Impact of Financial and Non-financial Rewards on Employee Motivation and Employee Commitment among SMEs textiles sector of Karachi Pakistan

Abstract

SMEs in Pakistan are not performing according to their potential. Besides other factors, they do not have a well-structured rewards package, due to which the employee motivation and commitment are low. Thus, we have developed a new model to examine the effect of rewards and packages on employee commitment and motivation. We have recruited six enumerators to collect the data from the target population. The enumerators have distributed 400 questionnaires, and they received 385 filled questionnaires. The authors have used Smart PLS version 3.2 for statistical analysis. The developed model has five direct and two mediating relationships. We found support for all hypotheses. The results suggest that financial and non-financial rewards affect employee commitment and motivation. Commitment stimulates motivation. Also, employee commitment mediates (1) non financial reward and motivation and (2) financial-reward and motivation. The findings are consistent with the past literature. SMEs in Pakistan do not have a well-structured HR department, and they make reward-related decisions arbitrarily. Thus, we recommend that SMEs develop a policy for rewards that is rational and unbiased. We also recommend that they should balance non-financial and financial rewards.

Keywords

• motivation
• commitment
• financial rewards
• non-financial rewards