Project – FINANCIAL REWARD AND WORKFORCE PRODUCTIVITY IN FIRST BANK

CHAPTER ONE

INTRODUCTION

• Background of the Study

The most valuable asset an organization could possess is the human resource because according to Armstrong (2006) the workers individually and collectively contribute to the achievement of an organization’s objectives. As a result of the importance of human resource its management impacts significantly on employees’ turnover and productivity and corporate financial productivity (Adams, 1999). The current business environment is changing rapidly and very unstable.

Alderfer (1972) assert that the economic environment is changing rapidly and it is typified by variables such as deregulation and globalization of the markets, unstable customer and investor demands and continually increasing product-market competition. This has become the standard for most corporate organizations. Thus, the banking sector, as a result of the dynamic environment needs highly competent and motivated human resource for it to remain competitive in the global market and changing technological environment.

The banking environment in Nigeria is replete with stiff competition especially after the recapitalization exercise induced by the government in 2005 (Ojo, 2008)  and the global recession in 2008. The competition is not only limited to the market but also talented employees. The banks that seek competitive advantages need competent employees. Those that have competent employees must guide jealously what they have by encouraging them to stay while those who do not have competent staff strive to snatch the available ones from their competitors by enticing them through various forms of motivation including offering attractive financial rewards. So, the banking sector strives hard to motivate its employees for them to be productive.

Armstrong (2006) posits that the unfortunate thing is that managers look at motivation using simple assumptions. Because different employees have different needs and goals and adopt different strategies to achieve these goals, motivating them is more intricate than the ways managers apply motivation in their organisations. As a result of these, Armstrong defines motivation as “the factors that influence people to behave in certain ways. It is about getting people to move in the direction you want them to go in order to achieve a result.” One form of motivation strategy management of banks use is the offering of high and attractive financial rewards. Incentives according to Hartman, Kurtz and Moser (1994) “are one technique by which employers carry out their end of the employment contract – that is compensating employees for their efforts.” In recent years employers have increased the rate in which they used money to influence employees’ behaviour (Kaarboe and Olsen, 2003).

However, Bergum and Lehr (2005).asserts that because people are suspicious of self-interest and incentives, motivating employees through incentives is being opposed because to him it is inconceivable that people’s actions could be associated to a response to incentives. The practice of using financial rewards to attract employees from one bank to the other may be a disadvantage to career development because the tendency will be for bankers to move from one bank to the other without considering prospect of their career. Jensen posits that Cole (2002) attacks the use of incentives for compensation not only for the executives but also in the society because “economics views rational behaviour as self-interested and that this proposition is wrong both in a positive sense and in a normative sense (because if they did behave in a self-interested way, the world would be a more brutish and undesired place).” Drucker (1999) agrees with Brennan on the fact that people may not sometimes behave in a rational way but that there is no evidence that support his view on incentives.

Workforce productivity is very paramount in organization and it is believed that job satisfaction leads to workforce productivity. Egwuridi (1981) assert that Fowler (2001) expectancy theory suggests that productivity leads to job satisfaction through the provision of intrinsic and extrinsic rewards. With these argument for and against the use of financial rewards to motivate employees in the banking sector in Nigeria it is imperative to empirically examine if the use of financial rewards motivates bankers to high level of productivity.

The banking industry in Nigeria has gone through many stages of evolution and growth since its inception in 1894 by the colonial government. The industry has been regulated and deregulated. There have been distress problems which have led to liquidation of many banks. These problems cannot be divorced from employees’ poor productivity. Poor productivity of employees sometimes is linked to low motivation. One important component of employee’s motivation is financial reward. Various banks in Nigeria are using financial rewards to motivate their employees. This strategy has led to some employees being snatched by one bank from the other. The questions are that (1) does financial reward alone lead to employees motivation in the banking industry (2) does financial reward lead to employees job satisfaction (3) is financial rewards effective in motivating employees attitudes?

• Research Problem

This study is meant to examine the influence of incentives on workforce productivity in the banking industry. This is necessary because the banking industry is very important in the economic development of a nation. The banking industry is a crucial sector for the development of the real sector as well as other sectors of the economy (Sanusi, 2010). The productivity of the industry depends on the employees and their attitude and behaviour. When the employees are motivated they will exhibit positive behaviour such as increasing their efforts for the growth and profitability of the industry; this at the end will result in positive growth in the economy. It is doubtful if financial rewards actually influence employee motivation, job satisfaction and productivity in the banking sector in Nigeria since the productivity of the banks are not being felt in the economy of the country and banking failures are constant experience. It is therefore, imperative to empirically determine the impact of financial rewards on employee motivation, satisfaction and productivity in the banking sector in Nigeria.

• Aims and Objectives of the Study

The aim of this study is to empirically examine the relationship between financial rewards and employees productivity in the banking industry in Nigeria.

As a result of the above aim, the following are the objectives of the study:

1. To review literature on financial rewards, employees satisfaction, motivation and productivity
2. To empirically investigate the effect of financial rewards on workforce productivity in the banking industry in Nigeria

iii.       To investigate the relationship between financial rewards and motivation of employees in the banking industry in Nigeria

1. To examine the effect of financial rewards on employees job satisfaction in the banking industry in Nigeria.

1.4    Relevant Research Questions

1. How can financial rewards, employees’ satisfaction, motivation and productivity be reviewed?
2. Does financial rewards have any impact on employees’ productivity in the banking?

iii.       What is the relationship between financial rewards and motivation of employees in the banking industry in Nigeria?

1. How effective is financial rewards on employees job satisfaction in the banking industry in Nigeria?

 

 

• Research Hypotheses

The following hypotheses will be tested in this study

H_O1: Financial reward does not have any effect on workforce productivity in the banking industry in Nigeria

H_O2: Financial reward does not have any relationship with motivation of employees in the banking industry in Nigeria

H_O3: There is relationship between job satisfaction and employee job productivity

 

1.6    Significance of the Study

The significance of the study are stated below:

The study helps students to understand the relevance of monetary and non-monetary reward on job satisfaction through various theories of motivational incentives on employees’ productivity.

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.

Practically, it assists practicing manager in understanding the impact of incentives on employees’ productivity, hence enabling these elements to be incorporated into policy and objectives of the organization.

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.

1.7    Scope of the Study

The research work seeks to examine “Financial reward and workforce productivity in First Bank within Lagos. 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 strive to accomplish its aims and purpose.

1.8    Definition of Terms

Workforce: Workforce are the people engaged in or available for work, either in a country or area or in a particular firm or industry.

Reward: Reward is a thing given in recognition of service, effort, or achievement.

Incentive: this is a conscious use of rewards and penalties to encourage good productivity in the utility sector.

Non-monetary: Transactions that do not result in a transfer of funds between accounts. Nonmonetary transactions can be something as simple as a change of address or an appreciation note.

Financial reward: A financial reward is to reward associates for excellent job productivity through money.

Productivity: The accomplishment of a given task measured against preset known standards of accuracy, completeness, cost, and speed.

Project – FINANCIAL REWARD AND WORKFORCE PRODUCTIVITY IN FIRST BANK