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Full Project – THE IMPACT OF SALARIES AND WAGES ON EMPLOYEE JOB SATISFACTION

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CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

The performance of a corporate organization, which determines its survival and growth, depends to a large extent on the productivity of its workforce. Also, the wealth of a nation as well as socio-economic wellbeing of its people depends on the effectiveness and efficiency of its various sub components. Labour is generally regarded as the most dynamic of all the factors that are employed for the creation of wealth, having the potential to energise and serve as catalyst to all of the other resources (Simbo, 2009).

Ibojo and Olawepo (2003) opined that productivity serve as a measure of the efficiency of management. They then described the concept (productivity) as a ratio between what is put into anything, human efforts etc and what is gotten out for example refrigerators, soaps, detergents etc. it is presumed that if the transformation process of the production process is not effectively done due to negative environmental influence, the rate of output of the productivity level will be low.

Employee’s performance means how well employees perform on the job and assignments assigned them measured against the generally accepted measure of performance standards set by their companies. This means there are general expectations expected of employees in relation to their performance in every company. Employees can be said to have performed when they have met the expectations and performed up to standard (Nadle, 2001). Employee performance can also be defined as the functioning and presentation of employees. This means, how employees are able to effectively administer their task and assignments and also how they present their assignment to reflect the quality and good service desired by their companies.

The level of employees’ productivity is determined by a number of factors such as management style, training and development, innovation, capital investment, environment etc. However, environment plays the highest role on productivity level because no employee can function optimally if the environment is a threat to his/her life. Aside from threats to life, at times, the circumstances in the environment can make the environment to be unstable thereby hindering positive response from the employee. In view of this, organization must constantly watch and monitor the circumstances in the environment in order to create friendly environmental conditions that will no doubt increase employees’ productivity (Simbo, 2009).

Mutchell (2012) stated that high productivity is what makes an organization grows. This means that for an organization to achieve success, it should embark on how to instantly improve its production in terms of quality and quantity. However, it is the responsibilities of both the management and employees to make sure that the quality of goods and services produced and rendered meets the expectations of the target market. This can only be successful and accomplished if the environment is friendly in nature.

1.1.2 Wages and salaries

The potential influence of wages and salaries on workers’ productivity is a key issue addressed by personnel economics. In this context, relative wages are often considered to play a determinant role. Assuming that workers compare their wages with those of their co-workers when determining their level of effort, wage dispersion should influence this level and hence average firm performance (Afanjo, 2002).

Rosen (1981) stressed that a more differentiated wage structure stimulates workers’ effort, through the incentive resulting from awarding the largest prize to the most productive worker. Their approach further suggests that the higher the pay spread, the higher the workers’ optimal level of effort. In contrast, other theories argue that wage compression, i.e. a lower dispersion, reinforces workers’ productivity by either improving labour relations, sustaining and stimulating cohesiveness among the workforce (Levine, 1991) or preventing workers from engaging in costly rent-seeking activities instead of productive work (Bozman, 2012).

Levine (2001) stated that wage compression, within a firm where teamwork is essential, increases the firm’s total productivity by stimulating cohesiveness. Hibbs and Locking (2000) provide a firm-level production function in which firms should establish a wage distribution that is more compressed than the variation in workers’ productivity.

Hibbs and Locking (2000) postulate that wage compression would reduce workers’ incentives to withhold information from management in order to increase their influence; engage in costly rent-seeking activities instead of productive work, and take personal interest decisions, which may not be profitable for the organization.

1.1.3 Employees Job Satisfaction

Job satisfaction can impact on employee productivity at most work places. If an employee is happy with how they are being treated and the rate of pay they are receiving then they are more likely to be more productive and take time to do their job more accurately. The issue of employee well-being and job performance has been discussed in a broad sense in connection with the happy/productive worker thesis (Wright and Cropanzano 2007). The issue has also been viewed more narrowly as the connection of job satisfaction and job performance. Job satisfaction is a narrower measure of well-being than happiness because it covers only well-being that is related to the job. Job satisfaction measures, however, have been easily available, and an extensive literature has examined the connections of job satisfaction with performance.

Afanjo (2002) suggested that the way employees experience their work would be reflected in organizational performance. Historically, the job satisfaction-performance linkage has been primarily discussed by theorists from the Socio-technical and Human Relations schools of thought.

According to the Socio technical approach organizational performance depends on congruence between the technical and social structures of the organization. Building on this notion, the Human Relations perspective posits that satisfied workers are productive workers. Thus, organizational productivity and efficiency is achieved through employee satisfaction and attention to employees’ physical as well as socioemotional needs. Human relations researchers further argue that employee satisfaction sentiments are best achieved through maintaining a positive social organizational environment, such as by providing autonomy, participation, and mutual trust .

Based on this logic, employee satisfaction is believed to influence the development of routine patterns of interaction within organizations. Through mutual interactions, employees develop relationships with coworkers that also prescribe behavioral expectations and influence behaviors (e.g., norms or informal standards of acceptable behavior). For example, an unhappy employee could be prevented from lowering their performance by control mechanisms (e.g., standards of measurement, supervisory influence); however, widespread dissatisfaction among employees could lead to a strike or sabotage that might hinder an organization’s effectiveness. Alternatively, dissatisfied employees might choose to maintain performance levels (due to control mechanisms) but neglect to inform supervisors of important information that, over time, would result in lower organizational effectiveness or efficiency. Thus, employees’ job satisfaction sentiments are important because they can determine collaborative effort.

Consistent with this reasoning, Bozman (2012). had argued that collaborative effort directed towards the organization’s goals is necessary for achievement of organizational objectives, with unhappy employees failing to participate (effectively) in such efforts. In summary, available theory supports the contention that the satisfaction level of employees (as a whole) may relate to performance at the business-unit and/or organizational levels.

1.2 Statement of the Problem

The management of people at work is an integral part of the management process. To understand the critical importance of people in the organization is to recognize that the human element and the organization are synonymous.

According to the happy/productive worker thesis, the tendency of unhappy people to emphasize negative aspects of their work leads to lower job performance. This holds especially in jobs that require social interaction with coworkers or customers. The unhappy workers may also have negative spillover effects on the performance of other employees.

Some leaders do not appreciate the fact that employees have to be motivated to ensure they do what they have to do so that the goals and objectives of the organization are achieved. Because of the prevailing situation in Nigeria where supply of labour is greater than its demand, some employers do not believe much in effective motivation of workers to produce high performance. They uphold the view that even if workers are not properly motivated they cannot leave the job since there is no job in the labour market.

Most employers are not effective in their leadership behaviour. They treat workers as machines believing that workers could be treated anyhow. Some leaders do not also manage their time effectively with their workers to enhance effective job performance from the workers. In response to this, workers do not handle their work properly.

There is no proper planning and they would not prioritize their task accordingly. They perform their task in a negative way, the effect of which is ineffectiveness. In this case, this study is set to investigate the influence of work motivation, leadership effectiveness and time management as they influence employees’ performance in an organization.

1.3 Aims and Objectives of the Study

This study aims at investigating the impact of salaries and wages on employee job satisfaction. Some of the other objectives are:

To examine the effect of wages and salaries on job satisfaction.
To evaluate the effect of remuneration on employees’ job satisfaction.

To show the effect of management attitude on workers’ job satisfaction.

To measure employees’ job satisfaction in the workplace.

1.4 Relevant Research Questions

Based on the purpose of the study, the following questions are raised to provide a guide and solution to the research problems:

Does wages and salaries affect workers’ job satisfaction?
How effective is remuneration on employees’ job satisfaction?

How does management attitude affect job satisfaction?

How can employees’ productivity be measure in the workplace?

1.5 Relevant Research Hypotheses

In carrying out this research work these hypothetical statements are made to serve as a direction on which the work will be premised.

Hypotheses 1:

There is significant relationship between wages and salaries and job satisfaction.

Hypotheses 2:

There is significant relationship between effective remuneration and job satisfaction.

1.6 Significance of the Study

When performance standards are clearly articulated by management’s motivation, employees know what is expected of them, what their role as a part of a group and organization is, what is considered unacceptable performance, and how organizational standards should be achieved (Ajila and Abiola, 2007).

To this end, the study will serve as a benchmark for management to further evaluate the effect of employer-employee relationship, and how it ultimately impacts the performances and growth of an organization.

The study will broaden students understanding about the effect of job satisfaction on employee performance and productivity.

This study will also help the employer to realize that a motivating environment can improve employee contribution in his workplace.

1.7 Scope of the Study

The research work will evaluate the impact of salaries and wages on employee job satisfaction with a view to explore First Bank of Nigeria, Marina, Lagos.

The study focuses on variables such as job satisfaction, wages and salaries plus the quality and nature of the Performance Evaluation process.

Limitation of the study: The study as perceived might face some logistic challenges in term of the time and the costs involved in carrying out the research, but nevertheless, it would endeavor to accomplish its aims and purpose.

1.8 Definition of Terms

Job Satisfaction: Job satisfaction is contentment (or lack of it) arising out of interplay of employee’s positive and negative feelings toward his or her work.

Salary & Wages: Payments made to employees of the institution for work performed.

Compensation: This is the reward or payment gain to the provider of labour. A labourer disserves his wages. Compensation could also be retired to as remuneration.

Employee: An employee contributes labor and expertise to an endeavor of an employer and is usually hired to perform specific duties which are packaged into a job.

Employment: it is a contract between two parties, one being the employer and the other being the employee.

Job evaluation: This is the systematic method of appraising the work of each job in relation to other jobs in the organization.

Motivation: Motivation of workers is very important in organizations. It is the driving force which compels a worker to be dedicated and diligent in his/her work.

Organization: An organization is a social group which distributes tasks for a collective goal.

Performance: A performance, in performing arts, generally comprises an event in which a performer or group of performers behave in a particular way for another group of people, the audience. Choral music and ballet are examples.

Productivity: Productivity is a measure of the efficiency of production. Productivity is a ratio of production output to what is required to produce it (inputs).

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