International Journal of Contemporary Business Studies

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International Journal of Contemporary Business Studies

International Journal of Contemporary Business Studies

Vol: 3, No: 11. November, 2012 ISSN 2156-7506

Available online at http://www.akpinsight.webs.com

VOLUME 3 - NUMBER 11 - NOVEMBER, 2012

ISSN 2156-7506

International Journal of

Contemporary Business Studies

In this Issue

Educational Facilities and School Dropout in Tribal Area: A

District Level Analysis in Andhra Pradesh

Dr.Murali Vallapureddy

Reward management as motivational tool in various

industries in Bangladesh: An empirical study

Emon Kalyan Chowdhury, Rahima Begum

Study of the Relationship between Capital Structure and

Tax: Evidence from Iran

Jamshid Mohammadzadeh Rostami, Zohreh Akbarpour

Influence of Organizational Culture on Employee Work

Behavior

Olu Ojo

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International Journal of Contemporary Business Studies

Vol: 3, No: 11. November, 2012 ISSN 2156-7506

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International Journal of Contemporary Business Studies

Vol: 3, No: 11. November, 2012 ISSN 2156-7506

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International journal of Contemporary Business Studies

A journal of Academy of Knowledge Process

Saddal H.A

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International Journal of Contemporary Business Studies

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DR.V.MAHALAKSHMI M.L,MBA,Ph.D

7A, CID Quarters, V.K.Iyer Road,

Mandaveli

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International Journal of Contemporary Business Studies

Vol: 3, No: 11. November, 2012 ISSN 2156-7506

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VOLUME 3, NUMBER 11

November, 2012

Contents:

Educational Facilities and School Dropout in Tribal Area: A District Level

Analysis in Andhra Pradesh

Dr.Murali Vallapureddy…………………………………………………………………………….…06

Reward management as motivational tool in various industries in

Bangladesh:An empirical study

Emon Kalyan Chowdhury ,Rahima Begum……………………………………………………….22

Study of the Relationship between Capital Structure and Tax: Evidence

from Iran

Jamshid Mohammadzadeh Rostami , Zohreh Akbarpour………………………………..…..35

Influence of Organizational Culture on Employee Work Behavior

Olu Ojo…………………………………………………………………………………………………..46

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International Journal of Contemporary Business Studies

Vol: 3, No: 11. November, 2012 ISSN 2156-7506

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Educational Facilities and School Dropout in

Tribal Area: A District Level Analysis in

Andhra Pradesh

Dr.Murali Vallapureddy

Associate Professor,

Mahboobia Panjetan PG College, Warangal, India

ABSTRACT

The present paper is an analysis of school drop-out in Tribal Areas in Andhra

Pradesh based on both primary and secondary data at district level. Developing a

very good infrastructure is a prerequisite of a good schooling system which will

be make more attractive to students and help in increasing the enrolment in

schools as well as improving the quality of education. The improvement in the

economic status of poor families is the pre-condition for stopping dropouts in

school. In the short run, the government may consider the policy option of

enrolling all the children of poor families in the residential schools compulsorily.

These residential schools should be run on professional excellence.

Key Words: School Dropout, School Enrolment,

INTRODUCTION

International Journal of

Contemporary Business Studies

Vol: 3, No: 11. November, 2012

pp.6-21

©Academy of Knowledge Process

Education is a key to sustainable development. For peace and stability within and among

countries, and effective participation in the economy of the 21 st century education is an

indispensable means for which is witnessing rapid globalization. While traditionally “Education”

has meant children in schools, it is equally important to address the learning needs of adults.

Combining these two components of the learning continuum, most countries around the world

have enlarged the scope of educational planning to include basic education and adult literacy

under the rubric of “Education for All”.

As per the article 21A and 93rd Constitutional Amendments 2009, education has

become a fundamental right. This article clearly spells out the responsibility of the

state to the extent of providing free and compulsory education to all the children from

the age of 6 to 14 years. Government is committed to achieve total literacy by 2015

and in this direction initiated several schemes for both quantitative and qualitative

improvement.

Education has a pivotal role to guide and induce the person to the process of self

realization. An educated person carries autonomous and authentic ideas and not one

who has been conditioned or indoctrinated. Education is direction but in a fashion

that does not estrange or alienate oneself but puts one on to the path of meaningful

learning and realizing.

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International Journal of Contemporary Business Studies

Vol: 3, No: 11. November, 2012 ISSN 2156-7506

Available online at http://www.akpinsight.webs.com

For educated person we make a positive value judgment. There is an expectation that education

will improve the qualities of life of a person and will behave in a better manner than one who is

not educated. There is a sense of being let down, disappointment and dismay if an educated

person cannot conduct himself in a manner that is rational, morally good and socially responsible.

It is clear that by education is meant all-round development of a person, not merely specialization

or professional training. Educationists too stress that education is a holistic process and not only a

training of the intellect. It is development of moral, social, aesthetic as well as rational capacity.

People might differ on the degree of importance that they place on these various dimensions but

most would include all these in their notion of an educated person.

Educational facilities definitely promote the prosperity of the society and contribute positively to

gross domestic product and create employment opportunity. It has a positive effect on reduction

of poverty, population growth, crime rate and better health condition.

The knowledge possessed by the population and their capacity and training to use it effectively is

also very important. Expenditure on education, training and research can contribute to the

productivity by raising the quality of the workforce, and these outlays yield a counting return in

the future. If this expenditure is considered as expenditure on capital then the proportion of

capital formation in national income in the rich countries would be much higher. But since poor

countries do not make huge investments in the formation of human capital, this broad

interpretation of capital would not increase significantly in proportion to their national income

spent on capital formation.

While investment on human resources has been witnessing a high growth in advanced countries,

the negligible amount of human investment in under developed countries has done little to extend

the capacity of the people to meet the challenges of accelerated development. The characteristic

of “economic backwardness” is still manifest in several ways like low labour efficiency, factor

immobility, limited specialization in occupations and in trade, a deficient supply of

entrepreneurship, and customary values and traditional social institutions that minimize the

incentives for economic change. It has to be recognized that the wrong kind of education

unaccompanied by the required complementary actions can check or reverse the process of

development.

To mitigating the contemporary problems of developing countries particularly in India, for the

efficient utilization of human resources, education continues to be a neglected part of planning of

India. To attract the down trodden such as SCs/STs, minorities communities and women, it is

essential to allocate more funds for the establishment, expansion and strengthening of educational

facilities like appointment of teachers, infrastructure, equipment, drinking water, sanitation,

compound wall, play ground, library etc. which are available to the rural masses. The existing

edge of challenge is in rural schools. More than a century ago, Jyothi Rao Phule wrote in his

moving appeal to the hunter commission (1984) that conditions in rural schools were terrible.

Government of India quantitatively forced a target of investing 6 per cent of national income on

education on the recommendation of the Education Commission (1966) and the Kothari

Commission also suggested that a higher (more than 6 per cent ) investment would need to be

allocated on education in India(1986). But the goal remains elusive even today. This is one of the

glaring promises that continue to remain a goal repeatedly postponed, unfulfilled and often

reiterated. The present UPA Government in its Common Minimum Programme (CMP) has laid

greatest emphasis on the development of social sectors to achieve a higher economic growth

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International Journal of Contemporary Business Studies

Vol: 3, No: 11. November, 2012 ISSN 2156-7506

Available online at http://www.akpinsight.webs.com

along with social justice and particularly decided to incur more on education and it has to be done

in a phased manner”.

The proportion of GNP invested on education in many other developing countries including India

are very low as compared to other developed countries of the world. According to Human

Development Report, 2004, India’s was ranks 78 th out of 137 countries. India was spending 4.1

per cent of her GNP on education (1999-2001). In comparison, a large number of countries spend

more than 6-8 per cent and some of them even more than 10 percent on education. Expenditure

on education influencing literacy levels (Sharif and Ghosh 2000). The share of elementary

education in the total expenditure on education continues to be below 50 per cent as against the

required 65-70 per cent to achieve universal literacy.

Literacy Rates in India 1951-2011

In order to fulfill the constitutional obligation, India has lunched the programme of Sarva

Shiksha Abhiyam to achieve Universalisation of Elementary Education in the country by the

year 2010. It implies that all children in the age group 6 to below 14 years get enrolled in a

regular school or an alternative school system and they do not drop out from school before

completing the full cycle of elementary education. Efforts are being made on various fronts to

ensure that no child in this age group remains out of school. The programme is an effort towards

recognition of the need for improving the performance of the school system through a community

owned approach and ensuring quality elementary education in a mission mode to all children

which also seeks to bridge gender and social gaps.

TABLE – 1 : LITERACY RATES IN INDIA 1951-2011

Census Year Persons Male Females Male – Female gap

in literacy rate

1951 18.33 27.16 8.66 18.50

1961 28.30 40.40 15.35 25.05

1971 34.45 45.96 21.97 23.98

1981 43.57 56.38 29.76 26.62

1991 52.21 64.13 39.29 24.84

2001 65.38 75.26 54.16 21.70

2011 74.04 82.14 65.46 16.68

Source: provisional data of the 2011 census

The15th official census in India was calculated in the year 2011. In a country like India, literacy

is the main foundation for social and economic growth. When the British rule ended in India in

the year 1947 the literacy rate was just 12%. Over the years, India has changed socially,

economically, and globally. After the 2011 census, literacy rate India 2011 was found to be

74.04%. Compared to the adult literacy rate here the youth literacy rate is about 9% higher.

Though this seems like a very great accomplishment, it is still a matter of concern that still so

many people in India cannot even read and write. The numbers of children who do not get

education especially in the rural areas are still high. Though the government has made a law that

every child under the age of 14 should get free education, the problem of illiteracy is still at large.

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International Journal of Contemporary Business Studies

Vol: 3, No: 11. November, 2012 ISSN 2156-7506

Available online at http://www.akpinsight.webs.com

It is clear from the above Table-1 that from 1951 census to 2011 census the literacy rates have

shown a substantial improvement. The literacy rate which was only 18.33 per cent in 1951 rose to

52.21 per cent in 1991 and further increased to 74.04.4 per cent in 2011. According to the Census

of India, 2011 the literacy rate has gone up to 82.14 per cent for male and 65.46 per cent for

females. Interestingly, literacy rate improved sharply among females as compared to males.

While the effective literacy rate for males rose from 75.26 to 82.14 per cent marking a rise of 6.9

per cent, it increased by 11.8 per cent for females to go from 53.67 to 65.46 per cent.

Educational Status of Andhra Pradesh

During 2011-12, the department provides schooling facility to school age population of 1.29 crore

children. Out of which 52.76 lakhs were in Primary School, 21.57 lakhs were in Upper Primary

School and 54.04 lakhs were in High School. Out of 1,02,436 schools in Andhra Pradesh, in the

Elementary Education sector there were 66,721 Primary Schools and 15,759 Upper Primary

Schools. Under Secondary Education there were 19,770 High Schools and 186 Higher Secondary

Schools. Out of 1,02,436 schools, 114 were Central Government, 7,716 State Government,

66,393 MP/ZP, 2,115Municipal, 3,335 Pvt.Aidedand 22,763 Pvt.Unaided.

Teachers:

During 2011-12, there were 4,95,138 teachers in position in all types of schools in the state. Out

of which, 1,89,722 in primary schools, 97,015 in upper primary schools, 2,04,060 in High schools

and 4,314 teachers in higher secondary schools. Government have committed itself to fill-up all

the existing teacher vacancies and sanction necessary additional posts to achieve teacher pupil

ratio of 1: 40. The percentage pass of students in S.S.C examinations during 2009-10 is 81.63

which is higher than the previous year pass of 78.83%.

Table - 2 : Educational Facilities

Year Primary Schools Upper Primary

Schools

High Schools Higher Scondary

Schools

Sc. En. Teac. Sc. En. Teac. Sc. En. Teac. Sc. En. Teac.

1 2 3 4 5 6 7 8 9 10 11 12 13

1996-97 48899 5635379 106974 7733 2130398 50287 8178 3505246 107506 93 99848 4365

1997-98 49919 5936750 121446 8142 2274897 58509 8566 3617222 112850 95 96131 4387

1998-99 51836 6237735 136363 8713 2443179 62845 8897 3767758 115670 97 101850 4654

1999-00 55398 6373837 136853 9530 2614524 69117 9659 4177431 122891 88 92292 4154

2000-01 55901 6060394 133546 9804 2628185 69265 10277 4537791 131324 82 82227 3847

2001-02 58249 5230748 127313 14472 3322826 85263 11464 4963392 145246 73 74765 3498

2002-03 63362 6351072 173731 15110 3389189 102152 12570 4078358 140019 79 78336 3628

2003-04 63897 5967010 172601 15215 3149964 100365 13160 4330479 140826 82 82033 3305

2004-05 61680 5524363 166935 16667 3172877 103985 14342 4633242 140399 79 80586 3475

2005-06 62159 5398008 166790 17290 3172134 106215 15437 4839243 142544 98 102538 3958

2006-07 62162 5513155 167723 17823 3246096 112388 16195 4988791 153988 97 103188 4056

2007-08 62464 5366949 167059 17957 3110686 110949 16937 5114442 156887 99 99664 4241

2008-09 65609 5686045 183197 14942 2492198 94662 17376 5369962 167159 100 110955 4127

2009-10 65932 5392253 169159 15384 2395849 90077 18143 5477427 187709 104 100827 4147

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International Journal of Contemporary Business Studies

Vol: 3, No: 11. November, 2012 ISSN 2156-7506

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2010-11 66834 5463896 174069 15421 2329730 93003 18776 5397690 205179 173 126870 4304

2011-12 66721 5276876 189722 15759 2157321 97015 19770 5407778 204060 186 138863 4314

Source: School Education Department, Note: Sc= No. of Schools; En.No = Enrolment; Teac. = Teachers

A person, who is 7 years and above and who is able to read and write with understanding in any

one language is considered as Literate. The literacy rate of the state is 67.66 in 2011 as against

44.08 in 1991. The literacy rate of the state is lower than that of all India literacy rate at 74.04.

Among the districts, Hyderabad is at the top with 80.96. The least literate district is

Mahabubnagar with 56.06 percent. Male literacy rate is 75.56 as against that of female at 59.74.

District-wise literacy rate is given in Table - 3.

Table - 3 : Literacy Rates by Sex for State and Districts

Sl. District Males Females Total

No.

1991 2001 2011 1991 2001 2011 1991 2001 2011

1 Adilabad 45.05 64.98 71.22 20.60 40.30 51.99 32.96 52.68 61.55

2 Nizamabad 47.33 64.91 72.66 21.35 39.48 52.33 34.18 52.02 62.25

3 Karimnagar 50.79 67.09 74.72 23.37 42.75 55.18 37.17 54.90 64.87

4 Medak 45.15 64.33 72.50 19.25 38.66 52.49 32.41 51.65 62.53

5 Hyderabad 78.90 83.74 83.35 63.56 73.50 78.42 71.52 78.80 80.96

6 Ranga Reddy 60.43 75.26 84.00 36.91 56.49 71.82 49.07 66.16 78.05

7 Mahabubnagar 40.80 56.63 66.27 18.03 31.89 45.65 29.58 44.41 56.06

8 Nalgonda 50.53 69.23 74.94 24.92 44.68 55.05 38.00 57.15 65.05

9 Warangal 51.98 68.88 75.91 26.08 45.09 56.45 39.30 57.13 66.16

10 Khammam 50.04 66.11 73.20 30.53 47.44 57.85 40.50 56.89 65.46

11 Srikakulam 49.14 67.19 72.25 23.52 43.68 52.56 36.22 55.31 62.30

12 Vizianagaram 45.93 62.37 69.04 22.47 39.91 50.16 34.19 51.07 59.49

13 Visakhapatnam 56.13 69.68 75.48 34.60 50.12 60.00 45.51 59.96 67.70

14 East Godavari 55.32 70.00 74.91 42.26 60.94 67.82 48.79 65.48 71.35

15 West Godavari 59.75 78.05 77.63 46.98 68.99 71.05 53.38 73.53 74.32

16 Krishna 60.55 74.39 79.13 45.54 63.19 69.62 53.16 68.85 74.37

17 Guntur 56.54 71.24 75.40 35.85 53.74 60.64 46.35 62.54 67.99

18 Prakasam 53.14 69.35 73.54 27.06 45.08 53.40 40.30 57.38 63.53

19 Nellore 58.04 73.67 75.93 36.99 56.38 62.30 47.61 65.08 69.15

20 Kadapa(Y.S.R) 63.14 75.83 78.41 32.35 49.54 57.26 48.12 62.83 67.88

21 Kurnool 53.24 65.96 71.36 26.04 40.03 50.81 39.97 53.22 61.13

22 Anantapur 55.92 68.38 74.09 27.61 43.34 54.31 42.18 56.13 64.28

23 Chittoor 62.61 77.62 81.15 36.44 55.78 63.65 49.75 66.77 72.36

ANDHRA

PRADESH

55.12 70.32 75.56 32.72 50.43 59.74 44.08 60.47 67.66

Source: Census of India, 2001, Director of Census Operations, Andhra Pradesh. & Census of India

2011(provisional figures)

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International Journal of Contemporary Business Studies

Vol: 3, No: 11. November, 2012 ISSN 2156-7506

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The Directorate of School Education deals with School Education catering to the educational

needs of children. The pattern of School Education in Andhra Pradesh is 5+2+3 i.e., 5 years of

Primary Education, 2 years of Upper Primary Education and 3 years of Secondary Education.

Govt. of Andhra Pradesh intends to achieve the goal of universalisation of elementary education

by recognizing education as a potential instrument for Human Development. The primary goal of

the state is to increase steadily the overall literacy levels. Provision of schooling facilities within a

distance of 1 km. of all rural habitations is a pre-requisite for achieving universal access. For this,

Primary Schools are started in almost all places within a distance of 1 km.

Teacher-Pupil Ratio

A major element of the approach to strengthening education will be to improve current learning

levels by lowering the teacher pupil ratio. Government has already committed to fill-up all the

existing teacher vacancies and sanctioning the additional posts necessary to achieve teacher-pupil

ratio of 1:40. The Teacher Pupil Ratios for Primary, Upper Primary and High Schools are shown

in Table- 4.

Dropout Rates

TABLE - 4 TEACHER PUPIL RATIOS

Year Primary Upper Primary High School

2000-01 45 38 34

2001-02 41 39 34

2002-03 37 33 29

2003-04 35 31 31

2004-05 29 25 30

2005-06 28 25 30

2006-07 29 24 29

2007-08 28 23 28

2008-09 27 22 29

2009-10 28 23 28

Source: School Education Department

Dropout rate is defined as a percentage of the number of children to total enrolment dropping out

of the educational system in a particular year. The ratio does not take into account repeaters and

children who enter the system after class-I. It is expected that every child who enters class-1

completes class-VII without discontinuing the school in between. With this view, efforts are

being made to tackle the problem of dropouts with the support of School Management

Committees. The Dropout Rate during 2011-12 in Primary Stage (Classes I-V) is 15.60, in Upper

Primary Stage (Classes I-VII) is 20.79 and in Secondary Schools is 45.71. Details of Dropout

rates are shown in Table-5.

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International Journal of Contemporary Business Studies

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Available online at http://www.akpinsight.webs.com

Table – 5 : Dropout Rates

Year I – V I - VII I - X

Boys Girls Total Boys Girls Total Boys Girls Total

1971-72 69.34 72.53 70.65 77.80 86.91 81.59 87.62 94.37 90.56

1981-82 58.48 62.87 60.31 64.40 73.19 67.98 78.28 85.91 81.35

1991-92 52.15 57.04 54.28 61.17 69.17 64.65 72.76 79.31 75.54

2001-02 35.36 33.64 34.54 51.98 55.77 53.78 71.62 73.28 72.37

2003-04 42.42 42.80 42.61 52.71 55.92 54.27 65.28 68.53 66.70

2004-05 31.77 32.14 31.95 51.96 54.46 53.17 62.30 65.24 63.69

2005-06 24.61 24.85 24.73 50.26 52.37 51.30 62.24 65.20 63.67

2006-07 26.76 27.32 27.04 42.14 44.32 43.22 62.99 65.33 64.13

2007-08 19.10 18.48 18.79 33.26 35.23 34.24 62.30 64.00 63.13

2008-09 16.14 15.15 15.65 34.39 35.41 34.89 60.12 61.38 60.73

2009-10 16.34 15.24 15.80 26.38 26.50 26.44 52.73 54.2 53.36

2010-11 18.10 16.73 17.43 22.56 22.11 22.34 45.83 46.59 46.21

2011-12 15.93 15.27 15.60 21.51 20.06 20.79 45.43 45.99 45.71

Source: School Education Department

New Education Policy Perspectives in Andhra Pradesh

Enrolment

Steps are being taken to enroll all out of school children and to free the children working in the

domestic sector and other organizations. As a result of the enrolment drive with the name of 'Badi

Bata' from 1 st - 16 th June 2006 to enroll all school age children, as many as 14.41 Lakh children

(5+) enrolled into class-I. 1.64 Lakhs of out of school children were enrolled into regular/bridge

schools. 522 Residential bridge courses and 3,063 Alternative and Innovative Education (AIE)

centers have taken in 1.341 Lakh of children. Innovative strategies and interventions of the

Government resulted in considerable increase in enrolment and retention. The strategy for

achieving universal participation involves strengthening of the existing infrastructure, opening

new primary schools, establishment of alternative schools and other types of educational facilities

in smaller and unserved habitations. Due to these interventions and several other programmes,

enrolment has increased significantly in all stages of education. Total enrolment as on 2011-12

was 129.81 lakhs in schools, out of which 52.77 lakhs (40.65%) were in Primary Schools, 21.58

lakhs (16.63%) and 54.08 lakhs (41.66%) were in Upper Primary and High Schools respectively

and remaining Higher Secondary Schools.

Mid-Day Meal Programme

In order to bring back the children into schools and retain them in schools for achieving the

objective of Education for All and to provide nutritious food to the children, for their physical and

mental development, Midday Meal scheme (MDM) is being implemented from January 2003 in

the state. Under the scheme, a minimum content of 450 calories and 12 grams of protein content

is provided per child on each working day of the school for classes I to V and 700 calories and 20

grams of protein content is provided per child on each working day of the school for classes VI to

X. Primary School, Upper Primary and High School Children of Classes I – X studying in

Government/Local bodies and Aided institutions are covered under this scheme. Under the Mid-

Day Meal programme, an amount of Rs. 597.29 crores, has been spent during 2007-08 to 2010-

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11(Till Dec.2011). The amounts include the state contribution besides the Central allocation.

Under the scheme, 60.33 lakh students during 2007-08, 70.44 lakh students during 2008-09,

70.43 lakh students during 2009-10 and 74.44 lakhs students during 2010-11 have been covered.

Govt. of India is providing rice free of cost @ 100 grams per child per working day. Conversion

cost is paid to the identified implementing agencies towards cooking cost.

Sarva Shiksha Abhiyan

Sarva Shiksha Abhiyan (SSA) is a comprehensive and integrated flagship programme of

Government of India, to attain Universal Elementary Education (UEE) in the country in a mission

mode. Launched in partnership with the State Governments and local self-governments, SSA

aims to provide useful and relevant education to all the children in the 6-14 age groups by 2010.

Under the SSA programme, an amount of Rs. 3134.68 crores was spent during the last four years

2007-08 to 2010-11(till Dec.2011). Under this scheme, during the 4-year period, 210 new school

buildings have been constructed, 170 schools have been made operational. Further, several

schools have been provided with adequate drinking water facility and toilet facility. Due to the

221infrastructure facilities and academic support, there has been improvement in enrolment as

well as reducing drop out ratios.

Community Participation (School Management Committee)

For the first time in the country, Govt. of Andhra Pradesh has enacted “Community Participation

Act 1998” involving the community in school management. Resources are transferred to School

Committees empowering them to plan, manage and promote quality education. In terms of 73 rd

and 74 th Constitutional Amendments, Sarpanches/Ward Councilors have been made the

Chairpersons of the School Management Committees.

Vidya Volunteers

In view of the large number of representations received from School Management Committees

seeking Government support to achieve Universalisation of Primary Education and duly taking

into account the inadequate teacher pupil ratio, Government of Andhra Pradesh decided to

support School Management Committees to provide “Vidya Volunteers”. Government decided to

provide financial assistance on purely temporarily basis to School Management Committees to

enlist Vidya Volunteers by them on contract basis. To improve the teacher pupil ratio in Primary

Schools, Subject teachers in Upper Primary and High Schools for imparting the quality of

education, 59,014 Vidya Volunteers were engaged during 2005-06 with an amount of Rs.263.13

Lakhs

Education for Minorities

Govt. of Andhra Pradesh is committed to the advancement and upliftment of Minorities in the

state. With a view to promote Urdu Language in the state, 300 Urdu Teacher Posts were created

additionally during 1997-98 are being continued every year. An amount of Rs.291.02 Lakhs is

provided during 2006-07. Government is granting de-reservation in respect of Urdu Medium

Posts year after year. Vacancies, which could not be filled in due to non-availability, carried

forward for selection.

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International Journal of Contemporary Business Studies

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District Institute of Education and Training (DIET)

Govt. of Andhra Pradesh has upgraded 23 Teacher Training Institutes as District Institute of

Education and Training and one Tribal Teachers Training Institute at Utnoor as Sub-DIET in a

phased manner. In 13 DIETs, Urdu medium parallel sections are functioning and 65 lecturer posts

have been sanctioned. The Tamil medium parallel section with intake of 50 is functioning at

DIET, Chittoor at Karvetinagar.

Improvement of enrolment through various programs:

The Computer Education Programme is being implemented under BOOT Model by seven

agencies in 5,000 High schools from 2008-09 for 5 years and in 1,300 high schools from 2010-11

for 5 years.

Tribal Education:

The tribal population of Andhra Pradesh according to 2001 Census is 50.24 lakhs constituting

about 6.59% of the total population. Tribal Welfare Department is maintaining 599 Ashram

Schools with a strength of 1,41,971, 442 Hostels with a strength of 77,420 and 4,317 Girijana

Vidya Vikasa Kendras (Single Teacher Schools) renamed as Government Primary Schools (TW)

with a strength of 1,01,852. 81% of students passed SSC exams held in March, 2010. 272

institutions are being run by Gurukulam (APTWREIS). 93% of students in TW Residential

Schools passed in SSC Public Examinations held in March, 2010. The lands recognized under

RoFR Act are proposed to be developed under ‘RoFR Land Development programme of

MGNREGS’ thus providing wage employment to poor tribal farmers as well as giving them an

opportunity to develop their own lands. In the first phase, 1.6 lakh acres are proposed to be fully

developed at an estimated cost of Rs. 310.00 cr. Under Recognition of Forest Rights Act, 2006

(RoFR) a total of 3,30,143 claims were received to cover 19,65,741 acres, and 1,67,582

certificates of titles were issued to cover 14,44,049 acres so far.

The Scheduled areas extend over 31,485.34 sq.kms which is about 11% of total area of the State

with 5,938 villages distributed in Srikakulam, Vizianagaram, Visakhapatnam, East Godavari,

West Godavari, Khammam, Warangal, Adilabad and Mahabubnagar districts. There are no

scheduled areas in other districts. There are 35 ST communities living in the State. Of the 50.24

lakhs tribal population, 30.47 lakhs are found in the above mentioned 9 districts. The remaining

tribal population of 19.77 lakhs is distributed in the other districts. Areas inhabited by primitive

tribal groups and remote areas of the ITDAs and MADAs are by and large lacking in necessary

infrastructural facilities required for a minimum standard of living. The availability of

infrastructure facilities in the tribal areas is far below the State and National averages.

The General Literacy rate is 60.5 as per 2001 Census, while the ST literacy is 37.04. Tribal

Welfare Department was established in 1962 with an objective to assist the tribal population in

the field of education, economic development and other programs. Tribal development did not

get translated into a definite program of action till the 4th Plan period until the socio-economic

development of STs was accepted as a general goal. The concept of tribal sub-plan strategy was

evolved after a detailed comprehensive review of the tribal problem was taken during V Five

Year Plan. For implementation of the strategy, Integrated Tribal Development Agencies (ITDAs)

were conceived. During VI Five Year Plan, Modified Area Development Approach (MADA) was

adopted to cover smaller areas of tribal concentration and for still smaller areas the cluster

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approach was adopted. Now there are 41 MADA Pockets and 17 Clusters. During VII Five Year

Plan the programs were extended to Dispersed Tribal Groups (DTGs) also.

By the end of IX Plan, the Program priorities of Tribal Welfare Department are provision of

incentives to students by way of free boarding and lodging for hostellers and package of

incentives like supply of text books, note books, dresses etc. For the first time, 82 Primary Health

Centers were sanctioned during 2004 exclusively for tribal areas to improve access to primary

health care. All efforts are being made to ensure that all the tribal habitations are provided with

safe drinking water. Government accorded high priority for the accelerated development of tribals

by implementing socio economic development programs. Major focus is on Education, Health

and Land based schemes.

Significance of the study:

In Andhra Pradesh introduced many programmes like Sarva Shiksha Abhiyan, Mid-day Meal

programme, Community Participation, Vidhya Volunteers etc., to improvement of enroll all out

of school children and to free the children working in the domestic sector and other

organizations. To provide minimum basic facilities to schools such as construction of school

building, providing accommodation, furniture, library and lab equipment etc., various schemes

have been taken up. In spite of the government taking up these various activities the drop out rate

has not reduced as per expectations. This studies aspects in Warangal district of Andhra Pradesh.

Methodology

The data for this study were collected from both primary and secondary sources. Primary data

were collected for studying causes for dropouts. The secondary data consists of enrollment of

students in the district statistics records; causes for dropouts have been analysed by direct

interview method with coverage of 78 respondents i.e., teachers, parents and students of

Warangal district of Telangana region in Andhra Pradesh, India.

Objectives

• To study the educational facilities available in the sample area

• To explore the accessibility of educational facilities to Schedule Tribes and women population.

• To find out the problems in getting proper educational services in govt. and private schools.

• To examine reasons for the dropouts in the study area.

• To suggest some policy measures to achieve the targeted literacy levels in rural areas.

Profile of the Study Area

Warangal, which is one of the ten districts in the Telangana Region of Andhra Pradesh, is considered

next to Hyderabad with economic, social education importance. There is a historical significance for

Warangal town, served as the seat of power of the Yadava kings in the 8 th Century AD and Kakatiya

rulers from the 12 th century AD onwards. Warangal then came under the influence of first of the

Qutubshahi dynasty of Golkonda and then the Nizam of Hyderabad. While the resurgence of Warangal

can be traced to the beginning of the 'Modern Age', the last decade has witnessed rapid acceleration of

economic growth.

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Vol: 3, No: 11. November, 2012 ISSN 2156-7506

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Table – 6 : Demographic Particulars of the Warangal District

S. No Category Population

1 Total population 3,522,644

2 Density of population 274 persons per Sq.Km.

3 Rural population 71.66 %

4 Urban population 28.34 %

5 Male population 17,66,257

6 Female population 17,56,387

7 Decadal growth rate of population 8.52%

8 Literate population 21,16,037

9 Male literacy rate 12,11,953

10 Female literacy rate 9,04,084

11 ST population (2001 census) 4,57,679 (14.10%)

Source: Census of India 2011(provisional figures)

Boundaries

The district lies between the latitude of 17-19 0 and 18-36 0 north and longitudes of 78-49 0 and 80-49 0

east, and is above midsea level by 870ft - 1700ft. it is bounded on the north by Karimnagar district. On

the west by Medak district, on the south by Nalgonda district and by Khammam district on the east and

south-east. The geographical area of the district is 12,846 sq.kms. The district possessed interesting

pictures of geographical formations and contains minerals of economic importance. The soils of the

district comprise of sandy loam's with parches of shallow black cotton soils, and at places even medium

and deep black cotton soil. Women self help group movements have made indelible impact on district

development in the shape of the promotion of literacy of women, decrease of population growth rate

part of from empowering women economically and socially. Today there are above 2500 groups with

3.10 lakh women members with Rs. 85 crores corpus funds.

Infrastructure development

Out of 1,098 revenue villages of the district 1,003 villages are inhabited and the rest of the

villages are deserted. There are five towns in the district. The total length of surfaced roads in the

district is 7,243 kms, and the total length of railway track (broad gauge) in the district is 153.84.

Kms including 115 kms, of double line. Total population of the district is 35.22 lakhs out of

which male 17.66 lakhs and female population is 17.75 lakhs. According to 2001 census, out

of total population 4,57,679 (14.10 percent) are ST community. Total literates are 21.16 lakhs,

male literacy rate is 68.61 and female literacy rate is 51.48. The Warangal city has considerably

developed during the past three decades. The establishment of many new educational institution

like Kakatiya University, NIT, KITS, Govt. polytechnic, Kakatiya Medical College, Govt.

Ayuverdic College, ITI , Law college, Women's College, College of Education, Music and Dance

School etc., besides the other private collages in all fields. The SDLCE has also added growth of

education, culture in large section of population.

There are 3008 primary schools, 706 upper primary schools, 1153 zilla parishad schools are

running in the district. Almost all educational institutions are poorly placed in infrastructural

facilities. Such as pucca building, drinking water, electricity, sanitation, compound wall and play

ground etc., the problem is acute in government. Institutions but is to say that the private schools

are well equipped, these institutions are also suffering from may lacunas, among the total in the

district 90 per cent schools are not having library and nearly 60 per cent schools are do not have

electricity and sanitation facility. Nearly sixty per cent schools do not have drinking water, less

than forty per cent schools have no proper boundary walls and more than forty percent schools

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Vol: 3, No: 11. November, 2012 ISSN 2156-7506

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have no play ground. Even today we can find that classes are running under shade of the threes

here and there in the district.

As far as quality aspects of school education is considered in general and particularly in this

district much has to be done to improve the quality of education. The poor infrastructure facilities

will have a direct bearence on the qualitative output from the schools. When the learning

atmosphere is not conducive to the students it gives ample scope for dropouts at various stages. It

is high among the backward class community with 45-55 percent.. There is 52.56 per cent

dropout found in the scheduled caste children. This has to be checked toughly to realize the

dream universal education the government with the cooperation of NGOs, local philanthropists

and elderly person establish working communities to mobilize funds to strengthen infrastructural

facilities and to monitor the academic activity, proper accountability has to be fixed at various

levels to the teachers and heads of the institutions to maintain and upgrade the standard of the

institutions and to prepare the students in such a manner to face the emerging challenges of new

socio-economic environment .

Education has become even more important today than before. An illiterate and low quality

educated person cannot participate in the new knowledge based society driven by information

technology. His /her exclusion will be total. Thus there is every need to bring about total literacy

and to and process of learning at various levels and particularly in schools educations is should

be made more qualitative such process should not confine only to the town a cities but should

reach the rural neglected lot.

TABLE – 7 : CHILD POPULATIONS AND ENROLMENT IN WARANGAL DISTRICT

Age Groups

All Communities Schedule Caste Schedule Tribes

6-10 11-15 Total 6-10 11-15 Total 6-10 11-15 Total

Child

population

Enrolment

Gross Enrl.

Ration

Boys 152555 163151 315706 25960 27763 53723 21836 23353 45189

Girls 146120 157174 303294 24774 26648 51422 20280 21814 42094

Total 298701 320328 619029 50739 54411 105150 42116 45165 87281

Boys 162271 146148 308419 32192 27694 59886 35557 24530 60087

Girls 152977 142719 295696 30813 28704 59517 34788 22129 56917

Total 315248 288867 604115 63005 56398 119403 70345 46659 117004

Boys 106.37 90.89 98.63 124.01 101.53 112.77 162.84 107.57 135.20

Girls 104.69 92.50 98.595 124.38 110.29 117.33 171.54 105.06 138.3

Total 105.54 91.68 98.61 124.17 105.82 114.99 167.03 106.34 136.68

Source: Registrar General, India, Ministry of Home Affairs Government of India, New Delhi & DISE data 2010-11

(as on 30th Sept-2010)

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An analysis of Table - 7 reveals that total child population of the Warangal district. Out of 6,

19,029 child populations in Warangal district, a majority of the child population 51.00 per cent

are boys and 49.00 per cent girls. 16.98 per cent i.e., 1,05,1506 are Scheduled Caste (SC), 14.09

per cent i.e, 87,281 are Scheduled Tribe (ST) and remaining other communities. The ST and SC

child population are almost equal. The observation showed that ST boys are higher compared to

SC community. It is interesting to note that, out of total child population more than 51.75 per cent

belong to 11-15 age group and less than 28.25 per cent belong to 6-10 age group.

The total enrolment students i.e., 6, 04,115, a majority of the children age group belong to 6-10

years and remaining were 11-15 age group. It is interesting to note that in Schedule Tribes total

enrolment students i.e, 1,17,004 of which 60.12 per cent were belong to 6-10 age group in which

35,557 students are boys and 34,788 are girls remaining 59.88 per cent are belong to 11-15 age

group in which 24,530 are boys and 22,129 are girls.

TABLE – 8 : ENROLMENTS AND DROPOUT RATE AT PRIMARY LEVEL (I-V) IN

WARANGAL DISTRICT

All Communities Schedule Caste Schedule Tribes

Enrolment

in class I in

2007-08

Enrolment

Classes -V

in 2011-12

Boys 42370 8373 11286

Girls 40809 7981 11166

Total 83179 16354 22452

Boys 31357 6361 6083

Girls 30279 6336 5837

Total 61636 12697 11920

Drop out

Rate

Boys 25.99 24.03 46.10

Girls 25.80 20.61 47.73

Total 25.90 22.36 46.91

Source: Registrar General, India, Ministry of Home Affairs Government of India, New Delhi & DISE

data 2010-11 (as on 30th Sept-2010)

An analysis of Table -8 indicates that enrolment and out of school (dropout) at primary level (I-

V) in Warangal district. It is interesting to note that the highest 46.91 per cent dropout recorded in

schedule tribes, in which girls dropout are very high i.e. 47.73. But it is observed that in Schedule

Caste girls dropout rate is low compared to boys, when we look in to the all communities the

dropout rate almost equal to boys and girls.

TABLE – 9 : ENROLMENTS AND DROPOUT RATE AT UPPER PRIMARY LEVEL (I-VII) IN

WARANGAL DISTRICT

All Communities Schedule Caste Schedule Tribes

Enrol

ment

in

class I

in

2005-

06

Boys 47651 9692 12867

Girls 46341 9464 12630

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Total 93992 19156 25497

Enrolment

in Classes -

VII in 2011-

12

Boys 30943 6037 5318

Girls 30824 6273 5017

Total 61767 12310 10335

Drop out

Rate

Boys 35.06 37.71 58.67

Girls 33.48 33.72 60.28

Total 34.28 35.74 59.47

Source: Registrar General, India, Ministry of Home Affairs Government of India, New Delhi & DISE data

2010-11 (as on 30th Sept-2010)

An analysis of Table -9 indicates that enrolment and out of school (dropout) at upper primary

level (I-VII) in Warangal district. It is interesting to note that the highest 59.47 per cent dropout

recorded in schedule tribes, in which girls dropout are very high i.e. 60.28. But it is observed that

in Schedule Caste and all communities girls dropout rate is low compared to boys. When we

observed the total dropout rate is almost equal in SC and all communities.

TABLE – 10 : ENROLMENTS AND DROPOUT RATE AT SECONDARY LEVEL (I-X) IN

WARANGAL DISTRICT

All Communities Schedule Caste Schedule Tribes

Enrolment

in

class I in

2002-03

Boys 57477 11194 16078

Girls 56039 10924 16381

Total 113516 22118 32459

Enrol-ment

in Classes –

I-X in 2011-

12

Boys 28182 5192 4342

Girls 27029 5300 3725

Total 55211 10492 8067

Dropout

Rate

Boys 50.97 53.62 72.99

Girls 51.77 51.48 77.26

Total 51.36 52.56 75.15

Source: Registrar General, India, Ministry of Home Affairs Government of India, New Delhi & DISE

data 2010-11 (as on 30th Sept-2010)

An analysis of Table -10 reveals that enrolment and out of school (dropout) at secondary level (I-

X) in Warangal district. It is interesting to note that the highest 75.15 per cent dropout recorded in

schedule tribes; in which girls dropout are very high i.e. 77.26 and boys dropout rate is 72.99

only. But it is observed that in Schedule Caste girls dropout rate is low compared to boys. But in

all communities indicates that girl’s dropout rate is higher than boys. When we observed the total

dropout rate is almost equal in SC and all communities.

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Reasons for Dropouts:

The preceding analysis shows the existence of high dropout rates at schools in Andhra Pradesh. In

order to understand the causes for dropouts and non-enrollment of children and also to identify

the socio-economic barriers at the primary and secondary education a sample survey of 60

respondents i.e., teachers, parents and students was undertaken to elicit their opinion on the

causes for dropouts in study area. Since local teacher's posses greater knowledge about the

children, their parents and also about the local problems, we had selected then purposefully. The

sample area also selected purposively representing different situations. This district represents

urban and tribal conditions and presents a situation with low dropout rates. As may as 78

respondents were randomly selected from this district. The sample is drawn from aided, unaided,

government and private school teachers giving weightage to the experience and / or service of the

teachers concerned, place of work etc., dropout students and parents the opinions of these 60

respondents are tabulated and their views are presented below.

• Educational background of the parents

• Poor economic conditions of the family :

• Excessive involvement of children in domestic work:

• Negligence of parents :

• Caste factor

• Frequent shifting of the families, for seasonal work, from one place to other place for

seeking livelihood, may also influence the dropout rate.

• Due to ill health, like incidence of malaria fever, some of the student's dropout from the

schools.

• According to the teachers some of the students discontinued their studies due to lack of

hostel facilities.

• Child marriages are also infecting the dropout rate.

Conclusion and Suggestions

The above analysis envisages that education is one of the most important social indicators, which

are directly linked with economic development. To increase the literacy levels in India in general

and AP in particular, the state should concentrate on retention rather than enrolment especially

schedule caste and schedule tribe communities to reduce social disparities. In addition to

universal facilities, universal enrolment and universal retention, the availability of a universally

high quality of teaching and learning should also be provided. Further, investment in education at

all India level needs to be more than doubled from the present level 3.1 per cent of the GDP.

As a whole, the highest dropout rate is recorded in the tribal community, As per the opinions

elicited from the local teachers literacy levels of parents and poor economic conditions of the

families are found to be the major reasons for dropouts. Excessive involvement of children in

domestic work, household chores, etc., and negligence of parents towards early marriages of girls

children are the other causes for the higher dropout rates. The policy implication of this study is

obviously that the improvement in the economic status of poor families is the pre-condition far

stopping dropouts. In the short run, the government may consider the policy option of enrolling

all the children of poor families in the residential schools compulsorily. These residential schools

should be run on professional excellence.

Developing a very good infrastructure is a prerequisite of a good schooling system. This will

make more attractive to students (Schools should be such were students like to spend more time

instead of running away from it. Good infrastructure helps in making schools more interesting)

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Vol: 3, No: 11. November, 2012 ISSN 2156-7506

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which will help in increasing the enrolment in schools as well as improving the quality of

education (Good infrastructure facilities like a well equipped computer laboratory with internet

connection will help enormously in improving the quality of education)

References:

Banerji, R. (2000), “Poverty and Primary Schooling: Field Studies from Mumbai and Delhi,

Economic and Political Weekly, March.

Hanushek, E. A. (2000). Schooling, Labour Force Quality and Growth of Nations. The American

Economic Review, 90(5), 1184-1208.

Murali V, et. al,(2005), “Educational opportunities in a village economy - a micro level study”,

published in AP Economic Association XXIII Annual Conference Volume, 2005

Murali V (2010) : “School Dropout and Educational Facilities – A District Level Analysis in

AP” in South Indian Journal of Social Science, Vol. VIII No.1 June, PP.39-55.

Sury, M. M. (2004), Indian Economy in the 21 st century, New Century Publications, New Delhi.

Tilak, Jandhya B.G(2004), “Education in the UPA Government Common Minimum

Programme, Economic and Political Weekly, 23 rd Oct, 2004.

----------- (1996), “How Free is 'Free' Primary Education in India?, Economic and Political

Weekly, Part-1 and Part-2(31), 257-282 and 355-366.

Rao, D. P, (2005), “Dropouts in primary education in east Godavari district of Andhra Pradesh -

mandal level analysis”, published in AP Economic Association XXIII Annual

Conference Volume, 2005.

Census reports, Director of Census Operations, Andhra Pradesh reports, various year

School Education Department reports 2011-12

Economic Survey of India, 2011

Outcome Budget 2009-10, Department of Tribal Welfare, Andhra Pradesh. Also available online

at http://www.aptribes.gov.in/

Performance Appraisal System of Tribal Welfare, Andhra Pradesh, January, 2003

Performance Appraisal System, Tribal Welfare Department, Andhra Pradesh: Guidelines for

Preparation of Action Plans, January, 2002

Performance Appraisal System, Tribal Welfare Department, Andhra Pradesh: Guidelines for

Preparation of Department Action Plans at Unit Level, January, 2002

Copyright © 2012. Academy of Knowledge Process

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International Journal of Contemporary Business Studies

Vol: 3, No: 11. November, 2012 ISSN 2156-7506

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Reward management as motivational tool in

various industries in Bangladesh:

An empirical study

Emon Kalyan Chowdhury

Lecturer, Department of Accounting,

Faculty of Business Studies, Premier University

Rahima Begum

Lecturer, Faculty of Business Studies,

Department of Management,

Premier University

ABSTRACT

This research deals with the study on reward management as motivational tool in

various industries in Bangladesh. The primary data has been collected from

employees working in different industries having zero to thirty years of

professional experience through survey method. The objective is to find the

relative strength of the monetary and non- monetary rewards being offered with

respect to motivation of the employees in the various organizations and to

understand the employee perspective about rewards. And after analyzing the data

collected from the respondents appropriate recommendations have been made to

determine a package of monetary and non-monetary rewards to help in increasing

employee motivation.

Keywords: Reward system, Performance, Motivation, Recognition.

INRODUCTION

International Journal of

Contemporary Business Studies

Vol: 3, No: 11. November, 2012

pp.22-34

©Academy of Knowledge Process

An employee reward system consists of organizations integrated policies, processes and practices

for rewarding its employees in accordance with their contribution, skill and competence and their

market worth. It is developed within the framework of an organization’s reward philosophy,

strategies and policies, and contains arrangements in the form of processes, practices, structures

and procedures which will provide and maintain appropriate types and levels of pay, benefits and

other forms of reward (Armstrong M, 2000). Any reward system consists of financial rewards

(fixed and variable pay) and employee benefits, which together comprise total remuneration. The

reward system also incorporates non-financial rewards (recognition, praise,

achievement responsibility and personal growth). From the organization’s point of

view, the aim of employee reward are to communicate organization’s values,

performance, standards and expectations and encourage behavior that will contribute

to the achievement of the organization’s objective. The basic questions to be answered

when developing reward systems are “What kind of rewards do employees actually

get motivated to work better?” and ‘What sort of behavior do we want?’ and ‘How can

reward processes promote that behavior?’ and ‘No reward initiative should be

undertaken unless it has been established that it will add value, and no reward practice

should be retained if it does not result in added value. From the employees’ point of

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view the reward system should treat them as stakeholders who have the right to be involved in the

development of the reward policies that affect them, meet their expectations that they will be

treated equitably, fairly, and consistently more over they have to be transparent. They should

know what the reward policies of the organization are and how they are affected by them.

Conceptual frame work of reward management:

1. Reward management: Procedures, rules, and standards associated with allocation of

benefits and compensation to employees. It is developed within the framework of the

organizations reward philosophy, strategies and policies, and contains arrangements in the

form of processes, practices, structure and procedures which will provide and maintain

appropriate types and levels of pay, benefits and other forms of reward (Nelson, B, "1001

Ways to Reward Employees", 2004).

The elements of employee reward:

a. Basic pay: Basic pay is the level of pay (the fixed salary or wage) that constitutes the rate

for the job.

b. Additions to base pay: Additional financial rewards may be provided that are related to

performance, skill, competence or experience. Special allowances may also be paid.

c. Individual performance -related pay in which increase in base pay or cash bonuses are

determined by performance assessment and ratings.

d. Bonuses - rewards for successful performance which are paid as lump sums related to

the results obtained by individuals, teams or the organization.

e. Incentives - payments linked with the achievement of previously set targets which are

designed to motivate people to achieve higher levels of performance

f. Commission - a special form of incentive in which sales representatives are paid on the

basis of a percentage of the sales value they generate

g. Service -related pay which increases by fixed increments on a scale or pay spine

depending on service in the job. There may sometimes be scope for varying the rate of

progress up the scale according to performance.

h. Skill - based pay (sometimes called knowledge based pay) which varies according to the

level of skill the individual achieves

i. Competence - related pay which varies according to the level of competence achieved

by the individual.

j. Career - development pay which rewards people for taking on additional

responsibilities as their career develops laterally within a broad grade (a broad branded

pay structure)

k. Allowances - elements of pay in the form of a separate sum of money for such aspects of

employment as overtime, shift working, call-outs and living in other large cities.

l. Total earnings are calculated as the sum of the base pay and any additional payments.

m. Employee benefits, also known as indirect pay, include pension, sick pay, insurance

cover and company cars. They comprise elements of remuneration additional to the

various forms of cash pay and also include provisions for employees that are not strictly

remuneration, such as annual holidays.

n. Total remuneration is the value of all cash payments (total earnings) and benefits

received by employees.

Performance based pay as a tool for motivation:

It is an effective element of compensation strategy. It is a quick-fix solution for many

organizational issues ranging from poor productivity to below par performance. It is a

tool to drive performance through increased motivation and creating a direct linkage

between employee performance and rewards. It is also used a powerful tool to attract

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retain, recognize and reward best talent i.e., high performing employees (Suri GK et.,

“Rethinking incentives and reward management 2003). This system has four elements:

1. Base pay matched close to competition, according to the company’s ability to

pay and attract quality talent. Base pay serves as a platform for variable pay

2. Variable pay is the centerpiece of the total compensation approach.

3. Methods include gain sharing; win sharing, lump-sum bonuses, individual

variable pay and so forth. It is flexible and links the future of the firm and

employees in a positive manner.

4. Indirect pay adds cost-effective benefits keyed to supporting the goals of the

company and sharing costs.

Impact of reward on the performance:

Research suggests that the positive consequences or rewards, whether they be internal, external,

tangible, or intangible, are most effective when they occur immediately following the specific

action being rewarded and when the reward occurs at a high frequency. In other words, small

awards received immediately and frequently seem to have more effect on performance than larger

rewards delivered long after performance and infrequently. The only reward managers’ control

that meets these high-frequency requirements is the manager's specific verbal compliments about

performance. These compliments can be delivered at a high frequency, immediately following

performance, and are very inexpensive. "Significant other" is a clinical term used to identify the

relative importance of one person in another person's life. Acceptance or rejection of a person

from the significant other has a lot more value than the same response from anyone else. So the

verbal or e-mail compliments about performance do influence performance. Analysis of the work

environment reveals that employees' rewards come from only three sources: the work itself,

fellow employees, and the boss. (Source: navis.gr)

Objectives:

1. To find the relative strength of the monetary and non- monetary rewards being offered

with respect to motivation of the employees in different organizations.

2. To understand the employee perspective about rewards.

3. To make appropriate recommendations to determine a package of monetary and nonmonetary

rewards to help in increasing employee motivation.

Hypothesis

H = reward does not influence the motivation of employees.

H₁ = reward influences the motivation of employees.

METHODOLOGY:

Sample size: 300 corporate respondents from different organizations.

Sample description: Face to face interview and questionnaire to collect information

Tools used: Percentage analysis

Software: SPSS, MS Excel

Sources of data: Construction companies, Commercial banks, RMG, Manufacturing Concerns,

Stock exchange, MNCs, Private Universities, Steel companies, NGOs, etc.

Limitations:

I. The research investigation is confined to limited sources.

II. The response could be subjected to prejudice/bias/reticence of the respondents.

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Vol: 3, No: 11. November, 2012 ISSN 2156-7506

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DATA ANALYSIS AND INTERPRETATION:

(Inferences from the table 1 to 11 have not been made as respective percentage columns are self

explanatory)

1 Responses regarding the importance of being recognized for doing a good job (by managers,

clients or colleague)

No. of responses Percentage

Strongly disagree 0 0.00

Disagree 0 0.00

Neutral 5 1.67

Agree 45 15.00

Strongly agree 250 83.33

Total 300 100.00

2. Responses regarding Opportunities for learning and developing new skills are very important

to me:

No. of responses Percentage

Strongly disagree 0 0.00

Disagree 0 0.00

Neutral 1 0.33

Agree 59 19.67

Strongly agree 240 80.00

Total 300 100.00

3. Responses regarding the importance of receiving formal monetary recognition in return of

efforts.

No. of responses Percentage

Strongly disagree 0 0.00

Disagree 0 0.00

Neutral 20 6.67

Agree 100 33.33

Strongly agree 180 60.00

Total 300 100.00

4. Responses regarding the motivating factors for employees: Job Vs Pay

No. of response Percentage

The job that I am doing 144 48.00

The pay that I receive for doing the job 156 52.00

Total 300 100.00

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Vol: 3, No: 11. November, 2012 ISSN 2156-7506

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5. Responses regarding the importance of work life balance

No. of responses Percentage

Strongly disagree 0 0.00

Disagree 0 0.00

Neutral 13 4.33

Agree 103 34.33

Strongly agree 184 61.33

Total 300 100.00

6. Preference of performance incentives

No. of responses

Percentage

Team 117 39.00

Individual 122 40.67

Depends (Respondents’ choice) 61 20.33

Total 300 100.00

7. Responses regarding employee perception towards recognition with respect to fulfillment of

targets:

No. of responses Percentage

Yes 208 69.33

No 92 30.67

Total 300 100.00

8. Responses regarding the level of transparency of rewards and recognition policies:

No. of responses Percentage

Yes 278 92.67

No 22 7.33

Total 300 100.00

9. Responses regarding adoption of a package of monetary and non- monetary incentives by

companies

No. of responses Percentage

Strongly disagree 0 0.00

Disagree 0 0.00

Neutral 5 1.67

Agree 223 74.33

Strongly agree 72 24.00

Total 300 100.00

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Vol: 3, No: 11. November, 2012 ISSN 2156-7506

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10. Responses regarding involvement of employees in a company’s compensation plan

No. of responses Percentage

Strongly disagree 0 0.00

Disagree 0 0.00

Neutral 9 3.00

Agree 93 31.00

Strongly agree 198 66.00

Total 300 100.00

11. Responses regarding impact of performance linked pay on motivation:

No. of responses Percentage

Yes 70 23.33

No 230 76.67

Total 300 100.00

12 a Responses regarding the importance of good pay

Rank No. of respondents Percentage

1 75 25.00

2 98 32.67

3 45 15.00

4 48 16.00

5 22 7.33

6 7 2.33

7 5 1.67

8 0 0.00

It can be inferred from the above table Good pay was ranked first by 25% of the respondents and

ranked 2nd by 32.67 % of the respondents. We can also infer that good pay is not the single most

important criteria to work but it does make a difference in motivating employees.

12 b Responses regarding the importance of position

Rank No. of respondents Percentage

1 51 17.00

2 57 19.00

3 96 32.00

4 42 14.00

5 21 7.00

6 12 4.00

7 9 3.00

8 12 4.00

It can be inferred from the above table that the maximum percentage of the respondents 32 %

have ranked 3rd for position in the organization .Also approximately 36 % of the respondents

have given ranks between 1 to 2 for position .So we can infer that for the employees position is

important.

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Vol: 3, No: 11. November, 2012 ISSN 2156-7506

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12 c Responses regarding the importance of job security

Rank No. of respondents Percentage

1 99 33.00

2 90 30.00

3 30 10.00

4 36 12.00

5 24 8.00

6 9 3.00

7 12 4.00

8 0 0.00

It can be inferred from the above table that job security was ranked 1st by 33 % of the

respondents and .Also approximately 52 % of the respondents have given ranks between 2 to 4

for position .So we can infer that job security is a very important factor at this time of job

uncertainty because of recession.

12 d Responses regarding the importance of good relationship with boss

Rank No. of respondents Percentage

1 0 0.00

2 12 4.00

3 24 8.00

4 36 12.00

5 18 6.00

6 42 14.00

7 75 25.00

8 93 31.00

It can be inferred that good relationship with boss was not ranked 1 by any of the respondents and

it was ranked 2nd by 8 % of the respondents. Maximum of the Respondents, 70% have ranked it

between 6 to 8, it proves that good relationship with boss might not be a main criteria but it does

make an impact on the employee.

12 e Responses regarding the importance of being treated fairly

Rank No. of respondents Percentage

1 9 3.00

2 6 2.00

3 18 6.00

4 45 15.00

5 57 19.00

6 69 23.00

7 51 17.00

8 45 15.00

It can be inferred from the above table that being treated fairly was ranked 1 by 3 % of the

respondents and rank 2 by 2 % of the respondents. The highest percentage of the respondents 23

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% ranked it 6, while most of them have ranked it around 4 to 8.This proves that it important for

the employees to perceive that they are being treated fairly or the treatment is equitable.

12 f Responses regarding the importance of being recognized for your contribution

Rank No. of respondents Percentage

1 15 5.00

2 15 5.00

3 6 2.00

4 0 0.00

5 63 21.00

6 78 26.00

7 69 23.00

8 54 18.00

It can be inferred from the above table that for being recognized for contribution was ranked 1 by

5 % of the responses. And further if we add the percentage values of the last 4 ranks we get

approximately 88 % .So we can infer from this that it is important for the employees in an

organization to be recognized for their contribution but not the most important factor.

12 g Responses regarding the importance having growth prospects

Rank No. of respondents Percentage

1 21 7.00

2 15 5.00

3 54 18.00

4 60 20.00

5 66 22.00

6 36 12.00

7 21 7.00

8 27 9.00

It can be inferred from the table that maximum number of respondents 22 % have ranked it 4 th or

5. Also approximately 71 % of the respondents have given ranks from 1 to 5 for the importance

of growth .So we can infer that for the employee’s professional growth is important to them.

12 h Responses regarding the importance of receiving appreciation & rewards

Rank No. of respondents Percentage

1 39 13.00

2 15 5.00

3 24 8.00

4 45 15.00

5 21 7.00

6 33 11.00

7 57 19.00

8 66 22.00

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It can be inferred from the table that it is ranked 1 by 13% of the employees and also appreciation

was ranked 6, 7, 8, by approximately 42 % of the respondents. We can infer that appreciation for

the work done is also important it is also a factor which impacts the employees.

13a Responses regarding the motivational aspect of monetary hike after a performance appraisal

Number No. of respondents Percentage

1 159 53.00

2 96 32.00

3 33 11.00

4 12 4.00

Total 300 100.00

It can be inferred from the table that 53 % of the respondents felt that it is important to receive

monetary hike after a performance appraisal to motivate them to work better.

13b Responses regarding the motivational aspect of resolving concerns and issues after a

performance appraisal.

Number No. of respondents Percentage

1 54 18.00

2 81 27.00

3 129 43.00

4 36 12.00

Total 300 100.00

It can be inferred from the above table that resolving of issues and concerns was ranked 1st by 18

% of the respondents, the highest percentage of respondents ranked it 3.We can infer that for the

employees resolving of their issues and concerns are important and the organizations also need to

look into this aspect.

13c Responses regarding the motivational aspect of better job responsibilities after a performance

appraisal.

Number No. of respondents Percentage

1 108 36.00

2 126 42.00

3 57 19.00

4 9 3.00

Total 300 100.00

It can be inferred from the above table that the maximum of the respondents would want better

job responsibilities after a performance appraisal .The performance management system in

organizations need to take feed back at regular interval from the employees and incorporate it

13d Responses regarding the motivational aspect of identifying your strong and weak points

Number No. of respondents Percentage

1 33 11.00

2 105 35.00

3 96 32.00

4 66 22.00

Total 300 100.00

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Vol: 3, No: 11. November, 2012 ISSN 2156-7506

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It can be inferred from the above table that the aspect of identifying your strong and weak points

was ranked 1st by 11 % of the respondents, the highest percentage of respondents ranked it

between 2 and 3, i.e. 67%.We can infer that for the employees identifying of their strong and

weak points is important.

14. The respondents were asked what rewards apart from money they consider important.

These are the following rewards which apart from money the respondents consider important:

1. Recognition

2. Promotion

3. Better responsibilities

4. Stock Options

5. Bonus

6. Fuel expenses

7. Housing facilities

8. Work culture conducive to work

9. Choice in the type of work (domain, vertical)

10. Professionalism

11. Better role in the organization

12. Gift vouchers

13. Free vacation with family

14. Certificates recognizing the contribution

15. Gift hampers

Hypothesis Testing

H = reward does not influence the motivation of employees

H = reward influences the motivation of employees

The level of significance was calculated. Based on additional calculations, it is found that

H=REJECTED

H=ACCEPTED

Therefore, we may conclude that, rewards have influence on enhancing the motivation level of

the employees.

RECOMMENDATIONS

• Create opportunities for employees to learn and grow so as to reduce the feeling of

repetitive work and to enhance their motivation to work

• The goals of the organization should be linked with the goals of the employee so that

they can appreciate their contribution to the organization’s performance and have a

better understanding of it.

• The measure of performance of an employee should be clearly defined and

communicated to the employee.

• The reward program should be transparent and the target set should be realistic and

achievable by the employees so as to motivate them.

• Monetary rewards are important to employees and they need to be fair.

• The interaction of the family life and work life is an important aspect in the life of

employees; the companies need to maintain work life balance of the employees in

order to motivate them to perform better.

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• Since recession is going on, company should take steps to reduce uncertainties about

the jobs positions and communicate the same to the employees, so that employees

feel more secure and motivated in their work.

• The top performance should be rewarded and it must be clearly defined to the

employees as what is considered top performance.

• Any effort by the employee should be acknowledged, and average performers should

be motivated to strive to do better.

• Should provide a variety of non-monetary rewards to the employees like certificates,

gift vouchers, vacations and holidays, etc.

• Involve the employees in deciding their compensation so that they get to choose

because different people have different motivational needs.

• The organizations must offer a package of monetary and non-monetary rewards to its

employees.

• Employees need to know that their contributions are noticed, valued and part of

expanding the enterprise.

• It might seem logical for companies to offer team rewards instead of individual to

foster team spirit, but they should not emphasize on team achievement at the cost of

individual achievement. Therefore it should be done both ways covering the

individuals and the team as a whole too.

• Employees concerns and issues need to be listened to and addressed.

• Verbal praises and recognition for the work done should never be denied to the

employees.

CONCLUSION

The organizations need to develop a reward strategy that is how its reward policies and processes

should be developed so that it is mutually beneficial to the employees and the organization. And

the rewards should succeed in motivating the employees according to their needs and the reward

policy is driven by the business needs. From this research we can infer that the employees in any

organization need to be constantly provided opportunities for learning new skills so that they do

not feel monotonous and they are motivated to use the acquired skills on their job. We can also

infer that it is not just one factor for example it is not just monetary rewards which motivate an

employees, though monetary compensation is important the job that they are doing also motivates

them. This essentially says that the employees need to be motivated with the content of their job.

The organizations need to provide challenging opportunities to the employee’s. The organizations

also should emphasize on work life balance, and should provide options to employees like flexi

time, work from home access. The employees would appreciate these initiatives. We can also say

that linking pay to performance is an effective motivator when people know what they are going

to get in return for certain efforts or achievements, and when they feel that what they may get is

worth having. This is possible only if it is completely transparent. It can drive performance

through increased motivation and if there is a direct linkage between employee performance and

rewards. It can also be used to attract, retain, recognize and reward high performing employees.

Recognition is one of the most powerful motivators. People need to know not only how well they

have achieved their objectives or performed their task but also that their achievements are

appreciated. Non monetary rewards can motivate employees better if it is integrated with

financial rewards, in the total reward system. However, it is important to note that needs of the

individuals varies from individual to Individual and depends on his or her psychological makeup.

So it cannot be generalized but what the organizations can do is increase the employee

participation in deciding their overall compensation. The organizations should treat the

employees as stakeholders who should be involved in the development of the reward policies that

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Vol: 3, No: 11. November, 2012 ISSN 2156-7506

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affect them. More over meet their expectations that they will be treated equitably, fairly, and

consistently and are transparent. They should know what the reward policies of the organization

are and how they are affected by them. Some of the rewards apart from money which are

considered important by the employees to enhance their motivation to work are recognition,

promoting to the next level enhanced responsibilities, stock options and bonuses, free vacation

with family and choice in the type of projects they would want to work on. We can also infer that

the employees prefer increased involvement in policies and systems in the organizations that

affect them.

REFERENCES

Armstrong M, “Employee Reward”,University Press,Hyderabad, 2000.

Bowen R.B, “Recognizing and rewarding employees” Tata McGraw Hill publications,

New Delhi, 2007.

Dessler G, "Human Resource Management “Pearson Education publications, Indian

Edition, 2006.

Kerr, Steven, “Ultimate Rewards What Really Motivates People To Achieve”

Nelson, B, "1001 Ways to Reward Employees" Workman Publishing, New York, 2004

Price. N, “Human Resource Management in a Business Context”, 3rd edition

Suri GK et., “Rethinking incentives and reward management “ Excel books, New Delhi,

2003.

Annexure:

Data collected from the following organizations:

1. Unilever (Bangladesh) Limited

2. One Bank Limited, Jubilee road branch

3. Chittagong Stock Exchange

4. KDS Group of Industries, Bayazid Bostami road, Chittagong

5. Sanmar Group, Chittagong

6. Baizid Group of Industries

7. Chittagong Hill Tracts Development Board

8. Premier University

9. Chittagong International School

10. Transcom Electronic Limited

11. Padma Oil Company Limited

QUESTIONNAIRE

“Reward Management as Motivational tool in Organizations”

Name of the respondent:

Designation:

Company:

1. It is very important for me to be recognized when I am doing a good job (by managers, clients or

colleague)

( ) Strongly disagree ( ) Disagree ( ) Neutral ( ) Agree ( ) strongly agree

2. Opportunities for learning more and developing new skills is very important to me:

( ) Strongly disagree ( ) Disagree ( ) Neutral ( ) Agree ( ) strongly agree

3. Receiving formal monetary recognition for my efforts is important to me:

( ) Strongly disagree ( ) Disagree ( ) Neutral ( ) Agree ( ) strongly agree

4. What does motivate me most?

( ) The job that I am doing

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( ) The pay that I receive for doing the job

5. Work life balance is very important to me (an environment that encourages me to work my agreed hours

and still have time for my personal life)

( ) Strongly disagree ( ) Disagree ( ) Neutral ( ) Agree ( ) strongly agree

6. Do you prefer team based performance incentives or individual incentives?

( ) Team ( ) Individual

7. Do you feel that if you meet your expected targets you will be recognized?

( ) Yes ( ) No

8. Is reward and recognition policy transparent (communicated clearly) in your organization?

( ) Yes ( ) No

9. Do you feel that companies should consider a package of monetary and nonmonetary incentives?

( ) Strongly disagree ( ) Disagree ( ) Neutral ( ) Agree ( ) strongly agree

10. Do you feel that company should involve you more in deciding your compensation?

( ) Strongly disagree ( ) Disagree ( ) Neutral ( ) Agree ( ) strongly agree

11. Do you feel that performance based compensation motivates you to perform better?

( ) Yes ( ) No

12. Which of the is important according to you; please rank the following on a scale of 1 to 8 with 1 being

the highest and 8 lowest?

a. Good pay ( )

b. Position ( )

c. Job security ( )

d. Good relationship with boss ( )

e. Being treated fairly ( )

f. Being recognized for your contribution ( )

g Growth ( )

h. Appreciation, rewards and awards ( )

13. After a performance appraisal, rank the following in the order (1) that is most important (4) that is least

important, which would motivate you to work better:

a. ( ) Monetary hike

b. ( ) Resolving of your concerns and issues

c. ( ) Better job responsibilities

d. ( ) Identification of your strong and weak points

14. What rewards apart from money do you consider important?

Comment …………………………………………………………………………………

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Study of the Relationship between Capital

Structure and Tax: Evidence from Iran

Jamshid Mohammadzadeh Rostami

Corresponding Author

Master of Arts (M.A),

Department of Business Management, Science and Research branch, Islamic Azad

University, Tehran, Iran

Zohreh Akbarpour

Master of Arts (M.A),

Department of Business Management, Science and Research branch, Islamic Azad

University, Tehran, Iran

ABSTRACT

The capital structure of a firm plays an important role in its investment decisionmaking

and, as result, in its overall performance outcome. The effect of taxes on

the capital structure has already been studied by some researchers. The present

paper is aimed at studying the relationship between the capital structure and taxes

imposed on the Iranian companies listed on Tehran Stock Exchange. A sample of

45 companies whose data of a ten-year period 2001-2010 was available has been

selected. Cross-sectional and panel data regressions have been used in order to

test the research hypotheses. A distributed-lag model, too, has been used for

hypothesis-testing purposes. The signification level of the model has been

calculated through T and F statistics. The results from the whole industries as

well as each single industry showed that there is a significant relationship

between capital structure and taxes.

Keywords: Capital structure, Tax, Financial leverage, Cross sectional regression,

Panel data regression, Tehran Stock Exchange.

JEL classification: G35; H25

INTRODUCTION

Nowadays managers are acting in such competitive and advantage environment, that determining

correct goal and having appropriate understanding from method of obtaining them is regarded as

vital issue. By increasing size of companies and developing technology, requirement to great

capital and supplying financial resources of firm has great importance. Under this

condition the capital budget decisions and financial supply are regarded as most

important field for making decision of financial managers of public joint stock

companies. These decisions shall be make in the way of maximizing profitability of

firm. Financial decisions are necessary for welfare of firm. Making an incorrect

decision in relation to capital structure results in; losing properties of firm, facing

International Journal of

Contemporary Business Studies

Vol: 3, No: 11. November, 2012

pp.35-45

©Academy of Knowledge Process

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with debit and finally bankruptcy. Firm managers shall select the capital structure so that to

increase value of firm (Eriotis et al 2007).

Classical capital structure theories (e.g., Modigliani and Miller, 1958, 1963) suggest that

corporate tax affects capital structure. Because interest expenses are deducted before tax, debt has

a tax advantage over equity, and this tax advantage increases with the corporate tax rate. In a

perfect world with no transaction costs, firms would finance with 100% debt. When there are

bankruptcy costs or other costs, firms have an optimal capital structure that trades o the costs and

benefits of debt. Firms with higher tax rates use more debt 1 .

Empirical studies on the relationship between tax rates and capital structure are voluminous.

Earlier studies (e.g., Bradley et al., 1984; Titman and Wessels, 1988) find no evidence to support

theoretical predictions that leverage levels and firms’ non-debt tax shields are substituted. Recent

studies, such as Scholes et al. (1990) and Graham (1996, 1999), find that marginal tax rates and

leverage are simultaneously determined. However, these studies do not answer the question of

how an exogenous change in the tax rate affects firms’ leverage decisions.

To examine the effect of an exogenous change in the tax rate on leverage, researchers need to

examine a circumstance in which the corporate tax rate has been changed exogenously. Suitable

circumstances are rare and are often accompanied by other events that could potentially affect

firms’ capital structure. Givoly et al. (1992) examined the 1986 US Tax Reform Act. They find

that after the tax reform, firms that had experienced larger drops in the corporate tax rate reduced

their use of debt. However, the 1986 Tax Reform Act affected personal tax at the same time,

which will also affect capital structure (Graham, 2003). This severely complicates the research

design. Although Givoly et al. (1992) use lagged dividend yield as a control variable for the

personal tax effect, Rajan and Zingales (1995) indicate that different measurements of personal

tax will substantially affect the conclusions 2 .

Miller and Modilani in year 1985 have offered some theories as follows: competitive market and

incomplete income tax, absence of bankruptcy costs, symmetrical information among market

activists and replacing domestic and foreign financial resources, may not change value of firm

due to change in structure financial resources i.e. value of firm is independent from capital

structure. Miller & Modigliani (1963) according to income tax of firms have revised in their first

theory and offered new theory. In their new theory they inferred that whereas receiving loan for

firm results in tax benefit, logical it is expected to use receive loan for supplying financial

resource; since, higher loan results in increasing value of firm.

Gordon (1982) noted that tax incentives to use debt are proportional to the product of the

difference between corporate vs. personal tax rates and nominal interest rates. While tax rates

may not have changed much over time, interest rates have. Variation in nominal interest rates,

however, can proxy for business cycle factors that may have important independent effects on

financial policy. In fact, any time-series study faces the problem that many nontax factors that

affect financial policy change over time, e.g. business cycles and financial regulations, as well as

inflation. Unless these other factors are controlled for directly or are uncorrelated with tax rates,

the estimated effects of taxes on financial behavior will be biased. These inherent difficulties in

making use of either cross-section or time-series evidence to identify the effects of taxes on

financial policy led Myers (1984) to argue: “I know of no study clearly demonstrating that a

1 For more details on theories of the relationship between tax and capital structure, please refer to Graham (2003).

2 Specifically, they find that if top personal tax rates are assumed, then the 1986 Tax Reform Act significantly affects the capital

structure, whereas if the average personal tax rates are assumed, then the 1986 Tax Reform Act does not significantly affect the capital

structure.

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firm’s tax status has predictable, material effects on its debt policy. I think the wait for such a

study will be protracted.”

Plesco (1994) in his research has insisted on tax saving as a result of increasing leverage and has

studied effect of change in tax rate on capital structure of American companies. Amending tax

structure in America in year 1986 resulted in creation practical condition to test effect of tax on

leverage decisions of firms. The principal section was related to amending tax structure and

decreasing tax rate from 46% to 34% in tax basis of companies. Results of research show that

amending tax structure in year 1986; resulted in average 5% decrease in tax rate and distribution

of tax between different industries and influences on decision of financial supply of firms.

Evidences show positive relationship between tax rate and leverage i.e. amending tax structure

results in decreasing leverage of firms.

Shih (1996) indicated that tax liabilities affects on the corporate capital structure. He tests effect

of tax liabilities that deals with corporate finance leverage. His results show that the tax liabilities

with corporate’s financial leverage is related inversely. Risk will reduce tax liabilities associated

with the use of financial leverage.Gropp (1997) by using integrated data attempted to study

effective rate of expected tax on financial supply of American firms. His selected sample was

1300 industrial companies attended at New York stock exchange for time period of 1979 to 1991

i.e. 16930 year-firms. He concluded that effective tax rate has positive significant relationship

with financial supply through creation of debit .

Results of research by Gordon & Lee (2001) show that tax has significant relationship with level

of firm’s debt; specially when difference between tax rate of great companies and small

companies (34% against 15%) results in higher tax rate of great firms in comparison to small

firms that more use from their assets for financial supply through creation of debt.

Campello (2001) assumes that a given firm’s debt and equity are held by a particular clientele of

investors (with the clienteles based on investor tax rates). He investigates the capital structure

response to the large reduction in personal taxes (relative to the smaller reduction in corporate tax

rates) after the Tax Reform Act of 1986. Campello finds that zero-dividend firms (which

presumably have high-tax-rate investors and therefore experienced the largest reduction in the

personal tax penalty) increased debt ratios in response to tax reform, while high-dividend payout

firms (which presumably have low-tax-rate investors and therefore experienced a small reduction

in the personal tax penalty) reduced debt usage relative to peer firms.

Kahle & Shastri (2002) in article attempted to study capital structure and tax benefit as a result of

option exercise. They found out that ratio short term and long term debt has negative relationship

with tax benefit as a result of option exercise. In addition change at annual leverage has negative

relationship with change in option exercise of transaction. Finally they found out that firms prefer

to publish stock in transactions related to tax benefit that net price of published stock is an

ascending function for tax benefits as a result of option exercise .

Wu & Yue (2009) investigate whether listed firms in China adjust their capital structure in

response to an increase in the corporate tax rate. In addition they have studied increase of tax rate

and its effect on capital structure of firms that China government had already observed tax

discount. Results of their study showed that these firms by increase in their tax rate have

increased their financial lever. Evidences show that the highest increase in lever relates to firms

receiving bank loan.

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Different theories have been offered in relation to capital structure of firms. Some of these

theories have referred that firm is the reason for increasing their value and other referred that firm

is factor for decreasing their value. Theoretically, it seems that managers have grounds to increase

structure of firm. Therefore, according to role of capital structure in creation of wealth for firm,

studying its effective factors has great importance. Several researches have introduced some

effective factors on capital structure of firms including tax. The present research attempts to

answer the following question:

Is there significant relationship between capital structure and tax among firms accepted at

Tehran stock exchange?

The remainder of the paper proceeds as follows. The next section introduces the Goals and

Importance of Research. Section 3 presents Theoretical Basics. Section 4 describes our research

methodology. Section 5 presents empirical results, and Section 6 concludes the paper.

GOAL AND IMPORTANT RESEARCH

Tax is amount that government on the strength of law and in order to improve structure of its

system and supplying its costs, receive from persons and firms and institutes. Tax is in fact one of

the most important economic infrastructure that plays key role at permanent growth of social

justice through redistribution of income and wealth and their optimum allocation to all groups of

society. In addition by receiving fair tax it is possible to solve important social and economic

problems of government including: budget shortage, unemployment and decreasing investment at

productive sector. Goal of the present research is studying relationship between capital structure

and tax of firms accepted at Tehran stock exchange.

THEORETICAL BASICS

The relationship between tax and capital structure of firms is very considerable issue that has

received attention by many researchers during previous decades.

Static Trade-Off Theory

This theory mentions that financial benefit of debt increases value of firm having debt. On the

other hand, costs of financial crisis and possible bankruptcy of firms as a result of not fulfilling

their commitments toward debt, decreases value of firm. Therefore, capital structure of firm may

results in creation of balance between financial benefit of debt, costs of financial crisis and

possible bankruptcy. Thus, 2 neutralizing factors including (balance of benefit and costs as result

of debt) results in optimum application of debit in capital structure of firm (Abor 2005).

Static Trade-off theory, centers on the repayment and costs of issuing debt, predicts that an

attractive target debt ratio is to make the paramount value of the company. The best point can be

accomplishes when the marginal value of the payback is linked with debt concerns exactly offsets

the raise in the present value of the costs correlated by handing out more debt (Myers, 2001). The

main benefit of debt is the tax deductibility of interest payments. The tax deduction of corporate

interest payments favors the application of debt. It will be more with the existence of personal

taxes (Miller, 1977) and non-debt tax protection (DeAngelo and Masulis, 1980).

Agency Costs Theory

This theory was offered by Jensen and Meckling for the first time in year 1976. Capital structure

of firm is determined through creation of agency costs as a result of contradiction in benefit of

beneficiaries. Jensen and Meckling within framework of economic unit have identified 2

contradiction of benefits as follows:

A. contradiction between benefit of managers and shareholders.

B. contradiction between benefit of shareholders and holders of debt papers to firm.

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Therefore, Jensen and Meckling by creation of balance between benefit obtained from financial

benefit and agency costs may obtain to optimum capital structure. Some feedbacks of this theory

are including: firstly, it is expected that persons offering loan shall observe specific limitations in

their contracts including keeping specified level of cash flow, not obtaining new asset, not

investment on new commercial activities that is irrelevant to current commercial activity and lack

of paying profit for lean receivers. Secondly, industries having less opportunity of growth in order

to meet their financial resources shall receive loan, thirdly, firms facing with few growth

opportunities and having higher free cash flow are expected to have higher debt. Having high free

cash flow results in having suitable investment opportunity; since, managers may extravagance

for using benefit and even may pay higher salary to their inferior employees. Therefore,

increasing level of debt in capital structure results in; decreasing Free Cash Flow and increasing

ownership of managers for final ownership rights of firm (Bagherzadeh 2003).

RESEARCH METHODOLOGY

Method

The present research with respect to type is regarded as applied research, with respect to

methodology is regarded as descriptive research (semi-empirical) and correlation research by

using post event information i.e. information in relation to past.Variables introduced in the

present research were studied with respect to 2 aspects. These variables were selected among

different firms and other variables were selected from time period 2001-2010. The suggested

solution under such case is integrating inner group data and time series and estimating desired

pattern based on new set. In case of putting together the sectional data with different time of

period, we may find merged data. Method of layout data is performed according to 2 methods. In

the first method, data of a section unit is observed for T year and then this operation is repeated

for second sectional unit and further units. Type of layout data is called pooled data. In the second

method, data for sectional unit of each year is put next together and this procedure is repeated for

further years. This type of data is called panel data (Khosravinejad 2001).

In order to produce time series pattern, it is required to pay attention to time for determining final

effect of independent variable on dependant variable. If time interval between decision and its

effect on variable may be long, it is required to add Lag explanatory variable. Under inefficient

market, information is invested on capital structure. Whereas Tehran stock exchange is not

efficient even at poor level, it is possible to conclude that in Tehran stock exchange, information

is reached with Lag . Therefore, in order to test hypothesis, it is required to pay attention to Lag

for transferring information into market (Namazi and Rostami, 2006).

According to this problem effect of annual tax on capital structure of next year shall be

measured; therefore, in order to test hypothesis it is required to use Lag variables and model of

Lag equation is as follows:

FL t = β 0 + β 1 T t-1 + e

(1)

H 0 : β 0 = 0

H 1 : β 0 ≠ 0

FL = Financial Leverage

T = Tax

β 0 = Constant coefficient

t = Time Period

e = Coefficient of error

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In this pattern it is assumed that there is normal distribution that is independent and there is no

continuous correlation and incompatible variance. Since the rejection of H 0 entails the acceptance

of H 1 , Indicate the existence significant relationship between capital structure and tax.

In order to estimate linear regression model it is used from OLS method. This method applies

from suitable statistical properties including best linear estimator without BLUE. Statistical

method applied in the present research is integrating time data and sectional data. In order to

perform statistical test, it was used from Eviews software.

Method of collecting data is library method i.e. required data and information were collected from

financial statement of sample firms i.e. balance sheet, profit and loss statement, cash flow and

other information published from firms’ member at stock exchange. Information related to

theoretical issues was collected from library resources including: books, journals and specialty

accounting websites

Sample

All firms accepted at Tehran stock exchange during year 2001 to 2010 were selected as statistical

universe by paying attention to accessibility of information and also clarity of accounting

information. Obligation of stock exchange for on time publishing financial statements resulted in

creation of suitable information for researchers. In order to select sample it was used from

classification sampling and simple random method. In classification sample method the statistical

universe was divided into homogenous and heterogonous group and then number of sample

toward each group is determined. By using simple random sampling method the number of

required elements for each heterogeneous group is selected. In the present research, first of all

firms accepted at Tehran stock exchange were divided to different groups and industries

according to the following 8 classes as follows:

1. Group of basic and fabric metals.

2. Group of non metal inorganic products.

3. Group of manufacturing machines and communication equipments and electric apparatus.

4. Group of pharmacy.

5. Group of machineries and motorized vehicles spare parts.

6. Group of oil by-products, producing materials and chemical products.

7. Group of foods, sugar and hard sugar.

8. Group of lime, plaster, tile and ceramics.

Therefore among all of the firms accepted at Tehran stock firm, all of the companies having

following qualifications were selected:

1. Firm shall accepted by stock exchange before year 2001.

2. Firm shall not be among investment, holding, bank and broker companies; since, type of their

activity is different with other industry firms.

3. Firm shall not have record of stop for its transactions.

4. Firm shall not have change in its fiscal year during period of being studies.

5. Termination of fiscal year shall be end to Mar 30 of each year to have ability to compare for

increase.

6. Complete information of firm shall be available.

According to the aforesaid terms and conditions, 45 firms were selected. In the present research,

first of all the entire firms were tested and then each group of firms was separately tested.

Variables

Carrying out any research entails defining each of its variables. Variables are divided into two

groups depending on the role they play in the research:

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• Dependent Variable

In the present research the dependant variable is financial leverage that is obtained from dividing

total liabilities of firm on total assets of firm.

FL =

(2)

Total Liabilities

Total Assets

• Independent Variable

In the present research the independent variable is tax that is obtained from natural logarithm of

firm’s tax.

EMPIRICAL RESULT

Results of Hypothesis Test for all Firms

In order to study significance of regression model, it was used from relations between

independent and dependant variable and F statistics. By comparing F and F statistics and table

(F(α,k-1, N-K)) at error level of 5% total hypothesis model was studied. In order to study

significance of independent variables it was used from t statistics and in order to study self

correlation it was used from Durbin-Watson statistics.

Results of statistical analysis were performed by assumptions of H 0 and H 1 .

H 0 : There is no significant relationship between capital structure (financial leverage) and tax of

firm accepted in Tehran stock exchange.

H 1 : There is significant relationship between capital structure (financial leverage) and tax of firm

accepted in Tehran stock exchange.

The results of hypothesis test among total firms in Table 1 indicated that there are significant

values for total firms (p=0.000


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Watson test; in which level of these variables as 1.631 at distance of 1.5 to 2.5 shows absence of

self correlation.

The results of hypothesis test at non pharmacy industry in Table 5 indicated that there are

significant values for total firms (p=0.001


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REFERENCES

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correction, American Economic Review, 53, 433-443.

Myers, S.C. (2001). Capital Structure. Journal of Economic Perspectives, 15, 81- 102.

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Namazi, M. and Rostami, N. (2006). The Investigation of the Relationship between Financial

Ratios and Stock Returns of the Firms Accepted in Tehran Stock Exchange Market, The

Iranian Accounting and Auditing Review, 13, 105-127.

Plesko, G.A. (1994). The Tax Advantage of Corporate Debt After Tax Reform: A Direct Test of

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Rajan, R.G. and Zingales, L. (1995). What do we know about capital structure? Some evidence

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Finance, 43, 1-19.

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Evidence from China, Journal of Banking & Finance, 33, 30-38.

Table 1. results of hypothesis test among total firms.

Dependant

variable

Independent

variable

β

Coefficient

Std.

Error

t-

Statistic

Financial

leverage

Sig.

Adjusted

R-squared

F-

Statistic

Durbin-

Watson

Tax 1.496 0.2494 5.987 0.00 0.15 28.08 1.894

Table 2. results of hypothesis test at basic and fabric metals.

Dependant Independent β Std. t-

Adjusted F- Durbin-

Sig.

variable variable Coefficient Error Statistic

R-squared Statistic Watson

Financial

Tax 1.819 0.1635 11.09 0.00 0.77 77.08 1.821

leverage

Table 3. results of hypothesis test at non-metal inorganic products.

Dependant Independent β Std. t-

Adjusted F- Durbin-

Sig.

variable variable Coefficient Error Statistic

R-squared Statistic Watson

Financial

Tax 2.317 0.3863 5.989 0.00 0.34 33.46 1.745

leverage

Table 4. results of hypothesis test at manufacturing machines, communication equipments, electric

appliances and transportation means.

Dependant Independent β Std. t-

Adjusted F- Durbin-

Sig.

variable variable Coefficient Error Statistic

R-squared Statistic Watson

Financial

Tax 1.721 0.4662 3.691 0.034 0.828 20.26 1.631

leverage

Table 5. results of hypothesis test at non pharmacy industry.

Dependant Independent β Std. t-

Adjusted F- Durbin-

Sig.

variable variable Coefficient Error Statistic

R-squared Statistic Watson

Financial

Tax 1.066 0.3088 3.454 0.001 0.37 28.8 1.699

leverage

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Table 6. results of hypothesis test at machineries and motorized vehicles.

Dependant Independent β Std. t-

Adjusted

Sig.

variable variable Coefficient Error Statistic

R-squared

Financial

leverage

F-

Statistic

Durbin-

Watson

Tax 1.459 0.1504 9.702 0.00 0.65 24.93 1.549

Table 7. results of hypothesis test at oil by-products, producing chemical material.

Dependant Independent β Std. t-

Adjusted F- Durbin-

Sig.

variable variable Coefficient Error Statistic

R-squared Statistic Watson

Financial

Tax 1.030 0.1115 9.236 0.00 0.90 75.23 1.883

leverage

Table 8. results of hypothesis test at food, sugar and hard sugar.

Dependant Independent β Std. t-

Adjusted F- Durbin-

Sig.

variable variable Coefficient Error Statistic

R-squared Statistic Watson

Financial

Tax 0.676 0.0112 60.78 0.00 0.45 28.70 1.647

leverage

Table 9. results of hypothesis test at lime, plaster, tile and ceramics.

Dependant Independent β Std. t-

Adjusted F- Durbin-

Sig.

variable variable Coefficient Error Statistic

R-squared Statistic Watson

Financial

Tax 0.868 0.0797 10.88 0.00 0.790 122.12 2.184

leverage

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Influence of Organizational Culture on

Employee Work Behavior

OLU OJO

Department Of Business Administration

College Of Management And Social Sciences

OSUN State University

P. M. B. 2008, Okuku

Osun State, Nigeria

ABSTRACT

This research work tries to examine the influence of organisational culture on

employee work behaviour. We try to ascertain the influence that organisational

culture has on employee work behaviour, and to formulate recommendations

regarding organisational culture and employee work behaviour. In order to

achieve the above objectives, the following research questions were asked: (i)

Does organisational culture have any influence on employee work behaviour? (ii)

In what way does organisational culture affect employee work behaviour? (iii)

Does organisational culture affects organisational productivity? (iv) Will a

change in organisational culture affects employee work behaviour? Three

hypotheses were advanced: (i) Organisational culture have a significant influence

on employee work behaviour. (ii) Organisational culture has a significant

influence on organisational productivity. (iii) A change in organisational culture

will cause a change in employee work behaviour. The study uses survey research

method. Our respondents were selected by using stratified and simple random

sampling techniques. Primary data were collected through questionnaire. Data

were presented and analysed by means of simple percentage and our hypotheses

were tested by chi-square test statistics. The findings of the study are: (i) That a

large number of respondents 84.0% of the respondents agree that organisational

culture influence employee work behaviour. (ii) 72.0% of the respondents agree

that organisational culture is a determinant of productivity level of the

organisation. (iii) 84.0% of the respondents agree that a change in culture will

cause a change in employee work behaviour. In addition, the result of the

findings shows that organisational culture i.e. norms, artefacts, values, traditions,

assumptions and belief influences employee work behaviour. Recommendations

were also made to the organisations that will find this study relevant to their

course to make their culture simple and easy to grasp and adhere to so that their

employees can be free to put in their best.

Key Words: Organisational Culture, Employees, Employee Behaviour,

Organisational Productivity.

International Journal of

Contemporary Business Studies

Vol: 3, No: 11. November, 2012

pp.46-57

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INTRODUCTION

An organisation is a collectivity with a relatively identifiable boundary, a normative order (rules),

ranks of authority (hierarchy), communications system, and membership coordinating systems

(procedures); this collectivity exists, on a relatively continuous basis in an environment, and

engages in activities that are usually related to set of goals; the activities have outcomes for

organisational members, the organisation itself, and for the society (Hall, 1999). The essence of

organisations revolves around the development of shared meanings, beliefs, values and

assumptions that guide and are reinforced by organisational behaviour. Employees are important

asset to the organisation. They serve as human capital to the organisation. Organisations make use

of their employees’ skills, knowledge and abilities in carrying out and fulfilling their objectives.

Culture is the environment that surrounds employees at work all of the time. Culture is a powerful

element that shapes employees work enjoyment, work relationships, and work processes.

However, culture is something that one cannot actually see, except through its physical

manifestations in work place.

The culture of the organisation should be developed to support continuous improvement, improve

employees’ style of performing their job and thus develop quality awareness. Organisational

culture has influenced employee work behaviour as a result of the acceptable behaviours and

attitudes to various jobs in the organisation. Organisational culture is a major determinant of an

employee’s efficiency and effectiveness in carrying out their jobs. That is, organisational culture

is one of the major key determinants of how employees perform or behaves in his job.

Academic interest in organisational culture is evidenced by the level of attention it has received

over the last few decades. The relationship between organisational culture and employee work

behaviour has been the subject of abundant research in several fields. While this topic is rich in

studies, many researchers concur on the fact that there is no agreement on the precise nature of

the relationship between organisational culture and employee work behaviour.

Despite the plethora of studies on organisational culture in the last few decades, there is no

widely accepted causal relationship between organisational culture and employee work

behaviour. The empirical evidences emerging from various studies about the effect of

organisational culture on employee work behaviour have so far yielded mixed results that are

inconclusive and contradictory.

Because of these contradictory results, the question of whether organisational culture improves or

worsens employee’s work behaviour is still worthy of further research such as the one being

undertaken in this study. In addition, despite the existence of these studies, very little attention

has been given to developing countries. This means that the impact of organisational culture on

employee’s work behaviour has not received adequate research attention in Nigeria. Thus, there is

a major gap in the relevant literature on Nigeria, which has to be covered by research. This

research attempts to fill this gap by studying the situation of the Nigerian service industry and

providing more empirical evidence on the effects of organisational culture on employee work

behaviour in Nigeria. The explicit objectives of this study are: (i) to ascertain if organisational

culture influence employee work behaviour. (ii) to find out if organisational culture affects

organisational productivity. (iii) to disclose whether a change in organisational culture could lead

to a change in employee work behaviour. Three hypotheses were also put forward. They are: (i)

Organisational culture have a significant influence on employee work behaviour. (ii)

Organisational culture has a significant influence on organisational productivity. (iii) A change in

organisational culture will cause a change in employee work behaviour. These objectives and

hypotheses guide the researcher in his study. Organisational culture is based on the history and

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tradition of the organisation or what an organisation has been identified with to be consistent in

doing from time past. It is the ability of the employee to adapt to this organisation tradition and

systems that will enable him perform well in his job and thus boost organisational productivity.

Therefore, this study will concentrate on organisational culture as a major factor that influences

employee work behaviour.

LITERATURE REVIEW

Conceptual Framework of Organisational Culture

The subject of organisational behaviour has been studied from a variety of perspectives ranging

from disciplines such as anthropology and sociology, to the applied disciplines of organisational

behaviour, management science, social sciences and organisational communication.

The study of organisational culture has been widely accepted and explained by different scholars

but there is no one definition of organisational culture that is generally accepted (Ojo, 2008).

Organisational culture permeates organisational life in such a way as to influence every aspect of

the organisation (Hallett, 2003). Organisational culture also has effect on the productivity level of

the organisation in the sense that it influences employee’s behaviour to work and it is the input of

the employees to the organisation that determines the organisational productivity level. It has

been suggested that organizational culture affects such outcomes as productivity, performance,

commitment, self confidence, and ethical behaviour (Buchanan and Huczynski, 2004; Shani and

Lau, 2005; and Ojo, 2009). Organisational culture is one of the core determinants of every

organisation’s success as it influences employee work behaviour.

Organisational culture is one of the metaphors used for organisational analysis (Morgan, 1997).

In this metaphor, the essence of organisation revolves around the development of shared

meanings, beliefs, norms, values and assumptions that guide and are reinforced by organisational

behaviour. Organisational values are important because they have effects on important individual

and organisational outcomes. Organisational values are expected to produce higher levels of

productivity (Jehn, 1994; Hall, 1999), job satisfaction (Jehn 1994), and commitment (Pettinger,

2000). Organisational values are also important because the fit between organisational and

individual values affects important individual and organisational outcomes. Values-fit has been

shown to affect application decisions (Cable and Judge, 1996; Cable and Judge, 1997; Scott,

2000a), job satisfaction (Bretz and Judge, 1994), and job tenure (Bretz and Judge, 1994; Ritchie,

2000).

Organisational culture has been seen as the pattern or way a given group has invented, discovered

or developed in carrying out a particular task or solving a particular problem or useful and

effective in learning. This pattern must have worked well enough for the group to be considered

valid and therefore must be taught to new members or entrants as the correct way to perceive,

think and feel in relation to those problems. Organisation culture is a set of values that help

organisational members know that which is acceptable and that which is unacceptable within the

organisation (Ojo, 2010).

How Organisational Culture Develops

The values and norms which are the basis of culture are formed through the following four ways

(Finegan, 2000).

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i. By Leaders in the organisation, especially those who have shaped them in the past.

People identify with visionary leaders – how they behave and what they expect. They note what

such leaders pay attention to and treat them as role models.

ii. Through Critical Incidents or Important events from which lessons are learned about

desirable or undesirable behaviour.

iii. Through effective working relationship among organisations members. This establishes

values and expectations.

iv. Through the Organisation’s Environment

Culture is learned over a period of time. Where a culture has developed over long periods of time

and has become firmly embedded, it may be difficult to change quickly.

Dimension of Organisational Culture

Jones, Chine and Ryan (2006) in some comparative works published said that seven dimensions

could be used to compare culture across organisations.

• Innovation and risk taking – willing to experiment, take risks, encourage innovation

• Attention to detail – paying attention to being precise vs. saying its “good enough for chopped

salad”

• Outcome orientation – oriented to results vs. oriented to process

• People orientation – degree of value and respect for people. Are people considered unique

talents, or is an engineer an engineer an engineer.

• Individual vs. Team orientation – are individuals most highly noted, or are collective efforts

• Aggressiveness – taking action, dealing with conflict

• Stability – openness to change

Deal and Kennedy (1999) also identified four key dimensions of culture:

1. Values – the beliefs that lie at the heart of the corporate culture.

2. Heroes – the people who embody values.

3. Rites and rituals – routines of interaction that have strong symbolic qualities.

4. The culture network – the informal communication system or hidden hierarchy of power in the

organization.

Types of Organisational Culture

Handy (1993) identify four main types of culture to be found in organizations, which are

summarised in Figure 1 below.

Figure 1: Four Types of Culture in Organisations

Type Metaphor Characteristics

Power Culture A web Control/power emanate from the centre; very

political and entrepreneurial; resource power and

personal power predominate. This culture serves the

figure head and the leader.

Role Culture A Greek temple Classical structure; bureaucratic nature; roles more

important than the people who fill them; position

power predominates, and expert power tolerated.

This culture serves the structure.

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Task Culture A net The focus is on completing the job; individuals’

expertise and contribution are highly valued; expert

power predominates, but both personal and position

power are important; the unifying force of the group

is manifested in high level of collaboration.

Person culture A Cluster or

galaxy

A loose collection of individuals – usually

professionals – sharing common facilities but

pursuing own goals separately; power is not really an

issue, since members are experts in their own right.

This type of culture serves the individual.

Source: Handy, 1993: Understanding Organizations. 4 th Edition, Penguin Business

Handy (1993) suggests that the culture within an organisation affects the way that it operates and

its members behave. One type of culture is not necessarily better than another; although one type

of culture might be more appropriate than others in particular circumstances.For example, a role

culture could be appropriate when the organisation exists in a fairly stable environment. A role

culture could have difficulty in adapting to change. In contrast, power culture or task culture are

probably more effective in conditions of change.

Management in an organisation might take the view that to be successful; the organisation must

be innovative, and continually look for new markets, new and better products and improved

processes. Innovation is often associated with the task culture. It can therefore be tempting for

management to try to change the culture of their organisation, so that it’s become more taskoriented.

Cascio (2006) also outlined four types of organisational culture and termed them as

‘Organizational Ideologies’. These are:

i. Power-oriented – competitive, responsive to personality rather than expertise

ii. People-oriented – consensual, rejecting management control

iii. Task-oriented – with a focus on competency, dynamic

iv. Role-oriented – with a focus on legality, legitimacy and bureaucracy

Concept of Behaviour

Behaviour is something psychologists have been trying to define for ages. Several theories have

come up and each has been right in a way. But we still don’t have an exact definition for human

behaviour. We probably never will have one, because human beings change and each individual

is different from one another. It might be possible to have a few generalisations but the truth is

that each one of us does things differently.

The operant conditioning model is one such model used to explain human behaviour.

Conditioning is a “systematic procedure through which associations and responses to specific

stimuli are learned” (Hollinshead, Nicholls and Tailby, 2003). Operant conditioning is defined as

“a type of learning in which the desirable or undesirable consequences of behaviour determine

whether the behaviour is repeated” (Sorensen, 2002). It is also known as instrumental

conditioning. The probability of an event occurring depends on its consequences. Much of the

research on the operant model was done by B. F. Skinner and E.L. Thorndike.

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International Journal of Contemporary Business Studies

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But the basic principle that governs operant conditioning is known as the law of effect.

The law states that behaviours followed by desirable outcomes are more likely to recur

than behaviours with unpleasant outcomes and vice versa. Rewards and punishments do

affect our behaviour.Shaping is an operant conditioning procedure in which “closer and

closer approximations of the desired behaviours are reinforced, as a way of eventually

producing the desired behaviour” (Osland, Kold and Rubin 2001; McShane and von

Glinow, 2008).

METHODOLOGY

In this section, the researcher detailed the research methodology used to achieve the purpose of

the study. The survey research design was used in this study. Survey research design was chosen

because the sampled elements and the variables that are being studied are simply being observed

as they are without making any attempt to control or manipulate them (Ojo, 2003). The

theoretical population of the study consists of the entire workers of Nestle Nigeria PLC, Ikeja,

Lagos State, Nigeria. For effective coverage and lower cost, stratified sampling technique was

used to select the participating respondents. The workers were stratified into junior, intermediate,

and senior cadres. Thereafter, a total of 55 employees were selected using simple random

sampling method. However, only 50 out of 55 respondents returned filled questionnaire and were

used for final analysis in this study. It is the believe of the researcher that the sampled elements

for the study have significant understanding of the concepts and terminologies used in the study

and contained in the questionnaire they completed. This premise was based on the educational

background of the respondents in which only 8% of them have General Certificate of Education

“Ordinary Level” while the remaining 92% of the respondents possessed higher educational

qualification. Primary data collected through the administration of questionnaire were used for

this study. The questionnaire was titled “Organisational Culture and Employee Work Behaviour

Questionnaire” One important way of ensuring that we have used the right instrument and have

taken correct measurement is that our outcome must be in consonance with two major criteria for

measuring quality known as validity and reliability (Ojo, 2003). To ensure the validity and

reliability of the questionnaire used for the study, even number of experts were consulted to look

at the questionnaire items in relation to its ability to achieve the stated objectives of the research,

level of coverage, comprehensibility, logicality and suitability for prospective respondents. Data

collected from the questionnaire were analysed, summarised, and interpreted accordingly with the

aid of descriptive statistical techniques such as total score and simple percentage. Chi-square was

used to measure the discrepancies existing between the observed and expected frequency and to

proof the level of significance in testing stated hypotheses.

TESTING OF HYPOTHESES AND DISCUSSION OF RESULTS

In this section we shall be concerned with two things; hypotheses testing and discussion of

results. There are various statistical tools that can be use for testing of hypotheses but this

research work will be limited to the use of chi-square (x 2 ) statistical tool.

Hypothesis 1

H 0 Organisational culture has no significant influence on employee work behaviour

Organisational culture has a significant influence on employee work behaviour

H 1

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International Journal of Contemporary Business Studies

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Table 11: Organisational Culture Influences Employee Work Behaviour

Observed Expected Residual

(O-E) 2

(O) (E) (O-E)

Strongly Disagree 2 10.0 -8.0 64.0

Disagree 2 10.0 -8.0 64.0

Undecided 4 10.0 -6.0 36.0

Agree 27 10.0 17.0 289.0

Strongly Agree 15 10.0 5.0 25.0

Total 50

Source: Field Survey, 2012

Test Statistics

organisational culture influences

employee work behaviour

Chi-Square(a) 47.800

Df 4

Asymp. Sig. .000

a 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is

10.0.

Decision rule: Reject H 0, where x 2 calculated is greater than x 2 tabulated, otherwise, accept

H 1 .

Calculated (x 2 ) = ∑ (O – E) 2 =

E

478

10 = 47.8

Degree of freedom “d.o.f” = n – 1

Where n = number of rows

Therefore, d.o.f = 5 – 1

= 4

Tabulated (x 2 ) = At 0.05% level of significance, the tabulated value of x 2 for 4 degrees of

freedom is 9.488

Decision: Since the calculated x 2 is greater than the tabulated x 2 , we reject the null

hypotheses (H 0 ) and accept the alternative hypotheses (H 1 ).

This indicates that organisational culture has a significant influence on employee work behaviour.

Hypothesis 2

H 0

H 1

Organisational culture has no significant influence on organisational productivity

Organisational culture has a significant influence on organisational productivity

Table 12: Organisational Culture is a Major Determinant of Organisational

Productivity

Observed Expected Residual (O-E) 2

(O) (E) (O-E)

Undecided 9 16.7 -7.7 59.29

Agree 24 16.7 7.3 53.29

Strongly Agree 17 16.7 0.3 0.09

Total 50

Source: Field Survey, 2012

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International Journal of Contemporary Business Studies

Vol: 3, No: 11. November, 2012 ISSN 2156-7506

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Test Statistics

organisational culture is a major determinant

of organisational productivity

Chi-Square(a) 6.760

Df 2

Asymp. Sig. .034

a 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is

16.7.

Decision rule: Reject H 0, where x 2 calculated is greater than x 2 tabulated, otherwise, accept

H 1 .

Calculated (x 2 ) = ∑ (O – E) 2 =

E

112.67

16.7 = 6.76

Degree of freedom “d.o.f” = n – 1

Where n = number of rows

Therefore, d.o.f = 3 – 1

= 2

Tabulated (x 2 ) = At 0.05% level of significance, the tabulated value of x 2 for 2 degrees of

freedom is 5.991

Decision: Since the calculated x 2 is greater than the tabulated x 2 , we reject the null

hypotheses (H 0 ) and accept the alternative hypotheses (H 1 ).

This indicates that organisational culture is a major determinant of organisational productivity.

Hypothesis 3

H 0 A change in organisational culture will not cause a change in employee work behaviour

A change in organisational culture will cause a change in employee work behaviour

H 1

Table 13: Change in Organisational Culture will cause a Change in Employee Work

Behaviour

Observed Expected Residual (O-E) 2

(O) (E) (O-E)

Disagree 3 12.5 -9.5 90.25

Undecided 5 12.5 -7.5 56.25

Agree 24 12.5 11.5 132.25

Strongly Agree 18 12.5 5.5 30.25

Total 50

Source: Field Survey, 2012

Test Statistics

change in organisational culture will cause a

change in employee work behaviour

Chi-Square(a) 24.720

Df 3

Asymp. Sig. .000

a 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is

12.5.

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Decision rule: Reject H 0, where x 2 calculated is greater than x 2 tabulated, otherwise, accept

H 1 .

Calculated (x 2 ) = ∑ (O – E) 2

E

309

12.5 = 24.72

Degree of freedom “d.o.f” = n – 1

Where n = number of rows

Therefore, d.o.f = 4 – 1

= 3

Tabulated (x 2 ) = At 0.05% level of significance, the tabulated value of x 2 for 3 degrees of

freedom is 7.815

Decision: Since the calculated x 2 is greater than the tabulated x 2 , we reject the null

hypotheses (H 0 ) and accept the alternative hypotheses (H 1 ).

This implies that a change in organisational culture will cause a change in employee work

behaviour.

Based on analysed data, the findings in this study include the followings:

(i) A large number of respondents 84.0% of the respondents agree that organisational culture

influence employee work behaviour.

(ii) 72.0% of the respondents agree that organisational culture is a determinant of productivity

level of the organisation.

(iii) 84.0% of the respondents agree that a change in culture will cause a change in employee

work behaviour.

(iv) 54.0% of the respondents agree that organisational norm is a major determinant of

organisational culture.

(v) Majority of the respondents (56.0%) agree that organisational artefact is a major factor of

organisational culture.

(vi) Organisational values influence employee work performance as 50.0% of the respondents

agree to this.

(vii) Adequate motivational factors improve employee work behaviour. 46.0% of the respondents

agree to this.

From the hypotheses tested, we are able to discover the following:

(i) In testing the first hypothesis, the calculated x 2 is greater than the tabulated x 2 , we therefore

reject the null hypotheses (H 0 ) and accept the alternative hypotheses (H 1 ). This indicates that

organisational culture has a significant influence on employee work behaviour.

(ii) When the second hypothesis was tested, the calculated x 2 is greater than the tabulated x 2 , we

therefore reject the null hypotheses (H 0 ) and accept the alternative hypotheses (H 1 ). This

indicates that organisational culture is a major determinant of organisational productivity.

(iii) Finally, when the third hypothesis was tested it was also discovered that the calculated x 2 is

greater than the tabulated x 2 , we reject the null hypotheses (H 0 ) and accept the alternative

hypotheses (H 1 ). This implies that a change in organisational culture will cause a change in

employee work behaviour.

CONCLUSION

In this study, the researcher tried to look at the analysis of the influence of organisational culture

on employee work behaviour with evidence drawn from Nestle Nigeria Plc.Questionnaires were

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administered to respondents who are employees at Nestle Nigeria Plc. to find out their opinions

and views about organisational culture and its influence on employee work behaviour. The main

focus of this study is to make recommendations that will help managements to create, maintain,

sustain and otherwise modify culture in a way that it will help improve employee work behaviour.

The conclusions we can deduce from the study among other things are that: (i) organisational

culture influence employee work behaviour in the organisation. (ii) organisational culture is a

determinant of the productivity level of the organisation in the sense that it influences

employee’s behaviour to work and it is the input of the employees to the organisation that

determines its productivity level. (iii) a change in organisational culture will lead to a change in

employee work behaviour in the sense that it is not what has been identified with the

organisation from time past. Therefore, organisations should make the changes in their culture

easy for their employees to learn and adapt to. (iv) organisational culture has a significant

influence on employee work behaviour.

RECOMMENDATIONS

The following recommendations are made to the management of Nestle Nigeria Plc. and

organisations that are interested in setting up or modifying their culture in order to improve their

employee’s work behaviour.

(i) Every individual has different culture and beliefs that he works with and when he comes to an

organisation that has a completely different culture and beliefs from his own, he must be allow to

internalise himself first with the organisation’s culture and beliefs to know whether he can cope

with them or not. It is the ability of the employee to cope with the organisations culture that will

determine how he behaves at work. It is strongly recommended that Nestle Nigeria Plc. should

encourage new entrants to get internalise first with the organisations culture to know whether they

can cope with them or not.

(ii) Adequate motivational factors must be put in place in the organisation for workers because it

improves employee living standard and thus gingers employee towards achieving higher

productivity. It is strongly recommended that Nestle Nigeria Plc. should provide adequate

motivational factors like housing allowance, car loan, holiday allowance, health allowance, etc

that will make their employee feel comfortable with themselves and their job and thus thrive

towards higher productivity. Hardworking and productive employees should also be compensated

as and when due.

(iii) When an organisation culture is unstable and changes from time to time, it makes the

employee discourage and tired of learning different culture all the time. It is strongly

recommended that Nestle Nigeria Plc. should operate with a strong culture and not weak culture.

It is a weak culture that changes from time to time. Strong cultures are cultures that are

established by the founders of an organisation to become the organisations way of life.

(iv) In cases where an organisational culture must be change, employees must first of all be

notified and made to learn the modification of the old culture or otherwise the new culture.

Organisations are recommended to always make their workers comfortable with their culture as

this will reduce the rate of employee turnover.

(v) Finally, organisational culture of Nestle Nigeria Plc. must be binding on all members and staff

of the company as this will encourage uniformity among members of the organisation and thus

enhance commitment and group efficiency.

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