Employee Performance and Rewards Mechanisms in First Abu Dhabi Bank

This study examines the impact of reward mechanisms on employee performance in the First Abu Dhabi Bank. It includes a literature review, research methodology, and the significance of the study for HR practitioners and academic research in the banking sector in Abu Dhabi.

Looking at employee performance through the lens of rewards mechanisms in the First
Abu Dhabi Bank

Acknowledgement
2

Acceptance Sheet
Capstone supervisor
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Abstract
“When you pay peanuts, you get monkeys,” goes a popular saying. Organizations today want
hard-working, sincere and diligent employees who would contribute to the success and
growth. These employees also expect to be compensated fairly and attractively in order to
perform well and stay with the organization. The proposed study aims to understand the
impact of reward mechanisms on employee performance in the First Abu Dhabi Bank in
recent times. The proposal mentions a detailed review of extant literature, a research
framework and the proposed research design. The study is significant in providing a guide to
compensation design for HR practitioners and would further academic research in the context
of the banking sector in Abu Dhabi.
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Table of Contents
Acknowledgement2
Acceptance Shee3
Abstract.....................................................................................................................................4
CHAPTER I Introduction.......................................................................................................6
1.1 Background of the Study...............................................................................................6
1.2 Statement of the Problem..............................................................................................7
1.3 Objectives of the Study..................................................................................................8
1.5 Research Framework.....................................................................................................9
1.6 Scope and Limitation of the Study................................................................................9
CHAPTER II Literature Review .........................................................................................10
2.1 About Reward Mechanisms ........................................................................................10
2.1 About Employee performance ....................................................................................13
2.2 About banking seector in Abu Dhabi.........................................................................14
CHAPTER III Research Methodology................................................................................15
3.1 Research Design............................................................................................................15
3.2 Sampling........................................................................................................................16
3.3 Statistical Tools and Treatment of Data.....................................................................17
CHAPTER IV Significance of the study..............................................................................18
CHAPTER V Summary........................................................................................................19
References...............................................................................................................................21
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CHAPTER I The problem and its background introduction
1.1Background of the Study
A strong human resource (HR) management system is the one made up of processes and
practices that are significant to the organization, differentiating, have a shared meaning, and
unambiguous (Ostroff & Bowen, 2016). Recruitment, selection, rewards and recognition,
performance management, learning and development, career development, grievance
handling, and employee relations form the strategic HR functions that contribute to an
organization’s growth, productivity and success (Nishii & Paluch, 2018). The AMO model
of HRM i.e. the ability-motivation-opportunity performance model (Appelbaum, Bailey,
Berg & Kalleberg, 2000) suggests that organizational HR practices impact individual
employees’ performance and behaviour at work (including counterproductive work
behaviour) by affecting their individual ability to perform, their motivation to perform and
the available opportunities to participate and do so. The present study aims to look at the link
between the ‘reward mechanisms and employee performance’ in the banking sector in Abu
Dhabi. People management and development practices form an important cog in the wheel
that is the organizational functioning. Any organization needs good and talented people to
run smoothly and achieve its goals. The staffing and acquisition functions of talent
management are suitable to attract potential employees as well as ensure that the present
employees have a positive image of the employer brand. The present employees would be
key in referring the vacancy and thus are the marketers of the employer brand. Competency
development, rewards and recognition programs, and performance assessment programs, in
the talent development framework, are crucial when it comes to development and retention of
talent. Talent planning is an important element of succession and leadership planning that
would enable the organization to create a talent pipeline to meet the future needs for
promotion, career development, and leadership development. The present study is focussed
on one of the most important practices of human resource management, which is ‘rewards
and recognition policy.’ The agency theory and the psychological contract theory suggest a
fair and just compensation commensurate with the job profile and the efforts put in by the
employee, as well as one that is based on the previous educational qualifications and work
experience and expertise of the employee. The proposed study intends to study what is the
relationship between the rewards mechanism and performance of the employees. The First
Abu Dhabi Bank (FAB) in the recent years would provide the context for the study.
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1.2 Statement of the Problem
Organizations are today are faced with a motley of challenges such as diversity in workforce,
globalization, dynamic business landscape, technological explosion, artificial intelligence, gig
economy, changing preferences of working patterns of individuals, environmental damage,
political upheavals, and growing discord between individuals. In such a scenario,
organization need their HR strategies and practices to be up to the mark and provide a
valuable and distinctive competitive advantage. Rewards and recognition forms one of the
high-performance work practices that research has found to be linked to employee and firm
performance (Shin & Konrad, 2017). Milkovich, Newman, and Gerhart (2011) reported that
for a majority of employees, extrinsic motivation continues to be the dominant factor in
explaining their work attitude and job performance. It would follow that the organization’s
reward systems would then be an important determinant of employee behaviour. For
example, if the employee perceive that the HR practices of compensation and rewards focus
more on individual contribution than team-based rewards, the work behaviour would be
inclined towards maximizing those rewards.
1.3 Objectives of the Study
The research proposal is intended to concentrate on the relationship between the rewards
mechanisms and the employee performance in FAB. The proposal aims at the following
research objectives:
 To understand the rewards mechanisms used by FAB
 To understand the reasons behind the differentiation in rewards, if any, between
different managerial levels
 To understand if the rewards systems have an impact on the performance of the
employees
 To understand if different set of rewards can have varying impact on the performance
of the employees
1.4 Hypothesis of the Study
The hypotheses being considered for the proposed study are as explained below. When
employees are provided with positive reinforcement in the form of rewards, they would see it
as the value that the organization puts on their work and efforts. When there are rewards
such as public accolades in the form of ‘employee of the month,’ or a team dinner to
celebrate a project success, the employee feels a sense of pride for his/her work. He/she
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would then celebrate that with his/her family and community as well. According to
Maslow’s hierarchy of needs, intrinsic rewards cater to the social needs of the employee. It is
hence estimated that this would lead to an increase in the employee performance levels. The
future score of performance should increase by the anticipation of the rewards to come based
on the efforts put in.
Extrinsic rewards refer to the financial and non-financial incentives that are tangible to the
employee and are significant when catering to the self-esteem needs of the employees,
according to Maslow’s hierarchy of needs. The past and present performance score of the
employee are expected to increase when the employee has received certain such rewards and
hence knows what to expect when he/she puts in more effort towards the same.
Organizations that offer variable pay do so with the same objective in mind. When a part of
the employees’ rewards is variable on the completion of target, the employee always tries
harder so as to receive the maximum rewards. Extrinsic rewards also refer to the non-
financial incentives that are a part of the job and are also crucial to the motivation of the
employee. These rewards are in the form of job security, challenging job assignments,
opportunities for international assignments, opportunities for availing training, opportunities
for taking a sabbatical for higher education, flexible work arrangements such as work-from-
home, flexibility in leaves and holidays, office facilities such as cafeteria, and recreational
area, office access to clubs and resorts, furnished accommodation provided by the
organization, company sponsored cars and fuel allowance, office space, access to latest
technology, and qualified team members.
H1a: Intrinsic rewards provided to employees will be positively related to employee
performance
H1b: Extrinsic rewards provided to employees will be positively related to employee
performance
H2: Financial rewards will be more positively related to employee performance than non-
financial rewards for entry level jobs
H3: Non financial rewards will be more positively related to employee performance than
financial rewards for senior management level jobs
H4: The use of a combination of financial and non-financial rewards mechanism will be
positively related to employee performance than just a financial system
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H5: Public admiration will be positively related to employee performance
1.5 Research Framework
1.6 Scope and Limitation of the Study
The proposed study is limited to the employees of the banking sector of Abu Dhabi. The
study would use sensitive data pertaining to rewards and performance measures. It is
estimated that the respondents and the organizations may be sensitive to sharing such data
and hence the sampling data would be restricted to the availability of the data. In such a
scenario, it may be difficult to generalize the findings to a larger population. It would
however be a good start for future studies. The compensation and rewards are affected by
national and organizational culture. The study is based in Abu Dhabi and hence may not be
suitable for generalizing globally to workplaces with different national cultures. The study is
quantitative nature which would provide an insight into if there is a relationship between the
said variables and the nature of the said relationship. It would however not be able to provide
the employee perceptions on the causes of such a relationship.
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Intrinsic Rewards
 Pride
 Sense of contribution
 Public admiration
Extrinsic Rewards
 Annual performance
review
 Financial incentives
 Training opportunities
 Promotion opportunities
 Holiday/leaves
 Challenging job profile
 Flexibility in working
hours
 Job security
 Employer Brand
Employee performance
 Performance score
 Performance ratings
 Future performance score

CHAPTER II Literature Review
2.1 About rewards mechanisms
High performance work systems are understood as people management practices that intend
to enhance the knowledge, skills and abilities of the employees, their motivation and morale
to perform their jobs to the best of their abilities, and to seek opportunity for growth, decision
making, and career development (Boxall, Hutchison, & Wassenaar, 2015; Nauta, Van
Vianen, Van der Heijden, Van Dam, & Willemsen, 2009). Developing a sound culture based
on values, aligning the goals of the founder and organization with that of the employees,
harnessing commitment, initiative and engagement among the employees, and creating a
workforce that is ready to take responsibility of leading the organization towards success are
some of the contributions that a good human resource management strategy would make for
entrepreneurial firms (Wright, Nyberg, & Ployhart, 2018). Jiang, Lepak, Han, Hong, Kim, &
Winkler (2012) very succinctly argue in their conceptual work that while the research on
synthesizing the internal components of HR systems is in a developing stage, their additive
properties have a strong influence on employee performance. They also point out that an
organization’s HR policy can provide clarity on the action required to carry out business in
the strategic direction as needed. These systems are generally related to how talent is
acquired i.e. recruitment and selection systems, how talent is developed and retained that is
systems related to socialization, career development, leadership and succession planning,
learning and development, performance assessment, and rewards and recognition.
Compensation and benefits or the rewards and recognition systems in any organization are
meant to serve as motivation for enhancing the performance and productivity of the
employees. The agency theory of compensation and motivation implies that employees
expect to be compensated adequately for the jobs they perform. The employee-employer
relationship is a contractual agreement where pay, both financial and non-financial, is
provided in return for the services of employment performed by the employees. The basic
pay thus becomes a hygiene factor while other forms of intrinsic and extrinsic rewards
become the source of motivation for performance and productivity (Chong & Leung, 2018).
Intrinsic rewards refer to the financial and non-financial inducements that affect the internal
needs for recognition, admiration, and esteem in the employees such as their pride, sense of
identity, sense of connectedness to the organization, identifying with the job, acclaim
received publicly, and the feeling of being valued by the organization (Qiu, Haobin, Hung, &
York, 2015). The extrinsic rewards are those that cater to the functional and more tangible
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needs of the employee and cater to an overt form of accomplishment such as financial bonus
and incentives, as well as external factors to the job such as job security, challenging job
profile, opportunities for learning and development, career development opportunities,
institutionalized socialization, group incentives, stock options, bonus for project completion,
employee value proposition, and physical forms of motivation such as swanky office spaces,
availability of food and beverages, flexible dress code, flexible work arrangements, lenient
leave and attendance policies, state-of-the-art technology and infrastructure, and qualified
team members (Gerhart & Fang, 2015).
Employees in any organization act as sources of competitive advantage. They are strategic
weapons for the organizations and need to be valued accordingly (Dubois & Dubois, 2012).
An attractive rewards and recognition program by the organization is their way of
communicating to the employees that they are valued and needed by the organization.
Employees make sense of how their employers see them and their work by how they are
rewarded for the same (Arthur, Herdman, & Yang, 2016). For example, if an employee is
rewarded in their performance review on their punctuality and sincerity, they will continue to
be so in the future as well. Conversely, if an employee who works hard, is a supportive team
member, is respectful and diligent, but is overlooked for someone who completes his/her
target but is otherwise lacking in the right attitude and is not a team player, the first employee
may deduce that the organization only values achievement of the targets while not caring
about the attitude or the behaviour of the employee. It may also send a message that while
teams exist and the organization insists on teamwork, in reality, the system and thus the
organization rewards individual performance only. There is extensive research available on
the effect of compensation policies on firm performance (Aryee, Walumbwa, Seidu, & Otaye,
2012; Bentley, Fulmer, & Kehoe, 2019; Lee & Bang, 2012) such as its profitability,
productivity, customer loyalty, customer retention, quality, and market positioning.
Similarly, extant literature (Li, Frenkel, & Sanders, 2011; O’Neill, Feldman, Vandenberg,
DeJoy, & Wilson, 2011) suggests that appropriate compensation and rewards policies have a
positive impact on employee performance measures such as productivity, job satisfaction,
organizational commitment, engagement, and retention. There is relatively scarce empirical
literature on how dissatisfaction with the compensation system may have an adverse effect on
employee behaviour and can lead to intent to quit, deviant behaviour, counter-productive
work behaviour, absenteeism, fraud, petty theft, aggressive behaviour, disengagement, loss of
productivity, low morale, and turnover (Hom, Lee, Shaw, & Hausknecht, 2017).
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The compensation structure in any organization would take the form of pay and benefits. The
rewards structure thus includes the basic pay and benefits provided along with any raises such
as increments or bonuses, the variable pay which is a part of the overall pay, and how non-
financial incentives get structured in the rewards system (DeGieter & Hofmans, 2015).
Depending on the position of the employee such as entry level, junior, middle managerial or
senior leadership level, the design of the compensation would be different. The motivation
level of executives at different stages of their careers is different and hence it makes sense
that compensation design reflects these changes as well. For example, an executive who is a
bank manager, at a mid-managerial level, would typically be someone who has a family and
is looking out for benefits related to his children’s education, flexible vacation policies, and
an option for flexible benefits. He may not be interested in getting food allowance but may
react favourably to a fuel allowance. Such an executive would appreciate a medical
insurance policy that covers him as well as his spouse and children compared to a perquisite
that offers him substantial coverage of a new mobile phone or laptop. When such an
employee who may be performing at an average level is granted a host of favourable benefits,
he may take this as an indication that he is valued by the organization and will be
compensated in the desired manner if he performs to the expected standards. Such an
employee may also strive to work harder to earn more benefits and would feel a sense of
pride in his work and desire to stay with the organization for a long time rather than move on
to another job where he would have to cultivate a trusting and mutually beneficial
relationship from the start. Thus, the design of the compensation can be an important factor
in determining the level of performance exhibited by an individual employee.
2.2 About employee performance
Employee performance has been conceptualized in various manner throughout academic
literature depending on the purpose and context of the empirical study. In the context of this
study, employee performance is understood as the sum total of how the employees have met
their targets, fulfilled their responsibilities, and have put in effort commensurate with their
potential. Employee performance is one of the most critical predictors of organizational
success (Gardner, Wright, & Moynihan, 2011). It is said to be one of the antecedents to the
growth, success and performance of an organization (Bohlander & Shell, 2010; Bose, 2018).
Employee performance is just a strategic tool that is used by organization to achieve their
goals and vision. Organizations hence place a lot of importance on how to enhance employee
performance so as to benefit the business and the bottom line. When employees perform well
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and are highly satisfied with their jobs, the levels of productivity are high in the organization.
High levels of performance would also signify a high rate of organizational commitment and
engagement. When employees are happy in their job, it would predict a lower rate of
turnover and absenteeism.
Employee performance is measured by the organization in different ways depending on the
stage of development they are in, the business climate they operate in, the culture of the
organization, the state of development of their HR systems, and the purpose of measuring
performance amongst other things. In the present study, employee performance is
ascertained to be measured based on the past, present and future score of the employees. The
performance scores are largely related to how the employees performed as against the targets
set at the beginning of the year, the feedback received from customers, the appraisal of the
supervisors, and their own appraisal of their work throughout the year. Organizations also
engage in creating a talent pipeline by predicting future performance of employees based on
their past scores and current performance. This data helps them in workforce planning as
well as succession planning. Companies can then think about promotion as well as training
and development needs of their employees. In the banking sector, one of the key result areas
for the employees has to be customer service orientation since the employees deal with them
for most part of the day. The performance appraisal system of the banks could measure the
customer service orientation through feedback sought from the customers, nature and
frequency of complaints registered by the customers, and the turnaround time at the counters.
The efficiency of the employees at their jobs could be measured by their achievement of set
targets, error rate, use of technology, nature of complaints, if any, turnaround time for tasks,
need for skills upgradation, learning and adaptability quotient, behaviour with peers and
customers, punctuality, focus on quality, contribution to administrative tasks, and other
metrics devised by the banks specifically for their employees. The banks in the study would
be the ones that have established performance appraisal systems that measure the supervisors’
rating as well as provide for a self-appraisal in a subjective and/or an objective score.
The dimension of past performance is important for the study to examine the effects of the
rewards systems in place. For example, if there is a case of an entry level cashier who has
been working with the bank for 4 years and is being provided with a basic pay, average
bonus, and basic perquisites, it may be suggested that a higher variable pay in his job based
on better performance may induce to him work harder. His manager can set his targets to
achieve minimal errors, shorter turnaround time, and an above average customer satisfaction
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score. The examination of how certain kinds of bonuses, financial incentives, perquisites such
as free beverages, flexible working hours and/or conveyance can then be studied to find their
impact on improvement in the performance of the employees. For example, if there is an
employee who asked for a travel allowance to be provided for him to enhance his
productivity when he goes to meet clients for investment opportunities, it can then be
examined if he managed to get more clients, over a significant period of being awarded the
conveyance allowance.
The future performance scores utilize the past performance as well as the supervisors’
prediction of how the employees would stand to perform in the next couple of years. This is
proposed to be used in the study to determine how a variation in the kind of pay would have
an impact on retention and promotion decisions. For example, a junior level employee
working for five years in the organization may be enticed to stay in the organization with a
promise of more financial bonuses or he may like more incentives such as conveyance, house
rent allowance, and flexibility in taking leaves based on the demands of his personal life.
2.3 About banking sector in Abu Dhabi
The banking sector in United Arab Emirates (UAE) is substantially scattered while Abu
Dhabi leads the share of assets along with Dubai. In the specific context of business
economy of Abu Dhabi and the larger context of the UAE, the global recession has had a
major impact. The impact of dynamic business landscape and fluctuations in the economy
would be suffered by the banking industry, like others. The subsequent effect would also be
on the employee performance since that is linked to the firm performance. The banking
sector has been chosen for this study since it is quite a lucrative industry in UAE. It also
forms the backbone of the financial system of any nation and thus a crucial industry for
economic development. The banking sector are crucial for the trade and commerce of the
nation. The banking sector has employees who deal with external customers on a regular
basis. It is thus a part of the service economy and that brings with it a different set of
challenges. Employees in service economy, especially those who deal with customers on a
regular basis have to mask personal emotions to offer customer service which leads to high
amount of stress, fatigue and emotional labour (Bhave & Glomb, 2016) The long working
hours and the pressure of dealing with sensitive information related to the personal finances
of their customers as well as the hassle of dealing with cash and investments can take a toll
on any employee. Most banking employees have to undertake basic level of education and
tests to make it to the entry level. With the plight of the global economy as it is, jobs are hard
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to find, and especially in the sector, it would take a lot of effort and high performance on the
part of the employees to retain their jobs. As the banks are a part of the economy and thus hit
by the recession, it is difficult for them to provide above the market level of pay and
incentives. This may take a toll on employees who may be putting in much more effort than
what they are being given in return. Additionally, banking in Abu Dhabi is on the verge of
more consolidation resulting from planned mergers and acquisitions. This brings with it
challenges of its own since employee relations tend to be affected the most during such
consolidations (Steigenberger, 2017). Employees would be vulnerable in such stages and
changes in the organization structure, climate and culture can have an adverse effect on their
self-esteem, role efficacy and job productivity. It can also be argued that such consolidations
would make the resultant organization stronger and more prepared to achieve its lofty
business goals and can thus avoid the pitfalls such as downsizing, reduced pay, and
disinvesting in employee relations activities such as training and development, career and
succession planning, and leadership planning. The economic climate of Abu Dhabi would
entail salaries reaching a plateau or minimum increase to match the cost of living. The
employees in most organizations would not find it feasible to look for job changes unless
there is a sufficient pay hike as well as job security offered. Many of the employees may
look at pursuing higher education by availing sabbaticals and thus upgrading their
employability for the future. International assignments with an opportunity to earn and save
more would be enticing for young professionals and previous expatriates. The overall
employment climate would thus be distraught with individuals who want to earn more but
fear for the security of their jobs, as well as a market saturated with talent and obsolete
technological skills. The impact of globalization, shifting of manufacturing to other
countries, repatriation, artificial intelligence and automation of work are other issues that
trouble the industries in Abu Dhabi and the world over. They are however beyond the scope
of the proposed study.
FAB provides ample opportunities for career growth and development to its employees. Its
employee value proposition is of making a difference together at an organization with a
performance oriented culture, innovative programs, and a focus on accelerated growth for
those who possess the merit.
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CHAPTER III Research Methodology
3.1 Research Design and Sampling
Research is viewed as ‘a continual process of data collection, followed by analysis, leading to
questions, followed by more data collection and so on (Corbin & Strauss, 2008). There are
various stages and methods involved in conducting a nuanced research. For the proposed
study, a quantitative survey method is proposed for the data collection along with a secondary
data analysis using extant literature about the banks and their employees on public sources.
A quantitative survey method would be useful in getting access to a substantially large
sample pool (N>400) that could then be run through a statistical software to understand the
relationships between the variables with more clarity and be later used in further research on
the implications of the relationship.
This study is being conducted for the very purpose of identifying and examining the
relationship between rewards and employee performance specifically in the context of
employees of FAB. It is thus quite a preliminary study and a qualitative analysis would
hence not be suitable for such a study. There is extant literature available (Albrecht, Bakker,
Gruman, Macey, & Saks, 2015) on how high-performance work practices such as that of
rewards and recognition have on employee motivation and performance, no such study has
been conducted in the given context. Once this study is concluded and the results derived, a
further qualitative examination of the perceptions of the employees towards reward systems
and how they make sense of these mechanisms in relation to their own performance may be a
good step forward in furthering the research. The proposed study deals with the nature and
direction of the relationship between the two variables and hence it is more prudent to use a
quantitative approach whose results can be used to generalize the data and find further
patterns for research.
3.2 Sampling
The proposed research aims to find the relationships between the different types of rewards
mechanisms and employee performance levels. There would be a scale used to identify and
qualify the said relationship. The sample would comprise of employees from different
functional groups and managerial levels from FAB. The sampling method would be
convenience sampling and the respondents would be approached personally, and requested to
fill up paper-pencil forms. Prior permissions would be sought from the organization to
approach the employees, with assurances of data anonymity and confidentiality. The
participants would also be assured that their data would be strictly used for academic
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purposes and their involvement in the study is voluntary. Age and gender of the employees
would serve as the control variables for the study. The respondent profile would be any
employee working at the bank for more than 3 years. This would ensure that they have
completed at least one cycle of performance appraisal and received an annual bonus under the
rewards plan. The employee performance measures are calculated based on the score of the
previous two years and hence employees with a minimum of three years of work experience
would be a suitable profile for sampling. The unit of analysis would remain the organization.
The study is examining the variables at the policy level and hence the organization becomes
the focal point of the research. FAB would be given a copy of the report as well so that they
can understand how the nature and composition of their rewards mechanisms are affecting
the performance of their employees. This would help them in designing future compensation
systems and restructure the present one, if needed, to adapt to their objectives of
performance. It would also help them to understand trends in attrition, job dissatisfaction,
and loss of employee productivity.
The proposed research aims to use both primary and secondary sources of data. Hence, other
than the survey, the researcher would also look at the employee details in the employee
records of the bank, the data regarding the banks’ performance in the last five years, HR
policies, organizational structure, details of organization culture, any change management
initiatives undertaken, profiles of key management personnel, financial and investment
information available on the bank website, and any other pertinent details related to
employees’ performance. This would be integrated into the analysis of all available data to
generate a comprehensive report post the study.
3.4 Statistical Tools and Treatment of Data
The survey is proposed to take 180 days for collection and another 120 days for analysis.
The data would first be cleaned to do away with any discrepancies and incomplete entries.
The survey would be subject to factor analysis to validate the instrument post which a
correlation and regression analysis would provide information on the nature and direction of
the relationship between the rewards mechanisms and performance of the employees. The
data so collected and analysed would also be able to shed light on what are the possible
reasons for the positive or negative relationship. It would then be used to explain directions
in further research that can be ascertained from the data so collected. Age and gender are
used as control variables in the said study but if significant data is unearthed, it can be a
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future research question to see if employees belonging to different genders related to
compensation in a different manner.
The scale (Mahaney & Lederer, 2006; Nyberg, Pieper, & Trevor, 2016) to be used in the
study is an already established one. It has hence been tested for its reliability and validity.
However, a principal component analysis (PCA) will be conducted with a pilot study in SPSS
to determine the reliability and validity of the scale in the context of Abu Dhabi. The further
statistical analysis would involve exploratory and confirmatory factor analysis to determine
the factor loading for the items in the scale. The structural equation model would be an ideal
approach for the same. The hypotheses testing would be concluded with correlation and
regression analysis to determine the nature and direction of the relationships between the
three different variables of intrinsic rewards, extrinsic rewards and employee performance
measures.
3.5 Variables used in the study
The proposed study examines the relationship between rewards and recognition systems and
employee performance. The dependent variable is employee performance that would be
measured by various items as described below. Intrinsic and extrinsic rewards form the
dependent variables in the present study. The demographic profile of the participants would
be recorded such as their age, gender, years of working in the present organization, total years
of work experience, and their functional job titles. The age and gender of the employees
would however serve as control variables as the study does not aim at understanding their
interaction with the rewards or performance measures. The following variables (Mahaney &
Lederer, 2006; Nyberg, Pieper, & Trevor, 2016) are considered relevant for the study
Intrinsic rewards – Pride, sense of contribution to the organization, public admiration
Extrinsic rewards – annual performance review, financial incentives, training opportunities,
promotion opportunities, job security, employer brand, flexibility in working hours,
holiday/leave policy, and challenging job profile
Employee performance – performance scores (provided by company), appraisal ratings,
projected performance score (projection based on score of previous 2 years)
It is assumed that the banks would have an established performance management system that
maintains records of employee ratings, self-appraisals, superiors’ subjective and objective
ratings, customer feedback, grievances filed against the employees, job description and job
18

specification that may have evolved over the years of work, organizational structure and
personnel records. This would help in understanding the results of the survey data analysis.
The banks would also need to provide with data regarding the potential of every employee,
especially those in middle and senior management level in order to understand how their
rewards mechanisms are different and how they have a bearing on their performance.
Chapter IV Significance of the study
The banking sector, like all sectors in the economy needs good talent to succeed. Talent
management involves understand what would work for acquisition, development, and
retention of superlative talent that would work in alignment with the organization’s goals.
The results of the proposed study would help in HR practitioners, specifically in the banking
sector, understand how rewards mechanisms affect the performance levels of the employees.
The study proposes to unearth evidence relating to how different forms of rewards such as
financial incentives and non-financial perquisites add to the employment experience of the
employees, their motivation levels, their engagement levels, overall job satisfaction and
productivity, and employees’ intent to stay with the organization for a long time. The
proposed study would give an insight into how employees perceive their present
compensation systems and whether their satisfaction or dissatisfaction affects their
performance levels. This would be a good insight for HR practitioners who want to design
suitable compensation plans for their employees. The study also aims to understand if
different set of rewards for different managerial levels such as provision of car and fuel
allowance for middle managerial levels, food allowance for junior staff, and furnished
accommodation for senior level staff has different impacts on their performance. HR
practitioners looking to restructure executive compensation can benefit greatly from the
study. The study would also help in furthering the availability of present research in the area
of compensation and benefits and employee performance.
Chapter V Summary
The research is a step forward in understanding the rewards-performance relationship in the
banking sector in Abu Dhabi, taking FAB as a case study. Academic research in this context
is not a lot, with very scant empirical research. This study would thus make an important
contribution to HR practitioners and academics in the field of compensation, rewards,
employee performance, and motivation. The study would use quantitative analysis for the
measurement and analysis of the data so collected that would provide an insight into the
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nature and direction of the relationship between intrinsic and extrinsic rewards and measures
of employee performance.
20

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