1.0 Introduction
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1.1 Background to the Study
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Reward being seen as a vital instrument in employee performance. A well rewarded employee feels that he/she is being valued by the company that he/she is working for. They are also encouraged to work harder and better if they are aware that their well-being is taken seriously by their employers, and that their career and self development are also being honed and taken care of by their company. Employees are the engine of organization vehicles while reward is the fuel. In the modern time management, no organization can achieve its stated objectives without commiserate rewards and fringe benefits for its employees (Martocchio, 2011).
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The role of reward system in shaping the live of an organization cannot be overemphasized. Reward system has been described as the development, implementation, maintenance, communication and evaluation of compensation processes (Galanou, Georgakopolous, Sotiropoulous and Dimitris, 2010). Ordinarily, the management of people at work is an integral part of the management process, put differently managers need to understand the critical importance of people in their organizations so as to recognize that the human element and the organization are synonymous (Popoola and Ayeni, 2007). Therefore, it is imperative and morally worthwhile to have a sound reward system and fringe benefits in place.
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Fringe benefit is defined as any form of compensation provided by the organization other than wages or salaries that is paid for in whole or in part by the employer. Employee benefits are also essential for the development of corporate industrial relations. Examples include retirement plans, child care, elder care, hospitalization programs, social security, vacation and paid holidays (Christoph, cited in Ju, Kong and Hussin, 2008).
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Cascio (2003) asserted that because of the importance that rewards holds on people’s lifestyle and self esteem, individuals are very concerned about what they are paid. While on the other hands organizations are concerned with what they pay because it motivates important decisions of employees about job satisfaction and overall corporate performance.
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The happier people are with their jobs, the more satisfied they are said to be (Odunlade, 2012). The perception of being paid what one is worth predicts job satisfaction. Job satisfaction is perceived as an individual’s attitude and behavior towards aspects of his own job. Personal job satisfaction is an affective or emotional response toward various facets and outcomes of one’s job; meaning that personal satisfaction in relation to a job is not unitary, as a person may be satisfied with one aspect of his or her job and may be dissatisfied with the rest (Bozeman and Gaughan, 2011).
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Employees will demonstrate pleasurable positive attitudes when they are satisfied with the corporate reward system and fringe benefits which the job brings. Thus, good reward system and fringe benefits will increase the employees’ job satisfaction which will invariably affect corporate productivity and performance (Millan et al, 2011). But, whether reward system and fringe benefits negatively or positively determines workers job satisfaction in Nigeria remains open to empirical studies. Hence, this study will investigate the impact of reward system and fringe benefits on job satisfaction with a special reference to Ensure Insurance Plc.
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1.2 Statement of the Problem
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Owing to the high level of unemployment that has plagued the labour market in Nigeria, many employers of labour have taken advantage of this menace by unilaterally fixing salaries and wages without the participation of their employees. Empirical researches also indicate that labour is largely underpriced since the numbers of job seekers are more than the number of available jobs. According to the National Manpower Board, (2009) the Nigeria labour market can barely absorb 10% of the over 3.8 million graduates turned out by the Nigeria educational system on a yearly basis.
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Sometimes, employers prove very difficult to negotiate with. While the employee wants the highest and the best package, the employer would like to minimize cost as much as possible for profit maximization. Bad and depressed economic condition in Nigeria makes it the more difficult to fully implement a good reward and fringe benefits system.
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Many of the studies on the dynamics of reward system, fringe benefits and job satisfactionwere done outside Nigeria. These studies particularly focus on workers in the banking industry. In Nigeria, most of the available studies such as Odunlade (2012) and Aninkan (2014) were too brief and lacking depths. Moreover, these researches were also theoretical studies whose findings were subjectively based on researchers’ personal opinions. It is noted that the past studies did not give adequate attention to reward system and fringe benefits, as well as highlighting plausible strategy that can stimulate employee job satisfaction in Nigeria. It is against this backdrop that this study seeks to fill in the gap in knowledge by critically examining the impact of reward system and fringe benefits on job satisfaction with a special reference to Ensure Insurance Plc.
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1.3 Aim and Objectives of the Study
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The major aim of this research is to investigate the impact of reward system and fringe benefits on job satisfaction. While the specific objectives include the following:
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\n- To investigate the relationship between monetary reward and employees’ job satisfaction.
\n- To examine the impact of fringe benefits on employees’ job commitment.
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1.4 Research Questions
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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:
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\n- What is the relationship between monetary reward and employees’ job satisfaction?
\n- What is the impact of fringe benefits on employees’ job commitment?
\n- How does compensation management affect workers’ productivity?
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1.5 Research Hypotheses
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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.
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Hypothesis One:
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\n- H0: There is no significant relationship between monetary reward and employees’ job satisfaction.
\n- H1: There is a significant relationship between monetary reward and employees’ job satisfaction.
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Hypothesis Two:
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\n- H0: Fringe benefit has no impact on employees’ job commitment.
\n- H1: Fringe benefit has an impact on employees’ job commitment.
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Hypothesis Three:
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\n- H0: There is no significant relationship between compensation management and workers’ productivity.
\n- H1: There is a significant relationship between compensation management and workers’ productivity.
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