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Research Proposal: The Compensation and Salary Scale, its effect on Job

Satisfaction of Northwestern University Employees

Compensation as a concept according to (Bernadin, 2007) refers to all
forms of financial returns and tangible benefits that employee receives as part
of employment relationship. Compensation as it were is divided into two parts
and these are cash compensation which is the direct pay provided by
employer for work performed by the employee and fringe compensation which
refers to employee benefit programs. Cash compensation has two elements
which include base pay and pay contingent. Base pay has to do with hourly or
weekly wages plus overtime pay, shift differential and uniform allowance while
pay contingent is concerned with performance allowances such as merit
increases, incentive pay bonuses and gain sharing. Fringe compensation on the
other hand refers to employee benefits programs. Fringe compensation also has
two parts to it which are legally required benefit programs and discretional
benefits. Compensation, work environment and other factors influence
employee satisfaction. By balancing pay with other programs, such as career
development opportunities, flexible work schedules and attractive surroundings,
you can improve job satisfaction for your employees in a cost effective manner.
This typically results in improved morale, reduced absenteeism, fewer conflicts
on the job and increased productivity. Increased compensation alone doesnt
always lead to increased job satisfaction. In fact, sometimes a small increase
can actually have a negative effect. To improve the performance of
employees was not only through financial compensation alone but also through
non-financial compensation. In Maslows theory of motivation that financial
compensation is only effective to improve the performance, especially for
employees who are new to the work and the employees received a lower level.
But for long-time employees and employees working at middle to upper levels,
they actually require more nonfinancial compensation. Nonfinancial
compensation in the form of awards for their work performance, providing the
opportunity for self-actualization, etc. In detail, nonfinancial compensation is
comprised of: (a) Employment. Non-financial compensation from the
challenging work tasks interesting, responsibility, and recognition. These
employees tend to prefer jobs that provide an opportunity to assess their ability
to work and challenge in work (b) Work Environment. Non-financial
compensation stemming from the work environment such as social status may
be, the pride of the employees and a pleasant working environment. The
employees care about the working environment both for personal comfort or to
ease the task well. For most employees work also fills the need for social
interaction. Therefore, it can be concluded that co-workers were friendly and
supportive will provide increased job satisfaction. Working environment is the
environment that surrounds the concrete and the abstract one. The work
environment is the closest intended work environment that is directly felt by the
employees in this case are the workers (c) Awards. Awards to employees are
intended, so employees can succeed in implementing the opportunity to
develop their own creative power to the job duties obligations and
responsibilities . This is useful for employees in order to work towards achieving
maximum results as expected. The award was given for the success of
employees who can develop the power of creativity to the task of a good job,
then the company should reward the achievements of employees (d)
Promotion. Progress in this regard is promotion.
A research conducted by Parilla (2011) revealed that in Northwestern
University the main factor of dissatisfaction of employees is its compensation
packages which include both financial and non-financial benefits received by
the employees. However, the same research revealed that employee
engagement and organizational commitment were both in an average level. It
is in this context that the researcher conceptualized this research to know the
effectiveness of the compensation package of Northwestern University and its
effect on job satisfaction.
Theoretical Framework
On Motivation
At a simple level, it seems obvious that people do things, such as go to work, in
order to get stuff they want and to avoid stuff they don't want.
Why exactly they want what they do and don't want what they don't is still
something a mystery. It's a black box and it hasn't been fully penetrated.
Overall, the basic perspective on motivation looks something like this:

In other words, you have certain needs or wants (these terms will be used
interchangeably), and this causes you to do certain things (behavior), which
satisfy those needs (satisfaction), and this can then change which needs/wants
are primary (either intensifying certain ones, or allowing you to move on to other
A variation on this model, particularly appropriate from an experimenter's
or manager's point of view, would be to add a box labeled "reward" between
"behavior" and "satisfaction". So that subjects (or employees), who have certain
needs do certain things (behavior), which then get them rewards set up by the
experimenter or manager (such as raises or bonuses), which satisfy the needs,
and so on.
Motivation is the force that initiates, guides and maintains goal-oriented
behaviors. It is what causes us to take action, whether to grab a snack to
reduce hunger or enroll in college to earn a degree. The forces that lie beneath
motivation can be biological, social, emotional or cognitive in nature.
Researchers have developed a number of different theories to explain
motivation. Each individual theory tends to be rather limited in scope. However,
by looking at the key ideas behind each theory, you can gain a better
understanding of motivation as a whole.
Instinct Theory of Motivation
According to instinct theories, people are motivated to behave in certain ways
because they are evolutionarily programmed to do so. An example of this in the
animal world is seasonal migration. These animals do not learn to do this, it is
instead an inborn pattern of behavior. William James created a list of human
instincts that included such things as attachment, play, shame, anger, fear,
shyness, modesty and love. The main problem with this theory is that it did not
really explain behavior, it just described it. By the 1920s, instinct theories were
pushed aside in favor of other motivational theories, but contemporary
evolutionary psychologists still study the influence of genetics and heredity on
human behavior.
Incentive Theory of Motivation
The incentive theory suggests that people are motivated to do things because
of external rewards. For example, you might be motivated to go to work each
day for the monetary reward of being paid. Behavioral learning concepts such
as association and reinforcement play an important role in this theory of
Drive Theory of Motivation
According to the drive theory of motivation, people are motivated to take
certain actions in order to reduce the internal tension that is caused by unmet
needs. For example, you might be motivated to drink a glass of water in order to
reduce the internal state of thirst. This theory is useful in explaining behaviors that
have a strong biological component, such as hunger or thirst. The problem with
the drive theory of motivation is that these behaviors are not always motivated
purely by physiological needs. For example, people often eat even when they
are not really hungry.
Arousal Theory of Motivation
The arousal theory of motivation suggests that people take certain actions to
either decrease or increase levels of arousal. When arousal levels get too low,
for example, a person might watch and exciting movie or go for a jog. When
arousal levels get too high, on the other hand, a person would probably look for
ways to relax such as meditating or reading a book. According to this theory,
we are motivated to maintain an optimal level of arousal, although this level
can vary based on the individual or the situation.
Humanistic Theory of Motivation
Humanistic theories of motivation are based on the idea that people also have
strong cognitive reasons to perform various actions. This is famously illustrated in
Abraham Maslow's hierarchy of needs, which presents different motivations at
different levels. First, people are motivated to fulfill basic biological needs for
food and shelter, as well as those of safety, love and esteem. Once the lower
level needs have been met, the primary motivator becomes the need for self-
actualization, or the desire to fulfill one's individual potential.

Classifying Needs
People seem to have different wants. This is fortunate, because in markets
this creates the very desirable situation where, because you value stuff that I
have but you don't, and I value stuff that you have that I don't, we can trade in
such a way that we are both happier as a result. But it also means we need to
try to get a handle on the whole variety of needs and who has them in order to
begin to understand how to design organizations that maximize productivity.
Part of what a theory of motivation tries to do is explain and predict who has
which wants. This turns out to be exceedingly difficult. Many theories posit a
hierarchy of needs, in which the needs at the bottom are the most urgent and
need to be satisfied before attention can be paid to the others.
Maslow's hierarchy of need categories is the most famous example:

Specific examples of these types are given below, in both the work and
home context. (Some of the instances, like "education" are actually satisfiers of
the need.)
Need Home Job
self- actualization
education, religion,
hobbies, personal
training, advancement,
growth, creativity
esteem approval of family,
friends, community
recognition, high status,
family, friends, clubs
teams, depts, coworkers,
clients, supervisors,
safety freedom from war,
poison, violence
work safety, job security,
health insurance
food water sex Heat, air, base salary

According to Maslow, lower needs take priority. They must be fulfilled
before the others are activated. There is some basic common sense here -- it's
pointless to worry about whether a given color looks good on you when you are
dying of starvation, or being threatened with your life. There are some basic
things that take precedence over all else. Or at least logically should, if people
were rational. But is that a safe assumption? According to the theory, if you are
hungry and have inadequate shelter, you won't go to church. Can't do the
higher things until you have the lower things. But the poor tend to be more
religious than the rich. Both within a given culture, and across nations. So the
theory makes the wrong prediction here.
Or take education: how often do you hear "I can't go to class today, I haven't
had sex in three days!"? Do all physiological needs including sex have to be
satisfied before "higher" needs? (Besides, wouldn't the authors of the Kama
Sutra argue that sex was a kind of self-expression more like art than a
physiological need? that would put it in the self-actualization box). Again, the
theory doesn't seem to predict correctly.
Cultural critique: Does Maslow's classification really reflect the order in which
needs are satisfied, or is it more about classifying needs from a kind of
"tastefulness" perspective, with lofty goals like personal growth and creativity at
the top, and "base" instincts like sex and hunger at the bottom? And is self-
actualization actually a fundamental need? Or just something that can be
done if you have the leisure time?
Alderfer's ERG theory
Alderfer classifies needs into three categories, also ordered hierarchically:
growth needs (development of competence and realization of potential)
relatedness needs (satisfactory relations with others)
existence needs (physical well-being)
This is very similar to Maslow -- can be seen as just collapsing into three tiers. But
maybe a bit more rational. For example, in Alderfer's model, sex does not need
to be in the bottom category as it is in Maslow's model, since it is not crucial to
(the individual's) existence. (Remember, this about individual motivation, not
species' survival.) So by moving sex, this theory does not predict that people
have to have sex before they can think about going to school, like Maslow's
theory does.
Alderfer believed that as you start satisfying higher needs, they become more
intense (e.g., the power you get the more you want power), like an addiction.
Do any of these theories have anything useful to say for managing businesses?
Well, if true, they suggest that
Not everyone is motivated by the same things. It depends where you are
in the hierarchy (think of it as a kind of personal development scale)
The needs hierarchy probably mirrors the organizational hierarchy to a
certain extent: top managers are more likely to motivated by self-
actualization/growth needs than existence needs. (but try telling Bill
Clinton that top executives are not motivated by sex and
Acquired Needs Theory (Mcclellan)
Some needs are acquired as a result of life experiences
need for achievement, accomplish something difficult. as kids
encouraged to do things for themselves.
need for affiliation, form close personal relationships. as kids rewarded for
making friends.
need for power, control others. as kids, able to get what they want
through controlling others. Again similar to maslow and alderfer.
These needs can be measured using the TAT (thematic apperception test),
which is a projection-style test based on interpreting stories that people tell
about a set of pictures.
Cognitive Evaluation Theory
This theory suggests that there are actually two motivation systems: intrinsic and
extrinsic that correspond to two kinds of motivators:
intrinsic motivators: Achievement, responsibility and competence.
motivators that come from the actual performance of the task or job --
the intrinsic interest of the work.
extrinsic: pay, promotion, feedback, working conditions -- things that
come from a person's environment, controlled by others.
One or the other of these may be a more powerful motivator for a given
Intrinsically motivated individuals perform for their own achievement and
satisfaction. If they come to believe that they are doing some job because of
the pay or the working conditions or some other extrinsic reason, they begin to
lose motivation. The belief is that the presence of powerful extrinsic motivators
can actually reduce a person's intrinsic motivation, particularly if the extrinsic
motivators are perceived by the person to be controlled by people. In other
words, a boss who is always dangling this reward or that stick will turn off the
intrinsically motivated people.
Note that the intrinsic motivators tend to be higher on the Maslow hierarchy.
Two Factor theory (Herzberg)
According to Herzberg, two kinds of factors affect motivation, and they do it in
different ways:
hygiene factors. These are factors whose absence motivates, but whose
presence has no perceived effect. They are things that when you take
them away, people become dissatisfied and act to get them back. A
very good example is heroin to a heroin addict. Long term addicts do not
shoot up to get high; they shoot up to stop being sick -- to get normal.
Other examples include decent working conditions, security, pay, benefits
(like health insurance), company policies, interpersonal relationships. In
general, these are extrinsic items low in the Maslow/Alderfer hierarchy.
motivators. These are factors whose presence motivates. Their absence
does not cause any particular dissatisfaction, it just fails to motivate.
Examples are all the things at the top of the Maslow hierarchy, and the
intrinsic motivators.
So hygiene factors determine dissatisfaction, and motivators determine
satisfaction. The two scales are independent, and you can be high on both.
If you think back to the class discussion on power, we talked about a baseline
point on the well-being scale. Power involved a threat to reduce your
well-being, causing dissatisfaction. Hence, power basically works by
threatening to withhold hygiene factors. Influence was said to
fundamentally be about promising improvements in well-being -- when
you are influenced to do something, it is because you want to, not
because you were threatened. Influence basically works by offering to
provide motivators (in Herzberg's terms).
Equity Theory
Suppose employee A gets a 20% raise and employee B gets a 10% raise.
Will both be motivated as a result? Will A be twice as motivated? Will be B be
negatively motivated? Equity theory says that it is not the actual reward that
motivates, but the perception, and the perception is based not on the reward in
isolation, but in comparison with the efforts that went into getting it, and the
rewards and efforts of others. If everyone got a 5% raise, B is likely to feel quite
pleased with her raise, even if she worked harder than everyone else. But if A
got an even higher raise, B perceives that she worked just as hard as A, she will
be unhappy.
In other words, people's motivation results from a ratio of ratios: a person
compares the ratio of reward to effort with the comparable ratio of reward to
effort that they think others are getting.
Of course, in terms of actually predicting how a person will react to a given
motivator, this will get pretty complicated:
1. People do not have complete information about how others are
rewarded. So they are going on perceptions, rumors, inferences.
2. Some people are more sensitive to equity issues than others
3. Some people are willing to ignore short-term inequities as long as they
expect things to work out in the long-term.
On Job Satisfaction
In order for an organization to be successful they must continuously ensure
the satisfaction of their employees. Job satisfaction is defined as "an individual's
reaction to the job experience" (Berry, 1997). There are various components that
are considered to be vital to job satisfaction. These variables are important
because they all influence the way a person feels about their job. These
components include the following: pay, promotion, benefits, supervisor, co-
workers, work conditions, communication, safety, productivity, and the work
itself. Each of these factors figures into an individuals job satisfaction differently.
One might think that pay is considered to be the most important component in
job satisfaction, although this has not been found to be true. Employees are
more concerned with working in an environment they enjoy.
Many theorists have tried to come up with an explanation for why people
feel the way they do in regards to their job. Locke developed the idea known as
discrepancy theory. This theory suggests that a person's job satisfaction comes
from what they feel is important rather than the fulfillment or unfulfillment of their
needs. A person's importance rating of a variable is referred to "how much" of
something is wanted. Discrepancy theory suggests that dissatisfaction will occur
when a person receives less than what they want (Berry, 1997). Here is an
example of one such study done on athletes.

Another theory was developed by Lawler. Lawler believed that job satisfaction
was driven by a motivational framework. This idea deals with how a person
measures job satisfaction based on what they got verses what they feel they
deserved. Satisfaction is determined by the difference between the exact
amount a person received and what they expected. Therefore, dissatisfaction
occurs when a person receives less or more than what was expected.
In order to put job satisfaction in an environmental perspective, Social
Psychologist Bandura developed a theory know as the social influence
hypothesis. This hypothesis describes a social effect where individuals want what
they percieve others around them to want.
The last theory used to explain job satisfaction was proposed by Landy. His
theory is known as the opponent process theory. He suggested that the primary
reaction (the immediate emotional response) combined with the secondary
reaction (the later emotional response) creates a stabilized equilibrium which
results in job satisfaction.
Among the theories of job satisfaction, probably the most widely-known is
the Range of Affect theory, or simply, Affect Theory. The principle behind this
theory is that a persons job satisfaction can depend on two factors: the
expectations he has for a job, and the actual things that he is going to get in
that job. The smaller the gap between these two, the more chances he is
satisfied in his work. The Affect Theory also states that a person prioritizes one
aspect of the job more than the other aspects, and that certain aspect can
affect how satisfied he is. For example, an employee prioritizes social
connections with his colleagues, and when this factor is met appropriately, he
may experience greater job satisfaction.
Dispositional Theory is also a prominent theory in the subject, and among
the other recognized theories of job satisfaction, it is probably the only one that
focuses solely on the natural disposition of a person. This theory states that ones
personality is an important determinant of the satisfaction level the person gets
from the job. From example, an introverted person who may be inclined to have
a lower self-esteem may experience a low job satisfaction. A person, however,
who has an internal locus of control and believes he is the captain of his own
ship may have a higher level of job satisfaction.
One of the theories of job satisfaction, called the Two-factor Theory,
pointed out two factors that could satisfy and dissatisfy an employee in his job.
The first factor would be the motivational factors that would encourage an
employee to have a better work performance, and as a result, attain
satisfaction. These factors can include job promotions, bonuses, and public
recognition. The other factor would be the hygiene factors, which are not
necessarily motivating, but would elicit dissatisfaction if they were inadequate.
Examples of these would be non-financial employee benefits, the companys
policies, and the overall environment of the workplace.
Another theory is the Job Characteristics Model, probably one of the most
job-focused theories of job satisfaction used. This model lists five features of a job
that can affect a person, three of which skill variety, task identity, task
significance can affect an employees perception of how meaningful the
work is. The fourth characteristic would be autonomy; the more
independence an employee experiences, more feelings of responsibility will
occur. The last factor is feedback or evaluation, which puts across how well an
employee does his tasks.
Included in a person's job satisfaction are the rewards for doing the job
and performing it well. If a person is rewarded for high performance or stands to
gain a reward for doing the work, he/she may find the job more satisfying. These
rewards range from improved work environment (a corner office, a nicer chair),
to higher security and more responsibility. Of all of these types of incentives,
money is one of the few that we can quantify and measure. Due to the social
influcence described by Bandura, money can often have a powerful effect on
job satisfaction regardless of how important a motivator money is to that person.
There are several different ways that pay can be distributed among the
employees and not all of the methods of pay involve simple pay checks! These
systems can be divided up into three different catagories and reflect how the
company is structured and managed.
The first category describes individual pay systems. The second involves
rewarding employees for their hard work. Finally, the third category describes
how employees can be payed as group.
In the category of individual pay, there are currently three major methods of
payment. One of the most frequently used pay systems is the hourly wage.
Employees take home a pay check that reflects how long they were there.
Another common method is salary payment. A person who's salaried, gets paid
for simply holding the job. As long as the job gets done in the end, everyone is
happy. In the category of bonus, there are also three commonly used systems of
pay: profit sharing, ESOP, and cafeteria style. Profit sharing is where the excess
profits of the company are divided equally among the employees for their
bonus. ESOP is a system that gives the employees stock in the company as a
reward. Cafeteria style bonus system lets employees select their reward for hard

Independent Variables Dependent Variables

Intervening Variables

FIGURE 1. Conceptual Framework

Level of Effectiveness of the
Compensation Package in NWU:

a. Policies
b. General Provisions
c. Salary Grade Assignments

Level of Job Satisfaction of NWU

a. Work System
b. Employee Education, training
and Development
c. Employees Well Being
d. Incentive System
e. Leadership

Personal Profile of NWU Employees:

a. Age
b. Gender
c. Civil Status
d. Educational Attainment

Statement of the Problem:
1. What are the personal profile of the NWU employees in terms of:
a. Age;
b. Gender;
c. Civil Status; and
d. Educational Attainment?
2. What is the level of effectiveness of the compensation package in NWU in
terms of:
a. Policies;
b. General provisions; and
c. Salary grade assignments?
3. What is the level of job satisfaction of NWU employees particularly on the
following organizational and economic aspects:
a. Work System;
b. Employee education, training and development;
c. Employees Well Being;
d. Incentive System;
e. Leadership.
4. Is there a significant relationship between job satisfaction and
compensation package given to employees?
5. What are the strategic recommendations to improve the job satisfaction
of NWU employees?
Scope and Delimitation of the Study:
This study will cover Northwestern University wherein respondent samples
will be taken. The respondents will include the deans, directors, heads of offices,
faculty members and rank-and-file employees. This study will focus on the
current compensation package given to employees by the Northwestern
University Management specifically its salary scale and job grades and its fringe
benefits. It will also look at the profile of the respondents in terms of age, gender,
civil status, and educational attainment; their level of job satisfaction in terms of
work system, employees education, training and development, employees well
being, incentive system and leadership.
It will further determine the effect of the moderator variables on the
relationship between the independent and dependent variables.
Significance of the Study
This study is believed to be significant to the administrators as this would
yield to significant information about the level of effectiveness of the
compensation package and level of job satisfaction of NWU employees. This
study will determine if there is a relationship and effect of the compensation
package of Northwestern University to the job satisfaction of its employees. It is
an accepted fact that low job satisfaction causes employees productivity to
decline and it affects their performance thus, knowing the level of job
satisfaction is the first step in developing and improving the productivity of NWU
Definition of Terms
Job Satisfaction. Job satisfaction is how content an individual is with his or her
Compensation. Refers to all forms of financial returns and tangible benefits that
employee receives as part of employment relationship
Motivation. Motivation is the force that initiates, guides and maintains goal-
oriented behaviors.
Salary Scale. The range of salary grades with the corresponding peso equivalent
as payment for the established employment relationship.

A. Related Literature

Compensation Package of Northwestern University (adapted from the HR Policy
Manual, 2012)

High morale and pleasant working relationship are indicators of job
satisfaction. Salaries, compensation and fringe benefits remain to be the
stringent motivating factors that can drive one to excel. Imbued with a
missionary zeal, the work shall force continue to work with commitment and
dedication in the pursuit of mission goals. It has always been the policy of
management to raise salary and benefits due the workforce with or without
mandated orders. Justice and fairness are observed in the disposition of funds
due the workforce.

1. Salaries

1.1 The salary of a faculty member is determined and based on his academic

1.1.1 Full time faculty shall be paid a basic salary provided he is given a
minimum of 24 units load.
1.1.2 Part-time and substitutes shall be paid based on contact hours.

1.2 Rate per hour shall be computed as follows:

Full time
Basic Salary
Rate per hour = 96

Part time

Rate per hour = hourly rate based on rank

1.3 The rate of the non-academic personnel is determined by their job grade

1.3.1 Rate per day/hour shall be computed as follows:

Rate per day = Basic salary
22 days

Rate per hour = Rate per day
8 hours

1.4 Summer Term Salary

The salary of the faculty member who is given nine (9) units teaching loads
shall be paid the basic salary equivalent to a 24 unit teaching load during the
regular semester, while the salary of one with less than nine (9) units shall be a
fraction thereof.

1.5 Overload Pay

Teachers assigned with an additional teaching load (s) shall be entitled to
receive additional compensation equivalent to their rate per unit.

Overload pay is computed based on the following formula:

Overload pay = (contact hours) x (rate per hour)

1.6 13
Month Pay

The 13
month pay is equivalent to 1/12 of the total basic salary received
during the year. For purposes of computing the benefit, the basic pay of an
employee includes all earning paid by his employer for services rendered on
normal working days and hours but does not include cost of living allowance,
profit sharing payments, premium payments, honoraria, or other monetary
benefits which are not considered as part of or integrated into the regular
salary of school personnel.

Overload partakes of the nature o temporary extra assignment and
compensation, hence, excluded in the computation of the 13
month pay.

An employee who has resigned or whose services were terminated at any
time before the time of payment of the 13
month pay is entitled to this
benefit in proportion to the period when the right accrues to the time of his
resignation or termination from employment. However, the benefit shall be
withheld if from the cessation of the employer-employee relationship, he has
existing liability and/or accountability with the University.

1.7 Advance Salary

The Administration may advance the salary of a permanent employee in
case of emergency such as but not limited to sickness or death of an
immediate dependent.

1.8 Overtime

An employee of the university who is officially permitted or required to work
beyond eight (8) hours on ordinary working days must be paid an additional
compensation for the overtime work in an amount equivalent to his regular
wage plus at least twenty-five percent (25%) thereof.

Overload shall only be considered as overtime if it is schedule outside
primetime or outside the ordinary working hours. However, an overload does
not necessarily mean overtime all the time.

1.8.1 Meals and Rest Periods all employees shall be given not less than
one (1) hour time off for regular meals, except in the following
cases when a meal period of not less than twenty (20) minutes may
be given to the employee provided that such shorter meal period is
credited as compensable hours work of the employee:

1.8.2 Where the work is non-manual in nature or does not involve so much
physical exertion; and
8.1.3 In case of actual or impending emergencies or there is an urgent
work to be performed.

Rest periods or coffee breaks of fifteen minutes in the morning and
fifteen minutes in the afternoon shall be considered as compensable
working time.

Overtime must be with the approval of the University President and
duly recommended by the Vice President concerned.

2. Offset Policy

This policy aims to provide guidance to University employees on the operation of
offsetting, to ensure that it does not impact negatively on either the individual or the
organization. The policy outlines the rates of pay applied to overtime worked and sets
out eligibility criteria. It should be noted that all offsets must be authorized in advance.

Basis of Offsetting:
Official work done beyond the official work schedule duly authorized by your
immediate head.

For Offset:
Official activities of the school such as:
Preparation for Accreditation
Preparation for ISO Audits
Preparation for Foundation celebration
Other tasks to be performed as instructed by the immediate
head based on urgency of output to be submitted.

3. Travel Allowance

A travel allowance is provided for official business travel expenses only. Personal leisure
travel expenses are an employees responsibility and are not provided for in this
allowance. The Finance Office sets equitable expense limits that ensure a fair
reimbursement to employees with limitations on the types of expenses that can
be paid from appropriated funds.


Level National Regional Local
Faculty/Staff Php 450 Php 300 0
Dean/Director Php 630 Php 375 0
Vice President/Other
Php 900 Php 600 0

Per Diem:

National Regional Local
Breakfast Lunch Dinner Breakfast Lunch Dinner Breakfas
Lunch Dinner
Php 70 Php
Php 100 Php 60 Php
Php 80 Php 50 Php
Php 70

If due to valid reasons and employees incur deficit in travel allowances, the
same will be reimbursed subject to audit. All claims should be evidenced by official
No new cash advance shall be granted if there is still unliquidated cash

Transportation Allowance
Per day Php 300 Php 100 actual

Destination Maria de Leon
Manila Php 500 Php 821
Php 380 Php 527
Damortis, La Union Php 330 Php 453
Baguio City n/a Php 480
San Fernando, La
Php 270 Php 378
Vigan City n/a Php 141

2. Awards, Grants and Benefits

A. Legal/Mandatory Benefits

1. Regular Holidays

January 1 New Years Day
Movable date Maundy Thursday
Movable date Good Friday
April 9 ArawngKagitingan
May 1 Labor Day
June 12 Independence Day
Last Sunday of August National Heroes Day
November 1 All Saints Day
November 30 Bonifacio Day
December 25 Christmas Day
December 30 Rizal Day

Other declared local and special holidays.

2. Health Benefits
2.1 Hospitalization/Health Care

All employees subject to compulsory SSS coverage and their dependents are
automatically covered under the Philippine Health Insurance Corporation (PHIC)
Dependents, as defined under the PHIC Law, are:
2.1.1 The legitimate spouse who is not a Medicare member;
2.1.2 The unmarried and unemployed children legitimate, legitimated,
acknowledged children as appearing in the birth certificate, legally
adopted or stepchildren who are below twenty-one (21) years of age;
2.1.3 Children who are twenty-one (21) years old or above but suffering from
congenital disability, either physical or mental, or any disability acquired
before the age of 21 that renders them totally dependent on the member
of support;
2.1.4 The parents who are sixty (60) years old or above who are not enrolled
members of PhilHealth and whose monthly income is not more than one
thousand pesos (Php 1,000.00)

Benefits under this law are:
a. Maximum of forty-five (45) days of confinement annually for
members, accumulated total of 45 days for all dependents;
b. Hospital room and board expenses;
c. Professional fees of Php15.00 per day but not to exceed Php
200.00 for ordinary cases and Php 300.00 for intensive care or
catastrophic cases per single period of confinement;
d. Surgical benefits:
d.a Surgeons fee not exceeding Php 650.00 (specified
amount shall be paid in accordance with the
Relative Unit Value (RUV), i.e., points assigned to
surgical procedures according to their comparative
complexity. This includes two (2) days of pre- and five
(5) days of post-operative care.
d.b Surgical procedures without any assigned RUV shall
be evaluated taking into considerations its similarity to
existing procedures.
d.c Anesthesiologists fee not exceeding thirty percent
(30%) of the allowable Surgeons fee. Only One
anesthesiologist shall be compensated.
d.d Local anesthesia is not compensable except when it
is a regional nerve block anesthesia.
d.e When the operating surgeon administers anesthesia
himself, no separate anesthesiologists fee shall be
e. Operating Room fee.
e.a A qualified beneficiary who undergoes surgical
procedure in the hospital operating room complex on
an out-patient basis is entitled to benefits provided
that one day is deducted from his forty-five (45) day
room and board benefits.
3. Maternity Leave

In compliance with the pertinent provisions of the Labor Code, the University grants every
pregnant female employee maternity leave:

a. 60 calendar days leave for normal child delivery
b. 78 calendar days leave for caesarian delivery

4. . Paternity Leave

A male employee applying for paternity leave shall notify the IPODD of the
pregnancy of his legitimate spouse and the expected date of such delivery.

The university shall grant male employee (7) seven working days with full pay for
the 1
four (4) deliveries of the legitimate spouse.

5. Solo parent

A solo parent who has rendered service for at least one year in addition to the
privileges under existing laws, shall be entitled to a parental leave benefit of not
more than seven (7) working days every academic year. (Sec. 8, RA 8972)

6. Separation Pay

6.1 An employee shall be entitled to a separation pay when his services is terminated
under the authorized causes provided for by the Labor Code.

7. Retirement Benefits

An employee shall be entitled to receive retirement benefit from Northwestern
University, separate from the SSS retirement plan. Moreover, an employee shall be
entitled to retirement pay equivalent to at least one-half month salary for every year of
service, a fraction of at least six (6) months being considered as one whole year.

7.1 Compulsory and Optional Retirement

An employee shall retire or be retired by the Board of Directors upon reaching
the age of sisty-five (65) years. However, the Board may extend the services for
meritorious reasons.

An employee may retire upon reaching the age of sixty (60) years if he has served for at
least ten (10) to fifteen (15)years in the University.

Institutional Benefits

1. Service Awards

The University recognizes the value of excellent and loyal service rendered by its
employees and acknowledges the same in a ceremony conducted annually
coinciding with the foundation anniversary celebration of the University.

2. Scholarship/Grants

Permanent employees may apply for a scholarship grant from the Fund for
Assistance to Private Education (FAPE), Department of Science and Technology (DOST),
University of Asia and the Pacific (UA&P) and other funding institution such as Nicolas N.
Nicolas Foundation. The terms and conditions of the scholarship are as follows:

3. Uniform Benefits
a. Permanent employee can avail of the 100% assistance.
b. Probationary employee can avail through salary deduction.

4. Tenureship

In its quest for academic excellence, Northwestern University encourages each faculty
member to upgrade his/her qualifications through the adoption of a policy on

4.1 Tenured status is granted to a faculty member who meets the following

At least ten (10) years of continuous service with the university from time of
employment as full time faculty.

5. Bonuses

The University gives Cash Gift to the employees during the Christmas Season as a
gesture of goodwill. The Cash Gift is not part of the 13
Month Pay.

6. Periodic Medical and Dental Check-up

6.1 Medical Consultations and Medicines

Employees may avail of the free medical consultations and medicines available at the
Medical Clinic. This is applicable to permanent and probationary employees.

6.2 Dental Consultations and Services

The Dental Clinic provides dental services for permanent and probationary
employees as well as their dependents (legal spouses and children below 21
years of age).
6.2.1 Services provided:
a. Dental Examination
b. Emergency Dental Treatment
c. Simple Extractions
d. Temporary Filling
e. Permanent Filling
f. Dental Prophylaxis
g. Oral Medication or Initial Dosage

7. Bereavement Assistance to Employees

7.1 Death of an Immediate Family Member

A financial assistance amounting to P 5,000 will be given to all regular employees
upon the death of any member of his immediate family. The amount is granted
as a gesture of sympathy from the management and staff of the University for his
deceased family members.

The immediate family or dependents of a married employee are composed of
the following:
Legitimate spouse
Legitimate children

3. Leaves

1. Leaves of Absence With Pay

1.1 Vacation Leave

A permanent academic or non-academic employee is entitled to a fifteen (15)
day leave with pay every academic year. Probationary faculty with at
least one year of service is entitled to a three (3) day vacation/sick leave
per semester.

Permanent non-academic employees may avail of their vacation leave
anytime, even during semestral breaks. Faculty members shall avoid
taking vacations when they have teaching loads. For special
considerations however, they may take their vacation leave as long as
arrangements have been made where a substitute may take over their
classes. However, it is within the authority of the VPAA for academic
employees and the VPA for non-academic employees to determine
when they may take their vacation leave considering the requirements
and nature of his work.
Unused vacation leaves upon the lapse of the academic year in which it
is granted shall be considered forfeited upon the end of such year and
shall not be converted to cash.
1.2 Personal Leave
In consideration of any contingency that may need immediate attention,
personal leave can be availed of by the employees. Personal leave is
limited to two (2) days per academic year. Leave for emergencies
beyond personal leave shall be without pay and subject to validation and
approval of the vice president for administration or vice president for
academic affairs, as the case may be.

1.3 Sick Leave
A permanent academic/non-academic employee is entitled to a fifteen (15) day
leave with pay every academic year while probationary faculty with at
least one year of service is entitled to a three (3) day vacation/sick leave
per semester during actual illness, provided all the requirements have been
complied with. Permanent/regular employees are given one hundred
percent (100%) of the monetary value of the total unused sick leaves. Sick
leaves shall be counted on a calendar year basis with releases of the
monetized value given bi-annually.
2. Leaves Without Pay
2.1 Prolonged Leave of Absence

A leave of absence for fifteen (15) days or more shall be considered as a
prolonged leave and may only be approved by the President. An extension of
such leave without approval by the President shall be deemed as a resignation
of the employee concerned.

B. Related Studies
On a research conducted by Lev Semenovich Vygotsky (1934)
compensation, work environment and other factors influence employee
satisfaction. By balancing pay with other programs, such as career
development opportunities, flexible work schedules and attractive surroundings,
you can improve job satisfaction for your employees in a cost effective manner.
This typically results in improved morale, reduced absenteeism, fewer conflicts
on the job and increased productivity. Increased compensation alone doesnt
always lead to increased job satisfaction. In fact, sometimes a small increase
can actually have a negative effect. By surveying employees on a regular basis,
you can find out what they really want.
Another study of Faheem Ghazanfar (2011) suggested that satisfaction
with compensation can be factor of work motivation; 2) flexible pay is not a
motivating factor in the jobs which the employees were holding; and 3) benefits
do not have a significant impact on work motivation. In their work, Minner,
Ebrahimi, and Watchel (1995) elaborate in a system sense that, motivation
consists of these three interacting and interdependent elements, i.e., needs,
drives, and incentives.For as long as organizations have existed, compensation
has been recognized as a major motivator of employees as well as an important
tool and expense for organizations. Understanding the construct of
compensation systems, its impact upon the organization's structure, strategies,
and employees has been an important area. To use compensation as a
motivator effectively, personnel managers must consider four major
components of a pay structures in an organization Popoola and Ayeni (2007).
These are (a) job rate, which is the importance the organization attaches to
each job;(b) payment, which encourages employees by rewarding them
according to their performance;(c) personal or special allowances; and (d)
fringe benefits such as holidays with pay, pensions, and so on. In his work,
Akintoye (2000) emphasize that money remains the most important motivational
strategy. As far back as 1911, Frederick Taylor and his scientific management
associate described money as the most important factor in motivating the
industrial workers to achieve greater productivity. Taylor viewed compensation
and performance based pay as one of the major tools management had at its
disposal to motivate employees and to increase their productivity and reduce
turnover Dulebohn, Ferris, & Stodd (1995). Money possesses significant motivating
power in as much as it symbolizes intangible goals like security, power, prestige,
and a feeling of accomplishment and success. Sinclair, et al. (2005) exhibits the
motivational power of money with the process of job choice. They explain that
money has the power to attract, retain, and motivate individuals towards higher
performance. For instance, if an employee has another job offer, which offers
greater financial rewards and has identical job characteristics with his current
job, that worker would most probably be motivated to accept the new job
offer. Banjoko (1996) states that many managers use money to reward or punish
workers. This is done through the process of rewarding employees for higher
productivity by instilling fear of loss of job or other related issues (e.g., no annual
increment or promotion due to poor performance). The desire to be promoted
and earn enhanced pay may also motivate employees. Another stream of
compensation research; focus on highlighting the internal orientation towards
an individuals reaction to pay. This research orientation is led by industrial
organizational psychologists and has contributed significantly to human
resource management practice. The main impetus for this research has been
the supposition that pay affects employees overall level of job satisfaction and
primary work behaviors or motivation, Oshagbemi (2000).


This section presents the research design, methods and procedures to be
utilized in conducting this study. Further this section will describe the sources of
data, the research instruments, the methods of study, data gathering
procedures and the statistical treatment to be used in the study.

Research Design. In this study, descriptive-correlational method will be used. To
determine level of effectiveness of compensation package of Northwestern
University in terms of Policies, General Provisions and salary grade assignments
and level of job satisfaction in terms of Work System, Employee Education,
training and Development, Employees Well Being, Incentive System and
Leadership, descriptive method will be utilized. After determining the level of
effectiveness and level of job satisfaction, the two variables will be correlated to
determine if there is a relationship between these variables.

Data Gathering Instrument. In this study, questionnaire and interview methods
will be the main instruments to be used. There will be one set of questionnaire
that will be prepared which will be used for the employees of Northwestern
The questionnaire for the employees will be consisting three parts. Part 1
will elicit personal profile: age, gender, civil status, and educational attainment.
Part II will provide the level of effectiveness of compensation package of
Northwestern University as perceived by the NWU employees. Part III will elicit
information about the level of job satisfaction of NWU employees. .
The researcher will prepare the items in the questionnaires. However some of the
items of the questionnaires will be patterned from the questionnaires of
dissertation conducted by Onofre S. Jara entitled The compensation and
Position Classification Act of 1989, RA 6758: Its effects on Job Satisfaction and
Productivity of employees in selected government agencies.
Records of the Institutional Planning and Organizational Development
Department of Northwestern University will also be part of the document analysis
to strengthen this study.
A five point scale , 5-1 with answer options of very highly satisfied as 5,
highly satisfied as 4, moderately satisfied as 3, slightly practiced as 2 and
not satisfied as 1, will be used in assessing respondents job satisfaction.
Moreover, a five point scale, with answer options of strongly agree as 5,
agree as 4, undecided as 3, disagree as 2, and strongly disagree as 1,
will be used in assessing the effectiveness of compensation package of NWU.

The following norms for interpretation will be used in the study:
1. The level of job satisfaction of NWU Employees:

Statistical Range Descriptive Rating
5.00 4.21 Very High Satisfaction (VHS)
4.20 3.41 High Satisfaction (HS)
3.40 2.61 Moderate Satisfaction (MS)
2.60 1.81 Low Satisfaction (LS)
1.80 1.00 Very Low Satisfaction (VLS)

2. The level of effectiveness of compensation package.

Statistical Range Descriptive Rating
5.00 4.21 Very Highly Effective (VHE)
4.20 3.41 Highly Effective (HE)
3.40 2.61 Moderately Effective (ME)
2.60 1.81 Slightly Effective (SE)
1.80 1.00 Not Effective (NE)

Data Gathering Procedure. A letter will be sent to the Director of Institutional
Planning and Organizational Development Department of Northwestern
University to seek permission on securing the list of employees and several
documents on the compensation package of Northwestern University.
The questionnaires to the employees will be personally hand carried by
the researcher. He will also retrieve the questionnaires personally.
Population and Sample. The population of the study will consist of 2 groups
namely: academic and non academic employees.
In the determination of sample size, the formula given will be used:
n = N / 1+Ne

where: n = sample size
N = population size
e = marginal error at .05
Table 1.1 is presented for the distribution of population and sample.
Table 1. Distribution of Population and Computed Sample of
Academic Non-Academic
N n N n

Statistical Treatment

The data that will be gathered in the study will be analyzed
statistically through the use of the following:
The frequency and percentage will be used to indicate the profile
of the respondents.
The mean will be used to effectiveness of compensation package
and job satisfaction of employees of Northwestern University.
To determine the relationship of the independent and dependent
variables, T-test will be used