THE IMPACT OF MONETARY INCENTIVE ON EMPLOYEE PERFORMANCE

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THE IMPACT OF MONETARY INCENTIVE ON EMPLOYEE PERFORMANCE

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

In recent times, managers and management researchers have long believed that organizational goals are unattainable without the enduring commitment of members of the organisation. It has been said that the workforce remains the most critical productive asset of any Organization. It is the human element that gives direction and dynamism to the organisation.

In fact, any organisation can only grow to the extent made possible by the Voluntary and creative application of the skills and expertise of its workforce. It is for this reason that the search ways and means of motivating the workforce for optimal organisational performance has more or less remained a cardinal concern of management since the

birth of industrial civilization.

Today, as in the early days of organizational history, managers often ask some fundamental questions: what can we do to motivate our workforce? What is the purpose of monetary incentive? No one yet has discovered a single Technique or gimmick that answers this question.

As many still ignore that fact that no organization can survive without its workers, and the workers themselves cannot be productive if their needs are not met.

Also, managers and management researchers have long believed that Organizational goals are unattainable without the enduring commitment of members of the organization.

Freeman (1998: 38-39) noted that organizations, emphasized increase in productivity without necessarily considering the needs of the workers. They are however, ignorant of the fact that organization cannot survive without its workers and the workers themselves cannot be productive if their needs may not be met.

Aluko, M.A. (2000: 32) asserted that workers should not be made to work as machines and tools whose presence in the organization is just to perform while emphasis is placed on productivity alone without thinking of what will drive the employee to put on his optimum best.

Stoner (1998:463) stated that monetary incentive is a human psychological characteristics, it includes the factors that cause channel and sustain human behaviours, monetary incentive deals with “what make people think”.

Aluko (2000:32) noted that the major monetary incentiveal factor is money, although we have seen that in Nigeria, money alone do not guarantee productivity.

Other non-monetary incentives such as price, job promotion, upgrading and advancement, job security and recognition go a long way to boost the morale of workers. If workers needs are satisfied, it might lead to an increase in productivity. However, every manager regardless of the size of the organization can incorporate monetary incentive into the work environment to stimulate and influence employee.

From the foregoing, since the study of monetary incentive is essential for organisational survival and growth, it is an attempt by this study to look at the effect of monetary incentive as a tool for increasing employee’s efficiency. A study of selected bank in Nigeria.

1.2 STATEMENT OF THE PROBLEM

Although much has been said and written on this topic, and the fact that the subject has been given increased in most organization especially in Guarantee Trust Bank and United Bank for Africa, one still finds out that productivity in most financial institution is low; it takes extra efforts for the staff to put on optimal performance.

In the light of the foregoing, the critical task of this research is to identify effective monetary incentiveal strategies that could propel and increase employee efficiency in Guarantee Trust Bank and United Bank for

Africa.

Also right from the beginning management of organizations has always been faced with the problem of how to motivate workers to greater performance with a view to increasing productivity. Even till now, the problem still persists in most organisations.

Therefore the problems posed by this study are:

– Does money or monetary incentive induce workers to perform well on their task?

– Some of the employee may not be satisfied with the present reward system as been instituted by management hence, management may ignore the real incentive that motivate employee.

– Money alone is not the only motivating force that induces employee to put their optimum best, there are other forms of this reward: praises, job advancement, higher responsibility and promotion. The question then is, to what extent has it been incorporated into the banking industries?

– Labour turnover is a major problem in most of Nigeria Banks.

Some banks record as much as 20% to 30% within a year.

The question then is, is labour turnover as a result of poor employee monetary incentive?

1.3 OBJECTIVES OF THE STUDY

This study intends to:

(i) Examine the effect of monetary incentive in increasing employee

productivity

(ii) Find out may be money (pay) is the main motivating factor that can make employee increase their level of performance.

(iii) Examine other inherent problem and constraints militating against effective employee monetary incentive in an organization.

(iv) Suggest personal administrative system, policy and procedure that can assist organization to highly remunerate their workforce and reduction in the labour turnover.

1.4 RESEARCH QUESTIONS

The research seeks to answer the following:

– Does monetary incentive have any impact on employee’s

performance?

– Does many play a determining role in the optimum

performance of an employee?

– Is it possible for employee to leave his/her present job if he/she is offered a higher package?

– Are there any difference in what is offered now compare to other banks?

– What are the causes of labour turnover in Nigeria banks?

– Are there any different in monetary incentiveal packages of the present generation banks compare to the old generation banks?

– Are labour turnover more prevailed in old generation banks to new generation banks?

– How can the present existing remuneration packages of this bank be improved?

1.5 RESEARCH HYPOTHESIS

The following research hypothesis shall be tested.

Ho: there is a relationship between monetary incentive and productivity

Hi: There is no relationship between monetary incentive and productivity.

1.6 SIGNIFICANCE OF THE STUDY

– The study will be of immense importance to different categories of people: namely individuals, students, organisations and the management of Guarantee Trust Bank and United Bank for

Africa .

– The research work when accomplished will create ways by which the management of Guarantee Trust Bank will reappraise there present monetary incentive package with the aims of improving employee’s performance and reduction in labour.

– It is also hoped to increase the level of knowledge on the existing monetary incentive schemes in the Nigeria Banking Sector.

– It will assist student as a reference material in their libraries.

– It will also pose a challenge to other researchers who may be interested to research more in their area.

1.7 SCOPE OF THE STUDY

The study intends to cover Guarantee Trust Bank and United Bank for Africa, headquarter of the banks and selected branches within Lagos metropolis. The study is limited to effect of monetary incentive of employee as a tool in increasing employee’s efficiency.

1.8 LIMITATION FOR THE STUDY

In the course of carrying out this study, a lot of challenges stood on our way, prevalent among these are:

– Finance

– Transportation

– Uncompromising attitude of some interviewers hoarding of

vital information by some staff of the two banks.

– Time constraints as to the deadline for the submission of the research work.

– Scarcity of relevant material

Despite these challenges effort were made to carryout a thorough investigation on the study without impede on the exercise.

1.9 DEFINITION OF TERMS

– PERFORMANCE: This is defined as the ability to achieve result or given objectives (Freeman, 2000:29).

– MONETARY INCENTIVE: This refers to an inner drive that Energizes activities compels and moves an individual to act or behave positively on a certain manner (Stoner, 1998:463).

– PRODUCTIVITY: This means output per unit of Labour input, it is the balance between all factors of production that will give the greatest output for the smallest effort (Freeman, 1998:38-39)

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