JUNE 2011

ISSN
2073-7122
INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS V 3, N 2
ijcrb.webs.com

OL

IJCRB
Vol .3, No. 2
June 2011

Interdisciplinary Journal of
Contemporary Research in Business
Double Blind Peer Reviewed Journal

Indexing /Abstracting in

Inclusion in

Included in
GOOGLE SCHOLAR
Listed in ULRICHS

www.ijcrb.webs.com

Indexing in ABI/INFORM ijcrbjournal@aim.com

Monthly Edition
USA, Americian Business Information

Indexed in CABELLs-USA

Copyright 2011
IJCRB

Indexed in APA-PsycINFO Listed in Journal Seek

Institute of Interdisciplinary Business Research~ IIBR

COPY RIGHT 2011 Institute of Interdisciplinary Business Research

INTERNATIONAL RESEARCH CENTRE

ijcrb.webs.com

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS

JUNE 2011

VOL 3, NO 2

REWARD PRACTICES: A TECHNIQUE TOWARDS ENHANCED

ORGANIZATIONAL PERFORMANCE
Jahanzeb Shah (Corresponding author)
Shaheed Zulfiqar Ali Bhutto Institute of Science & Technology (SZABIST)
Jamila Khatoon Warsi
Shaheed Zulfiqar Ali Bhutto Institute of Science & Technology (SZABIST),
Shoaib bin Naeem
Shaheed Zulfiqar Ali Bhutto Institute of Science & Technology (SZABIST)
Aamir Ghafoor Chaudhry
Shaheed Zulfiqar Ali Bhutto Institute of Science & Technology (SZABIST)
Abstract

This paper aims to study the affect of various rewards practices and the structure along with
policy of an organization about rewards as well as the awareness of employees about these
policies upon organizational performance. This investigation is based on survey research design
that proposes a hypothesized theoretical model. The hypotheses developed were tested to
examine the relationship between rewards practices and organizational performance. Structural
equation modelling and LISREL 8.8 software were used to evaluate data, test the proposed
model and all the hypotheses. The Mobile Telecommunication Industry of Pakistan was sample
population for this research study. The results of the study confirmed that intrinsic rewards
motivate the employees more than the extrinsic rewards for enhanced organizational
performance. In addition, the results of this study show that the familiarity of employees to the
extrinsic rewards structure and policy prevailing in their organization does not significantly
contribute to the organizational performance.
Keywords: Rewards Practices, Extrinsic Rewards, Intrinsic Rewards, Extrinsic Rewards
Structure and Policy, Structural Equation Modeling, Mobile Telecom Industry in Pakistan.
1. Introduction
In the last few decades, Government of Pakistan made many efforts and succeeded in making the
environment conducive for increasing investment in the country. These organizations in the
Telecommunication, Banking, Oil & Gas and other sectors are playing significant role in the
economic development of Pakistan. However, the importance of the Human Resource
Management Practices in a business cannot be undermined for un-exhaustive operations and
enhanced organizational performance.
1.1 An Overview of Telecom Industry in Pakistan
The mobile telephone industry is changing the lifestyle of the people in Pakistan. It is a pivot in
making the life patterns of masses easier day by day. The mobile Industry in Pakistan is quite
vibrant and is growing in a highly dynamic, sophisticated and competitive market environment.
The history of mobile telecommunication services can be traced back to early nineties, having a
substantial standing in Pakistans telecom sector with the cheapest calling rates in South Asian
region. In addition, the mobile service providers are also providing new services, like DSL
(Digital Subscriber Line), Local Loop, LDI (Long distance and International), WLL (Wireless
Local Loop) and ISP (Internet Service Provider). Compared to the developed countries there is

COPY RIGHT 2011 Institute of Interdisciplinary Business Research

1198

ijcrb.webs.com

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS

JUNE 2011

VOL 3, NO 2

still room for improvement in the service like the inclusion of WiMax and 3G cellular systems,
etc.
Having said this, the deteriorating law and order situation in the Pakistan and financial slump is a
hindrance in the development in the cellular industry in Pakistan. However, this industry still has
a good profit margin that is being reduced for the service providers due to competition. As per
the report of Pakistan Telecom Authority (PTA) (2008), Mobilink is the market leader with
35.3% market share and followed by Ufone (20.8%), Telenor (20.5%), Warid (17.8%), Zong
(5.4%) and Instaphone (0.4%) and the overall cellular subscriber base in Pakistan reached 9.2
million in September 2008. Currently, Instaphone is totally out of service and not in competition
anymore.
A study by Rafiq and Gao (2008) revealed certain important aspects about the market dynamics
of mobile telecommunications industry in Pakistan as a complex system of humans and
technology is operational in the mobile telecom industry in Pakistan. The study also elaborated
the robust growth of mobile telecom industry in Pakistan as a result of relatively favorable
conditions for growth. They further contended that a current competitive environment for mobile
telecommunications is backed by fair regulations and policies devised by PTA. Their study also
illustrated that the healthy competition among mobile operators is affecting the working patterns
of mobile phone companies and they are providing improved value-added services at highly
compatible rates to their consumers. Due to tough competition, some companies also died out.
1.2 Rewards and Organizational Performance: A Basic Motivation Tool
Miller & Hamblin (1963) and Rosenbaum et al. (1980) analyzed the impact of various different
combinations of rewards on team productivity and processes. They deduced that improper mix of
rewards leads to lowered efficiency and productivity.
If not motivated, a skilled employee can become a poor performer. One of the effective ways to
enhance employee motivation and performance is to provide pay for performance compensation
(Delaney and Huselid, 1996). The rewards system positively augments performance as the
interests of employee and the organization is on the same wavelength, thus resulting in improved
efficiency and performance (Kalleberg and Moody, 1994; Huselid, 1995; Kling, 1995). The
reward system rotates around the expectancy theory- good performance of employees is directly
linked to the rewards system (Fey and Bjorkman, 2001; Guest, 2002; Mendonca, 2002).
Lawler (2005) reported that organizational performance and effectiveness, organizational design
and change management are the outcomes of an outstanding Human Resource (HR) system.
Hewitt (2004) and Saratoga Institute (2006) concluded that for the betterment of the various HR
functions, specific indicators are required to be to empirically measured and reported by HR
Systems. Consequently, this approach will shift the HR systems and functions from traditional
personnel administration towards Strategic Human Resource Management (HRM) with a wide
range of growth opportunities for an organization. Therefore, reward and performance are
closely linked with one another in a way that improvement in rewards system results in an
increase in organizational productivity.
To improve organizational performance, motivation plays key role in enhancing employee
effectiveness and focuses the effects of intrinsic and extrinsic rewards in shaping employee
behavior. Therefore, we can say that rewards could be and often are being used as a motivator to
enhance organizational performance. The decision of an employee to join an organization and
perform well depends, among others, upon the prevailing rewards and incentives system (March
and Simon 1966; Rosenstiel 1975; Weinert 1998).

COPY RIGHT 2011 Institute of Interdisciplinary Business Research

1199

ijcrb.webs.com

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS

JUNE 2011

VOL 3, NO 2

1.3 Extrinsic versus Intrinsic Rewards

Based on the work of various researchers, rewards are divided into two main categories known
as intrinsic and extrinsic rewards. The intrinsic rewards exist in the job content and include
variety, challenge, and autonomy etc. Extrinsic rewards refer to the context of job such as pay
and fringe benefits, promotion or advancement opportunities within the organization, the social
climate, and physical working conditions. Brief and Aldag (1977) suggested that it is useful to
have a distinction between extrinsic and intrinsic rewards offered. However, Crino (1978)
highlighted that extrinsic and intrinsic rewards are not only different types of outcomes; these
two are separate ends of a same band. Contrary to this, Guzzo (1979) suggested that
differentiating extrinsic and intrinsic rewards is inadequate for understanding of different types
of rewards and incentive in organizations systems.
Porter and Lawler (1968) reported that there is an equivocal relationship between extrinsic and
intrinsic rewards with performance. However, there is a weak relationship between extrinsic
rewards and work performance because it is very difficult to maintain consistency and fairness in
rewarding work performance. One more reason is an inherent difficulty in performance
management system and evaluation to measure qualitative tasks. On the other hand, intrinsic
rewards can easily be linked to performance, as these rewards are associated with soul and spirit
of a person. Intrinsic rewards focus on achievement of something good that is urgent, immediate
and directly aligned with performance; such rewards are not bothered by situations and are not
externally controlled. Porter and Lawler (1968) further contended that the combined effect of
extrinsic and intrinsic rewards result in the satisfaction of employees and adds to their
performance positively.
On the other hand, Deci (1972a) advocated that both extrinsic and intrinsic rewards do not
improve motivation level rather extrinsic rewards when surpasses certain level, it overpowers the
impact of intrinsic rewards. Resultantly, there is a negative impact of extrinsic rewards on
intrinsic motivation at times when the work performance is linked with extrinsic rewards only.
1.4 Extrinsic Reward Structure and Policy
Although not much work has been done on linking the awareness of extrinsic rewards structure
and policy with the performance, some researchers have found significance association among
rewards and incentives tied to organizational performance. A study by Bau and Dowling (2007)
found that there is a close relationship between the reward and incentive systems established
within an organization. They further suggested that organizations having large number of skilled
and qualified employees usually have better financial and non-financial reward practices while
the smaller organizations with fewer staff cannot manage to have structured extrinsic rewards
practices.
In order to achieve the goal and objectives of an organization, extrinsic monetary pay is
considered to be an integral part of the rewards awarded (Heneman and Judge 2000; Milkovitch
and Newman 2004). According to Gardner et al. (2004) for work performance, an extrinsic
reward in the shape of monetary pay is often administered. Monetary pay is also used for
retention of workforce (Trevor et al. 1997). Contrary to this, another point o view suggests that
employees perceive monetary pay administration in negative terms, which shows that pay is not
considered to be a positive motivator for effective performance and retention of employee
(Currall et al. 2005; Tekleab et al. 2005; Trevor et al. 1997).
In addition, it is argued that salary raise and benefits have strong impact upon creating a sense of
commitment and gratitude because is the employees feel that they are being fairly treated.
Therefore, there is an indirect link between different facets of job attitudes with pay and benefits.
As Williams et al. (2002) stated that overall job satisfaction has a positive relationship with
benefit level and system. Dulebohn and Martocchio (1998) commented that knowledge and

COPY RIGHT 2011 Institute of Interdisciplinary Business Research

1200

ijcrb.webs.com

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS

JUNE 2011

VOL 3, NO 2

usefulness of pay plan is significantly related with organizational commitment. Various authors
of the same field maintained that satisfaction of the employee is greatly tied with the extrinsic
rewards that are given to the employees based on his performance. So, based on the findings of
the research work done, an empirical investigation about the extrinsic reward structure and
policy needs to be conducted. In addition, reward structure and policy becomes more important
when a new firm is initiated. A company needs to develop the major components of the reward
and incentive system with the passage of time, as a young firm will have an unstructured reward
and incentive system. This reward and incentive system contains various types of rewards such
as financial rewards and social incentives, which evolve as the company grows.
The approach to adopt the extrinsic rewards structure and policies in organizations depends upon
the perception of employers, market dynamics and strategic approach of the firm in question.
The compensation schemes of the organizations greatly assist in increasing their profit margins
in the related the industry. Based on the SWOT (success, weakness, opportunities and threats)
analysis for its effectiveness, the reward practices for the whole organization is formulated
(Stoughton and Pong Wong, 2007)
3. Theoretical Framework and Hypothesized Model
The framework of the study includes a model based on three independent variables that are
assumed to have a significant impact on organizational performance. The job satisfaction (JS)
model as presented in Figure1 includes three independent variables including Extrinsic Rewards,
Intrinsic Rewards and awareness to the Extrinsic Rewards Structure and Policy (ERSP).
Organizational Performance is the dependent variable in this hypothesized model.
3.1 Hypotheses of the Study
Based on JS model shown in Figure 1 and literature search foundations, three hypotheses of
this study have been developed. The survey instrument was designed based on the proposed
model of JS and the following hypotheses:

H1
Extrinsic rewards lead to better organizational performance.
H2
Intrinsic rewards lead to better organizational performance.
H3
Awareness of the extrinsic reward structure and policy positively affects organizational
performance.
__________________________
Insert Figure 1 Here
___________________________
4. Methodology
4.1 Data, Sample and Procedure
This empirical study is designed as an exploratory survey research to test the hypotheses
developed based on JS model under consideration. A survey instrument was developed to test
the hypotheses of this study and primary data was collected from employees of various mobile
telecommunication organizations working in the twin cities of Islamabad and Rawalpindi,
Pakistan. This instrument was designed with the help of various stakeholders and was pre-tested
for content validity. Its language and content both were fine-tuned on the basis of comments
received.
The sample size was 150, out of which 98 questionnaires were received back and 95 were found
completed in all respect. The demographic information as well as responses on research
variables was collected followed by a SEM (Structured Equation Modeling) and interpretation of

COPY RIGHT 2011 Institute of Interdisciplinary Business Research

1201

ijcrb.webs.com

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS

JUNE 2011

VOL 3, NO 2

results to identify the importance and predictive power of the model.

4.2 Measure
The questions in the survey instrument were grouped together into four categories out of that
three categories measured the three independent variables - extrinsic rewards (ER), intrinsic
rewards (IR) and awareness of extrinsic rewards structure and policy (ERSP) and the fourth
group measured the dependent variable - organizational performance (OP) in this study. The
survey tool was a two-part questionnaire consisting of demographic as well as research variables
questions. Respondents were asked to answer the questions on a seven-point Likert scale ranging
from absolutely dissatisfied/disagree (1) to absolutely satisfied/agree (7).
The independent variable ER was measured on 11 items scale having reliability statistic of 0.83
whereas IR was measured on 05 items scale having reliability statistic of 0.77 and third variable
named as ERSP was measured on 39 items scale. The reliability statistic for third measure was
0.92.

5. Analysis of Data and Results

According to Bollen (1989), SEM was used to measure relationships between the latent variables
since early 20th century for the first time. Moreover, Gefen et al. (2000) commented that the
SEM model is concerned about a grounded reality or null hypothesis and its pattern of linear
relationships between a set of observed and unobserved variables. The rationale behind using
SEM is to determine whether the model based on null hypothesis is valid, rather than to identify
and explore a proper workable one. SEM models consist of observed variables also called
measured variable or MV in short form and unobserved variables also called latent or LV in
short forms. LVs are based on hypothetical constructs that cannot be directly measurable, and in
SEM, they are shown as an indicator of various multiple or measured variables (MVs). The SEM
model is an a priori hypothesis about a pattern of linear relationships among a set of observed
and unobserved variables. The objective in using SEM is to determine whether the a priori model
is valid, rather than to find a suitable model.
SEM has been explained as a combination of exploratory factor analysis and multiple
regressions (Ullman, 2001). Moreover, path analysis and confirmatory factor analysis are two
special cases used in SEM and are broadly utilized in social science research. Path analysis (PA)
models spell out the patterns of directional and non-directional relationships among observed
and unobserved variables. The only LVs in such models are error terms (Hair et al., 1998).
In order to identify the impact of independent variables upon dependent variable, LISREL 8.8
Software was used for statistical analysis of the data by using path analysis and SEM of ordinal
data series to identify the strength of proposed independent variables upon dependent one.
Goodness of fit indices was computed and the potential impact in terms of statistical values of
independent variables upon dependent one was interpreted in next few tables and paragraphs.
5.1 Descriptive Statistics
Table 1 to 6 represents descriptive statistics of sample under consideration which include
demographic characteristics such as Age, Gender, Employees having shares in Organization,
educational level, Job Tenure and Size of Organizations.
_________________________
Insert Table 1 Here
__________________________
Insert Table 2 Here
_________________________

COPY RIGHT 2011 Institute of Interdisciplinary Business Research

1202

ijcrb.webs.com

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS

JUNE 2011

VOL 3, NO 2

_________________________
Insert Table 3 Here
_________________________
_________________________
Insert Table 4 Here
_________________________
__________________________
Insert Table 5 Here
__________________________
__________________________
Insert Table 6 Here
________________________
5.2 Proposed Model Analysis & Hypotheses Testing
Path analysis was conducted using SEM for ordinal Data Series. A JS model as shown in Fig.1
was proposed/constructed relating extrinsic rewards (ER), intrinsic rewards (IR) and extrinsic
rewards structure and policy (ERSP), which is represented by a latent variable, rewards to
organizational performance (OP). This model has been validated and showed model fit indices
clearly are illustrating a statistically significant positive relationship (p<0.01) for IR and ER on
OP, and a successive insignificant relationship of ERSP on OP. No negative relationship was
reported in this model fit statistics. The goodness of fit indicators was found strong enough for
hypotheses testing in this case.
The job satisfaction (JS) model was verified by having clear and tangible results on the
respective hypothesis tests. The first hypothesis (H1), that is extrinsic rewards leads to better
organizational performance, was confirmed by the data (path coefficient=0.60, t-values = 2.66,
p<0.01).
In addition, second hypothesis (H2) intrinsic rewards leads to better organizational performance.
This hypothesis was also found significant at p<0.01 with a path coefficient of 0.60 and t-values
= 2.68. Moreover, insignificant result was found to support H3, which tested that extrinsic
reward structure and policy awareness positively affects organizational performance. The path
coefficient for H3 was reported as 0.42, t-value and p-value were insignificant.
Table 7 illustrates the model fit statistics for the hypothesis H1, H2 and H3.
__________________________________________________________________________
Insert Table 7 Here
___________________________________________________________________________

Furthermore, LISREL estimates and structural equation for the model clearly is portraying that
the model having three independent variables, which are indicators of a latent variable i.e.
REWARDS accounts for most of variation in dependent variable i.e. organizational performance
(OP).
The Equation 1, 2, 3 and 4 shows LISREL Estimates based on Maximum Likelihood Estimation
having three measurement equations and a structural equation of independent, latent and
dependent variables used in the proposed model.
5.2.1 Measurement Equations
The measurement equations for the same model are as under:ERSP = 0.42*REWARDS Errorvar. = 1.90...
#1
Standerr
(0.28)
T-values
6.75

COPY RIGHT 2011 Institute of Interdisciplinary Business Research

1203

ijcrb.webs.com

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS

P-values
0.000
ER = 0.60*REWARDS
Errorvar. = 0.25
Standerr
(0.23) (0.049)
T-value
2.66 5.20
P-values
0.008 0.000
IR = 0.60*REWARDS
Errorvar. = 0.15
Standerr
(0.22) (0.039)
T-value
2.68 3.93
P-values
0.007 0.000

JUNE 2011

VOL 3, NO 2

#2

#3

5.2.2 Structural Equation

The structural equations for the same model are as under:-

REWARDS = 1.18*OP
Errorvar. = 0.52..
Standerr (0.44)
(0.23)
T-value 2.69 1.29
P-values 0.007 0.197

#4

The measurement equation # 1 shows that Extrinsic Rewards Structure and its policy have
insignificant relationship with latent variable, Rewards, having no standard error, t-value and pvalue calculated.
However, the measurement equation # 2 shows significant relationship of Extrinsic Rewards
with latent variable, Rewards, having standard error = 0.23, t-value = 2.66 and p-value = .0008.
Likewise, the measurement equation # 3 shows strong and significant relationship of Intrinsic
Rewards with latent variable, Rewards, having standard error = 0.22, t-value = 2.68 and p-value
= .0007.
Finally, the structural equation (Equation # 4) illustrates the strong and significant relationship of
REWARDS being used as a latent variable for intrinsic, extrinsic rewards and ERSP upon
Organizational Performance. The equation is having standard error = 0.44, t-value = 2.69 and pvalue = .0007 shows a model fit for further use.
The Figure # 2 shows the tested the Model using path analysis technique and SEM for ordinal
data series. The path coefficients and residuals are shown in the figure for the same model. The
bold blue line shows significant relationships and a gray line shows insignificant relation among
the variables.
_____________________________________________________________________________
Insert Figure 2 Here
_____________________________________________________________________________
Moreover, the whole model summary such as R Square and Adjusted R square values are
significant which are presented in Table 8.
____________________________________________________________________________
Insert Table 8 Here
____________________________________________________________________________

COPY RIGHT 2011 Institute of Interdisciplinary Business Research

1204

ijcrb.webs.com

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS

JUNE 2011

VOL 3, NO 2

6. Discussion and Conclusion

This paper focuses on the impact of rewards and its practices upon organizational performance.
The rewards practices play a decisive role in motivating the workforce and augmenting
organizational performance and HR specialists are required to be more focused to discover the
key factors that are more imperative and of significant importance for motivating the workforce
and gaining organizational effectiveness. Succinctly, the most important finding of the study is
the high level of importance and value that has been given to intrinsic rewards than extrinsic
rewards. Moreover, least concern was reported about extrinsic rewards structure and policy
awareness upon organizational performance by the sample understudy.
The results obtained support the investigation made by Ryan & Deci (2000) who commented
that employees who are intrinsically motivated/rewarded when compared to those who are
extrinsically motivated/rewarded, were found to have more interest in work, shows excitement,
feel fun at work, and are more confident which ultimately leads to enhanced organizational
performance, determination, creativity and innovation, job security, and high level of selfesteem, among other benefits. Likewise, intrinsic motivation enhances participation and high
level of satisfaction along with improved competency level contrary to extrinsic motivation,
which increases anxiety, and decreases self-esteem (Frederick and Ryan, 1993).
The sample of employees in this study recognizes intrinsic rewards as a better motivating
instrument than extrinsic rewards and they are found least concerned with their rewards structure
and policy being administered in their organization.
Therefore, it is concluded that approaches to enhance intrinsic reward practices as a motivator
are significant and prime value for better and enhanced organizational performance followed by
secondary importance given to extrinsic rewards and finally, extrinsic rewards structure and
policy.
7. Research Implications/Limitations
The HR experts may alter reward practices and its administration in order to make organizational
performance better. Therefore, this study provides empirical evidence to the HR managers about
the considerable relationships and links between rewards practices and organizational
performance. This study has revealed certain significant facts regarding perceptions of
employees of Mobile Telecom Industry of Pakistan about rewards practices and its impact on
performance of any firm, which were not already explored yet.
Although, a sample chosen for this study was very limited in number/size, however, the response
rate to our survey was fair enough and it is confidently said that the non-response bias is not
significant in the results of this study.
8. Future Research Opportunities
The future research may focus on the impact of rewards practices in public sector telecom
industry organizations of Pakistan so that to have a clear comparison of perceptions among
corporate and public sector companies.

COPY RIGHT 2011 Institute of Interdisciplinary Business Research

1205

ijcrb.webs.com

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS

JUNE 2011

VOL 3, NO 2

REFERENCES
Bau, F. & Dowling, J. M. (2007). An Empirical Study of Reward and Incentive Systems in
German Entrepreneurial Firms, Schmalenbach Business Review, Vol. 59, April 2007, pp. 160175, Accessed on 03.05.2009 from http://ssrn.com/abstract=1004732

Bollen, K.A., 1989. Structural Equations with Latent Variables. Wiley, New York.
Brief, A. P. & Aldag, R. J. (1977). The intrinsic-extrinsic dichotomy: Toward conceptual clarity.
Academy of Management Review, 2, 496-500.
Crino, M. D. (1978). Alternative models of intrinsic and extrinsic motivation. Unpublished
doctoral dissertation. University of Florida.
Currall, S. C., Towler, A. J., Judge, T. A., & Kohn, L. (2005). Pay satisfaction and
organizational outcomes. Personnel Psychology, 58, 613640.
Deci E. L. (1972a). Intrinsic motivation, extrinsic reinforcement and inequity. Journal of
Personality and Psychology, 22, 113-120.
Delaney, J.T. and Huselid, M. A. (1996) The Impact of Human Resource Management Practices
on Perceptions of Organizational Performance, Academy of Management Journal, 39(4): 949969.
Dulebohn, J. H., & Martocchio, J. J. (1998). Employee perceptions of the fairness of work group
incentive pay plans. Journal of Management, 24, 469488.
Fey, C. F. and Bjorkman, I. (2001) The Effect of Human Resource Management Practices on
MNC Subsidiary Performance in Russia, Journal of International Business Studies, 32(1): 5975.
Frederick, C. M., & Ryan, R. M. (1993). Differences in motivation for sport and exercise and
their relations with participation and mental health. Journal of Sport Behavior, 16, 124-146.
Gardner, D. G., Van Dyne, L., & Pierce, J. L. (2004). The effects of pay level on organizationbased self-esteem and performance: A field study. Journal of Occupational and Organizational
Psychology, 77, 307322.
Gefen, D., Straub, D.W., Boudreau, M., 2000. Structural equation modeling and regression:
guidelines for research practice. Communications of the AIS 1 (7), 178.
Greiner, Larry E. (1972), Evolution and revolution as organizations grow, Harvard Business
Review (July-August), 37-46.
Guest, D. E. (2002) Occupational Psychology. In Warner, M (ed.) (2nd ed.) International
Encyclopedia of Business and Management. London: Thomson Learning, pp. 4803-4820.
Guzzo, R. A. (1979). Types of rewards, cognitions, and work motivation. Academy of
Management Journal, 4, 75-86.
Hair Jr., J.H., Anderson, R.E., Tatham, R.L., Black, W.C., 1998. Multivariate Data Analysis.
Prentice-Hall, New Jersey

COPY RIGHT 2011 Institute of Interdisciplinary Business Research

1206

ijcrb.webs.com

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS

JUNE 2011

VOL 3, NO 2

Heneman, H. G., & Judge, T. A. (2000). Incentives and motivation. In S. Rynes & B. Gerhart
(Eds.), Compensation in organizations: Progress and prospects (pp. 61103). San Francisco,
CA: New Lexington Press.
Hewitt. (2004). Strategies for improving your HR Bottom Line. Research Highlights Europe,
Study, Hewitt Associates.
Huselid, M. A. (1995) The Impact of Human Resource Management Practices on Turnover,
Productivity, and Corporate Financial Performance, Academy of Management Journal, 38(3):
635-672.
Kalleberg, A. L. and Moody, J. W. (1994) Human Resource Management and Organizational
Performance, American Behavioral Scientist, 37(7): 948-962.
Kling, J. (1995) High Performance Work Systems and Firm Performance, Monthly Labor
Review, 118(5): 29-37.
Lawler III, E. E. (2005). From human resource management to organizational effectiveness.
Human Resource Management, 44(2), 165-169.
March, James G. & Herbert A. Simon (1966), Organizations, New York: Wiley and Sons.
Mendonca, M. (2002) Human Resource Management in the Emerging Countries. In Warner,
M(ed.) (2nd ed.) International Encyclopedia of Business and Management. London: Thomson
Learning, pp. 2697-2703.
Milkovich G. M., & Newman, J. M. (2004). Compensation (8th edn.). Burr Ridge, IL: Irwin
McGraw-Hill.
Miller, L.K. & Hamblin, R.L. (1963). Interdependence, differential rewarding, and productivity.
American Sociological Review, 28, 768-778.
Pakistan Telecom Authority.(2008). Industry analysis report 2007
Porter, L. & Lawler, E.E. III. (1968). Managerial attitudes and performance. Homewood, IL:
Richard D. Irwin.
Rafiq, A. & Gao, P. (2008). The transformation of mobile telecommunications industry in
Pakistan, 04.28.2009 from http://www.pacis-net.org/file/2008/PACIS2008_CameraReady_Paper_095.pdf
Rosenstiel, Lutz v. (1975), Die motivationalen Grundlagen des Verhaltens in Organisationen,
Berlin: Duncker & Humblot.
Rosenbaum, M.E., Moore, D.L., Cotton, J.L., Cook, M.S., Hiesser, R.A., Shovar, M.N. & Gray
M.J. (1980). Group productivity and process: Pure and mixed reward structures and task
interdependence. Journal of Personality and Social Psychology, 39, 626-642.
Ryan, R. M., & Deci, E. L. (2000). Self-determination theory and the facilitation of intrinsic
motivation, social development, and well-being. American Psychologist, 55, 68-78.

COPY RIGHT 2011 Institute of Interdisciplinary Business Research

1207

ijcrb.webs.com

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS

JUNE 2011

VOL 3, NO 2

Saratoga Institute. (2006). Key trends in human capital-- A global perspective. Retrieved May
02, 2009, from http://www.pwc.com/uk/eng/ins-sol/publ/hrs/ pwc_keytrends_mar06.pdf
Stoughton, N. M., & Pong Wong, K. (2007). Option Compensation and Industry Competition.
Accessed 05.01.2009 from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=385621
Tekleab, A. G., Bartol, K. M., & Liu, W. (2005). Is it pay levels or pay raises that matter to
fairness and turnover? Journal of Organizational Behavior, 26, 899921.
Trevor, C. O., Gerhart, B., & Boudreau, J. W. (1997). Voluntary turnover and job performance:
Curvilinearity and the moderating influences of salary growth and promotions. Journal of
Applied Psychology, 82, 4461.
Ullman, J. B. (2001). Structural equation modeling. In B. G. Tabachnick & L. S. Fidell (Eds.),
Using multivariate statistics (4th ed.). Needham Heights, MA: Allyn & Bacon.
Weinert, Ansfried. B. (1998), Organisationspsychologie, Weinheim: Psychologie Verlags Union.
Williams, M. L., Malos, S. B., & Palmer, D. K. (2002). Benefit system and benefit level
satisfaction: An expanded model of antecedents and consequences. Journal of Management, 28,
195215.

COPY RIGHT 2011 Institute of Interdisciplinary Business Research

1208

ijcrb.webs.com

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS

JUNE 2011

VOL 3, NO 2

Annexure
Figure 1: Job Satisfaction (JS) Proposed Model of Rewards Practices

Extrinsic Rewards

Intrinsic Rewards

Organization Performance

ERSP i.e. Extrinsic

Rewards Structure and
Policy

Figure 2. The Resultant Path Model with Path Estimates.

Table 1: Employees Age
Employees age
Frequency
20 to 30 yrs
72
30 to 40 yrs
11
40 to 50 yrs
9
Above 50 yrs
3
Total
95

Percent
75.8
11.6
9.5
3.2
100

Table 2: Gender
Gender
Male
Female
Total

Percent
84.2
15.8
100

Frequency
80
15
95

COPY RIGHT 2011 Institute of Interdisciplinary Business Research

1209

ijcrb.webs.com

INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS

Table 3: Employees having Shares in Org.
Employees having Shares in Org
Yes
No
Total
Table 4: Education Level
Education Level
Frequency
MS
50
Masters
45
Total
95
Table 5: Job Tenure
Job Tenure
Less Than 2 yrs
Less Than 3 yrs
Less Than 5 yrs
Less Than 10 yrs
10 yrs or above
Total

Frequency
39
24
19
12
1
95

Table 6: Size of Organizations

Size of Organizations
Less Than 500 employees
Less Than 1000 employees
Less Than 3000 employees
Less Than 5000 employees
5000 employees or above
Total

Frequency
50
45
95

JUNE 2011

VOL 3, NO 2

Percent
52.6
47.4
100

Percent
52.6
47.4
100
Percent
41.1
25.3
20.0
12.6
1.1
100
Frequency
24
32
20
10
9
95

Percent
25.3
33.7
21.1
10.5
9.5
100

Table 7: Goodness of Fit Indices

Fit Indices
Recommended Values
Predicted Values
Chi-square/degrees of freedom
3.00
1.72
GFI
0.90
0.98
AGFI
0.80
0.91
NNFI
0.90
0.97
CFI
0.90
0.99
RMSR
0.10
0.033
RMSEA
0.08
0.087
Where GFI = goodness-of-fit index; AGFI = adjusted goodness-of-fit index;
NNFI = non-normed fit index; CFI = comparative fit index;
RMSR = root mean square residual; RMSEA = root mean square error of approximation.
Table 8: Complete Model Summary
Model
R
R Square
Adjusted R Square
Std. Error of the Estimate
1
.760
.578
.564
.47
a. Predictors: (Constant), IR, ERSP, ER; Dependent Variable:
Org. Performance

COPY RIGHT 2011 Institute of Interdisciplinary Business Research

1210