Impact Of Job Security And Incentives On Job

Satisfaction Of Employees In Banking Sector Of

Pakistan

Mubashir Hassan Khan

Student, Riphah School Of Leadership
Riphah International University, Islamabad-46000, Pakistan
E-mail: Mubashirhassan.hassan@gmail.com

Abstract
Purpose: The main purpose of this study is to check relationship between job
security, incentives and job satisfaction of employees in banking sector of
Pakistan.
Method: A structured questionnaire survey conducted to collect data from 200
employees of 4 private and 2 public sector banks.
Findings: Results identified that employees of private sector banks were more
satisfied with incentives as compared to Public sector banks while employees of
Public sector banks were more satisfied with job security as compared to Private
sector banks.
Limitations: This model has not been tested in other cities of Pakistan except
Rawalpindi.

Keywords: Job satisfaction, Job security, Incentives, Public sector banks, Private
sector banks
Introduction:
Theme 1. The basic purpose of the human resource and labor management is to
enhance the confidence or to improve the employee’s attitude towards job in a well
manner. From many decades it is important area of research and many researchers
investigate the association among job satisfaction and its affecting aspects. The
significance of job satisfaction on a variety of organizational variables has been
studied by various researchers in the past [1].
Particularly we know that dissatisfaction lead employees toward job turnover.
That’s why taking into account job satisfaction of employee and its affecting
factors have significant value for any institution or concern to stay alive and
prosper [2].
The factors like incentives and rewards are the most preferred factors for employee
motivation programs (Danish, R, Q., and Usman, A, 2010).
Job security is also an important variable that directly affects employee
organizational satisfaction and level of his commitment. If an employee is sure that
he will not be kicked out of the organization any time sooner then he will definitely
work harder. In fact, he will try to reciprocate by giving more input to the
organization and it will also increase the level of his satisfaction [3].
Theme 2. Researchers argue that when employees are motivated to perform by
offering them good incentives in terms of salary etc., then the performance of the
organization ultimately increases [4].
Rewards and compensation has known to have a positive impact not only on
employee satisfaction, but also on organizational performance [7].

Employees want financial security from their organization and if an organization

fails to provide this then it can lose its human resource. The majority of the
business corporations these days are giving employee‟s part in the shares. This is
just one way of increasing job satisfaction and job security (Imran, R., Majeed, M.,
and Ayub, A, 2015).
According to the current literature, the best way to increase motivation and job
satisfaction among employees, including top management is to determine the
salary and wage rate solely on the basis of long term productivity of the
organization [5]-[6].
Employees can work properly only if they are committed, loyal and sincere
towards the organization and this is only possible if they are satisfied with the
organization, its decisions, their salary packages and other similar factors (Imran,
R., Majeed, M., and Ayub, A, 2015).
A large number of researchers have studied different aspects of organizational
justice and most of them have found out that if an organization fails to provide job
security to its employees whether they are on contract or permanent member, then
the level of motivation and organizational commitment in them decreases and both
these things directly affect their job performance [8].
Theme 3. As per my best knowledge, Incentives and Job security have not been
studied collectively with job satisfaction of banking sector employees in Pakistani
context.
Theme 4. Job Satisfaction is among the most critical aspects that influence the
performance of an individual. In Pakistan’s banking sector, which is one of the
fastest growing sectors in the economy, there seems to be a growing dissatisfaction
among employees after the sector was privatized in 1990s. The trend is reflected
through huge disparity between corporate level and branch level employees
(Qureshi, M, N., and Khalid, K, 2015).
Job security is also an important variable that directly affects employee
organizational satisfaction and level of his commitment.
Giving incentives to your employees not only motivates them to do their work, but
it can also motivate them to stay longer at the business [9].
Theme 5. The purpose of this study is to investigate the relationship of incentives
and job security with job satisfaction of employees in banking sector in Pakistan.
There is a strong need to study this framework in Pakistan as very less research has
been done on this topic. Pakistan is a developing country; there is a strong need to
study the factors like incentives and job security that affect employees satisfaction
level.

Literature Review

Incentives, Job Security and Job Satisfaction

Job satisfaction is defined as all the feelings that an individual has about his/her
job. Researchers have attempted to identify the various components of job
satisfaction, measure the relative importance of each component of job satisfaction
and examine what effects these components have on workers’ productivity.
Job satisfaction results from the exchange of personal factors, such as principles,
character, and opportunity with employment factors such as the impression of the
work situation and the job itself (Davies et al., 2006).
The traditional model of job satisfaction focuses on all the feelings that an
individual has about his/her job. However, what makes a job satisfying or
dissatisfying does not depend only on the nature of the job, but also on the
expectations that individuals have of what their job should provide. Satisfied
employee is inclined to be more industrious, inspired, and dedicated to their work
(Syptak et al., 1999).
The concept of incentive has become the cornerstone for attracting, encouraging
and retaining efficient employees in the organization. Every worker receives a pay
or reward in exchange for the work they do. Traditionally, organizations often
believe that pay is the greatest motivating factor for higher performance from
employees. Economically, man works and earn money which is then used more
directly to satisfy needs, usually physiological for purchasing food, shelter, and
clothing as well as for acquiring other good things of life. Employers also have the
ideology that to get the best from employees it is pertinent to offer them more
money. Hence, some workers believe in money, while others believe in other
incentives like recognition, job security, group cohesiveness, enabling
environment, training, etc., Bennett and Minty (2005) adduce that incentives can
be viewed from two broad perspectives. They are financial incentives and non-
financial incentives. The study of Kreitner and Kinicki (2001) revealed that
financial incentives has a short term result in encouraging and stimulating workers
for higher performance. Dorenbosch, De Reuver & Sanders (2006) indicated that
financial reward goes a long way in determining how effective and committed a
worker will contribute to organizational goal and objectives. According to Salau,
Falola and Akinbode (2014), the financial incentives given to workers comprises
bonus, increased salary/pay, fringe benefits, profit sharing, and other payment
packages. According to Rothwell & Kazanas (2004), salary/wages and other
payment packages play a critical role in workers’ motivation and commitment
while Lawler (2003) asserted that non-financial incentive give long term
motivational effect.
Job security is the probability that an individual will keep their job; a job with a
high level of security is such that a person with the job would have a small chance
of losing it.
Basic economic theory holds that during periods of economic expansion businesses
experience increased demand, which in turn necessitates investment in more
capital or labor. When businesses are experiencing growth, job confidence and
security typically increase. The opposite often holds true during a recession:
businesses experience reduced demand and look to downsize their workforces in
the short term. Governments and individuals are both motivated to achieve higher
levels of job security. Individuals can influence their degree of job security by
increasing their skills through education and experience, or by moving to a more
favorable location. The official unemployment rate and employee confidence
indexes are good indicators of job security in particular fields. These statistics are
closely watched by economists, government officials, and banks.[10]
Relationship Between Job Security and Job Satisfaction
The literature provides evidence for a strong relationship between job satisfaction
and specific individual socio-economic characteristics, namely, gender (Clark,
1997; Kaiser, 2002; Moguerou, 2002), age (Clark and Oswald, 1996; Groot and
Van de Brink, 1999), education (Ward and Sloane, 1999), wages (Lydon and
Chevalier, 2002), working hours (Clark and Oswald, 1996; Drakopoulos and
Theodossiou, 1997), trade union status (Borjas, 1979; Freeman and Medoff, 1984;
Lillydahl and Singell, 1993) and establishment size (Lang and Johnson, 1994;
Sloane and Williams 2000). One of the most consistent findings in the job
satisfaction literature is that the effect of job security on job satisfaction is large
and significant.
Job satisfaction arising from job security is a major factor affecting the quality of
the employer-employee relationship. Indeed, Blanchflower and Oswald, (1999)
indicate that US workers in secure jobs record higher levels of job satisfaction and
European data support the strong connection between the feeling of having a
secure job and the reporting of higher job satisfaction.
The International Social Survey Programme (ISSP (1989)) survey reveals that in
eight out of the nine OECD countries surveyed, job security was ranked as the
most important characteristic of a job among the respondents. Only in the
Netherlands the respondents ranked job security below having an interesting job.
Finally, Moguerou (2002) using data form the Survey of Doctorate Recipients
found that job security is a major determinant of job satisfaction in all sectors of
employment for both males and females. Blanchflower and Oswald (1999)
investigated the relationship between job satisfaction, job security and mental well-
being using cross-section information from three sources “the International Social
Survey Programme” (1989), “the Eurobarometer Surveys”(1995-1996), and “the
US General Social Surveys” (GSS) data. They found that expectations of possible
job loss have the largest negative effect on job satisfaction.
Souza-Poza and Souza-Poza (2000) used the ISSP to study the determinants of job
satisfaction2 and showed that job security significantly increases the individual’s
job satisfaction and it is ranked 7th in importance among all the determinants of
job satisfaction.
Heaney et al, (1994) surveying US car manufacturing workers found that chronic
job insecurity had an independent effect on job satisfaction and thus, they
concluded that high likelihood of losing the job may be a cumulative stressor for
the worker with increasing effects over time.
Based on the above literature, the Second hypothesis is expected to observe the
following:
H1: There is a significant positive relationship between Job Security and job
Satisfaction of Employees working in Banking Sector of Pakistan.

Relationship Between Incentives and Job Satisfaction

Incentive has been a shared factor influencing the performance of employees at
workplace. Numerous studies argued that there are different factors that lead to
employees’ satisfaction and also explain what really motivates them for distinctive
advantage. Over the years, the means of identifying these factors has been a major
concern for management bearing in mind that human needs are unlimited and their
wants are insatiable. Studies revealed that when organizational rewards are not the
actual needs of employees, job dissatisfaction and lower commitment tends to
appear. This corroborates with the findings of Kinicki and Kreitner (2003) that
when the sincere needs and supplications of the employees are not taken into
consideration and managed properly, then displeasure, discontent and pilfering
prevails and this facilitates unattractive state of the mind towards work. Rothwell
& Kazanas (2004) discovered that organizational effectiveness becomes vague the
moment an employee feels displeased, disgruntled or discouraged about how
things are done. However, it becomes necessary for organizations to put in place
the best strategies that will help to decrease the depressing factors, bearing in mind
the principle of individual differences when it comes to satisfying their
(employees) needs and requirements. Several factors have been identified to
influence high job satisfaction in the workplace; amongst these are career
development and progression, opportunities for growth, communication, training
and other work related issues (Bennett and Minty, 2005). Invariably, several
studies have also revealed that low compensation and rewards (monetary or
nonmonetary) are the most common reason given for dissatisfaction. Burgess
Simon, & Ratto Marisa (2003) stated that employees feel they are satisfied only
when they derive pleasure from their job, and this feeling influences their attitude
to work which eventually leads to greater performance. Studies indicated that there
are various dynamic ways of motivating worker for efficiency and effectiveness;
amongst these are pay, interpersonal relationship, sense of achievement, etc.
(Salau, et al., 2014)”. In the world of business, the relationship between incentives
and job satisfaction cannot be undervalued, the two variables depend on each other
but respond in different ways to increased employees engagement, participation
and retention, competence, commitment and involvement.
Based on the above literature, the Second hypothesis is expected to observe the
following:
H2: There is a significant positive relationship between Incentive system and job
Satisfaction of Employees working in Banking Sector of Pakistan.
Research Model

IV1 DV
Job Security
H1
Job
IV2 Satisfaction
Incentives H2

Methodology:
Job satisfaction has been taken as a dependent variable and other factors like Job
security and Incentives are considered as the independent variables.
The main purpose of this study was to identify the impact of Job security and
Incentives on job satisfaction of the bank employees of Public and Private sector
banks in Pakistan, to determine whether the differences in terms of growth,
benefits and job security influence employee’s perception regarding job
satisfaction.
Bank employees in this study refer to Top executives, senior managers, and
Middle-level-managers (not employees such as peons, guards, drivers, cleaners,
clerks etc).
Out of 22 Scheduled Banks depicting population, 6 Banks were selected as sample
to conduct research.
All employees are aged between 25 to 55 years. The data was collected from six
banks. Four belong to the private sector which includes NiB Bank, Bank Al Habib,
Soneri Bank and Summit Bank and other two belonging to the public sector
namely The Bank of Punjab and National Bank.
To achieve the objectives of the study 200 surveys were sent in six Banks of
Rawalpindi Region during the period of April- May, 2021. In all, 160 returned (a
response rate of 80%) which is quite enormous. Of the 160 returned
questionnaires, 16 were incomplete and therefore discarded; leaving 144 for
analysis.
A structured questionnaire was developed, approved by the Ethics Committee of
Riphah International University.
The questionnaire using 5-Scale Likert (1= Highly dissatisfied, 2=Dissatisfied,
3=somewhat satisfied, 4=satisfied, 5=Highly satisfied) was design to test the
impact of all the variables for this study. The questionnaire was divided into 3
sections: Incentives, Job security and job satisfaction. The question covers job
facets such as, promotion, pay, Job Security, opportunities for growth. This is a
relative and qualitative study for which a tested questionnaire was used to identify
various outcomes of the study.
Sample Characteristics:
Tables I, II, summarize the respondent organizations’ characteristics according to
the working experience in the current organization and working positions of the
respondents. About 51 percent of the respondent organizations were from private
sector, while the rest were from public sector organizations.
In addition, 59 percent respondents were male which clear depicts that a striking
number of female bank employees would provide healthy results.
Finally, with respect to the occupational scale, the sample constituted 16
Executive/Directors, 38 managers from senior management and 90 sub-managers
from middle-level-management.
Table I: Respondent’s gender
Gender Public Bank Private Bank Total
Males 50 35 85
Females 22 37 59
Total 72 72 144
Table II: Respondent's working experience in current organization
Experience Public Bank Private Bank Total
Less than 1 years 6 8 14
1-5 years 35 32 67
6-10 years 25 14 39
11-15 years 13 11 24
79 65 144
Table III: Respondent's working position
Organizational Private Bank Public Bank Total
Level
Executive / Director 8 8 16
Senior Management 18 20 38
Mid-level-Management 53 37 90
79 65 144
General Findings:
Table 1: Incentives matches with level of satisfaction
Incentives Total
Private Bank Public Bank
Highly dissatisfied 1 5 6
Dissatisfied 10 15 25
Somewhat satisfied 21 29 50
Satisfied 33 20 53
Highly satisfied 7 3 10
72 72 144
The above table clearly demonstrates that employees of private banks are more
satisfied than public sector employees. This may be because of fine incentive
packages along with additional benefits such as housing and car leasing for
employees.
Moreover, a total of 37 % respondents were satisfied with their current incentives.
In addition, 34% were also somewhat satisfied, while 7% were highly satisfied.
Only 22% respondents were either dissatisfied or highly dissatisfied. The result
clearly indicated that a significant majority comprising 78% is satisfied with their
current incentive packages. This may be linked to satisfactory.
Table 2: Job security and level of satisfaction
Job Security Total
Private Bank Public Bank
Highly dissatisfied 2 3 5
Dissatisfied 13 2 15
Somewhat satisfied 15 17 32
Satisfied 34 44 78
Highly satisfied 8 6 14
72 72 144

Public sector employees were found to be satisfied with the job security while
there is uncertainty among private sector employees. This may be because mostly
private banks issue contracts for duration of 6 months to 12 months except for
executives or directors. In addition, private bank jobs are goal oriented where
every employee has to meet certain goals within the time limit e.g., raising
deposits, credit cards issuance etc. In addition, failing to achieve targets leads to
threat of elimination.
Therefore employees do remain in state of depression and feel insecure. Overall,
54% respondents were satisfied with the job security while a further 22% were
somewhat satisfied. A total of 14% were among dissatisfies and remaining 10 %
were highly satisfied in feeling their jobs as secure for long-term.
Results:
The comparisons of all the mean values highlight a higher level of job satisfaction
in private bank employees than does the public banks. The fact is expressed by the
differences of the overall job satisfaction in public and private bank employees.
The average pay of private sector bank employees is greater than public sector
bank employees. The reasons for this difference in job satisfaction between private
and public sector bank employees might mainly be related to the bank’s salary and
fringe benefits.
The findings of the study indicates that the differences in terms of Incentives, job
security and benefits play a significant role in influencing one’s perception of job
satisfaction.
Furthermore, the present study attempts to enrich the existing knowledge base in
the area of job satisfaction in banking sector (both public and private), as there
have been very few studies within the Pakistani context that have studied bank
employee’s perception of job satisfaction.
The public sector bank needs to introduce new Incentive system based on merit, to
incase employee’s pay satisfaction. Human resources practices regardless of sector
(public or private) must be effectively and fairly used to enrich employee’s job.
Furthermore, private sector bank employee’s reported dissatisfaction in term of job
security. To overcome this obstacle private sector banks need to introduce special
schemes related retirement, pension, gratuity and other benefits to enhance the
employee’s sense regarding job security in effort to increase organizational
commitment which in turn will lead to employee’s commitment and high degree of
satisfaction.

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