The Impact of Monetary Incentive on Organizational Performance

THE IMPACT OF MONETARY INCENTIVE ON ORGANIZATIONAL PERFORMANCE. (A CASE STUDY OF FIRST BANK – PLC. ENUGU)

 The challenges for management other the years have been on how to share the gains from higher productivity in the way that stimulate the interest of the employees and the owners of the business.  This becomes necessary in order to strike a balance a considering that any of the two murests if not adequately represented will have a negative impact on the company’s productivity level and performance.  A management expert Alperts (1974) 96 was of the opinion that an organization cannot survive if it fails to satisfy the personnel motives of those who contribute resources.

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Incentive management is not dust a method of wage payment, it also involves both parties wanting to work together for the useful end in the accomplishment of the end both fulfill their basic desire for organization and pride in their individual abilities and Worth Nickerson, (1996:24) are cognized management consultant has this to say that a good incentive scheme should be a scientific attempt to work out the most advantages relationship between productivity and reward for all concerned.  According  to Taylor’s theory, man is mostly motivated by extrinsic and financial rewards established through time and motion study.

The two basic assumption for Taylor’s  theory:

1. industrial efficiency can be improved through the application of science here, the advocated the application for science methods to operative tasks with a view to develop accurate measurement to determines what constitutes a day’s work for various operations in the industry. Measured for reward purpose.

1. Payment o high wages will motivate workers to produce more given the assumption that the worker is motivated by money. He believed that what the workers need was raising wages.  It can be said that Fredrick Taylor’s theory was not adequate and could not serve as a motivating factor to an average Nigeria worker.  This is because it ignore the humanitarian and motivational aspect of the worker and saw man as individual machine like unit. Nevertheless, Taylor developed the first wages incentive in 1915

known as differential piece rate plan. First, a careful scientific study is made of each workers operations.  Then, a standard rate of output was established that is within the each of the average worker.  Two rates prevail, one for the worker who fails to complete the task within the allocated time, will received only a regular rate.  The bonus usually begins when the worker does three-quarter, 314, of the set standard.  This encourages those who are striving to reach the standards as well as those who have already surpassed.

Also Read: The Impact Of Tax Incentives On Economic And Industrial Development

Nonetheless, wage incentives plans are les popular today for workers, than they were two decades age.  Research has shown that for managers, pay is a strong incentives are not effective under all circumstance.  In so as raising the poor moral of employees may even be more important as motivators for higher productivity.  This is more likely true when wages and salary relationship are equitable and fairly administered.  Non –financial incentive if not a monetary one.  They are generally of a nature that appeals to individuals emotion rather than his pay packet.  This may take the form of praises or token rewards such as certificate of merit and other gifts items like wrist-watches or wall clocks etc.

• INCENTIVES AND PRODUCTIVITY

Employee behaviour like most human behaviours is not programmed, instead it is usually an adaptive response to the circumstances in which employees find themselves.  They can and do change their ways of coping. If it where to them that, their own benefit or best interest is being protected.

Incentive programme should therefore, be co-ordinate to tailor towards satisfaction of the employees need and the needs of the organization. But since the employees sees this cost as extra income, additional security, more desirable working condition what is needed by both parties since productivity gains cannot be without productivity pains.

Nwachukwu W. 1988:156, equally found out the average Nigerian employees with a medium of large organization spend from 20 to 30% on incentives. The therefore, a devised that the value for each incentive has to be evaluated in the light for intended objectives other thing to note where is that once the incentives schemes are introduced in a organization and employees get used to them, it becomes difficult to remove them. Some other commonly observed problems in introducing and administering incentive programmes are:

1. Integrity: Ejiofor and Osuji (1987:82) documented the fact that the worse energy of the public is a corrupt public servant. Most employee’s characters are unique time able.  This may lead to abuse of incentive packages.

143. Pressure from different angles: Designing and implimentary incentive programmes may not be systematic because incentive programmes may bound to exist in every organization.  In non-union firm, it is likely demands for increased incentives owners, different sections of the employees etc. in the unionized organization, the pressure always come from the union (Nwachukwu 1988:143.

1. Authority has Responsibility: Mangers need to be accountable for performance economic institutions and their managers have to have authority. One cannot be accountable for what one has no authority and cannot 9 Akpapal, 1998:74 – 75).  In many organizations, incentive packages cannot be introduced because manager power are often supped especially in government owned companies (Ejiofro and Osuji) 1987;

1. Reliability of Surveys: Most studies so far carries out an incentive appear to be lacking in thoroughness.  Such survey has not told us what causes different people who are looking for the same information to obtain different result.

1. Communication gap: Since there is the proper channel of communication the incentive schemes in some of our organizations most employees see such things as gifts which have nothing to do with their jobs.

1. Flections: There is always flexibilities in the value of incentives as there are no in built measures to take control to such flexibilities e.g. inflation rate keep on rising in this country.

Nigeria should to reflect the trend of thing, economically since

there is no exhaustive list of problem involved in designing and administering incentive programmes, these and more some of the problems associated with such exercising in most origination today.

• DIRECTLY RELATED LITERATURE INCENTIVES AND PRODUCTIVITY

Much have been written and discussed on the importance of

incentive scheme in organizations its philosophy is tailors towards satisfying the employees in order to get the best from them. It is for this study, 1991, carried out research on the impact of monetary incentives scheme on performance of workers.  A case study of NEPA, Enugu. Enugu.  The researcher made use of a cross-sectional survey and sampled three hundred, 300, workers from four departments NEPA, Enugu as follows:

personnel administration 75, from the survey, he found out that the structure of incentives scheme in NEPA, Enugu does not reflect the needs and aspirations of workers.  Management does not allow the junior and middle level workers of NEPA to take to in delusion making as it affect their welfare.  Thus, the workers to the organization were not receiving incentives/rewards which are commensurate with the efforts expended in their respective job responsibilities.

The relationship of this work to my study is the difference in the year of the year on one hand and the operation of the two case companies on the other hand. However, both companies are dealing on workers satisfaction and incentive programmes to enhance their productivity towards achieving the organizational objectives.

Also considered is this research is another closely related research on appraisal of the impact of remuneration on man power turnover in government owned companies.  A case study of cameral investment company limited 9 CIC, Enugu.  This research was carried out by Ngwu S. O. (1990).  The researcher used multi-sectional survey and sampled a total number of 180 workers of six departments of CIC as follows:-

• profit department
• profit
• general management
• administration
• accounts and
• legal services

The researcher was able to come up with the following:

1. There is low level of awareness of the remuneration scheme of CIC limited among senior workers. The senior staff are more aware of the remuneration schemes and its administration.  Under the findings the study future showed that qualification, status, grade levels, length of service etc. have positive correlation with the level of awareness of the worker.

Also, the researcher equally found out that from workers salaries, only seven items in terms of fringe benefits all offered to the employees of CIC Ltd., Enugu.  They need those fringe benefits which satisfy, their basic and immediate needs as wells as supplementing their salaries.  This may be as a result of the economic condition of this country which is affecting made the researcher to finally consider some measures to be adopted in order to leap or eliminate dower’s dissatisfaction, man power turnover and increase performance.  The resultant affect as discover from the study as follows:

1. Increase infringe benefits instead of salary. This view was share by majority of both senior and junior workers.
2. The employee should not be asked to contribute parts of their salaried in order to introduce those benefits that are not in existence. This was because 73.1% of the senior staff do not favour such gesture.

The relationship between the research and my present study is with thing both studies are coming up with thing to be done into eliminate workers dissatisfaction and increase worker’s performance in a given organization.

Equally considered was the study carried out on an evaluation study of employee incentive programme, adopted by project development institute (PRODA) Enugu, within by Okeye, T.N. (1988).  The researcher used both descriptive and historical methods in conducting from six department, namely:

• administrative department
• electrical department
• ceramics department
• documentation division
• securities department

The sample size comprised both junior and senior staff and the following fringe were made:

1. there were 120 appropriate incentive programme in project department institute (PRODA), Enugu what was operational in the institute were supplementary compensations and facilitative employees service programme.

1. That inadequate and lack of modern lyrical instruments and chemicals in PRODA Laboratories hampered the produces of work.

There were also the problem of insufficient technical and because of lack of funds, the few around are not well compensated and this hampered the progress of work and hence how periodicity.  The closeness or the relationships of this research to mine is that the study showed that if an organization does not install a well incentive scheme the staff will not be well motivated as a result their moral sill be low and this invariable will affect their performance productivity.

• CONCEPT OF INCENTIVE SCHEME

The term incentive represented a tangible gain to employees which may be financial or non-financial spending on the particular item involved.  Even though incentive may be seen an additional cost to the management the extent to which it satisfy workers vary, not only form one organization to another but also from one country to another. Experiences from some of these countries as regards income polices and incentive schemes administration are as stated below:

1. Sweden: Collective bargaining centralized between employers confederation and the federation of manual workers ad white collar unions who agreed on increased thought to be keeping with economic trend.
2. USA and Germany: General reliance on out coming for bargaining units with principles or norms recommended by government or agencies.

During the Nigeria civil war 91967 to 19700, worker suffered not only because of inflation but also because of some rights and privilege is being with drawn on the protest of emergency measures.

There was the Adebiyi Tribunal of enquiry into the activities of trade unions of 1979 and 1977, there was also the presidential commission on salaries and conditions of service in the universities.  As earlier stated all these commissions and committees were the instrument government use fixing minimum wage to be aid to all government employees is this country.  A good example is the National Minimum Wage Act of 1981 which fixed the minimum wage of the government employees at N125 per month.  Since the economic recession of the eighties, trade in Nigeria have witness continually reductions and replacements in the take home of their member.

Conclusively: The lesson thought by all the above statement to that management must continue to incur most costs on workers incentives since workers would continue to demand for more than with trend of things.

• TYPES OF INCENTIVE SCHEME

There has been no general agreed concept over what

constitutes a total incentive over what constitutes a total incentive or compensation packages among managers and employers. What had been practically in existence has been imitation of what in obtainable in similar organization and adopting the same in their own establishment.

However, this usually done within proper analysis of the information and condition on the ground, no thing that what worked for ‘A’ might not work for ‘B’.  Nevertheless, Nwachukwu 1988:128 – 156, classified an organization’s incentive/remuneration packages, as consisting of three (3) major items as detailed below:

1. Shift pay for employees who work on an unusual hours to compensate them for inconveniences and hardship.
2. Special additions like dangers money, dirty or wet money which are paid to the employee.
3. A salary is progressive in most cases in creasing annually, whereas wage earner reaches the standard rate for the job early in adult life and does not receive annual increase.
4. A salary is of ten regarded as personal to the individuals but a wage is the sum aid to all workers at a particular job.

• FIRST BANK OF NIGERIA INCENTIVE SCHEME

First bank of Nigeria Plc. Have the following incentive:

1. Annual basic salary
2. housing allowance

• transport allowance

1. Christmas bonus
2. Free medical services
3. Provision of company official cars fielding

• And their repairs or maintenance
• Hiring of drivers for managers and other senior staff entitled to official cars.

However, an organization’s compensational incentive packages is not the same.

• SUMMARY OF THE REVIEW OF THE RELATED LITERATURE

A study by Obuatu (1990) on the impact of monetary incentive schemes on performance of workers of NEPA, Enugu revealed that: The structure of incentive scheme in NEPA, Enugu does not reflect the needs and aspirations of workers.  Management does not allow middle and junior workers to participate incentives.

Most workers of NEPA, Enugu were not receiving incentive which are commensurate with their efforts. Ngwu (1990, in his study on the impact of remuneration on man power turnover in government owned companies a case study of Central Investment Company Limited reveled that:

1. There is low level of awareness of the remuneration scheme among junior workers often company
2. A par from workers salaries, other fringe benefits are offered tot eh employees Central Investment Company, CIC, Enugu.
3. Both junior and senior workers increase infringe benefits instead of salaries.

On evaluation study of employees incentives programme as adopted by PRODA, Enugu, Okoye (1988) found out that there was no appropriate incentive programme in place in the company.  What was operational was supplementary compensation and facilitative employees services programme.

From different ideas got about the impact for a well established incentive schemes towards the performance workers in an organization.  It was observed that a part from salaries and fringe benefits, there are some incentives which of place will go a long to motivate workers towards greater heights.

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