Motivating Through Satisfaction:

An Ongoing Effort of HR
in Organizations
S C Poornima*

Information Technology (IT) and Information Technology Enabled Services

(ITES) sector depends on technology and people who are capable of handling
the projects with a timeframe. As a consequence, people form the basic asset
of this sector. People working in this sector are young, view their careers as
supreme, have a different mind set relating to social norms, life balance, etc.
The new generation workers, working in the technology-driven industry and
tagged as high contributors to the economy, have an elevated platform to deal
with. This makes organizations to venture into a serious thought process of
holding the performers with them for as long as they can in a satisfying mental
state. This paper focuses on monetary and non-monetary compensation
components contributing towards employee motivation.

Introduction
The services sector, which is the main driver of economic growth in India, forms the
largest component of the economy. When compared with agriculture, manufacturing
and mining are the best performing sectors. Among the services sector, Information
Technology (IT) and Information Technology Enabled Services (ITES) have seen
a consistently steep growth irrespective of all the hurdles that came its way. The
contribution of IT industry to GDP has seen a rise from 1.2 percent in 1998-99 to
5.2 percent in 2007-08. IT companies were under pressure in the early 2008 with
a sharp rise in the value of rupee and a marked slowdown in the US economy, for
which the sector services are responsible to a large extent.

The services sector heavily depends on technology and on people who are
capable of handling it. As a consequence of this, people form the basic asset of
this sector. People working in this sector are young, view their careers as supreme
and have a different mindset relating to social norms, life balance, etc.
The new generation workers in the technology-driven industry and tagged as high
contributors to the economy have an elevated platform to deal with. This makes
organizations to venture into a serious thought process of holding the performers
with them as long as they can in a satisfying mental state.

* Faculty Me mb e r, OB and HRM, The Icf ai B usine ss S chool, B ang alore , Ind ia.
E-mail: poornimaresearch@yahoo.com

©
2 6 2009 The Icfai University Press. Journal
The Icfaian All Rights Reserved.
of Management Research, Vol. VIII, No. 5, 2009
Theory of Motivation
According to Frederick Herzberg, motivation is based on an employee being satisfied
or not satisfied. He put forward the theory of motivation based on two factors that
organizations need to work on: Hygiene factors and motivation factors. If hygiene
factors are not present in an organization, it can de-motivate and cause
dissatiafaction. Thus, human resource managers in all organization have nothing
much to work on the hygiene factors. But, the present day employee is more
complicated. His hygiene factors are spread more vertically and horizontally. The basic
needs of existence and security, which are considered to be the main components
of hygiene factors, are now expanded to good food, respectful clothing, and
admirable shelter. Further, the security needs should be laid on a foundation of
contended present living. The factors that motivate the present day employee are
the social, self-esteem and self-actualization needs. Organizations have a tough time
playing their own ball game with satisfying the present day employee with his/her
expectations of these needs.

The idea of satisfying employees in organizations through compensation

package is common. Organizations work out the salary and monthly wage with
utmost care. The intention of organizations is evident that they tend to work on
not dissatisfying their employees. The salary or monthly wage forms the biggest
component of the compensation package. It comprises basic wage, house rent
allowance, dearness allowance, city compensatory allowance, etc., and it
represents the designation or position of an employee in an organization.
A time-to-time increase in the salary or monthly wage denotes the upward
movement of an employee in terms of his tenure and performance in the
organization. The contribution of an employee to the organization is noted by
the return that the organization pays by way of salary or monthly wage.

The other components that work out to be an employee’s compensation

package are long-term incentives, health insurance, after retirement benefits,
bonus, pay for the time not worked, welfare benefits, etc. Organizations also lure
their employees with a lot of non-economic benefits or indirect economic benefits,
such as awards, recognitions, memberships to professional and recreation clubs,
opportunities for growth, organization culture, values, company reputation,
learning environment, supporting environment, work profile, ATMs, cafeteria, etc.

Research Methodology
A research was conducted on the IT and ITES sector in Bangalore. An information
sheet was used to acquire data relating to the components in the compensation
package worked out in the IT and ITES sector. The compensation components
were grouped into eight categories, such as compensation design, pay other than
allowances, allowances, and incentives and perks as the components directly
related to monetary terms; and the non-monetary components as the job,
organizational climate, career prospects and social environment.

Motivating Through Satisfaction: An Ongoing Effort of HR in Organizations 27

 A structured questionnaire was used to elicit the expectation and fulfillment
levels of software professionals working in the respondent organizations relating
to the monetary and non-monetary compensation components. Sign test was
used to analyze and interpret the data collected from 202 software professionals.

Components of Compensation
The basic and most important reason for an employee to stick to an organization
is accounted to what he is paid for the work executed. The employee skill, abilities,
capabilities, knowledge, attitude and value system become his real strengths as
well as advantages of the organization. This is put under a test of the equity
theory of motivation by the human resource department of the organization.

The monetary compensation practices grouped into four categories are

compensation design, pay other than allowances, allowances, and incentives and
perks. The compensation design was directed towards:

1. Compensation Design: The bases to design the salary of professionals in

the respondent organizations include performance or competency of the
individual employee and performance of the team or combination of two
or more than two. Thirty-two percent of the organizations followed the
bases of rewarding on performance. An important observation is the fact
that different organizations follow different bases of pay design and there
is nothing like a widely followed basis for pay design. Among the practices
followed by these organizations, designing compensation based on
industry standards and market worth come to 32 percent and 24 percent,
respectively. One important observation is that pay policies followed by
respondent organizations are widely distributed.

2. Pay Other Than Allowances: Eighty-eight percent of the respondent

organizations give earned leave and medical leave, while only 64 percent
of them give holiday leave. Respondent organizations also follow monetary
practices of providing different kinds of welfare benefits. Some of them
include statutory facilities such as provident fund and gratuity, and other
benefits like mediclaim, medical consultancy, etc. Allmost all the
organizations provide provident fund, whereas 64 percent of them also
provide mediclaim policy. The statutory obligation of gratuity is provided by
60 percent. Fifty-six percent and 24 percent of the respondents provide
medical consultancy and dietician consultancy, respectively. Thirty-six
percent or less of the respondent organizations provide all other benefits.
On a close observation, it can be noted that 50 percent and above of the
respondents provide either statutory or other facilities connected with
medical aspects.

3. Allowances: Respondent software organizations also follow the practice

of providing variety of allowances that vary from one organization to
another. Among the various allowances provided, house rent and medical

28 The Icfaian Journal of Management Research, Vol. VIII, No. 5, 2009

 allowance occupy the major share with 88 percent and 76 percent,
respectively. The only other allowance that comes very near to these is
traveling allowance. All other allowances were provided by less than
50 percent of the respondent organizations. House rent, traveling and
medical allowance were provided by more than 50 percent of the
organizations. This may indicate that they constitute major portion of the
total cost of living of the software professionals.

4. Incentives and Perks: Respondent software organizations follow the

practice of providing a host of incentives and perks to its performing
software professionals. A few to mention among them are the free coupons,
business cards, shared secretary, dress code waiver, personalized parking
slot, club memberships, etc. Forty four percent of the organizations provide
professional club memberships and 100 percent of them provide business
cards. Also, 33 percent of them provide free shopping and lunch coupons
to its professionals. Dinner with boss is offered by 64 percent of the
respondent organizations.

The non-monetary compensation practices were grouped into four categories,

such as the job, organizational climate, career prospects and social environment.

1. The Job: Respondent organizations have great non-monetary incentives

relating to the job that the professionals perform. Eighty percent of
the organizations offer responsibility of project to their professionals,
60 percent allow professionals to present projects to their clients,
56 percent offer an independence to select team, 68 percent practice job
rotation as per liking and 64 percent provide special assignments.

2. Organizational Climate: Respondent organizations have a variety of

non-monetary initiatives relating to organizational climate. Twenty-four
percent of the organizations offer work space according to the liking of the
professionals, 76 percent offer flexi hours of work and 28 percent offer
tele-commuting facilities to their professionals.

3. Career Prospects: Respondent organizations offer training to its

professionals of which 80 percent of them offer in-house training. Seventy-
two percent offer outbound training to facilitate professionals in their career
growth options.

4. Social Environment: Respondent organizations offer a plethora of

initiatives relating to enhancing the social environment for professionals in
the organizations. The most common of them are, organizing informal get
together by 56 percent of organizations, friendly greetings by 80 percent
and solicitation of advice by 40 percent of the organizations.

Motivating Through Satisfaction: An Ongoing Effort of HR in Organizations 29

Difference Between Expectation and Fulfillment Levels Towards
the Components of Compensation
The difference between expectation and fulfillment levels of the software
development professionals with regard to monetary and non-monetary
compensation practices are analyzed. This indicates not only the perceptions of
the respondent professionals but also the status of the compensation practices.
On the whole, the differences between expectation and fulfillment levels point
towards the attitudes of satisfaction or dissatisfaction among the software
development professionals.

Difference between expectation and fulfillment levels is analyzed with the help
of null and alternate hypothesis. These hypotheses are tested with the help of
sign test, which is a statistical technique to find out the difference between
expectation and fulfillment of software professionals towards compensation
practices. Here, the quantum of difference is not considered. But, emphasis is
given to the positive or negative difference. This is the case with the possible
association between two variables.

These expectation and fulfillment levels are given on a scale of 0-9, and the
respondent is asked to tick the appropriate level. Excess of expectation over
fulfillment is negative, excess of fulfillment over expectation is positive and
equivalence between the two is considered as a tie. With the help of these
numbers, z-value and asymptotic sign value were ascertained using the sign test.
The ties between them are not considered by the sign test. The asymptotic sign
value indicates the association between demographic factors and difference
between expectation and fulfillment levels. In certain cases, asymptotic sign is
not found as the z-values are exact binomial values due to the sample size being
low. Thus, statistically significant association cannot be established in those
cases.

The hypotheses set for study are:

Null Hypothesis (H0): There exists no statistically significant difference between

expectation and fulfillment levels of software development professionals with
regard to the monetary and non-monetary compensation practices followed by the
organizations.

Alternative Hypothesis (Ha): There exists a statistically significant difference

between expectation and fulfillment levels of software development professionals
with regard to the monetary compensation practices followed by the organizations.

It is revealed that in case of all the four monetary practices, there exists a
negative difference, as the number of negatives is higher than the number of
positives (Figure 1).

30 The Icfaian Journal of Management Research, Vol. VIII, No. 5, 2009

 Figure 1: Distribution of Respondent Software Development
Professionals Based on the Difference Between Expectation and
Fulfillment Levels with Regard to Monetary Compensation Practices

140
129
123
120
110
106
100

80

60 54 52
47 45
42 40 28
40
32

20

0
Compensation Pay Other Al lowances Incenti ves
Desi gn Than and Perks
Al lowance

Negative Differences Positive Differences Ties/No Differences

Perusal of Table 1 brings out that there is a negative z-value in case of all
the compensation practices. But the z-value of incentives and perks is higher than
that of other practices. The asymptotic sign value of all the practices is
0, that is less than 0.050, which is the level of statistical significance. Therefore,
the null hypothesis is rejected and the alternate hypothesis is accepted.

Table 1: Z-Values and Asymptotic Sign Values of the Difference Between

Expectation and Fulfillment Level of Respondent Software Development
Professionals with Regard to Monetary Compensation Practices

Practice Z-Value Asymp. Sign.

Compensation Design –5.179 0.000

Pay Other Than Allowance –5.752 0.000

Allowances –5.634 0.000

Incentives and Perks –7.981 0.000

Note: Statistically significant association up to 0.050 level.

Non-Monetary Practices
Figure 2 reveals that the number of negative differences is more than positive
difference in the case of the components, such as the job, career prospects and
social environment. Whereas in the case of ‘organization climate’, the number of

Motivating Through Satisfaction: An Ongoing Effort of HR in Organizations 31

positive differences is higher than the number of negative difference. The number
of ties is more in the case of ‘organizational climate’ and ‘social environment’.

Figure 2: Distribution of Respondent Software Development

Professionals Based on the Difference Between Expectation and
Fulfillment Levels with Regard to Non-Monetary Compensation Practices

120
104
100
81 82
80 76 74
69 66
64
59
60 54
43
40 34

20

0
The Job Organizational Career Soci al
Cl imate Pro sp ects Environment

Negative Differences Positive Differences Ties/No Differences

Perusal of Table 2 reveals that the z-value in the case of all non-monetary
practices is negative. The z-value of ‘career prospects’ is higher than the values
of other practices. The asymptotic sign values of ‘the job’ and ‘career prospects’
are less than 0.050, whereas that of ‘organizational climate’ and ‘social
environment’ are above this level. Therefore, the null hypothesis is rejected and
the alternate hypothesis is accepted in the case of ‘the job’ and ‘career prospects’.
But, in the case of ‘organizational climate’ and ‘social environment’, the null
hypothesis is accepted and alternate hypothesis is rejected.

Table 2: Z-Value and Asymptotic Sign Values of the Difference Between

Expectation and Fulfillment Level of Respondent Software Development
Professionals with Regard to Non-Monetary Compensation Practices

Practice Z-Value Asymp. Sign.

The Job –3.323 0.001

Organizational Climate –0.795 0.426

Career Prospects –5.874 0.000

Social Environment –1.004 0.315

Note: Statistically significant association up to 0.050 level.

32 The Icfaian Journal of Management Research, Vol. VIII, No. 5, 2009

Demographic Factors and Difference Between Expectation
and Fulfillment Levels
Difference between expectation and fulfillment levels of software development
professionals towards compensation practices have been analyzed further with
reference to their demographic factor age. This would bring out the possible
association between these variables.

The hypotheses set for are:

Null Hypothesis (Ho): There exists no statistically significant association

between age and difference between expectation and fulfillment levels of software
development professionals with regard to monetary and non-monetary
compensation practices followed by the organizations.

Alternative Hypothesis (Ha): There exists a statistically significant association

between age and difference between expectation and fulfillment levels of software
development professionals with regard to monetary and non-monetary
compensation practices followed by the organizations.

Table 3 brings out that:

21-24 Years: Z-values of all monetary practices are positive, and that of ‘design
of compensation’, it is the highest.

25-28 Years: Z-values in the case of all practices are negative, but in the case
of incentives and perks, it is the highest. Asymptotic sign values of all monetary
practices are less than 0.050, which is the level of significance. Hence, Null hypothesis
is rejected and alternate hypothesis is accepted in the case of all practices.
Table 3: Z-Value and Asymptotic Sign Values Based on Age and
Difference Between Expectation and Fulfillment Levels of Software
Development Professionals with Regard to Monetary Practices
Pay Other
Design of Incentives
Th an Allowances
Compensation and Perks
Allowances
Age
Z- A symp. Z- A symp. Z- A symp. Z- A symp.
Value Sign. Value Sign. Value Sign. Value Sign.

21-24 1.000 – 0.405 – 0.004 – 0.078 –

Years

25-28 –4.035 0.000 –4.610 0.000 –3.084 0.002 –5.379 0.000

Years

29-32 –2.704 0.007 –2.109 0.035 –3.288 0.001 –3.843 0.000

Years

33 Years 0.035 – –2.550 0.011 0.093 – –3.850 0.000

and Above

Note: Statistically significant association up to 0.050 level.

Motivating Through Satisfaction: An Ongoing Effort of HR in Organizations 33

29-32 Years: Z-values in the case of all practices are negative, but in the case
of incentives and perks, it is the highest. Asymptotic sign values of all practices
are less than 0.050, which is the level of significance. Hence, the null hypothesis
is rejected and alternate hypothesis is accepted.

33 Years and Above: Z-values in case of design of compensation and allowances

are positive, whereas in case of pay and incentives and perks are negative.
Asymptotic sign values are less than 0.050 in case of pay and incentives and perks
practices. Hence, Null hypothesis is rejected implying that there exists a
statistically significant association between age and difference between
expectation and fulfillment levels towards those practices.

Table 4 brings out that:

21-24 Years: Z-values of all non-monetary practices are positive. But, in the case
of ‘the job’, it is the highest.

25-28 Years: Z-value in case of all practices are negative except for ‘social
environment’. But, that of ‘career prospects’, it is the highest. Asymptotic sign
values of all non-monetary practices are more than 0.050, which is the level of
significance except for ‘career prospects’. Hence, the null hypothesis is accepted
and alternate hypothesis is rejected. But in case of ‘career prospects’, the null
hypothesis is rejected and alternate hypothesis is accepted.

29-32 Years: Z-values in case of all the practices are negative, except for
‘organizational climate’. And that of ‘career prospects’, it is the highest. Asymptotic
sign values of all the practices are more than 0.050, which is the level of significance.

Table 4: Z-Value and Asymptotic Sign Values Based on Age and

Difference Between Expectation and Fulfillment Levels of Software
Development Professionals with Regard to Non-Monetary Practices

Organizational Car eer Social

The Job Enviro nment
Climate Pro spects
Age
Z- A symp. Z- A symp. Z- A symp. Z- A symp.
Value Sign. Value Sign. Value Sign. Value Sign.

21-24 1.000 – 0.359 – 0.454 – 0.804 –

Years

25-28 –2.119 0.034 –1.420 0.156 –4.487 0.000 0.000 1.000

Years

29-32 –0.884 0.377 0.000 1.000 –1.945 0.052 –0.857 0.391

Years

33 Years 0.003 – 0.210 – 0.001 – 0.096 –

and Above

Note: Statistically significant association up to 0.050 level.

34 The Icfaian Journal of Management Research, Vol. VIII, No. 5, 2009

Hence, the null hypothesis is accepted and alternate hypothesis is rejected in
case of all the practices.

33 Years and Above: Z-value in case of all the practices are positive. And that
of ‘organizational climate’, it is the highest.

It is observed that there is a negative difference between the expectation

and fulfillment level of software development professionals with regard to
monetary practice. The negative difference between them with regard to
incentives and perks is more, when compared to other monetary compensation
practices.

The scenario relating to the non-monetary compensation components shows

that there is a difference between expectation and fulfillment level of software
development professionals with regard to ‘the job’ and ‘career prospects’. And
that of ‘organizational climate’ and ‘social environment’, it is same or equal. Career
prospects have more negative difference.

As age forms a major independent factor moderating on the level of

satisfaction, the analysis of data shows that software development professionals
in the age group of 21-25 years have a positive difference between expectation
and fulfillment level towards all the monetary compensation practices. Software
development professionals in the age group of 25-28 and 29-32 years have a
negative difference between them. Software development professionals
belonging to the age group of 33 years and above have a positive difference
between expectation and fulfillment level towards design of compensation and
allowances. Whereas, a negative difference towards pay, incentives and perks.
There is an association between 33 years and above age group and the difference
between expectation and fulfillment level of software development professionals
towards ‘pay other than allowance’ and ‘incentives and perks’.

In case of the non-monetary compensation components, software development

professionals belonging to the age group of 25-28 years and the difference
between expectation and fulfillment levels towards ‘organizational climate’ and
‘social environment’ are not associated. Software development professionals
belonging to the age group of 29-32 years and the difference between
expectation and fulfillment level towards all the non-monetary compensation
practices are not associated.

Difference between expectation and fulfillment levels with regard to

compensation practices imply the attitudes of software development professionals
in an indirect or implied manner.

A Workable Solution: Motivating Through Satisfying

The challenge faced by the present day human resource departments are not only
retaining their employees, but also retaining them in a good condition. Here, the
relevance of good condition is by keeping them healthy in mind, body and soul.
It is claimed by all human resource practitioners that the mind is healthy when

Motivating Through Satisfaction: An Ongoing Effort of HR in Organizations 35

jobs are challenging; when the content of the job is relevant finally; and when
the employee can see a reason for doing the job that he is doing. This condition
is arrived at when an employee is satisfied with the content of the job that he
is performing in the organization. The research takes the most happening IT and
ITES sector as a sample, as it is known for its people initiatives. The other reason
being that employee’s skills, abilities, knowledge go a long way in the growth
of the organizations in this industry. In fact, the head matters most in this industry.
Hence, every employee thinks in terms of his benefit, returns, growth, recognition,
career and project.

He is committed more to himself and his growth. This fact is fundamentally

crucial in understanding what motivates an employee in the software
development industry. Hence, there is a need for making the individuals to think
beyond themselves. The compensation practices of software development
industry are designed in such a way that performance of the individual is
recognized rather than the team. The package of pay and other incentives reward
the performance as individuals. Research finds that employees are not satisfied
with the pay other than allowance and incentives and perks. All these point
towards such of those practices that emphasize the performance beyond
individuals. It is also found that employees belonging to the age group of
25-28 years and 29-32 years, who form the cream of the organization workforce,
expect much more from the organization in terms of all the monetary practices
adopted. It calls for the industry to drive a change in its monetary practices,
especially in terms of incentives and perks offered to the employees who has
a considerable work experience.

Conclusion
Analysis of various findings reveals that non-monetary aspects of software
development industry are not only crucial, but critical also. This is because of the
fact that the software development professionals have already satisfied the basic
and physiological needs due to their monetary benefits. The review and perusal
of the non-monetary compensation practices in the software development
industry is characterized by certain features like more extrinsic and peripheral
than intrinsic and meaningful, and absence of innovation and creativity, suitable
to the context and condition. In case of the software development professionals,
the levels of fulfillment are below their expectations. This may be due to the
environment outside and their perception of their capabilities. This state is not
only desirable but also contributes to dissatisfaction and unfavorable attitudes.
The challenge before the industry is not only to know but also match the
expectations of software development professionals.

The software development industry in India has to be more pro-active and

strategic in its vision rather than re-active and responsive only to the
developments outside the industry and the country. It has been witnessed that

36 The Icfaian Journal of Management Research, Vol. VIII, No. 5, 2009

the US market predominantly governs the business in the IT and ITES sector. But,
as the sector has out-passed its nascent stage, the human resource practices
also need to be more mature and employee-centric. Innovation and creativity in
human resource management practices is the need of the hour, going beyond
the framework of industry and the market. 

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Motivating Through Satisfaction: An Ongoing Effort of HR in Organizations 37