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THE IMPACT OF INCENTIVE PLANS ON EMPLOYEE PERFORMANCE

ABSTRACT

The study examines the impact of incentive plans on employee performance. The research question that guided the study were: would employee performance be increased if there are good working conditions as incentives towards personal satisfaction? does the provision of benefit packages as an incentive lead to personal satisfaction and a sense of accomplishment thus improving employee performance? what specific problems do personnel department is encounter in the use of incentives as a motivational tool? would junior worker's performance be increased if there are mechanisms for comments, a suggestions grievance as a way of motivating them? what specific types of incentives of workers want in order to improve performance? and does the reward of superior work as an incentive lead to improved employee performance having achieved personal satisfaction?. A survey method was used for this study. The population consisted of all Staff of Niyya Food Kaduna. Out of 158 persons, a sample size of 70 was drawn from the total population using the stratified random sampling technique. A questionnaire developed by the researcher based on likert 5-point scale was used for the study. Mean scores was used to analyse the data based on the research questions. The research result shows that Niyya Food incentive scheme does not enhance  workers performance because, it does not take into cognizance in it remuneration and do  not even evaluate or appraisal workers  performance.It was recommended that  Other non financial incentives like lectures, seminar, symposium as well as Recreational facilities, such as club with sporting facilities, entry bar and other recreational facility that would help staff unwind after work should be designed and adopted. This will facilitate efficiency and increase productivity in Niyya Food.

CHAPTER ONE

INTRODUCTION

1.1   BACK GROUND TO STUDY

Developing the compensation package of an organization is a complex and continuous assignment of the personnel department. This possibly accounts for the reason why all personnel department structures, whether for a small or big organization, each has a section a signed with the function of ensuring that people are fairly and adequately remunerated. Compensation therefore refers to the payment of fair and adequate remuneration to employees. Direct compensation refers to money paid to a worker for his performance of his job assignment Le salaries and wages, while.Indirect compensation includes incentives, fringes benefits and other kinds of benefit paid to workers.

Incentive are there fore rewards (outside salary or wages) which are given to an employee with the aim of motivating or stimulating him to work harder. However salary/wages are used to attract employee and they are money paid for work done (Burack and Smith) stress that an incentive scheme is a plan or programme to motivate individual or group performance. An incentive programme is most frequently built on monetary rewards e.g. bonus or incentives pay but it may also include a variety of non‑monetary rewards or prize. It includes many kinds of inducements offered to employees to make work even beyond acceptable standards and time. This research work will look at the development of incentive schemes which is a sub‑function of the personnel department. However it must be discusses that incentives are paid of a motivation system this great emphasis will be laid on motivation with incentive being a contribution to motivation.

1.2   STATEMENT OF PROBLEM

The use of incentives in organization or industries today has become increasingly essential considering the dynamic nature of the business world. There are a number of reasons. The first is an economic. Economic theories of Benefit and Compensation. Administration, Wages are strictly on the down side when the company faces, hard times it is hard or impossible to lower the wages of current employees. In this way wages become a fixed. Cost. The only way, the employer has to lower this cost is to layoff workers for the past twenty years, this has been a way of life for American business. Incentive pay can soften this necessity to lay off members of workers by lowering the wage bill for all workers to some degree.

A second reason is continued in the “payment for results or performance” concept if the company relates pay to the desires outcome then this will increase the probability of obtaining that outcome. This may be through the employee working smarter faster or longer. As companies have laid off employee they have had to become learner and more efficient. Getting more accomplished with fewer people makes the promises of incentive pay very attractive to companies today.

Third, as union influence, has declined and the ideas of participate management has spread, there is a significant desire to tie the employees into, not only doing better on their job but being interested in how well the total organization is doing, including contributing to the overall company success some incentive pay plans focuses, mainly on trying to get the employee to join with management to create a successful company. Therefore there is every need to motivate workers in order to increase their productivity and performance for attainment of overall organizational objectives such as profit sharing holiday premium job enrichment flexible work hours.

Profit sharing: Is another popular organization‑wide program that is often classified as gain sharing plan. This type of plan can be made much more simple than a cost sharing plan. Nor does it requires the revolution in employee‑ management relationships that cost‑savings plans do with profit sharing, management hopes to change employee attitudes toward the employee. The idea behind profit sharing is to instill in the employee a sense of partnership with the organization. But most plans go beyond this and use profit sharing as a way to keep valuable employees and to encourage thrift in employees.

Clearly the relationship between effort and performance becomes very tenuous in any organization ‑wide incentive plan. Even if the performance (profit or cost savings) and the reward (an amount of the profit or savings based on salary) are clear, their connection with what the employee does every day is not clear. Infact, most organization ‑ wide plans fit the membership model better than they do the performance motivation model. This enhanced membership motivation appears to be the greatest strength of profit sharing. The profit sharing objective of instilling a sense of partnership is met to the extent that employees want to continue their membership and to make the additional contributions that enhanced membership implies.

1.3   PURPOSE AND OBJECTIVE OF THE STUDY

The major objective of this study is to investigate the impact of incentive plans on employee performance. This study will also identify various ways of implementing incentive plan for improved employee performance. However the specific purpose of the study are to

i.  To ascertain if employee performance would be increased through good working condition as incentive.

ii.  To determine if the provision of benefit packages as incentives would lead to personal satisfaction and sense of accomplishment this leading to improved employee performance.

iii. To determine if the rewards of superior work of employees as an incentive would improve performance.

iv. Determine if junior worker would improve their performance if there are mechanisms for comments, suggestions grievances as a way of motivating them.

v.  Ascertain the specific types of incentives workers want.

vi. Highlight the specific problems encountered by personal departments in the use of incentives as a motivational tool.

vii. Proffer solutions to the problems highlighted above.

However in identifying various ways, of implementing incentive plan for employee motivation must first be considered. Motivation fundamental Element in employee performance the job of a manager in a work place is to‑ get things done through employees. To do this the manager should be able to effectively motivate them. But, that is easier said their done. No employee ever get up in the morning and said “I am going to work really hard today because I've got health insurance” Yet an employee could have no difficulty giving extra effort for a manager who shows a level of trust and respect, commitment and support on a daily basis and in a timely sincere and specific way, such as through an incentive program.

Motivation is also a very personal element. What motivates people varies from person to person and it varies over time with the same person. For this reason, how to motivate employees is a moving target. Research however indicates that, regardless of the size or types of business, the best motivation is manager‑initiated and based on performance. Performance is considered a product of both ability and motivation. Ability, dependent on education, experience and training, can be a show and long process. Motivation however, can be improved quickly through a varity of influential strategies motivated employees don't happen by accident an organization has to have a plan to reinforce the behaviour that they want. It is important to remember that employees are people. And, people will usually do what they want to do or otherwise. Motivated to do so. Motivated employees tend to reach their full potential and encourage co‑workers with their enthusiasm and passion to reach new heights.

1.4   RESEARCH QUESTIONS

In order to achieve the purpose of this research work, there would be an attempt to provide answers to the following research questions:

i)  Would employee performance be increased if there are good working conditions as incentives towards personal satisfaction?

ii) Does the provision of benefit packages as an incentive lead to personal satisfaction and a sense of accomplishment thus improving employee performance.

iii) What specific problems do personnel department is encounter in the use of incentives as a motivational tool?

iv) Would junior worker's performance be increased if there are mechanisms for comments, a suggestions grievance as a way of motivating them?

v) What specific types of incentives of workers want in order to improve performance.

vi) Does the reward of superior work as an incentive lead to improved employee performance having achieved personal satisfaction.

1.5    RESEARCH HYPOTHESIS

In an attempt to investigate the impact of incentives on employee performance, the following hypotheses were tested

H1 That good working condition as an incentive improves employee performance in male workers than in female workers.

H2 That good working condition as an incentive improves employee performance in male workers than in female workers.

H3 That the provision of benefit packages an incentive would lead to personal satisfaction thus improving employee performance in junior staff more than in senior staff.

1.6   SCOPE OF THE STUDY

Organisations abound in every from whether large or small, sole proprietorship or partnership or public liability company. This fact reveals that attempting a research work to cover every organization is not only Herculean but totally impossible hence there is needs to draw out an area of study which this becomes the scope of the study. For this research work therefore, the scope shall be a union. Bank Nigeria Plc branch operating in Lagos State of Nigeria. This branch has at least 10 senior staff and at least 40staff of junior rank.

1.7    RELEVANCE OF THE STUDY

The relevance of this research is to make a theoretical and practical contribution to organizations on the impacts and importance of intensive plans on the performance of employees. The study will also provide useful contributions to organizations on how to motivate their employee towards improved performance for efficiency in the every dynamic business world. Emphasis was laid on trying to identify the reaction of employees towards certain incentive plans while also trying to pin-point the exact incentives that workers want.

OPERATION DEFINATION OF TERMS

For effective communication, it is pertinent to operationally define some of the salient concepts in this study.

INCENTIVES: These are rewards (out side salary and wages) which are given to employee with the aim of motivating or stimulating him to work harder.

INTRINSIC INCENTIVES: These are incentives that are non-monetary in nature i.e job enrichment participation in decision making etc.

EXTRINSIC INCENTIVES: These are incentives which are monetary in nature i.e pay for time not worked.

SHORT TERM PLANS: Those are incentive plans which are based on output be increased production.

LONG TERM PLANS: These are incentives plan which are based on group performance out-011-t

EMPLOYEE PERFORMANCE: This is the amount of work done by a worker or an individual in an organisation.

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