Warid Telecom Pakistan

Role of Incentives
in
Performance Management
Sana Ali Gillani

2010
Role of incentive in Performance Management
In
Warid Telecom Pakistan

by

Sana Ali Gillani

Roll no. MHRM-39

Under the supervision of

Sir Rana Nadir

Institute of Administrative Sciences.

University of the Punjab, Lahore
Session 2009-2011

1
 Al-Quran

In the name of Allah, the beneficent, the Merciful

Say: “If the ocean were ink (where with to write out) the words of my Lord,
sooner would the ocean be exhausted than would the words of my Lord,
even if We added another ocean like it, for its aid”

2
 Acknowledgement

Praise to be Almighty Allah, Whose blessings and exaltation flourished

our thoughts, enlightened our heart, thrive our ambitions and enabled us to
contribute sincerely to the sacred wealth of knowledge. Special praises and
regards for His last Prophet Hazrat Muhammad (PBUH) who is forever a tower
of knowledge and guidance for humanity.

I am thankful to Sir Rana Nadir for his indispensable guidance,

patronizing concern and provision of facilities for this research work.

I express omy profound and cordial gratitude to reverend and respected

Atiq Khan; Regional Manager- HR Operations and HIna Zahid; Sr. Executive
R&D, Warid Telecom Pakistan for their enormous cooperation and help.

3
 Role of incentive in Performance Management

Contents
Page Number
Chapter One Introduction
1.1 Aims and Objectives……….………………………………… ……….…..……... 7
1.2 Literature Review………………………………………………………..…….……7
1.2.1 Performance………………..………………………………………………..…..7
1.2.2 Performance Management………………….……………………………..…..7
1.2.2.1 Managing Performance Effectively…………………………...………..….8
1.2.2.2 Benefits of Performance Management………………………….……..…8
1.2.2.3 Concerns about Performance Management…………………….….……9
1.2.3 Incentives………………………………………………………………….……..9
1.2.3.1 Categories of Incentives……………………………………..…..…………9
1.2.3.2 What Incentives can do?.....................................................................10
1.2.3.2.1 Theories on Incentive-Effort Relationship………………….……….…..11
1.2.3.3 Incentives that impact on motivation of staff…………………………...14

Chapter Two Theoretical Framework and Hypothesis Development

2.1. Theoretical Framework….……………………………………………………15
2.2. Hypothesis Development……………………………………………………16

Chapter Three Data Collection

3.1 Data Collection Methods …………………………………………………..…….17
3.1.1 Interview......................................................................................................17
3.1.2 Questionnaire.......................................................................................…...17
3.2 Data Collection…………………………………………………………………….18
3.2.1. Company Profile……………………………………………...………………..18
3.2.1.1. Origin and History………….……………………………………………...18
3.2.1.2. Vision……………………………………………………………………….18
3.2.1.3. Location……...…….……………………………………………………….18
3.2.1.4. Market Share...…………………………………………………………….18
3.2.1.5. Financial Performance…………...……………………………………….19

4
3.2.1.6. Size in Terms of Employees……………………...………………………19
3.2.1.7. Roles and Positions in the Organization………………………………..19
3.2.1.8. Communication channels…………………………………………………20
3.2.1.9. Control System………………….…………………………………………20
3.2.1.10. Human Resources Management ……………………………..…………20
3.2.1.11. Performance Management System……………………………………..21
3.2.1.12. Reward system…………………………………………………………….21
3.2.1.13. Interdependencies among Various Departments …………………..….22
3.2.1.14. Perceptions, Attitudes, and Behavior of Organization Members……..22

Chapter Four Data Analysis

4.1 Data Analysis……………………………………………………………………...24
Chapter Five Conclusions and Recommendations
5.1 Conclusions………………………………………………………………………..26
5.2 Recommendations………………………………………………………………...26

Appendix I…………………………………………………………………………..…28
References…………………….………………………………………………………33

5
 Chapter One
INTRODUCTION

This report comprises of the study of the role of incentives in performance

management of the employees working in Warid Telecom, Pakistan. Both
behavior and results are the two critical elements of what is known as
performance. Managing employee or system performance facilitates the effective
delivery of strategic and operational goals. Performance management includes
activities to ensure that goals are consistently being met in an effective and
efficient manner. Performance management can focus on the performance of an
organization, a department, employee, or even the processes to build a product
or service, as well as many other areas.1

Performance management which focuses on employees implies that being

busy is not the same as producing results and that lot of hard work, strong
commitment and training alone are not results. Hence performance management
redirects our efforts away from busyness toward effectiveness.

Organizations are facing challenges like never before. Increasing global

competition among businesses has meant that all companies must develop
effective strategies to remain competitive. Everyone (and everything) in the
organization must be doing what they're supposed to be doing to ensure
strategies are implemented effectively.

These circumstances have put more emphasis on effectiveness that

systems and processes in the organization must be applied in the right way to
achieve desired results. All of the results across the organization must continue
to be aligned to achieve the overall results desired by the organization for it to
survive and thrive. Only then it can be said that the organization is actually
performing.2

1
http://en.wikipedia.org/wiki/Performance_management; retrieved on 02-08-2010
2
http://www.managementhelp.org/perf_mng/defntion.htm; retrieved on 02-08-2010
6
 Since ineffective employees performance can lead to ineffective
organizational performance on whole. Hence an effective performance
management system needs to be in place and aliened with rewards system
which positively enhance employee’s performance. Thus a study of the role of
incentives in performance management of the employees would help to identify
how far incentives are positively related to employee’s performance, which can
be used to make recommendations and take necessary actions for improvement
to make up for any gaps between current and effective performance
management system.

1.1. Aims and Objectives

The objectives of undertaking this research are;
 To study the correlation between incentives and employee’s performance
 To analyze the results and findings.
 To suggest necessary changes to improve the system to enhance
performance of an employee as well as of organization on whole.

1.2. Literature Review

1.2.1. Performance

Performance has two dimensions; behaviors and results. Performance

can be thought of as actual results vs. desired results. Any discrepancy, where
actual is less than desired, could constitute the performance improvement zone.
Where performance improvement is any effort targeted at closing the gap
between actual results and desired results.3

1.2.2. Performance Management

Performance Management is a term used to improve team performance,

based on the principles of measurement, appraisal, action and monitoring.
However, it can be manifest in very different forms depending on whether the aim
3
http://en.wikipedia.org/wiki/Performance_management; retrieved on 02-08-2010
7
is to further improve good performers, or deal with underperformance.
Performance Management can also apply to individuals, teams, groups or
organizations.4

Performance management can be defined as "Taking action in response

to actual performances to make outcomes for users and the public better than
they would otherwise be."5

Employee performance management includes:

 Planning work and setting expectations
 Continually monitoring performance
 Developing the capacity to perform
 Periodically rating performance in asummary fashion
 Rewarding good performance.

1.2.2.1. Managing Performance Effectively

In effective organizations, managers and employees have been practicing

good performance management naturally all their lives, executing each key
component process well. Goals are set and work is planned routinely. Progress
toward those goals is measured and employees get feedback. High standards
are set, but care is also taken to develop the skills needed to reach them. Formal
and informal rewards are used to recognize the behavior and results that
accomplish the mission. All five component processes working together and
supporting each other achieve natural, effective performance management. 6

1.2.2.2. Benefits of Performance Management

The key Benefits of Performance Management are:

 PM focuses on results, rather than behaviors and activities.

4
http://www.teamtechnology.co.uk/performancemanagement.html; retrieved on 05-08-2010
5
http://www.idea.gov.uk/idk/core/page.do?pageId=4405770; retrieved on 05-08-2010
6
U.S. Office of Personnel Management 1900 E Street, NW, Washington, DC, 606-2532
8
  Aligns organizational activities and processes to the goals of the
organization.
 Cultivates a system-wide, long-term view of the organization.
 Produces meaningful measurements.

1.2.2.3. Concerns About Performance Management

Typical concerns expressed about performance management are that it

seems extraordinarily difficult and often unreliable to measure phenomena as
complex as performance. People point out that today's organizations are rapidly
changing, thus results and measures quickly become obsolete. They add that
translating human desires and interactions to measurements is impersonal and
even heavy handed.7
1.2.3. Incentives

An incentive is any factor (financial or non-financial) that enables or motivates a

particular course of action, or counts as a reason for preferring one choice to the
alternatives. It is an expectation that encourages people to behave in a certain
way.8

1.2.3.1. Categories of Incentives

Incentives can be classified into three broad classes:

1. Remunerative incentives (or financial incentives) are said to exist where

an agent can expect some form of material reward — especially money — in
exchange for acting in a particular way.
2. Moral incentives are said to exist where a particular choice is widely
regarded as the right thing to do, or as particularly admirable, or where the
failure to act in a certain way is condemned as indecent. A person acting on a

7
http://www.managementhelp.org/perf_mng/benefits.htm; retrieved on 02-08-2010
8
Sullivan, arthur; Steven M. Sheffrin (2003). Economics: Principles in action. Upper Saddle River,
New Jersey 07458: Pearson Prentice Hall. pp. 31.
9
 moral incentive can expect a sense of self-esteem, and approval or even
admiration from his community.

3. Coercive incentives are said to exist where a person can expect that the
failure to act in a particular way will result in physical force being used against
them, for example by inflicting pain in punishment, or by confiscating or
destroying their possessions.9

1.2.3.2. What Incentives can do?

There are three primary ways by which incentives can enhance organizational
performance

1. Motivational effect: Incentives could motivate more effort.10

2. Informational effect: Incentives provide people with information about

what the organization values and what its priorities are. 11

3. Selection effect: Incentives attract right kind o people and repel the
wrong kind.12

The motivational effect is directly related to the employee’s performance. It

encompasses the concepts of motivation and effort. Where motivation is the
ability of people to perform functions, solve problems and set and achieve
objectives. Motivation leads people to put in effort in what they do. Effort has two
directions – towards a task or towards learning. Both will eventually lead to
performance, but while effort towards a task (direction, duration, and intensity)
results in immediate performance, learning delays performance and is an
important characteristic of strategy development.

9
http://en.wikipedia.org/wiki/Incentive; retrieved on 02-08-2010
10
Gabor A. (1990) The man who discovered quality, times book, New York.
11
McCartney S. (1995) How to Make an Airline Run on Schedule, Wall Street journal
12
Edward P. (2000) The Power of Incentives, The American Review, 410
10
1.2.3.2.1. Theories on Incentive-Effort Relationship

Following theories show how incentives affect effort.

Expectancy Theory

“People act to maximize expected satisfaction with outcomes”.

People are motivated by two things:

1. What they think the payoff is for a particular behavior and (in this case,
money)
2. How much they value that payoff (research shows people value
monetary payoff over non-monetary payoff).

The combination of these two factors is what motivates people. In other

words, people make more effort when performance-based incentives are used

11
because they believe they will get money when they perform as expected and
they really like money.

Agency Theory

“Individuals have utility for increases in wealth”

Agency theory assumes that people are rational and will make choices
based on the choice’s ability to increase either their wealth or leisure. If a task
does not add to economic well-being, people will shirk the task.

Goal-setting Theory

“…proposes that personal goals are the primary determinant of, and immediate
precursor to, effort”

Goals have a main effect on effort, separate from expectancy, and are
themselves affected by monetary incentives in that monetary incentives may
cause people to set goals when they otherwise would not, set more challenging
goals than they otherwise would and have higher goal commitment.

Social-cognitive theory (self-efficacy theory)

Self-efficacy directly affects effort when a person expends effort (direction,

intensity, duration, and learning) on a task that he or she believes he/she is able
to accomplish. The belief that one can achieve a task also indirectly affects effort
via goal setting such as when people who believe they are able to accomplish
much, set high goals for themselves, which according to goal-setting theory
would immediately precede effort.

1.2.3.2.2. Person Variables:

 Direct role of skill on incentives-effort-performance relation:

Incentives may increase a person’s effort, but that effort will not

12
 necessarily lead to increased performance if the individual is lacking the
requisite skills.
 Indirect role of skill on incentives-effort-performance relation: If a
person has the requisite skills, then he/she should tend to believe that the
task could be accomplished. As a result of increased self-efficacy, a
person may then set higher goals and/or be more committed to those
goals.

1.2.3.2.3. Task Variables

 Effects of task complexity on the incentives-effort-performance

relation: An increase in task complexity would ultimately lead to a
decrease in the effect of monetary incentive’s impact on performance,
unless a person has a high enough level of self-efficacy and skills to offset
task complexity’s effect.

1.2.3.2.4. Environmental Variables

Environmental variables are all the things surrounding the person who is
doing a task and monetary incentives are one such variable. Additional variables
that would include “time pressure, accountability relationships, assigned goals,
and feedback”

 Effects of assigned goals on the incentives-effort-performance

relation: Assigned goals have an indirect positive affect on effort by its
positive direct affect on both personal goals and self-efficacy. However, if
assigned goals are so extreme that they cannot be accomplished, then
they will have a negative impact on performance. Furthermore, specific
goals lead to greater effort than vague ones. Monetary incentives,
combined with assigned goals, can also affect all four dimensions of effort
such as when compensation is tied to accomplishment of goals.

13
  Effects of other environmental variables on incentives-effort-
performance relation: Feedback can positively affect motivation,
learning, and self-efficacy and it can interact with monetary incentives
such as when people use feedback to increase their performance. Or, if
information asymmetry exists, feedback can assist people in shirking. 13

1.2.3.3. Incentives that impact on motivation of staff

 Pay, Salaries, “efficiency wages” etc.
 Direct financial benefits, such as Pension, illness/health/life
insurance; allowances (clothing, housing, etc.), subsidies, gain
sharing.
 Indirect financial benefits such as subsidized meals/clothing/
accommodation/ transport, scholarships, tax breaks; etc., deferred
compensation such as seniority pay.
 Flexible schedules, part-time/ temporary work; sabbatical, study
leave, holidays, vacation, etc.
 Work environment/conditions, occupational health, safety,
recreational facilities.
 Amenities, school access, infrastructure, transport, etc.
 Job security; Career/ professional development/ training
opportunities
 Feedback, coaching, valued by organization
 Solidarity, socializing, camaraderie, affection, passion
 Status, prestige, recognition
 Sense of duty, purpose, mission
 Security, opportunities, stability, risk14

13
http://maaw.info/ArticleSummaries/ArtSumBonnerSprinkle02.htm; retrieved on 02-08-2010
14
UNDP Conference Notes #8 working draft (2006), incentive systems: Incentives, motivation, and
Development performance.

14
 Chapter Two

THEORETICAL FRAMEWORK AND HYPOTHESIS DEVELOPMENT

2.1. Theoretical Framework

Performance is the dependent variable, which is the variable of primary
interest, which can be effected by various independent variables based on
literature review:

 Incentives
 Motivation
 Skill
 Task complexity
 Feedback
 Time pressure
 Assigned goals

Higher incentives and feedback will motivate employees to performance

better. As found in literature feedback affect motivation, learning, and self-
efficacy positively and it can interact with monetary incentives such as when
people use feedback to increase their performance for higher monetary gain.
Higher the task complexity lower will be the performance as complex tasks
would consume more time and performance in such case is highly dependent on
motivation and self efficacy of the employees.
High skill level and time pressures are positively related to performance
given the elevated importance of reward for the employee as skill employees
would perform on better pace as compared to unskilled one and timelines
motivates employees to higher performance if results are associated with
incentives which employee thinks are important.

15
 Furthermore specific, clear, realistic and challenging assigned goal will
lead to better performance.

A schematic diagram of the theoretical framework is as follows;

Incentives

Motivation

Skill

Performance
Task
Complexity

Feedback

Time
Pressure

Assigned
Goals

Independent Variable Dependent Variable

2.2. Hypothesis Development

Based on the above theoretical framework various hypotheses can be

drawn. The focal one is as follows;
“Incentives motivate people which leads to greater employee
performance”

16
 Chapter Three
DATA COLLECTION

3.1. Data Collection Methods

Data was collected by following methods:

 Review of national and international relevant literature on the subject was

carried out in libraries and online search engines.

 Interview of the HR-Manager of Warid Telecom.

 Survey questionnaire filled by the HR-Manager of Warid Telecom.

3.1.1. Interview
A structured interview is a research tool in which questions are prepared
in advance. Data could be analyzed later and report results based on analysis.
A face-to-face interview is used in this study, which is based on a direct
meeting between interviewer and interviewee.155 Interviewer guides the questions
and focuses the study.
Face-to-face interview does not bore a respondent and ensures full and
accurate data. Researcher can adapt the questions as necessary, clarify doubts
and ensure that responses are properly understood by repeating or rephrasing
questions.

3.1.2. Questionnaire
Questionnaire is also used to collect data. It is a written set of questions to
which respondents record their answers. Questionnaire formulated for this study
is a blend of close ended as well as open ended questions.
The interval scale (Likert scele) is used in which responses to various
items measuring the variable can be tapped on a five-point sale.
155
http://www.romir.ru/en/products/methods/face/; retrieved on 02-08-2010
17
3.2. Data Collection
Data was collected through interview and questionnaire. Following is the
information obtained based on data.

3.2.1. Company Profile

3.2.1.1. Origin and History

Warid is operated by Abu Dhabi Group led by Sheikh Nahayan Mabarak

Al Nahayan. Warid started it services in Pakistan May 2005. Now is a joint
venture between Abu Dhabi Group & SingTel Group. Abu Dhabi Group entered
into a strategic alliance with Singapore Telecom. Subsequent to this transaction
in July 2007, telecom giant SingTel acquired 30% percent equity stake in Warid
Telecom, Pakistan, for US$758 million. This partnership is part of a strategy to
support Warid Telecom’s continued growth and to enhance its market position.

3.2.1.2. Vision

“To become the primary service provider of all communication needs of

subscribers in Pakistan, supported by exemplary customer care”.

3.2.1.3. Location

Warid telecom has one head office in Lahore and three regional offices;
 Central region (Lahore being focal point)
 North region (Islamabad being focal point)
 south region (Karachi being focal point)

3.2.1.4. Market Share

According to Pakistan Telecommunication Authority, Warid Telecom has

18.14 million subscribers of 32 million in total as of July 2009. It is ranked as the
18
fourth largest operator in Pakistan. Warid Pakistan claims it has the largest “post-
paid” subscriber base in Pakistan.1616

3.2.1.5. Financial Performance

Warid is one of the leading companies in Pakistan Telecom industry.

Warid Telecom’s revenue has been increased by 14% during the year 2008 -
2009 as compared to its competitors; Ufone’s revenue increased by 4% and
Telenor’s by 12%. On the other hand it is still lagging behind the Mobilink whose
revenue has been increased by 46% on the said year.

3.2.1.6. Size in terms of Employees

Total numbers of employees working in Warid Telecom are 1201.

3.2.1.7. Roles and Positions in the Organization

Warid Telecom has three types of employees;

 Permanent
 Contractual
 Outsourced

Following are the grade levels in Warid Telecom;

 Grade 5 - General Manager

 Grade 4 - Deputy General Manager/ Senior Manager
 Grade 3 - Managers
 Grade 2 - Assistant Managers
 Grade 1 - Executives
 Below Grade 1 - Laborers, Patrols / guards
 Variable Grades – Contractual

1616
http://ptcltelephonedirectory.com/blog/about-warid-telecom.html; retrieved on 05-08-2010

19
3.2.1.8. Communication Channels

Both formal and informal communication channels are in place in Warid

Telecom.

Formal communication channel include;

 Online communication using company’s own intra-net
 E-mails
 Written memos
 Letters
 Notices

Informal communication channels include;

 Meetings
 Presentations
 On job face to face conversation
 Telephone (calls / sms)

3.2.1.9. Control System

Warid Telecom has various Formal Control Mechanisms;

 Code of conduct, which is frequently emphasized and clearly
communicated to the employees. Penalty system is in place to ensure
realization of code of conduct
 Attendance management system
 Policies
 Performance objectives and targets

3.2.1.10. Human Resources Management

Warid telecom has a well organized human resource department which

consists of a team of around 20 personal. The HR system has sound and
comprehensive policies regarding various human resources management

20
functions. The department has various technical facilities and competent work
force which is managing human resources of the company effectively and
efficiently. It is evident from the 14% increase in the revenue earned by the
company during last year and the lower turnover and absenteeism rate as quoted
by the head of HR- Operations.

3.2.1.11. Performance Management System

Performance management system in Warid Telecom involves;

 Goals and objectives setting of every employee by the supervisor in
consultation with the employee concerned
 On going coaching, monitoring and feedback on the performance to
ensure achievement of set objectives
 Annual evaluation of the performance through performance
appraisal

3.2.1.11.1. Performance Appraisal

 Management by Objectives (MBO) format of Performance appraisal is

being used in Warid Telecom.
 Weightage of job related factors personal characteristics is as follows;

o Job related factors = 80%

(e.g. knowledge of work , quality of work, quantity of work etc.)
o Personal characteristics = 20%
(e.g. interpersonal skill, interpersonal, leadership,
communication skills, punctuality, decision making, co
ordination etc.)

3.2.1.12. Reward system

Reward system consists of both financial and non financial incentives. All
financial incentives are strictly performance based.

21
Financial incentives include
 Salary Increments
 Bonuses
 Leave fair assistance (LFA) which encompasses one additional basic
salary and 5 days leave
 Sponsored travel
 Accelerated promotion
 Sponsored recreation activities
 Special prizes

Non financial incentives include

 Assignment of additional authority
 Ceremony arranged in recognition of performance e.g employee of the
month award issuance of certificate of appreciation
 Recreational activities e.g.
o Annual cricket match
o Tours and trips
o Annual night / concert
o Bowling competition etc.

3.2.1.12. Interdependencies among Various Departments

Various departments/units of Warid Telecom are interdependent. The
focal point of which is quality assurance department i.e. every department is
dependent on each other through QA and the dependencies are clearly
communicated.

3.2.1.13. Perceptions, Attitudes, and Behavior of Organization Members

 Organization members/employees have partial participation in decision
making
 Warid Telecom has a strong team based culture and coworkers are
helping and friendly
22
 Warid Telecom do offer opportunities for the advancement to its
employees as it prefer internal recruitment for position filling and also
give preference to its own employees over external candidates.
 Leaves: Warid do encourage employees to avail annual leaves which
are for ten days in a calendar year. Other leaves include without pay
casual leaves and fully paid maternity leaves for two months.

23
 Chapter Four

DATA ANALYSIS

4.1. Data Analysis

The data acquired show that Warid Managerial workforce have a clear
understanding of the vision of the company, which is very important as
effective performance management’s utmost objective is to set individual
goals that are aligned with the company`s strategic objectives, and that every
employees should contribute to the ultimate achievement of the company`s
strategic objectives. For that matter a clear understanding of vision of the
company plays a vital role, which provides direction and guideline for setting
of individual goal in performance management. Hence in Warid Telecom
Individual goals are developed on departmental goal which are in line with the
organizational vision and mission statement.
Warid Telecom has tied incentives with good performance. And the
objectives and scheme of rewards based on performance is clearly
communicated to the employees which would stimulate employees to perform
well for the achievement of the desired reward.
Warid Telecom is aware of the importance of incentives hence it grants its
good performers with both financial and non financial rewards. As monetary
benefits stimulate employees to perform well and it can retain higher
performers. Non financial incentives results in higher employee satisfaction. It
has also been revealed by the data that the Warid Telecom has designed and
implemented a competitive reward system which also helps higher employee
satisfaction and retention.
On part of the effectiveness or the performance based incentives data
illustrate that the employees are satisfied with the current incentives offered
by the company and that they think implementation and reinforcement
mechanism are suitable. And they believe that only good performers should
be rewarded which will create difference between good performers and
average or bad performers and it will motivate other employees to perform
24
well. Also the recognition of good performance plays a vital role in motivating
others. Also Warid’s workforce believe that the PBI system can increases
institutional competitiveness and they are satisfied with the system and
believe that it can positively effect performance by increasing their motivation
to perform well.
Warid Telecom frequently distributes performance based incentives for
example bonus, recognition and certificate for the “Employee of the Month”.
Frequent and timely rewards are more effective in terms of motivating
employees as compared to less frequent or delayed reward. It helps increase
the rate on which other employees can be stimulated and motivated to
perform well.
The effectiveness of the PBI system depends on the clear understanding
of the results/outcomes by the employees. Hence it is found that in Warid
employees clearly understand what is expected of them as there are
comprehensive job descriptions as well as continuous coaching and by the
supervisor.
Warid employees are also seemed to be satisfied with the competence of
the supervisor who evaluate their performance and that they are objective
and fair in their judgment.
Furthermore Warid Telecom employees do not strongly agree that a fair
budget is allocated to the PBI system to the employees. A problem indentified
with the current PBI system in Warid is that that employees are not involved
in the process, neither in the formulation of the type and amount of rewards
nor in the evaluation of the performance. This may leave employees less
satisfied with the fair working of the system.

25
 Chapter Four

CONCLUSION AND RECOMMENDATIONS

5.1. Conclusion
On the basis of the analysis of the data it can be concluded that the
incentives play a vital role in managing and enhancing employee’s performance
by increasing their level of motivation.
Furthermore it can be said that the reward system which incorporates
employee’s aspirations and consider their expectation is far more effective than
the one which does not.
It has been found that non-financial incentives increase employee
motivation than financial incentives. Moreover non financial incentives alone are
not enough to increase employee motivation; it is most effective when a blend of
both is offered to the employees.

5.2. Recommendations
Based on the findings following recommendations can be made to improve
the effectiveness of the PM system.
 Performance evaluation should be done bi-annually or quarterly.
 Training should be provided to the appraiser to frequently upgrade and
indentify KPI`s and goal setting with reference to current needs. As well as
to evaluate performance objectively and impartially.
 Incentives should be provided which will directly contribute to the
employee development for example educational assistance, study leave
etc.
 Employees should be involved in formulation of reward policies and
evaluation of their performance.
 Sufficient budget should be allocated to the PBI system to increase its
effectiveness in terms of greater employee motivation, satisfaction and
retention.
 Frequent up gradation of the policies is recommended for incessant
progress and growth.

26
 Employee’s aspirations, expectations and wants should be considered
while designing the reward system.
 Underperformers should be provided with appropriate training to enhance
their skill level and motivation.

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 Appendix I

A study on “THE ROLE OF INCENTIVES IN PERFORMANCE

MANAGEMENT” in WARID TELECOM PAKISTAN.

Research Questionnaire

Section One: Demographic and Attributes, Please tick the appropriate box

0 Name of Employee/department: Atiq Khan

1 Position/Designation: Head of Recruitment, Development & Regional – HR Operations

2 Qualification:

Ph.D. M.Phil/MS Masters Bachelors

3 Experience in Job (Years): Years with current Organization: 4+ years

5 Age (Years):

6 Gender :

Male Female

Section Two: Role of Incentives in Partially

Strongly
Performance Management Agree Agree/partially Disagre
agree
disagree

7 I have a clear understanding of

organizational vision and mission.

8 In my organization, department
performance goals are developed in line
with Organizational vision and mission
statement.

9 In my opinion, performance

28
 management system is in existence in
my organization.

10 I am aware of the objectives of current

performance related reward offering.

11 Following type of performance based incentives (PBI) are currently offered by the organiza
my performance

Financial Non-financial Combination of both

12 Following non-financial performance based incentives (PBI) are currently offered to me: (
applicable box)
Accelerated Promotion Salary increment Special prize Sponsored Trav
Sponsored Training And education Sponsored Recreation/entertainment Othe

13 Following non-financial performance based incentives (PBI) are currently offered to me: (
applicable box)

Assignment of additional charge/authority Issuance of certificate of merit/Honour/Appr

Employee of the year award Acknowledgement of performance in official publications
Ceremony arranged in Recognition of performance Job enrichment/ Job rotation
Employee of the spot/month/ quarter Other. Please specify

Partially
Strongly
agree Agree/partially
agree disagree D
disagree

14 I think that existing performance

based incentive system is compatible
with other Organization in Pakistan
known to me.

15 I feel satisfied with the current

availability of performance based
incentives system.

29
16 Implementation/reinforcement of
performance based incentive system
based on performances suggested by
Higher Management is suitable.

17 In my view there should be a

noticeable difference in reward
increasing among employees based
performance.

18 -------------should be given higher

weightage in my performance
evaluation.

19 When an employee receives a

performance incentive, the other
employees are motivated to exert
extra effort.

20 Performance based incentives are

distributed less frequently.

21 My suggestions and reservations

relating to PBI are duly considered by
the concerned authorities.

22 I fully understand the

results/outcomes expected from me
to do my job.

23 My supervisor who evaluate my

performance is competent enough to
discharge such function with due
care.

24 My supervisor who evaluates my

performance is generally biased and
unfair.

25 In my view, serious attempts are

made to mitigate the , risks and
challenges faced by performance
based incentive system.

26 I am given proper briefing / feedback

30
 regarding performance targets,
reward entitlements, performance
evaluation and reward distribution
mechanism.

27 In my organization a fair budgetary

allocation is available for award of
performance based incentives system
to the employees.

28 Funds allocated for performance

based incentives system can be used
as a tool to save payroll cost.

29 I feel that performance based

incentives system can improve
institutional competiveness

30 Higher I am satisfied with

performance based incentives
system. Higher will be its impact on
my performance.

31 Please tick against the type of other

risks and challenges faced by PBI
system, which need to be addressed:

Lack of vision and strategic direction

Lack of employees involvement in the process involvement in the process

32 Following are my suggestions for PBI improvement, which may be helpful in creating high
positive impact on an employee performance

31
 REFERENCES

1. http://en.wikipedia.org/wiki/Performance_management; retrieved on 02-

08-2010
2. http://www.managementhelp.org/perf_mng/defntion.htm; retrieved on 02-
08-2010
3. http://en.wikipedia.org/wiki/Performance_management; retrieved on 02-
08-2010
4. http://www.teamtechnology.co.uk/performancemanagement.html; retrieved
on 05-08-2010
5. http://www.idea.gov.uk/idk/core/page.do?pageId=4405770; retrieved on
05-08-2010
6. U.S. Office of Personnel Management 1900 E Street, NW, Washington,
DC, 606-2532

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7. http://www.managementhelp.org/perf_mng/benefits.htm; retrieved on 02-
08-2010
8. Sullivan, Arthur; Steven M. Sheffrin (2003). Economics: Principles in
action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall.
pp. 31
9. http://en.wikipedia.org/wiki/Incentive; retrieved on 02-08-2010
10. Gabor A. (1990) The man who discovered quality, times book, New York.
11. McCartney S. (1995) How to Make an Airline Run on Schedule, Wall
Street journal
12. Edward P. (2000) The Power of Incentives, The American Review, 410
13. http://maaw.info/ArticleSummaries/ArtSumBonnerSprinkle02.htm;
retrieved on 02-08-2010
14. UNDP Conference Notes #8 working draft (2006), incentive systems:
Incentives, motivation, and Development performance.
15. http://www.romir.ru/en/products/methods/face/; retrieved on 02-08-2010
16. http://ptcltelephonedirectory.com/blog/about-warid-telecom.html; retrieved
on 05-08-2010.

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