CHAPTER-1

INTRODUCTION

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1.1 Background of the Study:
Master of Business Administration (MBA) is a professional course and the project work
program is an important part of Master of Business Administration (MBA). It creates a
unique opportunity for the student to apply their theoretical knowledge into practice and gain
valuable real world business experience. During the work period, students can also realize
existing business condition apart from having opportunities to solve the problem using
various analytical tools.

For any business school student, only curriculum activities are not enough for handling the
real business situation. So it is important, to know about the field of business. This project
work is originated as a partial fulfillment of the MBA program on ―“The Impact of
Reward on Employee’s Productivity: A Study on AB Bank Ltd”. Project Supervisor of
the MBA Program is instructed by Vhokto Kumar Biswas, Assistant Professor, Department
of Business Administration, ASA University Bangladesh (ASAUB). On the basis of working
experience and under the supervision of him, it was a great endeavor to prepare this project,
which relates to the theoretical knowledge with the practical work situation.

1.2 Significance of the Study:

The study has the following significances,

 Brings awareness to the banking sector how the motivation of employee can be affected
by the level of rewards provided to their employee.
 Helps the management of the organizations to understand the importance of reward and
how it could be effectively delivered to the employee to improve their performance.
 Give a way or serve as a source for other researchers who want to make further
investigations in the area and to conduct detailed work on the issues.

1.3 Objectives of the Study:

The objective of the study can be viewed in two forms:
 The broad Objective
 The specific Objective

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1.3.1 The Broad Objective:

The main objective of the research is to assess the effects of reward on employee productivity
in AB Bank Ltd.

1.3.2 The Specific Objective:

To measure the relation between extrinsic reward (payment, benefits, promotion,

work condition and supervision) and employee motivation.
To identify the relation between intrinsic reward (recognition and work content) and
employee motivation
To determine which types of rewards most contribute to work motivation of
employee.

1.4 Methodology of the Study:

1.4.1 Sources of Data:

The data collection method of the study was based on secondary sources. All of the
information was collected from secondary sources.

Secondary Data Collection:

The secondary data in this study are collected from ABBL. These are-

 Bank's Annual Report 2012 to 2016.

 Information from AB Bank Ltd. Website.
 Internet was also used as a source of information.
 Textbook.

1.5Scope &Limitations of the Study:

Due to time and other constraints, the scope of the study was delimited in three categories
namely, geographically, conceptually.

The first one is geographically, only employee of the bank located in BCIC Bhaban, 30-31,
Dilkusha C/A Dhaka 1000, Bangladesh. Secondly conceptually, the study only focused on
extrinsic reward like payment, benefits, promotion, working condition, recognitions,
supervision and intrinsic reward like work content and employee work motivation.

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Thirdly methodologically, the study has followed qualitative research approach in AB Bank
Ltd.
Due to the fact that, the company non-clerical positions are outsourced and reward practices
is not implemented for temporary workers.

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 CHAPTER-2
PROFILE OF AB BANK LTD.

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2.1Historical Background:

The formally known State Bank of Pakistan ‘was renamed as Bangladesh Bank ‘right after
Bangladesh‘s independence. The Bangladesh Bank automatically became official foreign
exchange reserve institute. It was too accountable for currency control, monitoring exchange
and credit control. In the early 1970s, the government decided to permit foreign banks to
continue their business and nationalize the local banks.

In that very decade of 1970s, the primary concern of the government was to develop the
country‘s agricultural industry. This resulted in the Krishi Bank extending loans to more
farmers. In the later decades, however, the county‘s focus shifted to industrialization;
resulting in various difficulties in the economic growth process.

Lack of proper private activity guidelines and proper methods on loan giving were more signs
of these problems. It was not until the late 1980s that these difficulties were being overcome
and compensated for the agro sector. However the financial institutions failed to recover the
loans the industrial sector. Interestingly, Grameen Bank has set an ideal example of how
things should be managed during this devastating time. The bank gave out a small amount of
loans to the poor population in order for them to be self-employed. The selection process of
giving out these loans was extraordinary. They gave loans mostly to women who were
subordinated; these women became self-employed and hence paid back when were helped
with guidance to run their business.

In the mid-1980s, the government adopted new policies for recovery. It did not work.
Government-owned banks continued to fail in recovering the loans.

In the 1990s, many private banks started to emerge. A local group of companies became
aggressive in investment so the money flow was rather big. Bangladesh Bank played key role
in managing these private banks with modern outlook. As consciences the banking sector
grew many folds.

Throughout the 2000s, governments maintained positive economic policies. The economy
grew, so did the Bangladesh's banking sector and business sector. Since 2011 however, many

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banking scams took place, mainly at government owned banks. This created a bad vibe,
which is still to recover from.

2.2Profile of the AB Bank Ltd.:

The Company was also issued a Certificate for Commencement of Business on the same day
and was granted license on October 05, 1999 by Bangladesh Bank under the Banking
CompaniesIntroducing Bangladesh to its very first private sector bank; AB Bank Limited was
incorporated on 31st December, 1981. Arab Bangladesh Bank as formerly known started its
effective operation from 12th April, 1982 with the mission to be the best performing bank of
the country.

With an ambition to secure its place as the leading service provider, creating lasting value for
its clientele, shareholder, and employees and particularly for the community it operates in,
AB has formulated a golden heritage and an envious legacy that may not be imitated by
many. Achieving plenty of milestones and incorporating numerous changes over the last 35
years, AB has always been authentic to its desire of being the technology driven innovative
bank of Bangladesh. To excel this new era of technological triumph, AB has successfully
introduced internet banking, SMS banking, cutting edge ICT, state-of-art network solution,
24/7 ATM service and many other e-products.

AB has extensively widened its services over the last three decades in both home and abroad.
The bank opened its very first branch at Karwan Bazar on 12th April 1982 and now has a
successful footprint of 105 branches including one overseas branch in Mumbai, India and 270
plus ATMs spread across the country. it has associated 6 subsidiary companies including one
exchange company in UK, Off-shore Banking Unit and Custodial services with its core
banking activities. The Bank opened its Representative Office at Yangon, Myanmar and at
London, UK for extending its foreign operations.

2.3Mission, Vision, Goal and Core Values:

2.3.1 Mission
To be the best performing bank in the country.
2.3.2 Vision

To be the trendsetter for innovative banking with excellence & perfection.

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2.3.3Core Values
Our Compliances
We consider adherence to national policies and objectives a priority for giving our customers
the best financial support with corporate integrity, meaning a fully compliant bank along with
involvement in social development.
Our Customers
As a bank, we are judged solely by the successful execution of our commitments; we expect
and embrace that form of judgment. We are accountable for providing the highest level of
services along with meeting the strict requirements of regulatory standards and ethical
business practices.
Our Shareholders
We assure the best returns to our shareholders by committed prudent performance.
Our Team Members
We provide secure, satisfying employment, ensuring the contribution of each individual to
the success of ABBL.

2.4 Objectives and Goals:

ABBL’s main objective is to maximize profit through customer satisfaction, which very
much reflexes the idea of marketing concept. Its objective is to remain objective. The bank
will support al constructive reforms that are in the national interest and encourage more
competition and choice for the people. Besides investment in trade and commerce, the bank
will participate in the socio economic development of the priority sectors like agriculture,
industry, housing and self-employment in the country. It also wants to ensure high return on
investment, sound growth and profit and service with different service products.

2.5ABBL’s Corporate Social Responsibilities

In recent times, CSR is receiving increasing attention in the business world, government
policies, industry events, advertising space, and other arenas in these parts of the world.
Although the concept of CSR may have been formally introduced through to the financial
sector of Bangladesh in 2008, chiefly by Bangladesh bank however, in similar approach, the
local banking community has been involved in benevolent activities. AB, which has remain a
responsible member of the society seems its journey that begun 28 years back, has indeed
duly played its societal role of business. AB, however, feeling the need to carry out its social

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responsibilities in a more organized way, formed Arab Bangladesh Bank Foundation (ABBF)
in the year 2003, which eventually became the vehicle for specific program oriented CSR
activities of the bank.

            AB conducts it CSR in 2 ways- policy driven and through direct participation in
specific programs. However, AB intends to adopt CSR practices, more in the formal and
structured manner in light of the Bangladesh bank guidelines for mainstreaming CSR
practices in the financial sector. Future efforts of the bank in respect of CSR will include
more involvement of its stakeholders in terms of their expectations and needs in order to
incorporate more responsible business practices in all of bank’s functions and operations with
a goal to fulfill social, economic, environmental, and ethical responsibilities of the bank.

            Total involvement for CSR activities stood at tk. 1.5 crore at the end of the year 2016.
AB channelized this CSR outlay in diverse areas judging from need and importance it
attaches to the bank’s perspectives.

            ABBL believes that CSR is first and foremost a commitment to contribute to the
society for improving the quality of lives of its people, particularly for that segment of the
people who are under privileged and less fortunate in terms of basic needs such as food,
health, education, housing etc. and also alongside to remain a sincere benefactor of the
country’s rich heritage of arts, culture and sports.

            AB has always tried to respond to the changing needs of the society and stood beside
the affected one’ sin times of crisis of the world, be it a natural disaster or tragedies taking
place through immortal act of man. In the past, ABBF participated in disaster relief
operations for the landslide victims in Chittagong, SIDR affected people of the coastal areas
and for the flood affected people across the country. Bank also ran a media campaign for
SIDR Rehabilitation Program at that time which later won the “Best TVC Jury Award” from
Bangladesh Journalist Association. ABBF donated a substantial amount to Bangladesh
Organization for Disabled Advancement (BODA) for making the disabled blinds self-reliant
and skilled through a special training called “Applied ICT”. AB also made donations to
organizations like “WahidulHaqueKarmoParishod” and to “MonirSmritiSangsad”. AB’s CSR
activities also included contribution of the treatment of prominent cultural artist, donation for
procurement of training, room equipment for the DSE training academy, etc besides regular
sponsoring in different publications in the form of advertisement which are not widely

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circulated but regarded as sincere efforts for the benefit of the society is also viewed by the
bank as a part of its CSR activity. The bank also ran and awareness campaign in a private
radio station for creating awareness among the general public about the bad impact of money
laundering in local economy.

Some CSR activities of ABBL are given in the followings:

 Standing beside the families affected by BDR tragedy.

 Warm clothes/blanket distribution to the affected underprivileged and destitute
people.
 Donation to Bangladesh Organization for Disabled Advancement (BODA).
 Support to Cancer Care Center.
 Caring for the Environment.
 Patronization of sports (2nd AB Bank Cup Golf Tournament, ABBL Summer Cup
Golf Tournament, ABBL SirajSmriti Cricket Tournament)
 Health and Safety of employees.

2.6Corporate Information:

Name of the Company

AB Bank Ltd

Legal Form: A public limited company incorporated on 31st December, 1981 under the
Companies Act, 1913 and listed in the Dhaka Stock Exchange Ltd and Chittagong Stock
Exchange Ltd.

Commencement of Business

27th February 1982

Registered Office

BCIC Bhaban, 30-31, Dilkusha C/A

Dhaka 1000, Bangladesh.

Tel: +88-02-9560312

Fax: +88-02-9564122, 23

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SWIFT: ABBLBDDH

E-mail: [email protected]

Web: www.abbank.com.bd

Auditors

S.F. Ahmed & Co.

Chartered Accountants

Tax Consultant

K.M. Hassan & Co.

Chartered Accountants

Legal Retainer

A. Rouf& Associates

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2.6Management Hierarchy of AB Bank Ltd.:

Hierarchy of Board of Directors of AB Bank Ltd.

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2.7Organizational Structure of AB Bank Ltd.:

Organizational Structure

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2.9Financial achievements:

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2.10 Financial Performance of AB Bank Ltd. (2012-2016):

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 CHAPTER-3

Employee Work
Motivation

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3.1. The Concept of Motivation
Different authors define motivation in different ways. Torrington et al., (2009), defined the
term as the desire to achieve beyond expectations, being driven by internal rather than
external factors, and to be involved in a continuous striving for improvement.

Armstrong (2010), describes motivation as the force that energizes, directs and sustains
behavior.

Motivation theory explains how motivation works and the factors that determine its strength.
It deals with how money and other types of rewards affect the motivation to work and level
of performance. It therefore influences decision on how people should be valued, the choice
and design of financial rewards and the use of nonfinancial rewards.

The most practical definition proposed by different social scientists is that, motivation is a
psychological processes that origin the stimulation, direction and persistence of behavior.

3.1.1 Employee Motivation

The direct effect of rewards is on employees‟ motivation. Various definitions of motivation
exist. For this thesis, employees‟ motivation is seen as the employees desire to work and
perform well in order to contribute to organizational or project success. Two types of
motivation exist: Intrinsic and extrinsic motivation. Intrinsic motivation is “self-generated”
and means employees are motivated to work because of the work while extrinsic motivation
is generated by external stimulus such as rewards.

3.1.2 Types of Motivation

There are two types of motivation at work as originally identified by Herzberg et al (1957).
These are:-
Intrinsic motivation– this is derived from the content of the job. It can be described as the
process of motivation by the work itself in so far as it satisfies people’s needs.
Intrinsic motivation can arise from the self-generated factors that influence people’s behavior.
It is not created by external incentives. It can take the form of motivation by the work itself
when individuals feel that their work is important, interesting and challenging and provides

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them with a reasonable degree of autonomy (freedom to act), opportunities to achieve and
advance, and scope to use and develop their skills and abilities.

Three perspectives were identified in the literature about how rewards affect motivation and
hence reward practice. First, extreme opponents of rewards argue that rewards negatively
affect employees‟ motivation under any circumstances. Accordingly, the extreme reward
opponents completely refuse the use of rewards. In contrast the extreme proponents of
rewards argue, rewards positively affect employees‟ motivation under any circumstances.
Accordingly, they advocate the use of one universal reward style and propose a best practice
approach. Finally, modest reward proponents argue that the rewards effect on employees‟
motivation may be both, positive or negative. The effect depends on some variable factors
that lead to different good practices in rewarding but no universally best practice.

Extrinsic motivation– It arises when management provides such rewards as increased pay,
praise, or promotion. The extrinsic motivators can have an immediate and powerful effect,
but this will not necessarily last for long.
Extrinsic motivation occurs when things are done to or for people to motivate them. These
include rewards, such as incentives, increased pay, praise, or promotion; and punishments,
such as disciplinary action, withholding pay, or criticism.

3.2. Theories Related to Motivation

A central aspect for all organizations is to motivate their employees. From an organizational
perspective, the motivation is important due to the fact that it can empower high-performing
employees to stay within the organization. Additionally, the employees can through a higher
degree of motivation develop their overall skills in their specific job task and be more
engaged to perform at a higher level.

The most practical definition proposed by social scientist that, motivation is a psychological
processes that origin the stimulation, direction, and persistence of behavior. Motivation
theory examines the process of motivation. It explains why people at work behave in the way
they do in terms of their efforts and the directions they are taking.

Thus motivation becomes those psychological procedures that cause the arousal, direction,
and persistence of voluntary actions that are goal directed. The features such as incentives

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and rewards are the most favored factors for employee motivation programs. However, the
performance of employee job satisfaction is an imperative motivator and an arrangement of
psychological and environment circumstances. Motivation programs are the key component
of incentives, rewards and recognition as different organizations correlate success factor with
employee performance. Employees are completely motivated when they achieved their needs.

Motivation theories can be classified as content (need) or process (approach to motivation)

theories. The content theories attempts to identify the specific factors that motivates people
and it helps us to understand what people will or will not value as work rewards.
Alternatively, process theories offer more dynamic approach and are more interested in
understanding the process of developing motives. Thus, there is less emphasis on specific
factors that cause behavior.

3.2.1 Content Theories of Motivation

Hierarchy of Needs Theory

Maslows theory stated that individuals are motivated to satisfy a number of different kinds of
needs, some of which are more powerful than others. Maslow argues that until these most
pressing needs are satisfied, other needs have little effect on an individual’s behavior. In other
words, we satisfy the most proponent needs first and then progress to the less pressing ones.
As one need becomes satisfied, and therefore less important to us, other needs loom up and
become motivators of our behavior.

According to this theory, once the needs at a particular level in the hierarchy of needs are
satisfied, they are no longer a motivating factor for an individual. The five levels of hierarchy
are satisfied, they are no longer a motivating factor for an individual. The five levels of
hierarchy are Physiological needs, security needs, social needs, esteem needs and self-
actualization needs. Maslow represents this prepotency of needs as a hierarchy. The most
proponent needs are shown at the bottom of the ladder, with prepotency decreasing as one
progress upwards.

Maslows five levels of hierarchy of needs from the top to the bottom are mentioned below.
 Self-Actualization – reaching your maximum potential, doing you own best thing.
 Esteem – respect from others, self-respect, recognition.

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  Social Needs (Belonging) – affiliation, acceptance, being part of something.
 Security (Safety) Needs – physical safety, psychological security.
 Physiological Needs – hunger, thirst, sex, rest.

The basic needs are arranged in a hierarchy where the most basic need emerges fist and the
most sophisticated need last. In other words, the higher-order needs including belonging,
esteem, and self-actualization are not seen important until the lower-order needs which are
safety and physiological are satisfied. Managers should find out what motivates the
employees at each of the levels and develop a reward strategy.

Maslow's hierarchy of Needs has been criticized because there is little evidence that support
its strict hierarchy and the fact that people satisfy only one motivating need at a time. The
theory also fails to prove any clear relationship between needs and behavior, and is therefore
unable to predict when a specific need will be manifested.

ERG Theory

According to Alderfer, there are three groups of core needs - Existence, Relatedness, and
Growth coded as (ERG theory). Alderfer‟s three cores needs include the five needs of
Maslow‟s need hierarchy and also define the differences between the two theories. First of
all, Alderfer has recognized that more than one need can be operative at the same time, and
second, if the gratification of a higher level need is stifled, the desire to satisfy a lower level
need increases. In general, ERG theory represents a more valid version of the Maslowian
need hierarchy. Robbinsputs in this way: ERG theories, argues, like Maslow‟s theory, that
satisfied lower-order needs lead to the desire to satisfy higher-older needs; but multiple needs
can be operating as motivators at the same time and frustration in attempting to satisfy a
higher-level need can result in regressions to a lower level need.

Hertzberg’s Two-Factor Theory

A well-cited motivation theory is Hertzberg‟s two-factor theory. This theory argues that
employees have two different factors, which are named, satisfiers and dissatisfies. The
dissatisfies can only provide that the employees within the organization are not dissatisfied,
and the satisfiers are therefore the factors that could increase employees‟ motivation. The
dissatisfies can for example be high salary or bonuses that employees are working in. These

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are factors that need to be fulfilled so that employees do not feel uncomfortable. However,
these factors cannot generate satisfaction for the employee. The satisfiers on the other hand,
which for example could be personal development, greater responsibility and the work tasks
itself, can satisfy the employees.

According to Hertzberg, specific emphasis should be put on tasks that the employees
associate with the job task, or the results from these tasks. The organization should to a
greater extent put effort on personal development and recognition for a well-done work or
through the use of promotion, which are more intrinsic motivational aspect that to a greater
extent should be emphasized on.

Goal-Setting Theory
Latham and Locke (1979), argue that setting goals are a fundamental aspect in achieving
motivational effectiveness. In addition, the authors emphasize that those goals, which are
unrealistic and arbitrary, could become a demotivating aspect for the organization‟s
employees. According to their analysis, goals that are designed to as lightly difficult approach
are the ones that to a greater extent are motivating the employees to greater productivity. On
the other hand, goals that are too hard to achieve or too easy to reach is resulting in a less
productive action by the employees.

 According to Locke and Latham ,goals are mainly serving four different mechanisms.
Firstly, the goals serve as a distinct directive function; this allows the employee to, at a
greater extent, focus on goal-oriented activities, instead of focusing on activities that is
beyond the goals. This mechanism provides the fact that the firm can align the employees
with the organization’s overall targets, when well-designed goals are used.
The second aspect that Locke and Latham points out is that goals allow employees to take on
greater effort and is functioned as a stimulating function. If the organization had tougher
goals, the employees would to a larger extent put more effort in comparison with low-setting
goals, which provide less effort by the employees.

Thirdly, goals are providing persistence affection to the employees, which imply that
employees that control their own time to reach the goal increase their effort in the task.
Finally, the authors describe that goals are encouraging employees to use their overall
knowledge and expertise to solve the task.

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To reach goals, commitment is essential in the sense that the employees are dedicated to
reach the goals. This is especially important when the goals are more complex, since greater
complexity requires higher efforts in comparison with lower level of complex tasks.

Another vital aspect in reaching more effective goals is to provide employees with constant
feedback from the managers. This feedback is fundamental since it allows the employee to
receive comments on progress to reaching the goal. This feedback can enhance the effort,
since unaware low-preforming employees is more likely to enhance their effort to achieve the
goal if they are well aware of that they are below the current goal level. Goal effectiveness is
also depending on the tasks complexity, which implies that it is of great importance that the
goals are designed properly to suite task. The motivational effect is underpinning that the
goals need to be achieved, and a potential threat can occur when employees is taking
shortcuts to achieve the goals, which results in performance that is less qualitative.

The goal-setting theory is presented in order to generate a wider picture of how organizations
use goals and feedback to improve the motivation within the organization.

Theory of Expectancy
The underlying motive behind the reward system is to motivate employees to perform at a
higher level when attractive rewards are offered.
The core of the expectancy theory is relying on employees‟ willingness to perform a certain
activity. This is depending on the extent to which a specific target is rewarded, which for
example could be a higher salary or a promotion within the organization. If the employee
within the organization perceive the reward as valuable, the performance will be greater. On
the other hand, if the rewards are demotivating the employee, the performance will be poorer.

It is essential that the reward is of a nature which is preferred by employees. The higher
degree of an actual desire for the reward, will affect to which extent the employees are
motivated to put down greater effort to perform. It is fundamental that there is a clear-cut
connection between a higher degree of effort, and that these actions are leading to the
preferred reward. This is the expectancy parameter, which summarize the individual
employee’s degree of expectancy to put down the effort in alignment with the organization.
The achieved results are depending on factors such as roles, ability to perform a certain action
and other human resources, which affect theability to reach the result. Therefore, employees

23
within the organization are often to a great extent motivated to act in a certain way. Hence,
not all of the employees have the ability to perform actions that leads to the preferred result.

Equity Theory
Equity theory focuses on people's perceptions of the fairness of their work outcomes
compared with, or corresponding to, their work inputs. The theory in facts complements
expectancy and need theories by shedding light how people perceive the relationship between
the outcomes they receive from the organization and the inputs the contribute.

The theory is based on strong social norms about fairness. It postulates that employees are
inclined to subjectively weight efforts given to do the job and rewards taken for doing this job
and compare rates of the rewards with other people doing the same job. “An employee is the
most satisfied in situations when the gives and takes are equal. If comparison shows
imbalance and unfairness (i.e. an employee thinks his or her co-worker has been paid more or
less for the same job), the worker is inevitably brought to psychological tension”.

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 CHAPTER-4

Reward Practices of
AB Bank Ltd.

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4.1. The Concept of Reward
Reward is the compensation which an employee receives from an organization (mainly refer
to enterprises) for his or her service. It not simply contains direct currencies and other forms
which can convert to currencies, but also a comfortable office, favorable interpersonal
relationship inside the organization, having access to decision-making involvement, the
challenge and sense of achievement and preferable growth opportunities.

Reward management is concerned with the formulation and implementation of strategies and
policies that aim to reward people fairly, equitably and consistently in accordance with their
value to the organization. It deals with the design, implementation and maintenance of reward
processes and practices that are geared to the improvement of organizational, team and
individual performance.

Reward system is an important tool that management can use to channel employee
motivation in desired ways. In other words, reward systems seek to attract people to join the
organization to keep them coming to work, and motivate them to perform to high levels. The
reward system consists of all organization components – including people processes rules and
decision making activities involved in the allocation of compensation and benefits to
employee in exchange for their contribution to the organization.

Reward management system contains the organization’s policies, processes and practices for
rewarding its employee in accordance with their contribution, abilities and artifice. It is
progressed within the organization’s reward philosophy, strategies and policies, and includes
agreements in the form of processes, practices, structures and procedures which will provide
appropriate types and levels of pay, benefits and other forms of reward.

Employee will give their maximum when they have a feeling or trust that their efforts will be
rewarded by the management. There are many factors that affect employee performance like
working conditions, worker and employer relationship, promotion and development
opportunities, job security, and company’s overall policies and procedures for rewarding
employee, etc.

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4.2. Reward Objectives
Different writers present varying purpose of reward management. But, the purpose of reward
management according to includes attracting and retaining good employee, reducing
absenteeism, motivating enhanced performance, developing employee skills, facilitating
organizational culture and strategic objectives, and defining and reinforcing organizational
structure. Among these, the idea of having or attracting and retaining good employee worth
further enlightenment as many of the competitive advantage of firms in today’s dynamic
business environment lies more on having good pool of human resources than technology,
good system in place and other production tools .

The main purpose of reward is to attract the right people and provide interest to motivate by
some types of rewards, so that employees are dedicated to maintain high level of
performances. Other purpose of reward is acknowledging individuals for their contribution
and performances moreover should foster loyalty and pride in so that employee want to stay
and strive to do their best.

Among many the aim of reward management are rewarding people according to what the
organization values and wants to pay for; reward people for the value they create, convey the
right message about what is important in terms of behaviors and outcomes, develop a
performance culture, motivate people and obtain their commitment and engagement, help to
attract and retain the high quality people the organization needs; create total reward processes
that recognize the importance of both financial and non-financial rewards.

Develop a positive employment relationship and psychological contract, and align reward
practices with both business goals and employee values. Further, it helps to operate fairly
apply equitably, function consistently and operate transparently.

Reward management is based on a well-articulated philosophy – a set of beliefs and guiding

principles that are consistent with the values of the organization and help to enact them.
These include beliefs in the need to achieve fairness, equity, consistency and transparency in
operating the reward system. The philosophy recognizes that if human resource is about
investing in human capital from which a reasonable return is required, then it is proper to
reward people differentially according to their contribution.

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The overall objective is to reward people fairly, equitably and consistently in accordance with
their value to the organization in order to further the achievement of the organization’s
strategic goals. Reward management is not just about pay and employee benefits. It is equally
concerned with non-financial rewards such as recognition, learning and development
opportunities and increased job responsibility.

4.3. Elements of reward management

ABBL reward management consist of reward policies, practices, processes and procedures.
notably, reward policies address broad issues of the level of rewards, taking into account
„market stance‟, achieving equal pay, the relative importance attached to external
competitiveness and internal equity, the approach to total reward, the scope for the use of
contingent rewards related to performance, competence, contribution or skill, the role of line
managers and transparency – the publication of information on reward structures and
processes to employee.

4.3.1 Reward Policies

ABBL Reward policies provide guide lines for the implementation of reward strategies and
design and management of reward processes. They will be influenced strongly by the guiding
principles and reward philosophy of the organization. The reward policy will be concerned
with, the level of rewards, the relative importance attached to market rates and equity,
attraction and retention of employees , the match between rewards andbusiness performance,
total reward policy, the need to communicate reward policies to employees and transparency.

4.3.2 Reward Practices

It consists of the grade and pay structures, techniques such as job evaluation, and schemes
such as contingent pay used to implement reward strategy and policy. For example, the policy
on pay levels will lead to the practice of collecting and analyzing market rate data, and
making pay adjustments that reflect market rate of increase.

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4.3.3Reward Philosophy
The reward philosophy advocates that if human resource management (HRM) is about
investing in human capital from which a reasonable return is required, then, it is proper to
reward people differentially according to their contribution. The philosophy of reward
management also recognizes that it must be strategic in the sense that it addresses longer-term
issues relating to how people should be valued for what they do and what they achieve.
Reward strategies and the processes that are required to implement them have to flow from
the business strategy.

4.4. Total Reward Program

ABBL Total reward is the combination of financial and non-financial rewards available to
employee. It comprises of total remuneration (base or basic pay, job evaluation, market rate
analysis, grade and pay structures, contingent pay, employee benefits, performance
management and non-financial rewards - rewards that do not involve any direct payments and
often arise from the work itself, for example, achievement, autonomy, recognition,
promotion, scope to use and develop skills, training, career development opportunities,
working condition and high quality leadership.

4.4.1 Financial Rewards

AB Bank given rewards in the form of monetary pay that may be given directly or indirectly
to employee. The direct form of payment incorporate base pay/ salary, merit pay/cost of
living adjustments, incentives, bonuses, and others, that are directly given to employee. On
the other hand indirect form of payments are provided in the form of employee benefits such
as pensions, holidays, and varied fringe benefits such as medical cost coverage, cafeteria
benefit, etc. They are also known as transactional rewards.

Base pay
Base pay is the core payment made by the employer for work performed and usually tends to
reflect the organizational value of either the work that the employee undertakes or the value
of skill and competency who is undertaking the work. It is directly related to time and the rate
is calculated in terms of number of hours, week or month that the employee performed the
task given.

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There are a number of assumptions that underpin the relationship of time to pay. One of these
is that time beyond stated hours of work has more exchange value and therefore is paid at
premium rates. The variation in premium rates reflects the differing value paced on different
periods of time. For example, employees work at their day offs are paid double of their daily
salary, those who work at night shift get additional of half of their hourly salary for each
hours they worked, etc. The basis of base pay is the period of time an employee worked and
normally not associated with productivity of an employee at a particular time.

Benefits
These are benefits given to employees in addition to their salary/wage. Such benefits are
those monetary and non-monetary benefits given to the employees during and post-
employment period which are connected with employment but not to the employee’s
contribution to the organization.
They are also known by the name fringe benefits.

4.4.2Non-Financial Rewards
Rewards that do not involve any direct payments and often arise from the work itself, for
example achievement, autonomy, recognition, promotion, scope to use and develop skills,
training, career development opportunities, working condition and high-quality leadership
Non-financial rewards can be focused on the needs most people have, although to different
degrees, for achievement, recognition, responsibility, influence and personal growth.

Recognition
Recognition of AB Bank works in the essence of securing good work. It is one of the most
powerful motivators. Efficient people would naturally like to get recognition for their skill
and excellence in their work. Such recognition can do many things that what a cash reward
can do.

Achievement
The other type of non-financial reward is recognition. It is defined as the need for competitive
success measured against a personal standard of excellence. This is one of the three major
needs of employees at managerial position: achievement, power, and affiliation. Employees‟

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achievement motivation can be raised by organizations through processes such as job design,
performance management, and skill or competency-related pay schemes.

Promotion
It involves a competitive selection process, and results in the employee’s movement in to a
different role in a higher pay band. If it is done fairly it enhance employee motivation and
competitiveness.

Personal growth
Individual employees irrespective of their current level want to upgrade themselves. This is
the philosophy of continuous development. The availability of learning opportunities, the
selection of individuals for high-prestige training courses and programs and the emphasis
placed by the organization on the acquisition of new skills as well as the enhancement of
existing ones, can all act as powerful motivators of employees to higher performance

Working Condition
The conditions in which an individual or staff works, including but not limited to such things
as amenities, physical environment, stress and noise levels, degree of safety or danger, and
the like.

4.5. Effects of Reward

AB Bank Ltd. stated reward has multi-dimensional effect on the general effectiveness of a
company through such as attraction and retention of employees, motivation of performance,
motivation of skill development and driving changes.

4.5.1. Attracting staff: The reward package on offer must be sufficiently attractive to that of
an organization’s labor market competitors to ensure that it is able to secure the services of
the staff it needs. The more attractive the package, the more applications will be received
from potential employees and the more choice the organization will have when filling its
vacancies.

4.5.2 Retaining staff: The costs associated with recruiting and developing people, as well as
the growing significance of specialist organizational knowledge in creating value and

31
maintaining competitive advantage, mean that retaining effective performers is a central aim
of reward strategy in many organizations, particularly those competing in knowledge
intensive industries where highly qualified people are in short supply. This requires strategic
aspects of reward package that is attractive enough to prevent people from becoming
dissatisfied and looking elsewhere for career development opportunities.

4.5.3 Motivating staff: Reward play a vital role in determining the significant performance
in job and most commonly, it is positively associated with the process of motivation. Aside
from helping to ensure that effective performers are recruited and retained, in more general
terms it is necessary that reward package should serves to motivate positively and does not
demotivate. Occupational psychologists many of whom accept that the power of monetary
reward to motivate is very limited, at least over the longer term, have long debated the
question of the extent to which money ever can positively motivate. What is not in doubt,
however, is the very considerable power of poorly designed or implemented reward practices
demotivate, particularly when they are perceived by staff to be inequitable in some shape or
form.

4.5.4 Driving change: Pay can be used specifically as one of a range of tools underpinning
change management processes. The approach used is to ties base pay, bonuses or promotion
to the development of new behaviors, attitudes or skills gained by employees. Pay works far
more effectively than simple exhortation because it provides a material incentive to those
whose natural inclination is to resist change. It also sends out a powerful message to
employee indicating the seriousness of the employer’s intentions as regards proposed or
ongoing changes.

4.6. Forms of Reward and the Relation between Employee Motivations

4.6.1 Intrinsic Rewards
Intrinsic rewards are an intrinsically motivated individual will be committed to his work to
the extent to which the job inherently contains tasks that are rewarding to him or her.
Intrinsic rewards are those that exist in the job itself. Examples are achievement, variety,
challenge, autonomy, responsibility, and personal and professional growth, status,
recognition, praise from superiors and co-workers, personal satisfaction.

32
According to AB Bank Ltd., Intrinsic rewards are derived from the content of the task itself
and include such factors as interesting and challenging work, self-direction, variety,
creativity, opportunities to use one’s skills and abilities, and sufficient feedback regarding the
effectiveness of one’s efforts . Employee are thought to be motivated to work hard to produce
quality resultswhen they have pride in their work and they believe their efforts are important
to the success of the organization objectives

4.6.2 Extrinsic rewards

Extrinsic rewards, on the other hand, are external to the job itself. An extrinsically motivated
person will be committed to the extent that he can gain or receive external rewards for his or
her job.

The extrinsic rewards themselves can be divided as financial and non-financial rewards and,
it enhance directly the financial well-being of the employee.

They comprise such elements as competitive salaries, pay raises, merit bonuses and fringe
benefits, bonus and promotions. On the other hand, non-motivational rewards do not increase
the financial pay offs to the employee. Instead of making the employee’s life better of the job
like the financial rewards, they emphasize making life on the job more attractive.

These types of rewards include things such as job security, office furnishings, parking spaces,
private office space, and the social climate and top-line computers in the office.

ABBL is able to improve worker productivity by paying workers a wage premium- a wage
that is above the wage paid by other firms for comparable labor. A wage premium may
enhance productivity by improving nutrition, boosting morale, encouraging greater
commitment to firm goals, reducing quits and the disruption caused by turnover, attracting
higher quality workers and inspiring workers to put forth greater effort. As a result, people
are attracted to well-paying jobs, extend extra effort to perform the activities that bring them
more pay, and become agitated if their pay is human resource decreased

33
4.7. Discussing the variables
A variable refers to a characteristic or attribute of an individual or an organization that can be
measured or observed and that varies among the people or organization being studied AB
Bank Ltd.

4.7.1 Independent Variables

Are variables that (probably) cause, influence, or affect outcomes. They are also called
treatment, manipulated, antecedent, or predictor variables

4.7.2 Dependent Variables

Are variable that depend on the impendent variables; they are the outcomes or results of the
influence of the independent variables. Other names for dependent variable are criterion,
outcome, and effect variables.

Finding out exactly what makes people feel motivated about their work can become a multi -
faceted issue. There are a variety of factors that make people feel positive or negative about
their job. It has been of keen interest to many scholars on why some people report being
motivated with their jobs, while others express much lower levels of motivation.

According to Hertzberg , there are factors which act as strong determiners of employee
motivation which include; achievement, recognition, the work itself, responsibility and
advancement. Other determinants are supervision, working conditions, salary and
interpersonal relations.

Payment
Base pay is the core payment made by the employer for work performed and usually tends to
reflect the organizational value of either the work that the employee undertakes or the value
of skill and competency who is undertaking the work. It is directly related to time and the rate
is calculated in terms of number of hours, week or month that the employee performed the
task given.

There are a number of assumptions that underpin the relationship of time to pay. One of these
is that time beyond stated hours of work has more exchange value and therefore is paid at

34
premium rates. The variation in premium rates reflects the differing value paced on different
periods of time. For example, employees work at their day offs are paid double of their daily
salary, those who work at night shift get additional of half of their hourly salary for each
hours they worked,etc. The basis of base pay is the period of time an employee worked and
normally not associated with productivity of an employee at a particular time.

Well-paid workers are believed to be more motivated by. There is no doubt that monetary
rewards may play a very influential role in determining motivation. As indicated by Arnold
and Feldman, pay can have a powerful effect in determining motivation. Man has multiple
needs and money provides the means to satisfy these needs (Arnold & Feldman).

Benefits
These are benefits given to employees in addition to their salary/wage. Such benefits are
those monetary and non-monetary benefits given to the employees during and post-
employment period which are connected with employment but not to the employee’s
contribution to the organization.
They are also known by the name fringe benefits. AB Bank Ltd. claim that fringe benefits
covers bonus, social security measures, retirement benefits like provident fund, gratuity,
pension workmen’s compensation, housing medical, canteen, Co-operative credit, consumer
stores educational facilities, recreational facilities financial advice and so on.

Employee benefit is one of powerful motivator factors and it is element of remuneration

given in addition to the various forms of cash pay. They also include items such as annual
holidays, pension sick leave insurance cover, company cars, home, and transportation. It also
taking into account, market stance is that internal rate of pay and compare with market rates

Promotion
Herzberg, supported that the achievement of recognition and advancement are the main
causes of motivation. Several researchers focused on the correlations between motivation and
promotion. Locke, advocates that the wish to be promoted stems from the desire for
psychological growth, the desire for justice and the desire for social stays. Management
should therefore bear in mind, that promotion can serve as a very positive motivating tool in
ensuring that the employee attains goals at a higher level.

35
The importance of promotion appears to be different for people that belong to different social
classes and who perform at different skill levels. For professional and managerial people,
work is part of their career and promotion is the highest reward. For semi-skilled and
unskilled people, promotion is less important. It involves a competitive selection process, and
results in the employee’s movement in to a different role in a higher pay band. If it is done
fairly it enhance employee motivation and competitiveness
Supervisions
According to Hertzberg, leadership or supervision includes all the skills and abilities of the
supervisor to lead, to coach and to solve problems. These aspects are crucial for his or her
success and enhance employee motivation in their working environment.

Work condition
The conditions in which an individual or staff works, including but not limited to such things
as amenities, physical environment, stress and noise levels, degree of safety or danger, and
the like.
Workplace environment may have either positive or negative impact on the motivation level
of employees depending upon the nature of working environment. The employees can
perform better if they are provided good environment. The working outcomes are directly
interlinked with working environment; the more it (environment) is conducive the better the
outcome will be.

AB Bank Ltd. emphasized that when working environment is conducive it will give higher
level of motivation then it reduces turnover and in turn enhances the morale of an employee.

Recognition
Recognition is one of the most powerful methods of rewarding people. Recognition needs are
linked to the esteem needs in Maslow‟shierarchy of needs. They are defined by Maslow as
the need to have a stable, firmly based, high evaluation of one (self-esteem) and to have the
respect of others prestige. ABBL emphasized that recognition is the acknowledgement of an
individual contribution showing appreciation and to reward the individual for an
accomplishment of a task or sound performance.

Recognition can be provided by positive and immediate feedback from managers and
colleagues that acknowledge individuals and team contributions. It is also provided by

36
managers who listen to and act up on the suggestion of their team’s members. Other actions
that provide recognition include acknowledge contribution, allocation to a high-profile
project, and enlargement of the job to provide scope for more interesting and rewarding work.

4.8. Reward practices and employee motivation of AB Bank Ltd.

According to Hertzberg‟s two-factor theory,the dissatisfies can only provide that the
employees within the organization are not dissatisfied, and the satisfiers are therefore the
factors that could increase employees‟ motivation. The dissatisfies can for example be high
salary or bonuses that employees are working in. These are factors that need to be fulfilled so
that employees do not feel uncomfortable. However, these factors cannot generate
satisfaction for the employee. The satisfiers on the other hand, which for example could be
personal development, greater responsibility and the work tasks itself, can satisfy the
employees.

Based on expectancy theory; the underlying motive behind the reward system is to motivate
employees to perform at a higher level when attractive rewards are offered. The core of the
expectancy theory is relying on employees‟ willingness to perform a certain activity. This is
depending on the extent to which a specific target is rewarded, which for example could be a
higher salary or a promotion within the organization. If the employee within the organization
perceive the reward as valuable, the performance will be greater. On the other hand, if the
rewards are demotivating the employee, the performance will be poorer. The higher degree of
an actual desire for the reward, will affect to which extent the employees are motivated to put
down greater effort to perform.

According to Equity theory focuses on people's perceptions of the fairness of their work
outcomes compared with, or corresponding to, their work inputs. It postulates that employees
are inclined to subjectively weight efforts given to do the job and rewards taken for doing this
job and compare rates of the rewards with other people doing the same job. “An employee is
the most satisfied in situations when the gives and takes are equal. If comparison shows
imbalance and unfairness (i.e. an employee thinks his or her co-worker has been paid more or
less for the same job), the worker is inevitably brought to psychological tension”.

37
All the above studies ABBL deal with reward practices and their effects on employee work
motivation and employee satisfaction. They found that rewards generally have positive
impacts. However, the results vary when seen in terms of magnitude by which they affect
employee performance and employee satisfaction and motivation. As the needs of human
beings vary significantly, the extent by which their motivation affected by one reward type to
the other varies significantly. Therefore based on the above discussed theories (Hertzberg’s
two-factor theory, expectancy theory and Equity theory) and empirical studies the study
has been derived and tested the following hypothesis.
H1: payment is correlated positively with work motivation

Ho: payment is not correlated positively with work motivation

H2: Benefit is correlated positively with work motivation.

Ho: Benefit is not correlated positively with work motivation

H3: The promotional practices are correlated positively with work motivation

Ho: The promotional practices are not correlated positively with work motivation

H4: The recognition is correlated positively with work motivation

Ho: The recognition is no correlated positively with work motivation.

H5: work condition is correlated positively with work motivation

Ho: work condition is not correlated positively with work motivation

H6: Supervision or leadership is correlated positively with work motivation

Ho: Supervision or leadership is not correlated positively with work motivation

H7: Work content is correlated positively with work motivation

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 CHAPTER-5

FINDINGS, RECOMMENDATION AND

CONCLUSION

39
5.1 Major Findings from Study:

The general objective of this study was to examine the effect of Reward practices on Employee
Motivation in AB Bank Ltd. From the study the following particular findings were observed:

 The overall perception of respondents towards the reward practice of the bank in
terms of the relatedness with payment dimension, like reasonable basic payment,
fairness with compared with other, the bank salary classification and adjustment to
market shows that the majority of the respondents were not satisfied.

 The overall perception of respondents towards the reward practice of the bank in
terms of benefits package provided by the bank, most of respondents were not happy.
So that current reward practices wasn’t enough.

 The rest of dimensions (work condition and work content) majority of respondents
were not satisfied.

 Finally, according to respondent choice of the most influential factors of that affect
motivation, they chosen as payment is the highest and the first influential factor for
employee motivation followed by Benefit, promotion, recognition, and working
condition respectively, but according to respondents‟ choice work content and
Supervision have the least motivational factors respectively.

40
5.2 Recommendation:

Effective, fair and equitable reward administration should be put in place to help encourages,
support and sustained improvement in work motivation that in turn contributes to the overall
success of organizations. Therefore, other things remain as it is, organization that operates in
a competitive market to make profits, it should place the right reward tools that can boost the
motivational level of its employees.
If rewards offered are not competitive, it will be difficult to recruit staff since potential
employees can obtain better rewards from competitors. Existing staff may also be tempted to
leave the organization if they are aware that their reward system is uncompetitive. High staff
turnover can lead to higher costs of recruitment and training of new staff. Losing existing
employees may also mean that some of the organizations accumulated knowledge is lost
forever and hence it leads to uneconomical cost.
As distinguished in the study, respondents have shown their area of interest that extrinsic
rewards play a critical role in increasing their work motivation. Therefore, the management
of the bank should keep these rewards practices more attractive to increase employee work
motivation. Based on conclusion the following recommendations have been mentioned.

 The bank should pay competitive, reasonable and attractive payment in order to get
and
retain competent and motivated employee. Since from result payment is found to be
best predictors and most contribution factors of employee motivation.

 ABBL should also give for its employee opportunity for promotion and it should be
fair and transparent and acceptable criteria in order to get the best out of motivated
employee. Since promotion is the second highly significant and predictors of
employee motivation.
 When seen from the view of intrinsic rewards, since lower mean value is registered on
general view of respondents towards dimension of work content, the bank should
work on improving work content and the personal feelings of employees‟ towards
their jobs. Related with this, creating of a loyal employee should also be given the
right attention
 Optimum benefit package and quality supervision also enhancing employee work
motivation should further be encouraged.

41
 In general, the effectiveness of reasonable payment & benefits, opportunity for
promotion and recognition, convenient work place, relatively variety of work content
& quality of supervision are directly affects employee motivation. Therefore, the
proper implementation of all these aspects leads to high employee motivation because
of without employee motivation, organization cannot achieve its objectives .as study
investigated demotivated employee have no commitment, belongings, loyalty,
responsibility and luck the value of work done.

42
5.3 Conclusion:

The AB Bank Ltd is a first growing third generation bank with setting a new standard in
bankingsector. The management team of the bank consists of well-educated, highly skilled
and dynamicexecutives who have been contributing in the continued growth and progress of the bank.

The independent variables (Payment, benefit, promotion, recognition and supervision) are
positively and significantly related to employee motivation as this variable changes directly
affect employee motivation.
There is also moderate positive and significance between extrinsic reward and employee
motivation. On other side, there is positive relation with intrinsic reward but not significant.
However this is different from as the study conducted by ABBL, they conclude that extrinsic
rewards are to some extent old-fashioned and employees are nowadays searching for rewards
beyond solely monetary rewards, are to a larger extent motivated by intrinsic rewards.
Due to the fact that, they employee Motivation is different due to many factors like culture,
countries economy status of society and others environment. However nowadays in this
country context this result it might be true because employees move here and there in order to
get better salary and better benefits are as priority ,therefore they prefer extrinsic rewards first
rather than intrinsic rewards.
The HR department of AB Bank Ltd plays a vital role in retaining its employee’s performance and mental
piece. HR department of the bank already has establi shed a competitive salary
and compensation structure as well as other employee benefits

43
 Bibliography
Books:

1. DeCenzo D.A. and Robbins S.P., “HUMAN RESOURCE MANAGEMENT”,7thEd.

2003, John Wiley & Sons (ASIA) Pvt. Ltd
2. Dessler Gary, “Human Resource Management”, 10thEd. 2005,Prentice – Hall of India Private
Limited, New Delhi- 110001C)
3. Fisher C.D., Schoenfeild L.F., and Shaw J.B., “ Human Resource Management”,5thEd.
2004, biztantra, New Delhi 110002.d)
4. French Wendell L., “Human Resource Management”, 3rdEd. 1997,Houghton Mifflin Company,
U.S.A.e) Mello A. Jeffrey (2006). Strategic Human Resource Management (2ndedition)
5 . C . R . K o t h a r i . R e s e a r c h M e t h o d o l o g y , 2 n d ' edition. New Delhi:
WishwaPrakashan, 2003-2004

Annual Report
6. AB Bank Limited Annual Report 2012-2016
7. Bangladesh Bank Annual Report 2012-1016
Websites:

8. http://www.abbbank.com/
9. https://www.bb.org.bd/

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