Monetary and Non Monetary Incentives

7/27/2019 Monetary and Non Monetary Incentives

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Project Title

An exploratory study of employee attitude towards monetary

and non-monetary incentives in the public enterprises

Submitted By

Mr. XXXXX XXXXXXX

MBA in HR

1
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XXXXX University

Table of Contents

ABSTRACT ......................................................................................................................... 4

INTRODUCTION

............................................................................................................................................... 5

BACKGROUND OF THE STUDY

..................................................................................................................................................5

STATEMENT OF THE PROBLEM

..................................................................................................................................................6

OBJECTIVES OF THE STUDY .........................................................................................6RESEARCH QUESTIONS

..................................................................................................................................................7

FORMULATED HYPOTHESES

..................................................................................................................................................7

SIGNIFICANCE OF TE STUDY ........................................................................................7

SCOPE/LIMITATION OF THE STUDY

..................................................................................................................................................8

DEFINITION OF TERMS ...................................................................................................8

REVIEW OF RELEVANT LITERATURE............................................................................................................................................. 10

INTRODUCTION

................................................................................................................................................10

EFFECTS OF ORGANIZATIONAL INCENTIVES .....................................................14

VARIABLE PAY: INCENTIVES FOR PERFORMANCE

................................................................................................................................................16

TYPES OF VARIABLE PAY ................................................................................... ....... 18

SUCCESSES AND FAILURE OF VARIABLE PAY PLANS .......................................20

FACTORS AFFECTING SUCCESSFUL VARIABLE PAY PLANS

................................................................................................................................................20

INDIVIDUAL INCENTIVES.

................................................................................................................................................25

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THEORETICAL FRAMEWORK ................................................................................... 30

RESEARCH METHODOLOGY

............................................................................................................................................. 39

INTRODUCTION................................................................................................................................................39

RESEARCH DESIGN ........................................................................................................39

POPULATION OF STUDY ...............................................................................................40

SAMPLE AND SAMPLING TECHNIQUES ..................................................................40

INSTRUMENTS .................................................................................................................40

PROCEDURE FOR DATA COLLECTION

................................................................................................................................................42

DATA ANALYSIS ..............................................................................................................42

DATA ANALYSIS AND PRESENTATION .................................................................. 43

INTRODUCTION ...............................................................................................................43

RESPONDENTS BLO-DATA

................................................................................................................................................44

SUMMARY OF FINDINGS, CONCLUSION AND

............................................................................................................................................. 58

SUMMARY OF FINDINGS

................................................................................................................................................59

CONCLUSION ....................................................................................................................60

RECOMMENDATION ......................................................................................................61

REFERENCES

............................................................................................................................................. 62

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ABSTRACT

There has been controversy as to whether Human Resources can be developed in

public enterprises. It is against this background that an evaluation of Human

Resources development in public enterprises was conducted. The questionnaire

method was used to obtain data for the study and random sampling procedure was

used in the selection of respondents from the organization under study. The sample

percentage method of data analysis was used in analyzing the data obtained. The

study found training, motivation; effective evaluation of employees performance

can be used to develop Human Resource in public enterprises and various training

methods were used to training employee in this organization. The study there fore

concludes that for effective utilization of Human Resources in public Enterprises,

there is need for training and development policy formulation and implementation.

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INTRODUCTION

BACKGROUND OF THE STUDY

Ordinarily an enabling environment is required for employee (either as a term or

individual) to improve his/her performances in order to accomplish organization

goals and objectives. It is based on this background that manager suppose to know

the attitude of his/her employees/subordinates in the interest of the organization. The

employees could be influences through several incentives; either monetary or non-

monetary. These two forms of incentives for improve employees performance.

However, there is the need more than ever before to re-discover the weakness and

the strengths of incentives used in motivating employees attitudes as a basis for

future improvement and also to unravel the effectiveness of the use of incentives in

motivating employees. It will also reveal the problems, frustrations, anxieties that

employees pass through in their work environment where certain incentives are de-

emphasized. It will equally assist management to engage in staff welfare

development that will aid improved productivity.

Productivity is concerned with the total value or volume of output in work situation

while production refers to the volume, value or quantity of goods and services

produced in a given period by employees productivity shows the efficiency of

production. Employees attitudes and performance have an immense bearing on

productivity. Job performance of employees is determined by the ability of

individual employee to perform well on his job as well as the level of motivation

offered by the work environment and it is of fundamental importance in

productivity. The study examined the attitude of employees towards monetary and

non-monetary incentives in organization with the mindset that management will

appreciate the needs of the use of incentives in motivating employees attitude.

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STATEMENT OF THE PROBLEM

In the past, employers of Labour complained that employees performance were

efficient when they are new but with time, their efficiency and productivitydecreases, in turn the employees have attributed the decreases in efficiency and

productivity to the fact that employers failed to provide adequate incentives and

motivation that commensurate with their job and performance.

Therefore, the problems of this study can be stated as follows.

The inability of the management to effectively use non-monetary incentives

to improve employees performance.

Employees preferences between monetary and non-monetary incentives

how (the) managers applied this significantly.

The composition of factors considered by employees to be non- monetary

incentives.

The impact of monetary incentives on employees attitude.

OBJECTIVES OF THE STUDY

The objectives of this study are as follows:

To ascertain the extent of employees attitudes towards monetary and non-

monetary incentives in the course of their work.

The impact of age, gender and status on employees preference for monetary

and non-monetary incentives.

Identification of incentives employees like best in their work place

How management can use incentives to encourage employees to heightenand increase productivity.

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RESEARCH QUESTIONS

These follows are the research questions for this study:

What are workers attitude towards the use of monetary incentives?

What are workers attitude towards the use of non-monetary incentives?

What are the incentives considered by workers to be non-monetary

incentives?

What are the workers preferences between monetary and non- monetary

incentives?

FORMULATED HYPOTHESES

These follows primaries statements were formulated as an hypotheses and

subsequently tested in order to ascertain their reliability.

Ho: There is no perfect relationship between employees/workers incentives

motivation and productivity.

Hi: There is perfect relationship between employees/workers incentives

motivation and productivity.

Ho: Other incentives tend to have little motivation value if monetary

incentives are perceived to be adequate.

Hi: Other incentives tend not to have little motivation value if monetary

incentives are perceived to be adequate.

SIGNIFICANCE OF TE STUDY

There is the need now than never to rediscover the weaknesses and the strengths of

incentives used in motivating employee attitude to serve as a basis for further

improvement. The study will through more light into the effectiveness of the use of

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incentives in motivating employees meet in their work environment, especially

where incentives are emphasized. It will also help organizations to know the likely

incentives to put in place in motivating employees.

In addition, it will assist management to engage in staff welfare development in

order to improve the output of productivity of employees. This study will also serve

as a useful tool for those in the management sciences discipline who would like to

carry out further research in this area.

SCOPE/LIMITATION OF THE STUDY

This study focused on the employees attitude towards monetary and non-monetary

incentives using selected unionized organizations in Lagos metropolis as a study.

However, several factors necessitated against proper investigation of this study;

such as time factor, financial constraint and unavailable data. The researcher was

faced with the time limited time for this study and in combinations of other

engagements, like social engagement, work time, academic etc; financial constraint

also set in and caused effective implementation and investigation; meanwhile, the

organizations under study refused to realize some important data that are necessary

for this study.

DEFINITION OF TERMS

Employees Attitude: This refers to a persistent tendency to feel and behave

every individual employee exhibited towards a particular issue.

Monetary Incentives: It refers to remuneration in money form employee

received for performing his/her official duties.

Non-Monetary Incentives: These are incentives that employees gained in

work place, in form of promotion, training etc. This not in money term.

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Job Performance: These are the available jobs in organization at a

particular point in term, in which employees are employed for.

Motivation: The idea of creating an enabling environment for employee to

increase his/her performances in work place. The motivation may be in

monetary or non-monetary form.

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REVIEW OF RELEVANT LITERATURE

INTRODUCTION

According to Ubeku (1975) the key to understanding of human behavior is

knowledge of human needs. People work in order to satisfy their needs and these

needs can be met through monetary incentives. Monetary incentives are repayment

in cash and in money form for a given work done by employees in the organization.

Employees would go any extent to increase their cash income just as they will do

anything to prevent their source of income from being eliminated. The fact that

employees fear to lose their jobs, cash has been an extremely effective motivatorsimply because money is indispensable for survival in an economy. Monetary

incentives in modem societies are the most transferable means of satisfying basic

needs. Satisfaction of physiological, security and social needs can hardly be

achieved with money. Other incentives tend to have little motivational value if

monetary incentives are perceived to be inadequate. Monetary incentives take

variety of forms and include wages, salary, allowances, bonus, e.t.c. According to

Cole (2002), a salary system can best be considered as a mechanism by which an

organization plans how to attract, retain, reward and motivate its salaried employees

to provide a fair reward to those performing specified roles, to provide an incentive

for employees and to keep pace with inflation. Pitfield (1980) explained that bonus

provide greater rewards for output above a certain agreed level. They may be based

on individual output or on the output of a group. Bonus adds flexibility to a

compensation plan i.e. they are paid monthly under the terms of an annual rate of

pay. It includes employees benefit which were once associated with salaried staff,

but which are now being applied to all grades of employees. Salary is a fixed

amount per year payable to the employee monthly and it ignores both time taken and

quality produced. Drucker (1999) stated that there is a basic conflict between wage

(daily pay) as living and wage as cost. As living, wage needs to be predictable,

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continuous and adequate to the expenditures of a family, its aspirations, and its

position in the society and community. Wage as a cost needs to be appropriate to the

productivity of a given employment or industry.

Cole (2000) posited that benefits are forms of compensation beyond wages for time

worked, including various protection, mans services, pay for time not worked, and

income supplements. Such benefits include housing allowance, transport allowance.

In spite of the positive role monetary incentives have played, workers tend to have

different attitude towards money incentives. The most common of the diverse

reaction to wages and salaries by workers is that once it exceeds minimum levels, it

is regarded as a measure of fairness. Pitfield (1980) posited non-monetary incentives

as fringe benefits made availa6ie to staff and are regarded as an addition to wages

and salaries. It consists of direct and indirect benefits. The direct benefit may

include profit-sharing, sick pay, pension schemes, etc. the indirect benefits may

include welfare amenities, social and recreational facilities, etc. Gellermen (1976)

insisted that pay, if only it could be properly packaged would somehow bring about

the desired approach to work. Adam (1999) argued that employees perception of

his pay in relation to other employees of similar status could affect the satisfaction,

which he gets from the job. From his work, when there is a discrepancy between

what he gets and his efforts in relation to what employees of similar status gets, the

employee become dissatisfied with the job. Ojo (1991) stated that managers and

supervisors need to apply situational appropriate motivational factors in the context

of their peculiar organizational environment. Kepner et al (2001) explained that the

purpose of monetary incentives is to reward employees for excellent performance

through money. He noted that monetary incentives include profit sharing, project

bonuses, stock options, warrants and scheduled bonuses (e.g. Christmas and

performance-linked and additional paid vacation). Traditionally, these have helped

maintained a positive motivational environment for employees. The purpose of non-

monetary incentives is to reward associates for excellent job performance through

opportunities. Non- monetary incentives include flexible work hours, training,

pleasant work environment and sabbaticals. Employees encounter problems,

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frustrations, and anxieties in their work environment where certain incentives are

deemphasized. According to lkpefar (2003) in order to step up the incentives of

employees, trade unions serve as a means of improving the terms and conditions for

employees, improve rates of remunerations, raise status of employees, protect

members against unfair practices and also strive for security of employment. Trade

union Act 1990 provides that employee has a right to receive all benefits of

employment which are expressed in documents of employment, including the letter

of offer, and the condition of service and in collective agreement. S.7 of the Act

provides the minimum content of the contract of service and shows the place and

nature of employment, terms of work, duration and special condition of the contract.

The Act also gives employees the right to health and safety at work, right to resort to

court or tribunal on matters pertaining to his employment, right to belong to union

may be optional in the new proposed trade union Act before the National Assembly.

Parties usually fix wages of employee. However, where no rate is fixed the rate is

deemed to be what is current in similar trade. Collective bargaining serves as a

means for trade unions to negotiate the terms and conditions of employment. When

negotiation breakdown, parties may resort to mediation, conciliation or arbitration.

Government sometimes intervenes and the intervention takes the form of statutory

enactments. The major statutory enactments governing contracts of employment in

Nigeria are: Labour Act 198 (as amended) 1990, Factories Act (as amended) 1990,

Workmens Compensation Act 1990, Trade Union Act (as amended) 1990. Kohn

(1993) cited in Kepner et al stated a balance of monetary and non-monetary

incentives should be used to satisfy the diverse needs and interests of employees. He

argued that monetary incentives encourage compliance rather than risk taking

because most rewards are based only on performance and discourages employees

from being creative in their work place. Nelson (1999) also cited in Kepner et at

(2001) posited that research suggests that desired monetary incentives differ for

employee based on carrier stage and generation surveys by American Association of

Retired Persons (AARP) have shown that most employees will work past retirement

age if offered flexible schedules, part-time hours and temporary employment. Aside

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from these types of motivational strategies, an organizations reward system is its

most basic tool for managing employee motivation. An organizational reward

system is the formal and informal mechanisms by which employee performance is

defined, evaluated, and rewarded.

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EFFECTS OF ORGANIZATIONAL INCENTIVES

Organizational incentives can affect attitudes, behaviors, and motivation. Thus, it isimportant for managers to understand and appreciate clearly their importance

(Griffin 2002)

Effect of Incentives on Attitudes

Although employee attitudes such as satisfaction are not a major determinant of job

performance, they are nonetheless important. They contribute to (or discourage)

absenteeism and affect turnover, and they help establish the culture of the

organization. According to Edward (1999) four major general Lzations about

employee attitudes and incentives. First, employee satisfaction is influenced by how

much is received and how much the individual thinks should be received. Second,

employee satisfaction is affected by comparisons with what happens to others.

Third, employees often misperceive the incentives of others. When an employee

believes that someone else is making more money than that person really makes, the

potential for dissatisfaction increases. Fourth, overall job satisfaction is affected by

how satisfied employees are with both the extrinsic and the intrinsic rewards they

derive from their jobs. Drawing from the content theories and expectancy theory,

this conclusion suggests that several needs may cause behavior and that behavior

may be channeled toward various goal.

Effect of Incentives on Behaviour

An organizations primary purpose in giving incentives is to influence employee

behavior. Extrinsic incentives affect employee satisfaction, which, in turn, plays a

major role in determining whether an employee reward system. The formal and

informal mechanisms by which employee performance is defined, evaluated, and

rewarded will remain on the job or seek a new job. Reward systems also influence

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patterns of attendance and absenteeism; if rewards are based on actual performance,

employees tend to work harder to earn those rewards.

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Effect of Incentives on Motivation

Incentives systems are clearly related to the expectancy theory of motivation. The

effort-to-performance expectancy is strongly influenced by the performance

appraisal that is often part of the reward system. An employee is likely to expend

extra effort if he or she knows that performance will be measured, evaluated, and

rewarded. The performance-to-outcome expectancy is affected by the extent to

which the employee believes that performance will be followed by rewards. Finally,

as expectancy theory predicts, each reward or potential reward has a somewhat

different value for each individual. One person may want a promotion more than

benefits; someone else may want just the opposite.

VARIABLE PAY: INCENTIVES FOR PERFORMANCE

Robert and Jackson (2004) states that variable pay is compensation linked to

individual, team, and organizational performance. Traditionally also known as

incentives, variable pay plans attempt to provide tangible rewards to employees for

performance beyond normal expectations. The philosophical foundation of variable

pay rests on several basic assumptions:

Some jobs contribute more to organizational success than others.

Some people perform better than others.

Employees who perform better should receive more compensation.

A portion of some employees total compensation should be contingent on

performance.

Contrast the assumptions with a pay system based on seniority or length of

service:

Time spent each day is the primary measure of contribution.

Length of service with the organization is the primary differentiating factor

among people.

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Contributions to the organization are recognized through different amounts

of base pay.

Giving rewards to some people but not others is divisive and hampers

employees working together.

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TYPES OF VARIABLE PAY

Individual incentives are given to reward the effort and performance of individuals.

Some of the most common means of providing individuals variable pay includes

piece-rate systems, sales commissions, and bonuses. Others include special

recognition rewards such as trips or merchandise. Two widely used individual

incentives focus on employee safety and attendance. However, individual incentives

can present drawbacks. One of the potential difficulties with individual incentives is

that an employee may focus on what is best individually and may block or inhibit

performance of other individuals with whom the employee is competing.

Competition intensifies if only the top performer or winner receives incentives,

which is why team or group incentives have been developed.

According to Cole (2000), when an organization rewards an entire work group or

team for its performance, cooperation among the members usually increases.

However, competition among different teams for rewards can lead to decline in

overall performance under certain circumstances. The most common team or group

incentives are gain sharing plans, where employee teams that meet certain goals

share in the gains measured against performance targets. Often, gainsharing

programs focus on quality improvement, cost reduction, and other measurable

results.

Organizational incentives reward people based on the performance results of the

entire organization. This approach assumes that all employees working together can

generate greater organizational results that lead to better financial performance.

These programs often share some of the financial gains to the firm with employees

through payments calculated as a percentage of each employees base pay. Also,

organizational incentives may be given as a lump-sum amount to all employees, or

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different amounts may be given to different levels of employees throughout the

organization.

The most prevalent forms of organization-wide incentives are profit- sharing plans

and employee stock plans. For senior managers and executives, variable pay plans

often are established to provide stock options and other forms of deferred

compensation that minimize the tax liabilities of the recipients. (Benneth 1990, Cole

2000, Luthans 2003)

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SUCCESSES AND FAILURE OF VARIABLE PAY PLANS

Even though variable pay has grown in popularity, some attempts to implement it

have succeeded and others have not. One study suggests that about 74% of

companies have a variable pay plan of some sort. Of those, most feel these plans

have been successful in aligning pay with performance for executives (79%),

managers (73%), and exempt/ professionals (60%). However, only 48% felt variable

pay was effective for non-exempt/administrative personnel (Alexander and Fred

(2001).

Most employees prefer that performance rewards increase their base pay, rather than

be given as a one-time, lump-sum payment. Further, employees prefer individual

rewards to group/team or organizational incentives. Incentives do work, but they are

not a panacea. The enthusiasm that many employers have for variable pay is not

shared universally by workers. The success of variable pay plans depends upon the

circumstances.

FACTORS AFFECTING SUCCESSFUL VARIABLE PAY PLANS

According to Robert and Jackson (2004) most employers adopt variable pay

incentives in order to: (1) link individual performance to business goals, and (2)

reward superior performance. Other goals might include improving productivity or

increasing employee retention. Variable pay plans can be considered successful if

they meet the goals the organization had for them when they were initiated. A

number of different elements that can affect the success of a variable pay plan.These factors have been categorized into three areas for discussion:

Does the plan fit the organization?

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Are the behaviors encouraged by the plan the ones desired?

Is the plan being administered properly?

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Does the Plan fit the Organization?

In the case of variable pay, one size does not fit all. A plan that has worked well for

one company will not necessarily work well for another. Obviously, the plan must

be linked to the objectives of the organization.

The success of any variable pay program relies on its consistency with the culture of

the organization. For example, if an organization is autocratic and adheres to

traditional rules and procedures, an incentive system that rewards flexibility and

teamwork is likely to

fail. The incentive plan is being planted in the wrong growing environment.

Does the Plan Encourage the Desired Behaviors?

Variable pay systems should be tied as much as possible to desired performance.

Employees must see a direct relationship between their efforts and their financial

rewards. Indeed, higher-performing companies give out far more incentive pay to

their top performers than do lower-performing companies. Griffin (2000)

Because people tend to produce what is measured and rewarded, organizations must

make sure that what is being rewarded ties to meeting organizational objectives. Use

of multiple measures helps assure that various performance dimensions are not

omitted. For example, assume a hotel reservation center sets incentives for its

employees to increase productivity by lowering their time spent per call. That

reduction may occur, but customer service and the number of reservations made

might drop as employees rush callers to reduce talk time. Therefore, the center

should consider talk time, reservations booked, and customer satisfaction survey

results.

Indeed, linking pay to performance may not always be appropriate. For instance, if

the output cannot be objectively measured, management may not be able to correctly

reward the higher performers with more pay. Managers may not even be able to

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accurately identify the higher performers. Under those circumstances, individual

variable pay is inappropriate. (Martins and Bartol (1999)

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Is the Plan Administered Properly?

According to Robert and Jackson (2004), a variable pay plan may be complex or

simple, but it will not be successful if employees do not understand what they have

to do to be rewarded. The more complicated a plan is, the more difficult it will be to

communicate it meaningfully to employees. Experts generally recommend that a

variable pay plan include several performance criteria. However, having two or

three areas to focus on should not complicate the calculations necessary for

employees to determine their own incentive amounts. Managers also need to be able

to explain clearly what future performance targets need to be met. Successful

variable pay plans clearly identify how much is provided to employees separate

from their base pay amounts. That separation makes a distinct connection between

performance and pay. It also reinforces the notion that part of the employees pay

must be reearned in the next performance period.

An incentive system should consistently reflect current technological and

organizational conditions. Offering an incentive for sales representatives to sell

older-generation equipment in order to clear it out of stock might be appropriate

until that merchandise is gone, but no incentive may be needed to sell high- demand

items. Incentive systems should be reviewed continually to determine whether they

are operating as designed. Follow-up, through an attitude survey or other means,

will determine if the incentive system is actually encouraging employees to perform

better. If it is not, then managers should consider changing the system. (Pitfield

1980, Nwachkwu

1996).

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INDIVIDUAL INCENTIVES.

According to Williams (2001) that conditions necessary for the use of individual

incentive plans are as follows: Identification of individual performance: The performance of each individual

must be measured and identified because each employee has job

responsibilities and tasks that can be separated from those of other

employees.

Independent work: Individual contributions result from independent work

and effort given by individual employers.

Individual competitiveness desired: Because individuals generally pursue the

individual incentives for themselves, competition among employees often

occurs. Therefore, independent competition in which some individuals win

and others do not must be desired.

Individualism stressed in organizational culture: The culture of the

organization must be one that emphasizes individual growth, achievements,

and rewards. If an organization emphasizes teamwork and cooperation, then

individual incentives will be counterproductive.

Piece-Rate Systems

The most basic individual incentive system is the piece-rate system, whether of the

straight or differential type. Under the straight piece- rate system, wages are

determined by multiplying the number of units produced (such as garments sewn or

customers contacted) by the piece rate for one unit. The rate per piece does not

change regardless of the number of pieces produced. Because the cost is the same

for each unit, the wage for each employee is easy to figure, and labor costs can be

accurately predicted. (William 2001) A differential piece-rate system pays

employees one piece-rate wage for units produced up to a standard output and a

higher piece- rate wage for units produced over the standard. For example, assume

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that the standard quota for a worker is set at 300 units per day and the standard rate

is 14 cents per unit. For all units over the standard, however, the employee receives

20 cents per unit. But the worker producing 400 units in one day will get $62 in

wages (300 x 14 cents) + (100 x 20 cents). There are many possible combinations of

straight and differential piece-rate systems that can be used depending on situational

factors. (Robert and Jackson 2004)

Despite their incentive value, piece-rate systems are difficult to use because

standards for many types of jobs are difficult and costly to determine. In some

instances, the cost of determining and maintaining the standards may be greater than

the benefits derived. Jobs in which individuals have limited control over output or in

which high standards of quality are necessary also may be unsuited to piecework.

Bonuses

Alexander and Fred (2001) emphases that individual employees may receive

additional compensation payments in the form of a bonus, which is a one-time

payment that does not become part of the employees base pay. Generally, bonuses

are less costly to the employer than other pay increases because they do not become

part of employees base wages, upon which future percentage increases are figured.

Growing in popularity, individual bonuses often are used at the executive levels in

organizations, but bonus usage also has spread to jobs at all levels in some firms.

Bonuses also can be used to reward employees for contributing new ideas,

developing skills, or obtaining professional certifications. When the skills or

certification requirements are acquired by an employee, a pay increase or a one-time

bonus may follow. For example, a financial services firm provides the equivalent of

two weeks pay to employees who master job-relevant computer skills.

A bonus can recognize performance by an employee, a team, or the organization as

a whole. When performance results are good, bonuses go up. When performance

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results are not met, bonuses go down. Most employers base part of the employees

bonus on individual performance and part on the company if appropriate.

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Special Incentive Programs

Numerous special incentive programs that provide awards to individuals have been

used, ranging from one-time contests for meeting performance targets to rewards for

performance over time. For instance, safe-driving awards are given to truck drivers

with no accidents or violations on their records during a year. Although special

programs also can be developed for groups and for entire organizations, these

programs often focus on rewarding only high per forming individuals. Edward

(1999).

Awards Cash merchandise, gift certificates, and travel are the most frequently used

incentive rewards. Cash is still highly valued by many employees because they have

discretion on how to spend it.

Another type of program recognizes individual employees for their performance or

service. For instance, many organizations in service industries such as hotels,

restaurants, and retailers have established employee of the month and employee

of the year awards. In the hotel industry more than half of the hotels surveyed use

favorable guest comment cards as the basis to provide recognition awards to desk

clerks, housekeepers, and other hourly employees.

The design of most group incentives is based on a self-funding principle, which

means that the money to be used as incentive rewards is obtained through

improvement of organizational results. A good example is gain sharing, which can

be group or plant wide in its incentive scope. (Drucker 1999).

Gain sharing

Gain sharing is the sharing with employees of greater-than- expected in gains in

profits, and/or Gain sharing attempts to increase discretionary efforts, that is, the

difference between the maximum amount of effort a person can exert and the

minimum amount of effort necessary to keep from being fired. Workers in many

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organizations currently are not paid for discretionary efforts, but are paid to meet the

minimum acceptable level of effort required. However, when workers demonstrate

discretionary efforts, the organization can afford to pay them more than the going

rate, because the extra efforts produce financial gains over and above the returns of

minimal efforts. To begin a gain sharing program, management must identify the

ways in which increased productivity, quality, and financial performance gain occur

and decide that some of the gains should be shared with employees. (Cole 2000)

The rewards can be distributed in several ways:

A flat amount for all employees

Same percentage of base salary for all employees

Percentage of the gains by category of employees

A percentage based on individual performance against measures. Cuttan (2003)

stated that the first two methods generally are preferred because they promote and

reward teamwork and cooperation more than the other two methods. Where

performance measures are used, only those measures that employees actually can

affect should be considered. Often, measures such as labor costs, overtime hours,

and quality benchmarks are used. Both organizational measures and departmental

measures may be used, with the weights for gain sharing split between the two

categories. Naturally, an individuals performance must be satisfactory in order for

that individual to receive the gain sharing payments. Two older approaches similar

to gain sharing exist. One, called Impro share, sets group piece rate standards and

pays weekly bonuses when the standard is exceeded. The otherthe Scanlon plan

uses employee committees and passes on savings to the

employees.

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THEORETICAL FRAMEWORK

Griffin (2002) opines that motivation is the set of forces that cause people to behave

in certain ways. On any given day, an employee may choose to work as hard as

possible at a job, to work just hard enough to avoid a reprimand, or to do as little as

possible. The goal for the manager is to maximize the likelihood of the first

behaviour and to minimize the likelihood of the last. This goal becomes all the more

important when manager understand how critical motivation is in the workplace.

Individual performance is generally determined by three things: motivation (the

desire to do the job), ability (the capability to do the job), and the work environment

(the resources needed to do the job). If an employee lacks ability, the manager can

provide training or replace, the worker. If there is a resource problem, the manager

can correct it. But if motivation is the problem, the task for the manager is more

challenging. Individual behavior is a complex phenomenon, and the manager may

be hard-pressed to figure out the precise nature of the problem and ho to solve it.

Thus, motivation is important because of its significance as a determinant of

performance and because of its intangible character (Jeffrey

1998).

The Need Hierarchy Approach

The need hierarchy approach has been advanced by many theorists. Need

hierarchies assume that people have different needs that can be arranged in a

hierarchy of importance. The two best known are Maslows hierarchy of needs and

the ERG theory.

Maslows Hierarchy of Needs: Abraham Maslow (1954) a human relationist, argued

that people are motivated to satisfy five need levels. Maslows hierarchy of needs

shown in figure 2.1. At the bottom of the hierarchy are the physiological needs

things like food, sex, and air that represent basic issues of survival and biological

function. In organizations, thee needs are generally satisfied by adequate wages and

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the work environment itself, which provides restrooms, adequate lighting,

comfortable temperatures, and ventilation.

Next are the security needs for a secure physical and emotional environment.

Examples include the desire for housing and clothing and the need to be free from

worry about money and job security. These needs can be satisfied in the workplace

by continuity (no layoffs), a grievance system (to protect against arbitrary

supervisory actions), and an adequate insurance and retirement benefits package (for

security against illness and for the provision of income in later life). Even today,

however, depressed industries and economic decline can put people out of work and

restore the primacy of security needs.

Belongingness needs relate to social processes. They include the need for love and

affection and the need to be accepted by ones peers. These needs are satisfied for

most people by family and community relationships outside work and friendships on

the job. A manager can help satisfy these needs by allowing social interaction and

by making employees feel like part of a team or work group.

Esteem needs actually comprise two different sets of needs: the need for a positive-

image and self-respect and the needs for recognition and respect from others. A

manager can help address these needs by providing a variety of extrinsic symbols

accomplishment such as job titles, comfortable offices, and similar rewards as

appropriate. At a more intrinsic level, the manager can provide challenging job

assignments and opportunities for the employee to feel a sense of accomplishment.

The top of the hierarchy are the self-actualization needs. These needs involve

realizing ones potential for continued growth and individual development. The self-

actualization needs are perhaps the most difficult for a manager to address. In fact, it

can be argued that these needs must be met entirely from within the individual. But

a manager can help by promoting a culture wherein self-actualization is possible.

For instance, a manager could give employees a chance to participate in making

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decisions about their work and the opportunity to learn and use new information,

skills, and capabilities.

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Maslow suggests that the five need categories constitute a hierarchy. An individual

is motivated first and foremost to satisfy physiological needs. As long as they re-

main, the individual is motivated only to fulfill them. When satisfaction of

physiological needs is achieved, they cease to act as primary motivational factors

and the individual moves up the hierarchy and becomes concerned with security

needs. This process continues until the individual reaches the self- actualization

level. Maslows concept of the need hierarchy has a certain intuitive logic and has

been accepted by many managers. But research has revealed certain shortcomings

and defects in the theory. Some research has found that the five levels of need are

not always present and that the order of the levels is not always the same as

postulated by Maslow. In addition, people from different cultures are likely to have

different need categories and hierarchies. (Griffin 2002).

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The ERG Theory

Alderfer (1972) in response to these and similar criticisms, an alternative hierarchy

of needs called the theory of motivation was developed. This theory collapses the

need hierarchy developed by Maslow into three levels. Existence needs correspond

to the physological and security needs. Relatedness needs focus, on how people

relate to their social environment. In Maslows hierarchy, they would encompass

both the need to belong and the need to earn the esteem of others. Growth needs, the

highest Level in the ERG schema, include the needs for self-esteem and self-

actualization.

Although the ERG theory assumes that motivated behavior follows a hierarchy in

somewhat the same fashion as suggested by Maslow,

there are two important differences. First, the ERG theory suggests that more than

one level of need cause motivation at the same time. For example, it suggests that

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people can be motivated by a desire for money (existence), friendship (relatedness),

and the opportunity to learn new skills (growth) all at once. Second, the ERG theory

has what been called a frustration-regression element. Thus, if needs remain

unsatisfied, the individual will become frustrated, regress to a lower level, and begin

to pursue those needs again. For example, a worker previously motivated by money

(existence needs) may have just been awarded a pay raise sufficient to satisfy those

needs. Suppose that he then attempts to establish more friendships to satisfy

relatedness needs. If, for some reason, he finds that it is impossible to become better

friends with others in the workplace, he eventually gets frustrated and regresses to

being motivated to earn even more money. The Two-Factor Theory. Another

popular content perspective is the two-factor theory of motivation. Frederick

Herzberg (1959) developed his theory by interviewing 200 accountants and

engineers. He asked them to recall occasions when they had been satisfied and

motivated and occasions when they had been dissatisfied and unmotivated.

Surprisingly, he found that different sets of factors were associated with satisfaction

and with dissatisfactionthat is, a person might identify low pay as causing

dissatisfaction but would not necessarily mention high pay as a cause of

satisfaction. Instead, different factorssuch as recognition or accomplishment

were cited as causing satisfaction and motivation. This finding led Herzberg to

conclude that the traditional view of job satisfaction was incomplete. That view

assumed that satisfaction and dissatisfaction are at opposite ends of a single

continuum. People might be satisfied, dissatisfied, or somewhere in between. But

Herzbergs interviews had identified two different dimensions altogether: one

ranging from satisfaction to no satisfaction and the other ranging from

dissatisfaction to no dissatisfaction. This perspective, along with several examples

of factors that affect each continuum, is shown in Figure 2.2. Note that the factors

influencing the satisfaction continuum-called motivation factorsare related

specifically to the work content. The factors presumed to cause dissatisfaction

called hygiene factorsare related to the work environment.

The two-factor theory of motivation

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Based on these findings Herzberg argues that there are two stages in the process of

motivating employees. First, manager must ensure that the hygiene factors are not

deficient. Pay and security must be appropriate, working conditions must be safe,

technical supervision must be acceptable, and so on. By providing hygiene factors at

an appropriate level, managers do not stimulate motivation but merely ensure that

employees are not dissatisfied. Employees whom managers attempt to satisfy

through hygiene factors alone will usually do just enough to get by. Thus, managers

should proceed to stage twogiving employees the opportunity to experience

motivation factors such as achievement and recognition. The result is predicted to be

a high level of satisfaction and motivation. Herzberg also goes a step farther than

most theorists and describes exactly how to use the two factor theory in the

workplace. Specifically, he recommends job enrichment. He argues that jobs should

be redesigned to provide higher levels of the motivation factors.

Although widely accepted by many managers, Herzbergs two-factor theory is not

without its critics. One criticism is that the findings in Herzbergs initial interviews

are subject to different explanations. Another charge is that his sample was not

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representative of the general population and that subsequent research often failed to

uphold the theory. Robert and Lawrence (1967), At the present time, Herzbergs

theory is not held in high esteem by researchers in the field. The theory has had a

major impact on managers, however, and has played a key role r increasing their

awareness of motivation and its importance in the workplace.

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RESEARCH METHODOLOGY

INTRODUCTION

This chapter consist of insight into the research design and tactics for the study. It

focuses on what to study, when to study and how to study; Haven consider the

primary objective of the study; which examine the management of total quality and

monitoring techniques in Nigerian business environment.

RESEARCH DESIGN

Essentially, field study approach survey will be adopted for this study because of its

peculiar nature. Meanwhile, the survey will be conducted in the Skye Bank.

However, questionnaires will be the major instrument for collecting data for this

study. The questionnaires will be carefully structured and simply designed in order

to ensure easy answering; to obtain consistencies in respondents responses and at

same time to eliminate ambiguity and suspension. All the questions in the

questionnaires are designed in open-ended style and gives alternatives to therespondents.

The questionnaires will be personally distributed to the selected population of the

study; and all (the) questionnaires collected will be subjected to critical analysis,

appropriately synchronized and analyzed to aid a reasonable findings and

conclusions for the study.

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POPULATION OF STUDY

Population may be refers to the universe of research target audience, particularly

those who fall within the category of respond to the questionnaire of this study.

Therefore, the targeted population of this study consists of the Banks that are

operating in Nigeria, business environment. However, the major target population

for the study is Skye Bank; it shows that the staff of this organization randomly

selected for the study.

SAMPLE AND SAMPLING TECHNIQUES

According to Asika (2004) sampling plan is a segment of the population; selected to

represent the population as a whole, ideally, the sample represents the population in

order to make accurate estimate of the thought and behaviour of the large

population.

This study will consider both genders (that is male and female) in this organization;

regardless of their marital status, and physical challenges; in as much as he/she is

mentally alert. Therefore, the sample techniques will consider fifty (50) staffrandomly selected from the various branches of this banks within Lagos Metropolis.

INSTRUMENTS

Instrument are the tools, gadgets modalities and devices used to collect information

that are necessary for finding reliable and valid answers to the research questions

and hypothesis raised. Therefore, the major instrument use for this study isquestionnaire.

This instrument is reliability and validity for the fact that the drafted questionnaires

were examine and compared with other colleagues work, and the questionnaires

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were also test-and re-test within the same few selected respondents; more so, the

supervisor advice and guidance also helps a lot to prove the reliability and validity

of instrument.

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PROCEDURE FOR DATA COLLECTION

The major procedure for data collection of this study is through questionnaires; the

structured questionnaire will be distributed to the randomly selected population.

DATA ANALYSIS

The study will employ two major statistics tools for data analysis these tools are as

follows:

Sample percentage and

Chi-square (X2) method

The simple percentage method will be adopted to analysis the questionnaires; while

the chi-square (X2) method will be adopted to analysis for the formulated

hypotheses.

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DATA ANALYSIS AND PRESENTATION

INTRODUCTION

This chapter consists of data presentation and analysis. Descriptive statistics such as

frequencies, percentages and the chi-squares (X2) statistics test were used in

analyzing the data obtained. The researcher administered the questionnaires, which

were divided into two parts. The first part contained demographic characteristics of

the respondents while the second part was designed to answer the research questions

and to elicit information on the level of monetary and non-monetary incentive

required to stimulate employees attitude in an organization.

However, the total number of sixty (60) questionnaires was randomly administered

into the selected respondents in these organizations; and forty two (42)

questionnaires were returned, these numbers of questionnaire returned were certified

okay and useable for study and the number constitute 70%.

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SECTION A

RESPONDENTS BlO-DATA

Table: Gender

Gender Frequencies Cumulative frequency Per (%)

Male 26 61.9

Female 16 42 38.1

Total 42 100

0

10

20

30

40

50

Male Female Total

Frequencies

Frequencies

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Table: Marital Status

Statues Frequencies Cumulative frequency Per (%)

Married 24 - 57.1

Single 9 33 21.4

Divorce

d4 37 9.5

Widow 2 39 4.8

Widowe

r3 42 7.1

Total 42 100

0

10

20

30

40

50

Married Divorced Widow er

Frequencies

Frequencies

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Table: Educational Qualifications

Qualifications Frequencies

Cumulative

frequency

Per (%)

SSC/GCE/NECO 3 - 7.1

OND/AL/NC 5 8 11.9

HND/B.Sc/ACA 19 27 45.2

MBA/M.Sc 11 38 26.2

Others 4 42 9.5

Total 42 100

0

10

20

30

40

50

SSC/GCE/NECO HND/B.Sc/ACA Others

Frequencies

Frequencies

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Table : Years in service

Years in service

Frequencies

Cumulative

frequency

Per (%)

15 4 - 9.5

610 6 10 14.3

1115 13 23 31.0

1620 13 36 31.0

21above 6 42 14.3

Total 42 100

0

10

20

30

40

50

15 610 1115 1620 21above Total

Frequencies

Frequencies

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SECTION B

Q1- Well paid employee/workers may perform better on heir job.

Table: Paid employees

Positions Frequencies

Cumulative

frequency

Per (%)

Junior staff

Senior staff

Manager

21

14

7

-

35

42

50.0

33.3

16.7

Total 42 100

Responds Frequencies

Cumulative

frequency

Per (%)

Strongly agree 20 - 47.6

Agree 13 33 31.0

Disagreed 4 37 9.5

Strongly disagree 5 42 11.9

Total 42 100

0

1020

30

40

50

Strongly agree Agree Disagreed Strongly

disagree

Total

Frequencies

Frequencies

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The empirical evidence from the table 4.6 research reveals that 47.6%, 31%, 9.5%

and 11.9% strongly agreed, agreed, disagreed and strongly disagreed, respectively

that well paid workers/ employees may perform better on their jobs.

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Q2- Salaries, bonus and allowances may motivates workers/ employees

attitudes towards work

Table: Salaries, Bonus and Allowances


Cumulative

frequency

Per (%)


Agree 17 38 40.5

Disagreed 2 40 4.8


Total 42 100

0

10

20

30

40

50


disagree

Total

Frequencies

Frequencies

It shows the respondents responds of 50% strongly agreed, 40.5% agreed, 4.8%

disagreed and 4.8% strongly disagreed that salaries, bonus and allowances may

motivates workers/employees attitudes towards work.

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Q3- Training and development in an organization may have positive influence

on employees/workers performance.

Table : Training and Development


Cumulative

frequency

Per (%)


Agree 18 36 42.9

Disagreed 2 38 4.8


Total 42 100

0

10

20

30

40

50


disagree

Total

Frequencies

Frequencies

From the responses provided in the data analyzed in table 4.8, 42.9% and 42.9%

strongly agreed and agreed that training and development in an organization may

have positive influences on employees/workers performances, 4.8% disagreed while

9.5% strongly disagreed.

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Q4- Training in an organization may reduce cost and as well increase

productivity.

Table : Increases productivity


Cumulative

frequency

Per (%)

Strongly agree

Agree

Disagreed

Strongly disagree

18

17

4

3

-

35

39

42

42.9

40.5

9.5

7.1Total 42 100

The analyzed responses on training and cost reduction of research questions 5 shows

that 9%, 442.9%, 40.5%, 9.5% and 7.1% strongly agreed, agreed, disagreed and

strongly disagreed that training in an organization may reduce cost and as well

increase productivity. Details in table 4.9 above.

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Q5- Good working conditions in an organization may improve employee

performances.

Table 4.10: Good working conditions


Cumulative

frequency

Per (%)

Strongly agree

Agree

Disagreed

Strongly disagree

15

19

4

4

-

34

38

42

35.7

45.2

9.2

9.5Total 42 100

0

10

20

30

40

50


disagree

Total

Frequencies

Frequencies

The empirical evidence available in table 4.10 shows that 35.7% and 45.2% of the

respondents strongly agreed and agreed and agreed that good working conditions in

an organization may improve employee performances; 9.5% disagreed and 9.5%

strongly disagreed.

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Q6- Any employee/worker who expects promotion and dully promoted is

bound to increase his/her efforts and performances.

Table : Employee Promotion


Cumulative

frequency

Per (%)

Strongly agree

Agree

Disagreed

Strongly disagree

21

15

3

3

-

36

39

42

50.0

35.7

7.1

7.1

0

10

20

30

40

50


disagree

Total

Frequencies

Frequencies

From the analyzed responses in table 4.11, it shows that 50%, 35.7%, 7.1% and

7.1% strongly agreed, agreed, disagreed and strongly disagreed respectively that any

employee/worker who expects promotion and dully promoted is bound to increase

his/her efforts and performances.

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Q7- Employees performance appraisal may influence employee performances.

Table : Performance Appraisal


Cumulative

frequency

Per (%)

Strongly agree

Agree

Disagreed

Strongly disagree

16

19

3

4

-

35

38

42

38.1

45.2

7.1

9.5

Total 42 100

0

10

20

30

40

50


disagree

Total

Frequencies

Frequencies

The analysis of the responses respondent in table 4.12 shows that 38.1% strongly

agreed, 45.2% agreed, 7.1% disagreed and 9.5% strongly disagreed that employee

performance appraisal may influence employee performance.

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Q8- Employees, welfare, pension, medical facilities etc may facilitate effective

performances.

Table : Employees welfare

Responses Frequencies

Cumulative

frequency

Per (%)

Monetary

Non-monetary

27

15

-

42

64.3

35.7

Total 42 100


Cumulative

frequency

Per (%)

Strongly agree

Agree

Disagreed

Strongly disagree

17

17

5

3

-

34

39

42

40.5

40.5

11.9

7.1

Total 42 100

0

10

20

30

40

50


disagree

Total

Frequencies

Frequencies

The analyzed of respondents responses in tale 4.13 shows that 40.5%, 40.5%, 11.9%

and 7.1% strongly agreed, agreed, disagreed and strongly disagreed that employees

welfare, pension, medical facilities etc may facilitates effective performances.

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SUMMARY OF FINDINGS, CONCLUSION AND

INTRODUCTION

This chapter consists of the summary from the data analyzed, the conclusion from

the data analyzed and recommendation.

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SUMMARY OF FINDINGS

From the data analyzed, it is find that the employee/workers that were well paid will

increase in their performances, the payment in form of salaries bonus andallowances will also motivate workers/ employees attitudes towards work; more so,

fringe benefit is another factor that may influence employees performances.

It is also find that the non-monetary incentives such as training and development in

an organization have positive influences on employee performances, training, an

organization may reduce cost and as well increases productivity; good working

conditions in an organization will also improve employees performances.

The study find that any promoted employees will increase his/her efforts and

performances in work place and employee performance appraisal influences

employees performance; employee welfare, pension, medical facilities also

facilitates effective performances, lastly the employee prefer monetary incentives to

non-monetary

incentives.

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CONCLUSION

In view of these findings, the study thereby conclude that there is clear relationship

between monetary incentives and workers performance; fringe benefit can motivate

workers performance. However, some of the main objectives of training employee

include, increase in productivity, lower labour turn over rate, higher morale and

better co-ordination and training helps to reduce cost as it increases productivity,

promotes goal congruency. Lack of training increases absenteeism rate, low output,

poor quality and rejects and results in high unit cost.

Non-monetary incentives, good working conditions promotion, good supervision,

staff welfare, scheme, pension, medical facilities facilitates increases in employees

performances and employee prefer monetary incentives to non-monetary

incentives.

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RECOMMENDATION

In any organization, incentives are a very sensitive issue not only to employer but

also to the employees. Therefore, the ability of the organization to attract and retain

employees depend on how much monetary and non-monetary incentives, it is

prepared to offer. Poor wages and salaries as well as poor working conditions is a

constant source of frustration to employees ands when they engage management in

constant strife, the result is decrease productivity. Promotion, better pay fringe

benefit and other social incentives are essential factor that motivate the employees to

increase productivity.

Therefore, it is thereby recommend that organization should strive to introduce a

satisfactory incentives package to the employees, increases in salary bonus etc. This

is important because employees satisfaction can motivate high performance.

More so, non-monetary incentives, such as training promotion, effective

performance appraisal should be encourage, employee needs adequate training to

carry out their duties and employees that were promoted as well due will be

motivated to increase its performances, and the management should ensure effective

performance appraisal, whenever employees rating is being conducted, this should

be done without any fair of favour and bias mind. Non-monetary incentives should

be tailored in line with monetary incentives in order to motivate employees to put in

their best and at the same time, organization should strive towards equity in the

administration of monetary and non-monetary incentives.

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REFERENCES

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Martins, D. C and Bartol K. M (1998) Management Boston McGraw Hill

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Pitfield, R. R. (1950) Business Organization. London, Macdonald and Evans.

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Monetary and Non Monetary Incentives

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