EFFECT OF MONETARY INCENTIVE ON EMPLOYEES PERFORMANCE ( A CASE STUDY OF LOCAL GOVERNMENT WORKERS IN IKERE EKITI)

EFFECT OF MONETARY INCENTIVE ON EMPLOYEES PERFORMANCE ( A CASE STUDY OF LOCAL GOVERNMENT WORKERS IN IKERE EKITI)

CHAPTER ONE

INTRODUCTION

Background to the study

Employee performance simply is the target and goal achievement of an entity facilitated by the contributions – labour which is skilled or unskilled and possible suggestions to decisions or policies made by the entity the employee works for. That is to say, the extent to which an organization‟s objective (goals) are being achieved courtesy to the role played by the employee is what employee performance is all about. Consequently, employee performance include all of the employees efforts in terms of his/her commitment to work, punctuality, willingness to work extra hours, exerssion of innovation in the execution of task to mention but a few directed at goal achievement at effective cost.

However, this performance of employee which is desired by entities in both private and public sectors is a function of employee motivation. These motivations are broadly referred to as monetary and non-monetary incentives. It is a general belief that reward system seek to attract people to join an organization, to keep them coming to work and motivate them to perform to high levels (Puwanenthiren Pratheepkanth, 2011).

Evidently, both employers and employees do have their needs intertwined or dependent on each other. It is however mostly use one that the employees performance depends on the corresponding compensations, recognition and benefits. Studies have shown that organizations are increasingly realizing that they have to establish a blend or balance between the employee‟s contribution to the organization and the organization‟s contribution to the employee. Whereas, the compensation to the component of the rewards content is monetary and is mostly believed as major motivator of employees, no doubt, the role played by non-monetary incentives – promotions, flexible work hours, recognition, awards, healthcare, off-day, leave, free bus services to mention but a few in motivation employees cannot be relegated to the background.

Indeed, the environment in which an employee works, how he or she is made to contribute towards decision/policy making of the organization, un-biased promotion and the expectations of career advancement can greatly motivate an employee to perform or put in his or her best towards organizations goal/objective achievement.

Organizational performance is a complex phenomenon largely affected by the ability and motivation of the workforce in any firm. One of the major problems facing m ost employers in both public and private sector is how to motivate their employees in order to improve performance. Economics is largely based on the assumption that mo netary incentives improve performance (Igbaekemem, 2014). Thus, employees of an organization have motives and inner desires that are expressed in the form of actions and efforts towards job roles to meet their needs. Employee motivation is the level of energy, commitment, and creativity that a company’s workers apply to their job (Ebrurajolo, 2004). The issue of employee performance cannot be over emphasized. The most important thing for an organization is the devotion and loyalty of its employees, which is achieved if the emplo yees are paid with better rewards. Rewards are highly conce rned to overcome dissatisfaction and to increase performance of employees (Mehta, 2014).

In most business and other organizations, money is actually used in keeping an organization adequately staffed and not primarily as a motivator. Any bonus scheme for manual workers should be related to c riteria which are meaningful to the employees and which arre capable of being measured consistently. The incentive to achieve one particular objective for example, increased volume , should not act as an incentive to worsen other standards of achievement like quality. It is therefore, important to know what induces a worker most, as many people have different needs and aspirations. Despite the fact that reward management h as received substantial research attention, this has dwelt more on developed and emerging economies (Carton, 2004; San, Theen, and Heng, 2012), with little done in the developing economies (Agwu, 2013). Various researchers have come up w ith various ways to motivate people at work. However, bec ause human beings are different from one another in terms of needs, culture, religion etc. so does what motivates them alsso varies. Some employees are motivated by financial and other incentives and some non-financial incentives. Managers continuously seek for ways to create a motivating environme nt where employees will work at their optional levels to achieve the organizational objectives. Since human resource is the most valuable resource of any organization, it must activate, train, develop and above all motivate in order to achieve individual and organizational goals. Monetary rewards as a motivator is high in developing countries due to high cost of living and low quality of lives which they are facing. Most activities of man are related to making money. To this extent, money is the most critical incentive to work but when money is taken away, how many people will continue to work in Nigeria today? In Nigeria, employee in both public and private sectors are sometimes owed between 3-6 months ‘salary and yet they have not resigned, but continue to work because they know they will be paid and not because they so much value the job. The truth here is that primarily, people are motivated by economic rewards. It is believed that man, if motivated will go extra mile in satisfying his employer. All organizations are concerned with what should be done to achieve sustained high levels of performance through people. Consequently the subject of adequate motivation of workers as derived from the so many attempts made by management practitioner is to look for the best way to manage so as to accomplish an objective or mission with the least inputs of materials and human resources available (Ehiorobo, 2004).

Berger and Berger (2015) argued that employees prefer to have monetary incentives in return to their successful accomplishments. Sajuyigbe, Olaoye, and Adeyemi (2013) stated that rewards are basic conceptual elements in improving employee performances. Entwistle (1987) propounded that rewarded employees have ahigh degree of motivation and it directly impacts their performances. However, Buchbinder and Shanks (2017) differed that monetary incentives motivate only to a certain extent. Kube, Marechal, and Puppe (2006) confirmed that monetary incentives are effective during the short-term period and noting the long-term period whereas non-monetary incentives givesignificant and consistent satisfaction. Danish and Usman (2010) opined that proper usage of rewards as a tool in an organization would produce a conducive environment so as the employees gets motivated and rise to the occasion. Lawler (1985) claimed that rewards leads to increased employees’ satisfaction and will have a direct impact on employee’s performance. Hong (1995) proposed that rewards might motivate employees only when they yield rewards due to their sincere and hard work. Fairbank and Williams (2001) suggested thatto stimulate an employee’s creativity managers should use rewards. Sonawane (2008) stated that it is not only important for their cognizing good job performances through rewards but also should be encouraged through providing proper feedback. Schaufeli (2002) found out the need for the rewards in an organization so as to avoid burnouts – the situation in which employees tend to be not satisfied; will have negative outlooks and a little dedication. Well performed employees should beincentivized with monetary compensation, which is an easier and the best way to encourage employees so as to effective and efficient (Pink, 2011). According to Lemieux, MacLeod, and Parent (2009), performance pay based on a good performance measure can increase qualitative productivity. Muralidharan and Sundararaman (2009) claimed that the incentive payment is directly related to the employees’ output, which accelerates their performances. Perry, Mesch, and Paarlberg (2006) found that in public sector organizations, financial incentives for individuals is not that much effective; however, they stated that it depends on the organizational conditions. Every individual employee may not consider merit pay as a motivating factor (Rynes, Gerhart and Minette, 2004).Bates (2003) indicated that merit pay could be made as an attractive factor provided the merit pay rise should be not less than seven percent of the core pay so that it can be perceived as a motivating factor.Lazear (2000) confirmed that when salary increases, most of the employees diligently dispose of their duties. Langton and Robbins (2007) emphasized the fact that an individual can be motivated only when there is a difference in pay between a good performer and an average performer. Salary is one of the determining factorsin job selection (Lopez 2002;Al-Zoubi, 2012). Bokorney (2007) confirmed that salary plays couldbe designated as an appreciating factor for an individual. Hislop (2003) proclaimed that the motivated employees are required in a rapidly growing organization, and Yongsun, Barbara, and Christy (2002) found that an organization to be more productive the employees need to perform their jobs with full zest. A study by Kiruja and Mukuru (2013) found that most of the time workers are not happy with their salary and working environment, but Crewsen (2010) confirmed that in the public sector there was the influence of the rewards on employees’ motivation and behavior which need not be true in the private sector. Managers from different organizations face different kind of challenges towards satisfying the needs of their employees so as to motivate them and enhance their job performances (Alonso and Lewis, 2001). To summarize, the monetary incentive in its various forms encourages employees to be more productive and self-motivating towards the welfare of the organization they belong.

Statement of the problem

There have been several problems associated with monetary incentives on workers’ performance on the part of workers and managers in various business organizations. These are;Poor incentives package which have been a major factor affecting employees’ commitment and productivity, employees lack of willingness to increase their performance because they feel that their contributions are not well recognized by their organizations and Management lacks the necessary skills that could help in the formulation of a good monetary incentive policy. The success and the survival of any organization are determined by the way the workers are remunerated and rewarded (Lawler, 2003). The reward system and motivating incentives will determine the level of employees’ commitment and their attitude to work. According to Kreitner and Kinicki (2007), incentives are the compensation for doing work well given to a worker in the form of both financial and non-financial incentives. However, for any organization to achieve its objective in any competitive society, employers of labour must have a thorough understanding of what drives the employees to perform efficiently and reward them accordingly. There is rising need for organizations to develop reward systems that motivate staff to work hard. To this effect, this study attempts to critically analyze the effect of monetary incentives on workers performance in firms within the three senatorial districts of Anambra State.

Objectives of the study

The main aim of the study is to examine the effect of monetary incentives on worker’s performance. The specific objectives are:

 

  1. To ascertain if there is a relationship between salary, wages and workers performance.
  2. To determine if special benefits have an effect on workers performance.
  3. To assess the extent of relationship between bonuses and job performance.
  4. To ascertain if there is a relationship between commission and worker’s performance.

Research questions

The following research questions were formulated to achieve the objectives of the study:

1.Does salary and wages have a motivating potential in increasing worker’s performance in an organization?

2.Do special benefits have an effect on workers performance?

3.What is the extent of relationship bonuses and worker’s performances?

4.Is there is a relationship between commission and worker’s performance?

Research hypotheses

The following null hypotheses were formulated to guide this study:

Hypothesis One

Ho1: salary and wages have no significant effect on worker’s performance.

Hypothesis Two

Ho2: special benefits have no significant effect on worker’s performance.

Hypothesis Three

Ho3: There is no significant relationship between bonuses and workers performance.

Hypothesis Four

HO4: There is no significant relationship between commission and workers performance.

Significance of The Study

This study apart from helping us meet up with academic programme will also broaden our knowledge and expose her to real practical experience and training in the field of research for the purpose of problem solving. The study will give more light into the effectiveness of the use of monetary incentives in motivating employees meet in their work environment, especially where incentives are emphasized. It will also help organizations to know the likely incentives to put in place in motivating employees.

In addition, it will assist management to engage in staff welfare development in order to improve the output of productivity of employees. This study will also serve as a useful tool for those in the management sciences discipline who would like to carry out further research in this area.

Besides, management will learn how best to assess and apply the various patterns of non monetary incentives in Nigerian Communication Commission, that is the study becomes necessary because it is going to point out ways of how the management will maintain their workers, towards improving their performance so as to increase the productivity of the organization.

Scope of The Study

Whereas, there are both monetary and non-monetary incentives in existence, we cannot in this single study take cognizance of both. We are particularly concerned with the monetary incentives in existence.

Besides, in this study, we are confining ourselves to the public sector rather than the private sector hence the choice of Ikere Local government council workers , because it is not feasible for the researcher to go round all  the local government  and parasite in Ekiti state

  

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Updated: January 9, 2019 — 7:08 am

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