BACKGROUD OF THE STUDY
The success and the survival of any organization are determined by the way the employees are remunerated and rewarded and this reward system will determine the level of employees’ commitment and their attitude to work (Adams, 2013 p.422). As noted by Akerele, (2011, p.663) poor incentives packages have been a major factor affecting employees’ commitment and productivity. Organizational performance comprises the actual output or results of an organization as measured against its intended outputs (or goals and objectives). According to Campbell & Chia, (2013, p.131) organizational performance cuts across three specific areas of firm outcomes: financial performance (profits, return on assets, return on investment, etc.); product market performance (sales, market share, etc.); and shareholder return (total shareholder return, economic value added, etc.). Specialists in many fields are concerned with organizational performance including strategic planners, operations, finance, legal, and organizational development. Employee’s play very important part in the daily operations of any organization especially where the markets are very competitive and have ever-changing environment which is supported by majority of the theorists. The fate of an organization is usually determined by its employee’s so it sounds logical to understand how employees can be motivated. Financial reward is a measure of influencing individual’s drive to act towards desired direction. Financial rewards comprised all rewards that have a monetary value and add up to total remuneration such as base pay, pay contingent on performance, contribution, competency or skill, pay related to service, financial recognition schemes, and benefits such as pensions, sick pay and health insurance (Armstrong, 2010 p.77). The importance of financial reward cannot be over emphasized. Guajardo (2011, p.15) found that financial rewards are the strongest incentive in Africa, especially salary increase or performance based rewards. Armstrong (2010, p.80) argued that financial rewards are the core element in total reward. Similarly, a study conducted by Narsee (2012, p.89) in South Africa found that financial reward is the most important reward category. These findings cannot be far from the fact that people work so that they can satisfy their various needs and wants from the reward they get. Therefore, a good financial reward package attracts not only competent workers and retain them, but also determine their commitments and attitudes towards work.
Employee’s productivity and how it could it could be enhanced is central to the concern of industries and organizations, therefore many organizational scientists, are very much interested in different schemes and techniques related to employee’s productivity and its growth incentives are one of those techniques used in workplaces to stimulate employee’s in order to get desired employee’s productivity.
Armstrong and Taylor (2014, p.15), states that “employee’s productivity” is defined as behavior that accomplishes these results. In light of today’s business conditions especially in the flour mill industry where the managers has introduced a regulation on interest capping, motivating people to give their best has become more crucial than ever before. To achieve goals and objectives, organizations irrespective of size, develop strategies to compete in highly competitive markets and to increase employee employee’s productivity. The Human Resources Management has a role to hire and come up with retention strategies for the best employee’s, especially the ones holding key roles that can be difficult to replace because of the technical competencies required. Organizations consider the human capital as being their main asset, capable of leading them to success or if not managed properly can lead to failure of the organization and high staff turnover (Fisher, 2012).
Drucker (2011, p.359) believes that “the work of management is to make people productive” so as to achieve superior employee’s productivity, and gain a competitive edge in the globalized arena through effective compensation packages. Drucker’s belief is anchored on productivity, employee’s productivity, motivation quality and service in managing people in every organization. This emphasis is often captured in organizational mission statements and goals. Financial reward provides a platform through which firms can motivate their employee’s to improve their employee’s productivity, scholars like Pouliakas, (2018, p.5); Pinar (2018, p.151); Arnolds and Venter, (2017, p.102) have all carried out research into monetary and non-financial reward and how they affect organizations. Reward programs are put in place by organizations to reward and compensate exceptional employee’s productivity (Schiller, 1996).
Therefore, for any organization to record any degree of meaningful success in the pursuit of its goals and aspirations, it must have the ability to create values enough to compensate for the burdens imposed upon the staff. Such value or motivators can come in the form of good training policies, facilities or financial rewards such as fringe benefit, promotion, status symbol etc. so as to satisfy the needs of the staff for enhanced operational performance (Gibson, 2004). Hameed, Ali & Arslan, (2014, p.302) noted that financial rewards are financial rewards used mostly by employers to motivate employees towards meeting their targets. Money, being a symbol of power, status and respect plays a big role in satisfying the social–security and physiological needs of a person. From the foregoing it is evident that financial rewards therefore go a long way in promoting employees’ productivity in Nigeria organizations.
1.2 STATEMENT OF THE PROBLEM
Right from the beginning, management of organizations has always been faced with the problem of how to motivate worker in order to increase productivity that leads to profitability. Wealth or profit minimization is the goal of most organizations. This is however only achieved when shareholders or investors funds are invested with a higher return on their investment, which is only possible when that organization is able to effectively motivate its workforce to make profit (Henry 2016, p.294). Whiting (2013, p.126) posits that most organizations actually fail due to their inability to adequately motivate their employees for higher productivity ironically; human resources form a greater percentage of the total assets of organizations. The management of financial rewards is a very critical issue that should not be over looked, as its neglect can lead to disruption of work process, sales and service delivery loss and consequently financial losses. Financial rewards have created a lot of challenges to employee’s input and output in organization. The negligence of adequate structure in pay incentive, fringe incentive, and bonus and over time benefits has caused a lot of inequitable justice on the administration of incentive scheme. The resultant effect on employee productivity could be negative. The negative attributes can be seen as poor turnover, poor product quality improvement, job dissatisfaction, low morale, low commitment, absenteeism, low turnover intentions to stay with the organization and poor employee’s productivity that affects input and output. Companies are spending huge amounts of money on their reward programs which aim at motivating, retaining, committing and attracting new employees. Despite the great amount of money used in these incentives and rewards, only few of the Human Resource Managers are able to justify and measure whether they are efficient. The problem at hand therefore is to examine the impact of financial reward on employee’s productivity in flour mill Nigeria Plc.
1.3 OBJECTIVE OF THE STUDY
The main purpose of this study is to examine the impact of financial reward on employee productivity. The specific objectives are to;
- To ascertain the extent of financial reward operation in flour mill Nigeria Plc.
- To examine the various financial motivators in flour mill Nigeria Plc
- To examine the impact of financial reward on employee productivity in flour mill Nigeria Plc.
- To examine the relationship between financial reward and employee productivity in flour mill Nigeria Plc.
- To examine the manner in which financial rewards are carried out successfully in flour mill Nigeria Plc
1.4 RESEARCH QUESTION
- What is the extent of financial reward operation in flour mill Nigeria Plc?
- What are the various financial motivators in flour mill Nigeria Plc?
- What is the impact of financial reward on employee productivity in flour mill Nigeria Plc?
- What is the relationship between financial reward and employee productivity in flour mill Nigeria Plc?
- In what manner are financial rewards carried out successfully in flour mill Nigeria Plc?
1.5 RESEARCH HYPOTHESES
H0: Financial rewards has no significant impact on employee productivity in flour mill Nigeria Plc
H1: Financial rewards has a significant impact on employee productivity in flour mill Nigeria Plc
H0: There is no significant relationship between financial reward and employee productivity in flour mill Nigeria Plc.
H1: There is a significant relationship between financial reward and employee productivity in flour mill Nigeria Plc.
The study tries to portray the need for effective maximization of financial reward in improving employee’s productivity in organization. The study will therefore be beneficial to the organization understudy (Flour Mill Nigeria Plc) in area of policy formulations as regard employee reward schemes and remuneration. The study will also serve as an invaluable contribution to financial incentive as a factor to increase productivity. Therefore researchers and the general public can gain from it. To education, the study will contribute to already existing knowledge on the impact of financial rewards on employee productivity. Finally, to those in academics and human resource researches, the study will serve as a springboard for further investigations. It will also go a long way to widen the scope of the researcher’s knowledge in the subject matter.
- SCOPE OF THE STUDY
The scope of this study is restricted to impact of financial reward on employee productivity with particular focus to Flour Mill Nigeria Plc in Lagos state Nigeria. By choosing Flour Mill Nigeria Plc, the researcher will be able to assess the impact of financial rewards which will enable him to ascertain its contributions, and impact on the productivity of their employee, which will also provide a basis for making objective conclusions.
1.8 LIMITATION OF THE STUDY
Financial constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview)
Time constraint: The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.
- DEFINITION OF TERMS
Reward System: This is group renewal structures responsible for incentive salience (i.e, wanting, desire or craving) pleasure (i.e, hedonic liking) and enforcement learning (i.e, positive reinforcement).
Reward: Can be defined as something given or received in recompense for worthy behaviour or in retribution for evil acts. It can also be defined as the return for performance of a desired behaviour; positive reinforcement.
Financial reward: Financial rewards are monetary incentives that an employee earns as a result of good performance. These rewards are aligned with organizational goals. When an employee helps an organization in the achievement of its goals, a reward often follows. This may include cash awards, bonuses, commission, gift cards, and more. Apart from covering the bills, monetary rewards are mostly tied to an employee’s performance.
Employee Productivity: Employee productivity (sometimes referred to as workforce productivity) is an assessment of the efficiency of a worker or group of workers.
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