To Study the Impact of Commission Based Salaries

on Employee Motivation and Performance

Submitted to Ms. Salma Rahman in partial fulfillment for the requirements of
the course BA5103 Advanced Research Method

Class: MBA 1-D

Submission Date: November, 19th 2013
Submitted by:
Ambreen Alam Siddiqui
Ayesha Qayyum Khan
Khurram Khowaja
Manal Fazal
Rimsha Khalid

ACKNOWLEDGEMENTS

Shaheed Zulfiqar Ali Bhutto Institute of Science & Technology

Karachi Campus,
Pakistan.
In the beginning we would like to thank Almighty Allah for giving us enough strength and
courage to come par with this research paper and to our instructor of the course Ms Salma
Rahman whom this report is submitted in partial fulfillment for the requirements of the course
BA5103 Advanced Research Methods, for her faith and trust on us, without whose guidance and
assistance we wouldnt have been able to complete this research report.
We would also like to thank our friends, colleagues and all the group members for their
unconditional support, help and time for us who really helped us out towards the completion of
the research report especially our parents and other family members.

Yours Sincerely,

Ambreen Alam Siddiqui

Ayesha Qayyum Khan
Khurram Khowaja
Manal Fazal
Rimsha Khalid

ABSTRACT
The purpose to present the research was to see the how employee motivation impacts on
performance based on commission based salaries. In other words the present research was
conducted to see that to what extent employees get motivated by commission based salaries and
how this motivation affect their performance. In this research employee motivation in terms of
commission based salaries was independent variable and performance was dependent variable.
For this purpose data collection tool was questionnaire and our sample size consisted of 40
employees. The selected sample was selected on the basis of non- random convenience sampling
technique considering only those employees who were sales executives and were earning
commissions on their base salaries.
The hypothesis formulated for this purpose was:
Ho= Commission based salaries have no impact on performance.
HA= Commission based salaries have positive impact on performance.
The finding of our study was supported by the literature review of our research in which research
was carried out it was concluded that there is a positive impact of employee motivation on
performance based on commission based salaries.

TABLE OF CONTENTS
SNO

CONTENTS
CHAPTER 1: INTRODUCTION

1.1 INTRODUCTION
1.2 OBJECTIVES
CHAPTER 2: LITERATURE REVIEW
2.1 LITERATURE REVIEW
2.2 CONCEPTUAL FRAMEWORK
2.3 RESEARCH QUESTION
2.4 HYPOTHESIS
CHAPTER 3: RESEARCH METHODOLOGY
3.1 RESEARCH METHODOLOGY
3.2 SAMPLING TECHNIQUE
3.3 SAMPLE SIZE
3.4 INTRUEMENT OF DATA COLLECTION
3.5 STATISTICAL TECHNIQUE
CHAPTER 4: DATA ANALYSIS
4.1 DATA ANALYSIS
4.2 HYPOTHESIS ASSESSMENT SUMMARY
CHAPTER 5: CONCLUSION
5.1 CONLUSION
5.2 DISCUSSION
5.3 IMPLICATION
5.4 FUTURE RESEARCH
REFERENCES

PAGE
NO.

LIST OF FIGURES
SNO FIGURES
1

Expectancy Model- Figure 1

Compensation Model- Figure 2

Page
No.

LIST OF TABLES
SNO Tables
1

Reliability Analysis- Table 1

Descriptive Statistics- Table 2

Page
No.

CHAPTER: 1
1.1 INTRODUCTION
Motivation is a psychological feature that stimulates an organism to act towards a
desired goal and elicits, controls, and sustains certain goal-directed behaviors. It can be
considered as a driving force; a psychological one that compels or underpins an action toward a
desired goal. Motivation can be divided as extrinsic and intrinsic, in this research report we have
closely focused on extrinsic motivation. Extrinsic motivation includes compensation that can be
component based or performance based. We have targeted on performance based compensation
and in performance based compensation our area of interest was commission based salaries.
Commission is a sum of money that is paid to an employee upon completion of a task, usually
selling a certain amount of goods or services. Commission may be paid as a percentage of the
sales or as a flat amount based on sales volume.
The research was aimed at describing the relationship between employee motivation and
performance based on commission based salaries. To describe this relationship we used nonrandom sampling technique and made use of questionnaires as our research instrument. We
collected the data and used SPSS software for finding out results.
1.2 OBJECTIVES:
The reasons to conduct this study are as follows:

To measure the impact of employee motivation on performance based on commission

based salaries.

To see what kind of relationship (positive or negative) exists between two variables i.e.
motivation & performances.

CHAPTER: 2
2.1 LITERATURE REVIEW
MOTIVATION & PERFORMANCE
Mufti and Khan (2012) Motivation is often considered as a driving force; an inner force
or drive that induces and emphasizes an act in the direction of a desired aim or objective.
Motivation in other words can also be considered to be a psychological reason of an act.
Stephen P. Robbins; David A. Decenzo (2001) Motivation is defined as the willingness to exert
high levels of effort to reach organizational goals, conditioned by the efforts ability to satisfy
some individual needs. It is a need-satisfying process. Motivated employees are those who
are in state of tension.
Bateman and Snell, Principles of Management. New York: McGraw-Hill Higher Education gave
a generalized idea of motivation as they defined motivation as a power which uplifts, guides and
maintains the effort made by a person. All voluntary actions or behaviors of a person are
motivated by a force or factor which influences that person in order to do certain action or
conduct.
Robbins and Coulter, Management: Pearson gave a specific definition of motivation in reference
to the employees and the organizations they define motivation as a readiness of an employee to
put in immense hard work to reach organizational aims and objectives, on a condition that the
efforts put in by an employee will result in satisfying some individual need. Morgan (1997)
stated his studies on motivation bit differently he mentioned in his studies that inspired or driven
employees are an important pillar for the survival of an organization. Taylor (1911) in the
beginning employees were treated as motorized inputs to the firms outputs. Dickinson (1973) the
horizon was then broaden and the perception was soon changed after the Hawthorne Studies by
Elton Mayo from 1924 to 1932, this behavior and perception was soon altered and reflected
human morals, visions, goals and requirements into consideration.
Molander (1996) in this respect also emphasized and believes that success of any organization is
highly dependent on progressive and goal oriented work force and work force has to be
motivated in order to be effective and efficient and goal attaining. Workforce is valuable
resources which adds and contributes towards organizational success but the organizations
should keep their employees motivated in order to achieve their goals.
Campbell and Pritchard (1976) Graen (1969) Lawler (1964) Porter and Lawler (1968) describe
motivation as an ongoing process which keeps on forcing the individual to willingly put in some
effort in his or her respective work. Management consultants such as Fisher (2003) Harter et al
(2002) (2006) Judge (2001) in their studies show the importance of employee motivation, as they
suggest that by keeping employees motivated will enhance employees efforts in contributing
valuably for the productivity of the firm.

Kanfer(1999) studies show that, to enhance employee motivational levels organizations should
create a match between the goals of an individual and organizational aims and objectives to be
more productive. It gives us an insight that organization should change their management
practices in order to enhance motivational levels of its employees as a result of which employees
will be more productive, effective and efficient in their job roles which will result in increased
organizational productivity and returns. Mullins (1993) studies give us evidence that employee
motivation has a close relation with job satisfaction and one of the major driving forces of job
satisfaction which leads to employee motivation is compensation. For such devotion and
dedication the key remains the motivation.
According to Mufti and Khan (2012) employees with higher motivational levels work hard and
perform better in order to attain their personal and organizational goals as compared to those
employees with low level of motivation. Thus, if we understand the requirements and prospects
of employees will indicate us their bases of motivation. In this regard the work done by
employees and their level of satisfaction is a key in order to enhance the actual motivation. The
biggest variance in this respect is what employees want and perceive from their work is of
immense importance. According to Wiley (1997) there is something which has a great value for
employees and organizations should be aware of those strong motivators as they are of immense
importance which will help organizations to alter their policies and work in order to increase in
employee motivation.
Yeganeh and Su (2008) the key factor is to understand motivation which can easily be
understood by taking into account the relationship between needs, drives, and incentives.
Minner, Ebrahimi and Watchel (1995) in their work clearly mentioned and stated that motivation
depends on three interrelated elements, i.e. needs, drives, and incentives. A lot of work has been
done one workforce motivation which justifies that motivation enhances employee performance.
Brown and Shepherd (1997) in their works scrutinized the basic features of the work in an
organization by differentiating the work on the basis of, knowledge base work, technical work,
standards, and opinions. Their study results show that employees can perform successfully in
meeting their goals or deadlines only by motivating them through developing a common idea or
vision with respect to bond between values and beliefs.
Motivational models can be divided into two sub divisions. The first one is content theories that
focus on individuals intrinsic traits and the second is process theories which emphasis on the
persons relations with his/her settings.
Herzberg (1968) majorly focuses that internal factors are in relationship with motivation job
satisfaction whereas external factors are in relationship with job dissatisfaction. His further
argument is that a small amount of compensation can actually annoy and de-motivates dont
mean that higher compensation will result in increased motivation. Maslow (1943) study is also
based on internal factors of motivation as motivation is the driving force within a person to
accomplish a task which he desires to accomplish. It links motivation to human basic needs like
food; clothing and shelter. He stated his theory as Hierarchy of needs. This theory depends on
two ideas, people have a lot of needs that are meant to be satisfied and only those needs
motivate behaviors of an individual which are unsatisfied. Thus we can illustrate that a person
wants to satisfy his or her need to a definite or certain level but if that need is not satisfied it will

alter his or her behavior. The second part of this theory defines a well composed and wellstructured hierarchy of needs which we all have starting from bottom to top. When we are able to
accomplish or satisfy our initial or lower needs we tend to rise up towards our top most or higher
needs. Whereas Herzberg (1959) focuses on complex end conceptions such as motivating factors
and hygiene factors.
In Self-Determination Theory (SDT) Deci & Ryan (1985) distinguished between different types
of motivation based on the different reasons or goals that give rise to an action. The most basic
distinction is between intrinsic motivation, which refers to doing something because it is
inherently interesting or enjoyable, and extrinsic motivation, which refers to doing something
because it leads to a separable outcome.
Intrinsic motivation is based on an inner desire to do something for the pleasure or benefit it
brings to self. Intrinsic motivation emanates from the personal desire to gain knowledge and
pursue mastery in something, experience the pleasure of accomplishment, feel the kinesthetic
sensations of athletic performance, taste the true wonder of the world, and experience inner
happiness and fulfillment.
Extrinsic motivation is based on the desire for external rewards, such as gaining the approval of
others, earning money, winning prizes, or obtaining reinforcement for a certain behavior.
Deci (1971) and Harackiewicz (1979) several early studies showed that positive performance
feedback enhanced extrinsic motivation. Deci, Koestner and Ryan (2000) confirms that almost
every type of expected tangible reward made dependent on task performance does motivates
people to accomplish their tasks in order to be rewarded so high performance is evident.
Connell and Wellborn(1990) subsequent studies have extended these findings concerning to
rewards paid as commissions, showing that more autonomous extrinsic motivation is associated
with greater engagement better performance. Vallerand and Bissonnette(1992) stated that less
dropping out higher quality learning, and greater psychological well-being (Sheldon & Kasser,
1995), among other outcomes.
According to Grolnick and Ryan (1987) business organizations use extrinsic motivation and a
performance-reward system for energizing employees. Pay raises, bonuses, additional time off,
or other benefits are common forms of extrinsic motivation. Miserandino (1996) companies
institute a performance management system to achieve maximum efficiency from employees
when offering these benefits in order to motivate them to achieve more.
Vroom (1964) enlightened this subject by proposing a theory which defines motivation as an
activator which is target focused with behavior whether motivation is internal or external.
Intrinsic motivation comes from within the person extrinsic motivation is caused by external
factors. This theory has been exposed to severe academic analysis and various experiments were
conducted on its constituents in order to verify and confirm their influence on motivation which
were later declared positive. Expectancy theory was initially proposed by Vroom (1964) his
theory identifies three different driving forces which has an interactive role in motivation. The
first factor is effort, performance and expectancy (E-P expectancy). Expectancy theory is
basically a process theory of motivation, which explains motivation as a function of a single

entity or person and their views and opinions about their environment and their expectations that
are based on their perceptions. Klein (1991), Pritchard and Sanders (1973), and Arvy (1972)
advocate on the link between E-P expectancy and effort. Keeping in view the above literature by
Vroom we can establish that motivation is the force of an employee to act and achieve.
Kanfer (1990) Vrooms theory is one of the most widely used theories for resolving issues of
compensation and motivation.
E-P EXPECTANCY MODEL

Figure-1

COMPENSATION & COMMISSION BASED SALARIES

Bhattacharyya, Compensation Management. New Delhi: Oxford University Press this
term compensation is basically used on behalf of wages and salaries as compensation now is
viewed as the strategic management of wages and salaries. It has become vital for organizations
to stabilize both the cost of compensation and employee motivation in order to retain best
employees in the competitive environment. Aswathappa (2008) stated Compensation as a key for
employees; it is one of the vital reasons for which people work. Employees status in the society,
satisfaction, trustworthiness and productivity also depends on compensation. Bhattacharyya,
Compensation Management. New Delhi: Oxford University Press Salary, pay or compensation
represents the give-and-take between the employee and the organization, both the employee and
the organization provides something in return of something else and over the period the level of
expectancy both from employers and the employees increases as employers want their
employees to perform well and be highly productive and employees perceives fair compensation
in return. As per American Association (ACA, p. 9) compensation is cash and non-cash payment
given by the firm to its employees. Compensation can also be termed as the amount of
salary/reward that an employee expects from his/her work. Workforce is satisfied by the
competitive salaries provided to them by their employers in contrast of the pay scales of other
employees in the same sector or industry as they feel satisfied by attaining fair and equitable
salaries which further motivates them towards their work.
Taylor (1911) in his studies has emphasized that money is one of the most effective factors in
encouraging and motivating the industrial workers to achieve greater productivity. It was further
backed by Akintoye (2000) as in his studies he mentioned that money has always been the most
important motivational strategy. Hill & Wiens-Tuers (2002) tells us the historical background of
increase in compensation being one of the earliest strategies to motivate and retain employees in
reference to firms commitment.
Taylor (1911) compensation and performance based pay is one of the important tools
management had at its clearance to motivate employees and to escalate their output and shrink
turnover. Dulebohn, Ferris, & Stodd (1995) described in their studies that monetary returns have
imperative inspiring power; it represents elusive goals like safety, control, esteem, and an
emotion of achievement and victory. Sinclair, et al. (2005) also advocates compensation as they
clearly state that money has the influence to fascinate, hold, and encourage employees towards
higher performance. For instance, if an employee has another job offer, which offers greater
financial rewards and has identical job characteristics with his current job, that worker would
most probably be motivated to accept the new job offer.
Taylor (1911) studies show us that compensation can be differentiated on the basis of
Performance-based pay and Non-performance based pay, whereas Beard (1986) in his studies he
stated that compensation can be differentiated in to numerous portions. One way is to breakdown
it into three portions i.e., Fixed-Pay, Variable Pay and Benefits. Taylors model fits best in
industrial units and manufacturing units where labor is economical and rewards or compensation
are directly dependent on individual performance whereas beards model is utilized for years in
commercial sector. One of the current researches by Lipinge et al (2009) focuses on financial and
non-financial incentives as his studies clearly shows the importance of both financial and nonfinancial incentives as he refers non-financial incentives as a byproduct of financial incentives.
Champion-Hughes (2001) emphasis on improvement of work life cycle that includes equity in

compensation in order to maintain high performance of the individuals in order to keep them
motivated towards their work and long time commitment with the organization.
If we put together the work of Taylor (1911) and Beard (1986) the following model can be
formed constituting of three basic components of compensation,
The 1stcomponent is fixed pay is compensation where the salary is fixed and payments are
certain (base pay, seniority bonuses, 13th month, etc.).
The 2ndcomponent is flexible pay, which includes variable salary and overdue income or deferred
income. Variable pay is compensation in which the amount is variable or its sharing is unclear
(gain-sharing, bonuses, incentives, goal-based pay, overtime, etc.). Deferred income are
amounts that are jammed for a given period of years before being available to the employees
(profit-sharing, company savings plans, employee stock ownership plans, etc.). Sire and David
(1993) in their studies mentioned that the idea of flexible pay also incorporates the impression of
forms of imbursement which aim to reduce the fixed costs/variable costs ratio in labor charges.
The 3rdcomponent of total compensation reorganizes all the diverse kinds of benefits and is
prepared up of four primary elements. The first contains grants and settlements for
miscellaneous expenditures concerning food, transportation, clothing etc.
The second consists of miscellaneous remunerations and privileges in the form of goods and
services supplied at a reduced price, made obtainable, or ordered to employees (company
housing, company car, private usage of telephone, public transportation passes, etc.). The third
includes employee welfare programs and entertainment/ recreational opportunities regarding
tickets for various entertainment events, family assistance, scholarships, etc. The fourth
comprises corresponding retirement pension plans and health insurance cover paid for by the
employer.

Figure- 2

Compensation

Performan
ce Based
Pay

Performance
Based Pay
(Based on new
Management
paradigm)
*Commissions
*Bonuses
*Sales People
*Piece Rates
System
(Standard hour
plan)
*Merit Raise
Fixed Pay

Componen
ts Based
Pay

*Base Pay
*Promotions
*Cost of Living
Increase
*Merit Increase

Non
Performance
Based Pay
(Based on old
concept when
compensation
wasnt tied to
performance)
*Monthly Salary
*Weekly Wages

Benefits
Flexible Pay
Variable Pay
*Commissions
*Bonuses
*Gain Sharing
Deferred
Income
*Employee
*Stock
ownership
*Profit Sharing

Performance Based Pay Source: Taylor, F. (1911)

Components Based Pay Source: Beard, P. (1986)

*Vacations
*Sick Leave
*Company
Car
*Company
house
*Severance
Pay
*Medical
Insurance
Benefits

Mufti and Khan (2012) various corporations offer rewards people reporting external proposals.
These facts let corporations to modify or amend present salary system according to what market
is providing along with organizational strategies to be economical. Delano (2000) suggested that
equitable compensation as one of the best motivating factor for employees. He also stated that
salary and additional monetary inducements work to raise motivational levels of employees.
Vroom (1964) in his studies defined that if we do something it will lead to another as a chain
process, where whatever action or effort we make will lead us to an outcome, thus an incentive
or an additional benefit scheme or system will only be effective if the link between the effort and
compensation is strong and the worth of the compensation gives value to the effort. This study
became a theory and is known as Valence Instrumentality Theory (VIE).
According to Banjoko (1996) many managers use compensation plans to reward or punish
workers through the procedure of compensating personnel for higher productivity and by
encouraging fear of loss of job or other related issues.(e.g. no annual increment or promotion due
to poor performance).
Popoola and Ayeni (2007) stated in their study that constructing the compensation systems and
policies, its influence on the organization's structure, plans, and workers has been an important
area. To utilize compensational plans as a motivator efficiently, organizations must consider four
key constituents of a pay structures in their organizations.
Hodder Education, United Kingdom, 2005. Pay can be based purely on commission or can be an
addition to a salary. This type of pay is usually used for people in sales and is a percentage of the
amount of sales that are completed. Commission pay encourages the employees to make as many
sales as possible so they can increase their income.
Patten, Thomas and Henry (1977) stated that many employers use standards-based system for
evaluating employees and for setting salaries. Standards-based methods have been in de facto use
for centuries among commission-based sales staff, they receive more pay for selling more which
indicates their increased performance and effort to earn more.
Peach and Wren (1992) describes that the early evidence linking pay and performance is found in
the code of Hammurabi, written in the 18th century B. C., which documents the use of minimum
wage, a fixed wage, and incentive rewards.
Wilms and Chapleau (1999) talk about the industrialization era which found industrialist seeking
a way to use rewards to encourage productivity; the incentive wages. Incentive wages were
supported by early economists on the basis of the hungry man theory. Adam Smith (1776)
tailored this to develop the economic man theory.
Adam Smith (1776) advocated instead of physiological needs, money becomes the motivator for
work. Taylor (1903) advised that managers to learn to design jobs properly and then link pay
directly to measurable productivity. Luthans (2005) classified the commission based system
according to the level of performance target individual, team, or total organization.

According to Luthans (2005) there are two basic types of pay-for-performance plans;
individual incentive plans and group incentive plans. Individual incentive plans have been
around for many years. They were particularly popular during the height of the scientific
management movement. Hodgetts (1997) similar to the piece rate incentive plan of the
pioneering scientific managers, today individual incentive plans also pay people based on output
or even quality. Most salespeople work under an individual incentive pay plan earning which
becomes a key motivating factor for employees to perform more in order to achieve high
commissions.
Brown and Armstrong (2000) argued that increasing payroll cost and compensation in the global
market place have caused managers to search for ways to increase productivity by linking
compensation to employees performance.
Banker, Lee, Potter, and Srinivasan (1996) stated that the employees motivation to work harder
and better is obviously an important factor. According to them if pay is tied to performance, the
employee produce a higher quality and quantity of work.
Business theorists Professor Yasser and Dr Wasi(2010) supported this method of payment, which
is often referred to as PRP. Professor Yasser and Dr Wasi believed that money was the
main incentive for increased productivity and introducing the widely used concept of 'piece
work'. In addition to motivating the rewarded behavior, standards-based methods can provide a
level of standardization in employee evaluations, which can reduce fears of favoritism and make
the employer's expectations clear. Employees would be secure in knowing that their performance
was evaluated objectively according to the standard of their work instead of the whims of a
supervisor, or against some ever-climbing average of their group.
Risher and Howard (1999) according to them there are two basic ways to set commission. One is
a flat commission. This is usually a percentage on any sale the representative makes. Businesses
can also use a ramped commission, where the percentage of commission rises as sales
representatives hit certain targets. For example, the representative may earn a 10 percent
commission on the first $50,000 worth of goods or services, a 15 percent commission on the next
$50,000 and a 20 percent commission on anything above $100,000. Ramped commission may
also be based on targets, such as a 10 percent commission on any sales up to a set target, then a
20 percent commission on any sales after that. It motivates employees to sale more to earn more.
Schuster and Jay R ( 1992) tells the importance of commission based salaries as the advocate that
the primary reason companies pay commission pay plan is to motivate employees toward better
results and to reward high performers. If you pay salesmen a straight salary, some may have
limited motivation to exceed basic expectations. However, by adding commission-earning
opportunity, companies drive salesmen to set more aggressive goals, to work through obstacles
and rejection, and to continue to prospect and seek new selling opportunities.
Colletti and Jerome (1999) emphasis on the fact that if the balance of stability and incentive to
perform at a higher level has a nice balance of benefits from both straight salary and straight
commission. The key is to offer just enough stability that employees feel satisfied with their
basic financial security but still have motivation to sell more to earn more.

2.2 CONCEPTUAL FRAMEWORK

MOTIVATION

INTRINSIC

PERFORMANCE

EXTRINSIC

COMPENSATION

TARGET
ACHIEVED

FAILURE TO
ACHIEVE
TARGET

POSITIVE
NEGATIVE

COMPONENTS
BASED

PERFORMANCE
BASED

COMMISSION
BASED
SALARIES

In our study we are closely focusing on employee motivation and its impact on performance,
specifically our research talks about motivation of sales people focusing on extrinsic motivating
factor such as compensation, based on performance based salary system through which they earn
commissions and its impact on employee performance whether they achieve their targets or not
in order to measure positive or negative performance. Our study revolves around two variable
motivations being the independent variable and performance being the dependent variable.

2.3 RESEARCH QUESTION

What is the impact of employee motivation on performance based on commission based salaries?
2.4 HYPOTHESIS
Ho= Commission based salaries have no impact on performance.
HA= Commission based salaries have positive impact on performance.

CHAPTER: 3
3.1 RESEARCH METHODOLOGY
Our research is basically an applied research, correlation in nature. The raw data was pooled
through conducting survey. The study was conducted on employees working as sales executives
earning commissions on their base salaries upon the sales they make in various organizations of
Karachi. The study was carried out with the help of questionnaire. The questionnaire was
presented over to the respective respondents in order to test their perceptions as sales executives
regarding the impact of employee motivation of performance based on commission based
salaries. Analysis was then run on perceiving that there is no impact of employee motivation of
performance based on commission based salaries The appointments were made with different
employees in an organization that were selected for sampling with reference of SZABIST
Karachi.
3.2 SAMPLING TECHNIQUE
The sampling procedure that was carried in this study, to reach respondents was non-random and
was based on researchers convenience. The choice of organizations depended upon convenience
and the respondents (Sales Executive) were also selected on convenience basis.
3.3 SAMPLE SIZE
The anticipated sample size of this study is approximately 40 respondents.
3.4 INSTRUMENT OF DATA COLLECTION
Tool used to pool in data in this research was a Questionnaire that consisted of structured
questions on multiple choice questions. Every respondent was presented a questionnaire to
recognize alternative responses. Questionnaires consisted of close-ended questions some of
which questions were associated to their perceptions and practical exposure.
3.5 STATISTICAL TECHNIQUE
The motive of this study is to understand the impact of employee motivation on performance
based on commission based salaries, as reported by the respondents.
The statistical procedure used in the following research is to check the impact of employee
motivation on performance based on commission based salaries. Initially reliability of the data
was checked using Cronbach's Alpha. The mean of the answers by the respondents was taken in
order to understand that is commission the factor which motivates the employees performance.
Hence this research aims to illustrate the effects on the extrinsically motivating employees in
order that the employees perform better.

CHAPTER: 4
4.1 DATA ANALYSIS
Findings and Analysis of Results
Reliability Statistics

Cronbach's Alpha
Based on
Cronbach's Alpha Standardized Items N of Items
.709
TABLE#1

.744

12

The table above shows the statistics for the reliability of the data, where the value of Cronbachs
Alpha is .709, which is more than .7, which is a standard to check the reliability of the data.

Descriptive Statistics
Mean

Std. Deviation N

Base Salary And

Commission

1.10

.304

40

Commission on Sales

1.30

.464

40

Commission Reflects
Performance

1.15

.362

40

Sales are Realistic and

Attainable

2.53

1.132

40

I achieve my sales targets 3.00

easily

.987

40

Thirst to earn more

motivates me to perform
positively

2.25

.870

40

Work hard to receive

benefits

1.83

.712

40

Rewards associated with

targets motivates me to
accomplish goals

1.95

.876

40

Commissions earned by
me motivates me a lot

1.85

.864

40

Commissions motivate me 2.00

to achieve my sales target
which reflect my
performance

.751

40

Commissions increased
performance improved

1.93

.829

40

Receiving commissions
motivates me to perform
better work

1.85

.834

40

TABLE# 2
Average Mean: 1.895
Considering the table above showing the descriptive statistics of the data shows us the
respondents (sales executive) are motivated by commission based salaries which improves their
performance, which is evident from the average mean of the total data.

4.2 HYPOTHESIS ASSESSMENT SUMMARY

All the above respective outcomes recommend that there is a positive impact of employee
motivation on performance based on commission based salaries. This also shows that extrinsic
financial motivational strategies motivate an employee who improves the performance of sales
employees and affect their performance positively.

CHAPTER: 5
5.1 CONCLUSION
The study illustrates that there is a positive impact of employee motivation on performance based
on commission based salaries. Thus we reject our proposed null hypothesis (Ho) that is there is
no impact of employee motivation on performance based on commission based salaries and
accept our alternate hypothesis (HA) that is there is a positive impact of employee motivation on
performance based on commission based salaries which is evident by the responses of our
respondents.

5.2 DISCUSSION
Even though as this research was only conducted in Karachi only and very few respondents were
taken under consideration from five organizations, hence these results contain biasness and may
not be a representative of the whole population. Secondly the political correctness that people
adapt in order to respond to questions related to their basic job function and both the perceptions
of employees and organization might also have influenced the results of the research.
5.3 IMPLICATIONS

The results are seemingly alarming for the organizations in Pakistan as they need to motivate
there sales force by providing them with enough commissions in order to motivate them so that
they can perform positively.
5.4 FUTURE RESEARCH
On these grounds, we believe that further research in the area, with lesser biases might bring
different results. Apart from that basic statistical techniques were applied to carry out results
which can be improved if further improved statistical techniques are applied which can change
the paradigm of the research all together.

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