(With special reference to DSI company)    DissertationProposalV.M.WarkusMF/2013/3564      Departmentof Management and EntrepreneurshipFacultyof Management and FinanceUniversityof Ruhuna   Contents 1     Introduction/Research Background.

3 1.1      Research Problem.. 5 1.2      Research Questions. 6 1.2.1       General question.

6 1.2.2       Specific question.

6 1.3      Research objectives. 6 1.3.

1       General objective. 6 1.3.2       Specific objective.

6 1.4      Significance of the study. 7 2     Related Literature. 8 2.1      Introduction. 8 2.

2      Definition of the study. 8 2.2.1       Employee retention. 8 2.2.2       Reward.

8 2.3      Theories on study variables. 9 2.4      Prior research on study variables. 10 3     Methodology. 11 4     Conceptual framework.

11 5     Hypothesis development 12 6     Limitations of the study. 12 References. 13  1          Introduction/Research BackgroundEmployeeretention one of the main challenge faced by organisations in the competitiveenvironment(sharon ruvimbo terera, 2014). Frost (2001) statesthat many organisations are in a problem as a result of the competition that ispresent in attracting and retaining highly skilled workers because they fail tomatch the salaries being offered by their competitors or to offer more thantheir competitors.

The challenge for many organisations today is therefore isto come up with an efficient reward strategy for retaining these core employeesfor the success of the organisation. (sharon ruvimbo terera, 2014)Manyorganizations employee retention is a strategic intention. Retention ofcritical skills is a prerequisite to the success of an organization in themedium to long term.

Acquisition of key skills and talent work force animportant aspect of organization success and provides a key competitiveadvantage. Organizations develop various reward strategies and practices toensure that critical human capital resources are not only attracted but alsoretained and fully exploited for the benefit of the organization. (Mark okiny oyoo, 2016)Tocompete successfully in today’s worldwide economy, human capital need to bemotivated by their organisations. As such, certain organisations are employingan extensive range of monetary and non-monetary reward programmes to surgeemployee retention and motivation, thereby enhancing organisationalproductivity and shareholder value. (narsee, 2012)Basedon these reward is exerting considerable influence on employee motivation andretention. “Rewards are all of the employer’s available tools that may be usedto attract, retain, motivate and satisfy employees”. (Armstrong, Human resource management prctice, 2009)”Thereward   is the combination of financialand non-financial rewards available to employees”. Rewards which involve anydirect payments called financial benefit.

For example Basic and variouspayment, Pension, Low interest loan, Insurance, Leave, Allowances. Rewardswhich do not involve any direct payments and often arise from the work itself,called non-financial benefit. For example, achievement, autonomy, recognition,scope to use and develop skills, training, career development opportunities andleadership. (Armstrong, Human resource management prctice, 2009) Everyorganization develops and implements reward strategies that motivate staff toremain in the organization. Organizations should adopt the all-encompassingapproach of total reward, as this is likely to provide a greater attraction andretention to a greater number of employees. Reward is a critical motivatortowards an employee’s choice to remain in an organization.

(Mark okiny oyoo, 2016)Basedon these rewards is one of the major tools available to the employee intentionto retention. The organization will not be able to offer better reward(financial and non-financial) lead to the employee demotivation and increasedemployee turnover. In this study mainly focused “the impact of reward onemployee motivation and retention with reference to D Samson Industries (Pvt) Ltd in Sri Lanka”.

                   1.1        Research ProblemAccordingto (farrisGF) in a competitivebusiness world, more employers are looking at developments in excellence andincrease productivity while decreasing costs. An employee reward program is onemethod of motivating employees to change work routines and key behaviours to benefitan organization.

Reward programs are frequently used by organization to try toretain their employees. Employeeretention one of the main challenge faced by organisations in the competitiveenvironment(sharon ruvimbo terera, 2014). Frost (2001) statesthat many organisations are in a problem as a result of the competition that ispresent in attracting and retaining highly skilled workers because they fail tomatch the salaries being offered by their competitors or to offer more thantheir competitors. The challenge for many organisations today is therefore isto come up with an efficient reward strategy for retaining these core employeesfor the success of the organisation.

(sharon ruvimbo terera, 2014)Managingturnover is huge challenge to be a many organizations. Organizations incur veryhigh costs as a result of voluntary turnover. According to Gering and Conner(2002) retaining good workers is critical to any organization. If anorganization is not able to retain its employees, it will not be able tocapitalize on human assets developed within the organization.(Gering and conner(2002) in sharon ruvimbo terera, 2014)Basedon these any organization, rewards can be used as solution for managingemployee turnover and motivate their workforce.When considerthe rubber industry in Sri Lanka, DSI has become the major manufacturingcompany.

It was established in 1962 by Mr. D.S. Rajapaksa. Its principalbusiness activities are producing and distributing footwear, tyres and otherrubber products.

According to DSI annual report (2015/2016) 456 employees areworking in DSI Company (male employees 360, female employees 96) as well as theemployee turnover rate 1.8(2015/2016) and 1.6(2014/015).As a resultof researches were studies about these type phenomena as an important topic inpast and present scenario. But most findings are done in developed countriesand that are difficult to generalize for developing countries manufacturingindustry.

Further those findings include true different context according tovarious environmental factors such as size and culture of the company,economic, social, geographical and technological factors etc. also thosefindings are done under the various methods and sample so that those findingshave inconsistence. By thisresearch, researcher tries to find how impact of reward on employee motivation and retention with reference toD Samson Industries (Pvt) Ltd in Sri Lanka.

  1.2        Research Questions 1.2.1       General question·        Whatis the impact of financial and non-financial rewards on employee’s motivationand retention? 1.2.

2       Specificquestion·        Whatis the impact of financial rewards on employee’s motivation and retention?·        Whatis the impact of non-financial rewards on employee’s motivation and retention?·        Whatis the impact of financial rewards on employee’s retention?·        Whatis the impact of non-financial rewards on employee’s retention? 1.3        Research objectives 1.3.1       Generalobjective·        Toexamine the impact of financial and non-financial reward on employee’smotivation and retention. 1.

3.2       Specificobjective·        Toexamine the impact of financial reward on employee’s motivation and retention.·        Toexamine the impact of non-financial reward on employee’s motivation andretention.·        Toexamine the impact of financial reward on employee’s retention.·        Toexamine the impact of non-financial reward on employee’s retention.      1.

4        Significance of the studyThisresearch is expected to explore the impactof reward on employee motivation andretention of operational level workers.This study wills Significanceto theresearcher, to the organization, to the country as well as to the futureresearches.Thisstudy researcher can enhance knowledge through reading, analysing, learningabout reward employee motivation and retention and find whether the impact ofreward on employee motivation and retention or not.Thisstudy will be valuable to the management of the organization to identify howimpact of reward on employee motivation and retention. Organization canidentify which type of reward affect to the employee motivation and retention.

These studies will also making a support to adjustment of reward policies and strategiesof the organization.This study wills also being useful to other organizationsthat may be facing similar challenges. In this research finding, conclusionsand recommendations will provide useful information to the organization and helpspolicy makers and planners to ensure that organizationsenhanced output throughintegration of the reward in their operations and successfully face thecompetition and employee turnover.Futureresearcher will benefit from this study as reference for similar studies andresearch in future. This study supportive for future researchers to improvingknowledge and research information can be used when conducting their researchesin future.          2          Related Literature2.1        IntroductionInthis chapter researcher describes about literature part of this research.

Thischapter review the existing literature related to the independent and dependentvariables of this study.Independent variable is concerned reward and dependentvariable is employee retention. In here includeselectedauthors and researchershave proposed theories and concepts of reward, employee retention. Literaturereview includes the Definition of the study,Theories on study variables,andprior research on study variables. 2.2        Definition of the study2.

2.1       EmployeeretentionEncouragingemployees to remain in the organization for a long period of time can be termedas employee retention.(Bidisha Lahkar Das, 2013)Employeeretention is a process in which the employees are encouraged to remain with theorganization for the maximum period of time or until the completion of theproject.(Mark okiny oyoo, 2016)Parkinson(1990) defines employee retention as the efforts by which employers attempt toretain employees in their workforce.(Parkinson (1990) in Mark okiny oyoo, 2016) 2.2.

2       RewardRewardsare all of the employer’s available tools that may be used to attract, retain,motivate and satisfy employees. (Armstrong, Human resource management practice, 2009)Totalreward is the combination of financial and non-financial rewards available toemployees.(Armstrong, Human resource management prctice, 2009).2.2.

2.1      FinancialRewardsRewardswhich involve any direct payments called financial benefit. For example Basicand various payment, Pension, Low interest loan, Insurance, Leave, Allowances.(Armstrong, Human resource management prctice, 2009)Thefinancial rewards are pay, bonuses, fringe benefits, transportation facility,medical facility, health and life insurance and benefits like vacation with paymeal facilities.

(Saira Yousaf, 2014)2.2.2.2      Non-financialRewardsRewardswhich do not involve any direct payments and often arise from the work itself,called non-financial benefit. For example, achievement, autonomy, recognition,training, career development opportunities and leadership.

(Armstrong, Human resource management prctice, 2009)Non-financialrewards are those that focus on the needs people have to varying degreesforrecognition, achievement, responsibility, autonomy, influence and personalgrowth.(Armstrong, Reward Management Practice, 2010) 2.3        Theories on study variablesEfficiency wage theoryFirmswill pay more than the market rate because they believe that high levels of paywill contribute to increases in productivity by motivating superiorperformance, attracting better candidates, reducing labour turnover andpersuading workers that they are being treated fairly.

(Armstrong, Human resource management prctice, 2009)Frederick Herzberg’s Two-Factor theoryHygienefactors Hygienefactors are those job factors which are essential for existence of motivationat workplace. These do not lead to positive satisfaction for long-term. But ifthese factors are absent if these factors are non-existent at workplace, thenthey lead to dissatisfaction. These factors are extrinsic to work. Hygienefactors are also called as dissatisfies or maintenance factors as they arerequired to avoid dissatisfaction. These factors describe the job environment scenario.

The hygiene factors symbolized the physiological needs which the individualswanted and expected to be fulfilled. Hygiene factors include: Pay, CompanyPolicies and administrative policies, Fringe benefits, Physical Workingconditions Status, Interpersonalrelations, Job Security.(Armstrong, Human resource management prctice, 2009) Maslow’s hierarchy of needsThemost famous classification of needs is the one formulated by Maslow (1954).His theory is one popular and extensively citedtheory of human motivation.

Maslow’s theory is based on Hierarchy of HumanNeeds. (Armstrong, Human resource management prctice, 2009)Physiological needs: Provide lunch breaks, rest breaks, and wages thatare sufficient to purchase the essential goods for human life.Safety Needs: safe working environment, retirement benefits, andthe job security.SocialNeeds: Create a sense of community via team-based projects and social events.Esteem Needs: Recognize achievements to make employees feelappreciated and valued. Self-Actualization: Provide employees a challenge and the opportunity toreach their full career potential and achieve top positions in their life.

2.4        Prior research on studyvariablesInthis study is to investigate the influence of reward systems on retention ofemployees in faith based health organizations in Kenya.The study found out thatthere was a strong and positive correlation between employee retention andintrinsic rewards. There was also a strong and positive correlation between theEmployees’ retention and extrinsic rewards which was an indication thatextrinsic rewards has positive influence on employee retention.The studyconcluded that majority of the respondents indicated that intrinsic, extrinsicas well as career development are important components of employee retention.

(Mark okiny oyoo, 2016)Thisstudy explored the impact of rewards on job satisfaction and employee retentionamong nurses.The study revealed that employee rewards lead to employeeretentionbut however, they do not result in job satisfaction.(sharon ruvimbo terera, 2014)Thisstudy was to examine the effect of compensation packages on employee’s jobperformance and retention in a selected privateUniversity in Ogun State,South-West Nigeria.The results showed strongrelationship between compensationpackages and employees’ performanceand retention. (Omotayo A.

osibanjo, 2014)Theseresearch two studies involving data collect from 583 participants in Hong Kongand 121 participants in china. Result suggested that in Hong Kong, base salary,merit pay, year-end bonus, annual leave, mortgage loan and profit sharing werethe most important factor to retain and motivate employees. In china, basesalary, merit pay, year-end bonus, housing provision, cash allowance, overtimeallowance and individual bonus were the most important factor to retain andmotivate employees.(Randy K. Chiu, 2002)  3          MethodologyThisresearch comprise under descriptive research.

This study purposes to examineimpactof reward on employee motivation and retention of operational levelworkers. The population of study is both permanent male and female operationallevel workers who are working at D Samson Industries (Pvt) Ltd.Self-administered questionnaire used as main data collection methods. In hereindependent variables are financial reward and non-financial reward. Dependantvariable is employee retention.

Multiple regression analysis used to prove thehypothesis of the study. 4          Conceptual frameworkUnderthe Conceptual framework examined impact of rewards (financial andnon-financial) on employee motivation and retention.Conceptual framework hasdeveloped following figure.Thedependent variable is the variable of primary interest to the researcher.According to the study dependant variable was employee retention.

Theindependentvariable is one that influences the dependent variable in either apositive ornegative way. The financial rewards and non-financial rewards were independent variableof the study.Amediating variable (or intervening variable) is one that surfaces between thetime the independent variablesstart operating to influence the dependentvariable and the time their impact is felt on it.The employee motivation was mediatingvariable of the study.

   Financial rewards Non-financial rewards Employee Retention Employee Motivation         5          Hypothesis developmentAccording to the research hypothesisare,·        +H1:Financialrewards are positively impact to the employee’s motivation andretention.·        +H2:Non-financialrewards are positively impact to the employee’s motivation and retention.·        +H3:Financial rewards are positively impact to theemployee’s retention.·        +H4:Non-financial rewards are positively impact to the employee’s retention.  6          Limitations of the study               References Armstrong, M. (2009). Human resource management practice.

Armstrong, M. (2010). Reward Management Practice. Bidisha Lahkar Das, D. M. (2013). Employee Retention.

Business and Management. farrisGF, i. B. (n.d.). motivational factors of employee retention and engagement in organization.

Advances in management and economics. frost in sharon ruvimbo terera, H. n. (2014). The impact of rewards on job satisfactionand employee retention.

Mediterranean journal of social sciences. Gering and conner(2002) in sharon ruvimbo terera, H. n. (2014). The impact of rewards on job satisfaction and employee retention .

Mediterranean journal of social sciences. Mark okiny oyoo, N. k. (2016). Influence of reward sysstem on employee retention in faith based health organizations in kenya. commerce and managment research.

narsee, B. a. (2012). comparing the impact of monetary and non -monetary reward programmes towards employee and organization motivation. Omotayo A.osibanjo, A. A. (2014).

Compensation packages: a strategic tool for employees’ performance and. Journal of Sciences. Parkinson (1990) in Mark okiny oyoo, N. k. (2016). Influence of reward sysstem on employee retention in faith based health organizations in kenya. commerce and managment research.

Randy K. Chiu, V. W.

?M.?P. (2002). Retaining and motivating employees: Compensation preferences in Hong Kong and China.

Saira Yousaf, M. L. (2014). Impact of Financial and non Financial Rewards on Employee Motivation. Middle-East Journal of Scientific Research. sharon ruvimbo terera, H.

n. (2014). The impact of rewards on job satisfactionand employee retention. Mediterranean journal of social sciences.       

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