CHAPTER ONE

INTRODUCTION

 Introduction

 This study was an investigation of the effect of financial incentives on the performance of teachers’ in public secondary schools of Kwara state. In Uganda’s public secondary schools, there is a gap in knowledge on the standards employed by the school managers on how teachers are rewarded. This chapter explains the historical, theoretical, conceptual and contextual backgrounds of the study, objectives, research questions, scope and the significance of the study.

1.1              BACKGROUND TO THE STUDY

 1.1.1          Historical Background 

Today’s reality in the global world is that people influence important aspects of organizational performance in a multitude of ways. People conceive and implement the organizational strategy, while the mix of people and systems mostly determine an organization’s capabilities. Competencies are required to execute the strategy, and these competencies are primarily a function of the skills and knowledge of an organization’s human capital. Therefore, if an organization is to treat its employees as its most important asset, it has to be knowledgeable about what it is that motivates people to reach their full potential (Lawler, 2003). It is not easy though to know all the things that motivate people in life or at work but an effort has to be made.

Traditionally, individual performance in organizations has centered on the evaluation of performance and the allocation of rewards. Organizations are starting to acknowledge planning and enabling individual performance have a critical effect on organizational performance. Strategic success for the organization lies in focusing attention at all levels on key business imperatives, which can be achieved. The planning process is one of the primary elements of the total reward system. It is the process that impacts performance between pay checks and provides the basis on which individuals results are measured. It is the bonding agent in programmes that direct rewards to true performance. The primary focus of reward and recognition programs is how organizations define their reward schemes and communicate this in a manner that employees clearly understand the link between reward and performance (Flynn, 1998). Rewards and recognition programmes create environments especially where jobs provide intrinsic- rewards good feelings that people get from doing the work itself. Yet in many organizations, recognition is reserved for an elite few and rewards are defined solely in terms of wages and salaries. Effective recognition enhances employee motivation and increases employee productivity all of which contribute to improved organizational performance (Deeprose,1994). Baron (1983), argues that there is a close relationship between rewards and job performance. He notes that if successful performance does in fact lead to organizational rewards, such performance could be a motivational factor for employees. Under such conditions, they can see that their efforts result in rewards. Consequently, they may be motivated to exert higher levels of effort on the job.

The notion of rewarding employees for “a job well done” has existed since the 19th century when piece-work systems were first implemented (Schiller, 1996, 89). Piece-work systems simply involve plans which directly associate the employee’s level of pay to their output levels. From these piece-work systems evolved the traditional merit program. The traditional merit program is based on performance appraisals which employers evaluate to determine whether or not the employee is deserving of an increase in pay. This type of merit program could be seen within both the public and private sectors organizations.

MacLean (1990) argues that in general, employers were losing money with the traditional merit programs used during this period. Under the traditional system, a “meritorious” employee received a permanent pay increase that affected basic salary. If the performance of that employee declined, the agency lost money. Because both public and private employers began to lose faith in the traditional merit programs, they realized they “needed to develop new guidelines for assessing how well services were being delivered to citizens” (Brosz& Morgan, 1977: 7) thus justifying the emergence of financial incentives. So merit programs lost their appeal in the 1990’s (Lisa, 1997). Today many organizations and companies are implementing incentive programs, which recognize employee’s efforts and reward them accordingly in a multitude of ways. Incentive programs have been in existence since the beginning of the nineteenth century. Since then the idea of what an incentive program is for both the employer and the employee has changed. Incentive programs used to be simply a method of payment,meaning the   one makes. Today the definition of an incentive program has broadened to include not only a way of paying employees but a way of reducing costs for the employer, while at the same time rewarding the employee for making the extra effort.

In the last decades, a number of countries have adopted pay-for-performance strategies in order to modify the traditional salary scales. In the past, rewards generally referred to pay and for many years, rewards programs were viewed primarily as a necessary evil to attract and retain competent employees. Attitudes towards rewards programs, and awareness of their strategic value, are now changing. Increasingly, schools are also realizing that a properly designed and executed total rewards strategy can be a powerful driver of teachers’ performance (Owen 2003). An organization’s reward system is meant to provide and maintain appropriate types and levels of pay, benefits and other forms of rewards.

Performance-based reward systems have a long history in education, particularly in the United States of America (Owen, 2003). The reward system in an organization consists of its integrated policies, processes, and practices for rewarding its employees in accordance with their contribution, skills, competences and market worth, according to Harvey-Beavis (2003). This implies that performance- based reward corresponds closely with employees’ actual experiences. The distinguishing feature of a performance-based scheme is that it rewards or sanctions teachers based upon some form of performance evaluation (Chamberlin, et al. 2002). Distinctions in performance-based reward programs are found in the skills assessed and the rewards provided. Most individually-based programs have used pecuniary rewards for high levels of performance, usually defined in terms of student outcomes or teacher skills and knowledge. Today some analysts have proposed that intrinsic rewards, such as seeing students improve in performance, and increased feelings of well-being are better motivators of teachers.

Organizations in the world are recognizing the significant opportunity to improve the return on their human resources investment by aligning organization plans with business strategy and enhancing the value delivered to employees. This process is crucial to business success, and the ability of the organization to attract and retain top performers and critical-skill employees, in an increasingly competitive environment. Researchers have shown that managers can employ different strategies to reward employees, but that it is important that managers keep in mind that different strategies would have a different motivational effect on different people. To get optimum results from a motivational strategy, the manager has to realize and understand issues, which requires recognition of each individual’s unique values, beliefs and practices. Important to consider is that different motivation strategies may affect an employee in different ways at different points in time because conditions, needs and personal objectives are not static but in constant state of flux (Lawler, 2003).

1.1.2  THEORETICAL BACKGROUND 

This study is based on Adam Stacy’s Equity Theory of motivation and Victor Vroom’s Expectancy Theory. The Equity Theory states that employees expect fairness when being rewarded for the work done. The theory was developed from the Hertzberg’s job satisfaction theory and linked to the reward system by Adam Stacy. An important factor in employer’s motivation is whether individuals perceive the reward structure as being fair. The Equity theory essentially refers to an employee’s subjective judgment about the fairness of the reward she/he got in comparison with the inputs (efforts, time, education, and experience) when compared with others in the organization. The Equity theory of motivation concerns on the people’s perception and feelings on how they are treated as compared with others (Armstrong, 2001). The argument is that people work well in accordance to what they regard as fair. Employees consider whether management has treated them fairly, when they look at what they receive for the effort they have made. Maicibi (2003) agrees with this that employees expect rewards or outcomes to be broadly proportional to their effort. In this regard, Boddy and Patron (1998) give the formula below to illustrate the comparison.

Input (A) =Input (B) Reward (A) =Reward (B)

Employee A compares the ratio of his/her input to his/her reward to that of employee B. If he/she feels the ratios are similar, he/she is bound to be satisfied with the treatment received. If he/she feels inadequately treated, he or she is bound to be dissatisfied. This dissatisfaction is likely to breed tension and frustration in such employees and their consequent performance may be negatively affected and this may perhaps further lower rewards (Boddy& Patron 1998). Much as Employees must be rewarded, employers’ perception towards financial incentives can depend on many factors such as politically rewarding someone because of his/her political affiliation, circumstantial instances like one being in the right place at the right time and be rewarded with a high office position, it can be gender sensitivity, strategic, just because someone teaches well mathematics so it is assumed that he can equally teach physics, it can be ethical, personal, such as one being rewarded because of the relationship he/she has with the head teacher. The factors can even be policy based in that some schools are led and not managed but stagnant because there is a management blockage or poor management. The reasons can vary or be a combination of all the above and many more (Maicibi, 2003).

On the other hand, the Expectancy theory helped the study to understand how individuals are drawn to make decisions as regards various behavioral alternatives and perceptual differences among people. It also suggests that motivation is based on how much one wants something and how likely he/she could get it (Bodden, 2008). This is because the motivational force of every individual is influenced by his or her expectancies, valances all of which depend on a personal way of perception. The formal framework of expectancy theory was developed by Victor Vroom (1964). This framework states basically that motivation plus effort leads to performance, which then leads to outcomes. According  to this theory, three conditions must be met for individuals to exhibit motivated behavior and these include: effort to performance expectancy must be greater than zero, performance to outcome expectancy must also be greater than zero, and that the sum of the valances for all relevant outcomes must be greater thanzero.

The Expectancy theory explains that in any given situation, the greater the number and variety of rewards that are available to the employees (teachers), the greater is the probability that extra effort will be exerted in attaining the set goals or targets in the hope of getting the desired rewards (Bodden,2008). Gerald Cole (2004) agrees with this and explains that Vroom focused especially on the factors that are involved in stimulating an individual to put an effort in doing something since this is the basis of motivation. The outcomes are the consequence of behavior .This theory is illustrated in figure 1 on the following page.

The above model developed by Vroom indicates the components of effort that can lead to relevant performance and the appropriate rewards. Vroom defines the anticipated satisfaction an individual hopes to get from the outcome or reward. According to Vroom, the three factors; Expectancy, Instrumentality and Valence combine to create a driving force which motivates an individual to put in effort and achieve a level of performance to be rewarded in the end.

1.1.3  CONCEPTUAL BACKGROUND

Zigon (1998) defines rewards as “something that increases the frequency of an employee action”. This definition points to an obvious desired outcome of rewards and recognition: to improve performance. Non-monetary recognition can be very motivating, helping to build feelings of confidence and satisfaction (Kelle,1999). Another important goal is increased employee retention. Jimenez (1999) reports on retention research identified consistent employee recognition as a key factor in retaining top-performing workers. To achieve desired goals, reward systems should be closely aligned to organizational strategies (Allen & Helms 2002). For example, a company focused on a product differentiation strategy could design their reward practices to foster innovation to provide unique products or services, while a company focused on a cost reduction strategy might focus on rewards for ideas to minimize or eliminate costs and employee stock awards to foster an on-going cost reduction emphasis. Zigon (1998) offers a variety of ways to reward desired performance and increase the likelihood of it happening again, and more frequently than it would have, without these types of interventions.

Zigon’s (1998) ideas give managers a lot of flexibility both to offer rewards at various cost levels and to find rewards that match what individual employees will find valuable. To be really effective, this takes time and effort on managers’ parts, to get to know different employees’ likes and dislikes. How effective is non-cash recognition? Various anecdotal evidence reports non- monetary recognition as an important factor in retaining excellent employees and for improving performance. A quick search of a news service data base points to articles extolling various perks such as an in-house chiropractor, spa gift certificates, days-off, fancy parties and the use of personal trainers. The givers of such perks see these rewards as a way to keep high performing employees in a shrinking job market; and certainly companies like Walt Disney World have documented the success of employee recognition programs (Lynch, 2003).

Non-monetary rewards can be part of comprehensive performance improvement strategy. The type of recognition employees appreciate most is to be recognized by people they work directly for. In fact, 78% of employees indicated that it was very or extremely important to be recognized by their managers when they do good work (Nelson, 2004). The number one choice for recognition is sincere praise given in a timely manner with specific examples. Allen and Helms’ (2002) research confirmed the importance of regular expressions of appreciation by managers and leaders to encourage behavior of employees to reach strategic goals; and this was true for each of the strategies they examined. Reward system is the degree to which reward allocations are based on employee performance in contrast seniority, favoritism or any other non- performance criterion. Jacob (2005) citing Van der post et al. (1997) reported that the organization’s reward system should be perceived by employees as reinforcing the notion that most employees are good performers and there should be a linkage between reward and performance.

The definition of rewards encompasses the overall value proposition that the employer offers to the employee according to Armstrong (2001). It is a total package that includes compensation (Comprising of base pay, short-term incentives and long-term incentives), benefits (including health, retirement and work/life benefits, which account for an increasing portion of the rewards package) and careers (including training and development, lateral moves, stretch assignments and career incentives). Other reward systems consist of financial rewards (fixed and variable pay) and employee benefits, which all together may comprise total remuneration. The system also incorporates non-financial rewards like recognition, praise, achievement, responsibility and professional growth, and in many cases, performance management processes (Armstrong, 2001). In general, employees perform more energetically when they feel strongly connected to and valued by the organization.

The quality of education depends on the teachers as reflected in the performance of their duties. Over time pupils’ academic performance in both internal and external examinations had been used to determine excellence in teachers and teaching (Ajao, 2001). Teachers have been shown to have an important influence on students’ academic achievement and they also play a crucial role in educational attainment because the teacher is ultimately responsible for translating policy into action and principles based on practice during interaction with the students (Afe, 2001). Both teaching and learning depends on teachers no wonder an effective teacher has been conceptualized as one who produces desired results in the course of his duty as a teacher (Uchefuna, 2001). Performance refers to the result of an activity according to Boddy (2008). Upon individuals’ results, there are three main models of performance-based reward programmes that are commonly found in education systems. The first model is ‘merit-pay’, which generally involves individual pecuniary awards based on student performance, and classroom observation, McCollum (2001). The second model is ‘knowledge and skill-based’ compensation, which generally involves individual pecuniary rewards for acquired qualifications and demonstrated knowledge and skills, which are believed to increase student performance, Odden (2002). Knowledge and skill-based pay differs from merit-pay because it provides clear guidelines on what is being evaluated (Odden&Kelley, 2002). The third model is school-based compensation, which generally involves group-based pecuniary rewards, typically based on student performance (Odden&Kelley, 2002). For purposes of this study, performance based reward will refer to what a teacher earns as a result of his/her performance despite his/her skillfulness, knowledge and the level of education

1.1.4 CONTEXTUAL BACKGROUND 

Employers in public secondary schools in Kwara have not put up any standard measure upon which employees are rewarded. Some employers have used pecuniary rewards for high levels of performance, usually defined in terms of student outcomes or teacher skills and knowledge (Chamberlin et al 2002). It has been evident in some schools that when students perform well, the concerned teachers in candidate classes are given some rewards which may not be the case with  other teachers who teach in other classes yet they also play a role in preparing these candidates in lower classes for the final exams.

Other individuals in private schools have also been rewarded on grounds of nepotism and other unclear grounds. It is upon such a background that some teachers have performed reluctantly while others continue to be promoted due to their pseudo performance. Employers have the opportunity to leverage the value of their total rewards program to provide solutions to all the challenges affecting teachers; this would increase their motivation and their performance. Some school employers realized that they could not merely mimic the rewards practices of other schools. A rewards strategy would be deliberately created to support school’s unique human capital strategy if increased performance of teachers were to be realized (Odden&Kelly, 2002).

However, this study was based on the assumption that employers’ attitudes towards performance rewards, determines their work performance, in other words motivates or de-motivates them. The value that the employers attach to the rewards that they give to their teachers, determines the teachers’ perception of these rewards and their overallperformance.

1.2          PROBLEM STATEMENT

There appears to be mounting concerns that unacceptably high proportions of teachers working in public secondary schools in Uganda are poorly motivated due to a combination of low morale and job satisfaction, poor incentives, and inadequate controls and other behavioral sanctions. Consequently, standards of professional conduct and performance are low and falling in many public secondary schools. Incentives for teachers in the public secondary schools in Kwara state to perform well are frequently weak due to ineffective incentives and sanctions. Very low pay forces large proportions of teachers to earn secondary income from private tutoring and other activities. What is expected from teachers (the ‘social contract’) is not pitched at a realistic level in many public secondary schools in Kwara state given material rewards, workloads, and work and living environments. In many secondary schools, teachers are being asked to take on more responsibilities without rewarding them. The work and living environments for many teachers are poor, which tends to lower self-esteem and is generallyde-motivating.

Employers use pecuniary rewards for high levels of performance in schools, usually defined in terms of student outcomes or teachers skills and knowledge as was observed by (Chamberlin et al. 2002), it is expected that without such rewards, teachers’ performance would be low. In spite of management of private schools’ efforts to reward the teachers for better services to students, the teachers seem not to exhibit signs of well rewarded workers. This has resulted into high labour turnover, teachers part timing as a means of topping up on the basic salary by teaching in two or more schools, late coming, lack of commitment to the job, dodging classes which consequently results into poor performance of teachers and hence students. There is no study that has so far been undertaken to establish the reasons why private secondary school owners in Kwara state usually have a negative attitude towards rewarding teachers for their work. This raises curiosity and hence the need to establish the effect of financial incentives on the performance of teachers in public secondary schools in Kwara state.

1.3          GENERAL OBJECTIVE

 The general objective of the study was to establish the effect of financial incentives on the performance of teachers in public secondary schools of Kwara state.

1.3.1    SPECIFIC OBJECTIVES 

The specific objectives were as follows:

1. To identify the types of financial incentives used in public secondary schools in Kwara state.
2. To establish the effect of financial incentives on the performance of teachers in public secondary schools in Kwara state.

1.4          RESEARCH QUESTIONS

 The study was guided by the following research questions:

1. What are the types of performance- based rewards systems used in public secondary schools in Kwara state?
2. What is the effect of performance -based reward systems on teachers’ performance in secondary schools in Kwara state?

1.5          SCOPE

 The study covered the period of between 2000–2008. This period was chosen by the researcher because it is when there has been a lot of mushrooming of public secondary schools in Uganda and Kwara state in particular. The research was conducted on the effect that performance based rewards have on the performance of teachers in public secondary schools in Kwara state. There were 157 respondents who participated in the study; these included: 132 teachers and 25 head teachers in 25 schools.

1.6         SIGNIFICANCE OF THE STUDY

 Organizationally, the study will serve as a reference material for public secondary schools in Uganda in general and Kwara state in particular and other stakeholders’ in the education sector. It can also be used by Government and other organizations to design future staff reward system strategies. Conceptually, this study has empirically verified the influence of the Financial incentives on the performance of teachers’ in public secondary schools. This forms a basis for subsequent research to explore other factors that could affect teacher’s and students’ performance. The study would also help employers draw up proper performance rewards systems or mechanisms to increase on the teachers’ performance. It would also help policy makers to come up with informed policies/decisions on how rewards should be awarded

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