Sr. No.

CONTENTS PAGE
No.
CHAPTER 1 1.1 INTRODUCTION 2-6
1.2 REVIEW OF LITERTURE 7-10
1.3 STATEMENT OF THE PROBLEMS 11
1.4 OBJECTIVE OF THE STUDY 11
1.5 HYPOTHESES 11
1.6 METHODOLOGY 12
1.7 OPRATIONAL DEFINITION 13
1.8 SCOPE OF THE STUDY 13
1.9 SIGNIFICANCE OF THE STUDY 13
1.10 LIMITATION OF THE STUDY 13
CHAPTER 2 DATA ANALYSIS AND INTERPRETATION 15-25

CHAPTER 3 FINDINGS, DISCUSSION AND CONCLUSION 26-29

4 REFERENCES 30

1
 Chapter 1

Research Design

1.1. Introduction
This study is an analysis of the impact of financial incentives on the employee performance
in the organization.

In today’s competitive business scenario, companies are called up on to prepare the best
market strategy to improve their performance, and to come up with the way to keep their
employee motivation on the highest level so that the company as a whole can perform well
within the competition.

Monetary incentives are any form of financial good given to someone to incentivize their
actions and align their incentives with those of the principal who provides the monetary
incentive. This is a type of extrinsic incentive and is commonly seen in the workplace. The
effect of monetary incentive can be broken down into two categories: the "standard direct
price effect," and "indirect psychological effect". These two types of monetary effect often
work in opposite direction and crowed out incentivised behaviour. However, several studies
have suggested that it is possible to manage the crowding-out effects by utilising a principal-
agent model that incorporates nonstandard assumptions . For instance, a monetary incentive
may come in the forms of profit sharing, bonuses, stock options or even paid vacation time.
As such, a well-chosen monetary incentive programs can produce positive motivation and
influence the productivity and output of individuals and firms.

A common monetary incentive system used by firms is performance-based pay where

incentives are paid based on employees' productivity or output over a particular period of
time. Some methods are commission-based where the employee, for example a salesperson,
receives a payment directly correlated to their output level. Firms also pay additional wages
or rewards for employees who work overtime and for their additional work above firm
expectations. Expectancy theory implies that, provided employees place sufficient value on
the monetary incentive to justify their extra effort and perceive that greater effort will result
in better performance, such incentives can motivate employees to maintain high levels of

2
effort and discourage shirking. This in turn increases the individual productivity of workers
and the overall productivity of the firm.

Other monetary incentives are less direct, such as awarding periodic, discretionary bonuses to
top performers, offering the possibility of a promotion to a higher-paying position or profit
sharing for team projects. Alternatively, firms can also incentivize their employees to perform
by threatening to demote or terminate them for poor performance. When employees feel that
their careers are in jeopardy, they are more likely to increase their efforts.

Monetary incentives do affect the effort and average performance of employees but are likely
dependent on the scope of the job and the task variables. For routine jobs such as clerical and
administration jobs that are mundane, the presence of monetary incentives will encourage
employees to demonstrate consistent effort of diligence when the intrinsic incentive has been
exhausted. On the other hand, if the task assigned is too challenging, monetary incentives
make little to no difference in increasing an employee's contribution to work.[19]

The effect of monetary incentives can depend on the framing of the rewards. For example, in
cadaveric organ donation, funeral aids are perceived to be more ethical (particularly in
showing gratitude and honoring the deceased donor) and potentially increase donation
willingness than direct cash payments of the same monetary value.

Concept of Performance describes various measures of the efficiency of production.

Performance is expressed as the ratio of output to inputs used in a production process, i.e.,
output per unit of input. Productivity is a crucial factor in the production performance of
firms and nations. Increasing national productivity can raise living standards because more
real income improves people's ability to purchase goods and services, enjoy leisure, improve
housing and education and make businesses to be more profitable. There are many different
definitions of output, and the choice among them depends on the purpose of the productivity
measurement and/or data availability (Armstrong, 2016). Incentives According to Palmer,
(2012) defines incentives as the external temptations and encouraging factors that lead the
individual to work harder; they are effective when he or she feel satisfied in the organization.
Practically, incentives refer to all the concrete and moral methods institutions give in order to
positively encourage the employees in a way that increase the production rate and enhance
the employee’s performance, which has its importance in satisfying the employee’s desire and
guarantee a loyal attitude towards the institution. Incentives give the need to enthusiasm of
employees greater output. A person who expects a reward as an incentive will be difficult to

3
be given financial incentives. There are other driving forces that push an individual to
perform better in the organization; this may consist of career development, job promotion,
work security and recognition for achievement. Staff performance: is defined as the outcome
or contribution of employees to make them attain goals while performance may be used to
define what an organization has accomplished with respect to the process, results, relevance
and success Uganda National Development Program (2015). Afshan (2012) define
performance as the achievement of specific tasks measured against predetermined or
identified standards of accuracy, completeness, cost and speed. Employee performance can be
manifested in improvement in production, easiness in using the new technology, highly
motivated workers. Financial Incentives The financial incentives are pay, bonuses, fringe
benefits, transportation facility, medical facility, health and life insurance and benefits like
vacation with pay meal facilities. Pay is an approach that rewards higher performing
employees with additional pay sometimes called incentive pay. Pay help the employer
differentiate between the performance of high and low performing

employees and reward the performance of the high performers. This can aid in retention
because no organization wants to lose best performers (Susan M. Heathfield, 2018).
Bonuses:Bonus pay is the sum of money employers give to employees beyond their existing
wages (Mike Kappel, 2018).Bonuses come in various forms and there have been arguments
as to the reasons why most organizations prefer to usebonuses to motivate their workforce.
The reason why most organizations prefer the usage of bonuses is that they are the easy way
to thank the workers. Bonus can also increase employee morale and motivate workers to
reach goals. When employees are happy, the organization is primed to perform better than
ever (Mike Kappel 2018). The purpose of motivating through bonuses is also carefully linked
to the purpose of supporting the employees’ happiness in relation to the organizations. Wages
and Salaries:Motivation of employees comes in several ways and salary is a major
contributory factor to motivation.People are often motivated by money so the salary a worker
is paid bythe employer can have a great influence on his performance in the organization. A
worker does not simply view his salaryas a dollar amount, he or she sees it as the value his or
her employer places on him or her as a worker. The level ofappreciation he feels can have a
direct impact on his overall performance. A worker is more likely to be motivated andperform
well if he/she is happy about the salary he/she is earning. A person earning a high salary feels
motivated to do agood job, because he/she wants to please the employer to retain the position.
The salaries most of the time brings to theemployees the feeling of security and allow them to

4
feel accomplished and give them a high-status ranking that they enjoy(Laura Woods. 2019).
(Bowen et al., 2008), support the notion that salary is a motivating factor. In their
researchconducted on quantity surveyors in South Africa and their findings indicated that
salary, advancement in career, individualsatisfaction and acknowledgements were some of the
factors that were motivating enough. The quantity of cash anindividual gets at the end of the
month has the potential of becoming the utmost forecaster of a person’s stimulus. Vacations
with Pay:The Organization ensures the wellbeing of an employee by offering them vacations
with pay. If employees have been working for longer duration more than seven years only
they are eligible for seven, fifteen and twenty years. These vacations can be advantageous for
the employees who need extra time to care for aging parents or fulfil other assignments.
Pension:A deferred income that workers gather during their working lives and that belongs to
them after specific time duration. When an employee reaches a certain age of 21 and have
completed one year of service, they are entitled to company pension plan. The objective
behind pension plan is to motivate and retain the employees. It is offered for rewarding
employees for staying with the organization until retirement. Employees are disqualified for
the pension award if they leave or are fired before retirement. Non-financial Incentives This
is compensation given in a transaction which does not involve cash. A non-monetary reward
can consist of almost any material object such as jewelry, precious metals or an automobile
for example. In business, a non-financial incentives can also be a service such as
improvements made on a property or repairs done on a car (Business Dictionary, 2018). In
employment, it is a reward to an employee other than extra pay. Many non-financial
incentives are company cars, recognition, training, job promotion. However, an employee
may be rewarded, for example, by being given a better office or a bigger budget to control, or
by being given the choice of where to take a posting in a company. Non-financial incentives
can be very cost effective for companies because, in contrast with a pay increase, little or no
income tax or national insurance contributions are paid. Non-financial incentive programmes
and reward programmes structured to motivate positive behaviour change through means
other than money motivate and retain employees; a motivated employee will achieve a great
deal. A demotivated employee will be slow, horizontal to error and not likely to achieve. Non-
financial incentives helps to build feelings of confidence and satisfaction in employees and
can be very important for their long-term effect (Armstrong, & Brown, 2016). Recognition
Recognition is the demonstration of appreciation for a level of performance, an achievement
or a contribution toan objective. It can be confidential or public, casual or formal. It is always
in addition to pay (Pitts, 2005). Employees alsoneed recognition because it is a strong non-

5
financial motivator. Some employees are just moved by the fact that their bosswill always
appreciate they do well and also encourage them when they face some challenges. Individuals
also like to sharetheir achievements with others and have it recognized and celebrated. When
this need is satisfied, it works as an excellent motivator. If employers rely on a financial
incentive alone to recognize contribution and achievement it is most possiblethat the
employee’s objective will become modified to secure the pay and nothing more and this in
turn will lead to adegraded culture of the organization. When used correctly recognition is a
cost-effective way of enhancing achievementsand enable people to feel involved in the
company culture (Pitts, 2005).

6
1.2. Review of literature
The term incentive refers to something that intends to ignite one and or calls for greater effort
to act in a given manner. An incentive is often understood as an inducement that is given to
the employees in order to motivate, encourage and maintain a desired behaviour (Allen,
2001). According to (Hicks, 2003), incentives are mechanisms aimed at achieving a specific
change in behaviour. Whereas performance refers to how well an employee fulfils assigned
task through effort and skill, an incentive refers to an inducement for a desired action.
Incentive pay is a form of compensation given to employees upon attainment of some form of
job performance (Armstrong, 2009). Hence, the main objective of incentive programs is to
motivate performance. Team directed incentives have a markedly higher effect on
performance compared to individually directed incentives.

According to Armstrong, money is the highly tangible form of recognition and an effective
means of helping people to feel that they are valued. He goes on to say that as a powerful
force money is linked directly or indirectly to the satisfaction of many of needs and intangible
goals (Armstrong M. , 2009). Money was found to result in higher performance than non-
monetary, tangible incentives like gifts, travel etc., and long-term programs lead to greater
performance than short-term. The move towards a variety of employee-oriented incentive
schemes such as skill based payment plans and performance linked rewards may be traced to
the trend towards quality improvement teams and employee commitment programs.
Highlighting the significance of such incentive schemes Armstrong points out that the main
focus of such plan is to treat employees like partners and to get them to think of the business
and its objectives as their own.

Greater performance gains were realized for manual than for cognitive work. Authors like
V.S.P. Rao maintains the view that individual incentive plans are the most widely used and
effective for performance plan in the industry. (Rao, 2005)

The primary objectives of the financial incentive according to Bay Jordan are: (1) to give the
employee some control over their income as the employee’s income will be based on their
performance, (2) to create a greater sense of responsibility of the job on the part of the
employee, and (3) stimulating the employee to work harder than what he/she usually does
(Bay, 2011).

7
Diana L. Deadrick, and K Dow Scott reported that financial Incentive works on improving
the employee performance by positively affecting the employee perspective on the job and
achievement itself (Scott, 2012).

Luis R. Gomez classifies compensation tools into two broad categories of job-based
approaches and skill-based approaches, depending on the unit of analysis used to make
pay decision. He describes pay incentive as a program designed to reward employees for
good performance and the effectiveness with which compensation is allocated can make a
significant difference in gaining of losing a competitive edge. He maintains the view that
companies that emphasize monetary rewards want to reinforce individual achievement and
responsibility and a greater emphasis on monetary reward is generally found among firms
facing a volatile market with low job security, firms emphasizing sales rather than customer
service and firms trying to foster a competitive internal climate rather than long term
employee commitment. (Luis R. Gomez, 2012).

Strategies Use for Employees Motivation in an Organizational Organizational Commitment

can be achieved through, organizational trust and motivation. When employees posses
organizational trust, they believe organizational actions will benefit them and generally have
confidence in the words and actions of other people. Mistrust results when information is
withheld, resources are allocated inconsistently, and employees have limited support from
management. Motivation is a basic psychological process. A recent data-based
comprehensive analysis concluded that competitiveness problems appear to be largely
motivational in nature (Mine, Ehrahiini, and Wachtel, 1995). Along with perception,
personality, attitudes, and learning, motivation is a very important element of behaviour.
Nevertheless, motivation is not the only explanation of behaviour. It interacts with and acts in
conjunction with other cognitive processes. Motivating is the management process of
inf1uencing behaviour based on the knowledge of what make people tick (Luthans, l998).
Luthans (1998) asserts that motivation is the process that arouses, energizes, directs and
sustains behaviour and performance. That is, it is the process of stimulating people to action
and to achieve a desired task. One way of stimulating people is to employ effective
motivation, which makes workers more satisfied with and committed to their jobs. Money is
not the only motivator. There are other incentives which can also serve as motivators.
Specific employee attitudes relating to job satisfaction and organizational commitment are of
major interest to the field of organizational behaviour and the practice of human resources
management. Attitude has direct impact on Job satisfaction. Organizational commitment on

8
the other hand, focuses on their attitudes towards the entire organization. Although a strong
relationship between satisfaction and causes satisfaction. However, most studies treat
satisfaction and commitment differently, especially in light of things like: downsizing that are
part of modem organizations. Long with perception, personality, attitudes, and learning,
motivation is a very, important part of understanding behaviour. Luthans (1998) asserts that
motivation should not be thought of as the only explanation of behaviour, once it interacts;
saying that, “the ultimate test of organizational success is s ability to create values sufficient
to compensate for the burdens imposed upon resources contributed.” Bernard looks at
workers, in particular librarians, in an organized endeavour, putting in time and efforts for
personal, economic, and non-economic satisfaction. The following strategies are used for
motivation as organizational commitment: Salary, Wages and Conditions of Service: To use
salaries as a motivator effectively, personnel managers must consider four major components
of a salary structures. These are the job rate, which relates to the importance the organization
attaches to each job; payment, which encourages workers or groups by rewarding them
according to their performance; personal or special allowances, associated with factors such
as scarcity of particular skills or certain categories of information professionals or librarians,
or with long service; and fringe benefits such as holidays with pay, pensions, and so on. It is
also important to ensure that the prevailing pay in other library of information establishments
is taken into consideration in determining the pay structure of their Organization.Money:
Akintoye (2000) asserts that money remains the most significant motivational strategy. As far
back as 1911, Frederick Taylor and his scientific management associate described money as
the most important factor in motivating the industrial workers to achieve greater productivity.
Taylor advocated the establishment of incentive wage systems as a means of stimulating
workers to higher performance, commitment, and eventually satisfaction. Money possesses
significant motivating power in as much as it symbolizes intangible goals like security,
power, prestige, and a feeling of accomplishment and success, Katz, in Sinclair, et al. (2005)
demonstrates the motivational power of money through the process of job choice. He
explains that money has the power to attract, retain, and motivate individuals towards higher
performance. For instance, if a librarian or information professional has another job offer
which has identical job characteristics with his current job, but greater financial reward, that
worker would in all probability be motivated to accept the new Job offer.Banjoko (1996)
states that many managers use money to reward or punish workers. This is done through the
process of rewarding employees for higher productivity by instilling fear of loss of job (e.g.,
premature retirement due to poor performance). The desire to be promoted and earn enhanced
9
pay may also motivate employees. Staff Training: No matter how automated an organization
or a library may be, high productivity depends on the level of motivation and the
effectiveness of the workforce. Staff training is an indispensable strategy for motivating
workers. The library organization must have good training programme. This will give the
librarian or information professional opportunities for self-improvement and development to
meet the challenges and requirements of new equipment and new techniques of performing a
task. Information Availability and Communication: One way managers can
stimulate.Motivation is to give relevant information on the consequences of their actions on
others (Olajide, 2000). To this researcher it seems that there is no known organization in
which people do not usually feel there should be improvement in the way departments
communicate, cooperate, and collaborate with one another.Information availability brings to
bear a powerful peer pressure, where two or a more people running together will run faster
than when running alone or running without awareness of the pace of the other runners. By
sharing information, subordinates compete with one another.

10
1.3. Statement of the problem
Performance level of employees depends upon the financial incentives they receive in the
organization. Employees are demotivated to perform better in the absence of satisfactory
rewards and incentive schemes.
1.4. Objectives of the study
To study the relationship between financial incentives and the employee performance in the
organization.
To assess the impact of group directed financial incentives on the employee performance
compared to individually directed incentives.
To examine the impact of long-term financial incentive programs over short-term programs
on the employee performance.
To find out the impact of financial incentives for manual work than cognitive work.

1.5. Hypotheses
There is a positive relationship between the financial incentives and the employee
performance in the organization.
Group directed financial incentives have greater impact on employee performance than
individually directed incentives.
Long-term financial incentive programs have greater impact on employee performance over
short-term incentive programs.
Financial incentive programs have greater performance impact for manual work that
cognitive work.

11
1.6. Methodology

1.6.1. Type of research

Descriptive, applied and conclusive research analysis based on correlation research approach
and cross-sectional research analysis will be used for analyzing and interpreting the data.
1.6.2. Sources of data
This study will be based on both primary and secondary data. Primary data will be collected
from the field through survey and secondary data will be collected from books, journals, and
website.
1.6.3. Data collection
This includes a cross-section survey to collect data from employees.
1.6.4. Instrument
Well-structured and designed questionnaire was prepared by the researcher to collect data
from the selected samples.
1.6.5. Pilot Study
Since it is minor project, no pilot study will be conducted.
1.6.6. Sampling Method
Simple random sampling method.
1.6.7. Sample size
Data was collected from a sample size of 50 employees in various categories from
different organization for the purpose of study and analysis.

1.6.8. Plan of Analysis

Cross tabulation using univariate/bivariate/multivariate with the help of statistical tools such
as Frequency analysis, Cross Table analysis and One Way Anova test.
Data analysis and interpretation by using suitable technique with the aid of the statistical
package for the social science software (SPSS).

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1.7. Operational Definition
Financial incentives are the extra payments made to employees as extra compensation
for their efficiency and meritorious performance in terms of time, costs and equality.
The incentive rates may take the form of bonus or premium.
Performance refers to how well an employee fulfils assigned task through effort and skill.

1.8. Scope of the study

This study helps in finding out the extent financial incentives can positively impact the
performance of employees in the organization. It will analyze the relationship between the
financial incentives and the employee performance in terms of employee satisfaction, quality
of work and productivity level. The study will further focus on the effectiveness of long-term
financial incentives over the short-term incentives and also group directed incentive programs
over individually directed incentive programs as effective means to motivate employees for
higher performance.

1.9. Significance of the Study

The study is significant from the point of view of finding out ways and means to improve the
efficiency of employees which will ultimately lead to the greater efficiency and profitability
of the organization in terms of its set goals and objectives.

1.10. Limitations of the study

 As a mini project, the sample size of the survey is limited to 50. Hence, the reliability
and accuracy of the findings may lack wider application.
 Findings of the survey are based on the assumption that the respondents have given
correct information. Possibility of incorrect or partial information, factual errors,
misconception of terms and expressions et., need to be taken into account.
 The focus of the study is limited to the impact of financial incentives only. Other non-
financial incentives and factors that affect the motivation and performance of the
employees are not taken into account in this study.
 The data do not have regional/geographical representation.

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1.11. Chapter Scheme

Chapter I
Research Design
This chapter consists of the type of research carried out which include sample size, objective
of the study, scope of the study, limitations of the study, techniques or tools for data collection
and statistical tools used for analyzing the data.

Chapter II
Analysis and Interpretation
This chapter consists of the analysis and interpretation of the study based on the findings of
the survey.
Chapter III
Findings, Suggestions, Conclusions
This chapter gives a review of the findings of the study from the analysis of the preceding
chapters and suggestions are given based on the findings and overall conclusions of the study.

1.12. Scope for further research

Further research needs to be done on the impact of other non-financial incentives on
the performance of the employees. Other motivational factors which impact the
performance of employees need to be included within the scope of future research.

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 Chapter 2

Data Analysis and Interpretation

This project was undertaken to study the impact of financial incentives on the employee
performance in the organization. The data was collected using Questionnaire which is
analyzed and presented below.

Table 2.1 Gender of the respondents

Gender Frequency Percent Valid Percent Cumulative

Percent
Male 22 44.9 44.9 44.9
Female 27 55.1 55.1 100.0
Total 49 100.0 100.0

Source: Primary data

Chart 1

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 Tale 2.2

Age Frequency Percent Valid Percent Cumulative

Percent
18-22 years 7 14.3 14.3 14.3
23-26 years 6 12.2 12.2 26.5
27-30 years 6 12.2 12.2 38.8
30-35 years 16 32.7 32.7 71.4
Above 35 14 28.6 28.6 100.0
years
Total 49 100.0 100.0
Source: Primary data

Chart 2.2

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 Table 2.3 Income Group

Group Frequency Percent Valid Percent Cumulative

Percent
Middle class 24 49.0 49.0 49.0
Upper Middle Class 23 46.9 46.9 95.9
Upper Class 1 2.0 2.0 98.0
High Income Group 1 2.0 2.0 100.0
Total 49 100.0 100.0
Source: Primary data

17
 Size of the Enterprise
Argument Frequency Percent Valid Cumulative
Percent Percent
Strongly Disagree 1 2.0 2.0 2.0
Disagree 8 16.3 16.3 18.4
Neutral 7 14.3 14.3 32.7
Agree 33 67.3 67.3 100.0
Total 49 100.0 100.0
Source: Primary data

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 Motivating Factors
Frequency Percent Valid Cumulative
Percent Percent
Salary Increase 18 36.7 36.7 36.7
Promotion 8 16.3 16.3 53.1
Leave
Motivational 2 4.1 4.1 57.1
Talks
Recognition 13 26.5 26.5 83.7
Health care 8 16.3 16.3 100.0
Total 49 100.0 100.0

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Source: Primary data

Group or Individual Incentive

Frequency Percent Valid Cumulative
Percent Percent
Strongly Disagree 2 4.1 4.1 4.1
Disagree 13 26.5 26.5 30.6
Neutral 12 24.5 24.5 55.1
Agree 22 44.9 44.9 100.0
Total 49 100.0 100.0
Source: Primary data

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Cross tabs

Gender * Effect on Motivation Crosstabulation

Effect on Motivation Total
Gender
Strongly Disagre Neutral Agree Strongly Agree
Disagree e
1 0 3 13 5 22
Male (4.5) (0.0) (13.6) (59.1) (22.7) (100.0)

0 1 5 20 1 27
Female (0.0) (3.7) (18.5) (74.1) (3.7) (100.0)

1 1 8 33 6 49
Total
(2.0) (2.0) (16.3) (67.3) (12.2) (100.0)

Source: Primary data

Note: Figures in brackets are percentages to total.

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Interpretation
The test result shows that 74.1% female respondents (20) agree that financial incentives or rewards
affect their motivation level as against 59.1 % (13) male respondents. 22.7% (5) male responds
strongly agree that financial incentives affect their motivation level.
Inference
Financial incentives or rewards have greater impact on the motivation level of female employees that
the male employees. Female employees tend to value incentives more than the male employees.

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 Income Group * Duration of Incentive Crosstabulation

Duration of Incentive Total

Income Group
Strongly Disagree Neutral Agree Strongly Agree

1 10 10 3 24
Middle class (4.2) (41.7) (41.7) (12.5) (100.0)

1 6 14 2 23
Upper Middle Class (4.3) (26.1) (60.9) (8.7) (100.0)

0 0 1 0 1
Upper Class (0.0) (0.0) (100.0) (0.0) (100.0)

0 1 0 0 1
High Income Group (0.0) (100.0) (0.0) (0.0) (100.0)

2 17 25 5 49
Total
(4.1) (34.7) (51.0) (10.2) (100.0)

Source: Primary data

Note: Figures in brackets are percentages to total.

23
Interpretation
The test result shows that 60.9% (14) of the upper middle class and 41.7% of the middle
class employees and one from the upper class agree that long-term financial incentives are
more effective compared to short-term financial incentive programs. Only 8.7% of upper
middle class and 12.5% of middle class employees strongly agree that long term financial
incentives are more effective compared to short-term financial incentive programs.
One respondent from upper class also agree with the statement.
Inference
From the above data it can be inferred that both the upper middle class and the middle class
employees value long-term financial incentive programs as more effective compared to short-
term incentive programs.

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2.4: Test of Hypothesis (Independent Sample ‘t’ test)
Step 1: Hypothesis
H0:- There is no difference between men and women with regard to the impact of financial
incentives on employee performance.
H1:- There is a difference between men and women with regard to the impact of financial
incentives on employee performance.
Step 2: Level of significant = 5% (0.05)
Step 3: Test Statistic
 Independent sample ‘t’ test

Step 4: Running the test

Analysis- Compare means-independent sample ‘t’ test- Impact of Financial Incentive to Test
Variable – gender to grouping variable – define groups 1, 2- continue- ok
Step 5: Conclusion
Independent sample‘t’ test was conducted to find out if there is any difference between men
and women with regard to the impact of financial incentive on employee preference.
The test result shows

t = 0.654, 0.626
df: = 47, 34.052
p-value = 0.516, 0.536
Since p-value is greater than 0.05, the result is not significant.
Therefore, the null hypothesis is accepted.
Conclusion
Independent ‘t’ test shows that the null hypothesis H0 can be accepted. This means that there
is no difference between men and women with regard to the impact of financial
incentives on employee performance.

25
 Chapter 3

Findings, Discussion and Conclusions

Findings
The study has been aimed at finding out the Impact of Financial Incentives on Employee
Performance. Data has been collected from 49 employees who belong to different job
categories from across various types of organization such as IT industry, Health sector and
Service sector. The data was analyzed using SPSS tool and the following inferences have
been drawn on the tests run.
 From the frequency table 2.1 and graph we can see that 55.1% of the respondents are
female i.e. 27 out of 49 respondents and the remaining 44.9% of them are male which
comprises of 22 respondents.
 Majority of the respondents (32.7%) belong to the age group between 30-35 years,
followed 28.6% who belong to the age above 35 years of age, 14.3% belong to the
age group of 18-22 years and 12.2% each belong to the age group of 25-30 years of
age.
 Frequency Table 2.3. and graph gives the distribution of respondents according to
different income groups. Majority of the respondents 24, (49%) belong to the middle
class and the remaining 23, (46.9%) belong to upper middle class and one each to
upper class and High Income group.
 With regard to the educational background of the respondent, it is observed that a
significant number of 19 respondents are postgraduates and 17 of them are graduate
and 8 of them are with doctorate degree. Three of the respondents are 12 th pass and
one 10th pass.
 Nine employees are in managerial job, 7 in executive job, 3 in supervisory category
and the remaining are in different service sectors such as healthcare and teaching.
 The test analysis indicate that 58.3% (28) of the respondents agree that financial
incentives are the best option to motivate employees for excellent performance. It is
further observed that 29.2% (14) of the respondents strongly agree to the statement.
 The data further shows that 36.7% (18) of the respondent agree salary increase as the
most motivating factor followed by recognition 26.5% (13), healthcare and promotion
leave 16.3% each.

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 The analysis indicate that 44.9% (22) agree group directed financial incentives more
efficient than individually directed incentives, while 26.5% (13) disagree with the
statement and 24.5% are neutral in their response.
 The data analysis shows that 74.1% female respondents (20) agree that financial incentives or
rewards affect their motivation level as against 59.1 % (13) male respondents. 22.7% (5)
male responds strongly agree that financial incentives affect their motivation level.

 The test result shows that 60.9% (14) of the upper middle class and 41.7% of the
middle class employees and one from the upper class agree that long-term financial
incentives are more effective compared to short-term financial incentive programs.
Only 8.7% of upper middle class and 12.5% of middle class employees strongly agree
that long term financial incentives are more effective compared to short-term financial
incentive programs.

 Independent ‘t’ test shows that that there is no difference between men and women
with regard to the impact of financial incentives on employee performance.

 Regarding the impact of financial incentives on the performance level, 70.8% of the
responded that financial incentives are effective and 6.3% rate financial incentives as
highly effective.

 Respondents between the age group 30-35 years and above 35 years agree that
financial incentives have significant effect of their performance.

 The same age group also indicate that larger business enterprises have variety of
reward and incentive programs as opposed to small and medium enterprises.

 Performance related pay has been pointed out as the most valued type of incentive by
the respondent who belong to the age group between 30-35 years and above 35 years.

 It is also observed that 56% of female and 43.8% of male respondents also choose
performance related pay as the most valued type of incentive.

 Employees with 5-10 years of work experience observe that the financial incentives
do impact their performance in an effective manner, where 6.3% of the respondents
find it highly effective.

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DISCUSSION OF FINDINGS

Financial and non-financial incentives are very important for staff performance in
organizations. For a very long period of time, it was commonly thought that financial
incentive was the most powerfulmotivator. People went to work and did a good job in order
to be paid a fair wage. If they work hard and long enough, thatwage would increase, giving
them additional pay. It was a full circle concept where Money= Motivation, Motivation=
Work,Work= Money (Jennifer Foster, 2013). Findings from the study show that elements of
the financial and non-financial incentives exist in the organizations and have a positive
impact on staff performance. never the less, there are some financial and nonfinancial
incentives such as bonuses, pension, vacation with pay, medical care, recognition, trainning
etc which are not adequately put in place for better staff performance. When used correctly
recognition is a cost-effective way of enhancing achievementsand enable people to feel
involved in the company culture (Pitts, 2005). The study also found out that there is an effect
of financial incentives on staff performancein the organization. The items on the table
addressedpay, bonuses, vacation with pay, medical care and pension as important elements to
improving the quality of staff and their performances in the organization. Finally the study
sought to determine the effect of non-financial incentives on staff performance. From the
items on table 3, it was observed that the items on the table for non-financial incentives is a
great determinant to staff performance in the organization. It is obvious that when staff
working conditions are alright, he/she will be happy to put in his/her best in his job and vice-
versa.

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Conclusions

 Financial incentives are the best option to motivate employees for excellent
performance in the organization and they affect the motivation level of
employees in a significant manner.
 Salary increase has been rated as the incentive factor that motivates the
employees most followed by recognition, healthcare and promotion leave.
 Performance related pay is the most valued incentive factor for the employees
who belong to above 35 years of age.
 Only a few employees agree that they receive fair and just incentives for their
effort and level of responsibility in the organization.
 Large business enterprises have a variety of reward and incentive programs as
opposed to small and medium enterprises.
 Long-term financial incentives are more effective compared to short-term
financial incentive programs.
 Group directed financial incentives are more effective than individually
directed incentives.
 Absence of financial incentives demotivates employees to a very large extent
and adversely affect their performance.
 It is mandatory that organizations provide adequate financial incentives as a
means to improve the performance of employees.

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