SAN Institute of Management Sciences

(SIMS), Lahore. Affiliated with

RIPHAH INTERNATIONAL UNIVERSITY,
ISLAMABAD

MBA (HRM), Session (2007-2009)

Presented by:

Usman Babar 27F-603

Abdul Muneeb Arshad 27F-607

Presented to:

Syed Tanvir Hussain Kazmi

Title of the Project
THE IMPACT OF
COMPENSATION, HYGIENE
FACTORS ON MOTIVATION
AND PERFORMANCE
 Introduction

This is a descriptive study looking into the

impact of compensation and hygiene factors
on motivation and performance. Many
researchers have done research on these
variables.
 Importance of the Study
This study will contribute to research and
business communities by expanding the
knowledge base of compensation and
environmental factors in organizations as it

Compensation, Hygiene Factors, Motivation, Job

satisfaction and performance 2009
relates to specific relationships within an
organizational setting. Currently, there is a lack of
research in Pakistan specially the area of
compensation and hygiene factors, with even less
attention to the relationship between compensation,
hygiene factors and motivation, performance.
 Purpose of the Study
The purpose of this study was to gather information about
the compensation, hygiene factors that are used in different
organizations to motivate their employees in order to take
high productivity in limited time. what effect
compensation, hygiene factors, had on employees‘
motivation and performance. The study also gathered
qualitative information about compensation and hygiene
factors and their impact on performance and motivation.
 The Significance of Study
The current study will add the existing
knowledge by signifying:
1. Relationship between compensation and
motivation.
2. Relationship between compensation and
performance.
3. Relationship between motivation and
performance.
4. By looking into the motivation's aspect of
employees performance.
Key terms of the study defined
 Compensation Benefits
When employee's managers do annual employee
performance reviews. The downside of this is that
employees may begin to see it as a given that they will
get a salary increase after each evaluation, and it
ceases to be a motivation to perform better in their
jobs. For this reason, more companies are moving
toward more of a reward-based compensation style,
also called Incentive Compensation.
 Hygiene Factors
Particular factors often caused a worker to feel
unsatisfied with his or her job. These factors
seemed directly related to the person's
environment, for example, the physical
surroundings, other personnel such as
supervisors and even the company itself.

If you make sure the environmental factors are

in place the worker will be more efficient in
terms of performance.
However, the independent drive associated with
motivation may still be lacking. Hygiene might
include:
Policy.
Relationship with supervisor and other managers.
Work conditions.
Physical environment.
Salary.
Company can
Status.
Security.
Relationship with subordinates.
Personal life.
 Motivation
“Predisposition to behave in a purposive
manner to achieve specific, unmet needs”

Motivation is the activation or energization of

goal-oriented behavior. Motivation may be
internal or external. The term is generally used
for humans but, theoretically, it can also be used
to describe the causes for animal behavior as well
 Performance
Performance is the accomplishment of
work assignments or responsibilities and
contributions to the organizational goals,
including behavior and professional
demeanor (actions, attitude, and manner of
performance) as demonstrated by the
employee's approach to completing work
assignments.
 Job Satisfaction
Locke and Lathan (1976) give a comprehensive
definition of job satisfaction as pleasurable or
positive emotional state resulting from the
appraisal of ones job or job experience.

Compensation, Hygiene Factors, Motivation,

Job satisfaction and performance 2009.
 Compensation Benefits and
Motivation
Throughout the ages, pay for performance has been
used to reward both low-level employees as well as
top executives. The upper-left quadrant of the matrix
refers to the empirical literature on incentive
compensation, which tries to answer the question
how incentives can influence behavior, in particular
productivity. A specific subfield, on which empiricists
from various fields such as finance, industrial
organization and organizational behavior have
focused, deals with executive compensation.
 Hypothesis

Ho: There is no relationship between Hygiene

factors and Motivation.

H1: There is a significance relationship

between hygiene factors and performance.
Compensation and performance
Good remuneration has been found over the
years to be one of the policies the organization
can adopt to increase their workers performance
and thereby increase the organizations
productivity. Also, with the present global
economic trend, most employers of labour have
realized the fact that for their organizations to
compete favourably, the performance of their
employees goes a long way in determining the
success of the organization. On the other hand,
performance of employees in any organization is
vital not only for the growth of the organization
but also for the employees.
Frequency table of
Performance
 Valid Cumulative
Frequency Percent Percent Percent
Valid 2.63 1 .4 .8 .8
2.75 1 .4 .8 1.7
4.00 1 .4 .8 2.5
5.13 1 .4 .8 3.4
5.25 1 .4 .8 4.2
5.38 5 2.1 4.2 8.4
5.50 5 2.1 4.2 12.6
5.63 4 1.7 3.4 16.0
5.75 7 2.9 5.9 21.8
5.88 12 5.0 10.1 31.9
6.00 7 2.9 5.9 37.8
6.13 11 4.6 9.2 47.1
6.25 10 4.2 8.4 55.5
6.38 5 2.1 4.2 59.7
6.50 7 2.9 5.9 65.5
6.63 12 5.0 10.1 75.6
6.75 9 3.8 7.6 83.2
6.88 8 3.4 6.7 89.9
7.00 12 5.0 10.1 100.0
Total 119 50.0 100.0
Missing System 119 50.0
Total 238 100.0
 Explanation
The above table shows the frequency of
participants' responses for compensation, the
total number of respondents is 119. From the
whole 12 falls in 7.00, 6.63 and 5.88 that are 5%
of the sample, 11 falls in 6.13 that are 4.6% of the
sample, 10 falls in 6.25 that are 4.2% of the
sample, 9 falls in 6.75 that is 3.8% of the sample,
8 falls in 6.88 that are 3.4% of the sample, 7 falls
in 6.50, 6.00 and 5.75 that are 2.9% of the
sample, 5 falls in 5.38, 5.50 and 6.38 that are 2.1
of the sample, 4 falls in 5.63 that are 1.7% of the
sample, and at the end 1 falls in 2.63, 2.75, 4.00,
5.13, and 5.25 so that are the 0.4% of the whole
sample.
 Summary
This study suggests the positive relationship between
compensation benefits, hygiene factors, motivation
and performance. Pay is a key element in the
management of people. The importance of pay begins
with pay administration that deals accurately and
swiftly with payroll-related matters. The hygiene
factors are also affect able on performance because
better hygiene make employees effective and
motivated so in this study these factors will also
under consideration.
Thank you