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EFFECTS OF FINANCIAL INCENTIVES ON WORKERS SATISFACTION (A CASE STUDY OF ZENITH BANK)
1.0 BACKGROUND OF STUDY
Each individual has his own needs and wants, for that reason, he/she attempts to get satisfaction from them. It isn't for an employee to be satisfied materially, yet no material aspects are as fundamental as material viewpoints, a worker need both to be satisfied in his pay, rewards, recompenses, professional stability, and different offices. The fate of an organization is normally controlled by its worker's so it sounds acceptable to see how workers can be persuaded. Undoubtedly, worker satisfaction incentive programs have been discovered to be the most ordinarily embraced method among organizations. The reason for the program is to satisfy gainful employee's efficiency, strengthen positive conduct and mix enthusiasm for workers (Angrysis Chris, 2017).
Human asset gives the premise to an organization and have an practically upper hand amidst competitors. Since organizations are working in a dynamic and serious business condition, they have to create systems to employ and retain workforce. Human resources are viewed as the most significant resource of any organization and to get a productive and viable outcome from human assets, inspiration is essential (Zaman, 2011).
Researchers separate satisfaction into two classes, intrinsic and extrinsic. Extrinsic satisfaction comes from external factors like financial incentives and needs to be refilled at regular intervals, not to lose its effect Mundhra, 2010).
Armstrong and Taylor (2010), states that “employee’s productivity” is defined as behavior that accomplishes these results. In light of today’s business conditions especially in the banking industry, motivating people to give their best has become more crucial than ever before. To achieve goals and objectives, organizations irrespective of size, develop strategies to compete in highly competitive markets, and to increase employee’s productivity. Human Resources Management has a role to hire and come up with retention strategies for the best employees, especially the ones holding key roles that can be difficult to replace because of the technical competencies required. Organizations consider the human capital as being their main asset capable of leading them to success or if not managed properly, can lead to failure of the organization and high staff turnover (Fisher, 2012). Milton (2013) defines incentives as variable rewards granted according to variations in the achievement of specific results. It is also called a stimulus to greater action. They may be used to incite action or greater effort. An incentive is anything that can be given in addition to wages. Incentives are therefore satisfaction for work. They could be financial or non-financial rewards. Incentives provide zeal in the employee’s for better employee’s productivity. It is a natural thing that nobody acts without a purpose behind their actions. Therefore, a hope for a reward is a powerful incentive to motivate employees. Besides monetary incentive, there are some other stimuli which include job satisfaction, job security, job promotion, and pride for accomplishment. Employees occupy a strategic role and position in any organization. They are responsible for converting inputs to produce outputs. Since they are the key to the productive outputs, they ought to be effectively and adequately satisfied with their labor. Taking cues first from the Biblical expression that a laborer deserves his wages; and secondly bearing in mind that the reward for labor, a factor of production is “wages”, it becomes logical that employees be adequately and fairly satisfied if they are to be motivated to increase productivity in any organization be it the organized private sector or public sectorArmstrong and Taylor (2010). Drucker (1980) believes that “the work of management is to make people productive” to achieve superior employee’s productivity, and gain a competitive edge in the globalized arena through effective compensation packages. Drucker’s belief is anchored on productivity, employee’s productivity, satisfaction quality, and service in managing people in every organization. This emphasis is often captured in organizational mission statements and goals. Incentives provide a platform through which firms can motivate their employees to improve their productivity. Scholars like Pouliakas, (2008), Pinar (2008); Arnolds and Venter (2007) have all researched monetary and non-monetary incentive and how they affect organizations. Incentive programs are put in place by organizations to reward and satisfy exceptional employee’s productivity (Schiller, 1996). These packages could come in financial or non-financial forms but its objective is to compel the employee to show more efforts in any given task. Incentives are forces that cause the employees to behave in a certain way on any given day usually as hard as possible. However, it is noteworthy that incentives are designed to get maximum productivity from the employee and help retain the most productive and performing employee (Arnold, 2013). Organizations must ensure they use the best incentives to get the required result from their employees. Incentives are instrumental drive towards employee satisfaction and employee’s productivity as it has great benefits and high potential to motivate workers to put in their best in any given task (Condly, 2013). Delvecchio and Wagner (2007) observed the effect of different incentives on salespeople and concluded that younger salespeople react more dramatically and positively with higher intrinsic satisfaction when paid on plans with higher incentive proportions.
Ojokuku (2011) also identified the effect of financial incentives on information and communication technology professionals. Profit-sharing plans, premium pay, and cash bonuses are the types of financial benefits enjoyed by these professionals which enhanced their satisfaction to work. In the banking sector, Azasu (2004) identified the various incentives and benefits used to include variable pay, asset loan, paid paternity and maternity leave, lunch allowance, and travel insurance. The author also noted that training is not popularly used but the firms are willing to give allowance for self-initiated training. Identifying the types of incentives used by employers in banking firms and whether this significantly influences employee’s productivity and firm’s employee’s productivity is the focus of this research.
In the word of Armstrong (2018), the process of satisfaction is initiated by the conscious and unconscious recognition of an unsatisfied need. A goal is then established which, is thought to satisfy the need, and of course, action is determined that leads towards the attainment of a goal. Management should provide incentive schemes and pay workers based on the result they achieve on the job instead of the more physical routine performance of series activities and to retain them on their job making them feel satisfied.
In every organization, the management emphasizes on high productivity, quality of services, quality workmanship, industrial peace, cooperative labor, etc. On the other hand, employees need financial incentives, job satisfaction, good working conditions, and participation in decision making, self-recognition, and opportunity for advancement James, (2010).
Organizations and managers have suffered tremendously in trying to utilize their human resources, they usually encounter frequent industrial conflicts and several unresolved agitations by workers and different categories of employees steaming from one form of dissatisfaction or the other. The main point of misunderstanding between management and employees/workers in most cases is found in the arrears of inadequate and inequitable financial incentives Ebuka, (2004).
Financial incentive is a process of guiding the conduct and influencing people so that theystrive as individual or group towards the achievement of group goals through the use of money. Every employee comes to an organization with one motive, to earn a living and financial incentives play a vital role in the lives of these employees. Taking away financial incentives might jeopardize this individual or group interest. Management, on the other hand, established the organization for the return of investment and profit-making, high productivity, quality of services, industrial peace, and cooperative labor and to remain a going concern. Skinner B. F. (2013), states that by providing properly scheduled rewards is possible to influence behaviors.
It has generally been observed and noted that in a sample group of workers performing the same type of job, some do it better than others. This observation will raise and arouse the notion or questions or psychological tendencies, interest, and differences in performance. One school of thought holds the view that “differences in performance reflect varying characteristics, abilities and skills on the part of ‘workers’ (Bratton, J and Gold J. 2019). Skinner, (2015) but Industrial psychologist argues that differences in performance of workers doing the same kind of job might be a result of extra financial incentives attached to the job, conducive working environment, or friends they meet in the workplace.
As a result of these possibilities, recognition and thorough understanding of workers needs/wants before adopting any form of satisfaction techniques such as financial incentives, human relations, conducive working environment, leadership, and good supervision among others, becomes important since these factors have different influence and impact on different categories of workers and individuals.
The complexity of human nature, expectations, urges, and drives/motives make the art of satisfaction of one out of workers or employees a critical and complex point for consideration. A definite answer could not be reached since people differ in characteristics, backgrounds, traits, and needs. Thus, it becomes imperative for the manager to include positive satisfaction incentive programs like Financial incentives awards to motivate workers behavior towards the achievement of predetermined goals and objectives of the organization.
Satisfaction is a very important issue in managing people. A happy employee is said to be a motivated employee. So it is important for managers, especially human resource managers to figure out what motivates an employee to excel at his/her work. Workers in any organization need something to keep them working. Most times the financial incentives of the employee are not enough to keep him/her working for an organization due to economic factors and other variables. Sometimes also just working for a salary is not enough for employees to stay in the organization. An employee needs to be adequately motivated, the absence satisfaction scheme results to deteriorate in quality of work/performance either on an individual or at the corporate level. Even in a conducive work environment, it is generally observed that while some people work willingly, others work very unwilling. The question then is what is responsible for people’s motives and attitudes to work (Ruch and Goodman, 2013).
By definition, managers work with and through people to get things done. But people are complex and their satisfactions are not always easy to understand. It involves the unique feelings, through experience of individuals as they share a variety of relationships within and outside the organization. Many theories exist about satisfaction and most of them differ in what they suggest managers should do to obtain the most effective performance from their employees. Most successful managers, however, have learned by experience that people are generally very responsive to praise and satisfying-expressed not only in words but also in actions such as financial rewards-and they need to feel successful in their work to give their best effort to the organization. Managers who find the key to their employees’ inner satisfactions can tap an immense source of productive energyBen, (2003).
While satisfaction is essentially a personal experience, managers, in particular, should be keen to find reliable links between satisfaction and effective performance. They should also be concerned with creating the conditions under which organizational and personal goals may be harmonized. The key feature of satisfaction is that it determines the extent to which individual desires to place his/her knowledge and skill at the disposal of others, and more than that to push off the effects of obstacles and difficulties in sodoingBen, (2003). This project work examines the motivating power and relevance of financial incentives in boosting the performance of workers which is the focus.
1.2 Statement of the Problem
Incentives have created a lot of challenges to employee’s input and output in the organization. The negligence of adequate structure in pay incentive, fringe incentive, and bonus and overtime benefits has caused a lot of inequitable justice on the administration of incentive schemes. The resultant effect on employee productivity could be negative. The negative attributes can be seen as poor turnover, poor product quality, job dissatisfaction, low morale, low commitment, absenteeism, to stay with the organization, and poor employee productivity that affects input and output.
The general concept of financial incentives is one form of motivating techniques and its indispensability for the achievement of desired organizational goals and increase productivity and reward for performance has been a subject of controversy over the years, globally generating diverse research arguments, criticisms, and assumptions especially in developing country like Nigeria.