THE EFFECT OF NON-FINANCIAL INCENTIVE ON STAFF PRODUCTIVITY IN NIGERIAN SECURITY PRINTING AND MINTING COMPANY
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THE EFFECT OF
NON-FINANCIAL INCENTIVE ON STAFF PRODUCTIVITY IN NIGERIAN SECURITY PRINTING AND
MINTING COMPANY
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF
THE STUDY
Increasingly in the contemporary organization, human
resourcing strategies are based on three premises:
1. People-first
2.
High-performance
3. High-commitment
Armstrong (2012) suggested that people-first focus is a
pre-cursor to winning commitment and mobilising the workforce in executing
corporate strategy. Success in a highly competitive, global marketplace demands
high commitment but also high performance, and organisations 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. According to Banjoko (1996) hardly is any
issue more relevant and crucial to an employee than his financial and
non-financial remuneration, and scarcely has any matter led to strained labour
and management relations or lead to strike action much more than wage - related
issues as suggested by Fajana (2006). Considering the trends of great disparity
between one's expenditures and the income accruing into ones pocket due to the
increasing inflation in our economy, it is therefore proper to say that reward
management is a matter that is closest to the heart of every employee and their
employers. It is a common saying that man does not live by bread alone yet he
cannot live without it.In today’s competitive and global workplace, one of the
strategies that successful companies use in having the ability to attract many
qualified candidates, retain top talent, and maintain a highly motivated
workforce is the use of rewards.
Rewards can be used to keep the organisation and the attractiveness
of the job itself and proper reward management in of an organisation determines
how job applicants will romance with such organisation. The organisation reward
policy has an external influence on the source of labour supply.
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.
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.
Reward management is not just about pay and employee
benefits. It is equally concerned with non-financial rewards such as
recognition, learning and development opportunities and increased job
responsibility is the process of ensuring that people are rewarded fairly for
the work they do and for contributing to the achievement of the organization's
purpose and aims.
Reward management provides answers to two fundamental
questions:
1) What do we value?
2) What are we prepared to pay for?
All organisations face various degrees of competition in
variety of labour markets. Supply and demand conditions in these markets
require that organisations offer rewards that are competitive enough to attract
a sufficient number of competent job applicants.
In essence, for the organization to be effective, it must be
able to structure a reward policy that will match the desired reward of the
employee.
Consequently, part of the challenges face by organisations is
ensuring that their employees are highly motivated and committed and in this
regard there are techniques and strategies employers put in place to motivate
employees in order to improve job performance and guaranty their continuous
commitment to reward good work Khan et al (2010).
Identifying the
most suitable form of reward and to implement
it in such a way
that the businesses benefit has
also been one of the challenges facing management in modern organisation
Dommeryer et al (2010).
Over the years, the management of reward systems have been
one challenging area of concern to both industry practitioners and scholars.
This is because apart from its potential in motivating employees to spectacular
performances, it has proved to be a veritable tool to ensuring industrial
harmony, job satisfaction Raza et al, (2011) and organizational commitment if
used appropriately Oluseyi & Ayo (2009).
Equally challenging is the identification of the most
suitable reward and to implement it in such a way that benefit all stakeholders
in the organization. Thus, it is important to look at reward systems, view the
alternatives available and understand them. According to Robbins & Coulter
(2003) the focus is on four important components:
1. Type of rewards
2. Reward norms
3. Distribution
criteria, and
4. Desired outcomes.
Therefore this research work will serve as a veritable tool
in enlightening on non-monetary motivation and the focus is on how non-monetary
reward systems are used to motivate public sector employees to improve their
job performance and remain committed to organisational goals. Non-financial
rewards focus on the needs most people have, although to different degrees,
such as achievement, recognition, responsibility, influence and personal
growth.
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.
On the other hand, organizational commitment refers to a
strong desire to remain a member of a particular organization, a willingness to
exert high levels of efforts on behalf of the organization and a define belief
in and acceptability of the values and goals of the organization Adeyinka et al
(2007).
From the above, it is
emphasized that the need for recognition, self-respect, growth, meaningful work,
social activities, teamwork, participation in decision making are important
non-monetary rewards in boosting the employees’ morale and increasing their
commitments to their organisations.
1.2 Statement of the
Problem
Nigerian Security Printing and Minting Services (NSPMS) like
other public enterprise is constraint with the problem of using non-performance
based element like salaries to compensate its staff as against
performance-related pay structure which has hampered productivity because it
does not make worker put in extra effort in their work. This is so because
their compensation is not based on incentive schemes that elicit additional
effort of workers sequel to unfriendly government legislation on wages clause
and bureaucratic inefficiency. Hence the need to examine the effect
non-financial incentive on staff productivity in Nigeria Nigerian Printing and
Minting Services Lagos.
In the systematic study of organisation, it is accepted that
manpower is one of the most important assets of an organisation because things
are getting done through employees. In other words, the success of an
organization in realizing its objectives heavily depends on the performance of
its employees. Therefore, it is important to focus on the factors that
militates against the commitment and performance of the employees.
Performance is considered to be related with the concepts of
ability, opportunity and motivation Ivancevich & Matteson (1988)
Moreover, it is apparent that in the absence of willingness
to perform; capacity and opportunity will not generate the desired results. If
the situation is to be explained by a proverb; you can take the horse to the
water but you cannot make it drink.
All organisations, whether public or private, need motivated
employees to be effective and efficient in their functioning, in addition to
the other factors.
Employees who are motivated to work energetically and
creatively toward the accomplishment of organisational goals are one of the
most important inputs to organisational success. Consequently, the challenge
for organisations is to ensure that their employees are highly motivated.
Naturally every employee love to be motivated as they bear in
mind that this will drive extra input to their work but to the employers, when
the issue is motivation, one of the things that comes to their mind is giving
extra Non-Financial Incentives to indulge the employees to perform and get more
commitments which should translate to better performance at workplace.
Motivation refers to any means both financial and non -financial that makes an
employee desire to do better, try harder and expend more energy. With regard to
monetary Non-Financial Incentives, it can be argued that private organizations
have more financial sources to motivate their employees than the public
organizations. It is known that public employees’ payment levels in Nigeria are
generally low compared to private sector employees. Moreover, while many
private organisations have monetary Non-Financial Incentives such as bonuses,
commissions, cash rewards etc, it is quite challenging for the public sector to
provide such Non-Financial Incentives in adequate levels in a weak national
economy. As a result, it is important to look for any possible alternative
means that can be used to motivate employees in the public sector.
In line with this purpose, this research is meant to focus on
the use of non-monetary Non-Financial Incentives as a motivational tool and
their effectiveness in the motivation of public sector employees’. Non-monetary
or non-cash Non-Financial Incentives do not involve direct payment of cash and
they can be tangible or intangible. Some examples of this kind of Non-Financial
Incentives 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, organising social activities in the work place,
etc.
Starting with Elton Mayo and Human Relations School, it was
emphasised that the need for recognition, self-respect, growth, meaningful
work, social activities are as important as monetary Non-Financial Incentives
in increasing the employees’ morale and motivation. There are many contemporary
research studies supporting the effectiveness of non-monetary Non-Financial
Incentives as a motivating tool in the private sector organizations. However,
there is hardly any study regarding its use in public sector organisations.
This problem would be faced as this work will shed light on this issue by
exploring the motivating potential of non-monetary Non-Financial Incentives in
the public sector of Nigeria.
However, in a bid to successfully motivate their employees,
public sector managers are often faced with the difficulty of determining the
appropriate and the sufficient level of non-monetary motivating strategies to
use given the dynamic nature of people’s behaviour and their changing needs,
management is bordered by the challenge of not only having to determine the
right kind of non-financial motivational rewards but how to understand the
perception of the employee concerned and what value he or she would likely
attach to the adopted strategy in order to enhance greater level of commitment.
Furthermore, while many researches have shown that rewards
influence and motivate employees commitment to organisations, empirical
literature does not offer guidance on how organisational commitments are affected
by the type of non-monetary reward offered to employees and what effect has
such Non-Financial Incentives on public sector employees who by the nature of
the public service sector do not have much accesses to source of monetary
rewards.
Given these challenges, this study attempts to empirically
examine the relationship between the use of non-reward monetary rewards and
organizational commitment.
1.3 Objectives of the
Study
The central objectives of this study are to examine the
effect of non-financial incentive on staff productivity in Nigerian Security
Printing and Minting Company
Specifically the study is set out to:
Examine the non-monetary rewards used by the organisation in
motivating employee towards increased organizational commitment.
Examine the relationship between the measures of
non-financial rewards and dimensions of organizational commitment.
Determine the extent to which each measure of non-monetary
rewards contributes towards predicting organizational commitment.
To determine if there is any significant difference among
employees on their perception of non-monetary rewards.
1.4 Relevant
Research Questions
The following question serves as guides to the research
study:
1. Is there any
significant relationship between non-monetary rewards and dimensions of
organizational commitment?
2. What is the
relative contribution of individual measures of non-monetary rewards towards
predicting organizational commitment?
3. Is there any
significant difference among employees on their perception of non-monetary
rewards?
4. Is there any
significant difference among employees on dimensions oforganizational
commitment?
1.5 Relevant
Research Hypothesis
The following tentative statement will be tested in the
course of this study:
1. There is no
significant relationship between non-monetary rewards and organizational
commitment.
2. The individual
measures of non-monetary rewards do not significantly predict organizational
commitment.
3. There is no
significant difference among employees on perception of non-monetary rewards.
4. There is no
significant difference among employees on dimensions of organizational
commitment.
1.6The significance of study
Latham and Locke (1979) noted that: 'Money is obviously the
primary incentive' but they went on to say that 'money alone is not enough to
motivate high performance Money may be an important factor in attracting and
retaining people (the sorting effect). It can produce satisfaction, but this
may be short-lived. And if the principles of distributive and procedural
justice are not followed, it can cause lasting dissatisfaction.
It can be said that money will motivate some of the people
all of the time and, perhaps, all of the people some of the time. But it cannot
be relied on to motivate all of the people all of the time. To rely on it as
the sole motivator is misguided. Money has to be reinforced by non-financial
rewards, especially those that provide intrinsic motivation.
It was asserted by Pink (2009) that intrinsic rewards are an
underutilized source for motivating employees, especially those performing
complex or creative tasks. He refers to evidence that intrinsic rewards work
and that financial Non-Financial Incentives limit creativity and can undermine
it by interfering with our natural tendencies to direct our own lives to learn
and create new things. He believes that financial Non-Financial Incentives work
best for people in routine jobs which offer few intrinsic rewards to motivate
their holders.
When motivation is achieved by intrinsic rewards it can have
a more powerful and longer-lasting effect on people, and financial and
non-financial rewards can be mutually reinforcing.
Reward systems should therefore be designed and managed in
such a way as to provide the best mix of all kinds of motivators according to
the needs of the organization and its members.
According to Armstrong (2010) Reward management is an area in
HRM that deals with the strategies, policies and processes required to ensure
that the value of people and the contribution they make to achieving
organizational, departmental and team goals is recognized and rewarded. It is
about the design, implementation and maintenance of reward systems
(interrelated reward processes, practices and procedures) which aim to satisfy
the needs of both the organization and its stakeholders and to operate fairly,
equitably and consistently.
But it should be emphasized that reward management is not
just about pay and employee benefits. It is equally concerned with
non-financial rewards such as recognition, learning and development
opportunities and increased job responsibility.
1.7 Scope of the
Study
The study concentrates on the theories and models of
motivation; incentive, non-monetary rewards system and organizational
commitment but makes significant emphasis on non-monetary or intrinsic
motivational theories. In terms of research coverage, this study will be
limited to a particular institution in the public sector of Nigeria. The study
is focused on the effects of non-monetary incentive on organizational
commitments among junior and senior public officers of the Nigerian Security
Printing and Minting Company, Lagos.
Investigation shall cut across all departments and units within the
organization and shall include both male and female employees. It will help in understanding the importance
of reward and how it can be successfully applied across organizations
especially those that are effectively using Non-Financial Incentives to improve
performance.
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