentials can increase
workers cohesiveness.
Manufacturing and non- Training boost marginal productivity of
StijnVanormelingen manufacturing firms of an employee more than it increases its
Germany wage.
120 employees of six There is significant relationship between
organizations wages and motivational tools.
banjo
Jacob KibetMurey 100 employees at the Nation Motivation had an impact on the
media group productivity of the employees.
Canice Prendergast Agents of the firms Incentives do matter for better or for
worse.
Paul Osterman Manufacturing Private sector of Skill and technology clearly play a role in
America wage determination.
Johannes Van Biesebroeck 150 employees on private There is a strong relationship between
sector in Switzerland wages and performance.
Erik S. Katovich and Employees of private sector of Real wages may diverge from labor
AlexandreGori Maia Brazil productivity due to range of economic
and institutional factors.
Fabianocompagnucciandrea Employees of firms in Italy The positive relationship between
productivity growth and employment
growth.
Christopher Bruce 125 employees of Canadian There will be very little correlation
firms between an industry’s productivity
growth and its wage growth.
Research Methodology:
 The empirical study includes the quantitative data . The deductive approach
was used in the research. The participants were bankers, the sample size of
this research is 125 participants from 18 different branches of banks. Mono
method was used for data collection , we distributed 130 questionnaires for
data collection out of these we received 125 questionnaires that are
completely fill up. Descriptive research was used in data analysis . We
collected the data through self administered methods ( Delivery and
collection questionnaires).

 The deductive research based on reinforcement theory and Hertzberg two

factors theory . Reinforcement theory proposed by B.F skinners,
reinforcement theory proposed that you can change the behaviour of
someone by using reinforcement , likewise when any organizations gives
benefits to their employees so they can change their behaviour related to
work.

 Hertzberg’s two factors theory describes the level of satisfaction and

dissatisfaction . Satisfaction level encourage the employees to work harder .
Motivating factors increase employees job satisfaction such as recognition,
advancement , responsibility. Where as dissatisfaction and hygiene factors
won’t encourage employees to work harder.
 Strongly Agree Strongly disagree
SR.NO Questions Agree Disagree

The primary aim of being employed is to

4. 29.6% 64% 6.4% 0%
have an income that will finance your basic
life.
Financial Incentives are awarded to the
5. 28% 69.60% 0.8% 1.60%
employees performing well as motivated
strategies practiced by the organization.
Employee’s recognition is practiced in the
6. 27.20% 64% 8% 0.80%
organization.
Financial incentives practiced by the
7. 32% 63.20% 4.80% 0%
organization facilitate and encourage your
performance.
Pay decisions are linked to the performance
8 36% 51.20% 12% 0.80%
achievement.
The incentives system in the organization
9 30% 55.20% 11.20% 3.20%
facilitate the implementation of strategy by
attracting and retaining the right person in
the organization.
Increase salary can recognize employee’s
10. 32% 56% 10.40% 1.60%
contribution to the accomplishment of
organization’s objectives.
Performance based pay is intended to
11. 33% 60% 5.60% 1.60%
motivated employees to perform better.
To what extend do you agree with this
12. 35% 44% 18.40% 2.40%
statement “Poor salaries of employees
reduces their work performance”.
 According to your opinion “Financial
13. 28% 49.60% 17.60% 4.80%
incentives are more superior than non
financial incentives”.
Organization should give more financial
14. 26% 58.40% 10.49% 5.60%
incentives than non financial incentives.

Financial incentives encourage your

15. 36% 55.20% 8% 0.80%
performance and effectiveness in the
corporation.
There is a significant relationship between
16. 26% 64.80% 8% 0.80%
salaries and employees performance.

According to your opinion Financial benefits

17. 28% 56.80% 13.60% 1.60%
is received after training results.

Do you think training of the employees is

18. 53% 44% 3.20% 0%
necessary for the organization in order to
increase the financial incentives.
Do you think the trained workers have high
19. 33% 55.20% 6.40% 5.60%
financial benefits rather than untrained
workers.
Employees recognition is valued in the
20. 29% 64.80% 5.60% 0.80%
organization.
Do you feel performance appraisals increase
21. 30% 56.80% 10.40% 2.40%
the productivity of employees.
Changes in salaries structure guarantee an
22. 42% 52.80% 4% 1.60%
increase in employees performance.
The relationship between salary increment and
23. 30% 59.20% 9.60% 0.80%
productivity enhancement gives the employees
or organization growth.
Any recent changes in the banking sector
24. 24% 64% 8.80% 3.20%
resulted from provision of financial incentives.
Conclusion:
In our findings from the whole research it is concluded that Financial
incentives are highly impact on the employees productivity, the value of
financial incentives at the work place cannot be underestimated. If the
organization will provide the good salary to their employees so definitely the
organization will attract the quality employees.
So we conclude that financial incentives is highly impact on the employees and
organizational productivity when the organization will provide financial
incentives to their employees so they will be increase their productivity.

Limitations
Limited time period.

Lack of awareness related to advanced technology in data analysis.

Improper response of participants.

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