incentives abridged
TRANSCRIPT
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TITLE: EFFECT OF INCENTIVES ON SERVICE QUALITY AND EMPLOYEE
PERFORMANCE. A STUDY OF SELECT UP-SCALE RESTAURANTS IN WEST BENGAL.
By
Amitabh Dey Professor/Research Scholar
Principal – NSHM School of Hotel Management Arrah, shibtola, Durgapur – 713212
TEL: +91-9933049428 MAIL ID: [email protected]
P.R.Sandilyan Professor/Research Scholar
NSHM School of Hotel Management Durgapur-12
Tel: 03432533813/14/16 Mail ID: [email protected]
Gautam Bandopadhyay Assistant Professor
National Institute of Technology
(Deemed University) Durgapur
Tel: 03432544805 Mail ID: [email protected]
Manojit Mitra Research Scholar
National Institute of Technology (Deemed University), Durgapur
Tel: 03432544805 Mail ID: [email protected]
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TITLE: EFFECT OF INCENTIVES ON SERVICE QUALITY AND EMPLOYEE
PERFORMANCE. A STUDY OF SELECT UPSCALE RESTAURANTS IN WEST BENGAL.
0.0 Abstract
It has always been accepted and agreed upon that quality comes at a cost. This is true for service
quality also and applicable to the hospitality industry likewise. In modern days, Human Resource
Managers have recognized the need to keep well motivated employees to maintain quality
standards in service delivery. The aim of this study is to describe the role between Incentives
with employee performance and quality of service delivered. Change of employee‟s performance
and service quality due to incentives are examined to pave the way for further study and
research.
The best way to keep employees well motivated is by means of Incentives and most
organizations understand and apply this to get the best from their employees. The nature of
Human Resource practices in the catering and Hospitality Industry is reviewed and how
incentives affect the performance of employees and service quality is studied. This literature and
sample data based research will offer insight into the relation between performance of employees
and incentives. This will help Human Resource Managers to plan and adopt appropriate methods
to motivate employees and get the best results in terms of performance and service quality.
Determining appropriate incentive standards would be easier.
The literature concerning Human Resource Management and performance is briefly reviewed,
and its relevance to Hotel Industry and service quality and performance is addressed. Service
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Quality is indicated as a performance indicator in line with incentives and rewards. The need for
additional research is identified.
0.1 Key words
Incentives, Human Resource Management, Hospitality, Service Quality, Employee Performance.
0.1 Research Goal
The aim of this study is to describe the relationship between Incentives with employee
performance and quality of service delivered. Commitment of employees and workplace
attitudes are examined to pave the way for further study and research.
1.0 Introduction
Human Resource has been identified by most Human Resource Managers and Employers
globally as the most essential ingredient necessary for the success of any business. This belief
holds good for the Hospitality Establishments also. Hospitality organizations thrive on the
customer‟s perception of value for money in terms of amenities and service. Service being a
perishable and intangible commodity it goes without saying that it is more difficult to measure
and track. This challenge is unique to service product organizations worldwide and each one has
developed a yardstick to study and track the performance of their employees in accordance to the
location and market where they operate. In West Bengal also the HR managers face a similar
challenge and strive to meet the ever increasing demands of the modern day traveler and
customers. India being a labor market and West Bengal being one of the slower developing
areas, the challenge before the HR managers in this area is huge. They have to match the
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available talent pool with the cost structure permitted by the organization and thus ensure to
strike a balance between the two. This study is mainly to ascertain how far the efforts of these
employers and HR managers in this region have been successful in achieving the expectations. A
total of twelve establishments falling across various category cities in the region have been
examined for this study. There were some essential hypotheses that were examined for the
purpose of this study. Firstly it was taken that the rewards and incentive packages in metro cities
would be higher and more suited to meet the expectations of the employees because the
employees had plenty of options to switch jobs. Secondly it was taken that rewards and
remuneration had a direct bearing on employee performance and service quality. Thirdly it was
expected that service quality standards and expectations of customers in metros would be much
more as compared to the customers of smaller cities and towns. Lastly it was assumed that
employer expectations in terms of delivery in metros would also be higher as compared with the
smaller cities.
2.0 Review of Literature
P Joshi & D. N. Venkatesh, (2006) (H. R Management Pg 325, Remuneration centers around
factors such as job complexity, the company‟s ability to pay, and executive human capital.
Zeithaml, Bitner and Gremler, 2006, Services are characterized by intangibility, heterogeneity,
inseparability and perishability.
C.B Mamoria, S.V. Gankar, Personnel Management Text and Cases Himalaya Publishing House
Page No 460 Chapter 17, Incentives – Different people value things differently. Enlightened
managers realized that all people do not attach the same value to monetary incentives, bonus,
Prizes or trips. Employee views these things differently because of age, marital status, economic
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need and future objectives. However, even though employee reactions to incentives vary greatly,
incentives must have some redeeming merits.
C.B Mamoria, S.V. Gankar, Personnel Management Text and Cases Himalaya Publishing House
Page No 491, Chapter 18, Employee Benefits and services – It is important to note that
„financial‟ incentives are paid to specific employees whose work is about standard. „Employee
benefits and Services‟ on the other hand, are available to all employees based on their
membership in the organization.
These benefits are usually known as “fringe benefits” – as they are offered by the employer to
the employee as a “fringe”. Different terms have used for these benefits such as, “ fringe
benefits”, “ Welfare benefits”, “ Wage Supplements”, “Subwages” or “ Social Charges”.
C S Venkata Ratnam, BK Srivastava, Persannel Management And Human Resources, Tata
McGraw-Hill Publishing Company Limited, New Delhi, Pay and Benefits Chapter 8, Page no
169, Pay and benefits constitute an important element in human resource management. A
number of considerations like theoretical, public policy and legeal framework, company
objectives, labour market situation, pressures from unions and competition, etc. impinge upon
policies and programmes concerning pay and benefits. Job evaluation and pay surveys provide
the basis for a systematic approach to the subject.
A.M. Sarma, Understanding Wage System, Himalaya Publishing House, Wage Incentives
Chapter 5, Page No 95 Ninth Revised Reprint 2009, The term “incentives” has been used both in
the restricted sence of participation and in the widest sence of financial motivation. The concept
of incentive implies increased willingness or motivation to work and not the capacity to work. It
refers to all the plans that provide extra pay for extra performance in addition to regular wages
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for a job. Under this programme, the income of an individual, a small group, a plant workforce
or all the employees of a firm are partially or wholly related to some measure of productive
output.
3.0 Methodology
A questionnaire was framed and administered to employees of the service industry from select
establishments in West Bengal to collect their responses on the relation between Incentives and
rewards on their performance and service quality. The data so collected was initially scanned and
verified. Further statistical and mathematical tools were used to establish the relationship
between Incentives and rewards with employee performance and service quality. The outcome of
the analysis was studied and elaborated to draw appropriate conclusions. Initial Factor analysis
confirmed the fact that with the exception of one question where the answer was overall similar,
(Question on the effect of incentives and rewards on the performance of employees and service
quality) there was a divide in the opinion of employees in the rest of the questions.
4.0 Data Analysis
Here the average of the responses collected from about hundred employees on their views on
Incentives and its effect on service quality and employee performance was first calculated and
analyzed using various parameters of age, income group, qualification, gender and location. The
output of the analysis is as follows:
CROSSTABS
/TABLES=age BY income
/FORMAT=AVALUE TABLES
/STATISTICS=CHISQ
/CELLS=COUNT
/COUNT ROUND CELL.
Crosstabs
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age group * income segment Crosstabulation
Count
income segment
Total 0-1 lakh/yr 1-2 lakh/yr 2-3 lakh/yr 3-5 lakh/yr above 5 lakhs
age group below 25 yrs 25 5 0 3 0 33
25-30 yrs 8 6 2 3 5 24
31-35 yrs 1 4 7 4 0 16
36-40yrs 2 7 0 7 3 19
above 40 yrs 0 0 2 3 2 7
Total 36 22 11 20 10 99
Chi-Square Tests
Value df
Asymp. Sig. (2-
sided)
Pearson Chi-Square 69.583a 16 .000
Likelihood Ratio 75.280 16 .000
Linear-by-Linear Association 28.086 1 .000
N of Valid Cases 99
a. 18 cells (72.0%) have expected count less than 5. The minimum expected count
is .71.
Chi-Square tests were performed to check the interdependency of the attributes like age,
income group, gender, employee category and it was verified that most of these attributes
were interdependent. In the above table the 4th
column reads less than 0.5 and proves the
dependency of the attributes.
Only income and gender was similarly proved to be independent. ## (See Appendix 1)
Hence the data was analyzed using two-way ANOVA.
UNIANOVA Average BY age income
/METHOD=SSTYPE(3)
/INTERCEPT=INCLUDE
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/POSTHOC=age income(BTUKEY)
/PLOT=PROFILE(age*income)
/EMMEANS=TABLES(age*income)
/PRINT=HOMOGENEITY
/CRITERIA=ALPHA(.05)
/DESIGN=age income age*income.
Univariate Analysis of Variance
Tests of Between-Subjects Effects
Dependent Variable:Average
Source
Type III Sum of
Squares df Mean Square F Sig.
Corrected Model 77.135a 18 4.285 15.289 .000
Intercept 38.476 1 38.476 137.275 .000
age 2.091 4 .523 1.865 .125
income 29.542 4 7.385 26.350 .000
age * income 5.141 10 .514 1.834 .068
Error 22.143 79 .280
Total 124.958 98
Corrected Total 99.278 97
a. R Squared = .777 (Adjusted R Squared = .726)
Post Hoc Tests
age group
Homogeneous Subsets
Average
Tukey B
age group N
Subset
1 2 3
below 25 yrs 33 -.0404
25-30 yrs 24 .2396
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31-35 yrs 16 .9531
36-40yrs 19 1.1009
above 40 yrs 6 1.5972
Means for groups in homogeneous subsets are displayed.
Based on observed means.
The error term is Mean Square(Error) = .280.
income segment
Homogeneous Subsets
Average
Tukey B
income segment N
Subset
1 2 3
0-1 lakh/yr 36 -.4699
1-2 lakh/yr 22 .4773
2-3 lakh/yr 11 1.2121
3-5 lakh/yr 20 1.4833
above 5 lakhs 9 1.5093
Means for groups in homogeneous subsets are displayed.
Based on observed means.
The error term is Mean Square(Error) = .280.
Profile Plots
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For reference only one analysis of variance is shown here and the rest shown in appendix 2
5.0 Results and Inferences
On analysis of the data the following points emerged.
Age group, income, education were proven to be interdependent.
There was no relation between gender and income segment.
There were similarity in the views between the age groups of below 30, 30 to 40 and
those above 40 years or in other words there emerged three categories of responses.
Income groupings also had three segments.
The responses of employees with 2-3lakhs/annum were closer to those with a higher
income. There was negligible difference between the responses of employees in the
higher income bracket.
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Qualification had a very unique response pattern. Graduates and professionals were very
similar in their responses, where as much differences existed between the under graduates
and post graduates. However it was clear that undergraduates were mainly being used as
cheap labor and they had neither much income nor scope for growth.
Employee category showed that junior employees differed in their views with middle and
senior employees.
Gender had no or negligible influence on the employee category or the income group.
Location did have a bearing on the income of employees.
6.0 Conclusion
On analysis of the collected data various interesting results were visible. The interdependence of
age group, income segment and education was established by means of Chi-Square tests and
ratified the existing hypotheses on the same, which could be useful for further research work in
the area. Further the two-way ANOVA helped to group the employees in various sub groups.
Another hypothesis that was verified was that there was no effect of gender on the income or
employee category. So it was established that both genders had equal scope for performance and
growth. However the gender ratio of employees still is far different and also signifies that there
are more men than women in employment at all levels. The incentives were more acceptable to
the higher income group and also the fact was established that the lower income segment were
not very happy or content with what incentives that was being offered. The effect of education
was clearly established and also was seen that undergraduates were more likely to be fitted into
the lowest income groups and not much scope for higher paid positions as the graph showed no
undergraduates in the upper brackets.
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Senior and middle category employees were more inclined to agree with the incentive and
remuneration policies of the organization where as there was marked difference in the views of
lower category employees. Here one can also perceive that a lot of undergraduates were
employed and who probably never got any benefits in terms of rewards and recognition as well
as career growth. Organizations must look at making some policies to help these employees to
get educated or trained and provide them with opportunity to grow. Graduates and professionals
on the other hand showed that even though they belonged to a lower income group, there were
plenty in the middle and higher category also. This showed that they had the potential to grow
based on their education. Similar was the status of post graduates and higher. As the junior
employees had more interaction with the customers at various establishments studied, it is
imperative that the organizations look at these employees carefully and increase the satisfaction
levels of this segment. Location of the establishment had some effect on the satisfaction of the
employees as employees in metro cities were provided with better remuneration as compared to
the employees of smaller towns. Further it is necessary for organizations to invest more on the
employees at the junior levels and plan for them as this would help them in their efforts to
deliver service quality. Also we can justly state that employees must also try and upgrade
themselves if they wish to have career growth and better remuneration. Organizations using
unskilled and inefficient employees as cheap labor would lose their standards and ultimately
suffer as the customer would not like to pay for poor service quality and shift his loyalty to other
business units.
7.0 References
Human Resource Management, 2nd
edition, V S P Rao
Human Resource Management 12th
edition, (1997), Dr. Anjali Ghanekar
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Human Resource Management 10th
edition, 2004, Robert L. Mathis & John H. Jackson
Human Resources Management, 2008, 11th
edition, Gary Dessler
P Joshi & D. N. Venkatesh, (2006), Human Resource Management Pg 325,
Silva, P. (2006) Effects of disposition on hospitality employee job satisfaction and
commitment, International Journal of Contemporary Hospitality Management. Vol. 18.
Robert L. Mathis & John H. Jackson, (2004), Human Resource Management 10th
edition
B. Mamoria & S.V. Gankar, (2001), Human Resource management 6th
edition
Burack and Boldsmith, Human Resource Management,
K Aswathappa, 1997, Human Resource Management, 5th
edition
Rollinson, D., Breadfield, A. and Edwards, D. J. (1998) Organizational behavior and
analysis. Harlow: Addison-Wesley.
Hurley, R. F. and Estelami, H. (2007) An exploratory study of employee turnover
indicators as predictors of customer satisfaction, Journal of Services Marketing.
Philips, J. J. (1996) Accountability in human resource management. Houston, Texas:
B. Mamoria & S.V. Gankar, (2001), (H.R management 6th
edition pg- 303)
C S Venkata Ratnam, BK Srivastava, Persannel Management And Human Resources,
Tata McGraw-Hill Publishing Company Limited, New Delhi,
A.M. Sarma, Understanding Wage System, Himalaya Publishing House, Wage Incentives
Chapter 5, Page No 95 Ninth Revised Reprint 2009