Effect of Non-Monetary Incentive on Productivity of Commercial Bank in Lagos

EFFECT OF NON-MONETARY INCENTIVE ON PRODUCTIVITY OF COMMERCIAL BANK IN LAGOS

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CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

In today’s workplace, companies and managements are increasingly using non-monetary rewards as an incentive to motivate and influence employee performance, as well as to meet the financial and productivity objectives of the company. Non-monetary rewards are assuming greater significance in the present tight economic scenario, characterized by limited budgets for performance bonuses and incentives (Allen and Helms, 2002).

Monetary incentives include salary increases, profit sharing, stock options and warrants, project bonuses, festival and/or performance-linked scheduled bonuses, additional paid vacation time. As compared to monetary rewards, non-monetary incentives reward employees for excellent job performance through opportunities (Kepner, 2001).

Non-monetary incentives and rewards offer employee autonomy and personal recognition and include pleasant work environment, flexible work hours, training, new and challenging opportunities, and also mementos, trophies etc. These incentives are sometimes called internal rewards, as they meet the employees’ internal needs such as, recognition, self-esteem and fulfillment, thereby influencing employee motivation (Ballentine, 2003).

Until the recent years, employers essentially used monetary incentives to maintain a positive motivational environment for attracting and retaining employees [Kepner, 2001, Ballentine, 2003]. However as research in organizational and industrial psychology advanced, the importance of non-monetary rewards to recruit and retain resourceful workforce has been established.

It is reported that employers accomplish the same level of performance improvement with cash and non-monetary awards and that the awards hold approximately the same perceived value.

Effect of Reward Programs on Productivity and Turnover Management practitioners and researchers have established beyond doubt the positive, catalytic effect of rewards “monetary as well as non-monetary”on employee and business performance and productivity. ˜Reward’ implies offering recognition of and incentives to employees, individually and as members of teams, for their commendable performance and acknowledging their contributions to the organization’s mission.

There are many ways to acknowledge and reward excellent performance, from a genuine Thank You! note to establishing formal cash incentive and recognition award programs and granting the premier honors. Rewards are considered to improve employee productivity by around 20-30 percent. In order that organizations achieve the desired goals, reward systems need to be closely aligned to organizational strategies (Allen and Helms 2002).

Companies and organizations that use a comprehensive and strategic reward programs are able to retain the talented employees with themselves, thereby enhancing the productivity to meet financial objectives and long term business success. It may be concluded that non-monetary rewards are equally important than monetary rewards in motivating employees for enhanced performance and gaining competitive advantage for continued success (Troberg and De Meyer, 1985).

1.2 Statement of the Problem

Despite the increasing tendency of companies to use non-monetary rewards only very few companies understand the impact of these reward programs on the performance of the companies towards meeting financial and business objectives. This could be due to the fact that non-financial measures such as quality of product and services, reliability in delivery etc, which often form the basis of rewards and recognition, have not received the management attention they deserve considering their importance for financial success of businesses.

Human being as an individual has unique characteristic which distinct from others. Therefore in an organization that has over one thousand workers, it means there would be different kind of characteristics. Employee reward incentive as a psychology concept calls for a thorough understanding of employee’s need which enables the management to blend with the corporate need in order to have an equitable mix that enhances the realization of the overall objectives of the organization and employees.

On a closer look at most organization, the essential intrinsic factors have not been properly addressed by contemporary organization, no wonder there are high rate of incessant strike witnessed by the organizations over the year. The problem therefore is how to maintain an equitable reward system of fulfilling the aspiration of employees in such a way that an equilibrium social interaction is maintained.

1.3 Aim and Objectives

Specifically, the objectives of the study are stated below as follows:

To measure the effect of non-monetary incentives on employees productivity
To examine the benefits of non-monetary incentives on UBA employees.
To assess the effect of reward system on organizational performance.
To examine the relationship between reward system and employees’ productivity.

1.4 Relevant Research Questions

Will non-monetary incentives enhance employees’ productivity?
Will it motivate employees to work harder?
Will it enhance their job confidence and self imag?
Will it improve the relationship between reward system and employees’ productivity?

1.5 Relevant Research Hypotheses

In carrying out this research work these theoretical statements are made to serve as a direction on which the work will premised.

H_o: Non-monetary incentive does not have any effect on employees’ productivity.

H₁: Non-monetary incentive does have positive effect on employees’ productivity.

H_o: There is no relationship between reward system and employees’ performance.

H₁: There is relationship between reward system and employees’ performance.

1.6 Significance of the Study

It is hoped that the findings and recommendations of the study will be of great benefit through the following ways:

The study helps students to understand the relevance of non-monetary incentives on productivity and job satisfaction by exposing them to the various theories of motivational incentives on employees’ performance.

Practically it assists practicing manager in understanding the impact of incentives on employee performance, hence enabling these elements to be incorporated into policy and objectives of the organization.

The study gives an organization an in-depth insight into benefit of non-monetary incentive and it exponential effect on productivity.

1.7 Scope of the Study

The research work will evaluate the effect of non-monetary incentive on productivity of commercial bank in Lagos. United Bank for Africa, Marina, Lagos, shall be taken. And the study will be structured into five chapters.

The study as perceived might face some logistic challenges in term of the time and the costs involved in carrying out the research, but nevertheless, it would strive to accomplish its aims and purpose.

1.8 Definition of Terms

Incentive: this is a conscious use of rewards and penalties to encourage good performance in the utility sector.

Non-monetary: Transactions that do not result in a transfer of funds between accounts. Nonmonetary transactions can be something as simple as a change of address or an appreciation note

Remuneration: This is the total compensation that an employee receives in exchange for the services rendered to the employer.

Impact: this is the action or process of producing effects on the actions, behavior, opinions, of another or others.

Employee: A person who is hired to provide services to a company on a regular basis in exchange for compensation and who does not provide these services as part of an independent business.

Performance: The accomplishment of a given task measured against preset known standards of accuracy, completeness, cost, and speed.

Attitude: An attitude is an expression of favor or disfavor toward a person, place, thing, or event (the attitude object).

Motivation: this is influences a person to act towards certain goals and behaviors in order to achieve what they desire.

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