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    Motivation through Compensation and Working Environment

    in Banking Sector of Pakistan

    MOTIVATIONthrough

    Compensation and Working Environmentin

    Banking Sector of Pakistan

    Submitted to:

    Mr. Rana Tariq

    Submitted by:

    The Challengers

    Zahoor Ahmad.

    Ready for Challenge

    The Challengers

    IIHE, Karachi.

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    Motivation through Compensation and Working Environment

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    CONTENTS

    Abstract.3

    Literature Review .4

    Research Methodology 8

    Statistical Data . 9

    Findings 14

    Conclusion 16

    Guidance for Further Research 17

    Reference .... 18

    Questionnaire 20

    The Challengers

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    ABSTRACT

    In any organization employee motivation is the key factor for

    organizational performance. Previous studies have shown positive impact

    of Working Environment and Compensation on employees motivation. In

    this study a sample of 150 bank officer was taken by adopting nonprobability convenient sampling, to investigate the relationship between

    Motivation & Working Environment and Employee Motivation. Bank

    employees found not highly motivated as a result of working environment

    and compensation. Result showed there is a highly positive relationship of

    independent variable over dependent variable.

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    LITERATURE REVIEW

    Introduction

    A literature review is a clear and logical presentation of the relevant

    research work done before in the same area of investigation.Over and over again studies (Bacon et al, 1996; Deshpande and Golhar,

    1994 and Julien, 1998) have emphasized that employees are key to

    maintaining a competitive edge by a business. To be successful in a global

    market, a firm needs a highly motivated, skilled and satisfied workforce

    that can produce quality goods at low costs (Wagar, 1998).

    RESEARCHERS VIEW

    Figure: Compensation and Work environment effect on

    Employee Satisfaction and Performance.

    (Emmert and Tamer)

    Compensation

    Basically compensation refers to all forms of financial returns and tangible

    services and benefits employees receive as part of an employmentrelationship (Milkovich & Newman).

    Many researchers describe the importance of compensation in motivating

    employees.

    Compensation benefits (Pay, rewards, medical & transportation) are a

    major consideration in human resource management because it provides

    employees with a tangible reward for their services (Bohlander, Snell, and

    Sherman, 2001)

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    Sansone and Hareckiewicz (2000) identify that compensation benefits

    energize and guide behaviors toward reaching a particular goal (Milkovich

    and Newman, 2002).

    Stone (1982) indicated that people are motivated by money for manydifferent reasons. The need to provide the basic necessities of life motivates

    most people (Kovach, 1987).

    Benefits, both financial and otherwise, send a powerful message to

    employees of an organization as to what kind of organization management

    seeks to create and maintain, and what kind of behavior and attitudes

    management seeks from its employees (Beer, et al 1988).

    I- Pay or Salaries

    Cotton and Tuttle say that employee satisfaction with pay level is important

    because it has been found to have an effect on levels of absenteeism and

    turnover (Jerald, 1997).

    Pay can be a factor in decision to stay or leave, it is clear that

    dissatisfaction with pay can be a key factor in turnovers (R. Heneman and

    T. Judge: 1999).

    Linkage between pay and behaviors of employees results in better

    individual and organizational performance (W. N. Cooke: 1987).

    The process by which the organization creates and administers incentive

    pay can help, it use incentives to achieve the goal of motivating employee

    (R. T. Kaufman: 1992).

    Level of pay and pay system characteristics influence a job candidates

    decision to join a firm (E. E. Lawler: 1971).

    II- Rewards & Incentives

    In motivation, rewards and incentives directly effect on the behaviors ofemployees. Human Resource Professionals are continuously searching for

    fresh and innovative ideas to drive positive results through employees

    incentive, recognition and reward programs. According to Daniel and

    Metcalf, High-performance companies understand the importance of

    offering awards and incentives that recognize, validate and value

    outstanding work. They keep employees motivated and are effective

    methods of reinforcing company expectations and goals, especially in times

    when promotion is rare, health premiums are on rise and overall job

    satisfaction is low (Evans, 1986).

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    According to a report by the American Compensation Associations, August

    1996.

    When it comes to reinforcing team behavior, the reward system is one of

    the most effective and influential tools available to the organization (IRS

    1996).

    Rewards may enhance the employees financial well-being through wages,

    bonuses, or profit sharing, or indirectly, through employer-subsidized

    benefits such as retirement plans, paid vacations, paid sick leaves, and

    purchase discounts (Sue Shellenbarger, 19999).

    In Cheung and Scherling (1999:563), Martin and Touch identifies that

    employee job satisfaction is a function of extrinsic (pay, promotion and

    good relationship in the work place) and intrinsic (achievement of tasks)

    rewards offered by a job.

    Rewards that are proportional to the value of suggestions will facilitate

    intrinsic motivations (Amabile, 1996).

    Rewards promote efforts, performance and there is lot of evidence that they

    often do (Gibbons, 1997; Lazear, 2000,).

    D. M. Cable & T. A. Judge (1994) suggest that job candidates look for

    organizations with reward systems that fit their personalities.

    Therefore the reward issue can not be ignored, as it will create a situation

    in which the expectation or the actual goal-directed behavior of one person

    or group are blocked or are about to be blocked (Steers and Black 1994).

    III- Health BenefitsWellness programs for healthy working environment, may help

    organization to cut employer health costs and to lower absenteeism and

    turnover of employees (Carolyn Petersen).

    Family Health benefits often have spillover effects in the form of loyalty

    because employees see the benefits as evidence that the organization care

    about its employees. (S. L. Grover and K. J. Crooker: 1995).

    IV- Working EnvironmentOrganization officials have a legal responsibility, if not a moral one, to

    ensure that the workplace is free from unnecessary hazards and that

    conditions surrounding the workplace are not hazardous to employees

    physical or mental health (Decenzo).

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    Good working environment such as work relationships, adequate

    equipment, space, heating, lighting and ventilation motivated employees

    (Gerhart).

    Green (2001) says managers can motivate employees by setting in motionthe conditions required for motivation such as working environment,

    confidence, trust and satisfaction that enforce employees to improve their

    performances.

    Herzberg and Miller (1968) states that compensation including pay,

    rewards, communication and working conditions are four common

    incentives, which motivate employees.

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    Research Methodology

    Objectives / Aims of the research study

    It was an attempt to determine the impact of Working Environment andCompensation on employee motivation. The main objectives were:

    To investigate the impact of Working Environment and

    Compensation on employees motivation.

    To investigate the relationship between Independent variables

    (Working Environment & Compensation) with dependent variable

    (employees motivation).

    To recognize the degree of association between Independent

    variables and dependent variables.

    Instrument:Primary data was collected thorough questionnaires. This questionnaire

    was initially developed by the Challengers by consulting a number of

    research papers.

    Sample:Total 150 questionnaires were got duly filled by the employees of the

    different banks of Pakistan (e.g. ABL, HBL, MCB, UBL, FBL, ABN

    Amro, BAL etc.) These respondents were included Regional Heads,Operation Managers, Branch Managers, Cashiers and other middle level

    managers and first line managers.

    Questionnaire:For this purpose a questionnaire was designed and items were scored on a

    five point Likert Scale with end points of Disagree and Strongly

    Disagree.

    Procedure:Two of the independent and one of the dependent variable relationships

    was tried to found. As we have to establish the relationship between

    independent variables and dependant variable so we used the correlation to

    find the relation of the independent variables with the dependent variable.

    To check the impact of independent variables over the dependent variable

    we used regression analysis.

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    STATISTICAL DATA

    GenderMale 74%

    Female 26%

    AgeAbove 20 years

    21-30 years 53%

    31-40 years 28%

    41-50 years 11%

    Above 50 years 5%

    Education

    Ph.D 1%

    Master Degree 60%

    Bechlore Degree 31%

    Intermediat 8%

    Others

    Income (monthly) Rs.10,000-Rs.20,000 28%Rs.21,000-Rs.30,000 38%

    Rs.31,000-Rs.40,000 11%

    Rs.41,000-Rs.50,000 17%

    Above 50,000 6%

    Work Experience Less than 6 month 5%

    6 month to 1 year 32%

    1 to 2 years 22%

    3 to 5 years 23%

    More than 5 years 18%

    S. No. Demographics Working Environment Compensation Motivation IV 1 IV2 DV

    1 2.6 2.0 2.25 2.00

    2 2.2 2.0 2.125 2.00

    3 2.2 2.6 3.375 2.00

    4 2.4 2.4 3.375 3.00

    5 2.8 1.9 3 2.00

    6 2 2.4 3.375 2.50

    7 3 1.7 2.625 2.00

    8 2.2 2.5 3 3.00

    9 2.6 2.3 2.25 2.00

    10 1.8 2.2 3.5 2.00

    11 2.6 2.3 3.125 2.50

    12 2.4 2.3 3.25 2.50

    13 1.4 2.3 2.875 2.00

    14 2.6 2.6 3.125 3.00

    15 1.8 1.9 2.875 2.00

    16 1.8 2.0 2.375 2.00

    17 2 2.0 2.5 2.00

    18 1.8 2.3 3.25 2.50

    19 2 2.3 2.625 2.50

    20 2 1.8 3 1.00

    21 2.2 1.6 1.75 1.50

    22 1.8 2.1 3 2.00

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    23 1.8 2.0 3 2.00

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    24 1.4 1.9 4.25 2.50

    25 2.4 2.2 2.125 2.00

    26 3.4 2.0 2.375 1.50

    27 3.8 2.0 2.125 2.00

    28 3 2.3 2.25 2.00

    29 1.8 3.0 3 3.00

    30 2.4 2.2 1.75 2.50

    31 2.4 2.6 3.5 3.00

    32 1.8 2.5 2.625 2.00

    33 2.2 2.0 2.375 2.00

    34 2.4 1.8 2.25 2.50

    35 1.8 2.4 3.625 3.00

    36 2.6 1.8 2 1.50

    37 2.8 3.8 4.5 2.00

    38 2.8 2.3 2.375 2.00

    39 2 2.2 2.125 2.50

    40 2 2.0 2.375 2.00

    41 2.2 2.2 2.5 2.0042 3 1.8 1.625 2.50

    43 2.2 2.3 3.25 2.00

    44 3.4 2.0 2.5 2.00

    45 1.8 1.6 3.75 2.00

    46 2.6 2.4 3 1.50

    47 3.2 2.5 3.25 3.00

    48 2.2 2.0 3.875 2.50

    49 3.8 2.2 2.25 2.50

    50 2.4 2.3 2.75 3.00

    51 3 2.2 2.5 2.50

    52 3.4 2.2 2.125 2.00

    53 3.2 2.3 2.25 2.00

    54 3.4 2.8 2.875 3.50

    55 2.8 2.7 2 3.00

    56 3.2 2.2 2.25 2.50

    57 3 2.2 3 3.00

    58 3 2.3 2.125 2.50

    59 1.6 2.0 1.75 2.50

    60 2.6 2.2 1.875 2.00

    61 2.4 2.2 1.75 1.50

    62 2 2.0 3 2.50

    63 1.6 2.4 2.625 2.00

    64 1.8 2.4 2.5 2.00

    65 3.2 1.9 3.875 3.50

    66 2.2 2.1 3.5 3.00

    67 2.6 2.7 3.625 2.50

    68 2.6 3.2 3.5 4.00

    69 3.4 1.3 1.75 1.50

    70 1.8 3.0 3.75 3.00

    71 2.4 1.8 1.25 1.50

    72 2.2 1.8 2.875 2.00

    73 3 2.0 3.375 3.50

    74 3.2 2.3 1.625 2.50

    75 2.6 2.2 2.875 1.5076 2.2 2.1 3.5 2.50

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    77 3.8 1.7 1.5 1.50

    78 2 1.5 2 2.00

    79 2.4 2.1 2.25 3.00

    80 2.8 2.0 2.625 2.00

    81 2.2 2.8 1.75 3.00

    82 2.8 2.3 1.75 2.00

    83 2.2 1.6 1.375 2.00

    84 2.8 1.8 1.625 1.50

    85 2.2 2.1 1.25 3.00

    86 4 2.5 2.875 3.00

    87 2.6 1.9 2 1.50

    88 3 1.7 1.75 1.00

    89 3 2.3 1.75 3.50

    90 2.8 1.9 1 2.00

    91 3.4 2.5 4.5 2.50

    92 3.6 1.6 1.25 2.00

    93 2.8 2.1 2 2.00

    94 2 2.3 3.25 2.5095 2.4 2.3 1.75 2.50

    96 2.4 1.8 2.5 2.50

    97 2.4 2.4 2.875 2.50

    98 3 1.7 2.375 2.00

    99 2.8 2.2 3.125 2.50

    100 2.6 2.1 2.125 2.00

    101 2 2.6 5 4.50

    102 2 2.8 4.25 3.00

    103 1.8 3.4 4.25 4.50

    104 3 3.4 4.5 2.00

    105 2 3.4 4.75 5.00

    106 2.2 3.0 3.25 3.00

    107 1.6 2.1 2.375 2.00

    108 2.4 1.7 2.375 2.00

    109 2.6 2.8 3.25 2.50

    110 2.2 2.3 2.625 3.00

    111 2.4 1.9 2.625 3.00

    112 1.8 1.8 2.5 2.00

    113 2.6 1.6 3.125 1.50

    114 2.4 2.0 3.125 3.50

    115 2.2 1.3 2.25 1.50

    116 1.4 1.8 2.25 2.00

    117 3 2.7 4.25 3.50

    118 2.4 2.0 2.75 2.00

    119 2.2 2.2 3.375 2.50

    120 2.2 2.5 3.625 2.50

    121 2.8 2.1 3.375 2.50

    122 3.2 1.7 2.5 2.00

    123 3.2 3.3 2.875 3.00

    124 3.2 3.3 3.125 3.00

    125 1.8 2.4 3.625 2.50

    126 2 2.7 2.625 3.00

    127 3.4 2.3 2.625 1.50

    128 2.4 2.3 2.625 3.00129 3 2.3 2.5 3.00

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    130 2.6 4.2 3.625 4.50

    131 3.6 1.7 2 2.50

    132 3.2 2.7 3.375 3.00

    133 2.4 2.2 4 2.50

    134 2 1.8 3.625 1.50

    135 3.8 4.3 3.875 4.00

    136 2.8 1.7 2 2.00

    137 3 2.5 1.5 2.00

    138 2.6 2.3 2 2.00

    139 1.8 2.7 2.625 1.50

    140 2 1.9 2.5 2.50

    141 2.6 2.0 1.375 2.00

    142 3 2.5 3 2.50

    143 3.2 2.5 2.75 4.00

    144 3.8 1.6 2.5 1.50

    145 1.8 3.1 4.375 4.50

    146 2.4 3.0 3 3.00

    147 2 3.2 4.625 4.50148 2.8 1.8 2.25 2.00

    149 2 2.0 2.125 1.50

    150 2.8 3.1 3.75 3.50

    Working

    Environment

    Compensation Motivation

    Mean 2.256666667 2.784166667 2.436666667

    Median 2.2 2.6 2.5

    Mode 2.0 2.3 2.0

    Standard Deviation 0.5 1.0 0.7

    Sample Variance 0.3 0.9 0.5

    Minimum 1.3 1.0 1.0

    Maximum 4.3 5.0 5.0

    Correlation b/w Motivation

    and king Environment

    Correlation b/w Motivation

    and Compensation

    0.646238187 0.530625915

    Regression Lines b/w Motivation(X) and Working Environment (Y)

    Regression Lines b/w Motivation(X) and Compensation (Z)

    X = 0.30 + 0.95Y X = 1.11 + 0.48Z

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    0.01.02.03.04.05.06.07.08.09.0

    10.0

    1 12 23 34 45 56 67 78 89 100 111 122 133 144

    Motivation

    Working Environment

    Motivation and Working Environment

    Working Environment IV 1 Motivation DV

    0

    1

    2

    3

    4

    5

    6

    1 11 21 31 41 51 61 71 81 91 101 111 121 131 141

    Motivation

    Compensation

    Motivation and Compensation

    Compensation IV2 Motivation DV

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    FINDINGS

    Descriptive results revealed positive trend of variables i.e. Working

    Environment & Motivation and Compensation and Motivation. Likert

    scale helped to explain the feelings of bank officers towardsCompensation, Working Environment and motivation.

    The aggregate mean of 1st independent variable (Working Environment) is

    calculated as (2.26), median (2.2), mode (2) with (0.50) standard deviation

    and (0.30) sample variance, which shows that the people working in

    banking sector of Pakistan feel that there is need to update the working

    environment of the banks. They are of a view that working environment in

    banking sector of Pakistan has some flaws in it which needs to be removed.

    In nutshell, bank employees are not found highly satisfied and motivatedwith their current working environment of the banks in Pakistan.

    The aggregate mean of 2nd independent variable (Compensation) is

    calculated as (2.78),median (2.6),mode (2.3) with (1.0) standard deviation

    and (0.90) sample variance. This again reveals that most of the people are

    not satisfied with the fully satisfied with their compensation structure. The

    bank employees feel that they are not paid according to the services they

    are giving to bank. They are not getting the true fruit of their hard work.

    There is a need to update the compensation structure according to theservices provided by employees.

    Aggregate mean of dependent variable (motivation) is found as (2.44),

    median (2.5), mode (2.0) with (0.7) standard deviation and (0.5) sample

    variance. We find with the help of this analysis that the motivation level of

    bank employees is not very high. They are somehow dissatisfied or not

    motivated in terms of working environment and compensation.

    Co Relational Analysis

    Correlation b/w Motivation

    and Working Environment

    Correlation b/w Motivation

    and Compensation

    0.646238187 0.530625915

    According to the research we found that there is a high positive correlation

    between Motivation and Working Environment as well as Motivation and

    Compensation.

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    If the Working Environment is conducive and cooperating which give the

    employees a feeling of self accomplishment, hen they will be more

    motivated and loyal to their organization.

    Many of other researchers previously found similar results from their

    research and analysis. Sansone and Hareckiewicz (2000) identify that

    compensation benefits energize and guide behaviors toward reaching a

    particular goal (Milkovich and Newman, 2002).

    Stone (1982) indicated that people are motivated by money for many

    different reasons. The need to provide the basic necessities of life motivates

    most people (Kovach, 1987).

    Regression ResultsThe regression line expresses the best prediction of the dependent variable

    (X, Motivation), on the independent variables (Y, Working Environment)

    and (Z, Compensation). The regression lines equations for these variables

    are as follows:

    Regression Lines b/w

    Motivation (X) and Working

    Environment (Y)

    Regression Lines b/w

    Motivation (X) and

    Compensation (Z)X = 0.30 + 0.95Y X = 1.11 + 0.48Z

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    CONCLUSION

    Motivation is linked with good working environment and high level of

    compensation.

    The organization should must understand that what type of workenvironment can motivate their employees and they can become loyal

    employees of the organization which benefit the organization in the long

    run. Moreover the organizations should develop such a compensation

    structure that fulfill the needs of the employees in a best possible way and

    that they dont look around to meet their needs.

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    DIRECTION FOR FUTURE RESEARCH

    We can further carry on this research by adding certain other variables to

    check their relationship with motivation and these factors might be QualitySupervision, Empowerment, Career Development, Growth Opportunities,

    Qualification, and Participation etc.

    We can also do comparative study of employees motivation between

    public and private banks and also between national and international banks.

    Difference between the motivational level of male and female employees

    can also be analyzed thorough this research.

    AcknowledgementsThe authors gratefully acknowledge many helpful comments on this

    research.

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    Motivation through Compensation and Working Environment

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    24. S. L. Grover and K. J. Crooker, 1995, Who Appreciates Family Responsive

    Human Resource Policies: The Impact of Family-Friendly Policies on the

    Organizational Attachment of Parents and Non-parents, Personnel Psychology

    48, pp. 271-88.

    25. Sue Shellenbarger, 1999, Employees who value time as much as money Now

    get their Reward, Wall street journal, p. B-1.26. Wagar, Terry H., 1998, "Determinants of Human Resource Management

    Practices in Small Firms: some Evidence from Atlantic Canada," Journal of

    Small Business Management, pp.13-23.

    27. W. N. Cooke, 1994, Employee Participation Programs, Group based Incentives

    & company Performance, Industrial and Labour Relations Review 47, pp. 603-

    36.

    28. NUML University, Digital Lab.Black wall Synergy Data Basis.

    The Challengers

    IIHE, Karachi.

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    Motivation through Compensation and Working Environment

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    Motivation of Employees in Banking Industry of Pakistan

    Questionnaire

    This research is confidential. No responder will be disclosed individually. We request

    that you provide your honest views, avoiding overly positive and overly negativefeedback.

    DEMOGRAPHICS

    1. Gender

    Male Female

    2. Age

    a) Above 20

    b) 21 30

    c) 31 40

    d) 41 50

    e) Above 50

    3. Education Level

    a) PhD

    b) Post Graduate Level

    c) Graduate Level

    d) Intermediate Level

    e) Other

    ________________________________________________________________

    4. How long have you been working at _______________________(Name of Bank)

    a) Less than 6 months

    b) 6 months 1 yearc) 1 2 years

    d) 2 3 years

    e) 3 5 years

    f) More than 5 years

    5. What is your management level?

    ________________________________________________

    6. What is your pay level?

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    IIHE, Karachi.

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    Motivation through Compensation and Working Environment

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    a) 10,000 20,000

    b) 20,000 30,000

    c) 30,000 40,000

    d) 40,000 50,000

    e) Above 50,000

    WORK ENVIRONMENT StronglyAgree

    Agree Neutral Disagree Strongly

    Disagree

    7. I am treated with dignity and

    respect by management

    8. I fully utilize my skills and

    abilities in the Bank.

    9. Work assigned to me is

    interesting, rewarding and

    challenging and give me afeeling of personal

    accomplishment.

    10

    .

    Bank provides an environment

    where diverse individuals can

    work together effectively and

    happily.

    11

    .

    Bank is responsive to change and

    encourages change within the

    organization in order to stay

    effective in a changing

    environment.12

    .

    Bank place a great emphasis on

    honestly, integrity and ethical

    behavior.

    13

    .

    The amount of work expected to

    do in my job is reasonable.

    14

    .

    Employees have the support and

    authority to make the decision

    necessary for accomplishing

    their assigned tasks.

    15.

    Employees have the resources(personnel, finances, tools)

    necessary to do quality work.

    16

    .

    All employees at ____________

    are treated fairly regardless of

    age, race, gender, family status,

    veteran status, national origin,

    disability, personality, thinking

    style or sexual orientation.

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    Motivation through Compensation and Working Environment

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    17

    .

    We can exchange our views

    freely in the work place.

    18

    .

    Work environment is overall

    very comfortable, friendly andcooperative.

    COMPENSATION StronglyAgree

    Agree Neutral Disagree Strongly

    Disagree

    19

    .

    Overall, the employee benefits I

    receive meet my needs.

    20

    .

    I understand the value of the

    total compensation

    (compensation + benefits)

    package that Bank delivers tome.

    21

    .

    Bank pays for performance.

    22

    .

    I receive good medical

    allowances.

    23

    .

    Bank is providing me with

    transport allowances/facility.

    24

    .

    The overall benefits given to me

    by Bank, provide good security

    for me and my family.

    25.

    Compared to other banks in theindustry my Bank has an

    excellent compensation and

    benefits package.

    26

    .

    How would you rate the quality

    of service you receive when you

    have a benefits issue, question or

    claim?

    Very

    Good

    Good Average Poor Very Poor

    MOTIVATION StronglyAgree

    Agree Neutral Disagree Strongly

    Disagree

    27.

    I am highly motivated with thecurrent working environment of

    my Bank.

    28

    .

    I am satisfied with my

    compensation & benefits

    package.

    Thank you very much for your support

    Th Ch ll 23