The Impact of Compensation Types on Behavioral Productivity & Job. Satisfaction of ...... that is the salary taken usually on monthly or yearly basis for a full time employee, and Pay ...... International Journal of Management (IJM), 6(1), 373-. 384.
Yarmouk University Faculty of Economic and Administrative sciences Department of Business Administration
The Impact of Compensation Types on Behavioral Productivity & Job Satisfaction of Employees: Construction Sector in Jordan as Case Study
By: Waed “Mohammad Ali” Albataineh
Supervisor: Professor Jamal Abu Doleh
2017
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Dedication
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Acknowledgement
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Abstract This research is aimed at finding the impact of compensation types on employees’ behavioral productivity and job satisfaction in Jordanian construction sector. This research took a descriptive approach of the exploratory type in attempt to shed the light on the most important compensations provided to employees, also to understand the most practice dimensions of behavioral productivity and job satisfaction. The population of this research consisted of (187) firms from the 1st Class contracting and consultancy firms in Jordan that cover the main five fields (Roads, Building, Electromechanical, Water and Sanitation, and specialized work). Based on Area Sampling, the sample consisted of (42) firms containing (210) employees from low and middle management level, and finally this research relied on only (140) questionnaires that were valid for analysis from (165) returned ones. The main results emphasize the positive impact of compensation types on both behavioral productivity and job satisfaction, and there are a high level of both behavioral productivity and job satisfaction among the employees. Also the results emphasize there is no significant differences in respondents’ perspective toward compensation types at the level of (α≤0.05), and there is a significant differences in respondents’ perspective toward behavioral productivity and job satisfaction at the level of (α≤0.05) due to the following demographic variables (age, gender, jobv
level and years-of-experience-in-current-firm). This research recommends the firms to provide the variety of compensation elements such (health insurance and social security), also it recommends the firms to keep its employees up-to-date regarding the new issues and topics of compensations, finally this research recommends to provide further studies regarding those domains. Keywords: Compensation Types, Direct Monetary Compensation (DMC), Indirect Monetary Compensation (IdMC), Non-Financial Compensation (NFC), Behavioral Productivity, Job satisfaction, Construction sector, Jordan.
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Table of Contents Dedication ................................................................................................................ iii Acknowledgement ................................................................................................... iv Abstract ......................................................................................................................v List of Tables .............................................................................................................4 List of Figures ............................................................................................................5 List of Appendices .....................................................................................................5 Chapter One: General Framework .............................................................................6 1.1 Introduction .......................................................................................................6 1.2 Research Significance .......................................................................................7 1.3 Research Problem .............................................................................................8 1.4 Research Objectives ..........................................................................................9 1.5 Research Questions .........................................................................................10 1.6 Research Hypotheses ......................................................................................10 1.7 Research Terminologies .................................................................................11 1.8 Research Model ..............................................................................................12 Chapter Two: Theoretical Framework .....................................................................13 2.1 Introduction .....................................................................................................13 2.2 Compensations ................................................................................................13 2.2.1 Definition of compensation ......................................................................13 2.2.2 The Compensation according to Jordanian Labor Law............................14 2.2.3 The Importance of Compensation ............................................................14 2.2.4 Types of Compensation ............................................................................16 2.2.5 Compensation Theories ............................................................................19 2.2.6 Current Issues Affect Compensation System ...........................................22 2.3 Behavioral Productivity ..................................................................................24 2.3.1 The Concept of Productivity.....................................................................24
2.3.2 The importance of employee productivity ...............................................26 2.3.3 Factors affect employee productivity .......................................................27 2.3.4 Measurement of work productivity ..........................................................29 2.3.5 Concepts similar to Behavioral Productivity ............................................30 2.4 Job Satisfaction ...............................................................................................32 2.4.1 Definition of Job Satisfaction ...................................................................32 2.4.2 The Importance of Job Satisfaction ..........................................................33 2.4.3 Factors lead to Job Satisfaction ................................................................34 2.4.4 Models of Job Satisfaction .......................................................................36 2.5 Compensation Types & Behavioral Productivity ...........................................37 2.6 Compensation Types & Job Satisfaction ........................................................38 Chapter Three: Previous Studies ..............................................................................39 3.1 Compensation .................................................................................................39 3.2 Compensation and Productivity ......................................................................43 3.3 Compensation and Job Satisfaction ................................................................47 3.4 Summary of the previous studies and the contribution of this research .........51 Chapter Four: Research Methodology .....................................................................54 4.1 Introduction .....................................................................................................54 4.2 Construction Sector in Jordan .........................................................................54 4.3 Research Design .............................................................................................55 4.4 Sampling Process ............................................................................................55 4.4.1 Research population and sample .................................................................55 4.5 Data Collection Methods ................................................................................57 4.6 Research Instrument .......................................................................................58 4.6.1 Questionnaire Design ...............................................................................58 4.6.2 Instrument Validity ...................................................................................64 4.6.3 Instrument Reliability ...............................................................................64 2
4.7 Statistical Analysis ..........................................................................................65 Chapter Five: Statistical Analysis ............................................................................67 5.1 Introduction .....................................................................................................67 5.2 Characteristics of the Study Sample ...............................................................67 5.3 The Analysis of the Research Questions ........................................................69 5.4 Testing the Research Hypotheses ...................................................................78 Chapter Six: Result Discussion ................................................................................82 6.1 Introduction .....................................................................................................82 6.2 Results .............................................................................................................82 6.3 Recommendation ............................................................................................84 6.4 Limitation and Future Work ........................................................................85 References ................................................................................................................87 Appendices .............................................................................................................108 Appendix (1): List of Arbitrators ........................................................................108 Appendix (2): English Research Questionnaire .................................................109 Appendix (3): Task Facilitation ..........................................................................114 Appendix (4): Arabic Research Questionnaire ...................................................115 Arabic Abstract ......................................................................................................118
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List of Tables Table Description 4-1 List of items in the questionnaire regarding direct monetary compensation 4-2 List of items in the questionnaire regarding indirect monetary compensation 4-3 List of items in the questionnaire regarding non-financial compensation 4-4 List of items in the questionnaire regarding behavioural productivity 4-5 List of items in the questionnaire regarding job satisfaction 4-6a List of items in the questionnaire regarding the impact of compensation types on behavioural productivity 4-6b List of items in the questionnaire regarding the impact of compensation types on job satisfaction 4-7 Cronback’s Alpha coefficient, N=140 5-1a Demographic characteristics of the research sample 5-1b Demographic characteristics of the research sample 5-2a Compensation type elements that provided by the research sample firms 5-2b Compensation type elements that provide by the research sample firms 5-3 Mean & Standard Deviation for the compensation types 5-4 Level of behavioral productivity among the employees 5-5 Level of job satisfaction among the employees 5-6 Mean & SD for the impact of compensation types on behavioral productivity 5-7 Mean & SD for the impact of compensation types on job satisfaction 5-8 Regression Analysis, H1, N=140 5-9 Regression Analysis, H2, N=140 5-10 Difference regarding respondents’ demographic variables
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Page 59 60 60 61 62 63 64 65 68 69 70 71 73 74 75 76 77 78 79 81
List of Figures Figure No. 1-1
Name Research Model
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List of Appendices Appendix No.
Name
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List of Arbitrators
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English Research Questionnaire
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Task Facilitation
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Arabic Research Questionnaire
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Chapter One: General Framework 1.1 Introduction Investing in people can be considered as one of the most successful strategies; as today’s business is full of diversity, challenges and uncertainty, people are considered one of the main factors of gaining competitive advantage and in most case they are the competitive advantage itself (Lawler, 2009). What you give is what you gain! Organizations should spend a lot emotionally and monetarily in order to achieve their goals and objectives which are in many cases gaining profits, which make it critical how and where to spend money. Speaking of which, Employees’ compensation takes a huge part of financial budgeting and it is seen as an important role of organization performance because it affects the performance of employees. Compensation has been known as the heart of the employee and employer relationship (Gerhart et al., 1995) it is the direct linkage between employees and their employer which gives it an important role for both sides; where the employee is looking for the best package of compensation, organization are looking for the least cost, but taking this equation to a further dimension this cost should meet employee expectations and effort to make sure that employees are satisfied and their attitude toward work is positive.
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There are many definitions for compensation in business and as the simplest way; it is what the company offers to attract, motivate and retain employees (Gomez-Mejia et al., 2012). And according to Bernadin (2007) it is what the employee receives in term of financial returns and tangible benefits as part of his/her contract with the employer. Erasmus et al. (2001) defined compensation as a systematic approach to determine the return of employee’s contribution in the organization.
1.2 Research Significance Compensation is referred to many things beyond the wages which unfortunately is the main focus for almost all the study in the compensation area according to (Gerhart & Rynes, 2003). There is a lack of focus on the other aspect of compensation such as benefits, time flexibility, bonuses, and so forth. Also based on the compensation research that was conducted by Warner and Ward, (2004) which included an eclectic review of 6867 articles included in 20 top journal during the last seven years before 2004, it was found that only 396 articles were founded to be within the compensation domain!, and all of them were largely depend on quantitative research and none was entirely based on quantitative research!.
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The theoretical value of this research relies on the uniqueness of the variables as it considers one of the researches in Jordan to touch the area of compensation types and their effect on employee’s behavioral productivity and job satisfaction. The practical value is no less than the theoretical one; whereas this research will spot the light on a very important sector in Jordan, in order to bring for the construction sector the significant role that compensation take in regard of employees behavior towards their job and organization, which will finally effect positively on the organization performance (Salisu et al., 2015). The construction sector- focusing on contracting and consultancy- took and will take a huge role in the economy of Jordan as Halaseh said “… the Jordan 2025 vision counts on the sector to increase its contribution to the gross domestic product (GDP) and to enhance development.” The importance of construction sector in Jordan will be highlighted in the next chapter.
1.3 Research Problem Regardless of organizations industry, size, culture and operation area it seeks to remain sustainable and to gain competitive advantage especially the one that’s hard to imitate by others and here the human capital could be one of the wisdom choices, thereby organization started to focus on employees and support them to increase organization productivity and performance which lead to more profitability. One of the supportive sides is the flexibility in compensation because 8
at the end even with similar job duties reward will differ from one employee to another and that what make compensation a critical area. This research aims to answer the following questions: To which extent the compensation types are available in the construction sector? What is the impact of compensation types on employees’ behavioral productivity in the construction sector? What is the impact of compensation types on employees’ job satisfaction in the construction sector?
1.4 Research Objectives To identify compensation types those are being provided in construction sector, and the variety of each type. To understand the level of employee’s behavioral productivity and it’s relation with the compensation types. To illustrate the importance of compensation types on job satisfaction, To understand the role of demographic variables (Gender, Age, JobLevel, Job-Title, Years-of-Experience in the current company) on compensation types also on the behavioral productivity and job satisfaction of employees. 9
1.5 Research Questions 1. What is the most important compensation element that employees receive aside from salary? 2. What is the perspective of employees towards the types of compensation? 3. What is the level of behavioral productivity among employees? 4. What is the level of job satisfaction of employees? 5. What is the level of impact of compensation types on both behavioral productivity and job satisfaction?
1.6 Research Hypotheses Main Hypothesis One: There is a positive impact of Compensations Types on employees’ Behavioral Productivity. Main Hypothesis Two: There is a positive impact of Compensation Types on on employees’ Job Satisfaction, separately. Main Hypothesis Three: There are no significant differences at the level of (α≤0.05) in the views of the research sample members about compensation types due to demographic and functional variables (Gender, Age, Job-Level, Years of experience).
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Main Hypothesis Four: There are no significant differences at the level of (α≤0.05) in the views of the research sample members about the behavioral productivity due to demographic and functional variables (Gender, Age, Job-Level, Years of experience). Main Hypothesis Five: There are no significant differences at the level of (α≤0.05) in the views of the research sample members about the job satisfaction due to demographic and functional variables (Gender, Age, Job-Level, Years of experience).
1.7 Research Terminologies Employee Compensation: It is what the employee receives in return of his/her work and effort in tangible and intangible form, as referred by (Dessler, 2008). Employee Behavioral Productivity: Attitudes and behaviors that an employee voluntarily expressed that result in more efficient and effective output (Seok-Hwi Song, 2006). Employees’ Job Satisfaction: It is the individuals’ feeling of happiness and satisfaction of towards their job, (Khattab, 2001).
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1.8 Research Model
Figure (1-1): The Research Model partially depends on previous researches such as (Mabaso & Dlamini, 2017) and (Zaraket, et. al, (2017).
Independent Variable
Dependent Variables
Compensation Types Behavioral Productivity
Direct Monetary Compensation (DMC) Indirect Monetary Compensation (IdMC) Non-Financial Compensation (NFC)
Job Satisfaction
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Chapter Two: Theoretical Framework 2.1 Introduction The purpose of this chapter is to give an overview of Compensation, Behavioral Productivity, and Job Satisfaction of Employees. It will give a brief background on the most related headlines that are essential to understand the overall research. This chapter contains five main sections: the first section identifies the main aspect of employee compensations, the second and the third sections cover the topic of employee productivity and employee job satisfaction, respectively. The last two sections show the linkage between compensation types, productivity and job satisfaction, separately.
2.2 Compensations 2.2.1 Definition of compensation “Money talks!”; Compensation means for employees in most cases the paycheck that they get in returns for their efforts (Bessette, 2014), but compensation has more extension to that! There are many definitions for compensation in business and as the simplest way; it is what the company offers to attract, motivate and retain employees (Gomez-Mejia et al., 2012), and according to Bernadin (2007) it is what the employee receives in term of financial returns and 13
tangible benefits as part of his/her contract with the employer. Also (Erasmus et al., 2001) defined compensation as a systematic approach to determine the return of employee’s contribution in the organization.
2.2.2 The Compensation according to Jordanian Labor Law The Jordanian labor law didn’t use the compensation types literary, instead couple of articles (23), (25), (29), (49), (54), and (88-96) mentioned the minimum basic salary wage, the retirement reward, and the compensation in case of injuries during the work. The internal regulation of the companies is responsible of clarifying the types of compensation used for their internal environment which will be conducted under the supervision of the legal and HR departments, so there might be slight differences from one company to another but overall it will take for that the approval of Ministry of Labor and it will not go against the Jordanian Labor Law and Social Security, reviewed by HR specialists.
2.2.3 The Importance of Compensation The end result that organizations want is having motivated and great performance employees in order to stay alive in the current dynamic and volatile environment (Dobre, 2013), and according to Parijat and Bagga (2014) compensation is the essential factor for all human achievement, also motivation 14
considered as a key reason behind talent retention and performance in today’s marketplace (Stanley, 2012). Therefore one of the main factors for having a motivated environment is the compensation system that issued inside the organization (Acs and Audretsch, 1987), as the flexibility and reliability of this system will increase employee commitment and the attraction of talented people Thus improving the performance, which result from the health insurance and the provided benefits, as cited by (Devaraj & Patel, 2017). The management and control of compensation is in the hand of human resource specialists where there practices affect the overall organizational performance and that was shown through last quarter century of studies (Qureshi, et al., 2010), it was also emphasized by Armstrong (2005) as he expressed compensation management is an important part of human resource practices and that it can cause improvement in both individual and organizational performance. According to Dessler (2005) compensation has a major role in the success of the organization, whereas compensations in the eyes of employees mean the reflection of their lifestyle and their self-esteem (Cascio, 2003), and it’s a huge concern for the employees as it is important for them to feel fair, equal and consistent about what they get in return of their efforts (Armstrong, 2005). On the other hand how the company can attract, satisfy, retain and bring out the very best
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of each employee is what the compensation management is all about, referred by (Robert & Angelo, 2001; Anyebe, 2003). As a summary; Whitener (2001) pointed out that high commitment and motivation might be achieved by the existing of fair compensation.
And in
Njoroge & Kwasira (2015) study, the result showed that compensation has a great effect on employee performance; also the same result was for (Aslam et al., 2015; Prasetya & kato, 2011). Based on the literature review and the humble knowledge of the researcher of this thesis, compensation is a fundamental component of employee and employer relationship, and it causes multiple positive behaviors and result such as retention, productivity, job satisfaction that all result in raising the organization performance and success through motivation and organizational commitment based on (Rizal et al., 2014).
2.2.4 Types of Compensation As the common sense requests, employees gain an exchange for the work they do and they expect tangible and intangible returns in regard of their effort for the organization as referred by Bernadin (2007), who focused on two main side of compensation; Cash Pay that divided into two elements: Base Pay that is the salary taken usually on monthly or yearly basis for a full time employee, and Pay 16
Contingent which related to all forms of contingent work such as temporary workers, independent contractor, and Fringe Compensations that contain all the form of indirect payment in the form of health insurance, group term life coverage, education fees, childcare, cafeteria plans, employee discounts, personal use of a company owned vehicle and laptops, and so forth. According to Cascio (2003), compensations are divided into two main types; Direct Compensation that deals mainly with salary, and Indirect Compensation that deals with fringe benefits, whereas salary is based on job description, meritbased and bonus-based programs, and benefits are more likely refers to retirement plans, health insurance, social security, vacation, paid holidays and employee stock ownership as mentioned in (McNamara, 2006; Rue and Byars, 2003). Gomez-Mejia et al. (2006) also agreed on the two main types of compensations and they illustrated that Base Pay is the direct pay that includes overtime, shift allowance, bounces, gaining shares, so forth, and Fringe Benefits contain such as health matters, tuition, pension plans. Also Odunlade (2012) divided compensation into two types; Cash Compensation and Fringe Compensation where the first one refers to the direct pay for the employee’s performance that mainly covers the base pay which is related to wages and overtime pay, and pay contingent, and the second type refers to the benefit programs. 17
Financial and Non-Financial compensations are widely used terms for compensation types, where the financial compensations referred to cash whether spend directly or indirectly as it clarified in the above, on the other hand NonFinancial compensation is referred to non-cash type that is more related to Employment (involvement in challenging task, interesting work, handle responsibility and receiving recognition), Work environment (social status and the pride), Awards (expected to be received when employee think and act outside the box and bring creativity to the job), and finally Promotion (giving opportunity for the employees to climb the career leader and that will increase the productivity and competition inside the organization), where those types were clarified in (Simamora, 2005). Scholars have used different definitions, types and packages - underneath each type - for compensations, they have used the terms direct compensation, indirect
compensation,
compensation,
cash
non-monetary
compensation, compensation,
fringe financial
benefits, and
monetary
non-financial
compensation to refer to the compensation types and packages such in (Cascio 2003; Noe et al., 2006; Bernadin, 2007; Taras, 2012) but nevertheless the main idea and concept behind each is the same. In this research; compensation will be divided in three main types and each type will hold classifications, the first type will be called Direct Monetary 18
Compensations, the second is Indirect Monetary Compensations, and the third one is the Non-Financial Compensations. It is worth mentioning that these types in the business world are defined in terms of value and flexibility depending on employee’s performance, skills, seniority and others (Gupta & Shaw, 2014). Direct Monetary Compensations: It is the cash that employee receives in exchange of his performance and effort; (Bernadin, 2007), and it contains the base pay which involves mainly salary, wages, commissions and bonuses, overtime pay, and others such as stock options and share gaining. Indirect Monetary Compensations: Also known as fringe benefits; it contains retirement plan, insurance health, educational assessment, kid care, travel/ meals vouchers, and others in the kind (Cascio, 2003; Wright et al., 2003). Non-Financial Compensations: It involves praising, work recognition, flexible work schedules, career development, workplace flexibility and positive changes in the work environment (Milkovich et al., 2005).
2.2.5 Compensation Theories Expectancy Theory: It is related to the motivation and the performance theories that in general divided into three main types: a) Content Theories; people behave and act in certain ways according to their needs such as Maslow and McGregor, b) Consolidation Theories; people act in certain way based on the result occurred
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such as Thorndike and Skinner, c) Process Theories; it defines the factors behind motivation and how these factors related to each other as Vroom and Locke. The last type - Process Theories - is what important in this research as getting the needed performance which is affected by compensations is gaining through motivation (Vroom, 1964) as cited in (Certo, 2016). Reinforcement theory: it notes that a behavioral could appear in certain level of frequency depending on the result whether it pleasant or not and it was established by B. F. Skinner in (1963), as this theory explain the relationship between the work performance and its pay. Based on what Hoerr (2000) said; Businesses made their monetary and non-monetary incentives that refers to their employees performance is made upon reinforcement theory. Equity Theory: It was first developed by J. Stacy Adams in (1963) and it calls for the equality of the outcome that employee should receive to the input they provide. It states that a response followed by a reward is more likely to recur in the future based on Thorndike's Law of Effect which was developed later by B. F. Skinner, and the existence of fairness in regards of the ratio of input to output with the employees and their work, and with their coworkers. This theory is very important to be applied in the organization as the absence of it or a flawed equity will lead to negative behaviors and outcomes such as 20
absenteeism, low productivity and finally decrease in the performance according to (Greenberg, 1999), therefor Al-Zawahreh and Al-Madi (2012) noted that human resource specialist should really focus on this matter and do their best to apply this theory in every aspect of the organization especially the ones that related to pay, promotion, training and development and likewise. Agency Theory: Introduced by Stephen Ross and Barry Mitnick in 1970s it describes the conflict of interests and goals of the organization stakeholders, and here compensation is used to satisfy those interests and to achieve those goals according to (Eisenhardt, 1989; Fama & Jensen, 1983). The theoretical view referred that employees specially the one in the middle and top of the hierarchy should be paid on the base of performance and known indicators and that should be aligned with the primary goal of the organization that is maximize the shareholder value, but in the real life most of the shareholders and most of the time they know nothing about how these indicator are built and on what basis employers are getting the pay and benefits, and some concept appears such as opportunism (the executives try to get the annual bounce at any cost) that organization should avoid, according to (Dion, 2016).
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2.2.6 Current Issues Affect Compensation System To define the compensation types and to decide which one is more suitable and important than the other is not getting any easier by time, also the interest of one individual differs from another, and the individual behavior is unpredictable, and whereas money is the most important reasoning for employment, it is sometimes not enough to motivate employees, as in Aguinis (2012) where he mentioned that there are organizations who suffer from high turnover even they provide above average salaries, so it is crucial for managers to understand what motivate their employees (George and Jones, 2013). From this and the following paragraph that represent some issues face by compensations system, it shows the complexity of compensations system. Globalization means no longer for companies to deal with one domestic market, with one type of customer, with one geographic areas, or at least; not with one type of skilled employees, and according to that the increase of complexity brought by globalization made compensations a hot issue and it is rising as a strategic decision (Kapoor, 2011). The need of talent people and the ability to guarantee satisfaction for them for those compensations need to be expanded and integrated into programs and practices that will affect people behavior for better (Rosen & Wilson, 2004). In regard to Deci (2013) it is inevitable for growing
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companies to be in highly competitive and global environment situation and then the challenge will be to retain their diverse employees!. Based on the Global Human Capital Trends survey that was conducted by Deloitte in (2016) where over than 7,000 Human Resource and non-Human Resource leaders around the world participant, 43% of Middle East respondents will rely on the contingent, outsourced, contractor, and part time employees for the same year. Raising new types of job under the contingent form will consider as a challenge. It heard nowadays the term Flexibility which is the umbrella of other used terms such as family-friendly Working time, flexi-time, non-standard working time, unusual working hours, and such. Flexibility is a controversial subject where it might be seen as a negative or positive factor towards other variables like job satisfaction, talent retention, organizational commitment, higher morale, job insecurity, and job stress as shown in (Bird, 2014). The result of De Witte and Näswall (2003) shows that flexibility working hours do not consider as a stress factor instead that better achievement result from people working with flexible time. And across the other half of the employment equation, the employers face some barriers to adapt the flextime, as (Bird, 2014) said.
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2.3 Behavioral Productivity 2.3.1 The Concept of Productivity Productivity is one of the most used terms in different businesses by managers and widely used specially in the manufacturing, nevertheless people whether managerial or not still confuse it with production and still its concept, measurement and factors lead to it are ambiguous by them (Tangen, 2002). The term of productivity is barely fifty years old term; it was since the nineteenth century when major schools of thought such as Fredrick Taylor and the Human Relations Movement have started to focus on it (Taiwo, 2010). Generally speaking, when we hear the productivity terms it hits to our mind the quantitative side; the ration of output over input (Tangen, 2005). Productivity means as referred by different scholars, going through part of them; Rolloos (1997) defined the productivity as that which people can produce with the least effort, it is also the ratio to measure how well an organization (or individual, industry, country) converts input resources (labor, materials, machines etc.) into goods and services, as cited in (Ali et. al, 2013). Mokhtar et al. (2003) defined productivity as the amount of output obtained over a period of time by employees. In addition, it is more about the time needed to accomplish certain task to deliver certain outcomes based on the job description (Ferreira and Du Plessis, 2009). 24
While time passing, productivity starts to hold more than the ratio of output over input, or that it is attached to how long the work take time – meaning that greater productivity measured by how long the work took place-, it is now referred to the overall situation; the behind scene factors that in some way relates directly or indirectly to the employee productivity as Lambert (2005) illustrated; that productivity is difficult to be measured only by the traditional way where some changer/factors over looked for example changes in employees’ attitude and behavior. To sum up; the productivity is now seen as concept that exceeds the quantitative side, it is more now about the qualitative side also which mainly referred to the quality of works to the behaviors and attitudes of that employee which in one way or another affect the final result of his/her work, where it will be considered to depend on other key aspects that make a change in the total productivity (Hanaysha, 2016a), for further clarification and for an example; knowledge worker concept which involves the creation of new knowledge, the application of existing knowledge to current problems, the teaching of knowledge and the use of knowledge within production processes is now considered as part of the qualitative assessment of employee productivity (Moussa et al., 2017). The focus of this research will be on the qualitative side of productivity the one that studies more the behavior and attitudes of employees as referred to by 25
(Lambert, 2000), which will be measured based on personnel’s subjective assessments (ex: survey, interview). Finally we need to understand that there is still no singular definite criterion measure or operational definition (Wasiams et al., 1996), as cited in (Ali et al., 2013).
2.3.2 The importance of employee productivity Productivity is currently a global concern as it is a key factor for the success and the survival of the organization, and it is a key element for gaining competitive advantage through the ability to do more with less (Weaver, 2008) as cited in (Arraya, 2013). It is an indicator of how powerful, efficient and compatible is the organization according to (Okoye and Ezejiofor, 2013). One side of the importance of productivity is its impact on the financial performance (profitability) of the organization, where it could influence the production cost (Avelini-Holjevac and Vrtodušić-Hrgović, 2012). The other side relies on how effective and efficient productivity enhance the living standard and implies certain positive behaviours and attitudes to be adapted (Razak, 2003). The lack of productivity leads to higher turnover, increment in expenses, frequent absenteeism and finally a negative influence on employees’ morality (Jobber and Lee, 2014).
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2.3.3 Factors affect employee productivity Based on the literature review, scholars identify different factors that have an impact on employee productivity, whether they were related to organization behavioral factor (ex: training and empowerment of employees and teamwork) referred by (Bhat, 2013), Human factors: like the relations between employee and employer, social and psychological conditions of the job, wage, union practices, etc., factors related to the organization environmental condition (ex: equipment and tools) (Akinyele, 2007), or general factors (ex: climate, policies, programs) (Deci, 2013). A wide range of factors can influence the productivity in an organization, and for further explanation this research will highlight some of these factors; based on (Salavati et al., 2013; Ansari Rnani et al., 2009) Quality of Work Life (QWL) that’s include working condition and time, different programs of wages payment, health issues, the management of financial and non-financial benefits, opportunity to develop for career development, compensation and reward system, the flexibility and autonomy, and others, all do influence the employee productivity whether directly or indirectly. To focus on the organizational behavior (Hanaysha, 2016b)’s empirical research concluded that employee empowerment, teamwork and employee training do have a significant positive effect on employee productivity, another empirical research for (Hanaysha, 2016c) indicates that all 27
the dimension of work engagement (ex: dedication, absorption) do have a significant effects on employee productivity. Effective communication and open channels between managers and employees have great impact on the productivity (Femi, 2014) where the inability to provide such health communication will lead to lower productivity and higher degree of boredom and disorganization. For an inner scope inside the organization even small factors such as temperature, humidity and air flow, lighting and noise will have a positive or negative effect on employee’s productivity according to (Ali et al., 2013), on the other hand, an outer scope, organizational culture, organizational support, organizational growth, motivation evaluation all have a relation with the employees productivity as was result from (Bahaduri et al., 2013). In regard of construction sector, there are different specific and important factors that affect employee productivity in this field, and referring to Mahamid et al. (2014) as this study covered a literature review of these factors in different countries and the result contained the following: a. Financial factors (such as: low labors’ payment, payment delay and lack of financial motivation system), b. Managerial factors (such as: bad relation, poor communication, and lack of supervisors experience), c. Equipment and Tools (Such as: Material shortages, Low quality of materials), d. Labors (such as: lack of experience, labor absenteeism ), and Finally Project e. (such as: project size and project location). 28
2.3.4 Measurement of work productivity Traditionally, the quantitative side of productivity is measured using the ratio of output over input for certain factor as mentioned above, where a good measurement of employees’ productivity consider an accurate estimation towards overall efficiency according to (Taylor & Davis, 1977; Mali, 1978) as cited by (Razak, 2003). Also, as mentioned before, there is the qualitative side of employees’ productivity, the focus of this side is considered not as old as the quantitative side so the measurement for it is harder and complex especially when we are taking intangible factors, still there is no agreed upon measurement for the quantitative side that represent the attitudes and behaviors of employees, but the efforts and trails of scholars came with some parameters that considers the dimension of qualitative productivity or, to express more correctly, an indicators for the behavioral productivity, for example (Nilda, 2017) measured it by four indicators: work willingness, work ability, work environment, and work relations. The measurement that going to be used called subjective productivity measurement concentrate on indicators that affect the productivity that are not listed in the traditional method (Kemppilä and Lönnqvist, 2003). This research will adapt the subjective productivity measurement model that was conducted by Sari and Anti (2003) and Dyne and LePine’s (1998) model that was adapted by different scholars in their research of this type of productivity that 29
need personal assessment (survey and interview), where this model depend on six main factors: Willingness to help others to achieve a goal, Strive for higher quality work than required, Strive for more work to do than required, Creative about solving the work problems, Willingness to take new responsibilities, and Meeting deadlines and occasionally completed assignments ahead of specific deadline, further explanation will be provided in the next chapter.
2.3.5 Concepts similar to Behavioral Productivity Referring to what have been mentioned above, behavioral productivity is more as an extra-role that employee provides without having a written job description including the six factors. This concept considered newly developed term especially when we connect it with other variables, also there are similar concepts to it that still new to the human resource discipline (Sivasakthi & Selvarani, 2015): Organizational Citizenship Behavior (OCB) is an extra-role behavior that happens voluntarily without the demanding of compensation in return as referred by (Tanaka, 2013). It has five main dimensions according to (Polat, 2009) as cited by (Veličkovska, 2017); altruism (helping colleagues to perform their job), courtesy (helping others to avoid potential problem), conscientiousness (performing job according to the rules), sportsmanship (protecting team interests
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and avoiding team conflicts) and civil virtue (high level of interest for the organization and high level of loyalty to the organization). It was first defined by Organ (1988). Contextual Performance referred as employees expected to perform above and beyond the requirement listed in their job description. It includes five main dimensions; Extra enthusiasm or effort as necessary to complete task successfully, Volunteering to carry out task performance that are not formally part of the job, Helping and cooperating with others, Following organizational rules and procedures even when personally inconvenient, Endorsing, supporting and defending organizational objectives, according to (Befort & Hattrup, 2003). Being able to provide contextual performance depend on the compensation the employee gets in return, also it something will influence the HR offices to be put into performance appraisal. It was first defined by Borman and Motowidlo in (1997). Innovation-Promotive Behavior focus on exerting change and it can be referred as ‘taking the charge’; also it focuses on the organization level rather than the members. It has four main groups; Problem finding and solving, Gathering of important information to promote innovation, Actions that put the customer satisfaction as the highest priority ‘Customer first’, and Suggestion and recommendation at the organizational level as mentioned by (Tanaka, 2013). It was first defined by Morrison and Phelps in (1999). 31
Based on the humble knowledge and observation of this research; behavioral productivity is more related to OCB in part of being an extra-role activity, and it related more to CP of being related to the individual and its own job, and finally it related to the IPB as it encourage innovation. And as far as the expecting of compensation or reward in return it should be defined in the result of this research which will be explained in the final chapter.
2.4 Job Satisfaction 2.4.1 Definition of Job Satisfaction Job satisfaction is one of the most researched topic in today’s business where managers are having very closer look and attention to it, though it is still has different side and effect that didn’t see the light while time is passing. The need of job satisfaction comes from its impact on employees’ productivity and as an end result on enhancing organizational performance, and what makes job satisfaction to be that important is the fact of being a variable affecta and affected by different other variables and has many characteristics (Aziri, 2011). Job satisfaction has been known from a long time: “Any combination of psychological, physiological and environmental circumstances that cause a person truthfully to say, ‘I am satisfied with my job’ ” Robert Hoppock’s definition (1935). 32
And according to Armstrong (2006) job satisfaction is the feeling and attitudes of people towards their jobs, and as Mullins (2005) illustrated it is more of internal state, emotions and feelings that is associated with personal feeling of achievement, it is within the employees’ control and yet also beyond their control. Job satisfaction referred by Statt (2004) is what the workers gain by doing his/her job in an intrinsic motivation forms.
2.4.2 The Importance of Job Satisfaction Nevertheless job satisfaction was known before almost a century, the variety of job types and tasks available in the current time that was not existed in 70 years ago make the studying of job satisfaction still an important aspect from the point of view of the researcher. The importance of job satisfaction is derived from its positive effect on organization efficiency and effectiveness and the damage that will happen when dissatisfaction appear such as lack of loyalty and absenteeism (Aziri, 2011). Also the importance relies for job satisfaction being a key factor leads to a feeling of fulfillment, promotion, and recognition (Kaliski, 2007). Many experts agreed that job satisfaction can influence employee behavior, work productivity, employee absenteeism and turnover, and it can be responsible for leaving the job decision (Diaz-Serrano and Cabral Vieira, 2005). According to Nguyen et al. (2003),
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employees’ job satisfaction is something that employers want to achieve where satisfied employees means lower turnover rate, and more productivity. For todays’ it is somehow technology itself is not the key factor for leading the competition rather it’s more about innovation, creativity and job satisfaction and the ability of employees in regard (Gresov and Drazin, 2007). Finally we can simply say that satisfied employees mean happy ones which mean they can lead organization to achieve more and not just from economic point of view as referred by (Pepe et al., 2017).
2.4.3 Factors lead to Job Satisfaction Overall researchers divide the factors that have an impact on job satisfaction into two main types; Factors cause job satisfaction called Motivators such as Achievement, Recognition, Work itself, Responsibility, and Advancement & Growth, and factors cause dissatisfaction called Hygiene Factors and that refer to Company policies, Supervision, Interpersonal relations, Work conditions, Salary, Statues, & job security (Rue and Byars, 2003). Also the literature review showed that there is a consensus between scholars on the main factors that have influence on job satisfaction, and here are some of these factors: Demographic variables, factors related to the job’s surrounding area taking example the requirement and specifications, factors related to the policies 34
inside the organization such as working hours, the work flexibility, the salary, the autonomy, the opportunity to develop (Lane et al., 2010; Aziri, 2011; Parvin and Kabir, 2011; Pandita and Domnic, 2016). Job satisfaction has an impact on construction workers’ attitudes and behaviors towards their job based on (Marzuki et al., 2012), and one of findings of Attar & Sweis (2010)’s research that job satisfaction considered as a key success for construction organization because it has a positive effect on reducing employee turnover rate. Different factors lead to job satisfaction for construction workers, at different job levels, and wages were not enough, alone, to reach the satisfaction, it seemed that the effect of satisfaction because of salary increment last for short time, so employees do look for another compensation that last longer according to (Anin et al., 2015) where the main conclusion was that recognition, work environment, supervision, job security and job itself has a higher influence on job satisfaction than the wages. According to Giritli et al. (2013) there is a shortage of studies on job satisfaction especially in the construction sector, and the situation is not any better from the humble point of view of this research. Also Onukwube (2012) pointed out that even though there are studies regarding job satisfaction in construction sector their finding still mixed and inconsistent.
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To study what is that lead to job satisfaction in the construction sector and, particularly, to study the impact of compensation types on job satisfaction in the mentioned sector is considered a primarily work, and once again that based on the knowledge of the researcher.
2.4.4 Models of Job Satisfaction Researchers came to agree on three main models of job satisfaction based on the factors type that influence job satisfaction, based on what Franěk and Večeřa (2008) have mentioned: The situational model of job satisfaction: It suggests that job satisfaction come from the job characteristics so for that it assumes that all employees with similar needs are satisfied by the same job characteristics. It covers; the demographic variables: gender, age, education, and job level. The dispositional job satisfaction model: It states that satisfaction depend on the internal locus of control, self-esteem, self-efficacy and neuroticism, it not related to job characteristics or the kind of situation. For that it suggests that satisfaction are carried from the person him/herself, and with the higher level of the above four characteristics the higher the opportunity to reach job satisfaction.
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The interactional model of job satisfaction: It suggests that the combination of personal and environmental characteristics that lead to job satisfaction and this model is known by Person – Environment Fit.
2.5 Compensation Types & Behavioral Productivity As mentioned above, each variable bring a significant importance to the organization, and as time goes by; the diversity regarding human personality and skills, technology, principles an terminologies, and others lead to the need to study variables over and over again, in the purpose to adapt the change and variation that are witnessed by the world. There are many literature reviews regarding compensation and workers productivity combined together, where part compensation was taking as a whole factor affecting the productivity without referring to a specific type, and the result was always that good compensation system lead to higher productivity, nevertheless when it was connected to the productivity it meant the basic salary or fringe benefits as referred by (O’Brien, 2003; Lambert, 2005; Mattke et al. 2007; Taiwo, 2010). On the other hand productivity was studied as objective parameter not subjective where this research aims to focus on. In different studies that will be shown next in the previous studies part, most of research viewed productivity from the objective scale (ratio of output over input), and based on the humble 37
knowledge of this research there were no a dedicated research regarding the known compensation types and the behavioral or subjective productivity. There were only few scholars who have achievement in the scope of behavioral productivity such Jeffery LePine and Linn Dyne which there model will be adapted in this research, Antti Lönnqvist, Sari Kemppilä, and couple of others.
2.6 Compensation Types & Job Satisfaction Simply, satisfaction will increase and occur whenever a need is getting more to the saturation level, and for job satisfaction the main mean to reach is by the basic salary (money) (Bright, 2008), money is the key motivator for the employees if it is not the only reason behind applying to a job. There are a many literature investigated in the effect of different compensation types on job satisfaction, and the reason why these researches is still going on; it is because compensation types, the main umbrella, are still the same but the categories underneath each type is not the same and with time passing a new compensation form will show up, also new jobs come across with new context and new methodologies to calculate and provide a reliable compensation system , so this research subject needs to be updated.
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Chapter Three: Previous Studies This chapter aims to provide a general view of some of the most related previous studies in regards of employees’ compensation, productivity and job satisfaction, where this research tries to highlight key areas in each topic in different countries (Foreign and Arabic). The selected studies were ordered firstly according to the subject (Compensation, Compensation and Productivity, and Compensation and Job Satisfaction; respectively), secondly each part were arranged from older to newest.
3.1 Compensation Wu, (2008). Entitled “A Longitudinal Study of Pay Satisfaction: An Examination of Reactions to Commitment and Work Performance.” examined the relationship between pay satisfaction (PS) on individual’s attitudes and behaviors. The researcher studied the effect of different dimensions of pay (pay level, benefit, pay raise, pay structure/administration, and bonus) on employee’s effective commitment, work effort and performance in two different periods of time (T1 & T2). The population of the study was the employees and their supervisors in ten hotels in Guangdong Province of China. The result of the questionnaires that came out of 682 (T1) and 270 (T2) employees and their supervisors were summarized as follow: Outcome-based PS (pay level and bonus) 39
were stronger predictors of individual outcomes (work effort and performance) compared with process-based PS (pay raise and structure/administration). Comparing to Outcome-based PS the process-based PS was more likely to have a positive effect on organizational outcomes (effective commitment). Finally this study didn’t find direct effects of benefit and structure/administration satisfaction on the examined outcome variables; and that reasoning to benefit plays a relative less important role in compensation package of Chinese employees, and that the two types of PS might indeed have no significant lagged effects on subsequent variables. Indartono & Chen, (2008). Entitled “Perception of Direct and Indirect Compensations
Fulfillment
on
Hazardous
Work
Environment:
The
Relationship with Age, Tenure, Employee’s Rank and Work Status.” investigated how the demographic variables (age, tenure, employee’s rank and work status) fulfill the direct and indirect compensation in hazardous work environment. The population of the study is a hazardous working environment, where the sample was the employees who are worked in copper and gold mining company and were counted 250 individuals. The analysis and the result of the questionnaires were based on 107 returned ones, and the following represents the summary of the outcomes: Age has positive correlation with direct and indirect compensation, and that also goes with employees’ tenure, rank and work status. 40
Age has a strong correlation with direct and indirect compensation but the tenure and the rank has a strong correlation only with the direct compensation. Elder employee has higher perceived of direct and indirect compensation fulfillments than the younger ones. Middle tenure employee has higher perceived of direct and indirect compensation fulfillments than the both of lower and higher ones. And High employee’s rank perceived compensation fulfillment more than lower employee’s rank. Yang & Luo, (2014). Entitled “Impact of Employees’ Compensation Satisfaction on Slack Work of Private Electronic Manufacturing Enterprises” studied the impact of compensation five dimensions (Independent Variable); compensation system, compensation equity, intrinsic motivation, compensation structure and welfare policy on slack of work (Dependent Variable) “employees’ behaviors that slow down the progress of the work or decline the work quality due to negative attitude towards work.”, and taking the demographic variables as a moderate one. The population of the research was the employees in the private electronic manufacture enterprises of Jiangsu Province, 290 questionnaires were distributed and the analysis and the result were based on 251 valid ones. The following is the summary of the result: There is a negative correlation between the five dimensions of compensation and slack of work; which means, for example the more there is fairness in the compensation there will be less of slack of work. 41
Compensation equity and welfare policy turn out to be the two major factors that have the most significant influence on slack work. Finally the younger employees have greater likelihood of slack work, and less educated workers and nonmanagement employees are more prone to slack behavior. All the mentioned above considered as of the basis to prevent employees’ slack behavior. Gupta & Shaw, (2014). Entitled “Employee Compensation: The Neglected Area of HRM Research” represented an overview of the papers related to this topic, explained why there are less researches about this topic, the importance of compensation, also it trigged some questions regarding compensation that need a comprehensive answers. The amount of papers about compensation, benefits and rewards are considered few compared to other topics; The annual meetings of Society for Industrial and Organizational Psychology in (2013) contained only three sessions regarding compensation, rewards, or benefits out of 1200 session, The HR division at Academy of Management launched only three sessions on compensation, In addition, Only two articles devoted to compensation out 111 articles in Personnel Psychology in five years period (2003-2007). The authors reasoning this shortage of articles regarding compensation to three main factors: a. Employee compensations as a critical influence on the quality of work, b. Compensations affect the behavior and attitudes of the employees, c. It is a critical to increase the firms’ profitability along with the increase on 42
compensation; it need a skilled HR, and this last point could be the summary of the importance of compensation as it considered the link between employees and employers. Abed, et al., (2014). Entitled “The Determinants of Chief Executive Officer Compensation in Jordanian Industrial Corporations” investigated the main factors that affect CEO compensations. The population contained the entire industrial corporation listed in Amman Stock Exchange (ASE) during (20052010), the total observation for the 70 companies were 420, 266 of it where the sample of this study. Many factors were considered in this research (CEO tenure, CEO age, Company age, Board size, Role duality, Institutional ownership, CEO ownership, and Control variable). The main result was that the CEO compensation affected mainly by the company size followed by the CEO tenure, and the CEO age is negatively affects the compensation.
3.2 Compensation and Productivity Kazaz et al. (2008). Entitled “Effect of Basic Motivational Factors on Construction Workforce Productivity in Turkey” aimed to identify the main factors that affect productivity of construction workers. The sample included 187 contracting companies only 82 of them responded. The researchers depended on interview, and telephone, and email to collect the data for 54 detailed questions 43
related to four main group factors (Organizational, Economic, Physical, and SocioPsychological) that as a sum included 37 different factors. The end result was that the economic factors placed the second that has the largest effect on workers’ productivity after the organizational ones; where some of the economic factors refers to the amount and the delay of payment factors. Mahamid
et al., (2014). Entitled “Major Factors Influencing Employee
Productivity in the KSA Public Construction Projects” identified the main factors affecting the productivity in public construction projects in Saudi Arabia from contractors’ point of view. The sample consisted of 41 contractors working in public construction who participated in filling out a structured questionnaire survey that contained 32 factors mainly affect the productivity based on the literature review that was made by the researcher, and these factors were classified into five main groups: Labor, Managerial, Materials and Equipment, Project, and Financial. The final results showed the level importance of each factors and the main ten factors that the lack of them will negatively affect productivity are: lack of labor experience, poor communication and coordination between construction parties, bad relations between labors and management team, payments delay by owner, misuse of time schedule, rework, labor’s low wage, financial conditions of contractor, poor site management, and frequent change orders, respectively.
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Sherif et al., (2014). Entitled “Critical Factors Affecting Construction Labor Productivity in Egypt” Identified and investigated the rank of the factors that affect construction labor productivity in Egyptian construction firms. The target population of contractors was 1,283 companies which were the current members of the Egyptian Federation for Construction & Building Contractors (EFCBC) within first, second, third, and fourth grades during conducting this research, out of this population a 300 contracting companies were selected as a sample which represented contractors, consultants, and clients structured questionnaire survey was distributed among them, where each questionnaire contained thirty factors classified on the following basis: human/labor, industrial, and management. The main result showed that factors underneath management category ranked first followed by factors underneath labor category then the ones underneath industrial category. Jarkas, (2015). Entitled “Factors Influencing Labour Productivity in Bahrain's Construction Industry” investigated, and explored the rank of factors that affecting workers’ productivity in construction sector in the Kingdom of Bahrain, where four classification used for these factors; Management, Technological, Labor, and External. The population consisted of 90 construction firms, and the selected sample where 73 ones, where a structured questionnaire survey were distributed among them and each questionnaire contained 37 factors in 45
total chosen by the researcher. The findings showed that Labor came as the first important factor to affect the productivity, Technological come at the second place, and the third and the fourth were Management and External, respectively. Hiyassat & Sweis (2016). Entitled “Factors Affecting Construction Labour Productivity: A Case Study of Jordan”. Described and analyzed the factors that affect productivity. The population was the construction labor where the sample emphasized a 200 engineers and foremen who work in contractors who received a questionnaire containing 27 different variables; where the analysis was based on 90 returned and valid ones. The main result showed that when experience increased so the productivity also that productivity increase as financial incentives do, and finally it will be increased when more trust and communication are there between management and workers. Oloke et al., (2017). Entitled “Incentive Package, Employee’s Productivity and Performance of Real Estate Firms in Nigeria” examined the relationship between employees’ incentives and productivity. The population was The Directory of the Nigeria Institutions of Estate Surveyors and Valuers, (2016), that contains 343 Estate Surveying and Valuation Firms registered and operating at different parts of Lagos State, and the sample selected were: 79 in Ikeja, 34 in Victoria Island and 4 Firms in Lekki, so it’s was 117 estate firms. Three questionnaires were used in each firm, where two were distributed among the 46
employees that mainly referred to questions related to the existing type of incentives that were used in the firm and what factors affect their productivity, and the third one among the employers/managers capacity. The final result was there is a positive correlation between incentives and productivity in order to meet the final goal which improving the organizational performance. Also not all the incentives types that were highlighted by the researcher (Base pay, Pension, Insurance, Commission, Seniority pay, Staff bus, Official car, Leave (annual, maternity, casual), Training, Professional development, Recognition, Feedback) existed in each firm.
3.3 Compensation and Job Satisfaction Sangadji, (2013). Entitled “The Effect of Compensation toward Job Satisfaction and Job Performance of Outsourcing Employees of Syariah Banks in Malang Indonesai.” Investigated the answer of (if satisfaction can be reached and the performance can be achieved in a country that have problem of labor recruitment through outsourcing), and other objectives of this research is to answer a main two questions; whether the compensations give satisfaction to the employees? And the second one whether the employees satisfaction affect their performance? This explanatory research studied effect of the financial and nonfinancial types of compensation as dependent variable on the employees’ performance as a dependent variable and considering job satisfaction as a moderate 47
variable. The population of the study is all employees of Syariah banks in the city of Malang with the status as outsourcing employee which are 951 people, and the sample of the study was 141 and they are equal to the respondents’ number. The result of the research can be summarized as follow: The previous mentioned problem will not have effect on job satisfaction and employee performance, but must be balanced with adequate financial and nonfinancial compensation. There is a significant positive effect of financial compensation on employee performance. There is a significant positive effect toward compensated employee performance through employee satisfaction. This study indicates that there is a significant positive effect of financial compensation on employee performance. Finally there is a significant positive effect on the performance of nonfinancial compensation of employees directly. Yamoah, (2014). Entitled “Exploratory Analysis of Compensation and Employee Job Satisfaction” studied the existence of compensation and job satisfaction. The population consisted of all the workers at Expresso Head Office Dzorwulu, Accra, out of them 50 workers were selected to fill up a closed and open- ended questionnaire, The result showed that there is no significant relationship between compensation and employee job satisfaction, but some types of compensation such as career development and job security were highly
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recommended by workers as they are a major contributing towards reaching job satisfaction. Muguongo et al., (2015). Entitled “Effects of Compensation on Job Satisfaction Among Secondary School Teachers in Maara Sub - County of Tharaka Nithi County, Kenya” aimed to determine the effects of both financial and non-financial compensation on job satisfaction. The population of this research consisted of 474 secondary school teachers in Maara-Tharaka Nithi-Kenya, and out of them 214 was selected to participate in the questionnaire. The result showed that job satisfaction is greatly influenced by the basic pay, allowances and work environment. Laan & et al., (2016). Entitled “The Effect of Compensation and Employee Development on the Job Satisfaction and Employee Performance” determined the effect of financial compensation (salary, incentives, insurance, allowances, pensions and so on) and non-financial compensation (recognition, appreciation, praise, and so on), and employee development on the performance of public service employees either directly or indirectly through job satisfaction. The population was all Civil Servants who carry out the tasks of public service in the province of East Nusa Tenggara, and the sample consisted of 200 Civil Servants after using two stages random that was determined by Structural Equation Modelling (SEM). The final result showed the following: Compensation types 49
have a significant effect on performance through job satisfaction whether directly or indirectly. Employee development doesn’t have a significant effect on performance whether directly or indirectly. And job satisfaction is a good tool to predict performance that influenced by different compensation types. Sudarno et al., (2016). Entitled “Effect of Compensation, Motivation and Organizational Climate on Employee Satisfaction: Study on PT. Sumber Alfaria Trijaya Tbk. in Gedangan-Sidoarjo” investigated and examined whether employees’ job satisfaction in PT office is affected by compensation, motivation organizational climate. The PT office which considered the population of this research contains 400 people and the sample contained 80 people based on Solvin formula with techniques proportional stratified random sampling procedure where a questionnaire were distributed among them. The final result was that all variables (compensation, motivation and organizational climate) have a significant impact on job satisfaction; the highest impact was for compensation, organizational climate, and motivation, respectively. Mabaso & Dlamini, (2017). Entitled “Impact of Compensation and Benefits on Job Satisfaction” investigated the impact of compensation and benefits on job satisfaction among higher education’s academic staff in South Africa which considered the population of this study. The sample consisted of 279 academic staff where semi-structured questionnaire were distributed on them. The main 50
result was that among academic staff; compensation has a significant effect on job satisfaction but benefits showed no significant effect. The main recommendation is to improve compensation strategy to improve employees’ dedication that effect commitment. Zaraket, et al. (2017). Entitled “Impact of Financial Rewards on Job Satisfaction and Employee Retention among Employees of Lebanese Banking Sector” analyzed the impact that results from financial reward or compensation and benefit on both job satisfaction and employee retention. The population was the Lebanese Banking sector where a questionnaire was distributed among the employees and the analysis based on 155 after distributing 270 questionnaires. The summary of results was as follow: significant relation between financial reward and job satisfaction, where salary and benefits are keys for employees’ satisfaction, also job satisfaction bears positive relation on employee retention.
3.4 Summary of the previous studies and the contribution of this research This research intended to overview a sample of different previous studies related to the variables of this research and the relationship between them in different countries in the same sector so the researcher and readers will have a better understanding of the current situation. 51
Based on the first part of previous studies that relates to compensations; we can see that compensations have been studied from variety different point of views; compensation dimensions, compensation determinants, compensation types; only focus on two types (direct and indirect compensation). It is fair to say that this research is covering all the types of compensation and study the impact of each type independently on different important variables, where none presented such topic before, as far as the knowledge of this research. In regard of the second part that connect between compensation and productivity, it is obvious that the whole studies didn’t emphasized the type of productivity that is considered in this research, (behavioral productivity), so mainly it refers to the quantitative side rather than the qualitative ones; and here where this research in your hand has a great advantage where it shed the light on a side of productivity that still researches are immature about- it can be counted on hands fingers, at the knowledge of the researcher -. Also most of the previous studies focused on group factors that affect productivity where compensation took a place underneath one of these groups, but it didn’t compensation as an independent variables. Again this consider a plus where this research studies the impact of each type of compensation as independent variable. Finally, as for the third part; job satisfaction comes in great interest for scholars through the time because of its important influence on the organization. 52
Previous studies took job satisfaction as an independent and as moderate variable, but in most of them it didn’t clarify the dimensions of job satisfaction that being studies. On the other hand this research took six main dimension of job satisfaction a. Availability of equipment and tools, b. Reasonable task size, c. Team work high spirit, d. High Morality, e. Consider a job as a positive point, f. Being part of the organization.
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Chapter Four: Research Methodology 4.1 Introduction This chapter clarifies how this research was developed, and gives an overview of couple headlines: Construction Sector in Jordan, Research Design, Sampling Process, Data collection methods, and finally, Data Analysis Technique.
4.2 Construction Sector in Jordan The construction sector is a very important and complex sector that covers different areas of Jordan economy; it can be considered as a service, industrial, or investment sector. Jordan Chamber of Industry responsible of the industrial side of construction sector where it covers all the industry of, for example, cement, glass, asphalt, metal structure, and others. Contracting and Consultancy (Architecture / Engineering) emphasize more the service and investment sides; Where Jordan Construction Contractors Association (JCCA) responsible for all the contracting firms and Jordan Engineering Association (JEA) responsible for the consultancy firms, All of the mentioned institutions are regulated and work along the Ministry of Public Work and Housing. Construction sector play a significant role in the Jordanian economy especially the service and housing sub-sectors, as it contains more than120 54
thousands engineer and provide consultancy services to more than 31 countries, according to what Abdullah Nsoor (Former Prime Minister) at the International Conference and Exhibition for Contracting (2015). The contracting firms categorized in six different categories (1st Class, 2nd Class, …, 6th Class) each class reflects the size of the company and mainly the number and size of projects that have been established by that firm, where 1st Class considered the strongest. Same Goes for Consultancy firms that are categorised, mainly, 1st Class & 2nd Class.
4.3 Research Design This research adopted a descriptive approach of the exploratory type and relied on both primary and secondary data, in order to conclude the impact of compensation types on both behavioral productivity and job satisfaction of employees, and to understand the current situations of firms regarding the compensation types they provide.
4.4 Sampling Process 4.4.1 Research population and sample This research focuses on the 1st Class classification of both contracting and consultancy firms located in Amman, and according to the Instructions for 55
Classification of Contractors (2007) issued by the Ministry of Public Work and Housing, contractors of 1st Class must have three main people (Finance, Technician and Management) and according to the opinion and observation of more than four senior engineer who worked for more than 20 year, those contractors have mainly five people resident in the office for management. The population consists of 187 firms of 1st Class (Roads, Buildings, Electromechanical, Water & Sanitation, and Specialized Works) based on the data collected from the web sites of both JEA and JCCA - the last update was in (2016), multiplied by 5 results in 935 employees at low and middle managerial level. Referring to the short time that the researcher has and the high distribution of the firms in Amman, it was wise for this research to depend on Area Sampling (Sekaran, 2003); the firms of population were clustered using the location of the firms (considering the ones that familiar to the researcher), and the research used a comprehensive survey for these locations (Gardins, Mekkah, Abdulah Abu Ghosheh, Prince Tagreed, Queen Noor, and University) streets, also (Aldkheleh, 6th, 7th, and 8th) circles resulting in 42 firms which means 22% of the population. Based on the above, the population of this research consists of 42 (1st Class) firms with 210 employees relies at low and middle managerial level, aside from that five questionnaires were distributed as a pilot study on employees who are in
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and out the construction sector, in order to check on the time needed to fill it and to make sure all the questions are clear and understandable. At the end, 210 questionnaires were distributed after taking the permission from the person in charge, and only 165 questionnaires were returned; it reasoning for the refusal of management in some firms to distribute the questionnaires among their employees! And they refused to disclose the reason behind their decision, also some broke their promise to fill out the data and it was known in too late stage that it cannot be managed. After reviewing all the 165 questionnaires only 140 were valid and ready to be analysed.
4.5 Data Collection Methods As mentioned above; this research based on secondary data that has been collected through different available resources such as the university’s library, university’s database for MBA students, known scientific magazines, and reliable website such as ResearchGate (RG). Also it relied on primary data using questionnaires that were entered to and analysed by SPSS and multiple tests were conducted to reach the final result that the research wants to achieve.
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4.6 Research Instrument 4.6.1 Questionnaire Design Cross-Sectional questionnaire was developed as the main instruments to collect the data from the respondents. It contains four pages: the first one an introduction for the respondents about the topic of the questionnaire, the second page to collect the demographic variables for the respondents as well as the current compensations provided by their current firm; as the researcher depends on literature review as well as the familiarity of work environment in construction sector to make a comprehensive list of the compensations packages that could be provided underneath each type, finally the last two pages (contain the four main groups) followed 5-Point Likert scale; (1 “Strongly Disagree” till 5 ”Strongly Agree”) contained the questions related to the main variables. First Group: Compensation Types As discussed; there are three main types for compensation and were covered in this research, the following will shed the light on the purpose of each questions and it worth mentioning that questions number: 10, 11, & 12 , in the following tables, are related to overall compensation.
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First Part: Direct Monetary Compensation (DMC) This part consists mainly with few options (salary, commission, and bonus) as mentioned in the previous chapter, but also it is important in this part not only to focus on the type itself but the organizations structure and policies that affect those types. Table (4-1): List of items in the questionnaire regarding direct monetary compensation 1 2 3 4 5
Consistency and clearance of the company's pay policies. The salary paid in this organization is commensurate with the responsibilities shouldered. The company gives information about pay/compensation issues the concern me. I am aware of all the deduction made on my salary The company’s pay structure is clear.
Zarca Interactive (2016) www.zarca.com
Second Part: Indirect Monetary Compensation (IdMC) The purpose of this part is to give indication for two points: whether there is variety of IdMC provided by the company in order to achieve first objective of this research, on the other hand, as explained before, money is the driven to look for a job but we want to know if by time passing IdMC will be requested more than having increment on the base salary. 59
Table (4-2): List of items in the questionnaire regarding indirect monetary compensation Indirect monetary compensation are various in my company I consider the indirect monetary compensation is 7 as important as getting paid my salary. 6
By this research
Third Part: Non-Financial Compensation (NFC) Sometimes receiving intangible things such as praising a pet on the back can make someone’s day; NFC is really getting intentions especially when we talk about flexi-time and being able for someone to see his/herself climbing the ladder in their firm. Question 8 and 9 describe how employees look at NFC and their thought regarding the firm’s intention towards NFC. Table (4-3): List of items in the questionnaire regarding non-financial compensation The company takes good care of Non-Financial compensation as much as for the basic salaries. I consider the Non-Financial compensation is 9 as important as getting paid my salary. The types of compensation provided by the 10 company are clear. 11 I am fairly compensated. The compensation paid in this organization 12 does match the responsibilities I hold. 8
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(Bellingham, 2011) published by Wellness Council of America (WELCOA)
Second Group: Behavioural Productivity This part was measured using six main behaviors: an employee who helps others to complete the tasks, looks for higher quality, provides extra efforts, depends on creativity in overcome the challenges, takes account for new responsibilities, and finally, submits his/her task before deadline, is considered to have high behavioral productivity which eventually leads to high overall productivity. Table (4-4): List of items in the questionnaire regarding behavioural productivity 13 14 15
I have the willingness to help others to achieve a goal. I strive for higher quality work than required. I strive for more work to do than required.
16 I manage to use my creativity in solving work problems. 17 I am willing to take new responsibilities.
Dyne and LePine’s (1998) as cited in (Sari and Anti, 2003) and (Seok-Hwi Song, 2006)
18 I occasionally completed assignments ahead of specific deadline.
Third Group: Job Satisfaction According to scholars job satisfaction can be measured depending on variety of factors. This research covered the following factors as being the most used ones because of their comprehensive look for factors influencing job satisfaction: Work 61
condition; that defines the availability on instruments and tools, the organization policies and rules, and the job itself. Relation with Co-workers; it makes a huge difference if the communication channel and the easy talk do exist between colleagues. High moral; mainly achieved from having supportive managers. Job does matter; one of the effect of having a job satisfaction that employees consider their job as a positive thing that is going on in their lives. Finally, Work is home; it matters when the employee feel close to the company and feels he/she is a part of it and their work does add value. Table (4-5): List of items in the questionnaire regarding job satisfaction I have the tools and resources I need to do my 19 job. 20 The amount of work expected of me is reasonable. 21 It is easy to get along with my colleagues. 22 The morale in my department is high.
23 This work is a real plus in my life.
24 I feel like I am a part of this company.
62
(Parvin and Kabir, 2011) (Parvin and Kabir, 2011) (Parvin and Kabir, 2011) Minnesota Satisfaction Questionnaire (MSQ) in (1977) as cited in (Aziri, 2011) (Bellingham, 2011) published by Wellness Council of America (WELCOA) (Bellingham, 2011) published by Wellness Council of America (WELCOA)
Four & Fifth Groups: These two paragraphs of questions connect the independent variable with each dependent variable; it was established by the researcher, where it was emphasized on areas that matter to the research objectives. The last three questions 34, 35, & 36 are a result of overall satisfaction towards the three types of compensations. Table (4-6a): List of items in the questionnaire regarding the impact of compensation types on both behavioural productivity and job satisfaction Impact of Compensation Types on Behavioral Productivity 25 Fringe Benefits encourage me to do extra work. 26 Receiving non-financial compensation is what motivates me to submit my assignments before the deadline. 27 The overall good working condition supports my innovation and creativity. 28 29
To strive for higher quality output is related to the rewards I get in return. Helping others to achieve the intended goal is recognized by the company.
30 I am willing to take more responsibility in exchange of increment or expand in my compensations (ex: salary) Impact of Compensation Types on Job Satisfaction 31 The compensation is satisfactorily reviewed from time to time. 32 Fringe benefits (ex: health insurance, vacation, etc.) considered a reason behind me liking the job 33 Non-financial compensation (ex: flexible time, opportunity to develop, etc.) is why I like my job. 34 I am satisfied with the current direct monetary compensation (Salary, bonus, etc.)
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Table (4-6b): List of items in the questionnaire regarding the impact of compensation types on both behavioural productivity and job satisfaction 35 I am satisfied with the current indirect monetary compensation (health insurance, childcare, etc.) 36 I am satisfied with the current non-financial compensation (praising, recognition, promotion, etc.)
4.6.2 Instrument Validity The validity of this questionnaire was obtained by two experts in the field of management and marketing at Yarmouk University (see Appendix (1)). As mentioned before, the research adopted a pilot study to verify the validity of the questionnaire.
4.6.3 Instrument Reliability According to Sekaran (2003), Cronbach's Alpha Coefficient is used to examine constructs reliability of the research, and the value of it should be (α ≥ 0.6) for the studies of administrative science and humanity
64
Table (4-7): Cronback’s Alpha coefficient, N=140 Number of Items
Cronbach’s Alpha
Compensation Types
12
0.770
Behavioral Productivity
6
0.781
Job Satisfaction
6
0.805
6
0.665
6
0.871
The Domain
Impact of Compensation Types on Behavioral Productivity Impact of Compensation Types on Job Satisfaction
The above table shows that the Cronbach Alpha for the research main items is between (0.665-0.871) and this considered accepted, therefore it is suitable for the purpose of this research.
4.7 Statistical Analysis Descriptive statistical techniques have been used, due to the nature and the content of this research, depending on Statistical Package for Social Sciences (SPSS). Mean (average), Frequency, and Standard Deviation are most common
65
tools that are used for descriptive statics, also a multiple regression is used to test the research hypotheses. For more explanation T-Test is used for variables that have only two level, and ANOVA test was used for variables that have three and more levels. To estimate the level of the answer from the respondents point view the following criteria is used: Low- Level 1 - 2.33 Moderate-Level 2.34 - 3.66 High-Level 3.67-5
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Chapter Five: Statistical Analysis 5.1 Introduction This chapter considered the backbone of this research, where the result of the data analysis will be presented; as it will provide an analytical description of the set of data we have: demographic variables, Compensation packages provided, and the remaining point of view for respondent against independent and dependent variables, it will show if the hypotheses are correct or not, and as the net result it will achieve the objectives of this research.
5.2 Characteristics of the Study Sample The respondent requested to fill their general information: Gender, Age, JobLevel, Job-Title, and Years-of-Experience-in-the-Current-Company. Also they were requested to choose element/s from each compensation types that are currently receiving from his/her current company (see Appendix (2)).
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Table (5-1a): Demographic characteristics of the research sample Item
Job – Title
Name
Frequency
Manager Warehouse Manager Finance Manager Maintenance Manager Project Manager Dept. Manager Lab Manager HR Manager Public Relation Manager Contracts & Specification Manager Engineer Mechanical Engineer Architectural Engineer Procurement Engineer S. Planning Engineer Tender Engineer Project Engineer Civil Engineer Site Engineer Accountant Secretary S. Technician Supervisor Assistance General Safety Supervisor Surveyor Project Coordinator Project Monitor
5 1 3 1 6 2 3 4 1
Percentage % 3.6 0.7 2.1 0.7 4.3 1.4 2.1 2.9 0.7
1
0.7
21 2 5 4 3 1 3 12 20 9 9 13 2 1 2 2 1 3
15.0 1.4 3.6 2.9 2.1 0.7 2.1 8.6 14.3 6.4 6.4 9.3 1.4 0.7 1.4 1.4 0.7 2.1
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Table (5-1b): Demographic characteristics of the research sample Item Gender
Age
Job-Level Year-of-Exp.-in – the-CurrentCompany
Level Male Female 25-35 36-45 46-55 Older than 55 Managerial Engineering Technical 1-5 6-10 11-15 More than 15
Frequency 95 45 88 31 12 9 42 77 21 72 25 17 26
Percentage % 67.9 32.1 62.9 22.1 8.6 6.4 30.0 55.0 15.0 51.4 17.9 12.1 18.6
The above two tables (5-1a) & (5-1b) represent the frequency and percentage for each element that reflect the characteristics and the situations of the respondents. The highest percentage went to Male with (67.9%), 25-35 with (62.9%), Engineering with (55.0%), 1-5 with (51.4%), and Engineer with (15+1.4+3.6+8.6=28.6%) in regard of gender, age, job-level, years of experience, and job-title; respectively. It worth mentioning that still there are employees above 55 years working in that sector.
5.3 The Analysis of the Research Questions 1. What is the most important compensation element the employees receive aside from salary?
69
To answer this question, frequency test is needed to be run in order to get the compensation elements that occur higher than the rest, the reasoning why to exclude salary is because the population and the sample of the study targeting the low and medium managerial level employees, who considered as full time employee so the salary is a basic here. Table (5-2a): Compensation elements that provided by the research sample firms Compensation Types Element Frequency Percentage %
Direct Monetary Compensation (DMC)
Salary Commission DMC_Others - Bonus H_D_L_Insurance Profit_Sharing Stock_Ownership
Indirect Monetary Compensation (IdMC)
Child_Care Property_Ownership Retirement Tuition_Fees Paid_Vacations Mobility_Travel_Costs
70
140
100
8
5.7
5
3.6
41
29.3
4
2.9
5
3.6
2
1.4
0
0.0
24
17.1
4
2.9
77
55.0
45
32.1
Table (5-2b): Compensation elements that provide by the research sample firms Item
Element Food_Coupons
IdMC
IdMC_Others -Training IdMC_Others - Social Security Recognition_of_Effort Praise Promotion Participation_in_DM
Non-Financial Compensation (NFC)
Receive_Special_Tasks Friendly_Welcome Work_Autonomy Feedback Opp_to_Develop Flexibility_in_Working _Hours
Frequency Percentage % 3
2.1
2
1.4
11
7.9
78
55.7
68
48.6
42
30
45
32.1
32
22.9
52
37.1
55
39.3
15
10.7
35
25.0
39
27.9
Based on the above two tables (5-2a) & (5-2b); the highest percentage among all the elements is Recognition-of-Effort (55.7%) which is an element from the NFC, and it follows by Paid-Vacation (55.0%), Praise (48.6%), WorkAutonomy (39.3%); respectively. 71
2. What is the perspective of employees towards the different types of compensation? This research provided couple of question related to the three types of compensations, and the below table will present the mean of each type according to the respondents answer. The table below (Table (5-3)) shows that the overall level of compensation from the employees point view is moderate (3.16) depending on the three last questions, and even if we calculate it over the three types still the overall level will relies in moderate level. Let us focus here on the least means that belongs to q11 “I am fairly compensated.” and q8 “The company takes good care of Non-Financial compensation as much as for the basic salaries.” Although as the result for the highest elements of compensations beside the salary were under the Non-Financial Compensation, as mentioned above, it is still doesn’t reach to be taking care of as the payment system!. In addition feeling fair is something that should not be underestimated!
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Table (5-3): Mean & Standard Deviation for the compensation types No.
No.
Item
Mean
SD
4.04
0.94
3.39
1.001
3.47
1.042
4.28
0.750
3.26
1.153
3.21
1.007
3.73
4.486
The company takes good care of Non-Financial compensation as much as for the basic salaries. 9. I consider the Non-Financial compensation is as important as getting paid my salary. Overall, Compensations
3.08
0.982
3.49
0.978
10. The types of compensation provided by the company are clear. 11. I am fairly compensated.
3.22
1.004
3.09
1.021
12. The compensation paid in this organization does match the responsibilities I hold.
3.17
0.981
Direct Monetary Compensation (DMC) 1. 2. 3. 4. 5.
Consistency of the company's pay policies. The salary paid in this organization is commensurate with the responsibilities shouldered. The company gives information about pay/compensation issues the concern me. I know about all the deductions made on my salary. The company’s pay structure is clear.
Indirect Monetary Compensation (IdMC) 6.
Indirect monetary compensation are various in my company 7. I consider the indirect monetary compensation is as important as getting paid my salary. Non-Financial Compensation 8.
Overall average for compensation
73
3.16
3. What is the level of behavioral productivity among employees? This variable was measured through six different behaviors that employees exert, and in order to answer the question Mean and Standard Deviation test must be run. Table (5-4): Level of behavioral productivity among the employees No.
Item
Mean
SD
13. I have the willingness to help others to achieve a goal. 14. I strive for higher quality work than required. 15. I strive for more work to do than required.
4.24
0.795
4.34
0.747
3.96
0.913
16. I manage to use my creativity in solving work problems. 17. I am willing to take new responsibilities.
4.09
0.795
4.06
0.938
18. I occasionally completed assignments ahead of specific deadline.
3.99
0.857
The overall average of behavioral productivity
4.11
Table (5-4), shows that standard deviation are close range (0.74-0.93) it means that the variation of respondents towards this part was relatively small, meaning the majority having the same perspective towards the previous questions. The highest mean (4.34) was for the (q13 “I strive for higher quality work than
74
required.” And the least was (3.96) for the (q15 “I strive for more work than required.” The overall mean lies on the high level that ranges from (3.67 – 5). 4. What is the level of job satisfaction among employees? Each question in this part is a factor that effects or leads to job satisfaction, and in order to understand the level of satisfaction of the employees in the construction sector mean test was needed. Table (5-5): Level of job satisfaction among the employees No.
Mean
SD
19. I have the tools and resources I need to do my job. 20. The amount of work expected of me is reasonable. 21. It is easy to get along with my colleagues.
4.11
0.686
3.80
0.797
3.94
0.888
22.
3.81
0.910
4.19
0.801
4.09
0.864
23. 24.
Item
The morale in my department is high. This work is a real plus in my life. I feel like I am a part of this company.
The overall average of job satisfaction
3.99
The overall mean is (3.99) which again considered at high level, and based on the values in Table (5-5), the q23 “This work is a real plus in my life.” has the highest mean while q20 “The amount of work expected of me is reasonable.” has 75
the lowest one. It seems that most of employees take their job seriously as they considered it an advantage. 5. What is the level of the impact of compensation types on both behavioral productivity and job satisfaction? Each dimension of behavioral productivity was connected to compensation same as for job satisfaction, and using the mean we will answer the above question. In this part we used the two paragraphs of questions that connect the variables together. Table (5-6): Mean & SD for the impact of compensation types on behavioral productivity No.
Item
25. Fringe Benefits encourage me to do extra work. 26. Receiving non-financial compensation is what motivates me to submit my assignments before the deadline. 27. The overall good working condition supports my innovation and creativity. 28. To strive for higher quality output is related to the rewards I get in return. 29. Helping others to achieve the intended goal is recognized by the company. 30. I am willing to take more responsibility in exchange of increment or expand in my compensations (ex: salary) Average level of the impact of compensation types on behavioral productivity
76
Mean
SD
3.81
1.003
3.39
1.083
3.74
0.860
3.24
1.090
3.45
0.859
3.47
1.007
3.51
Table (5-7): Mean & SD for the impact of compensation types on job satisfaction No.
Item
31. The compensation is satisfactorily reviewed from time to time. 32. Fringe benefits (ex: health insurance, vacation, etc.) considered a reason behind me liking the job 33. Non-financial compensation (ex: flexible time, opportunity to develop, etc.) is why I like my job. 34. I am satisfied with the current direct monetary compensation (Salary, bonus, etc.) 35. I am satisfied with the current indirect monetary compensation (health insurance, childcare, etc.) 36. I am satisfied with the current non-financial compensation (praising, recognition, promotion, etc.) Avg. level Impact of compensation types on job satisfaction
Mean
SD
2.75
1.099
3.13
1.193
3.22
1.126
3.14
1.063
2.71
1.190
3.10
1.101
3.00
We can illustrate form the first table (5-6) that compensation types have a moderate impact on behavioral productivity with overall mean equals to (3.51), it means that respondents exert those six attitudes not relying totally on the received compensations, so we can say that most of employees do not expect something in return just like the OCB concept. Also the compensation types have a moderate impact on job satisfaction of employees with mean of (3.00); as it can be
77
seen that most of the employees agreed on least satisfaction of the indirect monetary compensation (q35).
5.4 Testing the Research Hypotheses Main Hypothesis One: There is a positive impact of Compensations Types on employees’ Behavioral Productivity. To test the validity of this hypothesis; simple linear regression test was conducted. Table (5-8): Regression Analysis, H1, N=140 Independent Variable
B
β
T
Sig
R
R Square
F
1.66
0.356
4.477
.000
0.356 (a)
0.127
20.042
a. Dependent variable: Behavioral Productivity According to the above table; the value of B (1.66) indicates that each 1 unit increase in the independent variable it will be followed by almost two unit increment in the dependent variable, and depends on R square value (0.127) compensation types’ effect on behavioral productivity by 12.7%. Finally, the value of Beta shows that there is a positive impact of compensation types on behavioral productivity, and that make our hypothesis to be true.
78
Main Hypothesis Two: There is a positive impact of Compensation Types on employees’ Job Satisfaction. Simple Linear Regression test have been made in order to refuse or accept this hypothesis. Table (5-9): Regression Analysis, H2, N=140 Independent Variable
B
β
T
Sig
R
R Square
F
0.200
0.464
6.159
.000
0.464 (a)
0.216
37.931
a. Dependent variable: Job Satisfaction Table (5-9) indicates that there is a positive impact of compensation types on job satisfaction with Beta equals to (0.464), and depends on R square value (0.216) compensation types’ effect on job satisfaction by 21.6%. As a result the second hypothesis is accepted. The following three hypotheses were checked by applying T-Test and ANOVA test, where T-test used for gender and ANOVA used for age, job-level, and years of experience characteristics as they have more than two level of options. Main Hypothesis Three: There are no significant differences at the level of (α≤0.05) in the views of the research sample members about compensation types due to demographic and functional variables (Gender, Age, Job-Level, Years of experience). 79
Main Hypothesis Four: There are no significant differences at the level of (α≤0.05) in the views of the research sample members about the behavioral productivity due to demographic and functional variables (Gender, Age, JobLevel, Years of experience). Main Hypothesis Five: There are no significant differences at the level of (α≤0.05) in the views of the research sample members about the job satisfaction due to demographic and functional variables (Gender, Age, Job-Level, Years of experience). The whole results are shown in table (5-10); which indicates the following there are no significance difference regarding the four demographic variables in regard of compensation types, nevertheless the values are related to the compensation types all together, the researcher founds no difference taking each type alone; that is why this research was satisfied by the overall result alone. The hypothesis one have been accepted as the significance is higher than (0.05), but the second and the third hypotheses were not accepted as the result shows the opposite of what had been suggested. Looking at the table we can see that the respondents’ change their mind regarding behavioral productivity according to their years of experience; a difference mainly found in regard of (q14, q15, q17) from behavioral productivity side . In addition, they show differences in 80
their opinion according to their job level regarding behavioral productivity and job satisfaction; (q13, q14, q16, q18) from the behavioral productivity side showed significance (α≤0.05), and (q19, q20, q23, q24) from job satisfaction side as well. See Appendix (2) to recall the questions. Table (5-10): Difference regarding respondents’ demographic variables Demographic Variable
Gender
Age
Job-Level
Years-of-Experience
Research Variables
Significance Difference
Compensation Types
0.699
No
Behavioral Productivity
0.772
No
Job Satisfaction
0.894
No
Compensation Types
0.552
No
Behavioral Productivity
0.927
No
Job Satisfaction
0.430
No
Compensation Types
0.076
No
Behavioral Productivity
0.003
Yes
Job Satisfaction
0.006
Yes
Compensation Types
0.784
No
Behavioral Productivity
0.037
Yes
Job Satisfaction
0.083
No
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Chapter Six: Result Discussion 6.1 Introduction After, the analysis of the research questionnaire and hypotheses; this part is responsible to address the main results and observation of this research, and the suitable recommendations will be listed, accordingly. In addition, to the contributions, limitation, and future work, of this research.
6.2 Results Starting with the compensations types provided by the firm; only 25% of employees receive retirement plan (social security), and only 29% covered with insurance services. The IdMC percentages were rating from (0% - 55%), regarding NFC the percentages rating from (10.7% - 48.6%). AS we mentioned before in chapter three, money is the main reason behind getting a job, and as a confirmation on that, people want to know how much they can get, and chose way to increase it and for most important they want to know what is being deducted from their money (salaries) as we have shown in table (53), q4 got the highest mean (4.28), also depending on this table, companies should take care also with the non-financial compensations, and according to equity theory that was discussed earlier it is very important for employees to feel fair in 82
regard what they receive in return of their work, and what they receive comparing to other return as well, and unfortunately firms doesn’t provide a fair compensation (3.09) and that will lead to a negative behaviours. In general, the level of behavioural productivity among employees was high according to (5-4) table, and comparing it with tables (5-6) and (5-8), only 12.7% of behavioural productivity can be explained by the existing of receiving compensation types.
This research suggest that the high mean of exerting
behavioural productivity comes from that employees or human in general come to justify themselves and appear as the ideal employees, and the weakness in selfjudgment and tasks, and according to this research the result might be a whole different if the employer give his/her opinion in the employees regarding this six factors. Based on tables (5-5), (5-7), and (5-9); the level of job satisfaction among employees were high (3.99), even though compensation types have a positive impact on job satisfaction that matches with (Stuurman and Walsh, 2014) who said that 70% of the studies about compensation and job satisfaction confirmed that impact, still it have a weak positive impact as shown above in the table. And there is a moderate relationship between both variables (3.00). The majority are not satisfied with the indirect monetary compensation (such, as insurance) and that matches with the first observations, also the compensation topics is not usually 83
discussed and reviewed from time to time according to the employees opinion (2.75), and one prove on that, some firms didn’t accept to distribute this questionnaire among their employees it could be they don’t want them to openwide eyes- on this topic! Employees’ perspectives towards behavioral productivity differ according to their job-level, and years-of-experience, also their perspectives towards job satisfaction differ according to their job-level.
6.3 Recommendation Job satisfaction is a core variable that need to be exist strongly in any organizational environment, as it an engine that drive firms for more sustainability, productivity, and profitability. Indirect monetary and nonfinancial compensation categories should be applied in wider scope. And according to (Kabir, 2016) fringe benefits raise employees satisfaction. Behavioral productivity should be increased or at least remain at the same level, and that by defining other variables that affect strongly on the six factors of this variable. Most importantly, employees have the right to know about the compensation types that can be provided for them and let them have the
84
right to speak for themselves and for their voice to be heard in this matter. HR should be aware of the rising issues and topics regarding compensation, and should maintain a flexible compensation policy as much as they could.
6.4 Limitation and Future Work This research based on questionnaire only, where the relationship between the independent and dependent variables were measured with the neglect of other variables that might indeed make the impact more/less powerful on the dependent variables. It will add more value if the future research about this topic strengthen the study with other tools such as interview. It was made on sub-part of construction sector so the results cannot be generalized; moreover it was dedicated to firms located in Amman only. In addition, the respondents only from low and middle level of management, as for including the workers it means to allocate all the projects managed by each firm and to make field visits. The number of Jordan population is noticeably increasing taking in consideration the political situation in the area that make Jordan a safe place to return to, and for other factors as well, which will impact the role of the 85
construction serviced sector in Jordanian economy, so further future research is recommended to understand how to make from this sector as a competitive advantage to the economy, and take full advantage of the quantitative and qualitative resources in order to achieve that. The shortage in time to cover the whole construction sector in order to give generalized results. A longitudinal study is recommended for future works in order to build a solid ground for the studied relationship.
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Important Web Sites: Instructions for Classification of Contractors http://www.mpwh.gov.jo/التعليمات/Pages/default.aspx Jordan Chamber of Industry http://www.jci.org.jo Jordan Construction Contractors Association (JCCA) http://www.jcca.org.jo Jordan Engineering Association (JEA) http://www.jea.org.jo Zarca Interactive http://www.zarca.com
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Appendices Appendix (1): List of Arbitrators
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Appendix (2): English Research Questionnaire
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Appendix (3): Task Facilitation
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Appendix (4): Arabic Research Questionnaire
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الملخص باللغة العربية البطاينة ،وعد .أثر أنواع التعويضات على االنتاجية السلوكية والرضا الوظيفي للموظفين :قطاع االنشاءات في األردن (حالة دراسية) رسالة ماجستير ،في إدارة األعمال .2017،إشراف أ.د .جمال أبو دولة. تهدف الد راسة الحالية إلى الكشف عن أثر أنواع التعويضات واالنتاجية السلوكية والرضا الوظيفي للموظفين في قطاع االنشاءات األردني .وقد اتبعت هذه الدراسة المنهج الوصفي للنموذج االستكشافي في محاولة لتسليط الضوء على أهم التعويضات المقدمة للموظفين إلى جانب معرفة واقع أنواع التعويضات المتاحة وأبرز األبعاد الخاصة باالنتاجية السلوكية والرضا الوظيفي. تكون مجتمع الدراسة من شركات المقاوالت واالستشارات فئة أولى والبالغ عددها ( )187شركة في التخصصات الخمسة الرئيسية (طرق ،وأبنية ،وكهروميكانيك ،ومياه وصرف صحي ،وأشغال متخصصة)، ثم ت ّم اعتماد العينة العنقودية في تحديد حجم العينة الذي بلغ عددها ( )42شركة ،حيث بلغ عدد الموظفين من إدارة دنيا ووسطى إلى ( )210موظف .واستندت هذه الرسالة الستخالص النتائج على ( )140استبانة صالحة للتحليل من أصل ( )165استبانة تم استردادها .وأظهرت النتائج وجود أثر ايجابي ألنواع التعويضات على كال المتغيرين :االنتاجية السلوكية والرضا الوظيفي .كما أظهرت النتائج وجود مستوى عا ٍل من االنتاجية السلوكية والرضا الوظيفي .وأشارت النتائج إلى عدم وجود فروقات ذات داللة إحصائية من وجهات نظر أفراد عينة الدراسة حول أنواع التعويضات ،ووجود فروقات ذات داللة إحصائية من وجهات نظر أفراد عينة الدراسة حول االنتاجية السلوكية والرضا الوظيفي تبعا للعوامل الديموغرافية التالية (الجنس ،والعمر، والمستوى الوظيفي ،سنوات الخبرة في الشركة الحالية) .ومن أهم توصيات هذه الدراسة :توفير كافة عناصر أنواع التعويضات ومن أهمها )التأمين الصحي ،والضمان االجتماعي( ،وتفعيل دور اإلدارة بتوضيح
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ى جديد والدخول التعويضات المقدمة من الشركة ،وأخيرا نرجو أن يتم أخذ موضوع التعويضات إلى مستو ً بأدق التفاصيل بالنسبة لهذه المتغيرات . الکلمات المفتاحية :أنواع التعويضات ،التعويضات المالية المباشرة ،التعويضات المالية غير المباشرة ،التعويضات غير المالية ،االنتاجية السلوكية ،الرضا الوظيفي ،قطاع االنشاءات ،األردن.
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