CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Rewards system has gained increased importance especially in the current dynamic and competitive environment. This is because it enables organizations to recruit and maintain employees as well as to increase organizational productivity (Dalvi and Ibrahim, 2013). Datta (2012) argues that many organizations consider employees as their main factor in creating organizational value and competitive advantage. As a result, it is important to maintain employees, create motivation and increase job productivity through diverse strategies like rewards. Therefore, it is necessary for companies to design reward systems based on employees’ skills and capabilities as well as in accordance with the organizational goals so as to improve performance and motivation. According to Armstrong and Murlis (2007), Reward management refers to the strategies, policies and processes that are required to ensure that the contribution of people in an organization is recognized by both non-financial and financial means. There are two categories of reward; financial rewards, tangible and they relate to pay as well as the benefits that an organization provides to its employees and non-financial rewards; rewards which focus on motivating employee as well as enhancing job engagement and commitment. Reward system in an organization is one of the most indispensible elements in motivating employees to contribute their best effort in order to generate innovative ideas that lead to better business operations. This implies that the aim of rewards management is to develop and operate rewards systems which lead to improved employee motivation and organizational commitment. Armstrong (2012) argues that when rewards are well managed, desired commitment are achieved efficiently and effectively since the employees get a sense of mutual gain. This gain is always interterm with the organization as well as with the employee in the attainment of the defined target or goals. White and Druker (2013) emphasize that reward management systems are meant to complement and reinforce business strategies. Armstrong et al (2009) state that reward management in high performing organizations are designed in ways that make them to have accurate predictions on their current and future expected results. This is because total rewards management concept emphasizes on the need to reward employees so as to obtain satisfaction in their work. Armstrong and Baron (2005) noted that obtaining employee satisfaction through total rewards strategy enables an organization to accurately predict its present and future performance thereby enabling it to plan its operations more effectively. According to Molahosseini et al (2014), behaviour of employees in all organizational levels is affected by the behaviour of managers which is derived from their power to use resources. Therefore, managers can use rewards so as to motivate the behaviour of employees and thereby attain the required organizational results. Jiang et al (2009) note that rewards management strategies are used to manage transformation in organizations. This is because rewards policies do not only reflect and acknowledge what employees have contributed in an organization but they also indicate a company’s strategic objectives and values. Ghorbani and Ladoni (2013) emphasize that rewards systems encourage employees’ efforts and they indicate the values and ideals of an organization. According to Molahosseini et al (2014), reward management systems should be designed in a way that ensures maximum benefits for an organization. This requires rewards to be designed in a way that leads to effective organizational performance. Dalvi and Ebrahimi (2013) observe that rewards can be an effective mechanism for encouraging employees and creating innovation as well as motivation. This can in turn lead to organizational transformation through knowledge sharing. According to Dalvi and Ebrahimi (2013), a well-designed reward system creates a sense of belonging among employees in an organization. It enhances employee growth and development, and increases employee self-esteem and this leads to healthier organizations. Thus, organizational development is based on continued employees’ motivation and this can be achieved through total rewards management strategy. Jiang et al (2009) argues that rewards management systems influence the efficiency of an organization and it also helps it to achieve its goals by increasing motivation and commitment. Danish (2010) emphasizes that effective reward management leads to increased employee motivation and this may in turn enhance employee commitment. Ihionkhan and Aigbomian (2014) observe that organizations need effectively and efficiently committed employees in order to enable them to achieve their objectives. Affectively committed employees have a sense of identification and belonging with an organization and this increases their involvement in the activities of an organization (Rhoades et al, 2001). According to Danish (2010), motivation depends on certain intrinsic and extrinsic factors which when combined lead to employees who are fully committed. This can in turn lead to increased organizational performance as well as to encourage employee innovations and to encourage them to support the goals of the organization. According to Dubihlela and Rundora (2014), the increased global competition has forced businesses to ensure increased employee commitment in order to enable them to have high levels of excellence and competitiveness in their processes. This is because committed employees have a desire and willingness to pursue the objectives of an organization thereby making the business to excel. Ihionkhan and Aigbomian (2014) argue that reward management strategies can be used to increase employee commitment by creating a sense of belonging in the organization. This means that organizations can increase the level of employees’ commitment by ensuring effective reward strategies. Therefore, organizations should take actions so as to obtain employee commitment through total reward management.
1.2 STATEMENT OF THE PROBLEM
In the world today, most universities have suffered the consequences of poor performance, low staff morale and high employee turnover due to poor or lack of effective reward system programs (Kirunda, 2010).A critical look at Universities in Nigeria, reward strategy is a factor that needs to be looked into. This is necessitated by the various murmurs, go slows and strikes that occurs occasionally owing to unequal remuneration packages compared to relevant others. A good number of these Universities have poor or no reward management structure that often result to uncommitted employees. The aim of rewards system is to ensure that the value of employees and the contributions that they make in an organization is recognized and rewarded (Armstrong, 2012). This means that organizations use rewards management in order to fulfil and satisfy the needs of their employees as well as to ensure that they operate equitably and fairly. Danish and Usman (2010) point out that those employees are fully motivated and satisfied with their jobs when their needs are met and this may lead to increased organizational performance and commitment. This implies that employees’ performance and commitment is based on the ability of an organization to recognize and reward its employees in respect to their input. Nonetheless, although many studies have focused on the effects of rewards management on employees’ performance, only a few have focused on the effects of rewards management on employees’ commitment (Joo, 2010; Lamasro, 1999; Nwosi et al, 2013). Therefore, it is evident that there is a knowledge gap to be filled. Therefore, the purpose of this study is to fill this gap by determining impact of reward system, employee turnover and productivity in Nigerian universities.
1.3AIMS OF THE STUDY
The major purpose of this study is to examine the impact of reward system, employee turnover and productivity in Nigeria: case study of university of Nigeria, Nsukka. Other general objectives of the study are:
1. To examine the difference in methods of reward system in Nigerian universities.
2. To examine the process of modern reward strategy in relation to employee’s productivity.
3. To examine the impact of reward system on employees motivation in the Nigerian universities.
4. To examine the rate of employee turnover in Nigerian universities.
5. To examine the relationship between reward system, employee turnover and productivity in Nigerian universities.
6. To suggest ways in which management of the university will aid in improving the reward system of Nigerian tertiary institutions
1.4 RESEARCH QUESTIONS
1. What is the difference in methods of reward system in Nigerian universities?
2. What are the processes of modern reward strategy in relation to employee’s productivity?
3. What are the impacts of reward system on employees’ motivation in the Nigerian universities?
4. What is the rate of employee turnover in Nigerian universities?
5. What is the relationship between reward system, employee turnover and productivity in Nigerian universities?
6. What are the ways in which management of the university will aid in improving the reward system of Nigerian tertiary institutions?
1.5 RESEARCH HYPOTHESES
H01: Effective reward system does not enhance employee turnover and increases productivity
H02: There is no significant relationship between reward system, employee turnover and increased productivity in Nigeria
1.6 SIGNIFICANCE OF THE STUDY
The significance of the current study lies in its theoretical and practical contribution as follows:
i) It will make a significant contribution to the body of knowledge on non-monetary and monetary rewards and provide useful suggestions in terms of designing a better reward program and strategies to University of Nigeria, Nsukka Enugu State and other organization in Nigeria.
ii) The study is also important in the sense that it is aimed at sensitizing policy makers and planners to have a comprehensive view in total reward system in our Universities, public and private organization.
iii) The study is important because it will serve as a reference point for both present and future researchers who intend to carry on similar study.
1.7SCOPE OF THE STUDY
The study is based on the impact of reward system, employee turnover and productivity in Nigeria: case study of university of Nigeria, Nsukka
1.8 LIMITATION OF STUDY
Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.
1.8 DEFINITION OF TERMS
Reward: Can be defined as something given or received in recompense for worthy behaviour or in retribution for evil acts. It can also be defined as the return for performance of a desired behaviour; positive reinforcement.
Reward Management: It deals with the design, implementation and maintenance of reward processes and practices that are geared to the improvement of organizational, team and individual performance.
Productivity: Productivity is the output unit / per labour input into the production process given the level of existing technology.
Remuneration: This is the financial reward accruing to employee for his or her performance in the organization.
Motivation: It is the inner drives that arouse direct and maintain an individual behaviour toward accomplishing organization goals.
Pay Structure: Is a framework for managing base pay progression over time for employee benefit.
Reward Strategy: It is a definition of the intention of the organization on how its reward policies and process should be developed to meet business requirement.
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