We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

See Pricing

What's Your Topic?

Hire a Professional Writer Now

The input space is limited by 250 symbols

What's Your Deadline?

Choose 3 Hours or More.
2/4 steps

How Many Pages?

3/4 steps

Sign Up and See Pricing

"You must agree to out terms of services and privacy policy"
Get Offer

The Role Of Compansation On Employee Motivation Essay

Hire a Professional Writer Now

The input space is limited by 250 symbols

Deadline:2 days left
"You must agree to out terms of services and privacy policy"
Write my paper

The banking sector is one fast of the turning sector in the universe including Africa. For case in Ghana the figure of bank employees showed an addition of 62.68 % ( or 4,157 ) from6, 632 at terminal 2001 to 10,789 as at terminal 2007. While twelvemonth 2002 exhibited the lowest growing ( 3.66 % ) in the figure of individuals employed by the industry, 2006 showed the highest growing ( 13.56 % ) in employment ( Amediku, 2008 ) .

The banking sector in Kenya operates in a comparatively deregulated environment. Foreign bank entry was ne’er a significant issue in Kenya, as the banking system after independency consisted merely of foreign-owned Bankss ; their laterality has been eroded since so, but they still account for a significant portion of the system.

Don't use plagiarized sources. Get Your Custom Essay on
The Role Of Compansation On Employee Motivation
Just from $13,9/Page
Get custom paper

A assortment of reforms to the fiscal system were introduced in the early 1980s to the mid-1990s ( Amediku, 2008 ) .

Monetary policy reforms during the 1990s have entailed liberalizing involvement rates and replacing direct controls on loaning with unfastened market operations.

The attempts to heighten the efficiency of intermediation were besides undermined by the presence of big, weak government-owned Bankss, which accounted for most of the banking system ‘s nonperforming loans ( NPLs ) .

The National Bank of Kenya ( NBK, the 6th largest bank ) has been insolvent for many old ages. The Kenya Commercial Bank ( KCB, the 2nd largest ) has fared better, but besides has suffered well from its bad loan portfolio. Brownbridge and Harvey ( 1998 ) happen some grounds that the liberalisation during the 1990s has lead to more vigorous competition among Bankss for sedimentations and in supplying services.

However, it is non clear that the liberalisation has improved the efficiency of recognition allotment in the presence of widespread deformations elsewhere in the economic system.

A authorities elected in December 2002 prepared an economic recovery scheme incorporating of import structural steps for beef uping the fiscal sector, including through keeping free competition among Bankss.

The civil perturbations in Uganda during the 1970s and 1980s led to a important diminution of fiscal intermediation, and fiscal services became concentrated merely in few commercial Bankss in the capital. Aleem and Kasekende ( 2001 ) find that nonprofessional direction became common in fiscal establishments and normal concern subject collapsed. Fiscal repression in the signifier of involvement rate controls and directed recognition contributed to disintermediation ; parallel markets in foreign exchange, trade, and recognition developed ; and the usage of recognition instruments declined.

By 1991 the volume of wide money ( M2 ) stood at merely 6 per centum of GDP. In the early 1990s, the authorities started a comprehensive fiscal system liberalisation plan. The chief aim of the plan, as in Tanzania, was to heighten the efficiency of the fiscal sector and advance economic growing. The authorities decided to cut down its function in the fiscal sector and let the market to play a more significant function in resource allotment. Brownbridge and Harvey ( 1998 ) and Aleem and Kasekende ( 2001 ) supply elaborate descriptions of the fiscal system reform in Uganda and its early consequences.

The first of import fiscal reform steps were introduced in 1992 and included liberalisation of involvement rates, phasing out of subsidies and remotion of directed recognition, leting entry ( and issue ) of Bankss ( including foreign Bankss ) . These steps were complemented by the debut of new legal and regulative model, attempts to beef up banking supervising, and an ascent of market substructure. The authorities bit by bit sold most of its portions in fiscal establishments. The figure of Bankss increased from 9 in 1991 to 20 in 1996, when a biennial moratorium on banking licences was imposed.

While the reforms did better the public presentation and deepness of the fiscal system in Uganda, it is still little even by regional criterions. Weak substructure, debatable legal and institutional environment, and weak recognition civilization continue to halter fiscal sector development. The governments have late tried to turn to of import fiscal sector issues. The banking system has been strengthened by preventative actions by the Bank of Uganda ( BOU ) in shuting four Bankss in 1998-1999.

In Tanzania, hapless public presentation of the state-owned fiscal sector in late eightiess forced the authorities to seek for new policy waies. NPLs were above 65 per centum of the loan portfolio, financial and fiscal operations were non separated, and an appropriate regulative model was losing. In 1990, a particular presidential committee recommended: ( I ) increasing competition by promoting entry of foreign Bankss ; ( two ) beef uping the bing fiscal establishments ; ( three ) developing direction answerability ; and ( four ) retrieving NPLs. Based on these, the authorities has issued a policy statement on fiscal sector reform with the purpose of making a market-based fiscal system, efficient in mobilizing and allocating resources and back uping long-run economic growing. With significant donor support, the reform attempt started in 1991 and has been ongoing since. Domestic fiscal intermediation has been well liberalized.

A new regulative model has been introduced, organisational and fiscal restructuring of the two largest ( once state-owned ) Bankss, the National Bank of Commerce ( NBC ) and the Cooperative and Rural Development Bank, has been implemented, and the sector has been opened to the entry of fiscal services providers.8 The new Banking and Financial Institutions Act approved in the 2nd half of 1991 allowed licensing of new Bankss, including subordinates of foreign Bankss. The liberalisation that took topographic point in Tanzania in the twelvemonth 1992 has made the banking sector a cardinal component to the proviso of employment in the state.

The first major foreign bank ( Standard Chartered ) started operations in 1992, with other international Bankss following — Stanbic ( 1993 ) , Citibank ( 1995 ) , and Barclays ( 2000 ) . Several other smaller foreign Bankss set up their subordinates during 1995-2002. These major reforms have created a new market-based fiscal system and limited direct financial costs, but so far have non yielded an improved entree to fiscal services by economic agents. The loss of convenient entree to banking services, because of the closing of some loss-making

bank subdivisions and through an initial addition in minimal balance demands by some Bankss under new ownership reduced entree to banking services, as witnessed by recent family budget study informations, which show a significant diminution of the figure of family bank histories and loans. The history of non-repayment explains Bankss ‘ slow replacing of the stock of NPLs by new recognition. Alternatively, as discussed in more item below, Bankss have been roll uping extended retentions of authorities paper and off-shore sedimentations in foreign exchange, restricting the sum of recognition available to the private sector.

Having recognized the demand to make an environment more contributing to loaning and fiscal sector development overall, the governments have late introduced wide-ranging reforms in the countries of legal, judicial, and information substructure, including the Land Act 1999 and the Companies Act 2002. Judicial and tribunal reform is one of the basic precedences to which increasing attending is being paid. However, relatively small advancement has been made, with preparation and installations still staying in demand of particular attending. Furthermore, land registers, company registers, and registers of mortgage involvements are inefficient, and considerable betterments are needed before they will supply a utile information footing for recognition determinations.

Banking has proven to be an of import sector as it accounts for 12.1 % of the GDP ( TNBC, 2005 ) . One of the major factors that contributed to this growing was human resource.

These yearss most Bankss do non hold good established policies and patterns associating to employees compensation. The job is that most Bankss have non yet to the full recognize the importance of counterbalancing their employees adequately. For this ground employees still tend to travel on work stoppage as evidenced that took topographic point on 11th August 2007 ( Mkonya, 2007 ) .

The consequence of traveling on work stoppage is that employees lose their occupations as the employer is inclined to end them, but the result in the long tally is that the organisation is forced to enroll new employees ; this consequences into incurring cost on preparation and development. The Former Minister for Labour, Employment and Youth Development, John Chiligati said “ rewards paid by private sector were non merely disturbingly low but besides a disincentive to workers. ” The Minister besides said: “ The Government would wish to see employers and workers ” ( Mkonya, 2007 pg 1 ) . From the Minister ‘s statement it can be deduced that the private sector is non counterbalancing its employees adequately.

Although the authorities of Tanzania has revised assorted labour Torahs in the state and has introduced new Act like the ELRA of 2004, yet most organisations do non decently counterbalance their employees. Inadequate compensation has led to assorted issues like deficiency of motive, occupation dissatisfaction and employee turnover.

In this essay subjects such as motive, occupation satisfaction and employee compensation that were described in the Essay 1, will analyzed in footings of the Banking sector in Tanzania.


As described in the first essay, motive is a psychological procedure that exerts high degree of attempt to make organisational ends conditioning by the attempts to some persons ( Prasad, 2001 ) . The facet of motive has an imperative function in the manner in which the employees perform in the organisation. As discussed in essay one motive has a direct relationship with public presentation. If people do non experience inclined to prosecute themselves in work behavior they will set in necessary attempt to execute good.

However single public presentation besides depends on other factors beside degree of motive. How motive works with other factors in shown in the figure below.








Role of perceptual experience

Sense of competency

Beginning: ( Robins, S 2004 ) .

The facet of compensation has been used as the chief issue of actuating the employees.

Abraham Maslow

With mention to the hierarchy of demand by Abraham Maslow, People ‘s demands differ from one state to another, depending on the degree of development. If an employee is endeavoring to run into the basic demand such as nutrient and shelter, the employer should supply equal wage to enable his employee meet such demands. Some companies besides provide insurance policy to their employees.

Taking Tanzania ‘s banking sector, many transnational Banks such as Barclays bank, metropolis bank and standard chartered bank are giving good wage to their employees ; they besides provide them with topographic points to populate and transit installations. These have made the Bankss extremely executing and many people are interested in those Bankss than other Bankss. The Standard charted bank which is a foreign bank was nominated the best employer due to its good compensation to its employees. In societies where nutrient and shelter is non a job, employees may be motivated by higher degrees of demands such as societal regard and self realization.

Social demands may be satisfied by supplying recreational installations and set uping parties and twenty-four hours out field daies. For illustration CRDB bank invited all its employees with their households a twenty-four hours out at Kunduchi Wet and Wild to observe household twenty-four hours. Most of the companies organize Christmas and New Year parties for the employees and their household. Honoring employees through publicities, supplying position symbols such as a good equipped office, luxury auto will heighten the employees self esteem.

Self realization demands may be satisfied by enriching the occupation and doing it more ambitious. Other methods include set uping a calling way and promoting employees to make their full potency. In contrast to the above Bankss which have participated in the facet of good compensation, employees in organisations that do non counterbalance good hold had troubles in their public presentations. A research conducted by Ali Hussein Parhan at the EXIM Bank in Tanzania concluded that the employees become motivated to make their work when they believe that they are being adequately compensated.

The survey farther observed that the employees who felt non adequately compensated were likely to go forth the banking sector and travel to other sectors which may be more moneymaking for them. The facet of compensation in the Tanzanian Banking sector is really important as it has a major part in the manner in which the employees operate. The kernel of this is that fact that surveies that have been conducted in similar concern environments `have indicated that if employees are non adequately compensated they do non go satisfied.

These include those surveies conducted by Assy ( 2009 ) and Kimbori ( 2009 ) which showed that bulk of the employees are non satisfied with their occupation due to unequal compensation. A survey by Amediku ( 2008 ) besides showed that the major cause of labour turnover was unequal compensation. A survey conducted by Tahir ( 2008 ) in Pakistan which involved the Pakistan Banking sector concluded that compensation direction had a direct relationship with employee motive and public presentation.

Three Need Theory

In the beginning of 1950, David C. McClelland of Harvard University proposed the three demands theory, which says there are three demands that are major motivations in work. This three demand include: demand for accomplishment ( n Ach ) which is the thrust to stand out, necessitate for power ( n Pow ) which is a demand to do others act in a manner they would non hold behaved otherwise and the demand for association ( n Aff ) .

One of the of import things to observe is that all the demands that McClelland proposed are all under secondary motivations hence these motivations must be learned.

A individual with high demand for accomplishment will be given to be characterized as a individual who wants to take personal duty for happening solutions to jobs, is end oriented, seeks challenges and establishes moderate, realistic and come-at-able ends.

A individual who has high demand to seek power in order to increase influence and power over others tend to be characterized as a individual who is concerned with geting exerting or retaining power or influence over others, likes to vie with others in state of affairss that allow him or her to rule. Harmonizing to McClelland there are to facets of power, positive and negative. Positive usage of power is indispensable if a director is to accomplish consequences through the attempts of others. Negative facet involves utilizing power in order to seek personal benefits which may turn out to detriment the organisation.

A individual who has need for association will be given to be characterized as one who seeks to set up and keep friendly relationships and close emotional relationships with others.

Satisfaction of the above mentioned demands would actuate persons to work. ( Robins, S 2004 ) .

Equity Theory

This theory was developed by J. Stacey Adams. This theory positions motive as being based on equity or equity. This theory attempts to explicate the equity of fiscal inducement programs. Harmonizing to theory of wage a individual looks at relationship between what he/she puts into work and what he/she gets out of it in comparing with that of other workers. We can sum up this theory by looking at the figure below which shows equity theory relationships. Equity exists whenever the undermentioned equation is in balance.

Person A ‘s Outcome = Other worker ‘s Result

Person A ‘s Input Other worker ‘s Input

Beginning: hypertext transfer protocol: //faculty.valenciacc.edu/srusso/chapter10.htm

If one side of the equation is greater than the other equity would non be and therefore when the worker sees this state of affairs he/she would desire to cut down his or her feeling of equity. This theory predicts that one time the employee feels he/she is overpaid on incentive programs therefore he/she will increase their inputs bring forthing better but fewer points to cut down the equity. The opposite applies when an employee is under paid he/she will raise their input by bring forthing more but lower quality point. ( Robins, S 2004 ) .

Expectancy Theory

In the early 1960s, Victor Vroom applied constructs of behavioural research conducted in the 1930s by Kurt Lewin and Edward Tolman straight to work motive. Basically, Vroom suggested that persons choose work behaviours that they believe lead to results they value.

The Expectancy Theory provinces as follows “ an single tends to move in a certain manner based on the outlook that the act will followed by a given result and on the attraction of that result to the person ”

From the above theory three variables are identified and all the three has interrelationship to one another. These variables are:

Their Anticipation or attempt public presentation linkage: intending the grade to which they believe that seting forth attempt will take to a given degree of public presentation.

Their Instrumentality or performance- reward linkage: intending the grade to which they believe that a given degree of public presentation will ensue in certain results or wagess

Their Valence or attraction of wages: intending the extent to which the expected results are attractive or unattractive.

All three of these factors are expected to act upon motive, so that for an person to be extremely motivated, all three of the constituents of the anticipation theoretical account must be high. And, if even one of these is zero, the individual will non hold motive for the undertaking. Therefore, directors should try, to the extent possible, to guarantee that their employees believe that increased attempt will better public presentation and that public presentation will take to valued wagess. ( Robins, S 2004 ) .

Herzberg ‘s theory of motive

For the instance of Herzberg it is recognized that in order to forestall the return of dissatisfaction, hygiene factors must lift continually. For illustration, a individual who gets a wage rise of 100,000 Tsh a twelvemonth and the undermentioned twelvemonth a rise of 50,000 Tsh will dissatisfy the individual with the 2nd rise because it will about amount to a wage cut.

An effort to actuate workers through human dealingss, pleasant working conditions and improved benefits does non work. The lone true manner to actuate workers is to upgrade their occupations through publicities.

McGregor ‘s theory Y is consistent with the existent concern environment that employees will confront in their day-to-day operations. A director who believes in this theory should make an ambiance which will enable employees to accomplish their personal accomplishments every bit good as organisational ends. He/she should non pull strings employees. Alternatively he/she should let them to take part in affairs associating to their occupations In order to accomplish better consequences.

This theory shows the true nature of worlds in that work is more than a manner of acquiring money. Those people engaged in tiring occupations will go on working so far as their basic demands are satisfied. Today ‘s universe contains worker who are more educated so their predecessors and they are interested in disputing occupations that provide chances for growing. Therefore directors should plan occupations that are more ambitious as this will assist immature coevals in better the calling and derive utile experience.


It is non ever true that merely satisfied employees are the 1s who perform better at work and unrecorded with their occupations with no purposes of traveling out to another organisation, but even the disgruntled employees can be at the same degree public presentation wise merely like the satisfied employees can. The lone difference is that the attempt of the dis-satisfied employees might non last for a long term because one time these employees have found a new possible occupation better than the 1 they hold so they will non waver to travel out.

Although occupation satisfaction decidedly has had an influence on work motive, on the other manus when dissatisfied employees are executing merely every bit good as satisfied/happy employees, the inquiry therefore is what motivates the unsated employees as they do n’t hold any satisfactions to actuate them in executing duties assigned to them? Some among the forces that stimulates the disgruntled employees to execute and go on their stay in the banking sector of Tanzania might be the followers:

High degrees of unemployment and recession.

Organizations excessive control mechanisms.

Family/society force per unit area and personal values.

Absenteeism is a behavior that the banking sector of Tanzania can ne’er extinguish, but they can command and pull off it. To make so, banking sector of Tanzania should non hold absence policies that are so restrictive that they literally force workers to come to work even if they are sick. It is hence necessary for the employees in the Tanzanian Banking sector to recognize that certain degree of absence ( possibly from a high emphasis occupation ) is so functional.

Tanzania is a tropical state this so implies there is high rate of malaria that every Tanzanian is a victim of and this has been the existent cause behind most employees absenteeism from their organisations, hence under state of affairs like this that Tanzania is faced with it is clear that occupation satisfaction wo n’t lend to the decrease of absenteeism most of which is a consequence of malarial.

No affair what employees feel about their occupations if they are attacked by malaria they can non assist it to be off from work and this can be more than one twenty-four hours absence depending on the malaria degree and prescriptions one is utilizing. This is apparent from the this survey ‘s findings where a monolithic per centum ( 87.2 % ) of the respondents stated that their absence was caused by the natural factors which are non adult male made and the chief 1 is likely malaria. ( Quick and Macilk 2004, Sharbrough et al 2006, and Pitt 2009 ) .

Unlike absenteeism, turnover can be reduced by employees being happy/satisfied with the organisations they work for. However the willingness of employees to stay in their occupations is besides affected by external factors to the organisation and this is independent from occupation satisfaction.

One of the most outstanding external factor that today affect the determinations of most employees as to whether they should remain or go forth the banking sector when they are non satisfied with their occupations is the relaxation or trouble involved in happening another occupation and this is a map of the degree of unemployment which is chiefly caused by economic catastrophe that about every state in the today ‘s universe is confronting. Therefore the economic recessions can curtail employees from go forthing when they know happening another occupation can turn out to be a incubus as degree of unemployment remains to be high.

Compensation Schemes

As described in the first essay, compensation is a manner of finding equal and just wage to an employee for his/her part to the organisation ( Gupta, 2006 ) . The different strategies that are exist and have been discussed in essay one included:

Piece Rate: Where workers are paid for each point they produce or for each undertaking completed. This does hold advantages in that workers will work every bit fast as they can to maximise their income, and payment is merely made when work is completed.

Wagess: These are paid on hourly bases, for illustration one may be paid 2000Tshs an hr. There is some security in being paid a pay and those who earn rewards will likely be able to work overtime to increase incomes.

Wages: wages are paid at an one-year rate. Salaried incomes are paid monthly, straight into a bank history.

Net income related wage: Net income related wage links portion of an employee ‘s income to the net incomes of a company.

Bonus strategies: There are a broad assortment of fillip strategies available, each designed to be suited for different employees making different occupations. These strategies include:

Gross saless fillip: This is usually paid if a gross revenues mark has been reached. For gross revenues people this may do up a important portion of their wage.

Performance fillip: This can be paid to an person or on a group or mill broad footing, and is frequently paid for making marks of end product and quality.

Christmas fillip: Often called a 13 month ‘s salary, paid for trueness to the concern. In some states such as Germany virtually all companies will pay a Christmas fillip.

Net income portion: Some concerns will pay a per centum of net incomes to employees. The sum that they receive will usually depend on salary and length of service, so honoring those that had been with the company longest, more.

Fringe Benefits: Other signifiers of fiscal motive include company autos, pension strategies, sickness benefits, subsidized repasts and travel, and staff price reductions.

The Tanzanian banking sector has been shiping on the usage of the few of the mentioned compensation strategies. The Banks that have used more of the strategies mentioned above are the 1s that have performed better as compared top those that have used less.


As concluded in essay one, compensation is important to the well being of an organisation. The latter is that fact that the equal compensation plays a function in guaranting that employers work for the benefit of the organisation, fiscal wage is cardinal in motive and the satisfaction of workers all of which increases the work public presentations in an organisation. The benefits of counterbalancing employees adequately include the undermentioned, equal employee compensation enables the employees to be motivated thereby increasing their productiveness. In a good compensation bundle is besides of import to retain employees in the organisation therefore avoiding cost in preparation and developing new employees.

Surveies have indicated that appropriate employee compensation is related to employee motive, occupation satisfactions every bit good as employee keeping. The relationship between equal employee compensation, employee motive, employee occupation satisfaction and employee keeping have a positive relationship has been scaled to be positive and hence imperative to be for the banking industry to recognize the function of equal employee compensation as it would straight take to employee motive, employee occupation satisfaction and employee keeping in the organisation. The banking sector will thrive if it analyses the methods that it uses for compensation the employees in the Tanzanian context.

Cite this The Role Of Compansation On Employee Motivation Essay

The Role Of Compansation On Employee Motivation Essay. (2018, Apr 15). Retrieved from https://graduateway.com/the-role-of-compansation-on-employee-motivation/

Show less
  • Use multiple resourses when assembling your essay
  • Get help form professional writers when not sure you can do it yourself
  • Use Plagiarism Checker to double check your essay
  • Do not copy and paste free to download essays
Get plagiarism free essay

Search for essay samples now

Haven't found the Essay You Want?

Get my paper now

For Only $13.90/page