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 

An International Journal Published by 

Academy of Knowledge Process 

www.akpinsight.webs.com 

Copyright © 2012. Academy of Knowledge Process 

Copyright © 2012 IJCBS 

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International journal of Contemporary Business Studies 

A journal of Academy of Knowledge Process 

Saddal H.A 

Editor-in-Chief 

Editorial Board 



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

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

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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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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 



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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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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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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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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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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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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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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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 


14




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. 


15




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 


16




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) 


17




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 


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 



Enrol 

ment 

in 

class I 

in 

2005- 

06 

Boys 47651 9692 12867 

Girls 46341 9464 12630 


18




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 



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. 


19




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) 


20




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 


21




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 




pp.22-34 


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 


22




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 


23




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. 


24




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: 





Agree 59 19.67 


Total 300 100.00 

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

efforts. 





Agree 100 33.33 


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 


25




5. Responses regarding the importance of work life balance 





Agree 103 34.33 


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: 


Yes 208 69.33 

No 92 30.67 

Total 300 100.00 

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


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 





Agree 223 74.33 


Total 300 100.00 


26




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





Agree 93 31.00 


Total 300 100.00 

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


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 


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. 


27




12 c Responses regarding the importance of job security 


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 


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 


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 


28




% 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 


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 


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 


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 


29




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. 


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. 


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 


1 33 11.00 

2 105 35.00 

3 96 32.00 

4 66 22.00 

Total 300 100.00 


30




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. 


31




• 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 


32




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: 


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


4. What does motivate me most? 

( ) The job that I am doing 


33




( ) 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) 


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? 


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


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 ………………………………………………………………………………… 


34




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 




pp.35-45 



35




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. 


36




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. 


37




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. 


38




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 


39




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: 


40




• 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




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




REFERENCES 

Abor, J. (2005). The effect of capital structure on profitability: an empirical analysis of listed 

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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. 



Sig. 



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. 



Sig. 



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. 



Sig. 



Financial 

Tax 1.066 0.3088 3.454 0.001 0.37 28.8 1.699 

leverage 


44




Table 6. results of hypothesis test at machineries and motorized vehicles. 


Adjusted 

Sig. 


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. 



Sig. 



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. 



Sig. 



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. 



Sig. 



Financial 

Tax 0.868 0.0797 10.88 0.00 0.790 122.12 2.184 

leverage 


45




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. 




pp.46-57 



46




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 


47




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). 


48




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. 


49




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. 


50




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 


51




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 


Total 50 



52





organisational culture is a major determinant 

of organisational productivity 


Df 2 



16.7. 


H 1 . 

Calculated (x 2 ) = ∑ (O – E) 2 = 

E 

112.67 

16.7 = 6.76 




= 2 





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 


Total 50 



change in organisational culture will cause a 

change in employee work behaviour 


Df 3 



12.5. 


53





H 1 . 

Calculated (x 2 ) = ∑ (O – E) 2 

E 

309 

12.5 = 24.72 




= 3 





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 


54




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. 


55




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Adjustment: Implications for Satisfaction, Tenure, and Career Success. Journal 

of Vocational Behavior, 44: 32-54. 

Buchanan, D. and Huczynski, A. (2004). Organizational Behaviour: An Introductory 

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