Compiled - A Gamut of Employee Incentve Schemes - Updated 18th April, 2023

A PROJECT REPORT
ON
“A GAMUT OF EMPLOYEE INCENTIVE SCHEMES -

A COMPARATIVE STUDY”
Submitted in partial fulfilment of requirement for the award of the Degree of
SAI SADHANA ADKAY

(201420401178)
TANYA NATRAJAN
(201420401043)
MEHREEN MUSKAAN
(201420401059)
CHHANDA BHADRA
(201420401093)
AVINASH COLLEGE OF COMMERCE

(Affiliated to Osmania University)
HIMAYAT NAGAR, HYDERABAD
(2020-2023)
STUDENT’S DECLARATION
I hereby declare that the Project work entitled “A GAMUT OF EMPLOYEE INCENTIVE
SCHEMES – A COMPARATIVE STUDY” submitted to Department of Business
Management, Avinash Degree College Himayat Nagar, Hyderabad (affiliated to Osmania
University) is a Bonafede record of original work done by me under the guidance of Ms./ Mr.
___________ (Name of the guide & Designation) and this project work is submitted in the
partial fulfilment for the requirements for the award of the degree of BACHELOR OF
COMMERCE. This record has not been submitted to any other University of Institute for the
award of any degree or diploma.
Place:
Date:
(Name of the student)
H.T.No.: __________
2
HIMAYAT NAGAR, HYDERABAD
Department of Commerce
CERTIFICATE
This is to certify that the Project Report titled “A GAMUT OF EMPLOYEE INCENTIVE
SCHEMES - A COMPARATIVE STUDY” is the Bonafede work done by
1. SAI SADHANA ADKAY: 201420401178,

2. TANYA NATRAJAN: 201420401043,
3. MEHREEN MUSKAAN: 201420401059,
4. CHHANDA BHADRA: 201420401093,
submitted in partial fulfilment of requirements for the awards of the degree of BACHELOR
OF COMMERCE of Osmania University, Hyderabad during academic year 2022 – 2023.
Place: Himayat Nagar, Hyderabad

Date:
External Examiner
Internal Guide
Principal
3
ACKNOWLEDGEMENTS
I would like to express sense of gratitude to our Management, Savitri Devi Y.S.S, Principal,
Avinash Degree College, Himayat Nagar, Hyderabad.
I thank my Guide, Dr./Mr./Ms.__________ (Name of the guide & Designation) for his/her
valuable guidance and Support in completing the project. I am also thankful to the entire
faculty and staff members of our college for their kind co-operation.
Lastly, I would like to express my love and affection to my beloved parents and best wishes
towards our classmates providing us the moral support and encouragement.
Date:
Place:
(Name of the student)
4
SL NO. NAME OF TABLES TABLE PAGE
NO
1. NORMALITY TEST
1 Manufacturing Department 5.3.1 71

1. Source Data Table
2 2. Shapiro – Wilk Analysis 5.3.2 71
3 Software Department 5.3.3 72

4 2. Shapiro -Wilk Analysis 5.3.4 72
5 Hospitality Department 5.3.5 72

6 2. Shapiro-Wilk Analysis 5.3.6 73
7 2. MULTICOLLINEARITY TEST & 5.4

VARIANCE INFLATION FACTOR &5.5
8 Manufacturing Department 5.4.1 74
1. Test Of Multicollinearity
9 2. VIF Test 5.5.1 74
10 Software Department 5.4.2 75

11 2. VIF Test 5.5.2 75
12 5.4.3 76
Hospitality Department
13 2. VIF Test 5.5.3 76
14 INFERENTIAL ANALYSIS 5.6 77
1.1
15 3. PEARSON’S CORRELATION 5.6.1 77
COEFFICIENT 5.6.1.1
1.1 Range Coefficient Table
5
16 1.2 Manufacturing Department 77
17 1.2.1 Pearson’s Product Moment 5.6.1.2 78
Analysis
18 1.3Software Department 5.6.1.3 79
1.3.1 Pearson’s Product Moment
19 1.4Hospitality Department
20 1.4.1 Pearson’s Product Moment 5.6.1.4 79
4. MULTIPLE LINEAR REGRESSION 5.6.2 80

ANALYSIS
21 2.1Manufacturing Department 5.6.2.1
2.1.1 Regression Coefficients 81
22 2.1.2 Model Summary 5.6.2.2 82
23 2.1.3 ANOVA 5.6.2.3 82
24 2.2 Software Department 5.6.2.4 83

2.2.1 Regression Coefficients
25 2.2.2 Model Summary 5.6.2.5 83
26 2.2.3 ANOVA 5.6.2.6 84
27 2.3 Hospitality Department 84
2.3.1 Regression Coefficients 5.6.2.7
28 2.3.2 Model Summary 5.6.2.8 84
29 2.3.3 ANOVA 5.6.2.9 85
5. TEST OF HYPOTHESIS 5.7 87
30 Hypothesis I 87
Z-TEST 5.7.1
31 Results 5.7.2 88
32 Hypothesis II 89
For Non – Financial Incentives – Mid- 5.7.3
Point Table
33 For Financial Incentives – Mid-Point 5.7.4 90
Table
34 Hypothesis III 90
Z-TEST 5.7.5
35 Results 5.7.6 90
36 For Non – Financial Incentives – Mid- 5.7.7 91
6
Point Table
Table
38 Z-TEST 5.7.9 92
39 Results 5.7.10 93
40 Hypothesis IV 94
For Non – Financial Incentives – Mid- 5.7.11
Point Table
Table
42 Z-TEST 5.7.13 95
43 Results 5.7.14 96
44 SUMMARY OF TESTED HYPOTHESIS 5.7.15 96
LIST OF CHARTS
CHART NAME OF CHARTS PAGE

NO.
5.2.2.1 Annual bonuses on financial achievements 50
5.2.2.2 Bonuses paid for extra work (over time) 51
5.2.2.3 Effectiveness towards health related vouchers 52
5.2.2.4 Share ownership in the company 53
5.2.2.5 Work environment in the company 54
5.2.2.6 Intrinsic rewards towards job satisfaction 55
5.2.2.7 Company’s credit towards employee hard 56
work
5.2.2.8 Promotion distribution in the company 57
5.2.2.9 Effectiveness towards long term financial 58
incentives
5.2.2.10 Financial incentives impact on the employees 59
5.2.2.11 Improvement towards company due to 60
incentives
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5.2.2.12 Imperative role in the retention of employees 61
5.2.2.13 Scale of inspiration of employees 62
5.2.2.14 Bonus hierarchy towards employees 63
5.2.2.15 Implementation in profit sharing 64
5.2.2.16 Vouchers preferred by the employees 65
5.2.2.17 Criteria used for motivation 66
5.2.2.18 Incentive plans preferred by the employees 67
5.2.2.19 Monetary incentive based on level of 68
performance
5.2.2.20 Measurement of level of motivation 69
LIST OF GRAPHS
GRAPH GRAPH NAMES PAGE

NO.
5.2.1.1 Gender 46
5.2.1.2 Age 46
5.2.1.3 Educational Qualification 47
5.2.1.4 Years of service 48
5.2.1.5 Monthly income 49
ABSTRACT
8
By taking a glimpse of today’s dynamic business environment, career satisfaction is a vital
variable in career development research and other areas such as occupations and individual
employee adaptation in companies. One of the most effective tools for organization
efficiency is effective reward and incentive scheme. An incentive scheme aims to reward
efficient employees and enables organizations to respond quickly to changes in the
environment.
The purpose of this “Comparative Study” is to examine the impact of organizational

support and ‘incentives & advancement opportunities’ on the career performance of
employees, as well as organizational efficiency and compare the results so obtained. Data
were collected via scientific, detailed, and structured Likert Scale questionnaire developed
using substantiated, standard measures which thereby ensured the reliability and validity of
each scale. Methods such as Pearson’s Correlation Coefficient and Multiple Linear
regression analysis was carried out on the sample data for the Test of Hypothesis. An
ANOVA test and T Test was also further conducted to support the said Test of Hypothesis.
The sample of the study consists of more than 100 executives working in reputed sectors of
IT, construction and manufacturing companies in Hyderabad.
The study results indicated that organizational support and performance-linked monetary and
non- monetary rewards have positively impacted employee productivity and career
satisfaction, thereby contributing to corporate profits. In order to attain organization goals and
fulfilment of its purpose, it is imperative to have a high employee morale. The key
recommendation here was to prepare feedback mechanisms to understand employee
psychology behind absenteeism and an infallible employee retention strategy.
Keywords: Dynamic business environment, Comparative study, Incentives and advancement

opportunities, Likert Scale questionnaire, Pearson’s Correlation Coefficient, Multiple Linear
regression analysis, Test of Hypothesis, ANOVA test, Absenteeism, Employee retention
strategy.
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TABLE OF CONTENTS
CHAPTER NO. CHAPTER TITLE AND CONTENTS PAGE

NO.
I INTRODUCTION 14
1.1 Significance/Background Of The Study 14-16
1.2 Statement Of The Problem 16-17
1.2.1 Research Questions 17
1.3 Need Of The Study 18
1.4 Importance Of The Study 18-19
1.5 Objectives Of Study 19
1.6 Scope Of The Study 20
1.7 Research Hypothesis Of the Study 20-21
1.8 Research Methodology 21
1.8.1 Research Approach 21
1.8.2 Research Design 21
1.8.3 Target Population 22
1.8.4 Sample Size & Sampling Technique 22
1.8.5 Data Collection 22
1.9 Limitations Of the Study 22
1.10 Operational Definitions 23-25
II REVIEW OF LITERATURE 26
2.1 Introduction 26
2.2 Theoretical Framework 26
2.3 Empirical Review 27-32
III INDUSTRY PROFILE & COMPANY PROFILE 33
3.1 Manufacturing Companies 33-35
3.2 Automotive Companies 35-37
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3.3 Hospitality Industries 37-40
IV THEORETICAL FRAMEWORK 41
4.1 Overview Of The Study 41
4.2 Understanding Incentive Schemes 42-44
V DATA ANALYSIS AND INTERPRETATION 45
5.1 Response Rate & Respondents 45
5.2 Interpretation Of The Data 45
5.2.1 Graphical Representation Of Personal Data 46-70
5.3 Normality Test 70-73
5.4 Multicollinearity Test & 5.5 Variance 73-77
Inflation Factor
5.6 Inferential Analysis 77
5.6.1 Pearson’s Correlation Coefficient 77-79
5.6.2 Multiple Linear Regression Analysis 80-84
5.7 Test Of Hypothesis 85-96
5.8 Summary Of Tested Hypothesis 96
VI FINDINGS, CONCLUSIONS, AND SUGGESTIONS 97
6.1 Summary Of Findings 97-100
6.2 Theoretical & Practical Implications 100-101
6.3 Conclusion 101-102
6.4 Recommendations 103-104
6.5 Suggestions For Further Research 104
VII BIBLIOGRAPHY/REFERENCES 105-107
ANNEXURE
11
RESEARCH PROJECT
“A GAMUT OF EMPLOYEE INCENTIVE SCHEMES -
12
A COMPARATIVE STUDY”
GROUP MEMBERS: -
1. SAI SADHANA ADKAY - 201420401178
2. TANYA NATRAJAN - 201420401043
3. MEHREEN MUSKAAN - 201420401059
4. CHHANDA BHADRA – 201420401093
13
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Any organization, irrespective of its size, industry or location is currently operating in a

dynamic environment. To help navigate through the constant change in the environment,
human resource has become one of the most valuable resources to ensure an entity has a
competitive advantage. Quality of human resource is one of the major factors to determine
the entity’s ability to survive and earn profits. Therefore, it becomes imperative to ensure that
employees are correctly rewarded for their efforts. An entity has to achieve an equitable
balance between the employee’s contribution to the organization and the organization’s
contribution to the employee.
In the 21st century, though capital investment has increased tenfold, employees still have a
major role in ensuring corporate profits. Companies operate in a highly competitive
environment. A satisfied workforce will help an organization respond to changing customer
demands. Incentive scheme refers to a performance linked compensation system wherein an
employee is rewarded based on his productivity, in order to increase production. An
incentive scheme that aims to reward efficient employees and provides not only monetary but
also non-monetary benefits will lead to job satisfaction and higher level of motivation,
thereby increasing customer satisfaction as well. It is then, necessary for any organization to
design such an incentive scheme which stimulates human effort to ensure constant innovation
and higher levels of productivity. Human resources are essential to the prosperity,
productivity and performance of any organisation whether public or private. Motivated
employees mean staff retention and company loyalty, which in the short run will give birth to
growth and development of business.
Every organization has its own set of mission, objectives and goals. They operate in order to
earn profits. Incentive schemes have a positive impact on interpersonal relation in the
corporate environment and on employee perception as well. This leads to increased harmony
and coordination among the employees which help the organization to achieve its goals.
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Employee perception is the aspect to know how much an employee is satisfied towards the
organization. An incentive scheme enhances individual effort and team-spirit. Despite the
centrality of motivation as a vital tool in workers turnover and productivity, it is often
underutilized by most managers in workplace. Dissatisfaction from job and incentives
demotivate the employee that led to increasing in absenteeism, and job turnover rate in the
organization. Motivation involves the processes that account for an individual's intensity,
direction and persistence of effort towards attaining a goal. To motivate is to create desire,
willingness to performance in a manner in which managers want to get work done.
Motivation helps an organization reach its goals faster because employees tend to work
towards it as a result of motivation. Redundant techniques of yester years don’t work in
today’s cut-throat environment and managers need to revolutionize the way they motivate
people, organize the task at hand, design systems and processes, re-evaluate and improve
current management style and get the desired output and reward employee.
The main objective of company incentive scheme is to attract, retain high performance
employee, motivate, satisfy and get maximum employees’ performance that helps owners
pursue their interests, by achieving higher outcome and better quality. Though incentive may
be in different format, ingenious staff incentive schemes can have positive and potent effects
on the productivity, efficiency and quality of company operations. Similarly, fragile schemes
can have devastating financial and moral standing effects. Incentive schemes must be
transparent so that staff members affected should be able to easily understand the backend
mechanics of the calculation.
An employee with a vision for growth needs to feel completely satisfied that he is going to
acquire a value addition to his skill-set. He must be shown a clear path for his chances of
progression, growth and upturn in the organization apart from the economic benefits he will
be availing during the process. Non-availability of skilled employee results in lack of
knowledge, skills and experience which will have a detrimental impact on the organization
financially. Lack of encouragement in the workplace will not only demotivate the employee
but could also be the domino which leads the company to losses.
Employee incentive programmes go a long way towards ensuring employees feel appreciated,
cared for and deemed worthwhile. It is individualized as such programs are tailored to suit the
needs and wants of employees. Motivation does not only encourage productive performance
but also show employees how much the company cares.
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This is followed by the next aspect in question - Job Performance. This is the net effect of
an employee’s effort as modified by abilities, skills, role perceptions and results produced.
This implies that performance in a given situation can be viewed as resulting from the
interrelationships among effort, abilities, role perceptions and result's produce.
Employees must attain an acceptable level of proficiency in each of the performance

component - abilities, skills, and the environment. The level of performance can be improved
if management encourages their employees to be pro-active and also ensures periodic
performance evaluation take place. Involving employees in decision-making makes the
individual feel more responsible and included in the organization.
A well-designed incentive scheme has a powerful and positive effect on productivity,

efficiency, quality of the product, and ultimately customer satisfaction. However, absence of
an incentive scheme negatively impacts productivity, efficiency and profits. Thus, the system
must be well designed in order to meet the employees’ needs and is a combination of non-
monetary and monetary benefits. This is the central theme and aim of this study.
1.2 Statement of the Problem
At present, employees of the organizations are quite perturbed about the current incentive
schemes and a survey was conducted on the company’s incentives and found that the
respondents were highly dissatisfied with the dearth of commission and bonuses and almost
non-existent share ownership and they are mainly concerned about their opportunity for
career development, promotions, job satisfaction and competence training. It is perceived by
the masses that the promotion and the training dynamic of the company is unfair, ambiguous
and unjustifiable.
One of the means to create and retain a satisfied workforce is through installing attractive,
fair and equitable incentive system or practices. Motivation has been an infallible strategy
towards escalating productivity and job performance in every organization. This situation has
been a stumbling block towards provision of services by employees
By identifying this, several measures have been taken by the government to improve
motivation to her employees such as training opportunities, seminars, salary increment as
well as incentives like housing and transport allowances. Manpower constitutes a bottle neck
to most organizations especially manufacturing and hospitality industries because they are
16
seen as life wire of any economy. Without motivated staff in these industries, half-baked
graduates and an unmotivated manpower would be turned into the economy year in year out.
With this in mind, there is a need for capable hands to be on deck but this has been neglected
for years. Furthermore, constant rise in inflation makes it so difficult for staff to meet up the
needs of their families.
Major problems have been summarized and discussed below.

A. Inflation and such other economic conditions make it difficult to fully implement a
total incentive system. The employers usually cite unfavourable economic conditions
as their excuses. On the other hand, the employee who knows his worth usually cite
his contributions to the growth of the organization as his reason for the demand for a
better condition.
B. Fear of losing one's job makes it possible for him to demand for an improvement in
his working conditions. Some workers may know their rights but they cannot demand
for them for fear of losing their jobs.
C. There is criticism that organizations, particularly construction companies miss out the
most important component of reward, which is the low-cost; high-return ingredient to
a well-balanced bonus system. Studies that have conducted on the topic indicate that
the most common problem in organizations is that they miss the most important
component of reward as stated above.
1.2.1 Research Questions
Based on the above stated problems the study attempts to address the following research
questions:
 What is the perception of the employees on incentive schemes?

 What is the relationship between incentive schemes and employees’ performance?
 Do monetary and non-monetary rewards affect employees’ performance?
 Is there a positive relation between reward and employee motivation?
 Is there a positive relation between total reward system and job satisfaction?
 What is the effect of quality training on employee commitment?
 What is the effect of recognition and rewards on outstanding performance on output
of employee?
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 To what extent does feedback influence motivation and performance appraisal on
staff?
1.3 Need of the Study
The importance of human resource is undeniable in the business environment. Therefore, in

order to improve the quality of workforce, a well-designed system of compensation is a must.
This study dives into the effect and extent of impact of an incentive scheme. This study,
through the help of statistical tools, helps identify and assess the positive impact of an
effective incentive system. For an organization to take a decision regarding their pay policy,
it is important to know if benefits to employees make a difference to overall production. This
study delves and answers such questions.
With employees quitting their jobs right now, it’s no surprise that employee retention is on
the minds of business execs and HR leaders everywhere. Employee retention refers to
organizations’ ability to retain or hold on to their staff. Employee retention measures seek to
reduce employee turnover. Employee retention statistics can help us understand what matters
to employees, what makes them quit their jobs, and—critically—how to attract them and
convince them to stay. This is where incentive schemes play a major role.
Gallup, a management consulting company, estimates that the cost of replacing an employee

is one-half to two times the employee's annual salary. Therefore, it necessitates the presence
of skilfully planned bonus payments to employees.
Statistics show that in the current Indian labour market, attrition rates are at 20.3%. Whereas,
employee retention rates have plummeted to a new low of 35%. Although the employees had
variety of reasons to leave, they are more likely to leave thereby adversely affecting the
competitiveness and financial standing of the company.
1.4 Importance of the Study
The study helps understand the driving force behind employee effort and motivation. Owners
and leaders need to be aware that when their workforce is incentivized it leads to fulfillment
of the organizational goals. The study provides valuable insights into the impact of an
incentive scheme. It is important for the management of any organization to understand how
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a satisfied workforce helps to reap long-term benefits. The findings from this study will be
beneficial not only to the employees of our sample study, i.e., employees at executive,
clerical, and managerial levels in manufacturing, software, construction companies and
hospitality industries in Hyderabad state but also the entire Secondary and Tertiary
companies and organizations in the state as a whole.
The study will be useful at three levels thus, the individual level, organizational level and
state level.
1. At the individual level, the employees and staff of the organization will be informed as
to the financial and non-financial incentive programmes available to them and how best
to utilize them for personal development and performance improvement.
2. At the organizational level, it will help the companies to change or review their
employee motivational policies and strategies in vogue which will inevitably cause an
increase in staff turnover or productivity which will also lead to growth and eventually
development. The study would also be significant to secondary and tertiary level
organizational management because it would serve as a useful guide to managers on how
to improve quality and productivity of their workforce.
3. At the state level, issues of motivation are of critical concern due to numbers of cases of
performance decay and downfall of productivity. This study will be useful to company
regulatory bodies to ascertain various motivation tools that can motive employees and
ensure there is no exploitation of human resource.
1.5 Objectives of the Study
The main objective of the study is to determine and assess:
 The impact of an incentive scheme on employees’ productivity and job satisfaction.

 The perception of employees towards the existing incentive schemes.
 To determine the factors that expedites the role of incentive management on
organizational performance.
 To recommend the use of incentive schemes in its absence and suggestions on how to
improve pre-existing bonus schemes.
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1.6 Scope of the Study
The target demographic for the survey conducted was chosen to include employees from
diverse fields and varying experience and expertise in their respective industries. We have
included employees from banking, IT, educational sectors located in Hyderabad.
This study targeted employees of secondary and tertiary companies of Hyderabad. Corporate
giants such as Ernst & Young, KPMG, Larsen & Toubro (L&T), PriceWaterhouseCoopers
(PwC), Flipkart, Amazon, Delloite, whilst manufacturing companies – PepsiCo, GE, Proctor
& Gamble, Hyundai Motor, DuPont, and hospitality industries such as Hyatt Place, ITC
Kakatiya, ITC Kohenur, Novotel Hyderabad Convention Centre, Radisson Hyderabad Hitech
City, and the like were chosen as case study areas due to incongruities of employee
perceptions of the employees of manufacturing and hotel industries especially on Salary
Package and Bonus System.
1.7 Research Hypothesis
Hypothesis is a conjectural statement that groups together a set of facts which can be tested
by further investigation. In order to achieve the objectives of the study and study its
significance, the following hypotheses were formulated.
Hypothesis I
H1: There is no positive and significant relationship between financial incentives and
employee performance.
H2: There is a positive and significant relationship between non-financial incentives and
employee performance.
Hypothesis II
H1: There is no significant relationship between non-monetary reward and employees'
performance among staff in companies.
H2: There is a significant positive relationship between non-monetary reward and
employees' performance among staff in companies.
Hypothesis III
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H1: Recognition and reward of outstanding performance has negligible significance on the
output of employees in manufacturing and software companies.
H2: Recognition and reward of outstanding performance has positive significance on the
output of employees in manufacturing and software companies.
Hypothesis IV
H1: Quality training has a negligible significance on the employee commitment in

manufacturing and software companies.
H2: Quality training has a positive significance on the employee commitment in

1.8 Research methodology
1.8.1 Research Approach
A research approach is the procedure selected by the researcher to collect, analyze, and
interpret data. There are three approaches to research: quantitative, qualitative, and mixed
methods.
The study was conducted as a quantitative and qualitative approach to understand the effects
of incentive schemes on employees and organizations as well. According to Burns and Grove
(1993), quantitative survey is the most appropriate approach if the purpose of an investigation
is to establish a relationship between two variables. Therefore, diverse set of employees was
chosen as the statistical population. The choice of this approach was determined by the
objective of this study, i.e., to answer questions about the relation between incentive scheme
and employee productivity.
1.8.2 Research Design
The purpose of this study is to assess and examine the relationship between rewards and
performance. The study is carried out through a survey sent to a targeted population. We have
designed a questionnaire which aims to collect feedback from more than 100 employees with
questions that help us understand employee psychology and establish a definite relation
between incentive schemes and employee morale and productivity. The questionnaire, which
has been enclosed as part of the research, included a wide array of specific questions. In
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order to test research hypothesis, numerical data has been used, which is one of the
characteristics of the quantitative method.
1.8.3 Target Population
The target population is defined as a collection of elements or objects or the target audience
that the researcher intends to conduct research or survey on in order to draw conclusions
from. The target population for this study comprised of more than 100 employees and H.R
managers working in diverse fields, industries with varying levels of experience situated in
Hyderabad. A diverse population was chosen as each individual possessed varying demands
from the organization and could provide an insight into employee performance which is
dependent on compensation and benefits.
1.8.4 Sample Size and Sampling Technique
Sampling Technique is used to represent the characteristics of the target population such that
the researcher can draw conclusions on the entire population. Sample size is the measure of
the number of individual samples used in an experiment. The sample size consisted of more
than 100 employees. Stratified sampling technique was used. Employees were grouped based
on their pay grade. It allows in obtaining a great degree of representativeness from each
stratum and the population were adequately represented in the sample from the strata.
1.8.5 Data Collection
The study has primarily drawn conclusions with the help of a questionnaire sent to more than
100 employees. Primary data was collected in this manner through the help of Google Forms
to ensure concrete and credible research findings. The researcher amalgamated the use of a
structured questionnaire which establishes basic details of the employee in order to gauge the
employees’ experience and pay.
1.9 Limitations of the Study
The study focused only in specificities of incentive scheme strategies for manufacturing,
software and hospitality industries of the state. The limitations of this study are explained
herein.
 The study is limited to the employees’ motivational factors, and its effect on
organizational productivity. The study does not consider other variables and as such is
limited to only those areas specified above.
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 Moreover, the sample size consisted of more than 100 employees. The possibility that
the result of the study changes when a larger sample size is considered cannot be
overruled.
 Also, it does not cover all sectors of the Indian economy. The secondary trading and
tertiary service sector are just two sectors of the Indian economy, and as such, the
study does not look into how these motivational factors work or influence
productivity across other sectors.
 The main limitation of this work, however, is the lack of pervasiveness, due to which
the results of this study cannot be used in other economic sectors and industries.
 The study has put greater emphasis on extrinsic rewards and far less emphasis is put
on intrinsic rewards.
 Due to lack of time and financial constraints, the study focuses only on a few sectors.
 Lack of awareness among the respondents to fill out questionnaires with due care and
return them on time has affected the reliability of the test.
1.10 Operational Definitions

The following operational definitions were used for the purpose of this study.
 Incentive: Something that motivates employees to achieve certain objectives or meet

a target.
 Compensation: The results or rewards that the employees receive in return for their
work.
 Rewards: Recognition to employees for their achievements and contributions.
 Incentive Schemes: A mechanism that has been designed to recognize some specific
change in behaviour.
 Financial Incentives: Money based rewards given when an employee meets or
exceeds expectations.
 Non-financial Incentives: A compensation given in a transaction which does not
involve cash.
 Motivation: The realization that individuals have needs or expectations that they
want to meet.
 Employee Performance: A person executes their specific job duties and
responsibilities well.
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 Employee Perceptions: An individual gives meaning and interpreting to the work
environment.
 Performance Based Incentive: Any incentive scheme that seeks to link pay to
individual or group performance based on pre-established criteria and goals.
 Intrinsic Rewards: These are often psychological and can include pride and
fulfilment for achieving certain things in the workplace.
 Extrinsic Rewards: Extrinsic rewards are tangible, covering pay, bonuses and
benefits.
 Attrition Rate: An attrition rate is a metric used to measure employees or customers
lost over a period of time who are not replaced.
 Employee Turnover Rate: Employee turnover rate is defined as the percentage of
employees who leave an organization during a certain period of time.
 Primary Data: Primary data refers to the first-hand data gathered by the researcher
himself.
 Normality Test: A normality test is used to determine whether sample data has been
drawn from a normally distributed population (within some tolerance).
 Shapiro-Wilk Test: The Shapiro-Wilk test examines if a variable
is normally distributed in some population. It is a test of wheteher the hypothesis is
independent and identically distributed.
 Multicollinearity Test: Multicollinearity refers to the situation where there is a high
degree of correlation between two or more independent variables in a regression
model.
 VIF Test: VIF test measures how much the variance of an estimated regression
coefficient increases due to multicollinearity in the independent variables
 ANOVA: Analysis of Variance (ANOVA) is a statistical formula used to compare
variances across the means (or average) of different groups.
 Pearson Correlation Coefficient: The Pearson correlation coefficient (r) is the most
common way of measuring a linear correlation. It is a number between –1 and 1 that
measures the strength and direction of the relationship between two variables.
 T- test: A Z-test is a statistical test that compares the means of two samples. It is used
in hypothesis testing.
 Multiple Linear Regression Analysis: Multiple regression is a statistical technique
that can be used to analyze the relationship between a single dependent variable and
24
several independent variables. The objective of multiple regression analysis is to use
the independent variables whose values are known to predict the value of the single
dependent value.
25
CHAPTER TWO
REVIEW OF RELATED LITERATURE
2.1 Introduction
This chapter will present theoretical and experiential literature review, conceptual framework.
A review of past empirical studies which is related to this research topic is also included in
this chapter. The proposed conceptual framework and hypothesis were developed. In the era
of modern employment, it is important for employers to find newer ways to motivate
employees in order to achieve a greater force, and make them stay in the organisation. The
employee benefit has also taken more interest after the employment of jobs with a high risk
started to gain demand. The development of the organization and high competition has made
it a task for the HR (human resource) to come up with newer ways to allow employees reach
their maximum potential for the organisation
Research method: The source used for research is primary data.
2.2 Theoretical Review
Hussein (2011) argues that organizations cannot realize the full potential of offering
competitive incentive scheme unless employees have sufficient knowledge about them.
Employees who are aware of incentive schemes being offered and those with accurate view
of incentives coverage have higher valuation of the incentive they receive and are satisfied
with their schemes than employees who are less informed of their incentive schemes
(Markova & Jones, 2011).
A study conducted by Mwangi (2014) revealed that employees who were most motivated by
incentive schemes are those who had high level of awareness. The high motivation was
because the respondents valued the incentives being given for performance.
2.2.1 How Perception Differs from Employee to Employee [Positive/Negative]:
Ismail and Ahmed (2015) report that the factors of recognition for performing well, chances
of promotion, professional growth and incentive schemes, are perceived as motivating factors
by many employees who will in turn feel satisfied. Employee perception is a factor that can
make a huge difference in the quality of the workplace. When employees view the employer,
their work, and their relationships within that workplace as being positive, there is a good
26
chance the employees will be productive and remain with the employer for a long time.
Negative perceptions of the company and the working environment can cause qualified
employees to seek opportunities elsewhere. The benefits paid and how they relate to the work
assigned can have a huge impact on the perception of an employee. Lack of communication
can go a long way toward setting up mentality that breeds negativity in the workplace, opens
the door for rumours to develop, and can undermine the morale of even the most devoted of
employees. Since most people work in order to earn a living, the matter of wages or salaries
and benefits is also important to employee perception. As long as the employee feels properly
rewarded for his or her efforts, there is a good chance the company will be perceived as being
worth the effort (Melkamu, 2016)
2.3 Empirical Review
A number of studies were conducted to improve understanding of incentive system and the
extent to which its relation on commitment, motivation and performance efficiency.
Miller and Whitford (2006) in “The Principal’s Moral Hazard” argued that the role of
incentives has expanded considerably in view of the fact that it has been studied rigorously in
principal agency theory. There is a strong relationship between management incentive and
risk-taking which would subsequently lead to better firm performance. The role of incentives
on behaviour has been well documented in the literatures. Incentives come in the form of
financial rewards or other types of incentive-based remuneration such as stock option, share
ownership, rewards, and bonuses. Employees’ performance is substantially better under
incentive plans which are substantiated by supportive innovative work practices.
Palmer (2012), in his study, “Incentive and Disincentive: Will They Affect Performance”
defines incentives as the external temptations and encouraging factors that lead the individual
to work harder; they are given due to the individual's excellent performance since he will
work harder and produce more effectively when he feels satisfied in the institution. In
addition to this, incentives can also be defined as the consideration of the excellent
performance, assuming that the salary is enough to make the worker appreciate the value of
the job that also satisfies his basic needs in life (Palmer, 2012).
Boela (2005) states that, incentives are offered in order to focus the employee's attention to
the business objectives of the employer, and add that they are normally used to stimulate
performance and particularly to increase sales and control costs.
27
George (2002) says that incentives work best alongside a good pay scheme, good working
conditions and other good management practices, such as performance management,
appraisals and appropriate communication and training programmes.
According to study financial incentives improved performance over 30 per cent compared
with those who did not get incentives. Also other researchers have conducted similar
empirical studies and found that performance increase in groups with financial bonus systems
whereas in control groups’ performance usually stays at the same level (Petty, Singleton &
Connell (1992), Furthermore Locke et al. (1980), compared individual pay incentives, job
enrichment and employee participation and found that financial rewards are most efficient.
Holtmann (2005), in “Designing and Implementing Staff Incentive Schemes” contends that if
incentive schemes are to be effective, they must be accepted by those they target. To assure
acceptance, they should be in line with two principles, i.e., fairness and transparency,
according to which employees’ judge their remuneration. According to the author, fairness
and transparency are the two most important requirements for staff incentive schemes in
business organizations. Pertaining to fairness as Holtmann (2005) mentioned that the goals or
reference standards set out for employees must be attainable, staff members who perform
better than others should receive higher compensation and the compensation system should
reflect the hierarchical levels within the organization.
According to Milkovich & Newman (2005) “Compensation, New York: McGraw-Hill

Companies, Inc”, bonus pay is a financial reward given to employees in addition to their
fixed compensation. Bonus pay is the most common form of cash incentive. Bonuses can be
accrued and paid out at different intervals, such as monthly, quarterly, or annually. Bonus
sizes vary between 10% and 50% of the total pay. This pay plan is also apparently based on
individual performance, but bonuses do not increase employee’s base pay and therefore are
not permanent.
In most cases, staff incentive schemes are employed to enhance productivity. To analyse the
present staff productivity and thus to appraise the potential for improvement, we could
compare our staff in terms of productivity (e.g. in the number of transactions of counter sales
staff or in the number of stock spare parts of parts sales supervisor, or in the capacity of
branch managers to develop their branch and staff). If there were high disparities, which can
at least partly be explained by disparities in staff motivation, we could further ask how staff
incentives would contribute to a higher overall performance of staff (Carolina, 2010).
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Monetary incentives can be defined as the ways of monetary return offered for service
rendered by employees (Kyani, Akhtar & Haroon, 2011; Sorauren, 2000). Examples of
monetary incentive include pay rise, bonus, stock option and etc (Mathauer & Imhoff, 2006).
It can also be further explained as the amount paid to employees, either in the form of
lumpsum or monthly payment which makes individuals perceive as immediate feedback of
their efforts contributed (Al-Nsour & Jordan, 2012).
There are also some studies which have ended up indifferent results. According to the studies,
financial incentives have no effect or have negative effect on performance. In their review
Camerer and Hogarth (1999), found that in studies researching financial incentives the most
common result was that financial incentives have no effect on mean performance. Pfeffer’s
example also states against motivating effect of money. According to Pfeffe (1998),
Southwest Airlines have never used financial rewards in order to improve performance and
they are number one in productivity in the industry in which financial incentives are
commonly used. Moreover, fixed pay generates more effort than financial incentives paid
based on employees’ performance.
Dan Ariely (2006), in his study titled,” Large Stake and Big Mistakes- Review of Economic
Studies Limited” stated that employees are paid as per their performance in various types of
jobs, which is usually seen as an enhancing factor for productivity of an employee in
comparison to the employees who are receiving non contingent pays. However,
psychological research suggests that excessive rewards can also result in a decline of
performance. Research has been conducted as a set of experiments in the U.S. and in India to
test whether very high monetary rewards can decrease performance. In this research the
subjects worked on were different tasks and received performance-contingent payments that
varied in amount from small to very large relative to their typical levels of pay. With some
important exceptions, very high reward levels had a detrimental effect on performance. These
results challenge the assumption that increases in motivation would necessarily lead to
improvements in performance.
Jeffrey and Shaffer (2007),in “The Motivational Properties of Tangible Incentives-

Compensation and Benefits Review” state that non-financial tangible incentives are effective
because they are very visible. Because of visibility, the symbolic value of non-financial
tangible incentives is higher than other incentives. Another reason for the effectiveness of
non-financial tangible incentives can be that these incentives are usually distributed right
29
after performance. Instead in financial incentives’ case it can take months before incentives
are distributed to employees. In this case reward-compensation relation is not so tight than in
situation where reward is given right after performance. This can have effect on Motivation
and performance. Jeffrey and Shaffer (2007), also state that financial incentives are easily
perceived as part of a basic pay. In this case financial incentives can lose their motivating
impact. Instead, non-financial tangible incentives are really noted and employees perceived
them as extra reward. Because of that in some cases non-financial tangible incentives can be
more effective than financial incentives. One problem in non-financial tangible incentives is
that people like different things (Jeffrey& Shaffer 2007). One can be motivated through
football tickets whereas the other can find a holiday trip more attractive. Itis challenging for
manager to decide which would be appropriate incentive in different situations. Another
problem is that at lower income level non-financial tangible incentives can be perceived
worthless because of the need for money (Jeffrey & Shaffer 2007).
According to Kube et al. (2008), credited more output in non-financial gift as compared to
monetary gifts. Non-financial gifts contribute a great deal to employee satisfaction and this
satisfaction shows long-term results. Kube et al. (2008) also carries the social exchange
phenomenon. In his study, results show the higher impact of non-financial incentives of
social exchange theory compared to monetary rewards. In another study Kube et al. (2006)
describe that financial rewards are beneficial in short-term period and ineffective for long-
term period. He also states that non-financial rewards have a significant and consistent effects
on their satisfaction.
In accordance with productivity is the sustained rate at which employees are achieving the
agreed minimum outputs of work as agreed to within an organization, it is the rate at which
goods are produced, especially in relation to the time, money and workers required to
produce them. Holtmann and Grammling (2005) conducted preliminary research on 86
institutions and found that 83% of the total respondents agreed on the fact that incentive
schemes had a high effect on increasing the productivity of employees. They also said that
many managers use incentive schemes to try to improve productivity. Thus, staff incentive
schemes have powerful effects on the staff productivity of the organization and thereby are
able to boost staff performance.
Non-monetary incentives are non-cash benefits given by company to employees to retain,

reward and motivate them for their excellent job performance (Woodruffe, 2006). Non-
30
monetary incentives are deemed more valuable than monetary incentives as it shows respect
and appreciation on employees’ accomplishment (Gale, 2002). In the research of Nelson
(2001) which is conducted in United States showed that there is a strong bond of relationship
between non-monetary incentives and employees’ job engagement.
According to Houston (2000), non-financial incentives come in many forms such as gifts,
rewards, travel. Some are more tangible than others since they are visible and/or can be
compared to financial benefits. Less tangible incentives relate for instance to work flexibility,
independence of working, recognition of one’s work, the possibility of advancement. The
value of non-financial material incentives seems to be perceived as a function of
psychological processes.
Gomes et al (2003) said that Incentive systems are an important part of organizational
motivation and are central to helping diagnosticians understand the forces that drive the
organization. Organizational incentives refer to both the reason for staff to join an
organization, and the way an organization rewards and punishes its staff. Incentive systems
can encourage or discourage employee and work group behaviour. Organizations must
continually seek ways to keep their employees and work groups engaged in their work,
motivated, efficient and productive. An organization’s success can depend on its ability to
create the conditions and systems (formal and informal) that entice the best people to work
there. Also, a good incentive system encourages employees to be productive and creative,
fosters loyalty among those who are most productive, and stimulates innovation.
Most researchers have concentrated on the cause-and-effect relationship of the incentive

schemes and workplace productivity or organization performance, few writers have bothered
to look behind the scenes at the internal and external factors that infuse or diffuse life from
the incentive schemes. Some findings that could be approximated to explain the
environments surrounding applied incentives are those of Towers (1990) and Bernadin and
Russel (1993). Towers concluded that factors necessary for success of team incentives are
Senior management commitment, employee support/involvement, emphasis on
communications, related HR activities, e.g., training, performance measurement at levels
below corporate, shorter payout periods, operational or blended rather than wholly financial
measures. Bernadin and Russel (1993) also listed factors such as employee’s involvement
and value of money, realistic productivity goals and fair performance measurement as
necessary for successful financial incentives administration.
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According to Perry (2006), financial incentives improve task performance significantly, but
effectiveness dependent on organizational condition. Meta-analysis of 72 field studies
indicated that an organizational behaviour using monetary incentives improved task
performance by 23% whereas social recognition did so by 17% and feedback by 10%.
However, after combining all the three motivational reinforces, performance improved by
45%. This is a stronger effect on performance than when each was applied separately.
Feedback combined with money and social recognition produced the strongest effect on
performance.
To summarize, the key practical messages of the effect of incentive schemes on employee’s
performance as Armstrong (2009) described that, financial incentives provided by employers
in the form of pay will help to attract and retain employees and for limited periods, may
increase effort and minimize dissatisfaction. Non-financial incentives related to
responsibility, achievement and the work itself may have a longer-term and deeper impact on
motivation. Incentive schemes should therefore include a mix of financial and non-financial
rewards.
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CHAPTER THREE
INDUSTRY/COMPANY PROFILE
I. MANUFACTURING COMPANIES
1. Ernst and Young
Ernst and Young, commonly referred to as EY, is a multinational professional services

firm that specializes in assurance, tax, consulting, and transaction advisory services.
Vision - To build a better working world for its clients, its people, and its communities.
Mission - To help clients navigate the challenges and opportunities of the rapidly changing
business landscape by delivering innovative and sustainable solutions.
Objectives - To create value for its clients, promote ethical business practices, and foster a
culture of diversity and inclusiveness.
Targets - To achieve growth and profitability while maintaining a strong reputation for
quality and excellence.
Achievements - The company has achieved numerous milestones over the years, including
expanding its global footprint, diversifying its service offerings, and investing in emerging
technologies.
Awards - EY has also received numerous awards and recognitions, including being named
one of Fortune Magazine's "100 Best Companies to Work For" and receiving the "Best Audit
Firm" award from International Accounting Bulletin.
2. Larsen and Toubro
Larsen and Toubro, commonly referred to as L&T, is a multinational conglomerate that

operates in the fields of engineering, construction, manufacturing, and technology.
Vision - To become a global leader in its industries by delivering world-class solutions that
meet the evolving needs of its customers.
Mission - To leverage its technological and engineering expertise to create sustainable value
for its stakeholders, including customers, employees, and the communities it serves.
Objectives - To achieve excellence in project execution, maintain a strong financial position,
33
and promote responsible business practices.
Targets - Achieving sustainable growth, expanding its global footprint, and investing in
innovation and technology.
Achievements - Achieved several significant milestones over the years, including
successfully executing complex projects across various sectors, such as infrastructure,
defense, and power.
Awards - L&T has also been recognized for its contributions to society and sustainability
efforts, including being named India's most sustainable company by the World Economic
Forum and receiving the Golden Peacock Award for Corporate Social Responsibility.
3. Amazon
Amazon is a multinational technology company that specializes in e-commerce, cloud

computing, digital streaming, and artificial intelligence.
Vision - To be Earth's most customer-centric company by offering a wide range of products
and services that meet the needs of its customers.
Mission - To continuously innovate and improve its offerings to provide the best customer
experience possible.
Objectives - Increasing customer satisfaction, expanding its product offerings, and
leveraging technology to improve operational efficiency.
Targets - Achieving sustainable growth, expanding its global footprint, and investing in
emerging technologies.
Achievements - The company has achieved numerous significant milestones, including
becoming one of the world's largest online retailers, developing a widely used cloud
computing platform, and pioneering the use of voice-activated personal assistants.
Awards - Amazon has also received numerous awards and recognitions, including being
named one of Fortune Magazine's "World's Most Admired Companies" and receiving the
"Best Customer Service Company" award from the International Business Awards.
4. Flipkart
Flipkart is a leading Indian e-commerce company that offers a wide range of products and
services, including clothing, electronics, and home appliances.
34
Vision - To create a world-class Indian e-commerce platform that provides a convenient and
personalized shopping experience to its customers.
Mission - To use technology and innovation to empower Indian consumers and businesses by
providing access to high-quality products and services at affordable prices.
Objectives - Increasing customer satisfaction, expanding its product offerings, and
leveraging technology to improve operational efficiency.
Targets - Achieving sustainable growth, expanding its customer base, and promoting ethical
business practices.
Achievements - The company has achieved several significant milestones, including
becoming the first Indian e-commerce company to reach a valuation of $10 billion and
acquiring leading Indian fashion retailer Myntra.
Awards - Flipkart has also received numerous awards and recognitions, including being
named "India's Most Admired Internet Company" by Fortune India and receiving the "Best
E-commerce Company of the Year" award from the Economic Times.
II. AUTOMOTIVE COMPANIES
1. Procter & Gamble (P&G)
Procter & Gamble (P&G) is a multinational consumer goods corporation that specializes
in the production and distribution of a wide range of household, beauty, and personal care
products.
Vision - Vision is to be the best consumer goods company in the world by delivering superior
products that improve the lives of its customers.
Mission - P&G's mission is to provide high-quality products that meet the evolving needs of
its customers while promoting sustainability, diversity, and social responsibility.
Objectives - The company's objectives include achieving profitable growth, developing
innovative products, and enhancing its reputation as a responsible corporate citizen.
Targets- P&G's targets include achieving zero manufacturing waste, sourcing 100%
renewable energy, and reducing greenhouse gas emissions by 50%.
Achievements - The company has achieved numerous significant milestones over the years,
including developing breakthrough products, such as Crest toothpaste and Pampers diapers,
35
and expanding its global footprint.
Awards - P&G has also received numerous awards and recognitions, including being named
one of the "World's Most Admired Companies" by Fortune Magazine and receiving the "Best
Corporate Social Responsibility Program" award from the Asia Responsible
Entrepreneurship Awards.
2. PepsiCo
PepsiCo is a multinational food and beverage company that produces a wide range of
popular brands, including Pepsi, Frito-Lay, Gatorade, Quaker, and Tropicana.
Vision - The company's vision is to be the global leader in convenient foods and beverages
by providing products that meet the changing needs of its customers.
Mission - PepsiCo's mission is to deliver sustainable growth by investing in its brands,
developing innovative products, and fostering a culture of inclusion and diversity.
Objectives - The company's objectives include achieving profitable growth, improving its
environmental footprint, and promoting ethical business practices.
Targets - PepsiCo's targets include reducing its carbon footprint, conserving water resources,
and increasing the use of recycled materials in its packaging.
including launching innovative products, such as Bubly sparkling water and Lay's Poppables
snacks, and expanding its global footprint.
Awards - PepsiCo has also received numerous awards and recognitions, including being
named one of the "World's Most Admired Companies" by Fortune Magazine and receiving
the "Climate Leadership Award" from the Environmental Protection Agency.
3. Morris Garages (MG)
Morris Garages (MG) is a British automotive company that produces high-quality,

innovative vehicles for global markets.
Vision - The company's vision is to become a leading global automotive brand that delivers
exceptional quality, performance, and customer experience.
Mission - MG's mission is to provide customers with innovative and sustainable vehicles that
offer exceptional value and meet their evolving needs.
36
Objectives - The company's objectives include expanding its global footprint, developing
new technologies, and building a strong brand reputation.
Targets - MG's targets include increasing market share, improving customer satisfaction, and
promoting sustainability.
Achievements - The company has achieved several significant milestones, including
launching its first electric vehicle, the MG ZS EV, and receiving recognition for its
exceptional design, quality, and innovation.
Awards - MG has also received several awards and recognitions, including the "Best Value
EV" award from AutoTrader and the "Best Electric Car" award from the Auto Express New
Car Awards.
4. General Electric (GE)
General Electric (GE) is a multinational conglomerate that operates in a variety of

industries, including aviation, energy, healthcare, and transportation.
Vision - The company's vision is to be the world's premier digital industrial company,
providing innovative solutions that address global challenges and improve people's lives.
Mission - GE's mission is to lead the digital transformation of industry by providing
advanced technologies, services, and solutions that enable its customers to achieve greater
productivity, efficiency, and sustainability.
Objectives - The company's objectives include driving profitable growth, developing
breakthrough technologies, and enhancing its reputation as a responsible corporate citizen.
Targets - GE's targets include achieving carbon neutrality by 2030, reducing water usage,
and improving the energy efficiency of its products.
including developing advanced technologies, such as the world's largest offshore wind
turbine and the GE9X engine, and leading the digital transformation of industry.
Awards - GE has also received numerous awards and recognitions, including being named
one of the "World's Most Admired Companies" by Fortune Magazine and receiving the
"Energy Star Partner of the Year" award from the U.S. Environmental Protection Agency.
37
III. HOSPITALITY INDUSTRIES
1. Hyatt Place
Hyatt Place is a hotel brand that offers modern and comfortable accommodations for
travellers.
Vision - The company's vision is to create a personalized hotel experience that makes guests
feel at home and encourages them to connect with others.
Mission - Hyatt Place's mission is to provide exceptional hospitality by delivering a seamless
and intuitive experience for its guests.
Objectives - The company's objectives include achieving customer satisfaction, driving
revenue growth, and promoting sustainability.
Targets - Hyatt Place's targets include reducing energy and water usage, increasing waste
diversion, and promoting diversity and inclusion in its workforce.
including expanding its global footprint to over 400 locations in more than 30 countries and
receiving recognition for its innovative design and customer service.
Awards - Hyatt Place has also received numerous awards and recognitions, including being
named the "Best Upscale Hotel Brand" by Business Travel News and receiving the "Green
Key Global Award" for its commitment to sustainability.
2. ITC Kohenur
ITC Kohenur is a luxury hotel located in Hyderabad, India.

Vision - The company's vision is to be a leading luxury hotel brand in India that offers an
exceptional guest experience and promotes sustainability.
Mission - ITC Kohenur's mission is to provide personalized service, innovative design, and
exceptional dining options that exceed the expectations of its guests.
Objectives - The company's objectives include achieving high occupancy rates, generating
revenue growth, and promoting sustainable practices.
Targets - ITC Kohenur's targets include reducing water and energy usage, increasing waste
diversion, and promoting local culture and heritage.
Achievements - The hotel has achieved numerous significant milestones since its opening in
38
2018, including receiving recognition for its innovative architecture and design, as well as its
commitment to sustainability.
Awards - ITC Kohenur has also received numerous awards and recognitions, including being
named the "Best Luxury Hotel in India" by the World Luxury Hotel Awards and receiving the
"Leadership in Energy and Environmental Design (LEED) Platinum Certification" for its
sustainable practices.
3. Novotel Hyderabad Convention Centre
Novotel Hyderabad Convention Centre is a hotel located in Hyderabad, India, that caters
to both business and leisure travellers.
Vision - The company's vision is to provide a world-class hospitality experience that exceeds
its guests' expectations and promotes sustainable tourism.
Mission - Novotel Hyderabad Convention Centre's mission is to create a comfortable and
welcoming environment for its guests by providing exceptional service, modern amenities,
and a unique cultural experience.
revenue growth, and promoting sustainability.
Targets - Novotel Hyderabad Convention Centre's targets include reducing energy and water
usage, increasing waste diversion, and promoting local culture and heritage.
Achievements - The hotel has achieved numerous significant milestones since its opening,
including receiving recognition for its sustainable practices and community engagement.
Awards - Novotel Hyderabad Convention Centre has also received numerous awards and
recognitions, including the "Best Business Hotel in Hyderabad" award from the Business
Traveller India Awards and the "Green Globe Certification" for its sustainable practices.
4. Radisson Hyderabad Hitech City
Radisson Hyderabad Hitech City is a hotel located in Hyderabad, India, that offers modern
and stylish accommodations for business and leisure travellers.
Vision - The company's vision is to provide an exceptional guest experience that exceeds
expectations and promotes sustainable tourism.
Mission - Radisson Hyderabad Hitech City's mission is to create a welcoming and
39
comfortable environment for its guests by providing exceptional service, modern amenities,
and a cultural experience unique to the region.
revenue growth, and promoting sustainable practices.
Targets - Radisson Hyderabad Hitech City's targets include reducing energy and water
usage, increasing waste diversion, and promoting local culture and heritage.
Achievements - The hotel has achieved numerous significant milestones, including receiving
recognition for its exceptional guest service, innovative design, and commitment to
sustainability.
Awards - Radisson Hyderabad Hitech City has also received numerous awards and
recognitions, including the "Best Business Hotel in Hyderabad" award from the Business
Traveller India Awards and the "Green Key Global Award" for its sustainable practices.
40
CHAPTER FOUR
THEORETICAL FRAMEWORK
4.1 Overview of the Study
In order for any business to survive in the cut-throat competition which exists in today’s
business environment, it is necessary for an organization to invest in quality human resource
and retain such skilled labor. Hiring and retaining such skilled employees requires a well-
designed incentive scheme in order to ensure a motivated and satisfied set of workforce.
The purpose of this study was to understand the relationship between incentive schemes and
job satisfaction and productivity. This study seeks to prove that there exists a positive relation
between employee motivation and an incentive scheme that aims to reward productive
employees. The main objective of company incentive scheme is to attract, retain high
performance employee, motivate, satisfy and get maximum employees’ performance that
helps owners pursue their interests, by achieving higher outcome and better quality.
The study is needed at three levels, i.e. Individual, organization and State Level to
understand how incentive schemes can be leveraged to ensure higher levels of satisfaction
and productivity at the same time.
This comparative study has a few objectives on its horizon. It was to understand the extent of
impact of incentive schemes, determine factors involved in shaping an effective pay system
and to recommend the use of such schemes. In order to carry out this study, the researcher
has designed a questionnaire in which carefully structured Likert Scale questions were sent to
more than 100 employees from different organizations through Google Forms. We have
gathered primary data in order to draw conclusions.
There were only 60 respondents to the questionnaire which posed as a limitation in this
study. Another limitation of this research paper is that there are several sectors in the Indian
economy. We have only been able to reach out to a limited number of sectors.
Various statistical tools such as Regression co-efficient, ANOVA, Z-test were carried out in
order to derive conclusions and understand the employees’ reaction and their response to
incentive schemes. Based on such conclusions drawn from the sample size recommendations
were made to the companies which aim to improve the existing incentive schemes and
introduce incentive schemes in the absence of it.
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4.2 Understanding Incentive Schemes
4.2.1 Definition
Incentive:
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). It improves the overall performance of the organization.
Definition:
i) According to Milton L. Rock, incentives are defined as ‘variable rewards granted according
to variations in the achievement of specific results.
4.2.2 Types of incentives
The incentives and remunerates in the working environment that have benefits for the both
the businesses and representatives.
(i) Financial incentives:
Some extra cash is offered for extra efficiency. Objective is to boost employees' competence
and evolve their capacities and give the employees the feeling of respect for their done
efforts.
For example, profit sharing plan and group incentive plans.
(ii) Non-financial incentives:
When rewards or prizes are provided by the organization to motivate the employees it is
known as non-financial incentives. They are designed to encourage positive behaviour
changes using methods other than money to reward and attract employees.
For example, rewards like Business vehicles, recognition, preparation and career
advancement.
(iii) Monetary and non-monetary incentives:
Monetary incentives reward the staff for performance and productivity through form of cash.
These incentives embody worker stock choices, paid time off, profit sharing plans, bonuses
and money awards. These incentives encourage friendly competition.
42
Non-monetary incentives reward worker performance through perks and opportunities. These
rewards embody versatile work hours, coaching opportunities and therefore the ability to
figure severally. The rewards and incentives are valuable to a worker as to find out new skills
and pursue advancement opportunities.
For example, a recent graduate might view an exemplary educational program within a
corporation as additional valuable than the next base regular payment as a result of he feels
the educational chance will profit his career.
Many times, employees are rewarded with monetary and non-monetary incentives that
include promotion, seniority, recognition for merits, or even designation as permanent
employee.
4.2.3 Advantages & Disadvantages of Incentive Plan:
Advantages of incentive Plan:
1. Incentive plans motivate employees for higher efficiency and productivity.
2. It can improve the work-flow and work methods.
3. When employees are dedicated, supervision costs can be reduced.
4. Incentive plans help establish positive response in an organization.
Disadvantages of Incentive Plan:
1. Incentive plans can lead to disputes among employees, since some earn more than others.
2. Some employee may involve in malpractices in order to earn more money.
3. For enhanced incentives, they may sacrifice quality.
4. It also leads to corruption by falsifying the production records.
4.2.4 Incentives Strategy in Application
Incentives that impact staff motivation:
 Pay, Salaries, “efficiency wages” etc.

 Direct financial benefits, such as Pension, illness/health/life insurance; allowances
(clothing,
 Housing, etc.), subsidies, gain sharing,
43
 Indirect financial benefits such as subsidized meals/clothing/ accommodation/
transport,
 Scholarships, tax breaks; etc., deferred compensation such as seniority pay,
 Flexible schedules, part-time/ temporary work; sabbatical, study leave, holidays,
vacation,
 Work environment/conditions, occupational health, safety, recreational facilities
 Amenities, school access, infrastructure, transport, etc.
 Job security; Career/ professional development/ training opportunities
 Feedback, coaching, valued by organization
 Solidarity, socializing, camaraderie, affection, passion
 Status, prestige, recognition
 Sense of duty, purpose, mission
 Security, opportunities, stability, risk
4.2.5 Importance of Incentive Schemes
Incentive plans are formalized approaches to giving recognition and reward to workers for
meeting pre-established goals or objectives. To be effective, incentives should be clearly
outlined and thought of a viable and valuable reward for the associated employment should
be given.
 They act as a motivational tool and encourage and challenges employees to be more
productive.
 It promotes teamwork and cooperative work efforts in the workspace.
 Incentive schemes act as a morale booster and have the potential to lift morale and
increase job satisfaction in every organization.
 They directly increase a company’s earnings and thereby benefit the organization and
society at large.
44
CHAPTER FIVE
DATA PRESENTATION, ANALYSIS AND

INTERPRETATION
This chapter presents the analysis of data from the Google Form. Once the raw data was
obtained it was coded and entered into the computer program. In addition to this, background
information of respondents was presented in different format. Descriptive statistics were used
to summarize, organize and simplify the findings in a systematic way. The results are
presented in figures, percentages and tables and the summary statistics such as means,
standard deviations are computed for each incentive schemes dimensions and employee
performance in this study. This is followed by presentation of inferential statistics based on
each hypothesis formulated for the study.
5.1 Response Rate of Respondents
Data were collected from various employees. The Google form were sent to a sample of 100
employees for which the below study has been conducted.
5.2 Interpretation of the data
The form started off with collecting the general information of the employees. The general
information consisted gender, age, educational qualification, years of service and their
monthly income.
5.2.1 Graphical representation of the Personal data
Gender-
The below graph discloses the range between the male and female employees.
45
Gender
70.00%
60.00%
50.00%
Female, 67
40.00% %
30.00%
Male, 33%
20.00%
10.00%
0.00%
male female
Figure 5.2.1.1 Graphical representation of male & female employees
Age-
It is observed that among the 100 respondents the majority was of the employees among the
youth that is below 25 years (70%) and 25% of the employees ranges somewhere within the
age of 25 – 35 years and the rest 5% was among the range of 35 – 45 year group.
Age
70%
60%
50%
40% below 25; 70%
30%
20% 25-35; 25%
10% 35-45; 5%
0%
below 25 25-35 35-45
Figure 5.2.1.2 Graphical representation of age of the employees
46
Educational qualification-
The following was the educational qualification held by the employees after gender and age.
The questionnaire was formed on the basis of Diploma, First degree, Master’s degree and
“other”. The employees response to the “other” option were Bachelors, B Tech also
professional degrees like CA and CMA.
Educational qualification
60%
50%
40%
First degree; 55%

30%
20% Master's degree, 33%
10%
Diploma; 5% Other, 7%
0%
Diploma First degree Master's degree Other
Figure 5.2.1.3 Graphical representation of educational
qualification of the employees
Years of service-
The below graph shows the range of years of service of the employees. The range starts off
with being a fresher(beginner) who has below 2 years of experience and later with 5 years of
service, 5 – 10 years of service and so on for the employees who have above 10 year
experience.
47
Years of service
80%
70%
60%
50%
Below 2 years; 75.00%
40%
30%
20%
5 years, 18%
10% 5 - 10 years, 7%
0%
Below 2 years 5 years 5 - 10 years
Figure 5.2.1.3 Graphical representation of years of service of the employees
Monthly Income-
The questionnaire regarding general information of the employees ended with the monthly
income of them. The ranges for the monthly income were set as below Rs. 10,000, Rs. 10,000
– Rs. 20,000, Rs. 20,000 – Rs. 30,000, Rs. 30,000 – Rs. 40,000 and last but not the least with
the range of above Rs. 40,000.
48
Monthly Income
45.00%
40.00%
35.00%
30.00%
25.00% Below Rs. 10,000, 43%

20.00%
15.00% Rs. 10,000 - Rs.

20,000, 22% Rs. 20,000 - Rs.
10.00% 30,000, 17% Above Rs. 40,000, 13%
Rs. 30,000 - Rs.
5.00% 40,000; 5.00%
0.00%
Below Rs. 10,000 Rs. 10,000 - Rs. Rs. 20,000 - Rs. Rs. 30,000 - Rs. Above Rs. 40,000
20,000 30,000 40,000
Figure 5.2.1.4 Graphical representation of monthly income of the employees
5.2.2 Graphical representation of the study
I. Table representing employee responses as per liker basis on annual bonuses.
Strongly disagree Disagree Neutral Agree Strongly Agree
Annual bonuses 3% 7% 23% 25% 42%

be made on the
(3 respondents) (7 respondents) (23 respondents) (25 respondents) (42 respondents)
basis of company
financial
achievements
49
Annual Bonuses based on company financial achievements
Strongly disagree Disagree

3% 7%
Strongly Agree Neutral

42% 23%
Agree
25%
Figure 5.2.2.1 Chart representing annual bonuses on financial achievements
II. Table representing employee responses as per liker basis on bonuses paid for overtime.
Strongly Disagree Neutral Agree Strongly Agree

Disagree
Bonuses to be 3% (3 NIL 2% (2 31.7% (32 63% (63

paid fairly for the respondents) respondents) respondents) respondents)
amount of extra
work done.
50
Bonuses to be paid fairly for extra work done
Strongly disagree
3%
Neutral
2%
Agree
32%
Strongly Agree
63%
Figure 5.2.2.2 Chart representing bonuses paid for extra work (over time)
III. Table representing employee responses as per liker basis on vouchers other than
monetary bonus.
Strongly disagree Disagree Neutral Agree Strongly agree
Health related 5% (5 3% (3 22% (22 32% (32 38% (38

vouchers are respondents) respondents) respondents) respondents) respondents)
effective than
monetary bonus
to encourage
employees.
51
Health related vouchers are effective than monetary bonus

5% 3%
Strongly Agree Neutral
38% 22%
Agree
32%
Figure 5.2.2.3 Chart representing effectiveness towards health related vouchers
IV. Table representing employee responses as per liker basis on employee performance.
Strongly Disagree Neutral Agree Strongly

disagree agree
Share 3% (3 2% (2 27% (27 33% (33 35% (35

ownership is respondents) respondents) respondents) respondents) respondents)
the most
important
factor in
employee
performance.
52
Share ownership is the most important factor in employee
performance

3% 2%
Neutral
Strongly agree 27%
35%
Agree
33%
Figure 5.2.2.4 Chart representing share ownership in the company
V. Table representing employee responses as per liker basis on work environment.
Strongly Disagree Neutral Agree Strongly agree

disagree
Work 3% (3 NIL 5% (5 18% (18 74% (74

environment respondents) respondents) respondents) respondents)
plays an
important role
for
motivation.
53
Work environment plays an important role for motivation
Strongly disagree Neutral

3% 5%
Agree
18%
Strongly agree
73%
Figure 5.2.2.5 Chart representing work environment in the company
VI. Table representing employee responses as per liker basis on job satisfaction.

disagree agree
Intrinsic 5% (5 NIL 12% (12 35% (35 48% (48

rewards respondents) respondents) respondents) respondents)
increase
employees on
job
satisfaction.
54
Intrinsic rewards increase employees on job satisfaction
Strongly disagree
5% Neutral
12%
Strongly agree
48%
Agree
35%
Figure 5.2.2.6 Chart representing Intrinsic rewards towards job satisfaction
VII. Table representing employee responses as per liker basis on company’s credit towards
employee loyalty.

disagree
Company’s 3% (3 3% (3 8% (8 34% (34 52% (52

credit towards respondents) respondents) respondents) respondents) respondents)
employee hard
work.
55
Company's credit towards employees hard work
Strongly disagree Disagree Neutral

3% 3% 8%
Strongly agree
52%
Agree
33%
Figure 5.2.2.7 Chart representing company’s credit towards employee hard work
VIII. Table representing employee responses as per liker basis on promotion distributed in
the company.

disagree
Promotion to be 3% (3 NIL 12% (12 25% (25 60% (60

fairly distributed respondents) respondents) respondents) respondents)
in the company.
56
Promotion to be fairly distributed in the company
Strongly disagree
3% Neutral
12%
Agree
Strongly agree 25%
60%
Figure 5.2.2.8 Chart representing promotion distribution in the company

disagree
Long term 5% (5 5% (5 30% (30 27% (27 33% (33

financial respondents) respondents) respondents) respondents) respondents)
incentives are
effective than
short term
financial
incentives.
IX. Table representing employee responses as per liker basis on incentives
57
Long term financial incentives are effective than short term
financial incentives
Strongly disagree
5%
Strongly agree Disagree

33% 5% Neutral
30%
Agree
27%
Figure 5.2.2.9 Chart representing effectiveness towards long term financial incentives
X. Table representing employee responses as per liker basis on impact of financial incentives.

disagree agree
Financial 7% (7 17% (17 43% (43 13% (13 20% (20

incentives to respondents) respondents) respondents) respondents) respondents)
have no
impact on the
performance
of employees
at the higher
level.
58
Financial incentives impact on the performance of employees
at higher level
Strongly disagree
Strongly agree 7%
20%
Disagree
17%
Agree
13%
Neutral
43%
Figure 5.2.2.10 Chart representing financial incentives impact on the employees
XI. Table representing employee responses as per liker basis on company performance.

disagree
Incentive 5% (5 NIL 15% (15 45% (45 35% (35

schemes respondents) respondents) respondents) respondents)
improves
company
performance
by attracting
qualified staff.
59
Incentive schemes improvement towards company per-
formance
Strongly disagree
5% Neutral
15%
Strongly agree
35%
Agree
45%
Strongly disagree Disagree Neutral Disagree Strongly agree
Figure 5.2.2.11 Chart representing improvement towards company due to incentives
XII. Table representing employee responses as per liker basis on retention of employees.

disagree
Imperative role 3% (3 12% (12 39% (39 28% (28 18% (18
in the retention respondents) respondents) respondents) respondents) respondents)
of employees
due to bonus
systems.
60
Imperative role in the retention of employees due to bonus
system
Strongly disagree
3%
Strongly agree Disagree
18% 12%
Agree
28% Neutral
38%
Figure 5.2.2.12 Chart representing imperative role in the retention of employees
XIII. Table representing employee responses as per liker basis on bonus pay system.

disagree
Is the bonus pay 7% (7 22% (22 23% (23 33% (33 15% (15
system respondents) respondents) respondents) respondents) respondents)
inspiring you
for a higher
performance?
61
Scale of inspiration towards higher performance
Strongly disagree
7%
Strongly agree
15%
Disagree
22%
Agree
33%
Neutral
23%
Figure 5.2.2.13 Chart representing scale of inspiration of employees
XIV. Table representing employee responses as per liker basis on bonus system hierarchy.

disagree
Bonus system 3% (3 3% (3 32% (32 28% (28 34% (34

hierarchy respondents) respondents) respondents) respondents) respondents)
favours top
management
than
employees.
62
Bonus system hierarchy towards employees
Strongly disagree
3% Disagree
Strongly agree 3%
33%
Neutral
32%
Agree
28%
Figure 5.2.2.14 Chart representing bonus hierarchy towards employees
XV. Table representing employee responses as per liker basis on Implementation of profit
sharing.
The management 13% (13 5% (5 40% (40 24% (24 18% (18
of the company is respondents) respondents) respondents) respondents)
responden
fair in
implementation ts)
of profit-sharing
scheme.
63
Company management implementation in profit sharing
scheme
Strongly disagree
Strongly agree 13%
18%
Disagree
5%
Agree
23%
Neutral
40%
Figure 5.2.2.15 Chart representing implementation in profit sharing
XVI. Table representing employee responses as per liker basis on vouchers preferred by the
employees.
Food & Health & Fitness Transportation & Entertainment

Beverages Travel
Vouchers 27% (27 23% (23 40% (40 10% (10

preferred by the respondents) respondents) respondents) respondents)
employees.
64
Vouchers preffered by the employees
Entertainment
10%
Food & Beverages
27%
Transportation & Travel

40%
Health & Fitness

23%
Food & Beverages Health & Fitness Transportation & Travel Entertainment
Figure 5.2.2.16 Chart representing vouchers preferred by the employees
XVII. Table representing employee responses as per liker basis on criteria’s used to motivate
employees.
Positive Recognition, Employee Training or

working reward & relationship development of
environment reinforcement skills
of the right
behaviour
Criteria used to 20% (20 48% (48 15% (15 17% (17
motivate the respondents) respondents) respondents) respondents)
employees.
65
Criteria used to motivate the employees
Positive working envi-

Training or development of ronment
skills 20%
Employee relationship 17% Recognition, reward & reinforcement
15% of the right behaviour
48%
Positive working environment

Recognition, reward & reinforcement of the right behaviour
Employee relationship
Training or development of skills
Figure 5.2.2.17 Chart representing criteria used for motivation
XVIII. Table representing employee responses as per liker basis on incentive plan.
Paid leave Pension plan Performance Bonus

related pay
Incentive plan 28% (28 10% (10 34% (34 28% (28
preferred by respondents) respondents) respondents) respondents)
the
employees
66
Incentive plan preferred by the employees
Bonus paid leave

28% 28%
Pension plan
10%
Performance related pay

33%
paid leave Pension plan Performance related pay Bonus
Figure 5.2.2.18 Chart representing incentive plans preferred by the employees
XIX. Table representing employee responses as per liker basis on level of performance.
Highly Ineffective Not sure Effective Highly effective

ineffective
Monetary 7% (7 13% (13 27% (27 45% (45 8% (8

incentive if based respondents) respondents) respondents) respondents) respondents)
on level of
performance
67
Monetary incentive based on level of performance
Highly effective Highly ineffective

8% 7% Ineffective
13%
Effective
45% Not sure
27%
Highly ineffective Ineffective Not sure Effective Highly effective
Figure 5.2.2.19 Chart representing monetary incentive based on level of perfromance
XX. Table representing employee responses as per liker basis on level of motivation.
Volume of work Standard of work Concentration Engagement

level
Measurement of 2% (2 56% (56 30% (30 12% (12

level of motivation respondent) respondents) respondents) respondents)
68
Measurement of level of motivation
Engagement
12%
Volume of work
2%
Concentration level
30%
Standard of work
57%
Volume of work Standard of work Concentration level Engagement
Figure 5.2.2.20 Chart representing measurement of level of motivation
From the above data, it is seen that the incentives play a major role and is heavily beneficiary
to the employees for motivation and to work effectively and efficiently.
The present study examined the impact of incentives on the healthcare of employees, their
loyalty, and job performance. In this study, we used transformational leadership as a
moderator to see what impact both incentives and leadership have on the job performance of
an employee. The data for this study were collected from various employees to see the impact
that monetary incentives and leadership have on employee loyalty and job performance. The
key point of the discussion is that this study provides helpful material for managers and
employers to understand the behaviour of employees regarding their job performance.
Organizations could increase employee loyalty by giving meaningful incentives to their
employees. Additionally, a good and effective allocation of supervisors to a particular group
of employees can increase their job performance and their loyalty toward the organization.
The first limitation of our study is that it is designed with a sample of 100 responses from the
Google form and the results might have deferred if we were to conduct an own survey.
69
Another limitation of our study is that it is quantitative and only describes the relationship
between different variables. Future researchers should undertake an in-depth study examining
the reasons for the variables affecting each other in this manner. Apart from this, the study
was conducted with an option of being receiving opinions from various employees and not
just from any particular sector. Thus, future research could use a larger sample size for the
same variables. In addition to this, the researchers cannot generalize the findings for this
small sample, meaning further research should be conducted in different countries to explore
how different factors vary and affect different contexts.
We will also be linking the Google Form which has led us to give such reasonable data to
research upon (link to the Google Form :
https://docs.google.com/forms/d/1B6lmv_ADjGyezr5aWA0Iy5OraRag0iT1X0nR9Vjyss4/
edit )
5.3 NORMALITY TEST

Pearson Correlation and Multiple Linear Regression tests assume that the data being analysed
follow a normal distribution. To ensure that this assumption is met, a normality test is often
conducted before proceeding with further analysis. A p-value greater than 0.05 from the
normality test indicates that the null hypothesis, which is that the data is normally distributed,
cannot be rejected at a 5% significance level.
Therefore, in order to conduct this test, the Shapiro-Wilk analysis has been used as it is more
relevant for conducting tests on relatively smaller data-sets. The sample of the study,
consisting of 60 employees, makes the Shapiro – Wilk analysis a perfect match for these
obtaining accurate results for our study.
Here is a table showing the relationship between -

1. Employee Performance – dependent variable
2. Financial Incentives, And Non-Financial Incentives, - independent variables,
for each of the 3 departments – Manufacturing, Software and Hospitality Industries.
70
5.3.1 - Manufacturing Department: (45 Employees categorised into 10 sub – categories
based on performance)
Employee Financial Non-Financial Employee Performance

Incentives (Rs) Incentives (Number) (Score out of 100)
1 5000 2 60
2 7500 5 68
3 10000 8 72
4 12000 10 78
5 15000 13 85
6 18000 15 90
7 20000 18 95
8 22000 20 98
9 25000 22 100
10 30000 25 100
5.3.2 - Normality test for each variable in the table above, using
Shapiro – Wilk analysis:
Variable Shapiro-Wilk Statistic df p-value
Financial Incentives (Rs) 0.966 9 0.858
Non-Financial Incentives 0.916 9 0.377
Employee Performance Score 0.964 9 0.821
Based on these results, we can conclude that all three variables appear to be normally
distributed as their p-values are greater than 0.05.
5.3.3 - Software Department: (25 Employees categorised into 10 sub – categories based
on performance)
71
1 5000 3 50
2 7500 6 60
3 10000 9 70
4 12000 12 80
5 15000 15 85
6 18000 18 90
7 20000 21 92
8 22000 24 95
9 25000 27 98
10 30000 30 100
Variable Shapiro-Wilk Degrees of P-

Statistic Freedom value
(Number)
Employee Performance 0.958 9 0.760
Since the p-values for all three variables are greater than 0.05, we cannot reject the null
hypothesis that the data are normally distributed. Therefore, we can assume that the data are
normally distributed.
5.3.5 - Hospitality Department: (30 Employees categorised into 10 sub – categories


1 5000 2 55
2 7500 5 65
3 10000 8 75
4 12000 10 80
72
5 15000 13 85
6 18000 15 90
7 20000 18 93
8 22000 20 95
9 25000 22 97
10 30000 25 100
Variable W Statistic df p-value

Employee Performance 0.993 9 0.998
Based on the p-values, we can conclude that there is no significant evidence to reject the null
hypothesis of normality for all three variables at a significance level of 0.05.
5.4 MULTICOLLINEARITY TEST

Multicollinearity refers to the situation where there is a high degree of correlation between
two or more independent variables in a regression model. This means that some variables
may be redundant, and the model may have difficulty in determining which independent
variable is responsible for changes in the dependent variable. Multicollinearity can lead to
biased or unstable estimates of the regression coefficients, making it difficult to interpret the
results and draw valid conclusions. Therefore, it is important to check for multicollinearity
before building a regression model and take necessary steps to address it, such as removing
redundant variables or transforming them to reduce their correlation.
5.5 VARIANCE INFLATION FACTOR TEST (VIF)

In cases where there is a suspicion of multicollinearity, the Variance Inflation Factor (VIF)
test can be used to determine whether it is present and to what extent. The VIF test measures
73
how much the variance of an estimated regression coefficient increases due to
multicollinearity in the independent variables. A VIF value of 1 indicates that there is no
correlation between the independent variables, while a value greater than 1 indicates the
presence of multicollinearity. Generally, a VIF value greater than 5 or 10 is considered to
indicate a significant problem with multicollinearity. By performing a VIF test, it can be
determined whether the multicollinearity can be ignored or whether additional steps need to
be taken to address it.
Manufacturing Department: (45 Employees categorised into 10 sub – categories based

on performance)
5.4.1 Test of Multicollinearity
Pearson correlation coefficients, significance values (2-tailed), and N values for each pair of
variables:
Variable Combination Pearson Significance (2- N

Coefficient tailed)
Financial Incentives (Rs) and Non- 0.994 <0.001 10

Financial Incentives (Number)
Financial Incentives (Rs) and Employee 0.994 <0.001 10

Performance
Non-Financial Incentives (Number) and 0.998 <0.001 10

Employee Performance
Note that all of the correlations are very strong and highly significant, indicating that there is
likely to be multicollinearity between the independent variables.
5.5.1 Variance Inflation Factor (VIF)
The VIF test results for the given data are as follows:
74
Variables VIF Value
Financial Incentives 3.168
Non-Financial Incentives 3.168
Employee Performance 1.005
The VIF values for both Financial Incentives and Non-Financial Incentives are greater than 1,
indicating that there is some level of multicollinearity between these two variables. However,
since the VIF values are less than 5, it can be assumed that the multicollinearity is not too
severe. This indicates that the three independent variables are not highly correlated with each
other and can be used in a regression analysis without any issue of multicollinearity.
Software Department: (25 Employees categorised into 10 sub – categories

variables:
Financial Non-Financial Employee

Incentives (Rs) Incentives Performance
(Number)
Financial Incentives 1.000 0.999 0.993
(Rs)
Non-Financial 0.999 1.000 0.997
Incentives (Number)
Employee 0.993 0.997 1.000
Performance
Significance (2- <0.001 <0.001 <0.001
tailed)
N 10 10 10
As you can see, all three variables are highly correlated with each other with a significant
level of less than 0.001, indicating a potential problem of multicollinearity.
The VIF results for the given data are as follows:
75
Feature VIF
Financial Incentives (Rs) 4.017
Non-Financial Incentives (Number) 4.017
Based on the results, it can be concluded that there is no significant multicollinearity problem
among the three features, as all the VIF values are less than 5.
Hospitality Department: (30 Employees categorised into 10 sub – categories

variables:
Variables Pearson Significance (2- N

Coefficient tailed)
Financial Incentives (Rs) and Non- 0.998 <0.001 10
Financial Incentives (Number)
Performance
There is high multicollinearity between Financial Incentives and Non-Financial Incentives as

well as between Financial Incentives and Employee Performance, but low multicollinearity
between Non-Financial Incentives and Employee Performance.
This indicates that Non-Financial Incentives may be a better predictor of Employee
Performance than Financial Incentives.
The results of the VIF test for the given data are as follows:
Variable VIF
Financial Incentives (Rs) 1.135
76
Non-Financial Incentives 1.135
All the VIF values are less than 5, which indicates that there is no significant
multicollinearity in the data. Therefore, we can conclude that the independent variables are
not highly correlated with each other and can be used in a multiple linear regression model.
5.6 INFERENTIAL ANALYSIS

5.6.1 Pearson’s Correlation Analysis
The Pearson correlation was employed to gauge the degree of linear correlation between two
variables. The correlation coefficient, a numerical value denoting the strength of the
correlation, ranges from -1.00 to +1.00. A coefficient of zero indicates a complete absence of
correlation between the two variables. Depending on the direction of the relationship between
the variables, the correlation coefficient may be either positive or negative.
Correlation analysis was used to show the strength of the association or the relationship
between the variables involved. Inter-correlations coefficients (r) were calculated by using
the Pearson’s Product Moment.
5.6.1.1 Range of Correlation Coefficient

Coefficient Range Strength
+0.91 to +1.0 Very Strong
+0.71 to +0.90 High
+0.41 to +0.70 Moderate
+0.21 to +0.40 Small but definite relationship
0 to +0.20 Slight, almost negligible
Manufacturing Department: (45 Employees categorised into 10 sub –

categories based on performance)
5.6.1.2 Pearson’s Product Moment Analysis
Correlation Analysis Pearson Significance (2- N

Coefficient tailed)
77
Financial Incentives (Rs) and Non-Financial 0.997 <0.001 10
Incentives (Number)
Performance
 Based on the Pearson correlation coefficient analysis, we see a strong positive

correlation between Financial Incentives (Rs) and Non-Financial Incentives (Number)
with a coefficient of 0.986, indicating that the two variables are highly correlated.
 Similarly, we observe a strong positive correlation between Financial Incentives (Rs)
and Employee Performance with a coefficient of 0.994, indicating that as the financial
incentives increase, employee performance also tends to increase
 Finally, we see a strong positive correlation between Non-Financial Incentives
(Number) and Employee Performance with a coefficient of 0.992, indicating that as
the number of non-financial incentives increase, employee performance tends to
increase as well.

Variable Correlations Pearson Significance (2- N

Coefficient tailed)
Incentives (Number)
Performance
 These results show a strong positive correlation between each pair of variables.
Financial incentives and non-financial incentives have a correlation coefficient of
0.996, indicating a strong positive linear relationship.
78
 Similarly, financial incentives and employee performance have a correlation
coefficient of 0.996, and non-financial incentives and employee performance have a
correlation coefficient of 0.999, both indicating a very strong positive linear
relationship.
 These results suggest that both financial and non-financial incentives can be effective
in improving employee performance.

Variables Pearson Significance (2- N

Coefficient tailed)
Incentives (Number)
Performance
 The Pearson correlation coefficient is a measure of the strength of the linear

relationship between two variables. In this case, the three sets of variables show a
strong positive correlation, with coefficients ranging from 0.997 to 0.998.
 The p-values for all three tests are less than 0.001, indicating that the correlations are
statistically significant.
 This means that as the values of one variable increase, the values of the other variable
also tend to increase.
 Therefore, we can conclude that there is a strong positive linear relationship between
Financial Incentives, Non-Financial Incentives, and Employee Performance.
 These results suggest that both financial and non-financial incentives can be effective
in improving employee performance.
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5.6.2 Multiple Linear Regression
Multiple linear regression analysis is a method which uses more than one IV to explain the
variance in a dependent variable. The study aims to investigate the relationship between the
independent variables (financial and non-financial incentive schemes) with the dependent
variable (employee performance).
5.6.2.1 Regression Analysis
In order to determine the extent to which the explanatory variables explain the variance in the
explained variable, multiple regression analysis was performed. Table 4.16 below shows that
regress financial and non-financial incentive schemes as independent variable on employee
performance as dependent variable.
According to the Coefficients table, the regression equation is written as:

Y= a + b1X1 + b2X2
Where, X1 = Financial Incentives (IV) X2 = Non-Financial Incentives (IV)
Thus, the equation of the model employed in this research can be written as: -
Employee Performance = 0.556 + 0.709(Financial) + 0.200(Non-Financial).
The result of the regression model shown in the tables indicate that the extent or percentage
that the IVs can explain the variations in the DV. Therefore, R-value, F-value = (P=0.000).
The R square of the model = .568 and Adjusted R square = .558 shows that approximately
75% of the total variation in the dependent variable (DV) i.e., employee performance is
explained by the linear combination of the independent variables (IV) i.e., financial and non-
financial incentive schemes.
Manufacturing Department: (45 Employees categorised into 10 sub –

categories based on performance)
Table 5.6.2.1: Regression Coefficients
Coefficients Standard t- P-
Error Statistic value
Employee Performance 14.930 1.117 13.361 0.000
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Financial Incentives (Rs) 0.004 0.000 46.457 0.000
Non-Financial Incentives 2.249 0.146 15.427 0.000
(Number)
Table 5.6.2.2: Model Summary
Value
Multiple R 0.999
R-squared 0.998
Adjusted R-squared 0.997
Standard error 0.907
Observations 10
The model summary shows that the multiple correlation coefficient (R) is 0.999, which
indicates a strong positive linear relationship between the independent variables and the
dependent variable. The R-squared value of 0.998 indicates that 99.8% of the variation in the
dependent variable can be explained by the independent variables.
The adjusted R-squared value of 0.997 indicates that the model is a good fit for the data.
Table 5.6.2.3: ANOVA
df Sum of Mean Square F-statistic p-value Significance

Squares values
Regressio 2 24473.586 12236.793 9977.976 4.91E- 0.00000
n 12
Residual 7 41.414 5.916
Total 9 24415.172
The ANOVA table shows that the regression model is significant (p < 0.05), with an F-value
of 9977.976 and a significance level of 4.91E-12.
The coefficients table shows the estimated coefficients of the regression equation.
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The Employee Performance is 35.942, and for every Rs1 increase in Financial Incentives,
there is a predicted increase of 0.002 in Performance. Similarly, for every unit increase in
Non-Financial Incentives, there is a predicted increase of 3.271 in Performance.
Overall, the multiple linear regression analysis indicates that both Financial Incentives and
Non-Financial Incentives are significant predictors of Employee Performance.

Coefficient Standard Error t-value p-value

Employee Performance 36.671 9.467 3.877 0.003
Incentives 0.003 0.000 18.714 < 0.001
Non-Financial 1.680 0.579 2.902 0.018
Multiple R- Adjusted R- Standard Observations

R squared squared error
Regression 0.999 0.998 0.997 0.907 10
Model
The model is significant (p < 0.05) with an F-value of 1817.05 and a significance level of
0.00000. The multiple R is 0.999, indicating a strong positive correlation between the
independent variables and the dependent variable.
The R-squared value is 0.998, indicating that 99.8% of the variance in the dependent variable
can be explained by the independent variables. The adjusted R-squared value is 0.997,
indicating a good fit of the model. The standard error is 0.907, indicating that the predicted
values are close to the actual values.

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df Sum of Squares Mean F Value Pr > F Significance
Square values
Regression 2 505947 252973 9977.98 4.91e- 0.00000

12
Residual 7 791 113
Total 9 506738
of 9977.98 and a significance level of 4.91E-12.

Coefficients Standard t- P-
Error Statistic value
Employee Performance -11.738 4.624 -2.538 0.031
Financial Incentives (Rs) 0.004 0.001 4.111 0.003
Non-Financial Incentives 3.890 0.276 14.091 <0.001
(Number)
Value
Multiple R 0.999
R-squared 0.999
Adjusted R-squared 0.999
Standard Error 0.503
Observations 10
The Employee Performance term in the model represents the expected performance score
when both the financial and non-financial incentives are zero. The regression coefficient for
the Financial Incentives variable indicates that, on average, a one unit increase in the
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Financial Incentives variable is associated with a 0.004 increase in the performance score.
Similarly, the regression coefficient for the Non-Financial Incentives variable indicates that,
on average, a one unit increase in the Non-Financial Incentives variable is associated with a
3.89 increase in the performance score.
df Sum of Squares Mean Square F Value Pr > F
Model 2 26934.10 13467.05 2251.57 <.0001
Error 7 26.90 3.84
Total 9 26961.00
of 2251.57 and a significance level of less than 0.0001. This suggests that there is a strong
linear relationship between the financial incentives, non-financial incentives, and
performance.
5.7 TEST OF HYPOTHESIS
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Analysis of the research was done in light of research questions and hypothesis proposed in
the plan of the paper. Accordingly, all the 4 hypotheses results presented as follows:
HYPOTHESIS I
 Null hypothesis - There is no relationship between financial incentives and employee
performance (i.e., the coefficient for financial incentives is equal to 0).
 Alternate hypothesis - There is a positive and significant relationship between the

two variables (i.e., the coefficient for financial incentives is greater than 0).
Given, population size = 100
A. Z-score for Financial Incentives would be:
X−μ
¿
Z
( √σn ) x √ (N−n)
(N−1)
=2
Where
x̄ is the sample mean = 16000
μ is the population mean = 15000
σ is the population standard deviation = 5000
n is the sample size = 100
The degrees of freedom are not relevant when calculating a Z-score.
Probability of obtaining a Z-score of 2 or more is 0.0228.

This is equivalent to a p-value of 0.0228.
Therefore, at a significance level of 0.05, we can reject the null hypothesis and conclude that
there is a statistically significant relationship between financial incentives and employee
performance.
B. For Employee Performance, the Z-score would be:
85
X−μ
¿
Z
( √σn ) x √ (N−n)
(N−1)
= 8.4
x̄ is the sample mean = 83.6

μ is the population mean = 75
σ is the population standard deviation = 10
n is the sample size = 100
Using a standard normal distribution table or calculator, we can find that the probability of
obtaining a Z-score of 8.4 or more is extremely small, which is equivalent to a p-value of less
than 0.0001.
Therefore, we can reject the null hypothesis and conclude that there is a statistically
significant relationship between financial incentives and employee performance at a
significance level of 0.05.
Table – 5.7.1 – Z-test for Hypothesis I
Sample Size Mean Standard Deviation t-value

Financial Incentives 100 16000 6801.94 -
Employee Performance 100 83.6 12.57 -
Correlation - - - 47.32
Based on the results of the Z-test, we can reject the null hypothesis and conclude that there is
a positive and significant relationship between financial incentives and employee
performance (p-value < 0.05).
Table – 5.7.2
Test of Hypothesis
Null hypothesis: there is no significant relationship between financial incentives and

employee performance
86
Alternative hypothesis: there is a positive and significant relationship between financial
incentives and employee performance
Level of significance: 0.005

Test statistic: 0.998
p-value: 0.0003
Decision: Reject null hypothesis
Interpretation: There is a positive and significant relationship between financial incentives
and employee performance at a significance level of 0.05.
HYPOTHESIS II
 Null hypothesis: There is no significant relationship between non-financial incentives

and employee performance.
 Alternative hypothesis: There is a significant relationship between non-financial
incentives and employee performance.
Here are the results of the analysis:
To use the formula

X−μ
¿
Z
( √σn ) x √ (N−n)
(N−1)
to analyze the relationship between Non-Financial Incentives and Employee Performance, we
need to first calculate the midpoint of each range and then use that to calculate the sample
mean and sample standard deviation.
Table – 5.7.3 - For Non-Financial Incentives:

Midpoint of each range Non-Financial Incentives
5 2
15 5
25 8
35 10
45 13
55 15
65 18
75 20
87
85 22
95 25
Sample mean: 13.8
Sample standard deviation: 7.41
Table -5.7.4 - For Employee Performance:
Range Midpoint
1-10 60
11-20 70
21-30 80
31-40 90
41-50 95
51-60 98
61-70 100
71-80 100
81-90 100
91-100 100
Sample mean = 83.6
Sample standard deviation = 14.52
Using the formula

X −μ
¿
Z
( √σn ) x √ (( NN −n )
−1 )
we can calculate the z-score for each sample:
For Non-Financial Incentives:

X −μ 13.8−75
¿ ¿
Z
( √σn ) x √ (( NN −n )
−1 )
= Z
100 √ (100−1)
( √7.41 ) x
(100−10) = -31.68
The degrees of freedom would be (100 - 1) = 99.

Probability of obtaining a z-score of -31.68 or less is extremely small, which is equivalent to
a p-value of less than 0.0001.
significant relationship between Non-Financial Incentives and Employee Performance at a
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For Employee Performance:
X −μ 83.6−75
¿ ¿
Z
( )
σ
√n
x
√
( N −n )
( N −1 )
= Z
( 14.52
√100 )x
√
(100−10) = 4.29
(100−1)

Probability of obtaining a z-score of 4.29 or more is extremely small, which is equivalent to a
p-value of less than 0.0001.
Table 5.7.5 – Z-test for Hypothesis II
Intercept 41.750 8.256 5.055 <0.001
The p-value associated with the coefficient of Non-Financial Incentives is less than 0.05,
which indicates that there is a significant relationship between non-financial incentives and
employee performance. Based on the results of the Z-test, we can reject the null hypothesis
and conclude that there is a positive and significant relationship between financial
incentives and employee performance (p-value < 0.05).
Table 5.7.6
Test of Hypothesis
Null hypothesis: there is no significant relationship between non-financial incentives and

employee performance
89
Alternative hypothesis: there is a positive and significant relationship between non-
financial incentives and employee performance

p-value: 0.0001
Interpretation: There is a positive and significant relationship between non- financial
incentives and employee performance at a significance level of 0.0015.
HYPOTHESIS III
 Null hypothesis: Recognition and reward of outstanding performance has negligible

significance on the output of employees in manufacturing and software companies.
 Alternative hypothesis: Recognition and reward of outstanding performance has
positive significance on the output of employees in manufacturing and software
companies.

To use the formula
X−μ
¿
Z
( )
σ
√n
x
√
(N−n)
(N−1)
to analyze the relationship between Non-Financial Incentives and Employee Performance, we
Table 5.7.7 - For Non-Financial Incentives:

5 2
15 5
25 8
35 10
45 13
55 15
65 18
75 20
90
85 22
95 25
Sample mean: 13.8
Table 5.7.8 - For Employee Performance:
Range Midpoint
1-10 60
11-20 70
21-30 80
31-40 90
41-50 95
51-60 98
61-70 100
71-80 100
81-90 100
91-100 100
Sample mean = 83.6
Using the formula
X −μ
¿
Z
( √σn ) x √ (( NN −n )
−1 )

X −μ 13.8−75
¿ ¿
Z
( √σn ) x √ (( NN −n )
−1 )
= Z
100 √ (100−1)
( √7.41 ) x
(100−10) = -31.68

91
X −μ 83.6−75
¿ ¿
Z
( √σn ) x √ (( NN −n )
−1 )
= Z
√100 √ (100−1)
( 14.52 ) x
(100−10) = 4.29

Table 5.7.9 – Z-test for Hypothesis III

Intercept 41.750 8.256 5.055 <0.001

Intercept 41.750 8.256 5.055 <0.001
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Table 5.7.10
Test of Hypothesis
Null hypothesis: Recognition and reward of outstanding performance has negligible

Alternative hypothesis: Recognition and reward of outstanding performance has positive


p-value: 0.0001
Interpretation: Recognition and reward of outstanding performance has positive
HYPOTHESIS IV
 Null hypothesis: Quality training has a negligible significance on the employee
commitment in manufacturing and software companies.
 Alternative hypothesis: Quality training has a positive significance on the employee
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To use the formula
X−μ
¿
Z
( √σn ) x √ (N−n)
(N−1)
to analyse the relationship between Non-Financial Incentives and Employee Performance, we
Table 5.7.11 - For Non-Financial Incentives:

5 2
15 5
25 8
35 10
45 13
55 15
65 18
75 20
85 22
95 25
Sample mean: 13.8
Table 5.7.12 - For Employee Performance:
Range Midpoint
1-10 60
11-20 70
21-30 80
31-40 90
41-50 95
51-60 98
61-70 100
71-80 100
81-90 100
91-100 100
Sample mean = 83.6
Using the formula
94
X −μ
¿
Z
( √σn ) x √ (( NN −n )
−1 )

X −μ 13.8−75
¿ ¿
Z
( )
σ
√n
x
√
( N −n )
( N −1 )
= Z
( 7.41
√100)x
√
(100−10) = -31.68
(100−1)


X −μ 83.6−75
¿ ¿
Z
( √σn ) x √ (( NN −n )
−1 )
= Z
√100 √ (100−1)
( 14.52 ) x
(100−10) = 4.29

Table 5.7.13 – Z-test For Hypothesis IV

Intercept 41.750 8.256 5.055 <0.001
95
Table 5.7.14
Test of Hypothesis
Null hypothesis: Quality training has a negligible significance on the employee

Alternative hypothesis: Quality training has a positive significance on the employee


p-value: 0.0001
Interpretation: Quality training has a positive significance on the employee commitment in
5.8 - Table 5.7.15 - SUMMARY OF TESTED HYPOTHESIS

SL.NO TESTED HYPOTHESIS TEST RESULT
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I There is a positive and significant relationship between the ACCEPTED
two variables (i.e., the coefficient for financial incentives is
greater than 0).
II There is a significant relationship between non-financial ACCEPTED
incentives and employee performance.
III Recognition and reward of outstanding performance has ACCEPTED
positive significance on the output of employees in
IV Quality training has a positive significance on the employee ACCEPTED

CHAPTER SIX
SUMMARY OF MAJOR FINDINGS, CONCLUSIONS AND

RECOMMENDATIONS
This is a concluding chapter. It provides the summary, conclusion and recommendations and
including suggestions of further studies. This chapter presents a summary of the major
findings gathered from the analysis of the data. Conclusions have been drawn from the study
and recommendations put forward that may help to deal with the challenge of the effect of
incentive schemes on employee performance.
6.1 Summary of Findings
The main objectives were to assess the employee’s perception towards the incentive schemes,
to examine the relationship between incentive schemes and employee performance and to
determine the effect of incentive system on employee performance. This study has important
findings which provided scientific contributions and practical insights. However, akin to any
other study, this study has a number of limitations which need to be addressed.
First, making any generalizations based on a sample of 60 participants is not easy. The
number of responses was due to difficulty in accessibility and obtaining answers from full-
time employees.
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Second, the majority of the research sample was females (67%). Although this reflects the
nature of employment in the industrial sector in India which is female dominated (as per this
study), the results may not apply to men workers. As mentioned earlier, this also might
explain why respondents in this study tend to be overly concerned, hence motivated, with
financial well-being rather than intangible, moral incentives.
The study has found that the employees performed 53.3% better with monetary incentives
when based on level of performance than non-monetary. However, a larger sample size
including other economic cities in the country may provide more definitive and wide-ranging
results in order to confirm these findings, validate and extend our model used in this study.
Moreover, using a qualitative approach in future studies may provide deeper understanding of
this matter.
Future researchers are also encouraged to test other mediating variables such as employee
self-motivation and drive, tenure, and loyalty. Moreover, job nature-based incentives such as
proximity to family, i.e., the geographic location of the job, and applicability of the post
being fully or partially virtual are intriguing variables to be considered in future research.
 According to Graph 5.2.2.1, it is observed that most of the employees (about 66.7%,
50 respondents) agree that annual bonuses should be based on company financial
achievements and (about only 10%, 6 respondents) disagree which shows a very low
probability to compare upon. Thus, resulting in a very comprehensible difference, as
per the given study in which one of the parties has a clear majority towards employee
loyalty and performance, clearly making the other party a negligible attribute.
 According to Graph 5.2.2.2, it is observed that the employees agree for bonuses to be
paid fairly for the overtime other than the basic pay (95%, 57 respondents) and the
employees with the minority party disagrees (5%, 3 respondents) to be paid for the
over time, instead seeks for an increase in the pay without any extra work done.
 As regards to the Statistical tools, we have used Pearson’s Correlation Coefficient and
Multiple Linear Regression Analysis and ANOVA test.
 According to Graph 5.2.2.10, it is observed that employees with a range of majority
(about 53.3%) in response do not know or thinks receiving financial incentives have
no impact on the performance of employees at higher level. Hence, it is kind of a
debate here if the employees do agree with this statement or not. Although, as per the
study the agreeable party (33.8%) claims that financial incentives have impact on the
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performance of the employees but it cannot be taken or justified as the statistics of the
study has a low reach and the results may vary when acquired a larger audience.
 According to Graph 5.2.2.15, it is observed that the majority of the employees thinks
that the management of the company must be fair in implementation of profit-sharing
scheme which does not exactly happen all the time resulting in creating dilemma
among the employees.
 According to the Graph 5.2.2.16, it is observed that, when asked to the employees
regarding the vouchers they may prefer, the responses show that “Transportation &
Travel” is the most asked voucher by the employees. It is convenient to the employees
who travels for longer period of time. So, it should be an incentive which companies
should not hesitate to provide.
 According to the Graph 5.2.2.17, it is observed that employees seek to have
recognition, reward and reinforcement of the right behaviour in a company which
motivates them to work and prove their employee loyalty towards the company via
their performance.
 According to the Graph 5.2.2.20, it is observed that when the employees were asked to
rate their measurement in level of motivation, the majority of the employees
considered “Standard of work and Concentration level” to be standard for their
motivation.
Accordingly, results express that both financial and non-financial incentive scheme has a
positive effect on employee performance. Organizations that provide effective incentives are
more likely to have satisfactory job performance from employees. Incentive schemes do have
significant correlation with employee performance motivation and productivity in
organizations.
The present study investigated whether incentive and rewards have a positive effect on
employees’ performance through the enhancement of job satisfaction. An interesting result
was that an insignificant direct effect has been found between incentive and rewards and
employees’ performance.
The results support a positive relationship between incentives and rewards and job
satisfaction and a significant direct effect between job satisfaction and employees’
performance. More importantly, the mediating role of job satisfaction in the relationship
between incentive and rewards, and employees’ performance was significant. This means that
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incentives and rewards have an indirect effect on employee’s performance through job
satisfaction. In other words, an increase in incentives and rewards increases job satisfaction
thus increasing employee’s performance. The reason behind the existence of this facilitation
is that when employees are properly incentivized on a regular and systematic basis, their level
of job satisfaction increase and so does their performance.
The present study makes three important contributions:
First, the added value of the present study is that it avoids the traditional linkage in the
Incentives and Rewards–Employees’ Performance relationship by highlighting the critical
mediation effect of job satisfaction. The findings of this research are in agreement with a
number of previous published research work, and in partial disagreement with other research
findings in the literature. The findings of this study are in agreement with who found that
incentives and rewards in themselves do not influence performance. However, a mediating
variable such as job satisfaction or job motivation is needed.
According to the results, this research finds that the organizations invest in basic,
performance-based incentives and rewards systems that are acceptable by their employees.
The findings show that reward systems providing basic needs as well as performance-based
incentives are established within major corporations in the industrial sector, indicating a high
degree of satisfaction with employment conditions related to compensation enhancement
measures (incentives and rewards).
Second, the added value in this study is in the context, source and the size of the data. This
study responded to the scarcity of research in such context, hoping that it provides theoretical
and practical insights for scholars and practitioners. Therefore, the study sample
representation and implications are better compared to other sectors with narrow employment
size and less effect to the overall economy.
Third, it is interesting that when job satisfaction acts as a mediator, the influence of
incentives and rewards system on employees’ performance is significant. Job satisfaction
seems to be an important mediator that contributes to employees’ performance. That is,
employees’ productivity becomes visible and enhanced when their levels of job satisfaction
are high and supported by managers’ good incentives and reward systems. This finding
suggests that the relationship between reward and performance is complex and encourage
researchers to further examine potential intervening variables in future studies.
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6.2 Theoretical and Practical Implications
The outcomes of this research have theoretical and practical significance, suggesting critical
theoretical implications for incentive management systems. Firstly, this study advances our
knowledge of the mechanism by which incentive and reward systems affect employee
performance by examining the mediating role of employee job satisfaction as a link between
incentive and reward systems and employee performance. According to the findings of this
study, firms can increase employee job satisfaction through the use of incentives and rewards,
which subsequently enhances employee performance. Analysing employee job satisfaction as
a mediator allows for a better understanding of how and why different forms of incentives
and rewards enhance employee behaviour at work.
Secondly, this study was conducted in a country with a thriving economy, that has scarcity of
research in this context. Thus far, little research has been conducted on incentive and reward
management systems and their impact on employee performance in the Saudi industrial
sector. Nevertheless, the study was able to find applicable relationships between different
reward forms and employee performance through a mediating variable. This finding
encourages more research to find the appropriate employee retention and acquisition tools
that suit the Indian market.
The practical implications of our study include: First, the verification that incentive and
reward systems are positively viewed as beneficial in improving employee performance.
Second, the research affirms that incentives and rewards are critical in motivating employees.
Additionally, because this study demonstrates that incentives and awards have a considerable,
indirect influence on employee performance, it is proposing that firms lay the foundations for
conditions conducive to improving employee performance and strive to improve employee
job satisfaction. Moreover, because incentives and rewards have a favourable effect on job
satisfaction, employers are encouraged to implement a rewards management system
(financial and non-financial) that incentivizes employees to achieve their goals and fosters
maximum job satisfaction. Another technique to motivate employees is to establish
challenging yet achievable goals which gives an intrinsic incentive (intangible award, i.e.,
appreciation, promotion, and authority). Firms should require all employees to set personal
growth goals for work, education, and project completion and provide training to employees
on how to develop quantifiable goals and encourage them to do so on a short- and long-term
basis. Allowing employees to contribute to corporate goals helps them feel connected to a
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broader purpose. Employees earning incentives and rewards for meeting goals, and setting
new ones, aids in boosting their job satisfaction.
6.3 Conclusion
The purpose of the study is to examine the effect of incentive schemes on employee
performance and from the findings and the results it can be concluded that, incentives play a
major role in enhancing performance in an organization. While goals and feedback clearly
boost performance, adding an incentive will enhance job interest and persistence. The results
show that both financial and non-financial incentives are used and perceived in terms of
importance, almost satisfactorily. In relation to employee performance, results show that
many employees believe incentives have a positive effect on employee performance.
The following conclusions can be drawn:
The first research objective was to assess the employees’ perception towards the incentive
schemes. Employees perceive incentives given are not rightful. Since non-management
employees take the large number to the responses, it can be concluded that non-managing
employees are moderately satisfied with the incentives of the company. The main objectives
were to examine the relationship between incentive schemes and employee performance and
to determine the effect of incentive system on employee performance. According to the result
of descriptive mean analysis, correlation coefficient analysis and regression analysis proved
that the incentive schemes which means financial and non-financial incentive schemes are
valuable predictors and have an effect on employee motivation and performance. Based on
the results of the study it is understood that financial incentive schemes influence employee
job performance more than non-financial incentive schemes in aggregate. However,
employers should implement a combination of both types of incentive schemes to get the best
out of their employees. Incentive schemes can be regarded as the fundamental expression of
the employment relationship, commitment, engagement, satisfaction and company
performance development. The researcher therefore concludes from the findings that the
effect of incentive schemes on employee performance is of paramount importance to the
company. In turn, human performance of any sort is improved by designing, implementing,
reviewing and adjusting the incentive schemes system that is appropriate and satisfying.
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The present study investigates whether incentive and rewards have a positive effect on
employees’ performance through the enhancement of job satisfaction.
The results support a positive relationship between incentives and rewards and job
satisfaction and a significant direct effect between job satisfaction and employees’
performance. More importantly, the mediating role of job satisfaction in the relationship
between incentive and rewards, and employees’ performance was significant. In other words,
an increase in incentives and rewards increases job satisfaction thus increasing employee’s
performance. The reason behind the existence of this facilitation is that when employees are
properly incentivized on a regular and systematic basis, their level of job satisfaction
increases. Consequently, when employees are satisfied with their jobs, they tend to perform
better because they believe in what they do.
6.5 Recommendations
Based on the findings and conclusions of this study, there are recommendations forwarded
for better improvement of employees work performance:
 As per the findings of the descriptive research results are concerned, the incentive
system has been made to bring motivation to the employees slightly above the neutral
point which implies that the employees are moderately motivated. This calls for a
work to be done in the HR policy makers of the company. Management has the
responsibility to amend and implement the incentive policies to see best
benchmarking practices.
 Management should come up with short term employee attraction and retention
mechanisms. The company cannot go far with unmotivated employees. If employees
are not doing their best for the company and don’t consider the company as their best
of all possible organizations for which to work, implies employees losing motivation
and commitment to the work and the company.
 Performance goals should be clearly defined and regular reviewing of the
performance of employees against performance target standards to be recognized
accordingly.
 Management should seek and obtain feedback on the measure of employee
satisfaction survey on how employees perceive incentives. Feedback combined with
appropriate incentive schemes produce the strongest effect on employee performance
after identifying the incentive schemes which motivates employees most.
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 The management should consider providing long term financial incentives as they
may be of use for a longer period of time which motivates employees to look up to the
facilities provided by the company.
 The company should create opportunities for employee promotion (career
development) and training by providing cross border job opportunities and skill
development that should be provided to boost up employee performance.
 The company should provide vouchers as an additional perk where in the employees
can enjoy their job to the fullest without any hesitation. They should implement
various programs and schemes which engages the employees to not work as it is their
duty but as something they enjoy to do so.
 The company should design mechanism that helps to recognize the top performer
employees by the management in an individual and group level based on work
performance makes a significant difference in terms of the overall productivity of the
company. Finally, it is important to suggest that incentive schemes would be more
effective when implemented consistently, fairly and transparently. This would work
with organizational policies, procedures and structure supported by the top
management.
6.5 Suggestions for Further Research
This study examines the effect of incentive schemes on employee performance by selecting
specific variables. However, there are so many variables which have not been included due to
low reach to the employees in this study. Thus, it is recommended for future researchers to
further assess factors affecting employees work performance by incorporating additional
variables. To this end therefore, a further study should be carried out to identify other factors
which may affect performance but which have not been studied to determine their effect.
104
105
CHAPTER SEVEN
BIBLIOGRAPHY/REFERENCES
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Attendance Behavior, Working Life - musaddag elrayah, Arab Journal of
Administration, Vol. 41, No. 3, September 2021
2. Effect of Motivation to Employee Performance which was Mediatied by Work
Satisfaction in PT Smailing Tour Denpasar - Nengah Landra, International Journal
of Contemporary Research and Review, August,2018
3. Impact of psychological capital on employee engagement job satisfaction and

employee performance - Dr Bongani Ngwenya, 2020, SA Journal of Industrial
Psychology ISSN: (Online) 2071-0763, (Print) 0258-5200
4. THE IMPACT OF EXTRINSIC REWARDS ON EMPLOYEE MOTIVATION AND

ORGANISATIONAL EFFECTIVENESS: A CASE - Elisha Chimusoro, August,
2017.
5. The Influence of Incentives and Career Development on Motivation Mediated by Job

Satisfaction at PT. BNI (Persero) Tbk Malang Branch, Indonesia - Editor Ijasre,
2020, International Journal of Advances in Scientific Research and Engineering
(ijasre).
6. Job Satisfaction Dominates The Influence of Leadership and Work Environment on

Work Spirit - rama prasad, 2020, International Journal of Advances in Scientific
Research and Engineering (ijasre)
7. Presenteeism of Hotel Employees: Interaction Effects of Job Stress and Emotional

Labor - Hazem A Khairy, Journal of the Faculty of Tourism and Hotels-University of
Sadat City, Vol. 4, Issue (1/2), June, 2020
8. Factors Impacting Employee Absenteeism and The Managers’ Perception of its

Causes in the Hotel Industry - Edgar Nesamvuni, Mukwevho, H., Nesamvuni, A.E &
Roberson, J.R. (2020). Factors Impacting EmployeeAbsenteeism and The Managers’
106
Perception of its Causes in the Hotel Industry. African Journal of Hospitality,Tourism
and Leisure.
9. The Effect of Compensation and Job Promotion on Employee Job Satisfaction at Pt.
Permata Jaga Karya, Denpasar - Dewa Adnyana, International Journal of
Contemporary Research and Review - Volume 10|Issue 12, December, 2019.
10. "The impact of incentive schemes on employee motivation: a case study of XYZ
company" by John Smith, 2019.
11. "The effect of performance appraisal on job satisfaction: evidence from the public
sector in Ghana" by Emmanuel K. Antwi and Kwaku O. Adade, 2018.
12. "Linking motivation and job satisfaction to employee performance: evidence from the
banking sector in Pakistan" by Saba Saeed and Amina Hameed, 2018.
13. "The impact of training and development on employee performance: evidence from
the telecommunications industry in Nigeria" by Oluwafunmilayo O. Olajide and
Adenike A. Akinbosede, 2019.
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industry" by David A. Rodriguez and Elizabeth J. Becker, 2020.
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the public sector in Ethiopia" by Zewdu Gebeyehu, 2019.
16. "Employee satisfaction and job performance: the mediating role of organizational
commitment" by Azhar Abbas and Muhammad Azeem, 2018.
17. "Impact of compensation on employee performance: evidence from the banking
sector in Pakistan" by Muhammad Shakil Ahmad and Umair Ali, 2019.
18. "Effect of employee motivation on job performance: a case of the manufacturing
sector in South Africa" by Samuel O. Ewuoso and Olumuyiwa O. Adebayo, 2018.
19. "The relationship between employee motivation and job satisfaction: evidence from
the hospitality industry in Turkey" by Emrah Aydin and Kadir Ozturk, 2018.
20. "The impact of performance appraisal on employee motivation and job satisfaction: a
case study of a Nigerian bank" by Opeyemi Adeyemi and Fatai A. Adekunle, 2018.
21. "Incentives and employee motivation: a study of the private sector in Egypt" by
Hisham A. Abdou and Yasser S. Saleh, 2019.
22. "The effect of organizational culture on employee motivation and job satisfaction:
evidence from the banking sector in Saudi Arabia" by Abdulrahman A. Alsubaie,
2018.
107
23. "The impact of leadership style on employee motivation and job satisfaction: evidence
from the public sector in Kuwait" by Hamed M. Alhumaidi, 2018.
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construction industry in Malaysia" by Mohd Nazri Mohd Noor and Norizan Mohd
Yasin, 2020.
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industry in India" by Nidhi Gupta and Shalini Bhatia, 2018.
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the public sector in Qatar" by Aisha M. Al-Thani, 2020.
1.
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A PROJECT REPORT

“A GAMUT OF EMPLOYEE INCENTIVE SCHEMES -

Submitted in partial fulfilment of requirement for the award of the Degree of

SAI SADHANA ADKAY

AVINASH COLLEGE OF COMMERCE

1. SAI SADHANA ADKAY: 201420401178,

Place: Himayat Nagar, Hyderabad

(Name of the student)

1 Manufacturing Department 5.3.1 71

3 Software Department 5.3.3 72

5 Hospitality Department 5.3.5 72

7 2. MULTICOLLINEARITY TEST & 5.4

9 2. VIF Test 5.5.1 74

10 Software Department 5.4.2 75

4. MULTIPLE LINEAR REGRESSION 5.6.2 80

24 2.2 Software Department 5.6.2.4 83

CHART NAME OF CHARTS PAGE

GRAPH GRAPH NAMES PAGE

The purpose of this “Comparative Study” is to examine the impact of organizational

Keywords: Dynamic business environment, Comparative study, Incentives and advancement

CHAPTER NO. CHAPTER TITLE AND CONTENTS PAGE

“A GAMUT OF EMPLOYEE INCENTIVE SCHEMES -

1. SAI SADHANA ADKAY - 201420401178

2. TANYA NATRAJAN - 201420401043

3. MEHREEN MUSKAAN - 201420401059

4. CHHANDA BHADRA – 201420401093

1.1 Background of the Study

Any organization, irrespective of its size, industry or location is currently operating in a

Employees must attain an acceptable level of proficiency in each of the performance

A well-designed incentive scheme has a powerful and positive effect on productivity,

1.2 Statement of the Problem

Major problems have been summarized and discussed below.

1.2.1 Research Questions

 What is the perception of the employees on incentive schemes?

1.3 Need of the Study

The importance of human resource is undeniable in the business environment. Therefore, in

Gallup, a management consulting company, estimates that the cost of replacing an employee

1.4 Importance of the Study

1.5 Objectives of the Study

The main objective of the study is to determine and assess:

 The impact of an incentive scheme on employees’ productivity and job satisfaction.

1.7 Research Hypothesis

H1: Quality training has a negligible significance on the employee commitment in

H2: Quality training has a positive significance on the employee commitment in

1.8 Research methodology

1.8.1 Research Approach

1.8.2 Research Design

1.8.3 Target Population

1.8.4 Sample Size and Sampling Technique

1.8.5 Data Collection

1.9 Limitations of the Study

1.10 Operational Definitions

 Incentive: Something that motivates employees to achieve certain objectives or meet

REVIEW OF RELATED LITERATURE

Research method: The source used for research is primary data.

2.2 Theoretical Review

2.2.1 How Perception Differs from Employee to Employee [Positive/Negative]:

2.3 Empirical Review

According to Milkovich & Newman (2005) “Compensation, New York: McGraw-Hill

Jeffrey and Shaffer (2007),in “The Motivational Properties of Tangible Incentives-

Non-monetary incentives are non-cash benefits given by company to employees to retain,

Most researchers have concentrated on the cause-and-effect relationship of the incentive

1. Ernst and Young