Exploring the Process, Impact and Outcome of Pay and Reward Systems on Employees in Nigeria.

A dissertation submitted to The University of Manchester for the degree of Master of

Science in the Faculty of Humanities

2010

OHIOKHARA IRAGBESON KERY-ANN

MANCHESTER BUSINESS SCHOOL

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CONTENTS

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Abstract

Declaration

Copyright Statement

Acknowledgement

CHAPTER ONE- Introduction

1.1 Background of study

1.2 Statement of Problem

1.3 Research Aims

1.4 Research Statement

1.5 Scope of Study

1.6 Structure of Dissertation

1.7 Conclusion

CHAPTER TWO- Literature Review

2.1 Introduction

2.2 The Motivational Impact of Money

2.3 The Influence of Pay on Employee Motivation, Performance and Satisfaction

2.4 Reward Systems: The Influence of Reward on Employee Satisfaction

2.5 Motivational Theories of Money, Pay and Reward

2.5.1 Expectancy Theory

2.5.2 Porter-Lawler Expectancy Model of Work Motivation

2.5.3 Equity Theory

2.6 Factors affecting Satisfaction with Pay and Rewards

2.7 Pay and Reward System in Nigeria

2.8 Pay and Reward in Media Organisations

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2.9 Conclusion

CHAPTER THREE- Research Methodology

3.1 Introduction

3.2 Types of Research

3.3 Research Design

3.4 Research Purpose

3.5 Qualitative Versus Quantitative Research

3.6 Types of Qualitative Methods

3.6.1 Interview as a Qualitative Method

3.7 Data Collection- Primary and Secondary Data

3.8 Participants/Sample

3.9 Research Procedure

3.9.1 Obtaining Information

3.9.2 Interview Process

3.10 Data Analysis

3.11 Conclusion

CHAPTER FOUR-Data Reporting

4.1 Introduction

4.2 Overview of Daar Communications Ltd

4.2.1 The Pay and Reward System in Daar Communications

4.3 Presentation of the Data Collected and the review of Findings.

4.3.1 Motivation and Performance

4.3.2 The Significance of Pay to Employees

4.3.3 Employee Expectations

4.3.4 Organisational Commitment

4.4 Conclusion

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CHAPTER FIVE- Data Analysis and Discussion

5.1 Introduction

5.2 Data Analysis

5.3 Discussion of the Findings

5.4 Conclusion

CHAPTER SIX- Conclusion, Implication and Recommendations

6.1 Introduction

6.2 Conclusion of Study

6.3 Implication of Research

6.4 Recommendation

6.5 Limitation of Research

References

Appendices

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LIST OF FIGURES

Figure 1.1 Dissertation Structure Model

Figure 2.1 Employer-Employee Exchange Process

Figure 2.2 Vroom-Lawler-Adam Theories Inter-relation

Figure 2.3 Consequence of Pay Dissatisfaction

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LIST OF TABLES

Table 3.1 Differences between Qualitative and Quantitative Methods

Table 3.2 Tables of Interviewees in Daar Communications Ltd

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Abstract

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Declaration

I declare that no portion of the work referred to in this dissertation has been submitted in support of an application for another degree or qualification of this or any other university or institute of learning.

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Copyright Statement

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Acknowledgement

I would like to give thanks to God Almighty. I also want to say a big thank you to my mother, Mrs Patricia Ohiokhara for supporting me throughout my studies. Thank you so much mum, I couldn’t have done it without you.

I also want to thank my supervisor, Miss Anastasia Kynighou for her time, attention and guidance thought the writing of this dissertation.

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CHAPTER 1

INTRODUCTION

1.1 Background of Study

Every successful organisation engages in total reward package for its employees in an

attempt to attain its organisational goals and objectives. These organisations measure the

contribution and performance of their employees in order to fairly and equitably distribute

pay and rewards. Also, the employees who spend their time, effort, energy, skills and

expertise anticipate adequate compensation and reward for their contribution (Ofili, 2004).

Several researchers have agreed that pay and rewards would greatly influence employees in

any organisation (Armstrong & Murlis, 1994; Kerr, 1995; Lawler, 1971; Blinder, 1990;

Taylor, 1911)

In the present day and with the global economic trend, employers of labour have come to the

realisation that the performance of employees is crucial to the success of the organisation.

However, this performance is not only significant for the growth of the organisation but also

for the development of the employee (Ajila & Abiola, 2004). The question then is what

motivates individuals to perform better? Is it the pay that they receive, or the rewards they are

given?

According to McCormick (1979), rewards can be either intrinsic or extrinsic. Intrinsic

rewards are rewards inherent to the job itself and are enjoyed by individuals who have

successfully completed a task. On the other hand, extrinsic rewards are rewards external to

the task of job and could include pay, fringe benefits, working conditions, promotion,

security, contract of service, the conditions of work as well as the work environment (Ajila &

Abiola, 2004). Research evidence has shown that the overall satisfaction of an employee at

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work is derived from a mix of rewards rather than from any single reward (Cameron &

pierce, 1994; Lachance, 2000). Hence, this evidence suggests that both extrinsic rewards and

intrinsic rewards are very important and cannot be substituted for one another (Beer and

Walton, 1990).

The effective use of reward to motivate performance or workers in Nigeria began in the

1970’s (Ajila & Abiola, 2004). Rewards were designed to increase performance and

employee productivity within organisations. However, the reward system of organisations in

Nigeria has suffered strongly over the past years due to its economy, corruption, and

favouritism (Abudu 1986). Little wonder Dike (1999), states that even though there are many

problems in Nigeria, the one which involves the non payment of workers for several months

is a difficult problem to comprehend. This makes the study of pay and reward in Nigeria an

interesting one.

1.2 Statement of Problem

Employees are a great asset to any organisation and the organisation that wants to be

successful needs to pay attention to the needs of the employees who contribute to its success.

For a while now, the economic and social factors present in Nigeria has posed a major

challenge to the way organisations handle reward systems (Ajila & Abiola, 2004; Dike,

2000). This economic situation has made it difficult to fully practice good pay and reward

system. Employers always refer to the poor conditions in Nigeria as their excuse for not

having good reward systems; on the other hand, employees usually cite their contribution to

the progress of the organisation as reason for better condition.

Also, employers hardly regard any labour law in Nigeria that is if it is in existence. This

condition leaves the employee with no other choice than to accept what they are been offered.

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If they don’t, they risk loosing their jobs. Consequently, the fear of loosing their jobs makes it

very difficult for employees to insist on an increase in pay or rewards when they are entitled

to it. As Dike (2000) points out, some of these workers know their rights but cannot demand

for them when it is due.

For this reason, this study would seek to explore the whole process of pay and rewards

system in Nigeria as well as the difficulties involved in implementing these system.

Secondly, the study seeks to examine the effect these pay and reward systems have on

employees’ motivation and performance as well as on their overall job satisfaction.

Furthermore, the study shall seek to point out problems associated with pay and rewards in

organisations in Nigeria, as there is the belief that a problem known is one that is already half

solved. Thus, understanding these problems would make it easy to provide solutions.

1.3 Research Aims

The aim of this research is to explore the process, impact and outcome of pay and reward

system on employees in organisations as well as its influence on employee motivation and

performance. The objectives are:

To explore the concept of pay and reward system

To determine how firms in Nigeria administer the pay and reward system and its

effect on employees.

To examine the causes of satisfaction and dissatisfaction with pay and reward.

To point out the problem associated with pay and reward in organisations in Nigeria

using the research organisation (Daar Communications).

Finally, the study would attempt to make recommendations using literatures from the

Anglo-Saxon Countries on how best to apply pay and reward system in Nigeria.

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1.4 Research Statement

It is imperative to point out some statements which would be used in the research to form

basis of data collection and analysis on the research topic.

pay and reward will have a positive influence on satisfaction of employees

Pay has an effect on the level of Absenteeism, Commitment and employee

Turnover in the organisation

Employees would be motivated to perform better when they are sure of getting

certain rewards.

The standard of living will influence employee overall satisfaction with pay and

reward.

1.5 Structure of the Dissertation

The dissertation comprises of six chapters. Chapter one has briefly talked about the

concept of pay and reward and the stated the reason for carrying out this research. In

Chapter 2, the researcher reviewed the various literatures on pay and reward and has

discussed previous studies of other authors on the subject matter. Furthermore, Chapter 3

deals with the methodology used by the researcher in carrying out the research. Chapter 4

reports the data collected for easy analysis. The analysis of data collected is done in

Chapter 5 as well as the discussions of the results. Finally, in Chapter 6, the researcher

concluded and summarised the research findings, discussed the implication of this

research for future researches, makes recommendations and outlines the limitations

encountered while conducting the research.

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Figure 1.1 Dissertation Structure Model

1.6 Conclusion

This research is an attempt to explore the process, impact and outcome of pay and reward

system on employees in Nigeria. The research will study and examine the various dimensions

of pay and reward and the impact it has on employees. This chapter has introduced the issue

of pay and rewards as well as the complexities associated with it. The research is fascinating

because it does not only explore pay and reward in general, it looks at how it is handled in a

media organisation in Nigeria. A number of literatures have been written on pay and reward

in relation to motivation of employees and their overall performance. The next chapter would

review some selected and related literatures.

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BACKGROUND TO STUDY

STATEMENT OF PURPOSE

RESEARCH METHODOLOGY

REVIEW OF PREVIOUS LITERATURE

DATA REPORTING

DATA ANALYSIS AND DISCUSSION

RESEARCH AIMS AND OBJECTIEVES

CONCLUSION, IMPLICATION AND RECOMMENDATION

CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

There is a large body of literature on pay and rewards around the globe but there is scarcity of

this work in the Nigerian environment. Many of these studies focus on the effect of rewards

on task interest and performance and are mostly found in the literature concerned with both

intrinsic and extrinsic motivation. Several researchers have agreed that pay and rewards

greatly influence employees in any organisation (Armstrong & Murlis, 1994; Kerr, 1995;

Lawler, 1971; Blinder, 1990; Taylor, 1911). Hence, an attempt to fully comprehend the

concepts of pay and rewards makes it necessary to review existing literature on the subject

matter. This would help inform the current research on the impacts of pay and reward on

employees in Nigeria. It would also examine the outcome of pay and reward incentives in

organisations in terms of motivation and increased performance.

2.2 The Motivational Impact of Money

Far back as 1911, Fredrick Taylor and his scientific management associate described money

as the most important factor capable of motivating the industrial workers to achieve greater

productivity. Taylor promoted the establishment of incentive wage systems as a means of

stimulating workers to higher performance, commitment and eventual satisfaction (Tella,

2007).

According to Akintoye (2000) money remains the most significant motivational strategy. To

Dornstein (2007), money seems to be an effective method used by organisations to stimulate

actions that will facilitate organisational accomplishments.

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Vroom (1964) argues that money acquires valence as the most significant with which

individuals needs and desires can be obtained. To Gellerman (1963), money possesses

significant motivating power in as much as it symbolises intangible goals like security,

power, prestige and a feeling of accomplishment and success.

Opsahl and Dunettee (1966) in their review of studies on the impact of money as a motivator

in an industrial organisation identify some attributes expressed by other researchers who

described money as a conditioned incentive (Wolfe, 1940); a generalised conditioned

reinforcer (Skinner, 1953); an anxiety reducer (Brown, 1954 ); a symbol of intangible goods

(Gellerman, 1963) and an instrument for obtaining desired outcomes (Vroom, 1967).

Brown’s view that money is an anxiety reducer results from the fact that the lack of money

can cause unnecessary anxiety, concern and other psychological problems for individuals. If

individuals have enough money to take care of basic needs, all the anxiety and problems

would disappear.

Ani (1977) also states that money has received attention as an instrument of industrial

motivation not because of its intrinsic value but because it seems to be a unit of account for

most essentials of life. However, even though some writers have argued that money is a

dissatisfier rather than a motivator (Herzberg et al, 1959), others agree that it motivates, at

least to a certain level (Whyte, 1955).

In Gellerman’s (1968) opinion, money is used primarily to entice people to join an

organisation and stay in it, and he continues by saying that workers might leave the

organisation because of the monetary opportunities elsewhere or take a partial leave by

means of strikes or slow-downs when they are not satisfied with their income.

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Therefore, it is argued that money is a significant instrument for obtaining the most essentials

of life and although it motivates people for different reasons, Kovach (1987) argues that the

need to provide the basic necessities of life motivates people the most.

Having looked at the concept of money and how it motivates people in general, it is

important to understand how pay motivates and influences the behaviours of employees in an

organisation.

2.3 The Influence of Pay on Employee Motivation, Performance and Satisfaction

From the inception of organisational science, pay has been considered an important reward to

motivate the behaviours of employees (Heneman & Judge, 2000; Taylor & Vest, 1992;

Taylor, 1911). This is because it allows employees to obtain other rewards (Lawler, 1971).

However, it was until theorists began to explore the fairness in social exchanges (Adams,

1963; Homans, 1961) that the precise cognitive methods through which pay motivates

workers became apparent.

Shortly after, some researchers speculated that the feeling of fairness lead to certain relevant

attitudes in the organisation, such as job satisfaction (Locke, 1969), as well as satisfaction

with pay (Locke 1976). These researchers conclude that job satisfaction and pay satisfaction

would influence employee behaviour in organisations (Scott & Taylor, 1985; Tett & Meyer,

1993).

Hence, for organisations to be successful in the global market, it needs a highly motivated,

skilled and satisfied workforce that can provide quality goods (Wagar, 1998). Bacon et al

(1996) also state that a business can only compete favourably in the global market if it has

good and competent employees. However, the question according to Julien (1998) is how

would organisations compete if they lack these competent and satisfied workers? To this,

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Cooke et al (1987) attempts to answer the question by saying that linkage between pay and

the behaviours of employees result in better individual and organisational performance

because pay increases the individuals power to work and their job satisfaction

simultaneously. Hence, Hertzberg (1957) expresses the opinion that the more satisfied

workers will tend to add more value to an organisation.

To Heneman and Judge (1999), pay can be a factor for employees to stay or leave the

organisation. In addition, the level of pay is important for employee satisfaction because it is

found to have an effect on the level of absenteeism and turnover of the organisation (Jerald,

1997, Omolayo & Owolabi, 2007). Moreover, asides from the level of pay, the characteristics

of an organisation’s pay system also influences an individual’s decision to join a firm

(Lawler, 1997).

Heneman and Schwab’s (1979, 1985) suggest that pay can be broken down into four distinct

categories: Pay level, Pay structure, Pay system and Pay form. According to them, pay level

is the average of different wages or salaries in the organisation; pay structure is the hierarchy

of pay grade or levels among employees in organisations; the pay system is the method used

by the organisation to determine pay raises for individuals which can be calculated based on

the amount of time the employee spends on the job or for his performance. Finally, pay form

is the type of pay received by the employee. It could be direct remuneration and indirect

remuneration in form of benefits.

Heneman (1985) added a fifth dimension which is pay policies and administration. This is

based on the theoretical work of Dyer and Theriault (1976). They studied Canadian and

American managers and tested a category of variables which was not previously included in

the study of pay satisfaction. This is employees’ perception of pay system administration.

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Their assumption that employees may be dissatisfied with their pay because they do not

understand or agree with how it is administered is supported by their initial test.

Furthermore, in a study of the effect of pay level and pay administration on work motivation

Kuvaas (2006) explains that the base pay of employees is the result of several years of

performance and other employee contributions and is less influenced by temporal factors.

Employees are entitled to pay and those who receive high levels of pay are trusted to continue

to perform well without being externally regulated or controlled by short term performance

contingencies.

Banjoko (2006) also states that the level of employee’s pay is a reflection of his growth and

development within an organisation in terms of the capabilities, performance and level of

responsibility that he can assume in the organisation. Some literatures on pay have shown

that to influence performance, pay level should not only be high, it must be adequately

different to reflect the contribution and efforts existing within the organisation (Livernash,

1957; Hamilton & Macy, 1923

However, Luthan (1988) and Bloom (1999) argue that if there are significant pay differences

between hierarchical levels, employees may focus on being successful rather than effective.

Belcher (1974) examines the significance and impact of pay on employees. He argues that the

payment of salaries indicates a valuable transaction between employers and employees,

where there has been an exchange of labour or services.

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ORGANISATION

AVAILABILTYCAPABILITY

PERFORMANCE

EMPLOYERS

REWARDS[BASIC PAY BENEFITS,

INCENTIVES]

EMPLOYEES

(Adapted from David Belcher (1974)

The figure above shows that every employer pays out compensation and rewards to

employees for their availability, capability and performance.

According to Banjoko (2006), employees have expectation that they believe the organisation

must fulfil. These expectations have changed remarkably in the past two decades. As a result

of the change, it has necessitated the need for management to be more tactful and realistic in

setting pay levels and in determining various sizes of employee benefits.

On the part of employers, effective pay administration is important for several reasons. First

and foremost because it is the most single expensive item of costs in any organisation, and as

a result, employers need to ensure efficient management by making sure that money is paid

for services actually rendered. Secondly, the remuneration package of employees is a major

criterion in attracting, retaining, and motivating good performance. Consequently, Banjoko

sees pay as important to both parties (employees and the organisation) and he claims that

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management must learn to devise an effective compensation package that meets with the

expectations and aspirations of the employees and also satisfy its own profitability and

growth objectives.

Herzberg (1968) indicates that pay is a hygiene that prevents an employee from being

motivated by such things as the work itself. He states that if an organisation wants to

motivate employees, the organisation must first make sure that pay and other hygiene factors

are at a level that dissatisfaction would not occur.

Finally, Miceli and Lane (1991), argue that from research, employees determine how much

they receive not only in comparison with others, but also on individual needs that include

factors such as family size. To them the perception of fairness of pay is affected by

environmental factors such as the cost of living and individual’s knowledge of other pay

systems. If the cost of living is high, the individual will expect higher pay and if they have

knowledge of other pay systems, this knowledge will serve as the basis of comparison.

It is thus imperative to state that pay is an important aspect of any organisation and

organisations need to have a good pay system in place if they want to keep their workers

motivated and also increase employee performance (Saleem, 2009).

2.4 Reward Systems: The Influence of Reward on Employee Satisfaction

There has been a continued debate as to what the component of rewards should be (e.g. Foot

and Hook, 1999; Milkovich and Newman, 2002; Wilson, 2003; Armstrong and Stephens,

2005; Opute, 2007).

In general terms, rewards systems come within the concept of compensation strategies which

are defined as the

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“The deliberate utilisation of the pay system as an essential integrating

mechanism through which the efforts of various sub-units or individuals are

directed towards the achievement of an organisation’s strategic objectives”

(Gomez-Mejia and Balkin, 1992; 1989:438).

To Lawler and Cohen (1992:8), reward systems are the management tools that contribute to a

firm’s effectiveness by influencing individual or group behaviour.

According to Armstrong (1996) reward consists of financial rewards (fixed and variable pay)

and employee benefits, which together compromise total remuneration. It also includes non-

financial rewards such as recognition, achievement, praise, responsibility and personal

growth. He agrees with the view expressed by Beer (1984) who argues that competent, loyal

and committed employees in an organisation need to be given some intrinsic rewards in form

of responsibility, personal growth, and a feeling of competence and acknowledgement as well

as extrinsic rewards such as salary, promotion, fringe benefits and bonuses.

Tuch and Martin (1991) identifies that a gathering of extrinsic (pay, promotion and good

relationship in the workplace) and intrinsic (achievement of tasks) rewards offered by a job

leads to the overall satisfaction that an employee gets from an organisation. Lawler (1985)

also states that intrinsic and extrinsic rewards determine employee satisfaction and overall

performance. However, Lawler argues that because the rewards that individuals’ desire

differs, so also is the value they attach to it.

Kanter (1987) looks at reward systems from a different perspective when she noted that in

many organisations rewards are differentiated on the basis of status (rather than contribution)

and often, the only way an individual can increase his or her pay is to get promoted. As a

result of this, employees are motivated to “look out for themselves rather than improve their

overall contribution”.

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To Milne (1997), incentives like rewards, praises and recognition programmes are used in the

belief that they would reinforce organisation’s values, promote outstanding performance and

encourage continuous learning by openly acknowledging role model behaviour and ongoing

achievement. In spite of this, she states that rewards are dependent on managers recognising

the subordinates achievements whether as individuals or as part of a team.

Nevertheless, some researchers have argued that not all rewards have positive outcomes as

some can undermine productivity and performance (Ali & Ahmed, 2008). One of such

researchers is Denning (2001) who suggests that the moment employees are offered reward

for performance, they begin to perform the task for external reward rather than intrinsic

reasons. In recent years, Denning’s view has gained popularity by some researchers (Kohn,

1993; Powell, 1998).

Herzberg, Mausner and Synderman (1959) are of the opinion that the rewards which are

typically used by organisations are not motivators. Gellerman (1968) and Katz (1973) state

that incentives can influence the intentions that an individual develops on his job and that

monetary incentives can convince an individual to accept the tasks and goals assigned to him.

However, they maintain that an individual would not accept any task unless it achieves other

valued goals. They contend that monetary incentives is likely to affect the degree of

commitment of an individual to his goal or behavioural intention and this commitment will

influence his degree of perseverance in the face of difficulty and frustration at work. Hence

Gellerman argues that the behaviours that rewards would affect are more likely to relate to

membership in the organisation rather than contribution to its effectiveness or productivity.

Nonetheless, a significant study by Cameron and Pierce (1994) which was based on an

extensive Meta analysis of 25years of earlier research examines rewards and performance and

refutes the argument that rewards undermine both motivation and performance. The research

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found that, people generally enjoy activities or tasks more when they receive a reward and the

contention that rewards undermine performance and interest was not supported by the

experimental data. They concluded that rewards can be used efficiently to enhance interest,

motivation and performance.

Cameron and Pierce also examined whether different types of reward have different effects. I

Cameron and Pierce from the research concluded that rewards increases performance and

interest when they are made contingent on quality or performance or are given back to

employees for meeting clear standards of performance and are delivered for excellent effort

and activity.

In addition, Lachance (2000) state that the reward that binds an employee to an organisation

has more to do with the way an employee is treated rather than any particular pay scheme.

She is of the opinion that while people may come to work for the pay, they stay at work for

many other reasons. For this reason, managers need to identify and manage those other

rewarding conditions as part of an overall strategic approach towards rewards.

To Beer al (1984) as part of reward from the organisation, employees expect to be provided

fair pay, safe working conditions and fair treatment. These employees sometimes expect

more depending on the strength of their needs for security, social status, challenge, power and

responsibility. However the extent of expectations of each employee varies from organisation

to organisation and for an organisation to address these expectations, an understanding of

what motivates an employee is required.

Armstrong and Murlis (1994) also assert that the reward process would most likely improve

motivation, performance and commitment and enhance quality if they are operated fairly and

if they are equitable, that is proportionate with the value of the job and of the person to the

organisation. They also state that the three factors that affect the level of pay of individual

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employees within an organisation include the value of the job to the organisation, the value of

the person to the organisation and the value of the job or the person in the market place.

Research has also shown that the attraction and retention of workers in an organisation is

influenced by the kind, and level of rewards the organisation offers (Mobley, 1982; Mobley,

Hand, Meglino & Griffeth, 1979). Thus, Lawler (1971) posits that organisations which give

the most reward would attract and retain quality people because individuals who are satisfied

with their jobs would want to stay within the same organisation.

Over the years, reward has been regarded as one of the many policies organisations adopts to

increase its workers performance and the organisation’s productivity (Ajila & Abiola, 2004).

To this, Ani (1977) makes an important argument stating that many managers have become

accustomed with using reward to commend or punish employees. Employers believe that it is

capable of motivating workers to greater productivity by instilling fear and compelling

loyalty and sustained output. Hence the fear of been fired from work or retired due to poor

performance as well as the desire to be promoted or financially compensated would stress on

the need for increased performance on the part of the worker. Nevertheless, Herzberg (1966)

expresses the view that using rewards and punishment as a yardstick for motivation adopted

by managers rests on their understanding of man in terms of his wants and avoidance needs.

To Herzberg, organisations adopt this motivational pattern because it seems easier to

introduce increased performance through the threat of hygiene deprivation rather than to

motivate in terms of achievement and actualisation of goals. Thus by offering certain

rewards, the individual is encouraged to perform desirable actions and restricted from

performing actions that are not desirable through the threat of punishment.

Finally, from research, reward seems to be the umbrella for all forms of payment and

compensation that any organisation gives. It was important to discuss the notion in isolation

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of pay so as to have an insight to it. It is also note worthy to state that both pay and reward

were used interchangeably in some of the literatures.

2.5 Motivational Theories of Pay and Reward

It has already been stated that pay and reward motivate employees to perform well in any

organisation. According to Fagbohungbe (2009), since no human activity is devoid of

theoretical explanation, pay and reward should not be an exemption. Several motivational

theories have been established over the years to adequately explain pay and reward systems.

The early research on pay and reward satisfaction relied upon the expectancy (Vroom, 1964)

which was later developed by Porter and Lawler 1968, and equity theory (Adam, 1963).

VROOM LAWLER ADAM

Figure 2.2: Vroom-Lawler-Adam Theories Interrelation

(Source: Fagbohungbe, O., 2009)

From the above, it can be deduced that every employee carries out task activities in an

organisation, and by doing this tasks the employees get certain rewards and thereafter

accesses the reward he receives for satisfaction or dissatisfaction.

In organisations, both employees and employers have expectations. The employees want to

be treated fairly, provided with work that uses their abilities, rewarded according to their

contribution and have opportunities to grow. On the other hand, employers expect that

employees do their job satisfactorily and should be committed to the organisation.

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TASK ACTIVITIES

(Employee Job Satisfaction)

REWARD

(Received by Employee)

REWARD PERCEIVED

(Critical evaluation of reward for satisfaction or dissatisfaction)

This, according to Argyris (1960) is referred to as the psychological contract. He sees the

contract as the implicit understanding and relationship between employees and their

employers. While the employees maintain high production, low grievances and so on, the

employer guarantees and respects the employees’ informal culture such as giving adequate

wages and providing security of jobs.

2.5.1 Expectancy Theory

Vroom’s (1964) expectancy theory proposes that employees tend to apply more energy

towards attaining goals when both the probability of receiving a reward and the extent of the

reward is known in advance. The concept of expectancy was originally contained in the

Valency-Instrumentality-Expectancy (VIE) theory. Valency stands for value, Instrumentality

is the belief that if we do one thing it would lead to another, and Expectancy is the probability

that action or effort will lead to an outcome. At this point, Vroom argues that motivation is

likely only when there exists a clear and usable relationship between performance and

outcome, and the outcome is seen as a means for satisfying needs. This would explain why

an extrinsic financial motivation (a bonus or an incentive scheme) works only if the link

between effort and reward is clear and the value of the reward is worth the effort. It also

explains why intrinsic motivation which arises from the job itself can be more powerful than

extrinsic motivation.

2.5.2 Porter-Lawler Expectancy Model of Work Motivation

Vroom’s theory was later developed into a model by Porter and Lawler (1968). Porter and

Lawler assume that the relationship between productivity and satisfaction is not a straight

one. Rather, a third variable mediates this relationship. This variable is Reward. Thus, an

employee does not only become satisfied because he has performed his job but he must

receive a reward for such performance. Consequently, it is the value the employee places on

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that reward (which he must perceive as equitable) that leads to satisfaction. They state that

work must be recognised as a means to an end not an end itself such that those individuals

who put in extra efforts want these efforts rewarded. It is this realisation that has today

compelled organisations to attach pay and reward to performance.

2.5.3 Equity Theory

Adam (1963) came up with the theory of equity measurement and perception. Equity theory

suggests that individuals are concerned with sustaining fairness in their relationships with

organisations. Fairness is established by social comparison (Festinger, 1957) which is based

on social exchange (Homans, 1961). Adam is of the view that people would be better

motivated if they are treated equitably. The feeling of satisfaction according to him comes

from the belief that an individual has been fairly rewarded for his labour and services.

This is buttressed by Jacques (1961) who states that pay systems will be fair if they are felt to

be fair. His assumptions are that:

there is no recognised standard of fair payment for any level of work

unconscious knowledge of the standard is shared among the population at work

to be equitable, pay must be felt to match the level of work and the capacity of the

individual to do it

People should not receive less pay than they deserve in comparison with their fellow

workers (Armstrong, 1996: 45).

Hence, to Jacques (1961), the employee is not so much concerned with the absolute amount

of money paid out to him but with the perceived relationship of what he gets in comparison

with what others, for example his counterparts receives. Therefore, if an employee receives

the same pay as his counterparts who possess the same job inputs such as education,

29

experience and skills and also achieves the same amount of output, he is likely to feel a sense

of equity and fairness.

The equality theory is reinforced by Dornstein (2007) who maintains that incentives are

evaluated according to whether they provide fair return to employees’ individual or group

investments. From research, employees have been found to be sensitive to the principle of

equality and equality of opportunity (Belcher, 1974, 1996; Whyte, 1955). Both Belcher and

Whyte agree that pay incentives quite often arouse fury among employees because they

create inequality among individuals.

The Equity theory is an important development in the study of reward and pay satisfaction

because it make makes clear of how individuals form an attitude regarding pay and reward.

It has already been mentioned that people need money and thus work for money (pay). It is a

powerful motivator, even though it might not be the only motivator. However, Herzberg et al

(1957) have doubted its effectiveness. This stems from the belief that although the lack of

money may cause dissatisfaction, pay does not necessarily result in lasting satisfaction.

Nevertheless, money motivates people because it is linked directly or indirectly with the

satisfaction of many needs. If income is regular, it clearly satisfies the basic need for survival

and security.

2.6 Factors Affecting Satisfaction with Pay and Rewards

Over the years, one major concern that researchers have faced has to do with the satisfaction

that employees’ get from their pay. Pay is one of the major aspects of job satisfaction (Butt,

Rehman & Safwan, 2007). Also, Senguin (2003) supported Hinshaw and Atwood (1984)

30

view that salaries and pay is one of the major variables for employee motivation in any

organisation.

Lawler (1990) is of the opinion that individuals most of the time are never satisfied with their

pay. He points out that the feeling that people have about the adequacy of their pay is based

upon the comparisons they make between their own and others. He argues that the external

market comparisons are the most crucial because they are the one that strongly influence

whether individuals want to stay with an organisation. Banjoko (2006) also states that for

employees to be certain that they are not underpaid, they tend to survey their environment as

to establish if their pay is similar to their counterparts in other organisations.

Porter (1961) and Lawler (1971) in the research conducted in the United States discovered

that majority of the managers interviewed expressed dissatisfaction with their remuneration.

One of the reasons for low pay satisfaction as discovered by Lawler seems to be that

individuals seek out unfavourable conditions. First, they look externally and if the

comparison is favourable, they focus on internal comparisons. It is only when these are

favourable as well are they most likely to be satisfied.

Lawler proposed that the possibility of an individual to experience pay satisfaction will

depend on the relationship between what he perceived he should receive and what he actually

received. According to him, the perceived amount one should receive is influenced by:

the perceived job input of the individual

perceived job characteristics

wage history

perceived non-monetary rewards

And perceived inputs and outcomes of referent others.

31

As a result, an employee will expect to receive a higher level of pay if his various job inputs

(such as education, experience, skills) are high; if the job is difficult complex, demanding; if

the wage history shows higher pay; if the perceived non-monetary rewards (status and

security) are attractive; and lastly if he has a better input and output ratio that his fellow

worker (Banjoko, 2006).

Dyer and Thierault (1976) are also of the belief that employees may be satisfied with the

amount of money paid to them but may be dissatisfied if the pay policies and procedures are

faulty. For example, if the pay is irregular, or if there is discrimination in pay administration

between individuals. To this, Armstrong and Murlis (1994) states that the pay and reward

process should be based on reward philosophies and strategies containing arrangements in the

shaping of policies, guiding principles, practices, structures and procedures which are devised

and managed to provide and maintain appropriate types and levels of pay, benefits and other

forms of rewards.

Besides, there is the possibility that people might launch their dissatisfaction with other

aspects of organisational life (for example their work and working conditions, security,

opportunity for training and so forth) on pay, but there has not been much evidence to support

this contention. Armstrong (1996) posits that the reaction to reward policies and practices

will depend largely on the values and needs of individuals on their employment conditions.

Thus, it is dangerous to generalise about what the causes of pay satisfaction or dissatisfaction

are. Even though causes of pay and reward satisfaction or dissatisfaction cannot be

generalised, people are often still and would continue to be dissatisfied with their pay. Pay

has been reported to have adverse effect on employer-employee relationship thereby leading

to some of the consequences illustrated by Banjoko (2006) below:

32

Figure 2.3 consequence of pay dissatisfaction.

Source: Banjoko, 1996

Figure 1.3 illustrates that, when a worker is not satisfied with their pay, their desire for more

pay rises and they build up their effort by putting pressure on the organisation through strikes,

grievances and complaints. Also, these individuals may decide to search for better paying

jobs and in the process the level of labour turnover and absenteeism might increase. To Guest

(1991), high organisational commitment is associated with lower turnover.

The consequence of pay dissatisfaction is always doubtful. It could damage employee morale,

and also limit the achievement of higher productivity within the organisation. Myer and Allen

(1991) in an exploratory analysis argued that the factors that could predict organisational

commitment include promotion, satisfaction, intrinsic and extrinsic motivation.

2.7 Pay and Reward Systems in Nigeria

33

Low performance due to moonlighting

Strikes

Pay dissatisfaction

Desire for more money Grievance

Absenteeism

Search for a higher paying job

Turnover

Job dissatisfaction

Absenteeism

Lower attractiveness of job

According to Ajila and Abiola (2004) the interest in the effective use of rewards in Nigeria to

influence the performance of workers began in the 1970’s. Rewards were designed to

increase employee productivity in organisations. Over the years, the economic and social

factors present in Nigeria have posed a major challenge to the way and manner in which

organisations handle reward systems. Although Vroom (1964) states that the wages and

rewards of workers should not be based on personal prejudice but rather on objective

evaluation of an employee’s merit. However, Abudu (1986) argues that Nigeria is a country

where the reward system is not so much linked (that is if at all) to effort and performance.

Rather it is based on unknown factors such as ethnic background, age, and sex, coupled with

a perception of favouritism, corruption or simply the lack of competence. he assets that there

is a high pay differential amongst grades of employees who regard climbing up the career

ladder a difficult task often as a result of factors such as favouritism through tribalism and

corruption. Since Abudu wrote this in the 1980’s, it is important to note that nothing much

has really changed. The adoption of performance related pay system, and the reward based

system is still been overshadowed by the presence of favouritism, social connection, and so

on in Nigeria (Ajila & Ajibola, 2004, Fagbohungbe, 2009).

Dike (2000) supports the above point stating that pay and rewards in Nigeria does not depend

on skills and experiences but in social networks. He argues that the society has acquired an

unenviable reputation of being slow in meeting her workers needs. He goes on to state that

workers do not get their money’s worth and often are not paid when due. Hence, employees

do so much work for very little pay and sometimes with no form of acknowledgement.

2.8 Pay and Reward in Media Organisations

Since this study is on pay and reward in a media organisation in Nigeria, it is important to

review literatures on pay and reward in media organisation.

34

The work life style of media professionals everyday consists of a rather restless combination

of network socialisation, deskilling (unlearning new skills) reskilling (training on the job

skills) and preparing for the (potential) next job, coupled with an all encompassing emphasis

on creating, sustaining and mining personal knowledge networks of colleagues, clients and

customers (Deuze 2007: 104).

According to Felstead and Jewson (1999), in terms of pay, there is a high degree of financial

flexibility in the media. For example, there has been a move from single and uniform

payment systems towards more individualised performance based system of reward and

remuneration. Also, Katz and Darbishire, (2000) stated that an increase in wage in-equalities

emerged in most of the developed capitalist world during the 1980’s and 1990’s and this is

observed in the media and telecommunications industries today.

Weaver (1998) is one of the many researchers to suggest that pay among media workers in

various professions is one of the weakest predictors of job satisfaction. In a survey of

journalists in twenty- two countries, he reports how intrinsic motivators such as peer

acknowledgement, status, prestige are valued mostly by workers in media industries. Another

study carried out by Curran and Park (2000) and Tunstall (2001) state that asides pay, a

general lack of evaluation, feedback, and discussion to employees in the work environment is

a predictor of job satisfaction.

Furthermore, Deuze (2007) contends that a study of about Ninety newspapers in the United

States found employing testifying that their organisations did not have good people

management practices citing a lack of training and promotional opportunities as well as the

exclusion of employees in decision making process on the future of the company as well.

Finally, Deuze argues that asides financial, for some workers, it is the “notion of feeling

good” while on the job that keeps them working.

35

2.9 Conclusion

The review of existing literature has drawn so much attention to pay and reward. Several

issues have been raised. However what can be gathered from the review of these issues is the

lack of concurrence and concrete findings in the various studies.

Having this in mind, this study carried out fifteen interviews with employees in the research

organisation on the various issues that have been raised in this chapter. The next chapter

attempts to explain the research methodology used by the researcher in conducting the study.

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction

36

This chapter focuses on the research approach and methodology adopted by the researcher to

tackle the statement of problem. The main objective of this chapter is to clearly define the

specific guidelines which will enable the researcher to confirm the attained hypothesis.

This research has explored the concept of pay and reward system in detail through the review

of literature. The researcher has also tried to explore the correlation between the process of

pay and reward system on employee overall satisfaction, looking at the impact of pay and

reward on employee motivation and performance at work.

On the basis of this relationship, the researcher has been able to explore the various aspects of

pay and rewards. The research is exploratory because it is conducted with the intention to

explore the concept of pay and reward (Lilani, 2008). It is also an explanatory research

because it attempts to answer some “why” questions. For examples, it attempts to know why

employees are satisfied or dissatisfied with the pay and reward that they receive. Hence, this

research is an exploratory and explanatory one because it does not only deal with the

underlying factors of pay and reward satisfaction, it also looks at why employees are satisfied

or dissatisfied with their pay.

3.2 Research Design

A research design is a plan, structure and strategy of investigation which is conceived to

obtain answers to research questions and problems. The plan is a complete scheme or

program of the research. It includes an outline of what the investigator will do from writing

the hypotheses and their operational implications to the final analysis of data (Kerlinger,

1986).To Selltiz et al (1962), a research design is the arrangement of conditions for collection

and analysis of data in a manner that aims to combine relevance to the research purpose with

economy in procedure.

37

Hence from the above definitions, the research design has two functions: the first is to

identify and develop procedures and logistical arrangements required to undertake a study,

while the second emphasizes the importance of quality in these procedures to ensure their

validity, objectivity and accuracy (Kumar, 2005).

This research was carefully designed and has the following characteristics:

-it falls within the qualitative research paradigm

-it is based on primary data

3.3 Research Purpose

According to Kumar (2008), the main purpose of research is to discover answers to questions

through the application of scientific procedures. The purpose of research is to find the truth

that is hidden and which is yet to be discovered.

The main purpose for conducting this research is to identify the process, impact and outcome

of pay and reward systems on employees and how this affects their motivation to work as

well as their performance.

The Study is Beneficial because:

- It will broaden management’s understanding that pay and reward plays a significant

role in the overall Job Satisfaction of their employees. Therefore, they would

understand the motivational impact of pay and reward on employees

- The study would help managers to devise pay and reward strategies that would keep

highly motivated employees.

38

After reading extensively into the enormous literature published on the area of study, the

researcher has attempted to identify the vagueness and ambiguity that covers the concept of

pay and reward.

3.4 Qualitative Versus Quantitative Research

Qualitative research is a class of research methods in which the investigator takes an active

role in interacting with the participants he or she wishes to study (Muchinsky, 2003; Ehigie &

Ehigie, 2005). To Shaughnessy et al (2003), qualitative research is that which produces

verbal summaries of research findings with no statistical summaries or analysis. On the other

hand, quantitative methods rely heavily on tests, rating scales, questionnaires and

psychological measures (Stone-Romero, 2002). Therefore, while quantitative research

produces results in number, qualitative research produces flows diagrams and narrative

descriptions of events and processes (Landy& Conte, 2004).

The methodical differences in the characteristics of qualitative and quantitative methods are

illustrated below in table 3.1

Table 3.1

Differences between Qualitative and Quantitative methods

Qualitative Quantitative

1 The aim of qualitative research is a

complete, detailed description

The aim is to classify features, count them,

and construct statistical models in an

attempt to explain what is observed

2 Researcher may only know roughly in

advance what he/she is looking for

Researcher knows clearly in advance what

he/she is looking for

3 It is recommended during the earlier It is recommended during the latter phases

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phases of the research project of the research project

4 The design emerges as the study unfolds All aspects of the study are carefully

designed before the data is collected

5 The researcher is the data gathering

instrument

Researcher uses tools, such as

questionnaires or equipment to collect

numerical data

6 Data is in the form of words, pictures or

objects

Data is in the form of numbers and

statistics

7 SUBJECTIVE- individuals’

interpretation of event is important. E.g.

uses participants observation, in-depth

interviews etc

OBJECTIVE- seeks precise measurement

and analysis of target concepts. E.g. uses

surveys, questionnaires etc.

8 Qualitative data is more “rich”, time

consuming, and less able to be generated

Quantitative data is more efficient, able to

test hypotheses, but may miss and lack

contextual details

9 The research tends to become

subjectively immersed in the subject

matter

Research tends to remain objectively

separated from the subject matter

Adapted from Neill (2007

Although both qualitative and quantitative methods are very different, they are thorough in

their approaches and the decision for the researcher to use qualitative method over

quantitative approach was based on the “suitability of purpose”. Qualitative research is used

principally because it involves in-depth interviews since quantitative methods are based on

the grounds that a large representative sample is needed. Qualitative research is therefore

selected because it is well situated for a research that seeks to understand and explain

40

individual’s social behaviour and how this individuals view their world and also to discover

the underlying motives of human behaviour. since qualitative research gives insight into

participants experiences of the world, this research attempts to report rich and detailed

experiences of participants in their organisation and also seeks to know in what ways, if there

are any that pay and reward influences employees.

3.5 Types of Qualitative Methods

Qualitative research studies typically include ethnographies, case studies, interviews,

observation, surveys, historical and document analysis and generally descriptive studies

which are often called ethnographies but are somewhat more specific. It is conducted in a

natural setting without intentionally manipulating the environment. However, for the purpose

of this research, in-depth interviews have been adopted as a means of gathering data.

3.6 Interviews as a Qualitative Method

An interview is seen as the “favoured digging tool” of social sciences (Kvale, 1996). Cannell

and Kahn (1968:527) defines the research interview as “a two person conversation initiated

by the interviewer for the specific purpose of obtaining research-relevant information, and

focused by him on content specified by research objectives of systematic description,

prediction, or explanation. Interviewing in an organisational setting simply requires verbal

accounts to learn about the social life of workers (Ehigie & Ehigie, 2005). It can be

structured, unstructured or semi structured. For qualitative research, interviews are flexible

and dynamic, and are thus described as in-depth interviews (Taylor& Bogdan, 1998). The In-

depth interview is a repeated face-to-face encounter between the researcher and participants

directed towards understanding participants perspectives of their lives, experiences, or

situations as expressed in their own words. Hence, this research was conducted through semi-

structured interviews which is used to explore or probe in detail the hidden attitudes and

41

feelings of respondents. Participants were asked questions about the pay and reward they

received in the organisation. Some were not willing to divulge any information, but from

their gesture, it was certain that they had information they were holding back. When they

decided to discuss the issues of pay, they were very ardent about it.

3.7 Data Collection- Primary and Secondary Data

In carrying out any research, the collection of data plays an important role. It can be collected

from various sources. There are two major approaches to gathering information about a

situation, problem or phenomenon. Sometimes, the information required may be already

available and only needed to be extracted. However, there are other times information need

and must be collected. Based on these approaches to information gathering, data are

categorised as:

-primary data

-secondary data (Kumar, 2005)

For this research, the researcher has collected both primary and secondary data. Data was

collected primarily through interviews. These interviews were conducted on employees in a

media organisation in Nigeria to garner information of how employees view pay and rewards.

The purpose of the study is to find out how satisfied or dissatisfied employees are with the

pay and reward they receive at work. Hence the interview was a good way to acquire this

information. According to Patton (2002), the purpose of interviewing is to “allow us to enter

into the other person’s perspective”. Patton goes further to state that “we interview to find out

what is in and on someone else’s mind, to gather their stories “(Patton, 2002:341). Thus the

researcher wanted to get the “stories” of employees to understand their “perspective” and to

find answers to the problem of their satisfaction and dissatisfaction with pay at work.

42

Data was also gathered secondarily through document analysis which includes published

sources such as books, journals and magazines and unpublished sources such as the company

profile and staff handbook. Secondary data was used to obtain theoretical information.

3.8 Participants/Sample

“Sampling is the method of selecting an adequate number of elements from

the population so that by studying the sample and understanding the

properties of the features of the sample subjects, one can generalise the

properties of features to the population element” (Sekaran, 1992: 226).

Sampling is a research strategy that is used to study a phenomenon as representative

examples of a larger population of similar phenomenon (Mouton, 1996). A good

sampling procedure fulfils two criteria: the sample should be representative of the

population, and the sample should be adequate, allowing for sufficient confidence to

exist in the stability of its characteristics (Martin 2007; Goddard & Melville, 2001;

Babbie and Mouton, 1998).

This research addresses both criteria through a “purposeful sampling” of the participants in

terms of their rank, work tenure, and the adequacy of the sample size (Mathie and Camozzi,

2005). The study achieved 15 in-depth responses. A letter of introduction was included

explaining to the respondents the reasons for the interview and also emphasizing the

importance of their contribution to the study (see appendix). The date considered for the

interviews was between the 13th of July and the 22nd of July.

A mix of males and female was required in the sample and also different ranks of employees

and this was basically to address any gender related issues as well as power-distance that

were not foreseen. The participants interviewed are summarised below:

43

S/N Position held Gender

1 Director Corporate communication and Planning MALE

2 Human Resource Support staff FEMALE

3 Deputy General Manager MALE

4 Assistant Manager, Programming FEMALE

5 Assistant Manager Public relations MALE

6 Head Programmes FEMALE

7 Accounts Officer MALE

8 Secretarial Staff FEMALE

9 Officer, Producing/ Reporting Sports MALE

10 Officer MALE

11 Officer MALE

12 Officer FEMALE

13 Accounts officer FEMALE

14 Programme Officer FEMALE

15 Treasury Officer MALE

TABLE 3.2: Tables of interviewees in DaaR Communication Ltd.

3.9 Obtaining Permission

Confidentiality is of great importance throughout the research and it is vital in gaining access

to organizations and individuals. Saunders et al (2009) argues that as soon as the promise of

confidentiality is made, it must be maintained.

44

The researcher followed this principle and obtained the permission to carry out the research

in the research organisation from the Director Human Resources of Daar communications.

The Access to the Director human Resources was influenced by the relationship that the

researcher has with the director, being her relative. However, procedures had to be followed

and there was a formal documentation of the permission to interview employees in the

organization.

Furthermore, although the researcher would keep in mind the sensitivity of the information

gathered, the researcher will not disclose names of the people involved and a sincere effort

will be maintained throughout this research to stick to the ethical concerns.

3.10 Interview Process

A scheduled interview was carried out with fifteen participants in the research organisation.

This involved about eight visits to the research organisation and the interviews were carried

out mostly during the lunch hours of respondents and at leisure which varied between

individuals. 15 interviews were conducted and it was done in a quiet setting to avoid

distractions. To keep the attention of the participants, interview lasted no longer than one

hour. With permission, the interview was audio taped and a pen and paper was used for easy

jottings. The interview was thus transcribed verbatim. Through this approach, the researcher

was able to develop a more accurate response analysis. The interview was conducted both

within the organisation and outside the organisation as some participants were sceptical about

giving information at workplace.

During the interview, the anonymity of participants was maintained and at no time were the

respondents’ required to disclose any information against the authority of the management of

the organisation. This anonymity was to build up trust between the researcher and the

respondent.

45

At the beginning of each interview, the interviewer always repeated the purpose of the

research and also emphasised that participation was voluntary and that it had the support of

the management of the organisation. At the end of each interview, participants were asked to

keep the content of the interview confidential so that there would be no preconceived notion

for other participants yet to be interviewed.

Some of the questions asked include:

1) How satisfied are you with the pay and reward you receive from Daar

communication? Why are you satisfied with it?

2) When it comes to the issue of pay, do you think pay increase is fairly handled by the

organisation? Why?

3) If you had the opportunity to move to another company would you leave the

organisation? Why would you leave the organisation?

3.11 Data Analysis

Data analysis is the process of bringing order, structure and interpretation to the mass of

collected data (Marshall & Rossman, 1999). It was decided that the interviews would be

analysed and written up using a case study approach. That is the case study of a media

organisation in Nigeria. As stated earlier, the researcher audio taped the participants,

transcribing the interviews verbatim. With the use of different colours of makers, the data

was coded after transcription and the researcher began to look for common relationships and

patterns. From the relationships, categories were then developed and the researcher had the

flexibility to modify categorised when necessary as analysis progressed throughout the study.

Thus careful analysis led to the generation of themes (Patton, 2002) and as specific themes

emerged, some inferences were made as to why employees may or may not be satisfied with

46

their pay and the reward they receive at work. The categories and themes that emerged from

data include

i. motivation and performance

ii. the significance of pay to employees- for examples participants talked about the

fairness of pay, regularity of pay, and comparison with what their counterparts earned

iii. employee expectations- in terms of job security, promotional opportunities

iv. standard of living- influence of the cost of living on pay satisfaction of employees

v. rewards- monetary and contingent rewards

vi. Organisational commitment- how reputation of organisation, structure of organisation

lead to turnover and commitment of employees to the organisation.

3.12 Conclusion

In summary, this chapter has looked at the choice of research methods and the processes

involved in gathering data. The procedure includes obtaining permission, conducting

interviews and how the interviews would be analysed. The data collected through interviews

is extremely valuable in evaluating the attitudes, perceptions and behaviours of employees to

the issue of pay and reward.

The next chapter focuses on analysing the data already collected.

CHAPTER FOUR

DATA REPORTING

4.1 Introduction

This chapter focuses on the presentation of data obtained from the conducted interviews. The

interviews were summarised and responses were analysed for any obvious themes and

47

patterns. It starts with a brief introduction of the selected research organisation which is a

media house in Nigeria, looking at its pay and reward system and structure. Following that is

the presentation of research findings.

4.2 Overview of Daar Communications Nigeria LTD

DAAR Communications is a private independent African organisation based in Lagos, the

former capital of Nigeria. It is the economic nerve centre of the West Africa sub-region and

was incorporated in Nigeria in August 1988. The organisation launched its broadcast

services in 1994 with the promotion of Nigeria’s first private independent radio station

Raypower 100.5FM. A second channel Raypower 2 106.5FM commenced formal operation

in April 1999. It also launched a 24 hour global television service called Africa Independent

Television (AIT) and has a philosophy that is geared towards the promotion of African values

and traditions of black people around the world. In the last quarter of 1999, Daar

communications launched into the information super highway with the commencement of the

Daar broadband services with capacity for voice, internet access, video conferencing, data,

telephony and other multi media capabilities. The company has a staff of about 600 people in

Africa, Europe and the United States and it is worth over 3.5 billion naira.

The vision of the company is to promote rapid integration of the African continent with the

rest of the world; encourage development in Africa; attract development to Africa; project the

hope and common aspirations of the black race and advance the positive goals of humanity.

4.2.1 The Pay and Reward System in Daar Communications

In the organisation, a rise in pay may be awarded annually and is subject entirely to the

discretion of the company and the basis of an assessment of the employee’s performance and

48

conduct during the preceding year. Also, promotion in the organisation is not a right.

However, if it does occur it is based on merit and also subject to vacancy.

Furthermore, all employees of the organisation who are on the payroll as at 31st December of

every year and have rendered satisfactory service during the year may be entitled to annual

bonus of one month salary or on pro-rata basis for a period of service less than one year. The

decision to pay bonus is determined by the board of directors on the basis of the financial

performance of the company in the relevant year. The employees in the company are also

entitled to 15% of their annual basic salary as leave allowance and those who are permanent

employees of the organisation are deemed automatic member of the pension scheme

approved by the federal government under the Nigerian pension reform acts 2004.

4.3 Presentation of the Data Collected

Fifteen (15) employees in Daar Communications were invited to participate and they

responded. The employees interviewed were from different working backgrounds, ranging

from the Human Resource support staff, Account officer to the Director Corporate

Communications and Planning. The idea of doing this was to understand how pay and reward

influence the motivation of employees to do better in different levels of the organisation. The

questions asked in the interview are shown in the Appendix attached. Only the most

important questions required for the purpose of this study were included in the interviews.

However, due to the fact that most people were interviewed at the workplace, they were not

able to give as much detailed answers as expected. More so, although the participants were

told that the information received would be completely confidential, some still found it

difficult to open up.

49

During the interviews, several general themes and sub themes emerged from the discussions

that was common to most of the employees, if not all. These themes would be useful in the

analysis and conclusion chapters of the research. These themes include:

4.4 Motivation and Performance

This section deals with the influence of pay and reward on motivation of employees which in

turn would increase their performance in the organisation.

Employees believed that pay and reward would greatly motivate and influence their

performance. When a particular employee was asked if certain benefits and bonuses would

influence his attitude towards work, he replied was that

“The idea of getting certain bonuses would influence you to deliver to time

and put in your best in achieving it”.

Also, another employee acknowledged the fact that getting certain benefits would boost his

motivated spirit to continue to do better. To him “pay motivates the workforce to do more”.

An interesting comment was made by an employee who stated that

“My attitude to work would be positive and would make me more encouraged

and committed to work, but at the moment i am not”.

Furthermore, with regards to the performance related system of the company, majority of the

employees agreed that this has not affected their performance in any way. While an employee

maintained that

“You don’t give your best because you cannot really be bothered”.

A director stated that “my performance is intrinsic and professionally induced and not

sycophantic”. He also stated that

50

“Pay and reward are fundamental and germane for the attainment of the

organisational objectives, goals and aspirations as they are motivational

elements that ensure the best output from the workplace”

4.5 The Significance of Pay to Employees

This section deals with pay issues that arose from the discussion with employees such as:

Regularity of pay

Fairness of pay

Comparison with colleagues in external market/industry

Satisfaction with pay

Questions were asked about the regularity of pay, its fairness and employees overall

satisfaction with the pay that they received. The interview gathered that pay was significant

to all the employees. They all understood the concept of pay and interpreted it in their own

way. To these employees, it is very important as it is the reason why they work. In view of

the regularity of pay in the organisation, all the employees including the managers agreed that

pay in the company was irregular and they uttered their resentment to it. An employee was

swift to say this

“I am not satisfied with the pay I receive because salaries are not paid as at

when due. I work so hard and I get very little in return. It is not fair but now it

looks like this is the best I can get”

Also, a manager confirmed this saying that

“The salary is not regular because of the prevailing economic situation

generally in the country. The organisation’s business and revenue yield is

credit based. The amortisation of the same affects the income stream”. He

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further stated that “although the salary is irregular, people understand that it

is due to the circumstances facing the country as a whole”

An intriguing discovery was made when an employee said

“The salary is just ok, not spectacular, it is the job satisfaction I derive from

the job that is the most rewarding”

Nevertheless, asides from the regularity of pay that they receive, majority of the employees

believed that the pay they received was not fair compared to what others in the organisation

received. One of the employees who believed that his pay was not fair argued thus

“pay in Daar Communication is not fair at all, you do not say how much you

earn when you know that others on the same level as you earn two, three

times more than you earn”

Another employee with a similar opinion asserted that

“Pay is not fairly handled in the organisation because the so called

management do not follow the structure, which they claim that they have. You

cannot do anything because you do not even know what structure is in place

in the first place. You keep working and some people who don’t do as much

work as you do come to work in flashy cars, live in the best of houses and talk

to you like trash and we are all supposed to be on the same level. It is a really

big shame”

However, when the question of fairness of pay was posed at managers, one of them

responded that

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“I consider pay to be fair. You don’t expect everyone to earn the same amount

of salary. It is what you work for that you get at the end of the day, so no

employee is expected to complain. Yes the salary is irregular but to say that it

is unfair, I don’t think so”

It is also worthy to note that even though some of the employees agreed that they knew how

the pay structure in the organisation was determined, others argued that the pay structure was

beyond comprehension and that it was simply shoved in their faces. An employee said that

“There is nothing like bonus or benefit in Daar communications and I do not

know how the salary structure is been done but the management would know”

On the other hand, a manager’s response to the same question was

“The pay structure is based on the organisation‘s laid down profile of

payment which is a function of positions, academic qualification and

experience” he further went on to state that “salary increment is based on

yearly assessment and proven track record and output”.

Subsequently, employees were asked if they were satisfied with the pay that they received

even though it was not regular and was considered as unfair. A greater part of the employees

were quick to say that they were not satisfied with the salary that they received from the

organisation. One of the employees who stated his dissatisfaction with the pay said:

“Pay is not well handled. I think the people at the top do not value employee

relations and do not care if we are suffering and satisfied”

Another employee who also stressed his dissatisfaction expressed that:

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“Pay in the organisation is reducing instead of increasing; they choose to

reduce our pay without staff consent”

A similar opinion was expressed by another employee who state that

“There is hardly pay increase and when it is to be done, it is discriminately

done”.

It was fascinating to note that an employee, who has worked for the organisation for 6 years

expressed that if he compared his pay with that of his colleagues in the external market, it

was very low. He argued that

“You are not proud to say how much you receive outside. People outside

expect you to earn higher but the reverse is the case”

As a result of the findings from what this employee said, some other employees were asked

about the competitive nature of their pay relative to that of others doing similar work in same

industry. Conversely, although some agreed that it was competitive compared to other

companies, majority of the employees interviewed were of the opinion that it was not

competitive at all and was even lower than some other companies. One employee said that:

“It is not competitive. People in same industry earn a lot higher than we do.

It’s a shame because some people look up to this organisation not knowing

that you should never judge a book by the cover. It looks attractive on the

outside but is a different ball game on the inside”.

Another employee with a similar view expressed that:

“You are not proud to say how much you receive outside. People outside

expect you to earn higher but the reverse is the case”

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However, when this same question was posed at the managers, some agreed that the pay was

competitive compared to other companies. One of them expressed that:

“Yes, it is competitive considering the state of the economy. However, it is in

the nature of people never to get satisfied with what they earn. Even when

they earn millions, they believe some people outside earn high than they do”.

4.6 Employee Expectations

Benefits

Job security

Rewards (the satisfaction with rewards not necessarily monetary) given for good

performance

Promotion

This section looks at what employees expect from the organisation. After interviewing the

employees, it is worthy to note that asides from getting their salaries when due and also been

satisfied with their pay, employees had so many other expectations from the company.

Employees felt that if these expectations were fulfilled, they would not have to worry so

much on how much they get as salaries as they would be satisfied to a large extent (although

they still categorically stated that pay is important). Some of these expectations included

benefits, rewards such as praises, acknowledgement and recognition; job security and

promotional opportunities.

With regards to benefits, some employees mentioned that they were entitled only to “ leave

allowances”. Others claimed that they were not eligible to benefit packages like holidays and

pensions. One employee stated that

55

“There are no bonuses and deducted pensions are not remitted. They tell us in

the handbook that we are entitled to certain bonuses, but in the real sense

there is none. Medical allowance is gotten only when one is almost dead and

not just ill”.

Yet again, a manager responded to this question saying

“The organisation pays holiday bonuses to members of all staff and pension is

based on the number of years imputed into the organisation”.

Another manager stated that

“The company’s benefit programme is based on an assessment by the various

department heads and the management’s approval eventually. The benefit

system is thorough as it is not based on sentiments. Your benefits are

standard. Performance is not based on sentiments and financial inducement

but on professional actualisation and sometimes certain incentives can elicit

extra efforts”.

Many of the employees also agreed that there is no job security in the organisation and this

could be a reason for high employee turnover. One employee stated that

“There is no more job security in the organisation. I am discouraged because

the company has not fulfilled all the promises they made when i got the job.

Sometimes I think of quitting, but I always remember that I have a family to

feed at home. I really consider leaving the organisation”.

A manager’s response was that

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“There is job security but sometimes downsizing is done considering the state

of the economy which also affects the company. It is not the fault of the

company; it is the situation of the economy. Sometimes it cannot be avoided”.

Although data gathered from the interview revealed that managers and non managerial staff

had diverse opinions as to the fairness of promotion, they all hoped and wished to get

promoted. All non managerial staff was quick to say “NO” when they were asked if

promotion was fair. One employee was of the opinion that

“Promotions are not fair. It is who you know and who you have good rapport

with. If you are not friends with a manager or someone on top, you might end

up staying in the same position for a long time and they would only remember

you by stroke of luck”.

On the other hand, a manager stated that

“Promotions are fair and objective sometimes. If you don’t do so well, then

you should not expect to be promoted. Promotion is based on performance

and vacancy”.

Employees also expect that their performance to be adequately rewarded. Majority of them

claimed that they did not get acknowledgment, praises or recognition for good performance.

They believed that the organisation has failed to meet these expectations thus reducing their

morale. A particular employee believed that:

“Waiting for reward for performance is a waste of time, I am driven by

passion”.

Another employee maintained that individual performance is not sufficiently rewarded

because

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“The organisation is too political. There is so much politics going on in the

company. They never reward the right set of people. The same set of people

get rewarded every time, it has become a way of life in the organisation”

One employee also stated that

“Since I joined the organisation, I have not received any; if I do receive one it

would make me feel better”.

Some asserted that when they did received praises, which was once in a while, it made them

put in more effort.

Nevertheless, one of the managers argued that

‘The organisation acknowledges individual inputs and the quality and this are

usually rewarded by the management”.

Consequently, most of the employees believe that their morale would be high if they are

given certain benefits and if their performance at work is adequately rewarded.

4.7 Organisational Commitment

Reputation of the Organisation

Structure of the organisation

Turnover

Standard of living

A number of employees stated that they were proud of the organisation, although there was

selection of those who argued otherwise. Employees claimed that their only commitment to

the organisation was the reputation it has with other media companies in Nigeria. A

particular employee asserted that

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“I am proud to work for Daar Communication because it has a big name

which is respected by other companies”

However, most of the employees stated that even though they are proud of the organisation,

they were not pleased with the structure in place. They argued that there was no proper

structure in place in the organisation and that the management neglected employee welfare.

One employee attributed the lack of proper structure to

“Bad management strategies. Management is not really bothered. The people

at the top keep enjoying while the staff who do all the work suffer”

A similar opinion was expressed by another employee who claimed that:

“I am not proud of the organisation because of neglect of management

towards taking care of the able employees”.

When all the employees were asked the reason for their dissatisfaction with the structure of

the organisation, they replied by saying that the organisation needed to review its salary

policy to fit into the standard of living of its employees.

One of the employees argued that

“It is long overdue; it does not conform to the standard of living in the

country”

A similar view was expressed by another employee who stated that

“It is due as a result of the increase in prices of goods and commodities. The

way we lived 5years ago cannot be the same as now so the organisation as to

review its policies if it wants to retain good people”.

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Also another employee opined that:

“The cost of living in Lagos is very high and the salary I receive is not

regular. How do I pay for rents, bills, buy clothes, feed the children and live

well if there is very little salary which is not paid as at when due and if there

is hardly any reward for my performance which would at least make me feel

good with my self. It is tiring, but you cannot just leave as jobs are hard to

come by these days”.

Surprisingly, a manager also admitted that salary policy in the organisation was overdue for

review. However, he stated that

“Salary can never be the best as the economic situation in the country is

usually on the rise so is staff’s ambition and desire for pay rise”

Finally, it is imperative to note that all employees felt that there was need to review salaries if

the organisation wanted to retain quality workers. An employee stated that he would love to

leave the company because

“I want to be in a company where hard work and regular pay are

appreciated”

Conversely, a particular employees’ answer to whether or not he would leave the organisation

was captivating. He said:

“If I have the opportunity to leave, of course i will leave. I seriously believe in

God for another job. However if you ask me why i want to leave, i have more

than a thousand reasons best known to me”.

The employee was cajoled to divulge this reasons but he would not disclose.

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4.8 Conclusion

The rationale of this research is to explore the process, impact and outcome of pay and

reward on employees. Data which has been transcribed is reported verbatim. This chapter has

discussed the themes that arose from the interviews. The next chapter would attempt to

analyse and discuss the findings from these interviews.

CHAPTER FIVE

DATA ANALYSIS AND DISCUSSION

5.1 Introduction

This chapter focuses on the analysis of data and discusses the results obtained from the data

reported in the previous chapter. The themes and sub themes generated from the previous

chapter will be analysed and discussed.

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5.2 Data Analysis

It is imperative to begin with the diverse opinions of employees on the issue of pay and

reward in the organisation. The data gathered from the interview revealed that managers and

non managerial employees had different opinions to most of the questions asked. While

employees where willing to give out the loop holes in the organisation, the managers were a

bit diplomatic in their answers. For example, although the managers believed the organisation

was fair, all the junior level employees’ considered the structure put in place by the

organisation as unfair. Also, before going to analyse the data, it is interesting to mention that,

both the managers and the employees only agreed on the irregularity of pay which posed a

big problem for all employees in the organisation.

From the research findings, the initial factor that attracts employees to the organisation is the

reputation of the company. People want to work in an organisation that has a high profile and

where wages are high, regular and fair. This is similar to Lawler’s (1971) thinking that

organisations which give the most reward would attract and retain quality people because

individuals who are satisfied with their jobs would want to stay in the organisation.

However, from the data gathered, retaining these employees might be a difficult task if they

are not satisfied with the pay and reward system in the organisation. This also agrees with the

view of Heneman and Judge (1999) who states that pay can be a factor for an employee to

stay or leave an organisation as the dissatisfaction with pay is a key factor to turnover of

employees. The research findings is also in line with Katz (1973) who posits that an

individual might leave his current job for another one within the same community if it offers

a more greater system of rewards in terms of wages and other benefits.

The importance of salary was also identified from the findings. Employees’ stressed that pay

is a reason why they work. This confirms the findings of Banjoko (2006) who argues that pay

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is a matter that is closest to the heart of every employee. The research findings also identified

some issues that existed in the organisation. They include the irregularity of pay; fairness of

pay; equality of pay in comparison to colleagues and the external market. All these factors

were regarded as de-motivators which led to employee dissatisfaction in the organisation.

This is in accordance with Adam’s (1963) theory of equitable measurement and perception.

He is of the view that people would be better motivated if they are treated equitably and

demotivated if they are treated inequitably. According to him, the feeling of satisfaction

comes from the belief that an individual has been fairly rewarded for his labour and services.

The research finding is thus similar to what Adam has said in the sense that employees

believe that their pay should be fair and equal with the counterparts working in the

organisation.

Data further uncovered that when employees consider their pay as unfair, they tend to

compare what they earn and receive to what their colleagues get. This is recognised by

Jacques (1961) who opines that employees are not necessarily concerned with the absolute

amount of money paid out to him but with the perceived relationship of what he gets in

comparison with what others for example his counterparts receives.

Consequently, result shows that when employees believe that pay is unfair compared to

others, they become dissatisfied with their pay. Employees also compared their pay with

colleagues in similar industry and expressed that they received less compared to their

counterparts in the external market. This supports Lawler’s (1990) opinion that the feeling

people have about the adequacy of their pay is based upon the comparisons they make

between their own and others. He further states that the external market comparisons are the

most crucial because they strongly influence whether individuals want to stay in the

organisation. Banjoko (2006) shares a similar opinion to this stating that for employees to

know for certain that they are not underpaid; they tend to survey their environment so as to

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establish if their pay is similar to their counterparts in other organisations within the same

industry. If they notice any significant difference, they are most likely to engage in such

obnoxious behaviours like reduced productivity.

In addition, it was surprising to discover that most of the employees do not know how the pay

structure in the organisation is determined or administered. From literature, Luthan (1988)

argued that employees should be acquainted with the pay structure of their organisation. He

states that the pay structure of any organisation will impact individual consequences. If there

are significant pay differences between hierarchical levels, employees would know and may

focus on being successful rather than effective.

For these reasons, employees were not satisfied with the whole process of pay in the

organisation and as Luthan (1988) posits, unsatisfactory pay and benefit levels may reduce

the motivation of employees and eventually negatively impact individual, group and

organisational performance

Furthermore, data gathered from the interview have shown that pay and reward influence

employee motivation and the desire to perform better in the organisation. Both managers and

employees acknowledged that pay and reward had a huge impact on their motivation at work

which in turn increased their performance. The opportunity of getting certain bonuses

increases their zeal to work. This agrees with Herzberg (1968) who suggested that if an

organisation wishes to motivate employees, the organisation must first ensure that pay and

other hygiene factors are at such levels that dissatisfaction would not occur.

Also, from findings, employees expect certain incentives from the organisation. This could

come in the form of praises, acknowledgement, promotion, job security and so on. This is in

agreement with Beer et al (1984) who assert that every employee expects the organisation to

provide them with fair pay, safe and good working conditions and fair treatment. He goes on

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to state that these employees sometimes expect more depending on the strength of their needs

for security, social status, power and responsibility. The data gathered has recognised a small

piece of psychological contract where employees stated that the organisation promised them

job security, rewards, benefits and promotion for good performance and has not fulfilled most

of the promises. From findings, employees have stated that rewards, benefits and promotion

were given to those close to managers and were based on personal relationships and

favouritism and not on performance. Although the managers argued otherwise, stating that

rewards and benefits were given to the most deserving employees, majority of the employees

were resolute about it. Then the issue of favouritism and personal relationship springs forth.

In view of this, it is important to note that even though Vroom (1964) argues that the wages

and rewards of workers should not be based on personal prejudices but on objective

evaluation of employee merits, Abudu (1986) confirmed the research findings from literature

that Nigeria is a country where the reward system is not so much linked to effort and

performance. Rather it is based on unknown factors such as ethnical background, age, and

sex, coupled with the perception of favouritism, corruption or simply the lack of competence.

Findings also show that the employees are committed to the organisation only when they are

satisfied with the pay and reward that the organisation gives to them. This supports Guest

(1991) argument that high organisational commitment is associated with lower turnover. To

him, it is possible to be dissatisfied with a particular feature of the job while retaining a

reasonably high level of commitment to the organisation as a whole. However, employees in

the organisation argued that their commitment is quite low due to the faulty policies and

procedures in the organisation. An example is the irregularity of salary which seems to be of

great concern to the employees. Hence, the result of findings confirms that the irregularities

of salary of employees have affected their standard of living and this is due to the high cost of

living in Nigeria. For this reason, employees suggested that the company review its

65

procedures and standards if it wants to increase staff motivation and retain workers. This is in

line with Armstrong and Murlis (2004) view that pay and reward process should be based on

reward philosophies and strategies and should contain arrangements in the shaping of

policies, guiding principles, practices, structures and procedures which are devised and

managed to provide and maintain appropriate types and levels of pay, benefits, and other

forms of reward. Moreover, Meyer and Allen (1991) also argued promotion, satisfaction, job

characteristics as well as extrinsic and intrinsic reward would increase the commitment of

employees to an organisation. From findings, employees that were not satisfied with the

whole organisation process did not feel committed to the organisation in any way.

For those employees committed to the organisation based on prestige and the reputation, the

findings also showed that the commitment was just based on reputation, but the employees

were not proud of the structure in place in the organisation due to the irregularity, unfairness

and dissatisfaction with pay and reward that they receive.

5.3 Discussion of the Findings

From analysis, the research has highlighted many factors in this area of study. It also gives

attention to the diverse opinions of managers and employees.

According to the analysis above, it is important to state that the themes follow into one

another. All employees believe that they are motivated when they are sure of getting certain

bonuses and rewards. This motivation would increase their performance in the organisation.

However they must also be satisfied with the pay that they receive, although some other

intrinsic reward such as the acknowledgement of good performance would keep them

motivated. Consequently, asides from pay and rewards, they expect job security and

promotion from the organisation, as all this would keep them committed to the organisation.

This is in accordance with Beer (1984) who states that competent, loyal and committed

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employees need to be given some intrinsic rewards in form of responsibility, praise, personal

growth and a feeling of competence and acknowledgement and extrinsic rewards like salary,

promotion, fringe benefits and bonuses amongst other things.

Their commitment to the organisation would influence the overall turnover. The reason for all

these expectations is because of the high standard of living in Nigeria which has made it

necessary for the organisation to review some of its policies.

The findings from the interviews also show that employees in Daar communications are

motivated by the pay and reward that they receive. However, the irregularity of the pay and

reward and its lack of fairness have made these employees generally dissatisfied with the

overall structure, policies and procedures of the organisation. The result also reveals that the

lack of proper structure in the organisation is as a result of bad management strategies.

Pay and reward are very important motivating tools and they help increase the performance

of employees in any organisation. Employees are motivated when they are rewarded based

on their performance and this would influence them to perform better. Satisfaction of pay is

of great importance, as the findings have shown that the more satisfied workers are, the more

motivated they are to improve their performance. This is supported by Hertzberg (1957) who

expresses that satisfied workers will tend to add value to the organisation.

Armstrong and Murlis (1994) have also stated that the reward process is most likely to

improve motivation, performance which would in return enhance commitment if they are

operated fairly and equitable. The research finding is similar to what Armstrong and Murlis

have said in the sense that employees believe that their pay should be fair and equal with the

counterparts working in the organisation.

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The results of findings also show the presence of favouritism as employees argues that

promotion and reward is based on who they know in the organisation rather than on their

performance. This finding is supported by Dike (2000) who points that pay and reward in

Nigeria hardly depends on skills and experience but on social networks.

Furthermore, results show that the level and kind of reward that an organisation gives would

attract and retain workers in that organisation. Hence, the turnover of employees in the

organisation is influence by their overall satisfaction.

Also, the findings of this research showed that employees believe that there is hardly

anything as reward in the organisation. This negates Ajila and Abiola’s (2004) opinion that

reward in recent times is regarded as one of the many policies adopted by organisations to

increase the performance of its workers as well as the organisational productivity.

However, from the result, it is evident that in any organisation, monetary reward is an index

for determining the level of employee commitment. Hence, it can be said that monetary

reward is a key influence on employees as long as they remain in the organisation.

It is vital to note that the investigation conducted on pay and reward raises two issues of

concern. Firstly, it is either the management of Daar Communications are not conscious of

the impact that pay or reward has on its employees in terms of motivation and performance or

the organisation is not willing to spend money or effort that will achieve excellent results for

both the organisation and its employees.

5.4 Conclusion

Hence, from the findings of this study, it is shown that pay and reward given to employees in

Daar Communication is very important especially if the organisation wants to realise and

achieve its goals and objectives. This is because pay and reward affect the commitment level

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of employees irrespective of their status, gender or work tenure. For this reason, insufficient

monetary reward system hinders employee commitment thus increasing low performance,

complaints and grievances and employee overall turnover. It is also concluded that

employees need adequate and regular pay to keep up with the standard of living of the

country. If the cost of living is high, the individual will expect higher pay, and if they have

knowledge of other pay systems, this knowledge would serve as a basis for comparison. They

also need to be given certain non monetary rewards such as promotion and recognition for

good performance to keep them motivated and to increase their performance. However, the

organisation needs to develop a proper pay and reward system which would lead to

satisfaction of employees. It is also important to state that although the level of employee

satisfaction with pay and reward cannot be fully determined, organisations need to strive to

meet the basic demands of its employees if they want to be successful. For this reason,

Banjoko (2006) stresses that pay and reward is a significant aspect of any organisation and is

important to both parties (the employees and the organisation). Hence, management must

learn to devise an effective compensation package that meets the expectations and aspirations

of the employees while trying to satisfy its own profitability and growth objective.

CHAPTER SIX

CONCLUSION IMPLICATION AND RECOMMENDATION

6.1 Introduction

The purpose of this study was to explore the process, impact and rewards of pay on

employees in organisation. The research also wanted to identify the factors that led to pay and

reward satisfaction of individuals in a media organisation. This chapter would draw

69

conclusion based on result of finding stating the implication it would have on management

and also given recommendation to management of the research organisation as well as to

other organisations.

6.2 Conclusion of the Study

The importance of pay and reward in encouraging workers to carry out their duties effectively

cannot be over emphasised, especially when they are rewarded for good performance. Also, it

has been established that the performance of employees is increased by their motivation.

Going from the findings of this study, it can be said that pay and reward packages matter a lot

in an organisation and should be the concern of both employers and employees. The result

shows that workers place great value on pay and the different types of rewards given to them

by their employer. When employees do not get these rewards, they express their

discontentment and displeasure through poor performance and lack of commitment to their

job and the organisation.

Therefore, Organisations need to put the interest of its employees to heart and consider their

needs and feeling, because “a happy employee would be very productive at work”.

6.3 Implication of Research for Organisations

The findings of this research have important implications for organisations and human

resource practitioners both in Nigeria and in other parts of the world with a similar economic

environment as to the way they design their pay and compensation and benefit programmes.

It is crucial for organisations and managers to understand and recognised that pay and

incentive systems are a distinct element of the pay structure and employees form specific

perceptions based on the system.

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There is also tension between what organisations pay their employees and the external market

(internal versus external pay). Management needs to make decisions as to where to place

emphasis. They also need to strive for regular pay allocation and monitor internal pay

structure as well as their position in the external market for uniformity.

6.4 Recommendations

From the result of this study, several recommendations can be made. For every business to

thrive it needs to identify employee needs. Some other the factors that organisations need to

take into account include:

1) Effective Management

This study is not only beneficial to the researcher but it also sheds more light on issues that

management sometimes overlook while managing people at work. Management need to take

the following factors in account: they,

they need to be aware of where they are going wrong

they also needs to be aware of areas where employees are unhappy

Need to improve the pay and reward structure to meet employee expectations.

Pay and reward should be related to performance, contribution and competence.

Employees should be involved in designing pay and reward systems

Pay and reward policies should be transparent and communicated effectively to

employees

Management need to understand the relationship between pay and reward and the motivation

of employees.

2) Increased and Regular Salary

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Employees should be paid what they deserve. Increasing salaries of workers does not

mean that the organisation should pay enormous amount of money for poor

performance. Management needs to learn to reward people for excellent performance.

Secondly, people work to get paid. It is unfair if employees have to work so hard and

do not get their wages when they should get it. These employees work to promote the

organisation so they should be paid regularly. For any organisation to gain

commitment from its employees, it must set wages in relation to attainable targets

which employees perceive as realistic and fair.

3) Staff Development/ Promotional Opportunities

Management should provide employees opportunities to participate in educational

activities and other activities that would develop their skills and knowledge. From the

research, there was no mention of staff development opportunities which makes the

researcher assume that this might not be taken into account by the organisation. It is a

win-win situation as employees benefit by expanding their knowledge and skills,

while organisations benefit from the additional proficiency that individuals bring to

the job. Employees would be motivated to work harder when they know that the

organisation is investing in them. Furthermore, promotion of employees should be a

long term reward that acknowledges individual professional growth, skills, and the

competence to contribute to the organisation. Promotion should also be associated

with an increase in salary and this could motivate an employee to perform better.

4) Praises and Recognition

Praises and recognition from managers and supervisor is one of the most important

motivators. Employees need to be praised, recognised and acknowledged for good

72

performance so that they feel that their contributions are noticed and valued by the

organisation. Management need to recognise the value and importance of recognition

and acknowledgement for employee contributions.

6.5 Limitation of Study

This study is not without limitations. The researcher faced some difficulties when carrying

out the research.

Firstly, the time period for conducting the research and gathering data was quite short. Not all

the participants scheduled for interviews turned up, as some said they were very busy. Those

participants who were available for interview were so in a hurry to finish as they said they

had things to do. As a result of this, some issues were not explored in-depth.

Secondly, there is lack of literature on pay and reward in Nigeria, so most of the research

relied on Anglo-Saxon literatures. However, the research was not comparable in nature and

the use of Anglo-Saxon literature was to shed more light on the issue of pay and reward.

Thirdly, as has been stated earlier, the interview was conducted on only 15 employees who

were available and this represents a small amount of the total population of employees in the

organisation.

The researcher also recognised that the relationship with the Director of Human Resources in

the research organisation was responsible for the easy access into the organisation. However,

the researcher believes that this affected the responses of the participants as some of them

were unwilling to provide certain information. Despite the researcher’s attempt to build trust

and credibility with the participants, they were not still wiling to give detailed information.

Lastly, the research is limited to the view of employees in Daar communications in Nigeria

and cannot be generalised. Since one cannot generalise findings to other organisations in

73

Nigeria, future research should focus on the limitations and work in relations to improving

the generality of results.

6.6 Future Research

Hence, this research lacked little bit of in depth and a more detailed study is needed to gain

better understanding of the subject matter. A larger sample size should be interviewed in

future research. This would help gather and understand a larger view on the subject matter.

The sample size used in this study was not enough to conclude and obtain a wide ranging

feedback that is not biased. Employees from different cities should be interviewed and the

results obtained should be compared. This type of research would be comprehensive and give

more depth to the study.

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Appendices

COVER LETTER

87

My name is Iragbeson Kerry-Ann. Ohiokhara. I am presently studying for a Postgraduate

degree in Manchester Business School. My research topic is exploring the process, impact

and outcome of pay and reward system in Nigeria. More specifically it examines the impact

it has on the organisation.

I would like to conduct an interview with about 15 to 20 employees in your organisation. I

would be grateful if employees and senior staff can spare some time and have a chat with

me. Personal interviews with participants should last between 45mins to 1 hour. It is

important to state that there are no risks associated with the project and there shall be no

personal benefit (i.e. compensation) for participation. The participation is entirely voluntary.

However, I do feel that any findings gleaned from this project will be quite informative for

those persons choosing to participate and this will help improve our understanding of the

Nigerian pay and reward system.

By answering some interview questions, you are consenting to participate in this research

project. Please note that all responses shall be kept completely confidential and at no time

will individual identities be used in any reports or publications from this project. The

responses shall only be used for analysis by the Researcher and Supervisor.

I am happy to provide a summary report of the collective results once this project is

complete (Late summer 2010).

Please feel free to contact me if you have any further questions.

Thanks in advance for you time and effort. Your participation is greatly appreciated

Iragbeson K. Ohiokhara

Iragbeson73ng@yahoo.com

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(+44) 07889082151

INTERVIEW QUESTIONS

89

The aim of this interview is to obtain your view on pay and reward. Your responses would be

valuable. Your answers to the interview questions will be treated strictly confidential and at no time

will individual identities be used in any reports or publications from this project. it would be used

only by the researcher and her supervisor. The interview should last between 45mins to 1 hour.

1) How long have you been working in Daar Communications?

2) Can you please state what your job function is? (for example, your position in the

organisation and what your roles are)

3) How clear are you about the end results expected of you on the job? ( for example, did you

get any training or induction when you got into the organisation)

4) How do you perceive the concept of pay and reward?

5) Can you please tell me about the pay structure in Daar communications? For example,

bonuses and benefits, compensation etc. Do you have an understanding of how salaries and

increases are determined?

6) How satisfied are you with the pay and rewards you receive from Daar communication? (Is

your salary regular)? Why are you satisfied or dissatisfied with it.

7) What bonuses are you eligible to? (is your benefit package competitive i.e. holidays,

pensions etc)

8) As an employee, do you think your individual performance is adequately rewarded? WHY?

9) When it comes to the issue of pay, do you think pay increase is fairly handled by the

organisation? Why?

10) How satisfied are you with the company’s benefit programme and why?

11) How would the prospect of getting certain bonuses and benefits influence your attitude

towards work?

12) How would you describe the morale in Daar Communications?

13) How secure do you feel about your job?

14) Do you think that you posses relevant skills and abilities which are currently not used?

90

15) How proud do you feel working for Daar Communications?

16) If you have the opportunity to move to another company would you leave the organisation?

Why would you want to leave Daar Communications?

17) How often do you get praises and acknowledgement for good performance and how do the

praise, recognition and acknowledgement make you feel?

18) Would you say the pay and reward you receive in Daar communications is competitive

compared to other companies? If yes, Why?

19) Are promotions fair?

20) In your opinion, is the salary policy in your organisation overdue for review?

21) If yes, why do you think it is due for review?

22) Is the pay level in your organisation flexible enough to allow your manager use pay to

motivate workers?

23) Do you perceive your pay as been fair compared to people doing similar work in the

company? What makes it fair? (do you have meetings with colleagues where you discuss

each others salaries)

24) In your opinion, how has the current performance related system in the organisation

affected your performance?

25) Is there any other thing you would like to add?

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