ENIOLA ESTHER FULL PROJECT
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Ladoke Akintola University of Technology**We aren't endorsed by this school
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ACCOUNTANC ACC 418
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Management
Date
Dec 24, 2024
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83
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CHAPTER ONEINTRODUCTION1.01Background to the StudyRewarding is an essential component of any organization, institutions and business of anynature. This system has been part of childhood when children in schools are rewarded ontheir good performance. The study of Lawler (2004), proved that rewarding both financialand non-financial has always been effective for human resource in the business process. Inrelevance to employee performance, rewarding always served as a source of motivation andincreased engagement. Pratheepkanth (2011) discussed human nature that an individual inorganisation performs well when he is motivated and the primary source of motivatingemployees is effective reward systems in the organisations. Pratheepkanth (2011) furtherdiscussed that in the field of neuroscience rewarding or reward system is referred to as therecognition and functioning of human brain which is responsible for reward-relatedrecognition. In this system, the human brain recognizes things as compensation, prize,remuneration or incentive as a result of outstanding performance. The reward system inorganizations has a central function in human resources management, as it is used in meetingthe organization's objectives (Alfandi and Alkahsawneh 2014). The study of GaltressMarshalland Kirkpatrick (2012) examined two forms of rewards, namely financial rewardsand non-financial rewards. The financial rewards are related to monetary prizes such ascompensation, increased salary, home allowance, car allowance etc. whereas non-financialrewards are job promotion, appreciation, recognition, appreciation lunch or dinner etc.(Galtress, Marshall and Kirkpatrick (2012).It has been observed that better outcomes in terms of performance and engagement can beattained if it is based on motivation because the workers show a lack of interest when there isno proper reward system in the organization (Alfandi and Alkahsawneh, 2014). The study ofSoutschek (2017) shows that motivation arises from a reward system and is not gender-specific or concerned with different culture or backgrounds. However, the priorities of gettingfinancial or non-financial rewards can be dependent on the abovementioned factors; alsoknown as intrinsic and extrinsic rewards. In addition to this, it is also said that rewards do notalways mean monetary benefits, sometimes they are based on recognition, appraisal orappreciations (Shields, 2015). The research therefore focuses on both facets of the rewardsystem (extrinsic and intrinsic), but to explore the effect of the intrinsic reward systems on1
employee performance and the relationship of extrinsic reward system in some selectedmicrofinance banks in Abeokuta, Ogun State, Nigeria.According to Trunk, Babnik and Breznik (2012) in order to understand the challenges ofreward system it is important to understand the vital role of Human resource management.Authors Trunk, Babnik and Breznik determine that human resource is important part oforganization that can fulfill the needs of employees. There are many practices of humanresource management one of which is managing the rewards system efficiently. Perogamvrosand Schwast (2012) stated that "reward system in any organization determines the set ofprocedures through which the management can control the behaviour of employees at work".Lam and Khare (2010) also discussed that HR professional evaluate the employeeperformance aligned with business objectives to reward them. Lam and Khare highlightedthat this reward system must have a positive value to be received by the employees otherwiseit will not be regarded as reward.It has been observed by Martono (2018) that employee performance can become a lowstandard if there is inadequate motivation. In order to attain a firm's productivity and generatemore revenue, it is important that the employees should be well engaged and motivatedtowards the work. Rewarding not only enhance their motivation but also help them to supporttheir extra expenses that every individual desire. Study highlighted various advantages thatare associated with the effective rewarding system such as good performance and increasedmotivation (Martono, 2018). Not just in terms of good performance and employeeproductivity it has been observed that motivated employees also keep the customers satisfiedby meeting their expectations. Because a good performance that is rewarded by theorganization is more likely to be repeated, in comparison to those are left unrecognized orunappreciated. In return, consistent customer satisfaction generates more revenue to helpcompanies to gain a competitive position on the market with an increasing reputation andloyal clients (Gungor, 2011).On the other hand, the inadequacy of motivation and poor reward system results in negativeconsequences in terms of a low level of satisfaction in employees, lack of concentration inwork, high employee turnover rate, taking early retirements and dissatisfied customers. Mostcompanies spend more in training and employee development to get more skilled workersinto the business (Karami, Dolatabadi and Rajaeepour 2013). Human resource managementof an organization has an approach for employee staffing and retaining considering people as2
an asset also known as human capital. The value of this asset can be enhanced throughinvestment. The current challenges in human capital management include retention andattraction of quality individuals, scarcity of skills and increased market-competitive salaries.In private firms, these challenges are very common because of increased competition andindustrialization. The firms are moving to a global level and thus require many skilledworkers that can add value to their organization. But to ensure that employees are satisfied,the firm must take effective steps that can overcome the issues of demonization in employees(Ngwa, 2019).The organizations must ensure proper planning and management to formulate a rewardingsystem. Rewarding systems are developed with the integrated efforts of the company's humanresource department and higher management. It is important for the company to create asystem that has the ability to preserve more quality workers and sustain it for a longer period.Since the globalisation has increased and technology has improved, there are manyopportunities for the enterprises to keep their employees motivated and engaged in a moreefficient manner (Ojeleye and Okoro, 2016). Therefore, the most important investment of thebusiness is investing in people because they are the actual backbone of the company. It ismore advisable to establish a good rewarding system rather than spending on hiring newemployees because of the high turnover rate. Lack of a good reward system, low jobsatisfaction level and non-competitive salaries are the key reasons because of whichemployees look to find other job opportunities and switch when they find one that is moreattractive in terms of financial and non-financial benefits (Wilson, 2005). This study,therefore, aims to identify the different types of intrinsic and extrinsic rewards given in someselected microfinance banks in Abeokuta, Ogun state and the impacts on the performance ofemployees in the selected microfinance banks.The selected microfinance banks used in the research study is continuously improving theirkey strategic human resource management area in terms of establishing a new and betterreward system. Meanwhile, the selected microfinance banks used as the study area in thisresearch work is looking for a more cost-effective strategy and therefore it is planning to cutthe cost in the Remuneration area. Remuneration is defined simply as the money paid forwork which can be in the form of salaries, bonuses, incentives etc. The company must lookfor other effective strategies in order to keep their employees motivated.3
1.02Statement of the ProblemEmployees nowadays are more educated and are more aware of their rights andresponsibilities. As employer expects that workers should work more efficiently andconsistently improve quality of work, in the same way, employees also have increasedexpectations from the owners in terms of financial and non-financial rewards. Therefore,employees always look for more incentives in the form of rewards (Alalade and Oguntodu,2015). The selected microfinance banks used as the study area is maintaining a worldwidenetwork of professional firms in different parts of the country, while managing 207,050employees. It provides different consultation services regarding audits, accounting andfinance, risk management, tax and other advisory services. It has been reported that theselected microfinance banks spends around $976 to $32,000 annually on employeecompensation and bonuses (from annual report, 2020).Though rewards and benefits are crucial part of human resource management yet there existsa wide gap between the reality rhetoric aspects. In the theories given by Terera and Ngirande(2014) and Ibrar and Khan (2015), it is mentioned that compensation is important foremployee motivation yet, in a practical scenario, it has been observed that companies pay lessattention to this aspect. Considering this scenario, the research is aimed to identify what typeof extrinsic and intrinsic rewards are given in the selected microfinance banks and how theyare impacting the employee performance in relevance to the case of the selected microfinancebanks used as the study area. Through Glassdoor reviews of employees, the companyprovides good compensation and benefits, yet this study explored how extrinsic and intrinsicrewards influence their performance (Glassdoor Review, 2020).1.03Objectives of the StudyThe purpose of this study is to examine the effect of compensation strategy and rewardsystem on employees.i.To access the relationship between salaries and wages and employee satisfaction inmanufacturing industry.ii.To identify the influence of fringe benefits on employee satisfaction in manufacturingindustry.4
iii.To ascertain the relationship between training and development and employeesatisfaction in manufacturing industry.iv.To examine the effect of job promotion on employee satisfaction in manufacturingindustry 1.04Research QuestionsIn pursuit of the research objective of the study, the following research questions have beenformulated.i. Is there relationship between salaries and wages and employee satisfaction inmanufacturing industry?ii. Does fringe benefits have influence on employee satisfaction in manufacturingindustry?iii. What is the relationship between training and development and employee satisfactionin manufacturing industry?iv. Does job promotion effect on employee satisfaction in manufacturing industry? 1.05Research HypothesesThe following hypotheses will be tested in this study, the study formulated the following nullhypotheses to guide the study:H01: There is no significant relationship between salaries and wages and employeesatisfaction in manufacturing industry. H02: Fringe benefits does not have influence on employee satisfaction in manufacturingindustry.H03: There is no significant relationship between training and development and employeesatisfaction in manufacturing industry.H04: Job promotion does not have effect on employee satisfaction in manufacturingindustry.5
1.06Significance of the StudyThe significance of the study includes;In order to clarify the interaction between the reward system and the performance ofemployees in the organization of the study area, it is hoped that work would improveknowledge and appreciation of the effects of the reward system on employees’ performancein the organization. As discussed below, the following would significantly benefit from thestudy:The suggestions that appear in the study should be helpful to the organization policymakersas they provide management the knowledge on the subject matter. It will improve operationalprocesses/personnel efficiency and performance, for private and public employees. It is alsohoped that industry companies will use the findings of the current study to develop andimplement strategies aimed at enforcing fair reward systems designed to better the individualand group performance of employees and help improve the long-term efficiency andeffectiveness of organizational processes.Employees would also be more informed of the reward problems within the organization, sothey are correctly informed of what their boss wants to minimize hostility between them andtheir employer. A harmonious working environment requires high efficiency and productiveoutput. This study will also explore the impact of non-monetary and monetary rewardprogrammes on organizational staff performance thereby contributing to the increased overallperformance of the organization.The Future Researchers: The study will be useful to those who will carry out studies inrelated areas in future. It will serve as a reference material to them. Even, the findings canprovide the bases for further studies.1.07Scope and Limitation of the StudyThis study is limited to the employees of organization of some selected microfinance banks inAbeokuta city, capital of Ogun state. It will also cover the organizational reward system andconsequent staff performance.Limitation of the study6
In the course of the study, the researcher encountered a lot of limitations. The majorlimitation encountered in the course of this study was time. This resulted from the nature ofthe semester, being short and full of academic and social activities; it was not an easy taskcombining classroom activities with field work to collect materials for the research.Secondly, another major limitation of this study is the officialdom and secrecy, whichcharacterize Business Service operations. This limited the procurement of relevant dataneeded for this study.1.08Historical Background of the Study Area1.08.1Historical Background of AB Microfinance BankThe AB Microfinance Bank is one of the best financial institutions in Nigeria. It was licensedby the Central Bank of Nigeria (CBN). Its head office is in Lagos State. Other branches ofAB microfinance bank are within Lagos state, Ogun State, Ondo State, and Oyo State.The microfinance bank is very passionate and fully committed to helping business ownersand entrepreneurs across Nigeria. AB microfinance bank makes it easy for individuals toobtain loans.This financial institution is a Limited Liability Company. It is also regulated by the CentralBank of Nigeria (CBN).AB microfinance bank has an outstanding relationship with a group of strong internationalshareholders who are committed to making financial services easily accessible in Nigeria. Some of the shareholders include the African Development Bank, Access MicrofinanceHolding AG of Germany, International Finance Corporation of the World Bank Group, andKfW – the German Development Bank. They worked together to establish to achieve the goalof setting up and managing microfinance banks in Asia and Africa. Some of the countriesthere have been able to achieve this goal are Nigeria, Zambia, Madagascar, Liberia, Tanzania,Rwanda, Georgia, Brazil, Tajikistan, and Azerbaijan.1.08.2History of Lapo Microfinance In 1987, the Lift Above Poverty Organization (LAPO) started as a non-profit entity atOgwashi-Uku in present-day Delta State. The Institution was established as a Non-Governmental Organization (NGO) by Godwin Ehigiamusoe in response to the effects of the7
implementation of the Structural Adjustment Programme (SAP) in 1986. In 1991, the FordFoundation gave a grant to LAPO. LAPO was formally incorporated as a non-profit, non-governmental organization with the Corporate Affairs Commission, a federal agency, in1993. In 2004, LAPO scaled up as a sustainable and effective lending institution drawinginspiration from best practice model of Grameen and ASA methodology in Bangladesh. In Nigeria, LAPO has partnered with the Grameen Bank. In 2010, LAPO transformed itsMicrofinance activities into a regulated microfinance bank, LAPO Microfinance Banklimited, while the remaining activities continued under the LAPO NGO. In 2010, LAPO Microfinance Bank obtained the approval of the Central Bank of Nigeria(CBN) to operate as a state microfinance bank and in 2012, it got an approval as a nationalmicrofinance bank. It celebrated their one millionth client and one billion dollars cumulativedisbursement in 2013. In 2014, LAPO MfB was awarded ‘Microfinance Bank of the Year2013’ by Business Day and Leadership Newspaper. LAPO stands for “Lift Above Poverty Organization” was originally established as a NigerianNGO in 1987 with a determined mission to help local Nigerians to move out of poverty. Itwas expanded as an MFI in 1990, and was registered as a microfinance bank in 2007.LAPO was formally incorporated as a non-profit, non-governmental organization with theCorporate Affairs Commission, a federal agency, in 1993. In 2004, LAPO scaled up as asustainable and effective lending institution drawing inspiration from best practice model ofGrameen and ASA methodology in Bangladesh.LAPO MfB is the largest microfinance bank in Nigeria with 1.1 million clients and 327branches currently operating in 26 out of 36 states in the country.The Nigerian government cued into this popular thinking in 2005 when it inaugurated themicrofinance banking scheme. This was founded to provide finance to economically activepoor excluded from financing by conventional banks, provide employment, engender ruraldevelopment and reduce poverty.LAPO is a Nigerian organisation with a microfinance bank dedicated to self-employmentthrough microfinance and an NGO, a non-governmental, non-profit community developmentorganization focused on the empowerment of the poor and the vulnerable. 8
LAPO focuses on assisting the poor, especially the women, in raising their socio-economicstatuses. It not only acts as a microcredit institution, but also assists clients in overcomingproblems beyond the lack of funds (Business capital), such as illiteracy and environmentaldegradation (which often aggravates poverty). Moreover, it aims to enhance leadership skills,literacy status and political participation among poor women. It empowers women byproviding opportunities for them to learn income generating skills such as sewing, foodprocessing and soap making. 1.09Operational Definition of Key TermsCompensation: This refers to direct and indirect rewards given to employees on the basis ofthe value of the job, their personal contributions and their performances.Performances: The extent to which an employee or group of employees have gone inachieving the set goals or standards.Employees: Person who work for compensation weather direct or indirect for another inreturn for stipulated series.Organization: A group of people who form a business in order to achieve a particular aim.Public Sector: The area of the nation’s affairs under governmental rather than private control.Policy: A course of action adopted and pursued by an organization, government, ruler,political party etc.Target: A result arrived at a goal or objectives aim at something.Productivity: The measure of the output of goods and series relative to resources available.9
CHAPTER TWOLITERATURE REVIEW2.01Conceptual Review of Relevant Concepts2.01:1Concept of Reward SystemReward system applies to all workplace resources available which can be used to recruit,maintain, motivate (inspire) and reward workers (Armstrong, 2013). The lack of rewards cancreate an uncomfortable atmosphere, undermining the workers' ability to work and may leadthem to flee their careers. Organizations also use financial rewards to reduce attrition in theworkforce and motivate workers, but this may not be the best long-term motivator(Armstrong and Brown, 2011). This is the material and psychological achievement thatenhances satisfaction with a well distributed reward (Mbah, Mgbemena, Ejike 2015).Thompson (2002) has defined reward as an appreciation for employees' additionalcontributions in cash or in kind to the organization and this rewards could be intrinsic orextrinsic in nature.Intrinsic RewardsThese are inherent rewards within the work itself. For example: achievement, diversity,challenge, independence, accountability, personal and professional development. They alsoinclude the status, recognition, praise and self-esteem of the superior and the colleagues(Mahaney and Lederer 2006). Intrinsic benefits improve self-esteem and satisfaction.Intrinsic rewards are drawn from the nature of the task itself and include aspects such aspleasant, difficult tasks, self-management and responsibility, diversity, imagination,opportunities to make use of talents and skills, and a proper contribution to the success ofactions. It is known that employees are motivated to work hard and achieve higher results10
when they are proud of their work and believe they make a significant contribution to thebusiness's performance and have fun, challenging and rewarding tasks (Mahaney andLederer, 2006).Extrinsic RewardsExtrinsic rewards go beyond the task itself. They include pay, fringe benefits, workplacesecurity, promotions, private office space and the social climate. Some examples are fairsalaries, salary increases, incentives for performance, and indirect forms of payment such ascompensatory off-time (Mahaney and Lederer 2006). Extrinsic rewards are used todemonstrate that the business takes teams' commitment to quality seriously. Components ofemployees' reward systems based on the study aims are, however, to be discussed, including:pay reward, recognition, a conducive working environment and the development of staff.2.01:1Pay RewardPay reward can be related to the encouragement of extrinsic. This is largely due to externalinfluences of a financial nature. The advantages and rewards have been discussed whetherthey really inspire or drive workers to work. According to Ryan and Deci (2012), the word"extrinsic motivation" is different from the success of a case. Extrinsic motivation encouragesemployees to work for the prize. In other areas, rewards encourage people to receive rewards.In their opinion, the ultimate strategic objective is to help them achieve their organizationalobjectives, ensuring that they have the qualified, competent, motivated and committedindividuals they need. The basic philosophy of the strategy is to recompense people for theirbenefit. The purpose is therefore to create incentives based on the principles that the values ofthe organization are willing to pay for. Ejumudo (2014) reports that there is still a debateabout whether money motivates, however, there is the argument that money can take ondifferent levels, since it can serve large requirements.11
2.01.2Employee RecognitionEmployee recognition is a kind of non-financial/non-cash payout which can be in socialapprovals and which really appreciates a well-documented work (Okwudili, 2015); Lotta(2012 ) argues that financial rewards generally motivated employees to increase their work,adding that the non-financial benefits of employees are greater compared to the effectivenessof Nelson (2014). Bruce and Walton (1992) receive many non-monetary rewards, such asdonations, prizes, trips and other incentives, which are more visible and/or comparable withfinancial advantages. The less tangible incentives, for example, relate to work flexibility,work independence, recognition of work and improvement potential. Non-monetary rewardsshould therefore be used for obvious purposes, particularly for workplaces or teamopportunities.2.01.3Conducive Work EnvironmentAlthough Ryan (2013) has not shown empirical evidence, it claims that non-financial rewardsin the form of a favorable working environment can have a higher impact on the satisfactionand motivation of employees than traditional financial rewards. His statement is based on thefindings of the Hay Group report. The study mainly revealed that many employees have lefttheir jobs due to the management's poor attitude towards "climate career development,appreciation, and other non-financial benefits." Eisenman (1995) says: "The environment theworkplace provides is a source of worker influence. In other words, the hierarchy is clear andone assumes that those controlled by a person must strictly comply with the requirements of aperson with greater authority. He pointed out that another approach is to question what makesa good or poor work. A more sophisticated approach is to discuss and then check how happythey are. Failure to conduct the workplace could detect employee dissatisfaction. This mightbe obvious to him if a worker considers him to be refused the position, to be inadequately12
organized, to have insufficient training for workers, to be a senior officer assigned to the jobof a junior officer, to have unsatisfactory pay and inconsistent wages, etc.2.01.4Staff developmentStaff development is recognized as a key element for achieving organizational objectives andgoals. In order to sustain economic and efficient performance, it is important to improveemployee contributions to the goals and goals of an organization (Rajah, 2016). Anitha(2014) said organizations require training and career development to ensure that staff remainscommitted, help employees build confidence in their work skills and increase their degree ofengagement. If the company does not use people development as a strategic tool, both theemployee and the company can be destroyed (Caplan, 2014). Organizations must ensure thatcareer development plans for all employees are implemented and that the grade and difficultyof present roles and a vision for future roles are recognized and development opportunitiesaddressed to meet their individual needs and ambitions.2.01:5Employee PerformancePerformance is the quality of a function that is evaluated for accuracy, completeness, cost andexpectations of time. Performance measures enable organizations to understand, manage andimprove business. Efficient performance measurement helps organizations to see how wellthey do, to determine if these organizations meet their objectives, to meet their customers, tomonitor their systems and to change the situation (Richard, 2009). In Elger's (2007) words,"performance is the implementation of a complex series of measures which combine theskills and know-how to achieve an outcome that pays off; and participant's performance isdefined as an individual or a group of people engaged in a collaborative effort."13
The performance of employees includes everything that affects employees and contributesdirectly or indirectly to their work. Performance demands behavior as well as results. Theaction emanates from the performer, which translates the product of representation intomotion. Activity is not only a performance indicator but also its own outcomes, which can bemeasured independently of the impact of physical and mental activity on activities. Theinstructions should be consistent with the real practice of high-performance systems andtranslated into actual practice.Employees need training in group dynamics and interpersonal relations and in systems tobetter understand the coincidence and interaction of all aspects of their business. Trainersplay an important role in guiding staff in their performance and financial results.2.01:6Adaptive PerformanceThe extent to which someone adapts to changes in the working environment or roles isdescribed as adaptability (Griffin, Neal and Parker, 2007). For example, it involves creativeproblem solving, addressing uncertain or unpredictable job situations, learning new tasks,technologies and procedures, and adapting them to other people's cultures or physicalenvironments. Many researchers have argued that adaptive performance differs from theindividual elements of successful work place (Allworth and Hesketh, 1999; Griffin, 2007;Pulakos, Arad, Donovan and Plamondon, 2000). In addition, Sinclair and Tucker (2006) sawadaptive performance as a different part of their work performance. Many authors also usedvarious names for adaptive performance.2.01:7Counterproductive Work BehaviourKoopmans (2011) defined counterproductive working behavior as behaviour that affects thewell-being of a company and includes activities. Fox, Spector and Miles (2001) identified14
harmful working activities involving aggressive acts such as violence and robbery, or subtleacts, such as a voluntary refusal to comply with orders or abuse. In addition, Robinson andBennett (1995) described workplace deviance as a conduct that violates voluntarilyorganizational standards and undermines the well-being of the organization and its members.This definition characterizes the absence of any moral values at work, but that conductdeviates from formal and informal rules imposed by practices, policies and regulations. Thisapproach actually argues that deviant behavior should in fact at least be able to damage theorganization's well-being and its members, eliminating breaches of decorum such as badmanners and other social mistakes.2.01:8Contextual PerformanceContextual performance refers to activities which do not contribute to the technical core, buthelp the psychological and social organization, and fulfill the organizational goals(Koopmans 2011). Contextual success not only involves acts such as helping colleagues orbeing a trustworthy member of an organization, but also ideas on how to enhance work.There are three key assumptions about task-based differentiations between task andcontextual performance: i.Task-relevant activities vary from one role to another whereas contextual performancecan be fairly comparable across occupations. ii.Task performance is related to ability whereas contextual performance is linked topersonality and motivation. Contextual strategies for "stabilizing" include actions oforganizational citizenry with five elements: altruism, empathy, civic virtue, courtesyand sportsmanship and other elements of organizational spontaneity.15
2.01:9Task PerformanceThe portion of management / administration includes, for instance, sub-dimensions like; i.plan and organize, ii.Guidance, direction and motivation for subordinate and feedback, iii.Training, coaching and subordinate development, and iv.Successful communication and consultation (Borman and Brush, 1993). Some terms sometimes used for tasks include: skills for work-specific job competencies;professional competencies (Griffin, Neal and Parker, 2007). Task performance also includesquantity, quality and knowledge of the work of Campbell (2001). Other researchers took careof specific task performance aspects such as innovation and customer-driven behaviour.Management work success includes: response feedback (getting something done,decisiveness), mission structuring (led management, planning) and monitoring, assessmentand assessment (resolving problems). Tett, Guterman, Bleier and Murphy (2000) alsodistinguished managers from traditional roles (determination, planning), acumen andconcerns (employment knowledge, amounts and qualities) at work.2.01:9:1Factors reflecting Fringe Benefits and Employee Performance: Based on the review of literature and expert validation, the following independent dimensionsor constructs reflecting the fringe benefits are Rewards and Recognition, Work FlexibleSchedule, Health and Life Insurance Coverage, Retirement Plan Contribution, Allowance(Travel and Food) and Dependent and Education Assistance. The dependent factor is theEmployee Performance: (Conceptual model)16
Rewards and Recognition:Organizations use prizes and acknowledgment to propelrepresentatives and exhibit that they are valued. Frequently, prizes and acknowledgmentappear as additional pay for representatives who complete the exercises in their job depictionand meet their destinations. Prizes and acknowledgment can likewise be given for groupbased achievements or for meeting venture based targets. Prizes and acknowledgment mightbe financial (rewards) or non-money related (affirmation in an organization pamphlet orduring a customary group meeting). They may likewise be tokens that cost cash, for example,blessings or celebratory dinners (Conceptual model)Work Flexible Schedule:Adaptable working hours are turning out to be increasingly moretypical in the present working environment. A flexi time game plan expects representatives tobe grinding away during a predefined centre period yet lets they in any case organize theirhours to suit themselves. It can assist with decreasing worker turnover and incrementrepresentative confidence and responsibility, (Conceptual model).Health and Life Insurance Coverage:Health insurance is one of the most desirable benefitsthe management can offer to its employees. The most widely recognized incidentaladvantages offered to representatives incorporate mixes of protection inclusion. Normally, itis given to the employees in gathering extra security, short-and long haul inability inclusion,and medical coverage alternatives. Businesses regularly share the expense of premiums withrepresentatives with an end goal to counterbalance the all-out expense to the worker. 4.Retirement Plan Contributions: One of the most significant incidental advantages a businesscan offer is commitments to a representative's retirement plan. A few organizations offermatches on the employee’s salary component, while others make qualified commitments toretirement plans without expecting workers to make commitments themselves. These planscan be amazing assets in putting something aside as long as possible and give pay to workerswell beyond their non-fringe benefits such as salaries and perks (Conceptual model)17
Allowance (Travel and Food):An amount paid by your employer to cover expenses such asaccommodation, food, or drinks while you travel for business is typically know as a travelallowance. There is also another type of allowance, called the living-away-from-homeallowance (LAFHA), which compensates you for additional expenses when you are requiredto live away from home due to work duties. Any expenses incurred on meals and incidentalexpenses may be deductible against the allowance if certain criteria are met (Conceptualmodel)2.01:10Job promotion According to Mathis, Jackson and Valentine (2013), promotion occurs when an employee istransferred from one position to another in a higher reward, responsibility and level in theorganization. While Robbins and Judge (2013) state that job promotion will provideopportunities for personal growth, more responsibility, and increased social status. If jobpromotion is good, it provides satisfaction to employees. Job promotion is an increase inworkforce or employees in better jobs, compared to previously greater responsibilities,achievements, facilities, higher status, higher proficiency demands, and additional wages orsalaries and other benefits (Neck, 2018). Hasibuan (2017) defines employment promotion isan effort to provide an important role for employees even a dream to look forward to, withthe promotion of recognition means that there is confidence about ability and skills relevantemployees to occupy a higher position. Thus the promotion will give social status, authority,responsibility, and greater income for employees. According to Kinicki and Fugate (2017),job promotion occurs when an employee moves from one job to another, which is higher inpayment, responsibility and level. Job promotion is one way to motivate employees to work.Work motivation is generally as awards, prizes for past efforts and achievements. Workmotivation includes unique feelings, thoughts and past experiences that are part of thecompany's internal and external relations. Work motivation can also be interpreted as18
individual encouragement to take action because they want to do it. If individuals aremotivated to work, they will make positive choices to do something, because it can satisfytheir desires. Scandura (2017) argues that work motivation consists of the need forachievement, the need for strength and the need for affiliation. The research results ofGathungu, Edith, Iravo, and Namusongeet (2015) show that job promotion affectssignificantly on work motivation. In the view of (Robbins, 2018), upgrading is theprogression of a worker’s level or position in an organization’s hierarchical order.Advancement in work might be an individual’s motivation for a job well done. An event topromote an individual to a certain rank guarantees that individual employee is capable ofhandling the extra duties. Promotion chances are the degree of potential occupationalmobility within an organization. Promotional chances also reduce turnover since an employeecan stay on hopefully eyeing a vacancy. Promotion of staff is a motivator in the sense that anemployee is satisfied even as he performs his duties2.01:11Training and DevelopmentNarrowly, training refers to how specific knowledge and skills necessary to perform aspecific job are taught and learned (Crowford 2014). According to McFarland, (2013)training is the term used to describe the process through which organizations build the skillsand abilities of non-managerial employees. It is from the aforementioned definitions thattraining is referred to as the process by which managers acquire knowledge and skills for adefinite task or purpose (Banjoko 2016) stated that training tends to be connected with non-managerial employees whilst development usually refers to management staff. Thus, tostraighten a distinction between the two terms, some scholars have referred to training asemployee training and development as management development, or executive developmentwhile employee training refers to training given to employees in the areas of operations,technical and allied areas, management development refers to developing an employee in the19
areas of principles and techniques of management, administration, organization allied areas,(Scott, 2007). Other terms sometimes used instead of training and development includeemployee development, manpower development, or education and training (Ginsberg, 2012)argued that training and development activities are an integral and important aspect of humanresource management. Such activities make it possible to adjust as well as enhance the skillsof the workforce, ranging from the lowest to the highest set of employees.2.01:11:1Types of Training The importance of training and development to employees and managers cannot be quantifiedfollowing the changing pattern in technology. Adequate provision of training needs foremployees will go a long way in reducing their intention to leave, absenteeism, industrialhazard, etc. Training needs are not only restricted to the confinement of new employees(Hutchins, 2009). The effective training and development of the managers are equallyimportant to employees' safety, efficiency, productivity, and fulfillment. It has been observedthat continuous training for workers helps to alleviate boredom, fatigue, inefficient and evenunsafe work habits. However, various kinds of training are often used by differentorganizations in acquiring and developing the skills and abilities of human resources. Themethod adopted is often a matter of convenience and organization policy. Among the optionkinds of training are the most popular or often used type of training as identified by Frayne,(2010) 2.01:11:2On the Job TrainingThis is also known as direct instruction. It is one of the oldest forms of training. It is the kindof interpersonal training where somebody who knows the job shows another person how bestto perform it. The on the job training requires direct instruction from the trainer andspecialized knowledge from the trainee (Boxall, 2007). The worker learns as he produces or20
works. This type of training is conducted either by the worker’s immediate supervision at theworksite or by an expert from another department. The advantages of this type of trainingmethod are: i. The workers use the same materials, requirements, and machines for training at thesame time for production. ii. The worker is subjected to the same environmental constraints under which he willhave to operate. iii. Only those skills needed are impacted by the worker to completely perform aparticular job. iv. Apprenticeship training: The method combines on-the-job and regular instructions bycombining the practical and theoretical aspects of the job and the worker acquiresboth skills and knowledge. 2.01:11:3Off-the-Job TrainingThese the worker (trainer) is not on the regular job environment but is tough a how to do thejob in an identical situation using prototype that would be used act the job site. This type oftraining is more appropriate for impacting complex skills as it produces broad-based trainerswho can apply their skills in a verity of work situations (Butler, 2018). This is another formof training that takes place outside the immediate workplace. It requires additional abilitiesand talents useful to perform a task efficiently (Chiaburu, 2019). This training is often offeredby specialist trainers who may be outsourced to help with the training. The knowledge andabilities acquired from this training are often used across different areas of the organization.Examples of the off the job training includes group discussions, case studies, role playing,conferences, T-Group, programmed instructions, etc21
2.01:11:4Classroom TrainingThis is interactive learning with a specialist or expert instructor. Classroom training has beenthe basis of an employee. Many employees learn best and have the greatest opportunity forretention (Kinicki and Williams, 2013) most especially when they learn from a live instructorin a classroom setting. It allows integrating various learning principles and values in adynamic environment. It includes lectures, conferences, demonstration, instruction, advancedinformation and training session similar to class discussion, workshop e.t.c. 2.01:11:5Coaching and UnderstandingCoaching is one of the training processes which allows an individual participant to acquireand obtain the strategic capabilities and core competencies needed to perform a taskefficiently (Kehinde and Oladayo 2017). Coaching is often seen as the most effective way ofproviding for the growth and productivity of workers in an organization through theconscious assessment of ordinates by their immediate boss. 2.01:12Job RotationThis method is used whereby a worker over a considerable period work in serious of works orjob, therefore, earning a broad range of skills.According to Esther (2019), organizations maintain their workforce by providing a betterreward system through training and development as this will motivate them to toil for theorganization hence better work performance. It is therefore significant for the organization tofocus on the best human resource management practices if at all they are to achieve theirgoals and objectives and also to survive in the competitive business environment. Trainingand development is one of the elements in HR practices may positively contribute to thesustainable of the organization performance. It is involving the process of adding to the22
employee’s knowledge, skills and attitudes required by an individual to improve hisperformance in the organization. Meanwhile, compensation and rewards is very important toensure effective compensation and benefits package by training employees can significantlyincrease the motivation of an individual to increase their performance, Hussien Nasir (2015).2.011:13Job Satisfaction Work Satisfaction is a picture of the attitude of an employee either happy or not happy aboutrewards that come by, the work that is associated with his own, with his superiors, fellowemployees, as well as environmental work. According to Robbins and Judge (2015) explainsthat the satisfaction of work is as feeling positive about the job as a result of evaluation of itscharacteristics. Compensation is a reward that is given by the company to the employees onthe work that it generates according to Rivai and Sagala (2011). According to Handoko(2014) satisfaction of the work is a state of emotional which is fun or not fun whereemployees see work them. Satisfaction of work (job satisfaction) is a response to effective oremotionally to various terms of job a person. According Wibowo (2014) indicators ofsatisfaction of work, namely:Satisfaction on the job its own, the satisfaction on salary, satisfaction over the co- work,satisfaction on sale, satisfaction on conditions of employment. Research which conductedYaseen (2013) with the title of the study " Effect of Compensation on Employee SatisfactionFactors-A Study of Doctor's Dissatisfaction in Punjab revealed that compensation impactsignificantly on the satisfaction of work . In addition to that, the research that is done Salisu(2015) with the research title “The impact of compensation on the job satisfaction of thepublic sector construction workers of Nigeria State of Nigeria" also revealed that jobsatisfaction has a positive and significant effect on job.23
2.04Conceptual Framework Organizational Reward SystemEmployees PerformanceBenefitsQualityCompensationEfficiencyIncentivesProductivityPromotionEffectivenessIntrinsic RewardResponsibilitiesTeam PlanningDevelopment ProgramAchievementExtrinsic RewardEmployees Performance or MotivationSalaryEmployee Productivity or OutputMedicalReduced Employee TurnoverBonusQuality of OutputAccommodationCareer Development OptionIn houseOff JobAward or QualificationLearning OpportunitiesOff Job TrainingScholarshipsIn job Training Sources: Author’s Compilation (2022)24
2.02Theoretical FrameworkVarious theories have been developed over the years to understand and explain howemployees' morale can be enhanced through the use of an effective reward system inaccomplishing organisational outcomes and goals. Being that rewards is directly associatedwith performance, various theories formed the groundwork of this study however the studyanchored on Expectancy theory. Other theories are discussed as thus:2.02.1Hertzberg's Two-Factor TheoryTheoretically, it is being assumed that the central motive of organisations is to keep theiremployees motivated and engaged. Motivation contributes highly to empowering employeesto perform high and stay committed to the organisation. This means that a high level ofmotivation enhances the overall employee skills which are required for the specific job task.Thus, more motivated employees tend to perform higher (Alshmemri, Shahwan-Akl andMaude, 2017). This is being proved through a well-known Hertzberg's two-factor theory. Thetheory detailed the importance and necessary existence of two important factors includingmotivators and hygiene factors. It is being said that in the presence of motivators employeesremain satisfied. The satisfiers include achievement, responsibilities, rewards, recognition,the job itself, advancement and personal growth Alshmemri, Shahwan-Akl and Maude,2017).On the other hand, hygiene factors are also known as dissatisfiers which mean that in theabsence of these factors the employees may not perform well. These factors are related tosupervisor and co-worker, working environment, policies, remuneration, security and salary.Hertzberg emphasized on the fact that organisations must ensure the presence and balance ofboth the factors to keep the employees motivated and engaged towards their job (Alfayad and25
Arif, 2017). In addition to this, it must focus on personal development through promotion andother intrinsic and extrinsic motivational aspects (Khanna, 2017). In this model there are two influencing factors, one category is Motivator Factors. Thesefactors impact the job satisfaction level of employees and thus results in enhancing employeeperformance. These factors include Achievement, Recognition, Responsibility, PersonalGrowth etc. Motivators impact employee performance because they provide a sense ofresponsibility in the individual and thus increase the commitment towards work. Theassociation is found that by improving the motivator, job satisfaction increases (Herzberg,2017). Alternatively, there is another category of Hygiene Factors; these factors are mainlyresponsible for decreasing the job dissatisfaction when they are improved. For example, morefavourable working conditions and strong bonding with supervisors reduce the level of jobdissatisfaction (Alfayad and Arif, 2017). According to Stello (2011), Herzberg theory iscriticized stating that factors leading to dissatisfaction and satisfaction are the same andcannot be differentiated from each other. Evans (2010) also presented the criticism thatinference of Herzberg theory cannot be accepted completely with respect to the difference insatisfiers and motivators as it delivers the same results. Generally, individuals attribute causesof satisfaction with achievements. The criticism of Sambhanthan and Good (2013) onHerzberg theory was similar to the point highlighted by Stello (2011). Sambhanthan andGood (2013) determined that factors that lead to employee satisfaction and dissatisfaction areindistinguishable because recognition, responsibility and achievement are vital factors forboth satisfaction and dissatisfaction. Conversely, dimensions like security, workingconditions are of less importance. Hur (2018) put forward the view that Herzberg's two-factortheory provides a superficial view of the association between motivation and dissatisfactionand it is over-simplified. According to the findings of Hur (2018) job satisfaction factorsvaries from individual to individual. One factor that is satisfactory for one employee can be26
dissatisfying for another such as increased responsibility without increasing salary can be ademotivating factor for employees. The study of Islam (2018) investigated the factors ininformation system generating user satisfaction. The theoretical assumption was based onHerzberg's model. Islam (2018) presented an inference regarding the Herzberg model bysaying that difference between motivators and satisfiers is not entirely acceptable. Individualsgenerally affiliate achievement to the cause of satisfaction. However, they are more likely toassociate dissatisfaction with the organisational practices, policies and supervision (Mni,2015). Despite the criticism received towards Herzberg' theory, its practical application andimplementation as a contribution towards job enrichment and job design techniques that areused by HR professionals in the companies (Parker, 2015). The study of Oldham and Fried(2016) determined that Herzberg's theory has provided a new light towards the motivation ofwork, job design and employee satisfaction.2.02:2 Goal-Setting TheoryThe next in line is the Goal-setting theory that is also essential in exploring the aspects that isrelated to employee motivation, performance and goals. The goal-setting theory of motivationis formulated and explained by Edwin Locke and Latham in 1979 stating that motivation toperform a task is directly linked with the goals of an individual (Nurmi, 2012). These goalscan be personal or professional. Achievement of these goals provides support to theindividual and encourages him to deliver higher and better task performance hence, goals-setting is fundamental to attain the motivational effectiveness. However, Edwin Locke andLatham emphasized on the point that the goals should be realistic and logical in accordancewith the perspective of the working organization (Aarts, 2019). The presence of unrealistic goals in employees leads to a more demotivating aspect and lowerproductivity. According to Latham and Locke, there are mainly four different mechanisms of27
Locke and Latham Goal Setting Theorygoal-setting including distinct directive function, stimulating function, persistence andencouragement (Latham, Mawritz and Locke, 2018). However, these goals are not limitedand confined to these aspects and can be associated with the employees' expectations ofrewards and recognition. In accordance with the goal-setting theory, Shoaib and Kohli (2017)explored that the performance of employees is tied with goals and aligned with rewards. Thegoals are established to remain focus on the relevant job areas, thereby getting feedback andcoaching from supervisors on the basis of performance (Shoaib and Kohli, 2017). Followingillustration explains the components of the model.Source: Murray Bowen (2010)28
The above diagram shows that how employees relate and link their motivation to a certain setof goals in the organization. Each goal has its own significance and thus results in achievingthe level of motivation in accordance with personal and professional goals. These goals areinfluenced by proper coaching and training of employees, conducting performance meetingscan also help them in setting job-related goals, supervisor's guidance is also important andmost importantly the goals are aligned with a reward system. The more improved the rewardsystem of an organisation, the employees will be more goal-oriented and committed to theirjobs (Latham, Mawritz and Locke, 2018).2.02.3Towers Perrin Model of Total RewardThe model presented by Armstrong regarding the reward system and reward managementholds a great significance in literature. Many of the organisations have formulated anddesigned a well-maintained reward system based on the Towers Perrin Model of TotalReward. This model is based on four major quadrants in a form of a matrix, having upper twoquadrants as pay and benefits which are mainly tangible aspects and contain a number ofbenefits and pay rewards that can be offered to an employee on the basis of performance.This quadrant is also represented as transactional or tangible rewards (Brown, 2018). Theyare normally monetary benefits or financial in nature and helps in attracting, recruiting andretaining talented staff for the organisation to attain a competitive edge from rivals in themarket. The first quadrant of pay consists of basic pay/salary, cash bonus, contingent pay,profit-sharing, shares, and long-term incentives. The second quadrant of benefits includesholiday packages, healthcare facilities, insurance, pensions, work flexibility and other perks.However, these can easily be copied by competitors (Pregnolato, Bussin and Schlechter,2017).29
The lower part of the matrix is based on two quadrants learning and development and Workenvironment which are relational or also known as transformational tangible rewards. Unlikeupper quadrants, these are company-specific rewards and cannot be copied easily by thecompetitors (Armstrong, 2010). For these types of rewards, companies set their own specificcriteria for achievement and are thus responsible for boosting the morale of the employeesand keep them more engaged and intact with the work. The third quadrant learning anddevelopment include on-job training, task-based training, career development, successionplanning, appraisal system and performance management. The fourth quadrant is workenvironment including the culture of an organisation, leadership, core values, internalcommunication, work-life balance, diversity management, HR policies and non-financialrecognition (Armstrong, 2010). Conclusively, the model clearly describes the tangible andintangible reward in a form of total reward system that can be beneficial for an organisationto make its employees perform well and remain satisfied. According to Armstrong (2012),the model of total rewards can be a significant factor to retain Generation Y with tangiblerewards whereas the younger generation can be attracted by intangible ones. The followingfigure illustrates the Towers Perrin model of total rewards (Armstrong, 2012).30
The Towers Perrin Model of Total RewardsBase payPensionsContingent PayHolidaysCash bonusesHealthcareLong-term incentivesOther perksSharesFlexibilityProfit-sharingTrainingOrganizational CultureOn-the-job learningLeadershipPerformance managementCommunicationsCareer developmentInvolvementSuccession planningwork-life balanceNon-financial recognitionSource: Armstrong 2010The above model by Armstrong explains the Towers Perrin Model that is the most effectiveapproach towards reward management in organisations. There are altogether four quadrantsin the model which include pay, benefits, work environment and learning and development.In the current study, the research is focused on all four quadrants to evaluate the tangible andintangible rewards in consistent with the transactional and relational factors. The model alsoshows that some rewards are defined at the individual level such as Pay aspect and Learningand Development while others are more relevant at the Communal level which means, theseaspects like perks and benefits and working environment are the same for all (Armstrong,31
2012). Recent research in the US shows that this model is effective for making the employeesmore focused on their jobs irrespective of the business challenges, job layoffs and tougheconomic conditions. Particularly in large organisations, employees are more focused on therationale. That is they perform for keeping themselves competitive for their personal growthand also for the company's achievement (Brown, 2018). This model is a complete frameworkof reward system through which a high level of engagement in employees can be exhibitedand key talent can be retained for the long-term based on their performance and capabilities.The Towers Perrin Model of Armstrong had to face criticism in relation to its transactionaland relational tangible and intangible factors. Tsede and Kutin (2013) stated that the totalreward system cannot be implemented based on its flexibility limitations. In order to attainthe competitive advantage firms might aim to communicate all the rewards and benefits to theemployees for attracting the best talent. However, poor communication and commitmentafterwards become the reason for the failure of the total reward system and its successfulimplementation (Tsede and Kutin, 2013). Moller (2013) argued that the idea of total rewardmanagement is nothing new but it is only the integration and merger of conventional'compensations and benefits'. It is also argued by Nazir, Shah and Zaman (2012) that theconcept of the total reward system has combined all the benefits from financial and non-financial reward system as one reward mix matrix. However, it has blended together all typesof reward for disengaging the flexibility of employees.Davids (2018) argued that though many employees do not have the idea of the true value ofbenefits and rewards and thus total reward management is entirely in control of management.It is important that employee understand the basic mechanism of Total Reward system in thecompanies about how it is planned and implemented through transparent policies (Al-Jarradi,2011). In addition to this, Hart and Daughton (2015) determined that many employees32
encourage flexibility and wide range of benefits in Total reward system however a significantamount of employees shows resistance.2.02.4Expectancy TheoryFirst, Victor Vroom developed the theory of expectancy to describe employees' motivation atwork and in such a way as to a.achieve reasonable performance (expectations), b.performance will be rewarded (instrumentality) and c.highly positive reward value (valence). The expectation is an estimation of the probability of an individual to achieve a defined levelof work-related performance. The requirements for the employees are generally measuredbetween two poles. Probabilities between 0 and 1 are based on expectation.The devices vary for instrumentality between 0 and 1. For example, if a person has strongresults often helping to improve progress, the method has a value 1. The device is zero if agood performance rating does not appear to be related to the promotion is a worker's strength.Valence may be either positive or negative, contrary to perceptions and instrumentality. It isgood value if an individual has a strong desire for a paycheck. Valence, on the other hand, isundesirable. And 0 is worth it if an employee is insensitive to a reward. The entire scale isbetween -1 and +1. Vroom indicates that the equation: M = E*I * V (motivation = anticipation) is connected to motivation, expectation, resources,and valence.33
2.02.5Equity Theory by Adams (1965) The theoretical foundation provides an understanding of the concepts of compensation andemployee performance and the linkage between the two concepts. The study is anchored onequity theory. The theories explain employee’s behavior, attitudes and perceptions arising outof compensation and employee performance. A linkage between compensation and employeeperformance is derived from employee’s behavior to various elements of compensation. Thisis because most empirical studies have relied heavily on these theories as the baseline theorywhen discussing effectiveness of compensation and employee performance (e.g.; Greenberg,1990, 1997; Rishipal and Manish, 2013; Antoncic and Antoncic, 2011, and Adams, 1965).Equity Theory by Adams (1965) is a comparative analysis by an employee of the rewards hereceives in relation to those of others who are in a similar position, with equal qualificationsand carrying similar tasks in form of effort, time and skills requirement. Out of comparison,employee develops a perception towards the rewards which in turn influence his behaviortowards work and the organization. Equity theory is shaped by two ratios used in the rewardanalysis; my pay vs. others pay; and my position on dimension relative to pay vs. othersposition on dimensions relative to pay. Inequality arising out of any of the ratios will beinterpreted as inequity leading to dissatisfaction and low level employee performance to workand the organization. Anvari (2011) points that the consequence of perceived inequalitiesresults to behaviors of; reduced commitment, psychological stress, reduced quality of out-putor reduction of effort in an attempt to rationalize the inequality. Rajiv and Tang (2000)provides a number of moderating factors to the employee perception towards the analyzedcomparison. The internal moderating factors included; valence, clarity of structure, fairness insalary administration and future plans of an employee. External moderating factors are;industrial practice, competitors willingness to absorb the employee in case he leaves theorganization and communication channels provided to air the pay grievance. Organizations34
need to exercise equity in compensation through carrying out salary market survey, adoptingpay-skill-performance system, openly communicating compensation policy of theorganization and promptly dealing with salary grievances (Armstrong, 2001). Rewardsprocedural justice serves to influence employee commitment because employees interpretfairness from the organization where inequities are perceived (Pare, 2007). According toAdams (1965), equity theory focuses on determining whether the distribution of resources isfair to both relational partners. It proposes that individuals who perceive themselves as eitherunder-rewarded or over-rewarded will experience distress, and that this distress could lead toefforts to restore equity within their national cycle. It focuses on determining whether thedistribution of resources is fair to both relational parties. Equity is measured by comparingthe amount of contributions and benefits of each person within the relationship. Partners donot have to receive equal benefits or make equal contributions, as long as the ratio betweenthese benefits and contributions is similar. Equity theory acknowledges that subtle andvariable individual factors affect each person’s assessment and perception of theirrelationship with their relational partners (Adams, 1965). In any case, an employee wants tofeel that his contributions and work performance are being rewarded with his pay. If anemployee feels underpaid then it will result in the employee feeling hostile towards theorganization and perhaps his co-workers, which may result in the employee not performingwell at work anymore. It is the subtle variables that also play an important role in the feelingof equity. Just the idea of recognition for the job performance and the mere act of thankingthe employee will cause a feeling of satisfaction and therefore help the employee feelworthwhile and have better outcomes. Adams (1965) proposes assumptions of equity theoryas follows: Individuals seek to maximize their outcomes. Groups can maximize collectiverewards by developing accepted systems for equitably apportioning rewards and costs amongmembers. When individuals find themselves participating in inequitable relationships, they35
become distressed. Individuals who perceive that they are in an inequitable relationshipattempt to eliminate their distress by restoring equity. The greater the inequity, the moredistress people feel and the more they try to restore equity. Equity theory has been widelyapplied to business settings by industrial psychologists to describe the relationship betweenan employee’s motivation and his or her perception of equitable or inequitable treatment. In abusiness setting, the relevant dyadic relationship is that between employee and employer.Equity theory in business, however, introduces the concept of social comparison, wherebyemployees evaluate their own input/output ratios based on their comparison with theinput/outcome ratios of other employees (Poole, 2007). Inputs in this context include theemployee’s time, expertise, qualifications, experience, intangible personal qualities such asdrive and ambition, and interpersonal skills. Outcomes include monetary compensation,perquisites, benefits, and flexible work arrangements. The theory was related to the studybecause of the set of variables formed into propositions that specify the relationship amongvariables, typically in terms of magnitude or direction (Creswell, 2007). A theory explainshow and why the variables are related, there by acting as a bridge between the variables. Thekey theories on organizational justice and organizational directed employee performance thatare relevant to the study variables are reviewed in this theory. The concepts of effectivenesscompensation and employee performance are today being supported, developed, andunderstood using a variety of theoretical frame workers and models of equity theory(Greenberg, 1987).2.02.6Need Theory There are various motivational theories but this paper will be anchored on the Need Theorywhich is based on expected satisfaction of a level of need. According to Jones and George(2006), needs-based motivation theory is based on the understanding that motivation stemsfrom an individual's desire to fulfill or achieve a need. Human beings are motivated by36
unsatisfied needs, and certain lower needs must be satisfied before higher needs can besatisfied. In general terms, motivation can be defined as the desire to achieve a goal,combined with the energy, determination and opportunity to achieve it. The basic premise ofthe need theory is that people are motivated to obtain outcomes at work that will satisfy theirneeds. It complements the expectancy theory by exploring the depth at which outcomesmotivate people to contribute valuable inputs to a job and perform at high levels. A managermust determine what needs the person is trying to satisfy at work and ensure that the personreceives outcomes that help to satisfy those needs when the person performs at a high leveland helps the organization achieve its goals. The study adopted motivational theory due toAbram Maslow (1954) that human resources need to be motivated at every level of theorganizational hierarchy as this will ensure the organizational performance is enhanced henceachieving its objectives. Human beings are motivated by many needs and these depend onmany factors as they vary from one person to the other and in every situation. Basic needsare; food, clothing, and shelter but the workplace needs acceptance and self-esteem. Each willexperience these factors in different offering awards when his job is done as expected.According to Maslow, it is important to be part of a social group that will motivate him(Wren, 2005). In general terms, motivation can be defined as the desire to achieve a goal,combined with the energy, determination and opportunity to achieve it. This research willconcentrate on the basis of this theory. The most basic human needs, represented by food,water, shelter and safety, are considered essential for human existence. According to(Maslow, 2014), portend five basic constructs from the human hierarchy of needs. There arephysiological needs, security needs, belonging needs, esteem needs and self-actualizationneeds. Maslow's conceptualization of needs is represented by a triangle with five levelswhich he called the Hierarchy of Needs. Maslow stated that lower-level needs must besatisfied before the next level. Higher-order needs are those associated with social activities,37
esteem building, and self-actualization or constant self-improvement. Elaborating further onthis theory, Whittington and Evans (2005) stated that "each of these needs operates at alltimes, although one deficient set dominates the individual at any one time and circumstance".The motivation experienced by humans to fulfill these needs is either derived from internal orexternal factors. People who experience internal motivation are influenced by factors thatcause a sense of accomplishment and pleasure, while externally motivated people arecommonly influenced by factors controlled by others, such as money and praise (Deci, 1985).Maslow's hierarchy of need theory is commonly displayed in a pyramid fashion, with thebasic needs at the bottom and the higher needs at the top. The needs were depicted in thisway to show the significance of each need on the others, with the most important andbroadest category being the physiological needs at the base (Redmond, 2010). Source: Maslow’s hierarchy of needs (1943)The theory behind this study was the principle of Expectation Theory by Victor Vroom in1964. The Victor Vroom Valance theory option has been stated that the problems with theemployee benefit programme, within the philosophic context, can be sufficiently assessed toimprove organizational performance. Valence-Instrumentality-Expectation (VIE) is widelyknown. The main theory is that if an event occurs, it will lead to a different event and thelikelihood of an action or activity that results is that the hypothesis is believed. Thus Vroomclarified: when an individual selects alternative with uncertain results, it seems obvious that38
their conduct is not only influenced by their desired results, but also by the degree to whichthey believe such results can be achieved. The expectation is ... A momentary presumptionthat the likelihood of a certain occurrence reflects a certain result.Expectation is the perception that certain behavior results, while valence refers to the value ofan individual in a certain outcome. Both must be present before there can be a high level ofmotivation (Ile, 1999). The principle is more focused on management and employeepreference, which can contribute to desired results (Peretomode 1991). According to Ejiofor(1984), the statement implies that the reward of a person depends both on expectation andvalence.It is widely used to explain the dynamic challenges of the management reward system and theperformance of both public and private sector organizations. It is like a social contract wherereciprocity law prevails. The employee wants the manager to be handled fairly in order forhim or her to do better.2.03Empirical ReviewRelationship between Compensation Strategy and Reward system on EmployeePerformanceMbah, Mgbemena, and Ejike, (2015) examined the impact of effective reward system as atool for employee performance in civil service using Anambra state civil service as casestudy. As specific objectives, the study examined the relationship between employeeperformance and pay reward, employee recognition, conducive work environment and staffdevelopment. Findings from the study shows that pay reward and some non-financial rewardsof employee recognition, conducive work environment and staff development are positivelyand significantly related to employee performance in civil service. The study recommended39
among others that the government at all levels should endeavor to provide employees withadequate pay incentives to facilitate the achievement of desired high level performance in theservice as obtains in the private sector of the economy. According to Tinaikar (2017), manypast studies had revealed similar outcomes proving that there is a strong connection betweenthe compensation strategy and the performance and retention of the employee. Sudiardhita,Mukhtar, Hartono, Sariwulan and Nikensari (2018) had conducted a study using exploratoryresearch method and respondents of the study were employees. The results of this studyindicated that compensation has a positive and significant impact on the employee’s workmotivation, job satisfaction, and performance. Besides, Jean, Cox and Morris (2017)conducted a case study was to discover the effect of compensation strategies on employeeperformance in Mombasa Cement Limited. Questionnaires were used as the primary researchinstrument to collect the data from the selected respondents. The result revealed thatcompensation has a significant effect on job satisfaction and employee performance.Meanwhile, Hameed, Hasiban and Mphilet (2014) and Peprah (2018). Azman, Shuraimi, Binti and Yunus (2018) conducted quantitative research to collect the dataon the factors related to compensation such as salary, rewards, compensation, and employeeperformance. Their outcome also revealed that compensation has a major influence on theperformance of the employee. Masea (2016) has conducted a study by applying thequantitative research method. The study utilized questionnaires as the primary researchinstrument for data collection from the respondents, who are the academic staff in highereducation institutions in South Africa. It was discovered that compensation has a positiveimpact on the performance of the employee. A similar outcome was reported by Ramli(2019) who also utilized the quantitative research method in his study. The respondents whowere involved in the study were the employees of RumahSakitSwasta in Jakarta. Theoutcome also demonstrated a similar finding whereby the compensation has a significant40
effect on job satisfaction and the employee’s performance. Haryono (2019) asserted thatcompensation is the organizations’ obligation that must be conducted as a form ofappreciation for the progress made by the employees to the organization. The organizationshould respect and acknowledge all the efforts made by the employees by giving themreasonable compensation based on the tasks they had performed. Thus, compensation doesaffect the level of performance done by the employee. In general, good performance andefficient outcomes are highly demanded in the current globalization era. Therefore, manyorganizations are implementing the compensation system. It is believed that effectivecompensation is predictable to add value to the employee’s satisfaction, which canpsychologically encourage the employees to perform effectively and efficiently. Anotherstudy that was conducted using a quantitative research method was done by Darma andSupriyanto (2017). The study was conducted to determine the impact of the compensationvariable on the employee performance variable. The compensations were in the form ofallowances, bonuses, salaries, and wages. Indeed, these compensations do have a significantimpact on the employee’s progress towards work completion. Nwokocha (2016) applied thecompensation strategy in organizations to ascertain their efficacy on the performance of theemployees, retention, and level of productivity. This study had revealed that there is apositive connection between compensation and the performance of the employees’performance, retention, and productivity in the organization. Based on this outcome, thecompensation system with articulated strategies should be embedded in the organization‘sculture. The management should also recognize and understand the employees’needs/preferences in establishing the compensation structure of the organizations. The use ofthese notions matched to a good managerial disposition, which will allow the organizations toformulate effective and sustainable strategies that will acknowledge the fair and sufficientreward for employees. This will improve the performance and the progress of the employees,41
retention, and productivity in the organization. Another study was conducted by Demerouti,Bakker, Derks, Arnold (2014) to investigate the compensation model with the strategies inthe selective optimization. Based on a few samples of employees, they discovered that theappropriate technique to hinder the negative impacts on the employee’s performance. Thisstudy had revealed the effective and ineffective techniques that people use to overcome theirburnout symptoms to attain maximum outcomes on the performance of the employees.Besides, a study by Ibrar and Khan (2015) had similarly discovered that the employee’sperformance can be improved with the implementation of an effective compensation systemin the organization. Questionnaires were used as the instrument of the study to conduct thedescriptive analysis, correlation, and multiple regression tests for the data analysis. Overall,based on the analysis, the study had concluded that there is a significant connection betweenthe compensation strategy and the performances of the employee. Larbi’s (2014) studydiscovered that there is a significant connection between the overall compensation, themanagement, and the performance of employees. In certain circumstances, the employee willnot have a clear picture of their rights when it is related to the matter of compensation. Thissituation can be perceived due to the employers are not exposing the employees to the clauseregarding compensation or the employees are not interested to read the policy manuals whenthey are provided with the manual. Thus, the management of the organization must ensurethat the employees are aware of the policies related to the matter of the compensation systemand the rewards offered. Other studies done by Brown (2003), Obasan (2012), Lawler andWorley (2016), and Okeke and Ikechukwu (2019) had also discovered similar outcome thatthere is a significant connection between the compensation system and the employee’sperformance in an organization. Salaries, rewards, allowance, and non-financialcompensations bring a major impact on the performance of the employee in theorganizations. Therefore, based on the outcomes of several past studies, it can be concluded42
that compensation has a positive impact on the employee’s progress and performance inmany organizations. However, there have been debates among scholars relating to the typeand blend of compensation methods that are best for the institutions. A few studies haveexhibited that rewards have positive impacts on the workers’ development and progress aswell as workplace security. It is one of the elements that will be highlighted to increase theemployee’s commitment to task completion (Furtado, 2015; Lawler and Worley, 2016).Idemobi, Ngige, and Ofili (2017) examined effect of reward system on organizationalperformance was aimed at determining the effect; effects of organizations reward system onworkers‟ performance; to determine the relationship between organizations reward systemand workers attitude to work; to determine the relationship between organizations rewardsystem and job satisfaction; and to find the relationship between rewards system and workerscommitment. The data used was gotten with the aid of a questionnaire and analyzed using thechi-square test of independence. The result shows that: organizations reward system has asignificant effect on workers‟ performance; there exists a significant relationship betweenorganizations reward system and workers attitude to work. Also there is a relationshipbetween organizations reward system and job satisfaction. These led to the conclusion rewardsystems have significant effect on workers attitude to work The study recommendedimproving the reward system of organizations so as to increase the level of satisfactionamong employees; and making the reward policy of the organization in such a way that it willcompete favorably with those of other organizations in the industry. Ejumudo (2014)examines pay reward system management and staff performance in Nigeria: using the Deltasate civil service as a focus. The data utilized in this study were obtained from both primaryand secondary sources. While the primary data were derived from focus group discussions,the secondary data were obtained from relevant textbooks, journals and governmentdocuments. The findings of the study indicate that the incongruence of the pay reward system43
of the Delta state civil service and the central guiding principles of fairness, costs of livingand moderation, the in-grained culture of poor performance and the dysfunctional employeemode of entry have negatively impacted on the performance of staff. The study made someuseful recommendations including the exigency of a fair, moderate, dynamic pay rewardsystem that should be reflective of the prevailing societal costs of living, the dismantling ofthe culture of poor performance and a merit-based employee entry practice. Onuegbu, andNgige, (2018) identified organizational rewards system and its effects on employees’performance in selected polytechnics of South-East Nigeria. The results of the study revealthat employee rewards policy significantly affects organizational performance. The studytherefore recommended that reward packages must be valuable to the employees and shouldbe based on realistic and reliable standards.Uwizeye and Muryungi (2017) examined the influence of compensation practices on workersperformance of tea companies in Rwanda: A case study of Rwanda Mountain Tea.Competitive environment, compensation system of the company has direct impact on itsworkers performance.2.04Gap in LiteratureThere is a large volume of research and literature available that assess the importance of abusiness reward scheme in order to improve the efficiency of the workers. Many researchstudies have established the relationship of both extrinsic and intrinsic rewards and theireffects. The available literature also shows that microfinance banks have an effective systemof reward management and effective strategies to retain its employees and keep them with theorganization together for a longer period. Yet, in contrast to intrinsic rewards, there are few studies that illustrate the importance ordesire of extrinsic rewards. Besides this, the banking industry in Nigeria in particular has very44
limited studies; the studies either are not up-to-date or are not especially focused on thefinancial and non-financial aspects. This research is therefore undertaken to fill this gaps. Tofill the literature gap, the study must conduct a survey to collect the primary data from someselected micro finance banks staff, and questions must be focused on core topics drawn fromliterature studies.However, the existing studies as mentioned above in this relation have concentrated on eitherintrinsic or extrinsic incentive system mainly on results, and the related studies have alsoneglected to recognize the service industries in Nigeria, such as microfinance banks, whichhave deep skills and expertise in audit, tax and advisory services, creating a gap for theresearch.Finally, it was found that very few assessments were performed with respect to the serviceindustries in Nigeria in terms of the reward system dimension. Although validating severalresearch studies, this analysis bridged the gap between existing literatures by presentingevidence on the effect of organizational reward system on employee’s performance of someselected microfinance banks in Abeokuta, Ogun state.45
CHAPTER THREEMETHODOLOGY3.01Research DesignResearch design is a kind of blueprint that guides the researcher in carrying out the researchwork. It contains a description of methods and procedure employed in data collection, designand validation of test instrument. It x-rays the format employed by the researcher in order tosystematically apply the scientific methods in problem investigation. The domain of thisstudy is the effect of organizational reward system on employee’s performance.A descriptive survey design method would be adopted for the study. This is because thepopulation of the study cannot be covered; therefore a sample is drawn from the wholepopulation to serve as representative of the population.3.02Source of Data Collection and ProcedureThe study made use of mainly primary source of data; the primary data would be gatheredfrom a personal administered questionnaire which is designed specifically to provide answersto the study research questions.3.03The Study PopulationThe target population for this research work consists of some selected microfinance banks inAbeokuta. The population of the study includes the entire middle and lower levelmanagement staff of the organizations.46
BankEstimated PopulationAB Microfinance bank, Ibara50Lapo Microfinance Bank, Oke-Ilewo50Total100Source: Field Survey (2022) 3.04 Sample Size and Sampling TechniqueThe size of a sample is very important in the research study. This is because sample size is used wherethe sample frame cannot be covered. Sampling enables us to be cost effective and cost efficientin our research that is spending less in terms of time, money, energy and other resources(Nnayelugo2001). The size of a sample is very important in the research study. This isbecause sample size is used where the sample frame cannot be covered. A simple randomlysampling technique is used in different Strata to select actual respondent. This implies aproportion of the population which was taken as a representation of the whole population andon which conclusion made on them based on the data, which they give was taken to bepeculiar to all members of the whole population. A scientific means or statistical tools whereused to determine the sample size of the study. However, for the purpose of this study thesample size adopted the Taro Yamani Formula which is used for a finite or knownpopulation.The sampling techniques can be differentiated into probability and non-probability sampling.For this research, the researchers adopted convenience sampling, which is one of thetechniques under the non-probability sampling.47
IndustriesEstimated PopulationSample sizeAB Microfinance bank, Ibara5040Lapo Microfinance Bank, Oke-Ilewo5040Total10080Source: Field Survey, 2022The Taro Yamane formulae was used in other to obtain the sample size.n =Nwhere: n = the sample size1+ N (e) 2N = population sizee = marginal error (0.05)n = 1001 + 100 (0.025)2n = 1001 + 0.25n = 1001 + 0.25n = 80The sample size for each study area is 80. Thus, 80 in total for sample size of this study3.05 Research Instrument SpecificationThe research instrument used in the study was the questionnaire. They were administered inthe Organization. The questionnaire was divided into two (2) sections “A and B”. Section Arelate to personal characteristics of respondents while section B relates to information onrelevant variables. Each questions was rated using four points Likert scale, they are asfollows; Strongly Agreed (SA), Agreed (A), Disagreed (D), Strongly Disagreed (SD).48
3.06Measurement of VariablesThe major variables of the study are reward, reward system, employee, employeeperformance and organization performance would be measured using 4 point liker scaleStrongly Agreed, Agreed, Disagreed and Strongly Disagreed.3.07Method of Data Presentation and AnalysisIn the study, simple frequency distribution with simple percentage would be employed indescribing the data in relation to the hypotheses to be tested and would be carried out with thehelp of With the help of version 23 of the Statistical Package for Social Sciences (SPSS) thesection B which is the inferential analysis, which uses regression analysis to assess the impactof the independent variable (employee performance) on the dependent variable (rewardsystem) was carried out.3.08Reliability and ValidityThe designed questionnaires will be given to our supervisor at first for approval andcorrections; thereafter, distributions within the organization and given to the superior tutorsfor eye-see and any further useful suggestions. The reliability measures are high since thestudy makes use of primary source of data collection49
CHAPTER FOURDATA PRESENTATION, INTERPRETATION AND ANALYSIS4.1Analysis of Demographic Characteristics of RespondentsThe following data presentation is based on the data retrieved from the administeredquestionnaire for the purpose of the study. A total number of one hundred (100)questionnaires were distributed among respondent and the 80 questionnaires were fully filledand returned. The analysis is based on these responses.4.2Data PresentationThe data for the analysis of the hypotheses of this study is being presented in the TablesbelowTable 4.1: Distribution of Respondents Based on GenderGenderFrequencyPercentValidpercentCumulativepercentValidMale60757575Female202525100.0Total80100.0100.0Source: Field survey, 2024The table 4.1above shows that 75% of the respondents are male while 25% are female. Thisimplies that majority of the respondents are male.Table 4.2: Age Distribution of RespondentsYearsFrequencyPercentValidPercentCumulativePercentValid18-27 Years1215.015.015.028-37Years3543.7543.7558.7538-47 Years2430.0030.0088.7548-57 Years67.507.5094.7558 And Above33.753.75100.00Total80100.0100.0Source: Field survey, 202450
The table 4.2 above shows that 15% of the respondents are between the ages of 18 and 27years, 43.75% are between the ages of 28 and 37 years, 30.0% are between the ages of 38 and47 years, 6.0% are between the ages of 48-57 Years while 3.75% are over 58 years of age andabove. This implies that majority of the respondents are between the ages of 28 and 37 years.Table 4.3: Marital StatusFrequencyPercentValidPercentCumulativePercentValidSingle2430.0030.0030.00Married4556.2556.2586.25Divorced67.507.5096.75Widow/widower56.256.25100.00Total80100.0100.0Source: Field survey, 2024The table 4.3 above shows that 30% are single, 56.25% are married, 7.5% are divorced while6.25% are widow or widower.Table 4.4: Educational QualificationFrequencyPercentValidPercentCumulativePercentValidPrimary cert----S.S.C.E Or Equivalent56.256.256.25Diploma Or Equivalent1012.5012.5018.751st Degree Or Equivalent2835.0035.0053.502nd Degree Or Equivalent2227.5027.5081.25Professional Qualification1518.7518.75100.00Total80100.0100.0Source: Field survey, 2024The table 4.4 above shows that none of the respondents possess primary certificate, 6.25% ofthe respondents are S.S.C.E or Equivalent holders, 12.5% are Diploma or Equivalent holders,35% are 1st Degree or Equivalent holders, 27.5% are 2nd Degree or Equivalent while18.75% are Professional Qualification holders.51
Table 4.5: Working ExperienceFrequencyPercentValidPercentCumulativePercentValid1-5 Years810.010.010.06-10 Years4050.050.060.011-15 Years2227.527.587.516 – 20 Years 1012.512.5100.0Total80100.0100.0Source: Field survey, 2024The table 4.5 above shows that 10% of the respondents have between 1-5 years workingexperience, 50% of the respondents have between 6 –10 years working experience, 27.5%have between 11-15 years working experience while 12.5% of the respondents haveexperience of between 16-20 years or above.Table 4.6: How Long has the Organization been in Operation FrequencyPercentValidPercentCumulativePercentValid1-10 Years2531.2533.331.2511-20 Years4556.2538.387.521-30 Years1012.5028.3100.0Total80100.0100.0Source: Field survey, 2024The table 4.6 above shows that 31.25% of the respondents opined that the organization hasbeen operating between 1-10 years, 56.25% of the respondents opined that the organizationhas been operating between 11-20 years while 12.50% of the respondents opined that theorganization has been operating between 21-30 years.52
Table 4.7: Distribution of respondent by Company Organization NameFrequencyPercentValidPercentCumulativePercentValidAB Microfinance bank, Ibara50505050Lapo Microfinance Bank, Oke-Ilewo505050100Total100100.0100.0Source: Field Survey, 2024Table 4.7 above shows that 51.1% of the respondents are staffs of AB Microfinance bank,Ibara while 48.9% of the respondents are staffs of Lapo Microfinance Bank, Oke-Ilewo.Therefore equal numbers of respondents’ are sampled from both organizations.Analyses of Research QuestionsTable 4.2.1: My company pays me wellFrequencyPercentValidPercentCumulativePercentValidStrongly Disagree33.753.753.75Disagree1012.5012.5016.25Agree3847.5047.5063.75Strongly Agree2936.2536.25100.0Total80100.0100.0Source: Field survey, 2024The table 4.2.1 above shows that 16.25% of the respondents disagreed that the company paysme well while 83.75% agreed. This implies that majority of the respondents agreed that thecompany pays me well.53
Table 4.2.2: I believe my overall reward package should provide morerewardsFrequencyPercentValidPercentCumulativePercentValidStrongly Disagree67.507.507.50Disagree1113.7513.7521.25Undecided33.753.7525.00Agree4050.0050.0075.00Strongly Agree2025.0025.00100.0Total80100.0100.0Source: Field survey, 2024The table 4.2.2 above shows that 21.250% of the respondents disagreed that his/her overallreward package should provide more rewards, 75% agreed while 3.75% could not decide.This implies that majority of the respondents agreed that his/her overall reward packageshould provide more rewards.Table 4.2.3: I am not satisfied with my salaryFrequencyPercentValidPercentCumulativePercentValidStrongly Disagree1518.7518.7518.75Disagree1113.7513.7532.50Undecided911.2511.2547.35Agree2531.2531.2575.00Strongly Agree2025.0025.00100.0Total80100.0100.0Source: Field survey, 2024The table 4.2.3 above shows that 32.50% of the respondents disagreed that they are notsatisfied with their salary while 56.25% agreed that they are satisfied with their salary and11.25% could not decide. This implies that majority of the respondents agreed that they aresatisfied with their salary.54
Table 4.2.4: I prefer cash to in-kind rewardFrequencyPercentValidPercentCumulativePercentValidStrongly Disagree67.57.57.5Disagree1012.512.520.0Undecided45.05.025.0Agree2227.527.552.5Strongly Agree3847.547.5100.0Total80100.0100.0Source: Field survey, 2024The table 4.2.4 above shows that 20% of the respondents disagreed that he/she prefers cash toin-kind reward, 75% agreed that he/she prefers cash to in-kind reward while 5% could notdecide. This implies that majority of the respondents agreed that he/she prefers cash to in-kind reward.Table 4.2.5: I get extra duties and additional work allowancesFrequencyPercentValidPercentCumulativePercentValidStrongly Disagree1012.512.512.5Disagree1215.015.027.5Undecided810.010.037.5Agree2835.035.072.5Strongly Agree2227.527.5100.0Total80100.0100.0Source: Field survey, 2024The table 4.2.5 above shows that 27.5% of the respondents disagreed that he/she gets extraduties and additional work allowances, while 62.5% agreed he/she gets extra duties andadditional work allowances. This implies that majority of the respondents agreed that promptand occasional training of staff increases the performance of staff which in turn brings highoutput from employees aligned with the set organizational goals.55
Table 4.2.6: I'm all right when I am appreciated for a job well doneFrequencyPercentValidPercentCumulativePercentValidStrongly Disagree33.753.753.75Disagree56.256.2510.00Agree4050.0050.0060.00Strongly Agree3240.0040.00100.0Total80100.0100.0Source: Field survey, 2024The table 4.2.6 above shows that 10.0% of the respondents disagreed that he/she is all rightwhen he/she is appreciated for a job well done while 90.0% agreed that he/she is all rightwhen he/she is appreciated for a job well done. This implies that majority of the respondentsagreed that the are all right when they are appreciated for a job well done.Table 4.2.7: Once I am recognized, I feel respectedFrequencyPercentValidPercentCumulativePercentValidStrongly Disagree67.57.57.5Disagree1215.015.022.5Undecided810.010.032.5Agree3037.537.570.0Strongly Agree2430.030.0100.0Total80100.0100.0Source: Field survey, 2024The table 4.2.7 above shows that 22.5% of the respondents disagreed that once he/she isrecognized, he/she feels respected while 67.5% agreed that once he/she is recognized, he/shefeels respected and 10% of the respondents opined for undecided. This implies that majorityof the respondents agreed that once he/she is recognized, he/she feels respected.56
Table 4.2.8:It stirs my interest in doing ever betterFrequencyPercentValidPercentCumulativePercentValidStrongly Disagree56.256.256.25Disagree1113.7513.7520.00Agree3037.5037.5057.50Strongly Agree3442.5042.50100.0Total80100.0100.0Source: Field survey, 2024The table 4.2.8 above shows that 20% of the respondents disagreed that it stirs his/her interestin doing ever better while 80% of the respondents agreed it stirs his/her interest in doing everbetter. This implies that majority of the respondents agreed that it stirs their interest in doingever better.Table 4.2.9: I prefer recognition to cash rewardFrequencyPercentValidPercentCumulativePercentValidStrongly Disagree1012.5012.5012.50Disagree1316.2516.2528.75Agree3543.7543.7572.50Strongly Agree2227.5027.50100.0Total80100.0100.0Source: Field survey, 2024The table 4.2.9 shows that 28.75% of the respondents disagreed that they prefer recognitionto cash reward while 71.25% of the respondents agreed that they prefer recognition to cashreward. This implies that majority of the respondents agreed that they prefer recognition tocash reward.57
Table 4.2.10: I feel fulfilled when management acknowledges my service yearsFrequencyPercentValidPercentCumulativePercentValidStrongly Disagree810.0010.0010.00Disagree1316.2516.2526.25Undecided56.256.2532.50Agree3037.5037.5070.0Strongly Agree2430.0030.00100.0Total80100.0100.0Source: Field survey, 2024The table 4.2.10 above shows that 26.25% of the respondents disagreed that they feel fulfilledwhen management acknowledges their service years while 67.5% of the respondents agreedthey feel fulfilled when management acknowledges their service years and 6.25% of therespondents opined of undecided. This implies that majority of the respondents agreed thatthey feel fulfilled when management acknowledges their service years.Table 4.2.11: I enjoy a friendly and conducive working environmentFrequencyPercentValidPercentCumulativePercentValidStrongly Disagree11.251.251.25Disagree11.251.251.25Agree3847.5047.5050.00Strongly Agree4050.0050.00100.0Total80100.0100.0Source: Field survey, 2024The table 4.2.11 above shows that 2.5% of the respondents disagreed that they enjoy afriendly and conducive working environment while 97.5% of the respondents agreed thatthey enjoy a friendly and conducive working environment. This implies that majority of therespondents agreed that they enjoy a friendly and conducive working environment.58
Table 4.2.12: My firm is doing a great deal to improve the work environmentFrequencyPercentValidPercentCumulativePercentValidStrongly Disagree78.758.758.75Disagree810.0010.0018.75Undecided56.256.2525.00Agree3240.0040.0065.00Strongly Agree2835.0035.00100.0Total80100.0100.0Source: Field survey, 2024The table 4.2.12 above shows that 18.75% of the respondents disagreed that their firm isdoing a great deal to improve the work environment, 6.25% of the respondents opined ofundecided while 75% of the respondents agreed that their firm is doing a great deal toimprove the work environment. This implies that majority of the respondents agreed that theirfirm is doing a great deal to improve the work environment.Table 4.2.13: I enjoy some degree of autonomy in fulfilling my dutiesFrequencyPercentValidPercentCumulativePercentValidStrongly Disagree1012.512.512.5Disagree67.57.520.0Undecided1215.015.035.0Agree3037.537.572.5Strongly Agree2227.527.5100.0Total80100.0100.0Source: Field survey, 2024The table 4.2.13 above shows that 20% of the respondents disagreed that they enjoy somedegree of autonomy in fulfilling their duties, 15% of the respondents opined for undecidedwhile 65% agreed that they enjoy some degree of autonomy in fulfilling their duties. Thisimplies that majority of the respondents agreed that they enjoy some degree of autonomy infulfilling their duties59
Table 4.2.14: My organization runs regular public health programsFrequencyPercentValidPercentCumulativePercentValidStrongly Disagree1518.7518.7518.75Disagree2025.0025.0043.75Undecided56.256.2550.00Agree1012.512.562.50Strongly Agree3037.537.5100.0Total80100.0100.0Source: Field survey, 2024The table 4.2.14 above shows that 14.9% of the respondents disagreed that their organizationruns regular public health programs while 50% of the respondents agreed that theirorganization runs regular public health programs and 6.25% of the respondents opined toundecided. This implies that majority of the respondents agreed that their organization runsregular public health programs.Table 4.2.15:My office is comfortableFrequencyPercentValidPercentCumulativePercentValidStrongly Disagree1012.5012.5012.50Disagree1113.7513.7526.25Undecided56.256.2532.50Agree2430.0030.0062.50Strongly Agree3037.5037.50100.0Total80100.0100.0Source: Field survey, 2024The table 4.2.15 above shows that 12.50% of the respondents disagreed that his/her office iscomfortable while 67.50% of the respondents agreed that his/her office is comfortable. Thisimplies that majority of the respondents agreed that his/her office is comfortable.60
Table 4.2.16: My company has a training and development policywhich applies to all employees.FrequencyPercentValidPercentCumulativePercentValidStrongly Disagree1316.2516.2516.25Disagree1215.0015.0031.25Agree2936.2536.2567.50Strongly Agree2632.5032.50100.0Total80100.0100.0Source: Field survey, 2024The table 4.2.16 above shows that 31.25% of the respondents disagreed that his/her companyhas a training and development policy which applies to all employees while 68.75% of therespondents agreed his/her company has a training and development policy which applies toall employees. This implies that majority of the respondents agreed that his/her company hasa training and development policy which applies to all employees.Table 4.2.17: I have attended Company-sponsored skill trainingactivitiesFrequencyPercentValidPercentCumulativePercentValidStrongly Disagree78.758.758.75Disagree1012.5012.5021.25Agree3948.7548.7570.00Strongly Agree2430.0030.00100.0Total80100.0100.0Source: Field survey, 2024The table 4.2.17 above shows that 21.25% of the respondents disagreed that he/she haveattended Company-sponsored skill training activities while 78.75% of the respondents agreedthat he/she have attended Company-sponsored skill training activities. This implies thatmajority of the respondents agreed that he/she have attended Company-sponsored skilltraining activities.61
Table 4.2.18: Supervisors support the use of training techniques learntby employeesFrequencyPercentValidPercentCumulativePercentValidStrongly Disagree22.52.52.5Disagree810.010.012.5Agree3240.040.052.5Strongly Agree3847.547.5100.0Total80100.0100.0Source: Field survey, 2024The table 4.2.18 above shows that 12.5% of the respondents disagreed that supervisorssupport the use of training techniques learnt by employees while 87.5% of the respondentsagreed that supervisors support the use of training techniques learnt by employees. Thisimplies that majority of the respondents agreed that supervisors support the use of trainingtechniques learnt by employees.Table 4.2.19: My company ties its corporate policy with training anddevelopmentFrequencyPercentValidPercentCumulativePercentValidStrongly Disagree45.05.05.0Disagree67.57.512.5Agree4050.050.062.5Strongly Agree3037.537.5100.0Total80100.0100.0Source: Field survey, 2024The table 4.2.19 above shows that 12.5% of the respondents disagreed that his/her companyties its corporate policy with training and development while 87.5% of the respondentsagreed that his/her company ties its corporate policy with training and development. Thisimplies that majority of the respondents agreed that his/her company ties its corporate policywith training and development.62
Table 4.2.20: Employees who use their expertise are granted priorityfor new assignmentsFrequencyPercentValidPercentCumulativePercentValidStrongly Disagree810.010.010.0Disagree1215.015.025.0Agree3847.547.572.5Strongly Agree2227.527.5100.0Total80100.0100.0Source: Field survey, 2024The table 4.2.20 above shows that 25% of the respondents disagreed that employees who usetheir expertise are granted priority for new assignments while 75% of the respondents agreedthat employees who use their expertise are granted priority for new assignments. This impliesthat majority of the respondents agreed that employees who use their expertise are grantedpriority for new assignments.Table 4.2.21: I try to keep my job knowledge up to dateFrequencyPercentValidPercentCumulativePercentValidStrongly Disagree56.256.256.25Disagree1012.5012.5018.75Agree3543.7543.7562.50Strongly Agree3037.5037.50100.0Total80100.0100.0Source: Field survey, 2024The table 4.2.21 above shows that 18.75% of the respondents agreed that he/she try to keepsmy job knowledge up to date while 81.25% of the respondents agreed he/she try to keeps myjob knowledge up to date. This implies that majority of the respondents agreed that he/she tryto keeps my job knowledge up to date.63
Table 4.2.22: I work to improve my job skillsFrequencyPercentValidPercentCumulativePercentValidStrongly Disagree22.52.52.5Disagree810.010.012.5Agree3240.040.052.5Strongly Agree3847.547.5100.0Total80100.0100.0Source: Field survey, 2024The table 4.2.22 above shows that 12.5% of the respondents disagreed that he/she work toimprove my job skills while 87.5% of the respondents agreed that he/she work to improve myjob skills. This implies that majority of the respondents agreed that they work to improve myjob skills.Table 4.2.23: I show flexibility in carrying out tasksFrequencyPercentValidPercentCumulativePercentValidStrongly Disagree67.507.507.50Disagree1113.7513.7521.25Undecided33.753.7525.00Agree4050.0050.0075.00Strongly Agree2025.0025.00100.0Total80100.0100.0Source: Field survey, 2024The table 4.2.23 above shows that 21.250% of the respondents disagreed that he/she showsflexibility in carrying out tasks, 75% of the respondents agreed that he/she shows flexibilityin carrying out tasks while 3.75% could not decide. This implies that majority of therespondents agreed that he/she shows flexibility in carrying out tasks.64
Table 4.2.24: I managed to cope with difficult situations and setbacks atwork wellFrequencyPercentValidPercentCumulativePercentValidStrongly Disagree1518.7518.7518.75Disagree1113.7513.7532.50Undecided911.2511.2547.35Agree2531.2531.2575.00Strongly Agree2025.0025.00100.0Total80100.0100.0Source: Field survey, 2024The table 4.2.3 above shows that 32.50% of the respondents disagreed that they managed tocope with difficult situations and setbacks at work well while 56.25% of the respondentsagreed that they managed to cope with difficult situations and setbacks at work well and11.25% could not decide. This implies that majority of the respondents agreed that theymanaged to cope with difficult situations and setbacks at work well.Table 4.2.25: I come up with innovative approaches to new problems atworkFrequencyPercentValidPercentCumulativePercentValidStrongly Disagree67.57.57.5Disagree1012.512.520.0Undecided45.05.025.0Agree2227.527.552.5Strongly Agree3847.547.5100.0Total80100.0100.0Source: Field survey, 2024The table 4.2.25 above shows that 20% of the respondents disagreed that he/she come upwith innovative approaches to new problems at work, 75% of the respondents agreed thathe/she come up with innovative approaches to new problems at work while 5% could not65
decide. This implies that majority of the respondents agreed that he/she come up withinnovative approaches to new problems at work.4.3Test of HypothesesThe hypotheses were tested using Pearson Correlation. The analysis enables us identifyrelationship between dependent variable and independent variable.Decision Rule:Reject the null hypothesis (H0) if the sig. value (0.000) is less than theconventional 0.01 level of significance and accept if otherwise. The level of strength betweenthese variables can also be determined as indicated below:Coefficient valueStrength of Association0.1</r/<.3Weak Correlation0.3</r/<.5Moderate Correlation/r/>.5Strong CorrelationWhere r means the absolute value of Pearson Correlation Coefficient66
Hypothesis OneH1:Pay reward impact on the performance of employee task significantly at organization.Table 4.3.1: CorrelationsPay rewardPerformanceof employeePay reward Pearson Correlation1.935**Sig. (2-tailed).001N8080performance of employee Pearson Correlation.935**1Sig. (2-tailed).001N8080**.Correlation is significant at the 0.01 level (2-tailed).Source: Field Survey (2024)It can be inferred from the Pearson correlation table above shows that there is a significantrelationship between Pay reward and performance of employee, this is shown by thecorrelation coefficient of .935 and probability error of 0.01 indicating a positive relationshipbetween the two variables at 1% level of significance. This implies that the null hypothesis(H0) is rejected. Therefore, there is significant relationship between Pay reward andemployees performance in impact of reward systems on employees’ performance inmicrofinance banks 67
Hypothesis TwoH0:Non-commitment of top managers are not one of the problems militating against theuse of Management by Objectives as an instrument for organizational performance.H2:Employee recognition in organization significantly affects employee contextualperformance.Table 4.3.2: CorrelationsEmployeerecognitionEmployee contextualperformanceEmployee recognitionPearson Correlation1.191Sig. (2-tailed).113N8080Employee contextual performancePearson Correlation.1911Sig. (2-tailed).113N8080Source: Field Survey (2024)It can be inferred from the Pearson correlation table shows above that the relationshipbetween employee recognition is one of the motivating factors that contributes highly toempowering employees to perform high and stay committed to the organization is significant,this is shown by the correlation coefficient of .191 and probability error of 0.113 indicating apositive significant relationship between the two variables. This implies that the nullhypothesis (H0) is rejected. Therefore, there is significant relationship between employeerecognition and organization performance.68
Hypothesis ThreeH0:Conductive work environment in the organization does not significantly affectemployee counterproductive behaviour.H3:Conductive work environment in the organization significantly affect employeecounterproductive behaviour.Table 4.3.3: CorrelationsConducive workenvironmentAchieving setobjectivesConducive workenvironment Pearson Correlation1.499**Sig. (2-tailed).000N8080Employee counter-productive behaviourPearson Correlation.499**1Sig. (2-tailed).000N8080**. Correlation is significant at the 0.01 level (2-tailed).Source: Field Survey (2024)It can be inferred from the Pearson correlation table above shows that there is a significantrelationship between conducive work environment and employee counterproductivebehaviour in the organisation, this is shown by the correlation coefficient of .499 andprobability error of 0.000 indicating a positive relationship between the two variables at 1%level of significance. This implies that the null hypothesis (H0) is rejected. Therefore, there issignificant relationship betweenconducive work environment andemployeecounterproductive behaviour in the organisation.69
Hypothesis FourH0:Employee development in the organization does not significantly affects employeeadaptive performance.H4:Employee development in the organization significantly affects employee adaptiveperformance.Table 4.3.4: CorrelationsEmployeedevelopmentEmployee adaptive performanceEmployee developmentPearson Correlation1.983**Sig. (2-tailed).000N8080Employee adaptive performancePearson Correlation.983**1Sig. (2-tailed).000N8080**. Correlation is significant at the 0.01 level (2-tailed).The results of correlation analysis from table 4.3.4 indicate that Pearson correlationcoefficient between performance appraisal and job satisfaction was r= 0.983 indicating thereis negative correlations between the two variables. The prob. Values (0.000) is lesser thansignificance value (0.01) we reject H0 which stated that there is no relationship betweenemployee development and employee adaptive performance. Therefore we conclude thatthere is significant relationship between employee development and employee adaptiveperformance at 1% significance level; also the Pearson correlation coefficient (0.983) showsthat there is significant relationship between employee development and employee adaptiveperformance.4.04Implications of Findings70
The implications of the study's findings are discussed in the following subheadings:management practices, industry and society.Management Practices: The study of management in terms of rewards system and employeeperformance is hereby enhanced as different approaches to reward system in the organizationas well as employee performance are provided. Through this, human resource managementpractices can affect performance in the areas of setting competitive compensation level,training and development, recruitment package, performance appraisal and maintainingmorale. Therefore, it should be noted that scholars and management practitioners can includethe findings of this study in their teachings.Industry: The industry and organizational managers in the industry are hereby enjoined tocreate a favourable atmosphere that will generate good employee performance. These includeproviding adequate reward and structuring such rewards in order to improve employeeperformance.Society: The society, too, will become a better place when employees work withorganizations that have their best interest at heart. Employees won't need any unrest orindustrial action. So this will keep society at peace.CHAPTER FIVE71
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION5.01Summary of FindingsIn this section, the various findings from this study carried out on: the impact of rewardsystems on employees’ performance in microfinance banks. In view of these, somehypotheses were formulated and tested using statistical method to reveal some finding fromthe state evaluated based on the plan design.i.The dependent variable in this research is employee performance which has four subvariable (quality, efficiency, productivity, effectiveness) and independent variable isorganization reward system which has 4 sub variables (benefits, compensation,incentives, promotions).ii.Hypothesis one states that pay reward impact on the performance of employee tasksignificantly at organization. The result is supported by Hertzberg that emphasized onthe fact that organisations must ensure the presence and balance of both the factors tokeep the employees motivated and engaged towards their job (Alfayad and Arif,2017). iii.Hypothesis two states that employee recognition in organization significantly affectsemployee contextual performance. This study was meant to confirm the existence of apositive and significant relationship between employee recognition and employeecontextual performance in keeping with the research work conducted by severalauthors. This research also highlighted the role of the supervisor, the main actor in theperformance appraisal process, and often the only appraiser in this process. The highlevel of motivation enhances the overall employee skills which are required for thespecific job task. Thus, more motivated employees tend to perform higher(Alshmemri, Shahwan-Akl and Maude, 2017)..72
iv.Hypothesis three states that conductive work environment in the organizationsignificantly affect employee counterproductive behaviour. This argument can bereinforced by the research finding that is anchored on equity theory. The theoriesexplain employee’s behavior, attitudes and perceptions arising out of compensationand employee performance. A linkage between compensation and employeeperformance is derived from employee’s behavior to various elements ofcompensation. This is because most empirical studies have relied heavily on thesetheories as the baseline theory when discussing effectiveness of compensation andemployee performance (e.g.; Greenberg, 1990, 1997; Rishipal and Manish, 2013;Antoncic and Antoncic, 2011, and Adams, 1965)v.Hypothesis four states that Employee development in the organization significantlyaffects employee adaptive performance. The findings demonstrate positive effects ofaction control and results control. A possible explanation for this finding could be thatthe strength of the crowding-out effect depends on the context in which it is studied,which would be in line with Deci (1999)vi.We therefore summarized that there is a significant relationship between each of thedependent and independent variable i.e. employee performance (quality, efficiency,productivity, effectiveness) and organization reward system (benefits, compensation,incentives, promotions). 5.02Conclusion73
The study having established the study's broad objective which was the impact of rewardssystem on employee performance in some selected microfinance banks in Abeokuta, Ogunstate. From the data collected, based on the empirical findings, it was concluded that: payreward affects employee Adaptive performance significantly in microfinance banks,employee recognition significantly affects employee counterproductive performance inmicrofinance banks, Conducive work environment affects employee Contextual performanceand finally employee development affects employee performance. Therefore, the studyconcludes that reward system impacts on employee performance.5.03RecommendationsBased on the findings, several guidelines are given;i.The management of microfinance banks should ensure that they provide the neededmotivation, compensation or remuneration irrespective of employees' level to spuremployees to act towards improving their task performance.ii.The bank industry should strive to recognize and appreciate employees as much aspossible more often this will help them improve their work.iii.The bank industry especially or particularly microfinance banks should ensure thatreward needs to be improved so that employee do not indulge in counterproductivebehaviour, but should be motivated to follow up behaviours that will improve theperformance of the organization in which they work.iv.The bank industry particularly microfinance banks management should pay particularattention to the work environment as it represents a significant variable that affects theperformance of the employee which will then impact on the efficiency and quality ofthe services.74
5.04Suggestions for Further StudiesIt is suggested that future studies should broaden the scope of the study and future researchshould analyze the research variables in other research contexts, industries, countries andbusiness environments so as to improve the generalizability of the findings. A comparativestudy of the relationship and effects of the reward system variables and the performancevariables of employees used in this research in the banking industry will thus open up moreunderstanding on the topic.5.05Contribution to KnowledgeThe study has contributed conceptually to the body of knowledge in the concept by broaderoutlook on rewards system concepts on employee performance and reward systemapproaches as well as employee performance as they improve and bring out the diverseviewpoints of the scholars. However, empirically, the study examination revealed how thesystem of rewards has helped to improve employee performance. This research as such addsto existing studies. The research made the following contribution to the findings: Pay rewardsignificantly affects employee Adaptive performance in the microfinance bank industry,Employee recognition significantly affects employee counterproductive performance in thebank industry, and Conducive work environment does not affect employee contextualperformance, and employee development in microfinance bank significantly affect theperformance of employee tasks. Therefore, the study concludes that the reward systemsignificantly influences the work performance of employees.BibliographyAarts, H., (2019). Goal-setting theory and the mystery of setting goals.75
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