ABSTRACT The research focuses on the consequence of different constituents of compensation on motive of employees. Compensation is divided into three basic constituents. viz. Fixed Pay. Flexible Wage and Benefits. Vroom’s Expectancy theory is selected for mensurating motive in this research. Two of the esteemed Bankss of the state were selected as the mark for survey viz. ; United Bank limited and Bank of Khyber Ltd. A 20 point questionnaire was developed for the testification of the hypothesis in the survey. One of the aims of the survey was to look into what constituent of Expectancy theory has an consequence on the motive degree of employees ; be it Effort-Performance. Performance-Outcome or Valence of Outcome and secondly to look into what constituent of Compensation Based Pay is set uping motive degree of employees ; Fixed Pay. Flexible Wage or Benefits. Validity of the Questionnaire was tested by utilizing Cronbach’s Alpha. It was calculated to be 0. 832. which by convention is greater than 0. 7 and therefore dependable.

Convenient Sampling was used to garner informations from both the Bankss. A sum of 95 Questionnaires were collected. 45 from United Bank Limited and 51 from Bank of Khyber. Regression and Chi-Square was applied to look into the consequences. Regression established that there is a strong relationship of compensation with motive ; whereas. ChiSquare was used for single relationships of each constituent ( variable ) with motive ( eg: Flexible wage with Valence ) . The consequence showed that employees are non motivated because of believe in their accomplishments neither are they motivated when told that they would be rewarded on the other manus. they get motivated if rewarded by something they value Key words: Compensation. Motivation. Vroom’s Expectancy theory. Fixed Pay. Flexible Wage. Benefits. Expectancy. Performance Outcome. Valence 1. Introduction

Compensation is one of the primary grounds for employees to seek employment. They are rewarded for their services and attempts that they exert for their organisations. They can be compensated in many ways for illustration wages. vacations. fillips etc. There are two basic compensation theoretical accounts ; public presentation based wage and constituents based wage. In the former paradigm. employee’s compensation is either tied to the manner he performs ; if he performs better he would be rewarded consequently ( public presentation based wage ) and on the other manus. non public presentation based wage ; where. employee’s public presentation is non tied to acquiring wagess. instead the employee is paid or rewarded even if its public presentation is non up to the grade e. g fixed wage and wages etc. ( Taylor. F. 1911 ) see diagram-1. The first theoretical account works best in mills and production units where labour is inexpensive and public presentation is tied to the wagess straight. The 2nd theoretical account is used for decennaries in corporate sector. in this theoretical account compensation is divided into three constituents viz. ;

Fixed Pay. Flexible Wage and Benefits ( Beard. 1986 ) . The theoretical account that would be used for this research survey is Compensation Based Pay. Motivation is the thrust of an person to move and accomplish. Psychology gives us different principles sing the nature of motive. For this ground. there are many theories associating to motive. as to what motivates human existences and how to pull strings that procedure for organisational demands. Major theories are Process. Content and Reinforcement motive theories. The theory that is selected for this research is Expectancy motive theory. which is a subtype of Process theory. The theory is about actuating employees based on three of import factors. motive due to self-belief. motive due to outcome and motive due to valency ( Vroom. 1964 ) . Simply. it can be said Motivation = Expectancy X Instrumentality X Valence. Anticipation means that employees will be motivated if they believe their attempt will ensue in public presentation. in other words. if they believe in their accomplishments they will be motivated. On the other manus. Instrumentality means that employees will be motivated if they believe their public presentation will give wagess. This factor determines that trust of employee’s on direction is really of import for their motive. Last. Valence means that employees will be motivated if they are rewarded with wagess they value and non merely any wages.

2. LITERATURE REVIEW 2. 1 Compensation Dessler. ( 2005 ) defines compensation as all signifiers of payments or wagess given to employees which arise from their employment. Compensation can be divided in to assorted parts. One manner is to interrupt it down into three parts viz. . Fixed-Pay. Flexible Wage and Benefits ( Beard. 1986 ) . The other manner is to split Compensation in to two parts. Performance-based wage and Non-performance based wage ( Taylor. F. 1911 ) . First attack of categorization of compensation would be used in this research. In the first categorization. Fixed wage is the compensation given to employees as their base wages e. g publicities. virtue addition and cost of populating addition. These come under fixed wage because all of them become portion of the employee’s base wage after its consequence. Flexible wage consists of two constituents in it self. variable wage and deferred Income.

Variable wage relates to committees. fillips. addition sharing. goal-based wage etc: where. the sum of wage is variable or its distribution is non certain. which is given normally to salespeople. Deferred income is long-run organisation wage strategies e. g. net income sharing. company savings programs employee stock ownerships etc. Finally we have Benefits. which include things like holidaies. ill leave. company auto. company house. rupture wage. medical insurance. retirement benefits etc. Diagram- 1 Compensation Performance Based Pay Performance Based Pay ( Based on new Management Paradigm ) *Commissions *Bonuses *Salespeople *Pieace work program Standard hr program Merit Raise Flexible Pay Variable Pay *Commissions *Bonuses *Gain sharing Deffered Income *Employee *Stockownership *Profit Sharing Benefits *Vacations *Sick Leave *Company Car *Company house *Severance wage *Medical Insurance Benefits NonPerformance Based Pay ( Based on old construct when compensation wasn’t tied to public presentation ) *Monthly Salary *Weekly Wagess

2. 2 Motivation: Motivation is the thrust of a individual to transport out a undertaking which he desires to make so. Some link motive to human basic demands like nutrient ; vesture and shelter ( Maslow 1943. Herzberg 1959 ) other focal points on higher terminal constructs like ; motive due to self-belief etc: ( Vroom. 1964 ) . However. one can state Motivation is the activation of goal-oriented behaviour whether motive is intrinsic or extrinsic. Intrinsic motive is something that comes from within the individual e. g disputing undertaking motivates some people while thirst for acknowledgment motivates others and extrinsic motive is motive caused by external factors e. g wage. fillips etc. The Focus of this research is on extrinsic motive. In the recent times. a batch of research is being done on what makes people motivated and how to actuate them by taking the best option among many? At first employees were considered as a mere mechanical input to the organisational end products ( Taylor. 1911 ) . But after the Hawthorne Studies. conducted by Elton Mayo from 1924 to 1932. this attitude changed and considered human values. dreams. aspirations and needs into history. ( Dickinson. 1973 ) . Following are motivational theories discussed briefly. followed by the theory used in this research ; Vroom’s Expectancy theory.

Vroom’s theory is the most widely used theory for the intents of compensation and motive related work. ( Kanfer. 1990 ) Expectancy theory and equity theory both comes under the Process Motivation theory. Process theory is normally used signifier of scientific research survey in which events are said to be the consequence of certain input taking to a certain result. following a set procedure. Although all of these theories provide great penetration into behaviour at organisations and how to actuate people but they lack research findings and are continued to be tested. However. Victor Vrooms Expectancy theory has a batch of research endorsing about its cogency and its most used theoretical model for work motive related surveies as compared to necessitate. equity or end puting theories. ( Kanfer 1990 ) . ( Pinder. 1984 ) Vroom’s Expectancy theory says that people are motivated when they have a self-belief on their accomplishments. belief in the promises of the direction about acquiring the wages and the personal value they place on a specific wages ( Vroom. 1964 ) .

The self-belief on accomplishments is called “Expectancy” . belief in acquiring the wages is “Instrumentality” and value on the wages is the “Valence” . It is of import to specify each term farther in order to be able to understand the hypothesis and theoretical model coming subsequently on. Anticipation: when Employees have a better perceptual experience of their accomplishments they are more likely to seek out hard aims. If they don’t believe in their accomplishments they won’t be motivated. For illustration some one believes in himself ; traveling in forepart of immense audience and presenting a talk so his motive to really make it. would be more. Instrumentality: if employee’s belief that they will be rewarded for their attempts they will be motivated to execute. Directors need to be honorable and nonsubjective about what they can supply as a wages and to whom they can supply. Otherwise employees will be in province of confusion and won’t be motivated. Valence: Every one topographic point a different value on a certain wages. To some wage is of more value than other wagess and to others more intrinsic wagess like acknowledgment. achievement etc. are of more value. Employer should take a personal involvement in his employees to cognize them better so that he can place which wages he values most. Equation for Vroom’s theory is as follows ;

Motivation = Expectancy X Instrumentality X Valence Expectancy theory remains the most widely used theoretical model for empirical surveies that concern motive and compensation related research ( Kanfer. 1990 ) . That is why this theoretical account is chosen to mensurate the consequence of compensation on Work Motivation as it is the most valid representation of the work-related attitudes ( Pinder. 1984 ) . Nadler & A ; Lawler ( 1977 ) . conducted a research on procedure of motive in relation to compensation and says that motive can be defined in footings of three independent variables: effort-performance anticipation. performance-outcome instrumentality and valency. Last two variables can be farther divided into six more variables three each. i. e. . public presentation fixed wage instrumentality. public presentation flexible wage instrumentality. public presentation benefits. and valency of fixed wage. valency of flexible wage and valency of benefits. Igalens & A ; Roussel ( 1999 ) summed the work of old research workers and came up with model shown in diagram 2. The diagram shows relationship between entire constituents of compensation ( Fixed Pay. Flexible Wage. Benefits ) with Vroom’s Expectancy Theory.

3. Research Frame Work A research design was developed to specify the relationship of compensation with motive. The Compensation Based Pay was incorporated in Expectancy theory. From this three hypotheses of the research were developed. First hypothesis was based on happening the relationship between Effort-Performance and Motivation due to Self-Belief. Second hypothesis was based on happening the relationship between PerformanceOutcome and Motivation due to Outcome. Both the variables were farther divided into three constituents viz. . Fixed Pay. Flexible Wage and Benefits. Finally. the 3rd hypothesis was based on happening the relationship between Valence of Outcome with Motivation due to Outcome. Again. both the variables here were divided into three constituents of Fixed Pay. Flexible Wage and Benefits. See Diagram 3 for illustration of the constructed Research Frame Work. Diagram 3. Research Frame Work

Effort Performance Performance Outcome Performance Fixedpay Performance Flexiblepay Performance Benefits

Motivation due to Self-Belief Motivation due to Outcome Motivation due to Fixed Pay Motivation due to Flexible Pay Motivation due to Benefits

H2

Valence of Outcome Valence Fixedpay

Motivation due to Valence Motivation due to Fixed Pay Motivation due to Flexible Pay Motivation due to Benefits

H3
Valence Flexiblepay Valence Benefits

Vroom’s Theory: Motivation = Expectancy X Instrumentality X Valence Components of Compensation = Fixed Pay. Flexible Wage. Benefits Hypothesis-1 ; relates to the Expectancy portion of Vroom’s theory. Hypothesis-2 ; relates to the Instrumentality portion of Vroom’s theory. Hypothesis-3 ; relates to the Valence portion of Vroom’s theory. In Hypothesis 2 and 3 Components of Compensation are incorporated to be able to mensurate the consequence of single constituents on motive of employees.

Hypothesis 1: More the belief of an employee on his accomplishments more will be his motive degree. There can be two variables in this hypothesis harmonizing to Vroom’s Expectancy theory. One is the independent variable of Effort Performance Expectancy and other is the dependent variable of Motivation due to Self-Belief. Effort Performance Expectancy ? Motivation due to Self-Belief There are four points in the questionnaire related to Effort-Performance Expectancy and one point is related to Motivation due to Self-Belief. Their relationship is tested by Linear Regression. Hypothesis 2: More the employee’s trust on management’s promises to honor him more will be his motive degree. Harmonizing to compensation constituents. wages can be of three types. fixed wage. flexible wage and benefits. Therefore. there is a demand to hold more variables to prove this hypothesis. If the wages is fixed wage. it will actuate employees If the wages is flexible wage. it will actuate employees If the wages is benefits. it will actuate employees ‘Performance Outcome Instrumentality’ is the independent variable which is tested with the dependant variable ‘Motivation due to Outcome’ .

Further. ‘Performance Outcome’ is divided into three constituents viz. . Performance Fixed Pay. Performance Flexible Pay and Performance Benefits. ‘Motivation due to Outcome’ is likewise divided into three constituents viz. . Motivation Fixed Pay. Motivation Flexible Pay and Motivation Benefits. The division is done to look into the consequence of single constituents of compensation on motive. Performance-Outcome Instrumentality ? Motivation due to Outcome Performance-Fixed Pay? Motivation due to Fixed Pay Performance-Flexible Pay? Motivation due to Flexible Pay Performance-Benefits? Motivation due to Profit There are five points related to Performance Outcome including the constituents and four related to Motivation including the constituents. The relationship of Performance-Outcome with Motivation due to Outcome was tested by additive arrested development. The relationships of Components of Compensation with Motivation are tested with Chi square.

Hypothesis 3: If the employee is rewarded with something he values. more will be his motive. For this hypothesis. there is a demand of three constituents every bit good to prove their single consequence on motive. Therefore ; If the wages is fixed wage. it will actuate the employee. If the wages is flexible wage. it will actuate the employee. If the wages is benefits. it will actuate the employee. There are two major variables. One is ‘Valence of Outcome’ which is independent variable and the other is ‘Motivation due to Valence’ which is the dependent variable. There are three variables for the constituents of compensation. viz. Valence of Fixed Pay. Valence of Flexible Pay and Valence of Benefits. Similarly. ‘Motivation due to Valence’ is divided into three constituents viz. . Motivation due to fixed wage. Motivation due flexible wage and Motivation due to benefits. Valence of Outcome ? Motivation due to Valence Valence of Fixed Pay ? Motivation due to Fixed Pay Valence of Flexible Pay ? Motivation due to Flexible Pay Valence of Benefits ? Motivation due to Profit There are four points related to ‘Valence of Outcome’ in the questionnaire. including the points related to constituents and there are four points related to ‘Motivation due to Valence’ . including the points related to constituents.

4. Scope of the Research: The impact of intrinsic factors such as consequence of ‘job satisfaction’ or ‘organizational justice’ on employee’s motive can non be underestimated. However. the range of this survey is limited to mensurating the consequence of compensation ( extrinsic factor ) on motive. The survey uses ‘Expectancy’ theory of Motivation to develop the research design. It focuses on three constituents of Expectancy theory ; Expectancy can besides be called Effort-Performance and Instrumentality can be defined as Performance-Outcome and Valence. 5. MEASUREMENT AND METHODS Convenient Sampling method was used to roll up the information from both the Bankss. There were entire 100 questionnaires distributed in assorted subdivisions of the Bankss in Peshawar. Out of which 95 were returned. 51 were taken from Bank of Khyber ( BOK ) and 45 were taken from United Bank Limited ( UBL ) . The subdivisions of BOK from which information was collected were Saddar Road Branch. University Road Branch. Khyber Bazar and City Branch.

The subdivisions of UBL from which information was collected were University Road Branch. Saddar Road Branch. University Town Branch and Cantt Branch. A clear description and intent of the questionnaire was attached with it to assist out the employees in make fulling out the questionnaire. After informations aggregation. SPSS package was used to analyse informations. respondent’s demographics include ; age. sex. instruction and term of office. Proper independent and dependent variables were made for each point in the questionnaire utilizing five point Likert Scale. They were organized harmonizing to the inquiries asked from the respondents and all were tested utilizing Linear Regression and Chi Square. First four inquiries were related to mensurating Effort-Performance Expectancy. The Question that followed it was related to Motivation due to SelfBelief.