1.1 Introduction
Employees in any given organization like to feel appreciated and valued, and one of the ways for an organization to express this to the workers is by having a reward and recognition system (policy). A manager must continuously recognize and reward good performance by giving praise and positive feedback, which works to create enthusiasm. 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 employees in exchange for their contribution to the organization (Mutia and Sikaleih, 2013).
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitation of the study and Definition of terms.
1.2 Background of Study
Globally, Organizational reward system has remained one of the most important components of management for encouraging people to achieve company goals and objectives. Reward system is crucial to the organization, through this they have the ability to attract the right employee retain them and motivate them to give desirable performance (Otieno, 2006). Employers of labour must build programs that will enthusiastically influence output in order to realize the total performance of any particular setting. While organizations are trying to get more from their employees, their employees are looking for more out of them (Adeoti 2009).
Hafiza (2011) argued that due to the fact that organizations have to perform optimally and compete effectively, they must maximize on the resources they have, one of which is the human asset and the most important asset any organization can boast of. In order to achieve the required organizational staff performance standards from the human resource, staff motivation through an effective reward system is necessary. Employees will peg their performance to the feeling of trust that their efforts will be rewarded by the management.
Herman (2009) argues that an effective reward system is one that seeks to meet the staff’s specific needs; however, for an employee who has already achieved his/her basic needs through monetary reward, then he/she will tend to value rewards that reinforce his or her self-actualization and hence will be more motivated by relational rewards. Various organizations staff has shown that they have diverse needs that require a comprehensive total reward system to meet the needs of various employees.
As a result the management has been faced with the challenge of implementing and offering competitive rewards to the workforce for the purpose enhancing their performance. Organizational staff performance is progressively being determined by the way their employees are treated (Lawler, 2003). Organizations are now recognizing the need to create a balance among individuals influence to the organization and the organization’s influence to the individual. Taking this into consideration, it is reasonable to assume that organizations need to have an understanding of how to reward and motivate and what motivates employees to achieve higher levels of performance and productivity (Amos, Ristow & Ristow; 2004).
According to Shaw (2006), human resource managers must try to develop human resource programs that improve staff performance and enhance organizational effectiveness. One popular approach to enhancing staff performance has been linking rewards to performance through various forms of incentive pay. Such as; special recognition to acknowledge outstanding individual or team achievements with small cash awards, individual performance rewards based on specific employee performance criteria and stock ownership rewards to professionals who meet specific goals.
The reward system and reward programmes have broken through the monetary categories and has increasingly shown that some non-monetary rewards have been of importance in the reward structure design. Sarvadi (2005) argues for the importance of non-monetary rewards, organizations sometimes miss the most important reward elements of appreciation and recognition, which are the inexpensive and high return elements to a reward programme.
An organization’s reward system is an important tool that can lead to organizational staff performance. Understanding the impact of both monetary and non-monetary rewards, based on employee preferences, is crucial for an organization to deliver growth and shareholder value. Lawler (2003) argues that for a reward system to work, it must be developed with a few limitations. Lawler (2003) states that reward system must provide necessary rewards to motivate employees; provide employees with a clear view of their roles going into the near future; give employees the authority to influence their productivity/performance and deliver on it.
Reward system is largely about managing expectations, what employees expect from their employers in return for their contribution and what employers expect from their employees in return for their pay and the opportunity to work and develop their skills. Expectations are built into the employment relationship, the starting point of which, from the rewards point of view, is an undertaking by an employee to provide effort and skill to the employer, in return for which the employer provides the employee with a salary or a wage. Although financial rewards are undeniably an important form of rewarding employees for their exceptional performance, other forms of recognition are often overlooked as part of an organization’s reward system (Luthans, 2002).
Armstrong (2012) articulated that ensuring organizational staff performance is the means of getting better results by understanding and managing employee performance within an agreed framework of planned goals, standards and competency requirements. However, a desired goal and target may only be achieved effectively if the workforce gets a sense of mutual gain of the organization with the achievement of a defined performance target. It’s against this background that an organization must strategically set the reward system to evaluate employee’s productivity at all levels and reward them effectively.
1.3 Statement of Problems
Investigation revealed that there has been a general outcry on the insufficient motivational services provided by employers to employees. This problem has been made worse by the loss of workers through different avenues, for example death, retirement, sacking or resignation. Also, there is generally low turnover. This is because, when employees are not rewarded for their efforts, it leads to a loss of productivity, diminished morale, strained communications between management and the employees, and increased costs of hiring and training new employees.
This has forced the need for organizations to review its reward policies and come up with perks like further education for its employees, promotion after every three years, and a faster processing of retirement benefits. Some of the factors that can contribute to poor performance among employees in any given organization include poor leadership, lack of team work among employees, lack of an effective rewards system and recognition system, a poor work environment, among others.
Studies that have been conducted on the topic indicates that the most common problem in organizations today is that they miss the important component of reward, which is the low-cost, high-return ingredient to a well-balanced reward system. Lack of allowances for transport reimbursements, influences the performance of these officers.
1.4 Aim and Objectives of Study
The aim of the study is to examine the Impact of Organizational Reward System on Staff Productivity in Business Establishment using Anchor Insurance Company as a case study. In achieving this aim, the following specific objectives were laid out as follows:
- To assess the relationship between the reward system and organizational staff performance in the area under study;
- To determine whether the reward system enhances organizational staff performance in the study area;
- To examine the impact of reward system on organizational staff performance in the area under review; and
- To identify factors in the reward system that impinges organizational staff performance in the area under review.
1.5 Research Questions
The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:
- Does reward system enhance organizational staff performance in the study area?
- What is the impact of reward system on organizational staff performance in the area under review?
- What is the relationship between the reward system and organizational staff performance in the area under study?
- What are the factors in the reward system that impinges organizational staff performance in the area under review?
1.6 Research Hypothesis
In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.
Hypothesis One
- H0: There is no significant impact of reward system on organizational staff performance in the area under review
- H1: There is significant impact of reward system on organizational staff performance in the area under review
Hypothesis Two
- H0: There is no significant relationship between the reward system and organizational staff performance in the area under review
- H1: There is significant relationship between the reward system and organizational staff performance in the area under review
Hypothesis Three
- H0: Reward system does not enhance organizational staff performance in the area under review
- H1: Reward system enhances organizational staff performance in the area under review
Hypothesis Four
- H0: There are no factors in the reward system that impinges organizational staff performance in the area under review
- H1: There are factors in the reward system that impinges organizational staff performance in the area under review
1.7 Significance of Study
The outcome of this study will provide evidence for organizations to construct, develop or structure an enhanced rewards system for their employees through the development of a reward framework.
This study will explore the impact of non-monetary and monetary reward programmes on organizational staff performance thereby contributing to the increased overall performance of the organization.
This will serve as guide to entrepreneurs, managers and administrators of both nongovernmental and governmental organization towards improved organizational performance and productivity.
This study will be of immense benefit to other researchers who intend to know more on this study and can also be used by non-researchers to build more on their research work. It will also contribute to knowledge and could serve as a guide for other study.
1.8 Organization of Variables
Dependent variable: Organizational staff performance which is measured by work performance, job quality, number of tasks completed
Independent variable: Reward system which is captured by basic salary, bonuses, promotion, recognition
Y* = f(Y1, Y2, Y3)
Y* = Organizational staff performance
Where:
Y1 = work performance
Y2 = job quality
Y3 = number of tasks completed
X = Reward system
X = f(X1, X2, X3, X4)
Where:
X1 = basic salary
X2 = bonuses
X3 = promotion
X4 = recognition
It can also be stated that the organizational staff performance is a function of reward system.
Y* = f (X1, X2)
Converting this functional relationship into a regression model, it becomes:
Y* = α0 + α1X1 + α2X2 + μ
Α0 = constant term of the regression model
Α1-2 = coefficients of parameter estimates of reward system
μ = Stochastic variable
1.9 Scope of Study
The scope of the research is focused on the Impact of Organizational Reward System on Staff Productivity in Business Establishment using Anchor Insurance Company as a reference point.
1.10 Limitations of the Study
During the course of this study, many things militated against its completion, some of which are:
- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
- Research material: availability of research material is a major setback to the scope of the study.
- Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
- Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
1.11 Definition of Terms
Reward: Something of value given in return for an act.
Motivation: An incentive or reason for doing something.
Compensation: A reward given for some loss or service.
Performance: producing or able to produce quality work output.
Remuneration: money paid for work or a service.
Productivity: The state of being efficient or yielding good results financially and otherwise.
