Total rewards components and work happiness in new ventures. The mediating role of work engagement
| DOI | https://doi.org/10.1108/EBHRM-12-2017-0063 |
| Published date | 03 December 2018 |
| Date | 03 December 2018 |
| Pages | 255-271 |
| Author | Gaatha Gulyani,Tanuja Sharma |
| Subject Matter | HR & organizational behaviour,Global HRM |
Total rewards components and
work happiness in new ventures
The mediating role of work engagement
Gaatha Gulyani and Tanuja Sharma
Department of Human Resource Management,
Management Development Institute, Gurugram, India
Abstract
Purpose –The purpose of this paper is to examine the influence of total rewards components (monetary,
material and non-monetary) on happiness of employees working in Indian technology-based new ventures.
Further, with the theoretical lens of social exchange theory, the mediating role of work engagement between
total rewards perceptions and work happiness relationship has also been evaluated.
Design/methodology/approach –A survey of 201 employees working in Indian technology-based new
ventures wasconducted. Structural equationmodeling was utilized to measurethe proposed theoreticalmodel.
Regression analysis was conducted to test the direct effects of the hypothesized relationships. Sobel test and
bootstrapping analysis were utilized totest the indirect effects of the proposedhypothesized relationship.
Findings –The findings supported the hypotheses that employees’perceptions of total rewards have a
significant impact on employee work engagement and happiness at work. However, individual component of
total rewards, i.e. monetary rewards, demonstrated an insignificant impact on the employee work happiness.
Work engagement was positively related to work happiness and fully mediated the relationship between total
rewards perceptions and work happiness.
Practical implications –Special attention should be given to enhance the material and non-monetary
rewards,specificallystrengthening thefeeling of appreciation, learningand growth opportunities and improving
feedback functions. Given the challenges of new ventures (productivity and efficiency of talent), management of
total rewards mix should be considered as the main concern of human resource (HR) managers and management
(founders). The paper also provides important implications for designing a reward system that enhances
employee productivity and efficiency in the unstructured and ambiguous work environment of new ventures.
Originality/value –The presentstudy has significant contributions to the HR, entrepreneurship and positive
psychology literature. It is an attempt to understand the association between total rewards components and
work happinessvia mediating mechanism,i.e. work engagement in new ventures.It also extends researchin the
entrepreneurialcontext. The emergence and growthof new ventures in India has meant a growingimportance
for understanding employees’needs and expectations and guaranteeing their happiness. The findings of the
study contributeto social exchange theory,Vroom’s expectancy and self-determination theory.This research is
also a rare investigationof employees’perspectives in an entrepreneurial context.
Keywords Work engagement, New ventures, Positive psychology, Monetary and non-monetary rewards,
Total rewards, Work happiness
Paper type Research paper
1. Introduction
India has emerged as the third largest start-up ecosystem globally and is expected to grow by
2.2 times till 2020 (NASSCOM, 2016). Although, new ventures (also called start-ups or young
firms) are enablers of innovation and economic progress, their success during their first years is
uncertain as they face competition from established firms andthe liability ofnewness challenge
(Boso et al., 2013). As new ventures struggle to grow and achieve success, motivating and
engaging talent is also a challenge and therefore developing innovative strategies to attract,
engage and improve the productivity of employees that can contribute to their survival
(Leunget al., 2006). A critical area in human resource management (HRM) that has been seen to
affect an individual’s motivation to join, learn and stay with the firm is compensation and
rewards(Medcof and Rumpel,2007). Since new venturesadopt an informalHRM function,they
have fewer choices available in terms of compensation options (Bau and Dowling, 2007) and
view their rewards system through “total rewards”perspective. The holistic view of total
Evidence-based HRM: a Global
Forum for Empirical Scholarship
Vol. 6 No. 3, 2018
pp. 255-271
© Emerald PublishingLimited
2049-3983
DOI 10.1108/EBHRM-12-2017-0063
Received 28 December 2017
Revised 7 April 2018
Accepted 10 April 2018
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/2049-3983.htm
255
Total rewards
components
and work
happiness
rewards includes both monetary (all monetary payments-pay, benefits, etc.) and non-monetary
(learning and growth opportunities, feedback and appreciation for work, etc.) rewards
(Heneman and Tansky, 2002). Research works measuring various comp onents of rewards and
its motivational effects are largely based on formal and structured work environments and
have overlooked its influence in young firms (Pajo et al., 2010). Therefore, studying
motivational effect of holistic view of reward system in an informal and unstructured work
environment, such as present in new ventures would help newly founded businesses to
manage their talent effectively (Khoreva et al., 2017).
Additionally, Baron and Hannan (2002) highlighted that in the highly uncertain and
ambiguouswork environment of new ventures, fewpeople typically need to cover all business
functions resulting in high degree of workload and greater stress negatively affects their
productivity at work. Keeping employees happycan boost their productivity as well as work
efficiencyand new ventures cannot delivergood services from unhappyemployees. Moreover,
the positive psychology field has asserted the need to the study the pursuit of employee
happiness and betterment issues in the entrepreneurial settings (Vo, 2016).
Happiness refers to the feeling of frequent positive affect and a sense of work and life
satisfaction (Hofmann et al., 2014). Huang (2016) documented that individuals’happiness
has a positive effect on individual performance, as happy employees remain enthusiastically
involved in different tasks of the organizations. Within work happiness literature, various
components of total rewards have been linked to happiness such as employee income
(Oishi et al., 2011), meaningfulness at work (Golparvar and Abedini, 2014), learning and
growth opportunities (Rego and Pina E Cunha, 2009), etc. However, little empirical evidence
on work happiness as an outcome of total rewards components (Latukha, 2016) in new
Indian ventures has been found. The study, therefore, aims to bridge highlighted gaps.
Additionally, work engagement literature has been conceptualized as a mediating
mechanism and is embedded in three dimensions: vigor, absorption and dedication
(Schaufeli et al., 2002). Organizational rewards model assumes employee engagement as a
driving force of the employees’positive attitude at work. This driving force may assist
employees to overcome the stress and burnout at workplace and feel happy for the
accomplishment of assigned task (Saks, 2006; Crawford et al., 2014). However, little
empirical evidence exists that examines work engagement as a mechanism through which
job resources (total rewards components) affect employee work attitude (i.e. employee work
happiness). Therefore, the research question addressed in the study is as follows:
RQ1. How do perceptions of total rewards components influence employee happiness
at work?
The purpose of this study is to examine the conceptual and empirical linkages between total
rewards components and workplace happiness. In addition, the study also aims to evaluate
the role of work engagement as a mechanism via which the perceptions of job resources
(total rewards) affect employee work attitude (work happiness).
2. Need and rationale of the study
In today’s competitive world of work, human resource (HR) are assumed to be a key source of an
organization’s survival and success. Specifically, in new ventures, each individual contributes to
its survival and success (Glaub et al., 2014). However, studies in entrepreneurship (new ventures)
domain are skewed toward the topics of firm’s growth (Edwards and Rahman, 2016). Therefore,
highlighting employee perspective in the unique and dynamic working environment of new
ventures would be a contribution in the field of HR and entrepreneurship literature.
Furthermore, past evidence suggests that substantial research works have been done on
rewards and itsconsequences in contextof large organizations(Thomas et al., 2017) with little
focus on young firms. The compensation models developed in the context of large firms are not
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