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CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO THE STUDY

The exponents of scientific management Taylor (1911), and his followers – maintained that the basic motive of man at work was economic. Money was seen as a principal motivation instrument. While the motivating power of money and material rewards could not be ignored, emphasis later shifted from economic man to social man. (Ezeani. 2005:135). This was the outcome of the Hawthorne experiment conducted by Elton Mayo at the Western Electric Company. The experiment drew attention to the effects of group membership and interaction on production, attitude and job satisfaction. The study gave rise to human relations movement which maintained that man does not just work for money, that other personal and interpersonal considerations, such as personal worth, recognition, friendship, social pressures from group members and status are powerful in determining production and level of job satisfaction. (Osuji,1985:91). In other words, it has become increasingly clear that beyond economic needs, man has some social-psychological needs that should be stratified in order to elicit behaviour towards increased productivity. While the traditional theories of management as exemplified by the Scientific Management Movement, stress the motivating power of money and material rewards, the classical theories take note of the latter, but, lay greater emphasis on satisfying the psychological needs of the workers.

Wage incentives and fringe benefits are motivational factors. According to Croft, (1996:46), motivation can be defined as “impulses that stem from within a person and lead him to act in ways that will satisfy those impulses” In other words, the concept, motivation, implies that there is some driving force within individuals, which drives to attempt to achieve a goal or objective, in order to satisfy their need or needs. (Croft, 1996:46). Therefore, to say that managers motivate their employees is to say that they do those things which they hope will satisfy those drives and desires and induce the subordinates to act in a desired manner. (Koontz et al, 1983:632).

Alugbuo (1981:13) asserts that people work to get reward for their efforts. The exchange of labour for financial rewards is the heart of pay process. People do not put forward their best unless they get reward for their work, based on what the current social and economic climate dictates as fair.

Ubeku (1975:301) stated that, the payment of good salaries and wages is fundamental to the increase in the prerequisite for effective performance. In order to motivate people to put maximum efforts, it is essential that their various needs, especially as it concerns their wages and other fringe benefits, be satisfied as far as practicable. In Nigeria, the salary structure falls below the level to maintain efficiency of workers. The salary structure is not in line with the economic realities.

According to Papola (1970:79): “a just minimum wage to maintain not only the life but the health and the vigour of the working people is a law of necessity and knows no other law”. The single most important obligation owed by an employer to an employee is to pay his or her wages. Typically, wages, salaries and other related costs (pensions, etc.) make up about 60 percent of the total costs of running a major business. Employers, therefore have more than a passing interest in this aspect of their operations. There are other important influences on these activity-trade unions negotiating a higher price for labour, competitors seeking to attract the best staff and the state seeking to impose minimum standards of working conditions for all employees (Cole, 2005:30).

A benefit is an additional compensation given to employees as a reward for organization membership. Because of fringe benefits cost to employers, it is important to indicate the scope and the overall costs associated with providing such benefits to employees.

According to Zolthistsch et al (1970:136), it’s all financial and non-financial payments to employees that are over and above the agreed upon basic salary rate due to the employee for the minimum result expected on the job. Armstrong et al., (1970:36) also said that “fringe benefits when combined with the basic pay of an individual forms that total remuneration which is the entire package of pay and benefits received by each employee, their value to an individual in more accurate basis for comparison with outside market rates than straight salary”.

According to Sunken (2008:20) “Motivation and productivity are twin concepts in organizational development. First, motivation works as the means toward attaining productivity as an end, secondly, motivation is the best cause to reach productivity as favorable effects and lastly, motivation is the stimulus to trigger productivity as a response”. People need motivation just as pieces of equipment need fuel and operators. This is highly demanded to ensure that they are always at their optimum working condition. In turn, this will absolutely lead to optimum productivity. (Sunken, 2008:20).

The necessity for managers and administrators to motivate their employees cannot be over-emphasized. There is no doubt that the ability of any organized enterprise and, indeed any group, to achieve its goals depends to a large extent on the motivation of its employees. Indeed, no manager or administrator can succeed in achieving optimal productivity for his or her enterprise without knowing what motivates the people. (Ezeani 2005:136). As Koontz et al (1983:631) pointed out, all those who are responsible for the management of any organization most build into the entire system factors that will induce people to contribute as effectively and efficiently as possible. A manager does this by building into every possible aspect of the organizational climate those things which will cause people to act in desired ways”.

According to Onah (2008:279), employee motivation represents one of the largest competitive reserves and a key element for increasing competitive advantage of any organization. Motivation is a central force and a strong factor in employee performance equation. It is a set of force that leads people to act in particular ways. Motivation represents the forces within a person that affect his or her direction, intensity, and persistence of voluntary behavior. (Moorhead and Griffin, 1995:78).

According to Pinder, (1984), direction refers to the fact that motivation is goal- oriented, not random. People are motivated to arrive to work on time, finish a project a few hours early, or aim for many other targets. Intensity is the amount of efforts allocated to the goal. For example, two employees may be motivated to finish their job a few hours early (direction), but only one of them puts forth enough effort (intensity) to achieve this goal. Motivation also involves varying levels of persistence, which is continuing the efforts for certain amount of time. Moorhead and Griffin (1995) further assert that the starting point in a motivational process is a need. Motivated behavior usually begins when an individual experiences a deficiency in one or more important needs. When a worker believes that equity does not prevail; he is bound to withhold a measure of his productivity in order to restore equity. To encourage higher productivity, it is essential that a system of reward be designed that attempts to relate hard-work to reward.

1.2 STATEMENT OF THE PROBLEM

Currently, the poor performance, lack of dedication and commitment of workers have been a matter of concern and debate among government officials, private organization and the general public. How to improve the productivity of employees has been the topic of many seminars, symposia and conferences? The reasons for this trend, as well as appropriate avenue for the apportionment of blame, have formed the basis for the controversy. Many reforms in the public service such as work ethics, transparency, dedication and commitment to duties are some of the ways of trying to improve productivity of workers in the country.

According to Nwachukwu, (1988:29) Nigerian people have always come with the impression that generally, Nigerian workers are lazy, sleepy, reluctant to act, unconcerned and deceitful in their approach. These workers are said to lack the zeal, the briskness and the momentum of hardworking people and generally, they dislike hearing anybody talk about efficiency, dedication, competence, determination and productivity, of which characterize people   in a production oriented society. In production oriented societies, the employers do everything humanly possible to retain their workforce and also recruit high quality staff. The employers strive to boost the morale of their employees with a view to eliciting positive attitude towards work, while the workers respond by fashioning ways of making their organizations successful. In Nigeria, there is inadequate stimulus to attract such responses, so the workers are still performing below average, moral still down and efficiency still nil.

The problem of this study therefore, focuses on the low productivity in Enugu State Local Government Service Commission, in the face of irregular and inadequate salaries and other fringe benefits, between 1999 and 2007. The problem can best be described with some pertinent questions.

1. Does the issue of irregular salaries/wages persist in Enugu State local government service commission?

2. Does the issue of inadequate salaries/wage persist in Enugu State local government service commission?

3. Are the levels of fringe benefits in Enugu state local government service commission affect the moral of workers?

4. What can be done to enhance worker productivity in the commission?

5. Are the salaries and other fringe benefits determined by collective bargaining; the trade union and the management in the commission?

6. What type of incentives and fringe benefits (financial/non-financial) boost the morale of workers of Enugu state local government service commission?

1.3 OBJECTIVES OF THE STUDY

The broad objective of the study is to find out the effects of wage incentives and fringe benefits on the productivity of Nigerian workers: a study of Enugu state local government service commission (1999-2007).

The specific objectives are:

i. Identify why the issue of irregular salaries/wages persists in organizations especially in Enugu state local government service commission.

ii. Identify why the issue of inadequate salaries/wages persists in organizations especially in Enugu state local government service commission.

iii. Find out if the level of fringe benefits paid to workers in the commission affect the morale of workers.

iv. To find out the type of incentives that motivates the workers in the commission and also the relationship between these incentives and worker’s productivity.

v. Find out whether wages and other fringe benefits are determined by collective bargaining.

 vi. To find out the whether financial or non-financial incentives boost the morale of the workers.

1.3 SIGNIFICANCE OF THE STUDY

Productivity improvement is significant because it has a bearing on the standard of living, the wages the employees can earn and the profit the organization can make. Productivity affects costs, prices, output, employments, and investments and thus plays a part in business fluctuation and in the rise and decline of industries. Understanding the effects of wage incentives and fringe benefits on productivity in the context of any organization helps in improving its efficiency and effectiveness. Therefore, in order to achieve high productivity, those who are instrumental to the high level of productivity must be taken care of, their needs and welfare should be paid adequately and promptly. The employees should have their own share of the productivity dividends. Many researches have been conducted on the above subject matter on both private and public organizations but none has focused on Enugu state local government service commission. This study however, seeks to fill that vacuum, especially considering the fact that even though there are basic organizational principles, their applicability varies from one organization to another. This work is expected to make some meaningful impact when applied to job situations in Enugu state local government service commission and many other organizations having similar problems. The research will equally discuss the means through which wage incentives and fringe benefits can be used as practical measures to improve productivity. It will serve as a practical operating guide for those who wish to introduce productivity improvement techniques through incentive systems in their organizations. Empirically, the research will serve as a blue print for organizational personnel who are experiencing decline in productivity and the method to prevent future occurrences. It will be of great help at any organizational level and to those who are responsible for the management of a work place-the executives, managers, supervisors, public administrators, government officials and other human resource managers. Finally, it will serve as a theoretical base and also add to the existing body of knowledge on the effects of wage incentives and fringe benefits on productivity. It will serve as a resource material in business schools, management programmes, training sessions, development seminars and conferences on how best to motivate workers and improve productivity.

1.4 SCOPE AND LIMITATIONS OF THE STUDY

The research work will analyze the activities of Enugu state local government service commission in relation to wage incentives and fringe benefits given to the workers of the commission. It has not been possible to generalize all the operational areas of the activities of the commission but to limit the boundary of the study to the policies regarding wage incentives and fringe benefits as it affects the seventeen local government areas of Enugu state. The study will therefore concentrate on the effects of wage incentives and other fringe benefits on the productivity of workers of Enugu state local government service commission between 1999 and 2007. This work has some limiting factors; there is no standard library in the commission to source information on the establishment, policies and overall programs and activities of the commission. Secondly, there is no database from where other vital information about the commission can be assessed. Some difficulties were also encountered since we are using survey research whose information is dependent on opinions, attitudes, values and preferences of the people. The possibilities of biased answers may not be completely ruled out because the respondents could be apprehensive that their responses could negatively affect their job security. Furthermore, the resentment by some public officers who are also apprehensive in making vital information available to the researcher on the excuse that information has been classified as “secret”. These limitations were surmounted by visiting some local government headquarters where I was able to collect useful information and document on the administration, functions, and achievements, regulatory and supervisory roles of the local government service commission in Enugu state. I also collected a letter from the head of department, public administration and local government, University of Nigeria, Nsukka, ensuring the commission that my research is merely an academic exercise and the information collected will be treated with utmost secrecy.

1.5  OPERATIONALIZATION OF KEY CONCEPTS

For the purpose of this research, some key concepts were operationalized for better understanding of the work.

WAGES: Wages are the total earrings a worker receives for the performance of services within a period of time. They are equal to the product of an hourly rate, times the number of pieces plus houses, premiums and fringe benefits. Wages means any economic compensation paid by the employer under some contract to his workers for the services rendered by them.

SALARY: Salary refers to the weekly or monthly rates to clerical, administrative and professional employees. Salary is mostly determined by mutual agreement between the individual and the employer. They are sometimes determined or fixed by the government.

INCENTIVE: An incentive scheme is a plan or programs to motivate individuals or group performance. An incentive programme is most frequently built on monetary, but may also include a variety of non-monetary reward or prizes.

FRINGE BENEFITS: all financial and non-financial payments to employees that are over and above the agreed upon basic salary rate due to the employee for the minimum results expected on the job. A benefit is an additional compensation given to employees as a reward for organizational membership. These are wide of variety of items which organizations typically pay to their workers.

COLLECTIVE BARGAINING: It is a method through which the wage rates and other employment conditions are determined. It also establishes a set of rules guiding relations between the parties during the life of collective agreement, as well as providing for an orderly method of settling grievances that are bound to occur from time to time.

MOTIVATION: It is a set of forces that lead people to act in particular ways. Motivation represents the forces within a person that affect his or her direction, intensity, and persistence of voluntary behaviour.

EMPLOYEES: By employees, we mean workers of Enugu state local government service commission. These include both staff and line workers of the commission.

MEAGRE: This means deficient in amount or quality. It implies that in the commission, workers’ wages/salaries are deficient in amount. It is not adequate enough to meet up their immediate needs.

IREGULAR PAYMENTS: Salaries and allowances of workers are said to be irregular when they not paid at the end of every month as stipulated by law. Salaries that are consistently paid at the end of every month is regarded as regular, while it is regarded as irregular when it is once in two, three or even four months.

INADEQUATE SALARIES/WAGES: Salaries/wage is said to be inadequate when it fails to meet the basic necessities of life-food, shelter, clothing, etc. and also not in tune with the economic realities of the time.

MORALE: This emotional or mental condition with respect to cheerfulness, confidence, zeal etc. Emotional and mental conditions of employees needed be boosted if high productivity is to be achieved. Employers are usually faced with the challenges of boosting workers’ morale. Unhappy, disinterested employees can lead to poor productivity.

FINANCIAL INCENTIVES: These are incentives paid to workers as money or physical cash. This is usually added to the basic salary at the end of the month as a total emolument for the month.

NON-FINANCIAL INCENTIVES: These are usually given to workers in kind or in materials like radio, television, motorcycles, cars, health facilities, free education to their children andwards.