Assignment

On

Compensation Management
Topics:
Factors of job satisfaction in private sector
Factors of job dissatisfaction in private sector
Suggestions about the effective compensation
package of private sector.

Prepared By:
Md. Erfan Ahmed

Department of Management Studies

Faculty of Business Administration and Management Studies
Comilla University
Comilla -- 3503

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 Table of Content

Sl. No. Subject Page No

01 Factors Affecting Job Satisfaction in Private 1
Sector

02 Factors Affecting Job Dissatisfaction 6

03 The Impact of Job Dissatisfaction in Private 7

Sector
04 Suggestions for effective Compensation 8
Package

05 Conclusion 12

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 Factors Affecting Job Satisfaction in Private Sector

There are many factors which influence the performance of the

employees such as the working condition, the salary, the job tasks, the
relationships between employees and managers including levels of their
communication between them etc. Below are lists of the factors I have
taken into consideration while constructing the Job Satisfaction
Questionnaire.

1. Pay: Findings from several studies underline pay as one of the most
important factors influencing one's level of job satisfaction. In a study
conducted by Lawler (1971), pay has been identified as a determinant
factor as most employees rated it as the most influential factor related to
job satisfaction. Furthermore, according to Herzberg (1959), employees
who are dissatisfied with their pay, is likely that they are also dissatisfied
with their work.

2. Job Security: Job security has attracted a great deal of research

interest in recent years. The importance of job security comes from the
fact that it is vital for influencing work-related outcomes. Job security
appears to be an important determinant of employee health (Kuhnert et
al., 1989); for employee turnover (Arnold and Feldman, 1982); for job
satisfaction and for organizational commitment (Ashford et al., 1989).
Ashford et al., (1989) examined the impact of job insecurity on
organizational commitment and job satisfaction and found that job
insecurity is leads to reduced satisfaction and commitment. There is also
evidence were job insecurity reduces job performance.

3. Social Simulation: Work and social simulation is another

determinant factor of job satisfaction.

Employees prefer positions were they are active rather than bound to a
working routine that is likely produce feelings of boredom.

Employees who perceive their job as a way of making a career out of it

rather than seeing it as a temporary position, are more likely to prefer
challenges in their working tasks and seek further developmental
opportunities in their working role (Greenberg & Baron, 1983).

4. Demographic Factors: Studies have shown that age, race and gender

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have important effects on job satisfaction.

In a study conducted by Kalleberg and Loscocco, (1983) older workers

were more satisfied than younger workers and minority groups of
different ethnicity were less satisfied than the rest of the workers (Amy S.
Wharton, Thomas Rotolo, and Sharon R. Bird ,2000).

However, the effects of gender on job satisfaction vary with the level at
which an individual works.

A study by H. Jack Shapiro and Louis W. Stern found that professional

women such as clinical psychologists, social workers, and medical
workers experienced lower levels of job satisfaction than their male
counterparts (Shapiro & Stern, 1998). Among non-professionals the
reverse was true.

In a consequent study, job satisfaction was examined across graduates

five years after they had graduated from university and the results show
that at higher occupational levels men expressed more satisfaction than
women in terms of pay and opportunities for advancement.

In addition, Charlotte Chiu (1998), found that female lawyers had

significantly lower job satisfaction than male lawyers, and that the
reason for the difference was that women feel they have fewer
opportunities for promotion than men.

The present questionnaire adds another demographic factor such as the

type of job in order to make vertical and horizontal comparisons between
and within types of jobs and departments.

5. Recognition & Appreciation: In a study that was carried out in 23

Romanian organizations, recognition and appreciation were found to be
motivating factors responsible for increased effectiveness of employees at
work and their high levels of job satisfaction.

6. Interpersonal Relationships: Several studies take a social approach

to job satisfaction, examining the influence of supervision, management,
and co-worker social support.

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An individual's level of job satisfaction might be a function of personal
characteristics and the characteristics of the groups to which she or he
belongs to. The social context of work is likely to have a significant
impact on a worker's attitude and behavior Relationships with both
coworkers and supervisors are important.

Some studies have shown that the better the relationship, between fellow
workers and between workers and their immediate boss, the greater the
level of job satisfaction.

7. Opportunity to Use One's Abilities: Internal rewards involve job

characteristics, or the nature of the task that an employee performs.

Employees generally need and like jobs that make use of their abilities.

8. Working Hours & Physical Conditions: Two elements related to job

satisfaction are the working hours and the physical conditions under
which workers spend their working days.

According to Siegel and Lane (1974), the level of importance to some

factors is strongly related to job type.

9. Adequate Authority & Sense of Control: Another important

component of job satisfaction is the worker's attitude toward the job. The
intrinsic rewards of a job, such as a sense of control over one's work and
a feeling of accomplishment are important determinants of job
satisfaction. Employees are more satisfied when they have adequate
freedom and authority to do their jobs and to choose their own method of
working. When workers have various autonomous tasks in their jobs,
they tend to have more of a sense of control. Previous studies have
shown that job satisfaction is negatively related to the performance of
routine tasks, and also that job satisfaction is positively related to the
performance of more complex and autonomous tasks.

10. Equal Opportunities Working Environment: Other factors that

affect one's levels of job satisfaction appear to be related to ethical issues
and individual differences. Workers prefer an equal opportunities
environment where they will be respected in terms of their race, religion,
gender, educational background, physical disability etc.

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An employee's overall satisfaction with his job is the result of a
combination of factors -- and financial compensation is only one of them.
Management's role in enhancing employees' job satisfaction is to make
sure the work environment is positive, morale is high and employees
have the resources they need to accomplish the tasks they have been
assigned.

11. Salary and Wages: The amount an employee receives in exchange of

rendering service to the organization is known as salary. It has a positive
relationship with job satisfaction. A high salary results in a high level of
satisfaction towards the job. It encourages the employees to work more
and more. So an effective salary scale must be introduced and
implemented for the employees to ensure their satisfaction.

12. Nature of Work: When an employee gets satisfaction doing the job, it
will motivate him to go a long way. It will be better if the nature of the
work is according to his efficiency and likings. A respectful job is
considered beneficial to the job satisfaction.

13. Work Environment: Where there is a facility of plenty light, fresh

air, pure drinking water, cleanliness, defined work rules, entertainment,
communication etc. the place is said to have a very good work
environment. If the environment is good, the employees will feel easy and
comfortable working there. So job satisfaction prevails there.

14. Relation with Co-workers: All employees are members of one group
or organization. Good relationship among members encourages them to
work in a satisfied mind. Thus relationship with co-workers is a very
important factor for job satisfaction.

15. Sound Supervision: Sound supervision must be ensured in the

organization. An efficient supervisor always gives necessary directions,
advices, to the employees. He ensures discipline and leads the
organization in a controlled way. Employees get job satisfaction while
working under such supervision.

16. Stability in Work: Stability in work ensures job satisfaction.

Frequent transfers make the employees unstable and thus reduce their
attentiveness and bond to the work. So an organization must ensure job
stability.

17. Opportunity for Promotion: All employees have expectation in mind

to get promoted to a respectable post. They always want to see them at

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the peak. Promotion in job ensures an increase in status along with
financial portion of a person. It is obvious that promotion increases job
satisfaction.

18. Proper Communication System: When a Proper communication

system prevails in the organization, the employees show satisfaction
towards the job. If the general employees can reach the executives of the
organization, there builds a good mutual understanding between them.
Under such circumstances, workers will work with satisfactory feelings.

19. Autonomy: Executives of an organization usually wish to work on

their own accord. Autonomy allows them to act such independently.
Thus, autonomy increases job satisfaction.

20. Responsibility: Employees want to increase their responsibility.

Additional responsibility increases their status in the organization as well
as in the society. Responsibility helps employees to increase job
satisfaction.

21. Employee Welfare Measures: All employees have the right to get
pension, gratuity, medical facilities, entertainment and provident fund
for future etc. Employees expect to get security of their retired life. They
want the organization to ensure all these facilities to them.

Factors Affecting Job Dissatisfaction

Every human being possesses a different attitude towards work. In some

cases, employees are found to enjoy their work while on the other hand
many employees are found to hate their jobs. Job dissatisfaction is
caused due to a number of reasons, some of which are mentioned here.
They are like:

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1. An employee who has a different educational background but has
unfortunately landed in a different profession is seen to develop some
kind of dissatisfaction towards the work. This is natural as the employee
is unable to match his preference for that kind of job.

2. Another prime reason of job dissatisfaction is work pressure. Many

times employers ask their employees to complete as many tasks as
possible within a stipulated time, thus creating huge work pressure on
the employees. Generally the employees develop some kind of aversion to
the work.

3. Workplace politics and inability on the part of an employee to suit with

the office environment is another reason for job dissatisfaction. This
minimizes his efficiency and productivity.

4. Sudden cuts in salaries, withdrawal of expected perks, promotions

also causes job dissatisfaction in an employee. It must be remembered
that a person must get the suitable price for the services he has
rendered. Nobody likes to work for peanuts.

5. Inefficiency on the part of the HR department of the company to place

the right employee for the right jobs and track their individual
performance also causes job dissatisfaction among the employees. The
HR executives must listen to what an employee has to say.

The Impact of Job Dissatisfaction in Private Sector

Employee satisfaction is important to your company’s overall success.

The impact of dissatisfied employees can range from high turnover and
low productivity to a loss in revenue and poor customer service. While a
company’s philosophy, mission and values are fundamental to success,
human capital is an organization’s most valuable asset. Your
organization’s human capital – its employees – must be fully engaged and
satisfied to keep your business running.

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Workforce Productivity

Dissatisfied employees tend to spend less time focusing on their job

duties and more time discussing with family, friends and coworkers why
they are unhappy at work. Lack of motivation and attention to detail are
the results of dissatisfied employees, which translates to low
productivity. Consequently, companies whose employees` productivity
levels are low also experience loss or profits. Satisfied employees make
the most of their work time, producing quality products and services.

Customer Retention

Customer loyalty declines when employees are dissatisfied with their

jobs. Employee satisfaction is one of the points HCL Technologies CEO
Vineet Nayar explains in his Forbes website article titled ―Why I Put My
Employees Ahead of My Customers.‖ Nayar states that ―Employees frist,
Customers Second is a management approach. It is a Philosopy, a set of
ideas, a way of looking at strategy and competitive advantage.‖ Satisfied
employees according to Nayer, are excited about doing their jobs.
Employees who enjoy what they do –especially employees in the
customer service arena – are more likely to interact with customers and
clients in a much more positively and cheerfully. An off – used business
tenet is that happy employees equal happy customer.

Employee Turnover

When employees are terminated or resign, turnover analyses reveal that

overall dissatisfaction is the cause for poor performance or the decision
to leave. Consumed with looking for work that motivates them and
finding a company that appreciates their efforts, employees slip into
patterns of poor performance or simply quit. Turnover is costly. As
turnover rates increase, dissatisfaction can spread throughout the
workplace, encoring others to find employment elsewhere. Employee
retention, a workplace measurement related to turnover, can be
extremely difficult in an environment where employees are frequently
dissatisfied with their jobs or working conditions.

Suggestions for effective Compensation Package

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Creative compensation

It's important to give a lot of consideration to your business's

compensation structure because it ultimately reflects how employees are
valued.

When it comes to employee compensation, most managers are busy

asking: "What do I have to pay to…?" That is not an easy question to
answer. A better question might be: "What do I want my compensation
package to say?"
Whether you realize it or not, it is already saying a lot. Child care and
health benefits say that you value family. Giving longevity bonuses for
employees on the anniversaries of their employment with you says that
you value employees who stay with the business. Throwing a party at the
end of your business's busy season lets the employees and their families
know that you appreciate it when your people go the extra mile. No
matter what compensation elements you use, they all carry a message.
That message is important. Compensation packages can be linked to
business structure, employee recruitment, retention, motivation,
performance, feedback and satisfaction. Compensation is typically
among the first things potential employees consider when looking for
employment. It is important, therefore, to give a lot of consideration to
your business's compensation structure. After all, for employees,
compensation is the equivalent not to how they are paid but, ultimately,
to how they are valued.

What is a compensation package?

It's easy to think "dollars per hour" when thinking about compensation.
Successful compensation packages, however, are more like a total
rewards system, containing non-monetary, direct and indirect elements.
Non-Monetary Compensation can include any benefit an employee
receives from an employer or job that does not involve tangible value.
This includes career and social rewards such as job security, flexible
hours and opportunity for growth, praise and recognition, task
enjoyment and friendships.

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Direct compensation is an employee's base wage. It can be an annual
salary, hourly wage or any performance—based pay that an employee
receives, such as profit-sharing bonuses.
Indirect Compensation is far more varied, including everything from
legally required public protection programs such as Social Security to
health insurance, retirement programs, paid leave, child care or housing.
Employers have a wide variety of compensation elements from which to
choose. By combining many of these compensation alternatives,
progressive managers can create compensation packages that are as
individual as the employees who receive them.
The more production information data your business has, the easier this
is to accomplish. Measures such as feed conversion rates, somatic cell
count or mortality can offer great sources for performance incentives.

Direct Compensation Alternatives

 Basic Pay: Cash wage paid to the employee. Because paying a

wage is a standard practice, the competitive advantage can only
come by paying a higher amount.
 Incentive Pay: A bonus paid when specified performance
objectives are met. May inspire employees to set and achieve a
higher performance level and is an excellent motivator to
accomplish farm goals.
 Stock Options: A right to buy a piece of the business which
may be given to an employee to reward excellent service. An
employee, who owns a share of the business, or just a few animals
or acres, is far more likely to go the extra mile for the operation.
For example, very few people leave their own gates open.

 Bonuses: A gift given occasionally to reward exceptional

performance or for special occasions. Bonuses can show an
employer appreciates his/her employees and ensures that good
performance or special events are rewarded. Some indirect
compensation elements are required by law: social security,
unemployment and disability payments. Other indirect elements
are up to the employer and can offer excellent ways to provide
benefits to the employees and the employer as well. For example,
a working mother may take a lower-paying job with flexible hours
which will allow her to be home when her children get home from
school. A recent graduate may be looking for stable work and also
an affordable place to live. Both of these individuals have different

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 needs and, therefore, would appreciate different compensation
elements.
In a tight labor market, indirect compensation becomes increasingly
important. Businesses that cannot compete with high cash wages can
offer very individualized alternatives that meet the needs of the people
you want to employ. Such creative compensation alternatives are the
small business's competitive advantage.

Indirect Compensation Alternatives

 flexible working schedules

 retirement programs
 moving expenses
 insurance (health, dental, eye)
 subsidized housing
 paid leave (sick/holiday/personal days)
 subsidized utilities
 tickets to events (ball games, concerts)
 magazine subscriptions
 boots and clothing
 laundry service
 company parties
 use of farm trucks, machinery
 farm produce/foods/meals
 cellular phones/pagers
 child care
 use of farm pastures and gardens
Elements of a successful rewards system
1. Non-monetary Compensation. Includes benefits
that do not involve tangible value.
2. Direct Compensation. Employee's base wage.
3. Indirect Compensation. Everything from legally
required programs to health insurance,
retirement, housing, etc.

Determining the cash wage

Ask ten different people what a fair wage is and you'll get ten different
answers. While there are no hard and fast rules in determining a fair

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wage, the importance of the task is obvious. Research according to
Gregory Billikopf indicates that employees expect wages to –

1) Cover basic living expenses,

2) keep up with inflation,
3) Provide some funds for savings or recreation, and
4) Increase over time.

Discussing wage expectations with employees can help determine what

their compensation package should look like.
The first thing employers should consider when developing compensation
packages is fairness. It is absolutely vital that businesses maintain
internal and external equity. Internal equity refers to fairness between
employees in the same business while external equity refers to relative
wage fairness compared to wages with other farms or businesses. No
matter the compensation level, if either internal or external equity is
violated, a business will most likely experience employee dissatisfaction
and employees with begin to balance their performance through a variety
of ways ranging from decreased productivity to absenteeism and
eventually to leaving the business.

So, what constitutes a fair wage? One approach to determining a fair

wage is a market survey. These are typically fast and easy ways to
establish compensation guidelines for many businesses. A few phone
calls to other employees in similar businesses can determine the
"market" value for a specific job. Unfortunately, this technique is not
necessarily well suited for agricultural producers. An agricultural
manager can do informal surveys of other agricultural producers to
determine the "going rate" for labor or modify existing studies of non-
agricultural businesses to compare employees not by job title but by skill
sets. For example, operating a forklift in a factory and driving a tractor
may require similar skills and, therefore, can be compensated similarly.

Conclusion

The Job Satisfaction and Job Dissatisfaction levels were different among
health care professionals in private (non-government) settings in the
Klang Valley. Differences in Job Satisfaction were found in terms of
promotion, supervision, operating conditions, co-workers, the nature of
the work, and communication, but not in terms of pay, fringe benefits,

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and contingent rewards among the 8 health care professions. It is
recommended that all organizations providing health care services in
Malaysia be encouraged to conduct Job Satisfaction surveys among their
health care professionals to improve the services provided to patients by
early intervention in any dissatisfaction expressed towards various facets
of the job.

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