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REWARD SYSTEM AND EMPLOYEE PERFORMANCE OF SELECTED MANUFACTURING COMPANIES IN LAGOS STATE, NIGERIA

CHAPTERONE

INTRODUCTION

1.1     Background to the Study

Organizations are in global competition to retain their market share in the market, and use effective rewards system to attract, retain and motivate their employees. It was believed that reward is one of the important tools used by the organization to attract, retain and motivate its employee. Any reward system that fails to motivate employees is considered to be an ineffective reward system. Employees need money for their daily needs and that is why they subject themselves to work in order for organization to reward or compensate them at the end of the month. Any organization that does not have the interest of its workers welfare is said to be working towards failure.

Organizations use different types of rewards to motivate their employees for desired performance in order to achieve organizational objectives. These types of rewards are extrinsic and intrinsic reward, financial and non-financial reward, performance-based reward as well as member-based reward.

In This global age, every organization needs to have competent and motivated employees, as to gain wider market coverage therefore it is important for organizations to find out what motivates their employees so that employees can give their best to the organization. (Onuegbu & Ngige 2018). Human resource managers seek to design reward system that facilitate achieving the organization strategic goals and meet the goals of individual employees (Bratton & Gold 1999).

Asaju & Yarie (2017) in their study on assessment of the extrinsic rewards on intrinsic motivation and performance of senior non-teaching staff of federal college of education Zaria (2005-2010) positively support this study. The authors contend that finance related rewards constitute the most important or vital motivator among the staff.  The study also validates the fact that financial rewards still dominate motivation among employees in Nigeria and many other developing countries. Olori & Edem (2017) also investigated intrinsic reward strategies and employee performance in Nigeria’s Microfinance Industry. It was found that the nonmonetary rewards or intrinsic rewards employees receive in microfinance banks influence their performance through quality output and effective customer service. The study also indicated that intrinsic rewards should be a key strategy in motivating employees. 

Transif (2012) studies relationship between intrinsic rewards and job satisfaction. A comparative study of public and private organization. The research focused on employing the relationship between intrmsie regards and job satisfaction for employees of service sector. The work examined the level of employees’ job satisfaction for intrinsic rewards such as task autonomy, task significance, task involvement opportunities to learn new things and recognition of public & private banking sector employees. The findings indicated that the intrinsic rewards such as task autonomy, task significance, task involvement, opportunities to learn new things and recognition are important antecedence to job satisfaction for the employees of service sector organization.  

Moreso, bari, Arif and Shoaib (2013) investigated impact of non-financial  rewards on employee attitude and performance in the workplace. A case study of business institutes of Karachi. The study aimed at finding the impact of non-financial reward on employee attitude and to get information about the factors which affect their performance at workplace. The findings showed that feedback to employees, freedom, career development plan and valuation of employees learning programmes, open and comfortable work environment and good supervisory relations, all these factors positively impact employees attitude and performance in the work place. The study is of the view that adequate reward by organization enhanced employee performance. 

Lotta (2012) states that financial incentives are indeed   very   effective in motivating employees. Gunu (2005) maintains that employee reward can either be financial or non-financial; or both. What is important is that an employee is adequately compensated for his efforts and such practice actually induces him for greater performance. Moreso, reward that motivate employees may not be the same for everybody.

Schuler (1998) Employee Performance (what an employee does or does not do) influences an organizational productivity and its competitiveness. Fortunately, what employee do can be measured and evaluated, particularly their job performance and absenteeism. Job performance describes how well an employee performs his or her Job, while absenteeism refers to whether the employee is there to do the work. Performance can be measured by employee‘s job-related: (1) Output for example, the number of shelves stocked by the shelf stockers at the grand union grocery stores, or the number of welding machines assembled by Lincoln electric workers (2) behavior in terms of working together co-operatively in teams (3) attitudes eg the willingness on the part of the workers at general electric (GE) to the flexible and adaptable or the friendliness. It is on this ground that this study investigates the relationship between reward system and employee performance in the manufacturing firms in Lagos State.

1.2      Statement of the Problem

Reward encompasses pay, remuneration and compensation, therefore reward strategy should be devised and developed to meet organizational and employee needs (Pilbeam and Corbridge, 2002). Some organizations mismanage their reward system thereby resulting to so many problems that lead to poor productivity and employee performance. There are frequent employees’ turnover in organizations due to poor remuneration by employers, thereby resulting to loss of skilled workers. These dissatisfied employees seek for enhanced pay in other organizations.

Irregular payment of workers’ salaries leads to demotivation of employees, this leads to poor employee performance in the organization. Bad and harsh economic condition in Nigeria makes it difficult for some organizations to adequately remunerate their employees. Most organizations in Nigeria do not follow employment legislation, disregard labour laws and edicts as a yard stick for rewarding their employees. These affected employees work in a state of acrimony. Moreover, due to high level of unemployment in Nigeria, employees are compelled to take whatever is offered to them by their employers.

Many researchers have researched on reward system but they have not worked on these manufacturing firms under study. Therefore the researcher decided to study reward system and employee performance with a view to find out how these firms reward their employees for high performance.

1.3     Objectives of the Study

The broad objective of the study is to ascertain the effect of reward system on employee performance in selected manufacturing firms in Lagos State. The specific objectives are to:

1.     identify the extent to which extrinsic reward affects employee performance in the organizations understudy.

2.     ascertain the extent to which intrinsic reward affects employee performance in the organizations understudy.

1.4     Research Questions

1.    To what extent does extrinsic reward affect employee performance in the organizations understudy?

2.    To what extent does intrinsic reward affect employee performance in the organizations understudy?

1.5     Research Hypotheses

1. Ho:  Extrinsic reward system have no significant positive effect on employee performance.

2.  Ho: Intrinsic reward system have no significant positive effect on employee performance.

1.6     Significance of the Study

The study will help the business owners to learn how to reward their employees effectively, thereby motivating them to put their best performance for the progress of their organization. The study will serve as a literature for further studies for students and researchers.  Also, it will educate the general public on the benefits of equitable reward system. It will help the government to compel organization to comply with employment legislations.

1.7     Scope of the Study 

The scope of the study is on reward system and employee performance as it affects the selected manufacturing firms in Lagos State Nigeria.

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