Intrinsic Value of Incentives Compared To Salaries: Can Organization Stop Paying Salaries?


 This research weighs significantly on challenging the present practice of compensation and rewards. Traditionally or conventionally, the organization reciprocates the gratitude to their employees in monetary terms. Non-monetary rewards being an exclusive section, it is not discussed in this research paper. Among the direct rewards, whether the companies should practice compensating their employees a fixed salary or pay only incentives for the tasks that are achieved? this question may not be welcomed by any employee as it touches the sensitive quotient. Nevertheless, organizations need to understand the right practice in the right era by implementing an intelligent framework. Equity Theory developed by Adams is laid as a foundation to encounter the present unfair reward system. Concurrent mixed-mode method research is done with 162 respondents (quantitative) and 15 respondents (qualitative). Multivariate analysis using SmartPLS 3.3.3 is executed to assess the measurement model and structural model to analyze the covariance between the constructs. The outcome of research claims that it is an ideal practice to implement task-based incentives in organizations rather than paying fixed salaries irrespective of the size or productivity of companies.


Introduction
The synergy in the organization is discussed intensely among scholars as a crucial element of human resource management practices (HRMP). The collective objective has to be singular and the motive to achieve it has to align with the rest of the fraternity (Hewett & Shantz, 2021). However, it is understood that the common goal has always (majorly) been subsided for personal accomplishments. Multinational corporations, small and medium enterprises, public institutions usually face the problem of optimizing personnel productivity and their corresponding compensation (Lee & Kray, 2021). In the 1960s large organizations devised strategies to motivate their employees with rewards, so that the collective objective on organizational success could be achieved. The strategy in Apple Incorporation was not only to cultivate patriotism in the organization but was also to identify the priorities of the individual. The moment, when an individual's priorities were deliberated it makes employees see where they intersect with organizational goals (Kaur & Randhawa, 2021). The familiar management tool viz. Management-by-objectives (MBO) enumerated that the employees should be driven to work with/for a common goal. (Drucker, 1954) popularized the concept of MBO through his book 'The Practice of Management. It conveys the objectives of the organization within the organization and then plow-in tools to adopt it commonly among all employees. It is understood that this allows the line managers to retrieve the work from workers without giving consistent directions. Here when individual priorities are synchronized with organizational goals, then it is considered a rightful approach. Similar to MBO, there are several management tools to improve the e cacy of individuals to improve organizational e ciency. Overall, the purpose is to get the best out of employees and attach their organizational goals.

Phenomenon of Salary
If offered what's demanded in high, then the prerequisite to fetch the offer will be the motive. One such trade was the concept of salary. It is well known that Salary is a term derived from a Latin glossary salarium, which means 'salt'. In ancient days, salt was in huge demand. Hence, if someone does work salt was offered to reciprocate the gratitude. Gradually, it became a right to claim salt for every work that is accomplished. Then this right transformed as policy in both businesses and kingdoms. Still now in the 21st century, this concept of salary is been carried. Salary is considered a powerful reward among all compensations (Park & Conroy, 2020). The major gap is, to determine or x the scale for work. How would one x USD 3500 per month as salary to a software engineer and x USD 1250 per month as salary to payroll personnel? On what basis? The rationale behind this is unclear. If it's about demand and supply of talents, then scavengers are to be paid more than project managers. If it's about quali cation, doctoral degree holders are to be paid more than machinelearning experts. In the least case, if it's about talent, then skilled pro le jobs are to be paid more than knowledgeable pro le jobs (Biele et al., 2009). Complete chaos has happened and organizations x the scale based on their terms. The tragedy here is, the employee presumes his or her PayScale with this prior experience. It would be fortunate if they get similar or higher scale, but the trend is usually negative, that is, people nd it di cult to get similar PayScale in their jumps. And the pandemic situation in 2020-2021, studies prove that both organization and employees are in two different extremes, whereby the former identi es to cut cost and latter wants to improve income (Kaur & Randhawa, 2021). Had there been a systematic rubric on xing salaries, these wouldn't have happened. The world today has several signi cant systems of policies. Regretfully, there are no common formulae for calculating salary (Stiegert et al., 2021).
Arguments claiming that it cannot be common due to differences in industries, organization, talents etcetera have to be quashed because the salaries cannot be based upon these above. It has to be based on an individual's outcome irrespective of any elements. But the experts have argued like, to achieve a task, how much can an organization pay? To accomplish the target, how much can an organization compensate from their budget as remuneration? To ful ll the goal, how much can an organization x the pay? These experts are answerable for the chaos now. In a way, these experts are answerable for an organization's dip in e cacy.
Two vital factors can deteriorate an organization. One is high competition and the other is weak-manpower. If manpower is not nurtured or maintained properly then it's a failure. An important aspect in nurturing manpower is compensation & rewards. One cannot refuse this fact. The underlying fact is, this stands as a motivator too.

Phenomenon of Incentives
The concept of Incentives is not new. Usually, this is discussed under motivation. A reward of remuneration payable on achieving a task is called an incentive. This works better if there is a need to replace salaries (Afridi et al., 2020). However, the idea was not to withheld salaries. Off later from 2020, the majority of multinational companies have started embracing this concept.
It was Coca-Cola and General Electric (GE) in the 1920s started the practice of incentives (Bouranta et al., 2019). They hired people and set targets individually.
These hired people were not on a payroll, however, they were holding the identity of the company and exerted the tasks. For keeping the competition between them, the companies started to reward cash more than what was committed. This made performance contagious and the entire salesforces started performing e ciently. No boss, no workplace, no holiday approval needed but still, people were able to get paid beyond their expectations (Tsourvakas & Yfantidou, 2018). For companies, this model worked because none of their salespeople were non-productive. If by any chance anyone is non-productive, the individual will not be a salesperson. Again, there was no space for legalities to intervene for terminating them, as the entire process was without any offer letters (Chi et al., 2018). This model started spreading to all leading companies in those days and got titled as 'Incentives'. At one point in time, the supply & demand of manpower along with economic depression, made these bonuses and incentives to be in limelight. People preferred it. It was the inception of anonym 'no pain, no gain', and e cacy of productivity was above the par. But eventually, this model was nulli ed due to a change in lifestyle of people where they conceived to earn more by working less. So, salaries were back on track than incentives. Still today in the 21st century, organizations carry out a mixed strategy in compensation (Wamba et al., 2017).

Theoretical Framework
Several theories in Human Resource Management relay a uni ed synonym, that is, to optimize the resource (manpower) (Harney & Collings, 2021). This could be through motivation, training, rewards etcetera. Equity Theory was developed by J. Stacy Adam during the 1960s. This theory claims that the output of an individual can / should be measured by the inputs given on respective exertion. In simpler terms, inputs can be as each employee's contributions or rewards, whereas, outputs are consequences with another. Adams insists that input has to equivalent to output (or) rewards has to be equivalent to accomplishment's value. The more the closeness of output and input, the higher is the satisfaction for employees. This astounding theory stood as a strategy for organizations to x the pay scale for their personnel. Figure 2 is a pictorial representation of Equity Theory.
Based on the types of rewards illustrated in Fig. 3, the direct rewards are examined in this research by analyzing their covariance and correlation of indicators. The literature of each of these direct rewards is highlighted in the following section.

Literature Review: Salary xation
An organization will opt to follow particular remuneration-regulation to minimize cost or to maximize pro t, or for both. The general thumb rule for calculating salary is (Almusaddar et al., 2018), Whereas represents salary, FS represents functions of sales and CS represents consumer satisfaction (Kalra et al., 2003). The organization offers any permutation and combination of compensation such as commission, salaries, task-based commission, incentives etcetera for the sole purpose of maximizing the bottom-line, that is, pro t. any combination of salary, sales commission, and satisfaction-based commission to maximize pro t. All the above elements have their own merits when it comes to evaluation. Several Human Resource experts claim that salaries are considered a signi cant strategy among all, to attract best-output from employees (Biele et al., 2009). Through this research, this is been challenged. Not for the sake of challenging, but for identifying whether this is still a better strategy post-2020 pandemic era and post-2019 IR 4.0 era.

Incentive Fixation
According to Bayesian equilibrium, the organization upgrades the employee's compensation scheme based on performance. Employees are offered additional compensation by comparing the increased sales done by individuals. In the context of this research, the salaries will motivate the person to maximize their interactive time with prospective consumers and consequently maximize the pre-sales exertions as described by Parasuraman in SERVQUAL theory (Kar, 2016). The purpose of Task-based incentives goes one step higher by ensuring that employees would consistently focus on pre-sales and post-sales exertion, like responding to customer's queries, sorting out any administrative concerns, etcetera. Further to that, it is understood that both salaries and task-based incentives stand as mechanisms to upgrade the productivity of employee's performance in an organization (Kishore et al., 2013).

Compensation
The process of Compensation is based upon philosophies in Compensation and strategies that include policy, structure, procedure, and principle on providing appropriate returns to employees or stakeholders in terms of pay or bene ts (Rosolen & Maclennan, 2016). He also claims that this process constitutes measuring the job value and maintain the pay pattern. Determining factors for compensation are the performance of the employee, the competence of the employee, skills of the employee., etcetera. If these are transposed to equivalent bene ts, then the process of compensation is complete. It has to be noted that compensation is merely not only about cash or money. This is wider than nancial rewards. Several types of research are done on non-nancial compensation and those have become eye-openers for Human Resource Managers (Kim et al., 2017) (Afridi et al., 2020) claims that compensation is a core element in human resources activity. If the principles are properly laid, then there could be evident productivity in the company. It is the responsibility of the HR department to concurrently revise the compensation & bene ts strategies depending upon growth or any internal factors in the organization. Since these deal with individual performance, there has to be an extensive interaction between employees and employers to arrive at compensation-slab. According to (Bouranta et al., 2019) compensation range enumerates the span between lower and higher PayScale of salary in the organization. The range of salaries in an organization is represented with grades of employment level which indicates the job value in the market. These are reviewed periodically as shown in Table 1.

Exploring Compensation and Bene ts
The organization recruits' employees to become part of the team to achieve organizational objectives and employees join the organization to gain monetary rewards as cash or other bene ts to growing in their career. One of the greatest factors, why individuals get employed in companies rather than embarking on their own business, is due to xed earning of rewards consistently (Arkin, 2008). Apart from the company's notoriety and work pro le, the cash advertised as compensation is urgent in drawing in individuals to work for the organization. The more the stipend and bene ts are advertised to workers, the more is their commitment, inspiration to work and do well. In any case, companies that offer lesser compensations see a tall whittling down rate and less e ciency from workers (Bhaumik et al., 2019). All these components offer assistance in making recompense and bene t an imperative gure in overseeing the workforce.
Pay rates for employees are xed by a few parameters like academic quali cation, work experience etcetera. While hiring personnel for the Management team, abilities like leadership, networking with industry, communication skills etcetera are considered (Eklinder-frick & Åge, 2020). Compensation has few ingredients such as variable pay, xed pay and certain bene ts. Figure 4 depicts the elements of compensation.

Commission
Commissions are considered as one of the common compensations to pay employees for obtaining consistent performance. The motive is to spread the organizational intention that the organization wants to create a solid reward for their employees to engage their best output in the prescribed job or task. The industry norm is 5% of total order billing, however, this depends upon the industry and organization. Among all compensation elements, the commission is a stronger motivator to perform more among employees (Kishore et al., 2013). If employees are assigned a task to accomplish in a stipulated period, a few of the coherent tasks may not be explicitly included in the calculation of compensation. This could be either because of unavailability of task-value or could be due to intentional cut in the framework of compensation devising strategy (Neessen et al., 2021). Whatsoever, it is important to x a value (preferably in monetary value) for each sub-task, this not only will enable to understand the process but also makes the process transparent (Urrila, 2021). By all means, the commission is regarded as a solid compensation scheme. The primary or only demerit is, the commission is not consistent like salaries. So, people tend to avoid getting commission and therefore become an employee of an organization to have sustainable income irrespective of sales or output, or performance. Below Fig. 5 illustrates how the commission has an edge over bonuses (Kishore et al., 2013) It is a fallacy of assumption to assume that the highest paid jobs are the best performing industry. It is also a myth to assume that the demand and supply of manpower determine the value-xation of compensation to them (Flepp et al., 2021). Following Table, 1A illustrates the fact that the highest paid jobs not necessarily be the most performing industry. From the above table, it could be understood that xation of compensation is not done based on the organization's performance in revenue generation, whereas, it's based on the market value of a particular skill set. Hence, if the market value is set for every skill-set as industry practice, then every organization has to make exact revenue. Though this is a prerogative to be as a theory, it is next thing to impossible to witness it. For instance, assuming all other things remaining the same, there are two similar skill-sets (a) and (b) is xed to receive $(n) for their employment in two different organizations respectively as (x) and (y), then the bottom-line of both (x) and (y) should be exactly same because the skill-sets deployed in same and their value is same (Harney & Collings, 2021). But this never happens. Never history of business, it is found two similar companies in one industry generate similar revenue because of deploying similar skill-set of employees (with ceteris paribus).

Research Framework
Based on the theoretical framework (illustrated in Figs. 2B and 2C), the following conceptual framework is constructed for this research. The latent constructs are formulated after a thorough literature review. Institutional policies are denoted as policies and hypothesized as moderating variables, whereas the xedsalary, task-based incentives, commission are hypothesized as independent variables. The target or outcome variable or dependent variable is improvising compensation and bene ts. Below Fig. 6 illustrates the conceptual framework of this research and Fig. 7 illustrates the covariance between each latent construct that is to be measured in the following sections.

Research Methodology
A concurrent mixed-mode method was executed for this research. The rationale for using the concurrent mixed-mode method is due to the velocity of its impact. With a singular approach, the recommendations cannot be accurate thus both quantitative and qualitative were adhered to. Importantly, both were done simultaneously to avoid differences in the period of observation. A sample of 15 respondents was considered for a qualitative method based on (Morse, 1994). And 162 respondents were considered for a quantitative method based on (Krejcie & Morgan, 1970), as the population of 280 employees was identi ed in four different sectors such as banking, education, Information Technology, and manufacturing companies in Singapore. Singapore is considered as one of the main hubs for business (Raju, 2018), thus the geography of Singapore was chosen to collect data from respondents. A proportionate strati ed random sampling technique was used to select respondents, that is, 25% from each stratum (sector in this research) were taken to arrive population. Further to that, Krejcie and Morgan's table for sample size calculation was used to arrive at nal respondent numbers.
In this research, demographics and descriptive statistics are not listed as it has less relevance. The focus was more on structural equation modeling, as moderation testing is considered as important to arrive at the recommendation (Ringle, C. M., Wende, S., and Becker, 2015). A revolutionary or challenging topic requires solid proof to justify its signi cance (Raju, 2021), hence the process in each phase is vital. If policies tend to have a signi cant role to impact the compensation while measuring task-based incentives, then it could lead to a big nding.

Data Analysis
As mentioned in the previous section, PLS-SEM (partial least square-structural equation modeling) analysis is done to measure and assess the indirect effects, direct effects, and moderation effects. SmartPLS 3.3.3 (Ringle, C. M., Wende, S., and Becker, 2015) version is used to analyze the data.

Measurement Model
The measurement model is used to compute the reliability, composite reliability, convergent validity, and discriminant validity. Following Fig. 9 is the path coe cient of the research model

Reliability and Validity
Further to Table 2, the construct reliability and validity are illustrated in Table 3 which is derived from SmartPLS analytical tool.     The values of discriminant validity should be above 0.85 according to (Fornell & Larcker, 1981). This is arrived at by the square root of AVE for that particular construct. Moreover, as a thumb rule, the value of a particular construct should always be higher than the remaining constructs. For example, in above Table 6, the value of moderating effect 0.815 which is greater than other sub-value of other constructs.

Structural Model
The structural model is to assesses the relationship between the latent construct's covariance (Raju & Phung, 2020 R square determines the variance of dependent variables explained by independent variables (Jospeh F. Hair, 2006). It is understood that the value above 0.75 is substantial, 0.50-0.74 is moderate and anything below 0.02 is weak. In this research, the R square value is 0.935, which can be considered excellent. P-value is expected to be above 0.05 which means the probability of occurrence of a particular hypothesis is like to be 95%. In Table 5, it could be understood that all p-values are higher than 0.05 except Fixed Salaries ◊ (towards) Improvising compensation and bene ts, which is like 0.595. Learning is, Fixed Salaries have less importance on compensation according to 162 respondents. Task based incentives has not been practiced full-edged in any organization, hence it is not worth to risk it in business.

15.
Possibilities of consistent revenue and pro t margin will be high if Task based incentive scheme is following Low All above analytics were quantitative, whereas, phenomenological analysis is done to su ce qualitative approach. Following 5 questions (semi-structured interview) were asked to 15 respondents face-to-face in Malaysia, 1. Do you prefer to get a salary or incentives?
2. How does the process of compensation and bene ts work in your rm?
3. How is the mentality of employees when salary is reduced?
4. Why not the organization pay for each task rather than a monthly salary?
5. What are the demerits of salary xation and incentive xation?
As this research is focusing on incentives as a better option compared to salaries, the phenomenon chosen was 'Task-Based Incentives'. The following analysis is done based on this phenomenon.
The common perception is, employees, feel compensation through salaries is less-risky and has the feature of job security. Despite this, it is identi ed that if companies or institutions want to survive, mere payment of salaries will not be helpful. Organizations will face stagnation at one point in time if salaries are alone rewarded to employees (Mohd Adnan & Valliappan, 2019).
After qualitative data collection (interview) is done, the responses were categorized into 'favoring Salaries' and favoring task-based incentives. It is understood that the majority of respondents favored task-based incentives as best practices to revive the growth of the organization. Hypothesis testing is the most crucial part of any research. In this research, except xed salaries vs. compensations, all other hypothesis is positive. The reason behind why 'salaries don't have signi cance to improvise compensation', is because people tend to see xed salaries as a redundant element (Polas & Raju, 2021). Hawthorne effect would have played a role to distract the meaning of questions in the questionnaire, that is, respondents would have assumed that the respective item is targeted to understand the notion of xed-salary towards employee motivation rather than improvising compensation. This assumption is considered because, in general salaries cannot be eliminated in any circumstances from compensation. But in this research analysis, it was understood several respondents disagreed unanimously. This could be an outlier or a serious nding to be noted through this research. However, the researcher through this research, considers the latter i.e. abide with respondent's response. Companies need to focus on needs and requirements when it comes to devising policies for compensation and bene ts. Salaries are a concern, at least from the post-2020 pandemic period (Flepp et al., 2021). It is time for companies to focus to compensate their employees based on task accomplishments.

Conclusion
Through this research, it is understood that task-based incentives are a rightful practice for companies to sustain their business engagements. Paying xed salaries as per market standard is collateral damage to companies, particularly those that are inconsistent losses of more than ve quarters (Stiegert et al., 2021). At the same time, compensation cannot be bought down publicly across all companies as it may spread negative emotions among the fraternity. The solution for the right balance is task-based incentives. This research identi es and submits the rationale for this. The limitations such as biased opinions, more sample size, geographical selection of respondents could have played a major role in this research, however, the unanimous answer from respondents were singular. It is time for a change in human resource practice. This empirical research shall stand as the pioneer to invite further researches in this area to either challenge or substantiate the ndings. Research Framework for the respective study Path Diagram: Measurement Model