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THE EFFECT OF NON FINANCIAL INCENTIVE OF STAFF PRODUCTIVITY IN NIGERIAN SECURITY PRINTING AND MINTING COMPANY

CHAPTER ONE

INTRODUCTION

1.0   BACKGROUND OF THE STUDY

Increasingly in the contemporary organization, human resourcing strategies are based on three premises: People-first High-performance High-commitment Armstrong (2012) suggested that people-first focus is a pre-cursor to winning commitment and mobilising the workforce in executing corporate strategy. Success in a highly competitive, global marketplace demands high commitment but also high performance, and organisations are increasingly focusing on developing such a culture as a core part of their employment practice. Armstrong believes that people is the fulcrum upon which organisations rest.

One of the most important, complex and problematic issues in managing human resources in any organisation is reward management. According to Banjoko (1996) hardly is any issue more relevant and crucial to an employee than his financial and non-financial remuneration, and scarcely has any matter led to strained labour and management relations or lead to strike action much more than wage - related issues as suggested by Fajana (2006). Considering the trends of great disparity between one's expenditures and the income accruing into ones pocket due to the increasing inflation in our economy, it is therefore proper to say that reward management is a matter that is closest to the heart of every employee and their employers. It is a common saying that man does not live by bread alone yet he cannot live without it.In today’s competitive and global workplace, one of the strategies that successful companies use in having the ability to attract many qualified candidates, retain top talent, and maintain a highly motivated workforce is the use of rewards.

Rewards can be used to keep the organisation and the attractiveness of the job itself and proper reward management in of an organisation determines how job applicants will romance with such organisation. The organisation reward policy has an external influence on the source of labour supply. Armstrong (2007) defined Reward management as a system that deals with the strategies, policies and processes required to ensure that the contribution of people to the organization is recognised by both financial and non-financial means. It is about the design, implementation and maintenance of reward systems (reward processes, practices and procedures), which aim to meet the needs of both the organization and its stakeholders.

The overall objective is to reward people fairly, equitably and consistently in accordance with their value to the organization in order to further the achievement of the organization's strategic goals. Reward management is not just about pay and employee benefits. It is equally concerned with non-financial rewards such as recognition, learning and development opportunities and increased job responsibility is the process of ensuring that people are rewarded fairly for the work they do and for contributing to the achievement of the organization's purpose and aims. Reward management provides answers to two fundamental questions:

1) What do we value?

2) What are we prepared to pay for? 

All organisations face various degrees of competition in variety of labour markets. Supply and demand conditions in these markets require that organisations offer rewards that are competitive enough to attract a sufficient number of competent job applicants. In essence, for the organization to be effective, it must be able to structure a reward policy that will match the desired reward of the employee. Consequently, part of the challenges face by organisations is ensuring that their employees are highly motivated and committed and in this regard there are techniques and strategies employers put in place to motivate employees in order to improve job performance and guaranty their continuous commitment to reward good work Khan et al (2010).

​Over the years, the management of reward systems have been one challenging area of concern to both industry practitioners and scholars. This is because apart from its potential in motivating employees to spectacular performances, it has proved to be a veritable tool to ensuring industrial harmony, job satisfaction Raza et al, (2011) and organizational commitment if used appropriately Oluseyi & Ayo (2009). Equally challenging is the identification of the most suitable reward and to implement it in such a way that benefit all stakeholders in the organization. Thus, it is important to look at reward systems, view the alternatives available and understand them. According to Robbins & Coulter (2003) the focus is on four important components:Type of rewards Reward norms Distribution criteria, and Desired outcomes. Therefore this research work will serve as a veritable tool in enlightening on non-monetary motivation and the focus is on how non-monetary reward systems are used to motivate public sector employees to improve their job performance and remain committed to organisational goals. Non-financial rewards focus on the needs most people have, although to different degrees, such as achievement, recognition, responsibility, influence and personal growth.

Non-monetary or non-financial rewards do not involve direct payment of cash and they can be tangible or intangible Adeyinka et al (2007). Some other examples of this kind of rewards are, encouraging the employees by providing them with autonomy in their job and participation in decision making, assigning challenging duties, improving working conditions, recognizing good work through small gifts, letters of appreciation, plagues, tickets to restaurant etc., providing some services for the employees, organizing social activities in the work place, etc. (Robbins and Coulter, 2003)

Non-monetary rewards generally motivate employees because they recognize the employees’ intrinsic needs. These are the needs that have to be satisfied on a long-term basis because they come from within the employee and tend to increase their willingness to be identified with organizational goals and objectives irrespective of unfavourable conditions. On the other hand, organizational commitment refers to a strong desire to remain a member of a particular organization, a willingness to exert high levels of efforts on behalf of the organization and a define belief in and acceptability of the values and goals of the organization Adeyinka et al (2007). From the above, it is emphasized that the need for recognition, self-respect, growth, meaningful work, social activities, teamwork, participation in decision making are important non-monetary rewards in boosting the employees’ morale and increasing their commitments to their organisations.

1.2    Statement of the Problem

Nigerian Security Printing and Minting Services (NSPMS) like other public enterprise is constraint with the problem of using non-performance based element like salaries to compensate its staff as against performance-related pay structure which has hampered productivity because it does not make worker put in extra effort in their work. This is so because their compensation is not based on incentive schemes that elicit additional effort of workers sequel to unfriendly government legislation on wages clause and bureaucratic inefficiency. Hence the need to examine the effect non-financial incentive on staff productivity in Nigeria Nigerian Printing and Minting Services Lagos.

In the systematic study of organisation, it is accepted that manpower is one of the most important assets of an organisation because things are getting done through employees. In other words, the success of an organization in realizing its objectives heavily depends on the performance of its employees. Therefore, it is important to focus on the factors that militates against the commitment and performance of the employees. Performance is considered to be related with the concepts of ability, opportunity and motivation Ivancevich & Matteson (1988) Moreover, it is apparent that in the absence of willingness to perform; capacity and opportunity will not generate the desired results. If the situation is to be explained by a proverb; you can take the horse to the water but you cannot make it drink. All organisations, whether public or private, need motivated employees to be effective and efficient in their functioning, in addition to the other factors. Employees who are motivated to work energetically and creatively toward the accomplishment of organisational goals are one of the most important inputs to organisational success. Consequently, the challenge for organisations is to ensure that their employees are highly motivated.

Naturally every employee love to be motivated as they bear in mind that this will drive extra input to their work but to the employers, when the issue is motivation, one of the things that comes to their mind is giving extra Non-Financial Incentives to indulge the employees to perform and get more commitments which should translate to better performance at workplace. Motivation refers to any means both financial and non -financial that makes an employee desire to do better, try harder and expend more energy. With regard to monetary Non-Financial Incentives, it can be argued that private organizations have more financial sources to motivate their employees than the public organizations. It is known that public employees’ payment levels in Nigeria are generally low compared to private sector employees. Moreover, while many private organisations have monetary Non-Financial Incentives such as bonuses, commissions, cash rewards etc, it is quite challenging for the public sector to provide such Non-Financial Incentives in adequate levels in a weak national economy. As a result, it is important to look for any possible alternative means that can be used to motivate employees in the public sector.

In line with this purpose, this research is meant to focus on the use of non-monetary Non-Financial Incentives as a motivational tool and their effectiveness in the motivation of public sector employees’. Non-monetary or non-cash Non-Financial Incentives do not involve direct payment of cash and they can be tangible or intangible. Some examples of this kind of Non-Financial Incentives are; encouraging the employees by providing them with autonomy in their job and participation in decision making, assigning challenging duties, improving working conditions, recognizing good work through small gifts, letters of appreciation, plagues, tickets to restaurant etc., providing some services for the employees, organising social activities in the work place, etc.

Starting with Elton Mayo and Human Relations School, it was emphasised that the need for recognition, self-respect, growth, meaningful work, social activities are as important as monetary Non-Financial Incentives in increasing the employees’ morale and motivation. There are many contemporary research studies supporting the effectiveness of non-monetary Non-Financial Incentives as a motivating tool in the private sector organizations. However, there is hardly any study regarding its use in public sector organisations. This problem would be faced as this work will shed light on this issue by exploring the motivating potential of non-monetary Non-Financial Incentives in the public sector of Nigeria.

However, in a bid to successfully motivate their employees, public sector managers are often faced with the difficulty of determining the appropriate and the sufficient level of non-monetary motivating strategies to use given the dynamic nature of people’s behaviour and their changing needs, management is bordered by the challenge of not only having to determine the right kind of non-financial motivational rewards but how to understand the perception of the employee concerned and what value he or she would likely attach to the adopted strategy in order to enhance greater level of commitment.

Furthermore, while many researches have shown that rewards influence and motivate employees commitment to organisations, empirical literature does not offer guidance on how organisational commitments are affected by the type of non-monetary reward offered to employees and what effect has such Non-Financial Incentives on public sector employees who by the nature of the public service sector do not have much accesses to source of monetary rewards. Given these challenges, this study attempts to empirically examine the relationship between the use of non-reward monetary rewards and organizational commitment.

1.3   Objectives of the Study

The central objectives of this study are to examine the effect of non-financial incentive on staff productivity in Nigerian Security Printing and Minting Company
Specifically the study is set out to:

Examine the non-monetary rewards used by the organisation in motivating employee towards increased organizational commitment.

Examine the relationship between the measures of non-financial rewards and dimensions of organizational commitment.

Determine the extent to which each measure of non-monetary rewards contributes towards predicting organizational commitment.

To determine if there is any significant difference among employees on their perception of non-monetary rewards.

1.4    Relevant Research Questions

The following question serves as guides to the research study:

Is there any significant relationship between non-monetary rewards and dimensions of organizational commitment?

What is the relative contribution of individual measures of non-monetary rewards towards predicting organizational commitment?

Is there any significant difference among employees on their perception of non-monetary rewards?

Is there any significant difference among employees on dimensions oforganizational commitment?

1.5. Relevant Research Hypothesis

H0: There is no significant relationship between non-monetary rewards and organizational commitment.

H0: The individual measures of non-monetary rewards do not significantly predict organizational commitment.

H0: There is no significant difference among employees on perception of non-monetary rewards.

H0: There is no significant difference among employees on dimensions of organizational commitment.

1.6. The significance of study

Latham and Locke (1979) noted that: 'Money is obviously the primary incentive' but they went on to say that 'money alone is not enough to motivate high performance Money may be an important factor in attracting and retaining people (the sorting effect). It can produce satisfaction, but this may be short-lived. And if the principles of distributive and procedural justice are not followed, it can cause lasting dissatisfaction. It can be said that money will motivate some of the people all of the time and, perhaps, all of the people some of the time. But it cannot be relied on to motivate all of the people all of the time. To rely on it as the sole motivator is misguided. Money has to be reinforced by non-financial rewards, especially those that provide intrinsic motivation.

It was asserted by Pink (2009) that intrinsic rewards are an underutilized source for motivating employees, especially those performing complex or creative tasks. He refers to evidence that intrinsic rewards work and that financial Non-Financial Incentives limit creativity and can undermine it by interfering with our natural tendencies to direct our own lives to learn and create new things. He believes that financial Non-Financial Incentives work best for people in routine jobs which offer few intrinsic rewards to motivate their holders. When motivation is achieved by intrinsic rewards it can have a more powerful and longer-lasting effect on people, and financial and non-financial rewards can be mutually reinforcing. Reward systems should therefore be designed and managed in such a way as to provide the best mix of all kinds of motivators according to the needs of the organization and its members.

According to Armstrong (2010) Reward management is an area in HRM that deals with the strategies, policies and processes required to ensure that the value of people and the contribution they make to achieving organizational, departmental and team goals is recognized and rewarded. It is about the design, implementation and maintenance of reward systems (interrelated reward processes, practices and procedures) which aim to satisfy the needs of both the organization and its stakeholders and to operate fairly, equitably and consistently. But it should be emphasized that reward management is not just about pay and employee benefits. It is equally concerned with non-financial rewards such as recognition, learning and development opportunities and increased job responsibility.

1.7. Scope of the Study

The study concentrates on the theories and models of motivation; incentive, non-monetary rewards system and organizational commitment but makes significant emphasis on non-monetary or intrinsic motivational theories. In terms of research coverage, this study will be limited to a particular institution in the public sector of Nigeria. The study is focused on the effects of non-monetary incentive on organizational commitments among junior and senior public officers of the Nigerian Security Printing and Minting Company, Lagos.  Investigation shall cut across all departments and units within the organization and shall include both male and female employees.  It will help in understanding the importance of reward and how it can be successfully applied across organizations especially those that are effectively using Non-Financial Incentives to improve performance.

1.8    Definition of Terms

Organisational commitment:This is referred to the extent by which organizational members identifies with the goals and activities of the organization and their willingness to make sacrifices for its success even in the face of difficulties.

Non-Monetary Incentive:This is a means of encouraging employees in boosting their morale without any form of cash payment to employees. Examples are periodic promotion, training and development, recognition of achievement, personal growth and responsibility.

Motivation:This is defined as the process of arousing, directing and maintaining behaviour towards a goal. It is also the stimulation of people to action to accomplish desired goals.

Intrinsic Rewards:These are the rewards that are directly associated with the work itself. They are derived by the work/employee or individual from other sources in the organisation including co-workers, informal groups and other formal organisations.

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