1.1 Introduction
Financial incentive is a process of guiding the conduct and influencing people so that they strives individual or group towards the achievement of group goals. Every employee comes to an organization with one motive, to earn a living and financial incentive play a vital role in the lives of these employees. Taking away financial incentive might jeopardize this individual or the group interest. Management on the other hand, established the organization for the purpose of return of investment and profit making, high productivity, quality of services, industrial peace, cooperative labour and to remain a going concern. The incentives involved are fairly intangible and are the one related to maslows higher needs and involve in particular, the fulfilment of those needs defined by Herzberg as the motivating need.
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, Limitations of the Study and Definition of technical terms.
1.2 Background of Study
Incentive strategies are those possible instruments which move, impel of induce one to act to satisfy a need or want. It is therefore defined as a force that pushes one to increase effort to achieve a goal or an objective for reward. Incentive is anticipatory in nature. When one is moved to action, a reward must be expressed. As the names imply, intrinsic satisfaction is the derivation of satisfaction of needs from the work itself; while extrinsic satisfaction is the derivation of the needs satisfaction through reward received for doing the work. In every organization, the management emphasis on high productivity, quality of services, quality workmanship, industrial peace, cooperative labour etc. On the other hand, employees need fair wages, job satisfaction, good working conditions, participation in decision making, self recognition and opportunity for advancement.
Scott Jeffrey (2002), states the long-term benefits of tangible non-monetary incentives as follows. First, tangible non-monetary incentives might be perceived as gifts, which change the nature of the employment relationship. Second, a tangible non-monetary incentive like a trip to a touristic place will be remembered longer and more clearly than what is done with a cash bonus. This type of incentive creates fond memories (e.g. photographs of the trip) that will create a positive feeling in construction staffs, which will induce more positive attitude towards the firm.
Nwachukwu (2001) also observed that most building workers on construction sites complain on the need for motivation which has been affecting productivity in the construction industry. Given the large nature of the construction industry and its importance to the Gross Domestic Product as well as number of people it employs, so there is need to identify ways at which workforce productivity in the construction industry can be improved.
Organizations and managers have suffered tremendously in trying to utilize their human resources, they usually encounter frequent industrial conflicts and several unresolved agitations by workers and different categories of employees basically steaming from one form of dissatisfaction or the other. The main point of misunderstanding between management and employees/workers in most cases is found in the arrears of inadequate and inequitable monetary rewards.
Armstrong (2012) suggested that people-first focus is a pre-cursor to winning commitment and mobilizing the workforce in executing corporate strategy. Success in a highly competitive, global marketplace demands high commitment but also high performance, and organizations are increasingly focusing on developing such a culture as a core part of their employment practice.
Armstrong believes that people is the fulcrum upon which organisations rest. One of the most important, complex and problematic issues in managing human resources in any organisation is reward management. Armstrong (2007) defined Reward management as a system that deals with the strategies, policies and processes required to ensure that the contribution of people to the organization is recognised by both financial and non-financial means. It is about the design, implementation and maintenance of reward systems (reward processes, practices and procedures), which aim to meet the needs of both the organization and its stakeholders.
Non-monetary or non-financial rewards do not involve direct payment of cash and they can be tangible or intangible (Adeyinka et al., 2007). Some other examples of this kind of rewards are, encouraging the employees by providing them with autonomy in their job and participation in decision making, assigning challenging duties, improving working conditions, recognizing good work through small gifts, letters of appreciation, plagues, tickets to restaurant etc., providing some services for the employees, organizing social activities in the work place, etc. (Robbins and Coulter, 2003)
Non-monetary rewards generally motivate employees because they recognize the employees’ intrinsic needs. These are the needs that have to be satisfied on a long-term basis because they come from within the employee and tend to increase their willingness to be identified with organizational goals and objectives irrespective of unfavourable conditions.
Equally challenging is the identification of the most suitable reward and to implement it in such a way that benefits all stakeholders in the organization. Thus, it is important to look at reward systems, view the alternatives available and understand them. 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.
Therefore, in Nigeria where the research was carried out, the activities that was conducted is to know the Effect of Financial and Non-financial Incentives on Staff Productivity.
1.3 Statement of Problems
Investigation revealed that the general concept of financial incentives is one form of motivating techniques and its indispensability for achievement of desired organizational goals and increase productivity and reward for performance has been a subject of controversy over the years globally generating diverse research arguments, criticisms and assumptions especially in developing country like ours. Although many researches had been conducted on this concept, there are many avenues not yet explored and considered as per the complexities to the time understanding of what actually motivate the individuals in the work place.
Organizations and managers have suffered tremendously in trying to utilize their human resources, they usually encounter frequent industrial conflicts and several unresolved agitations by workers and different categories of employees basically steaming from one form of dissatisfaction or the other. The main point of misunderstanding between management and employees/workers in most cases is found in the arrears of inadequate and inequitable monetary rewards.
One of the problems of workers in National Board for Technical Education is financial incentives which led to workers dissatisfaction and low productivity. It is evident here that the mode of financial incentives used by National Board for Technical Education has not been effective.
Secondly, there is correlation between financial incentives and workers productivity in National Board for Technical Education which the management is not implementing.
Thirdly, the problems militating against National Board for Technical Education staff is financial incentives because there are not adequately provided. Another problem is delay in paying those who have performed their duties.
1.4 Aim and Objectives of Study
The aim of the study is to examine the Effect of Financial and Non-financial Incentives on Staff Productivity. In achieving this aim, the following specific objectives were laid out as follows:
- To examine the non-monetary rewards used by the organization in motivating employee towards increased organizational commitment;
- To examine the relationship between the measures of non-financial rewards and dimensions of organizational commitment;
- To determine if there is any significant difference among employees on their perception of non-monetary rewards; and
- To determine the extent to which each measure of non-monetary rewards contributes towards predicting organizational commitment.
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:
- Is there any significant relationship between non-monetary rewards and dimensions of organizational commitment?
- Is there any significant difference among employees on their perception of non-monetary rewards?
- Is there any significant difference among employees on dimensions of organizational commitment?
- What is the relative contribution of individual measures of non-monetary rewards towards predicting organizational commitment?
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 relationship between non-monetary rewards and organizational commitment.
- H1: There is significant relationship between non-monetary rewards and organizational commitment.
Hypothesis Two
- H0: The individual measures of non-monetary rewards do not significantly predict organizational commitment.
- H1: The individual measures of non-monetary rewards significantly predict organizational commitment.
Hypothesis Three
- H0: There is no significant difference among employees on perception of non-monetary rewards.
- H1: There is significant difference among employees on perception of non-monetary rewards.
Hypothesis Four
- H0: There is no significant difference among employees on dimensions of organizational commitment.
- H1: There is significant difference among employees on dimensions of organizational commitment.
1.7 Significance of Study
The researchers’ choice on the topic “The Effect of Financial and Non-financial Incentives on Staff Productivity” therefore emanates from the fact that early available research on the topic seems to have conducted based on developed nations with totally different socio economic, political and other background different from ours which to some extent still is under-affluent economy. This study therefore is meant to contribute to the unresolved controversy as to whether or not financial remuneration is a positive incentive in motivating human behaviour at work.
The study will enable policy makers in the development of appropriate and adequately competitive incentives regime with appropriate rewards to adequately motivate public servants towards acceptable standards of performance. Findings for the study also benefited other stakeholders like commercial banks, other government agencies and the general public in understanding financial incentives that could impact work performance in any setting.
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. This study contributes to knowledge and could serve as a guide for other study.
1.8 Scope of Study
The scope of the research is focused on the Effect of Financial and Non-financial Incentives on Staff Productivity.
1.9 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.
- Establishment Policies: Establishment policies posed a serious limitation as most staffs are not ready to release information needed for this project work. There were lots of information needed from the staffs of this establishment to enhance the study which took them time to release or they did not release at all for security purposes, hence the scope was reduced.
- 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).
1.10 Definition of Terms
Incentives: These are instruments of material or possible statement used to motivate or encourage employees to higher productivity in an organization.
Employees: This simply means people or persons that are successfully employed for wages/salary in an organization.
Productivity: This can be defined as a measure of the output on organization per unit of input (labour, capital, raw materials, etc.). But simply put as the ration of output to inputs.
