THE IMPACT OF FINANCIAL INCENTIVES ON EMPLOYEE PRODUCTIVITY IN PUBLIC SECTOR

1.1 Introduction

Financial incentive is the management responsibilities to create condition under which employee will willingly and voluntarily work toward organization objective because they enjoy the work and feel it’s importance to do a good work. Incentive is a form of financial encouragement recognizing a particular contribution made by the work force. In other words, it is either a sum of money paid or a motivation given in addition to the basic rate which the organization pays to ensure that its most important production aspects are being optimized. Good incentive policies, when put in place, motivate workers and make them happy and happy workers are often productive. Good management incentive could be financial or non financial in nature. Financial incentive happens to be the most important of the incentive schemes and it includes wages and salaries and profit sharing scheme.

As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitation of the study and Definition of technical terms.

1.2 Background of Study

Notable management experts such as Abram Maslow, Elton Mayo, Fedbrick Herzberg, Christ Agyris etc. has carried out studies and made recommendations on how to finance employee for effective performance. Abraham Maslow developed a popular content theory which the state that people are finance to five groups of need and that those exist in an hierarchical order. The theories argue that lower order need in their hierarchical order are physiological needs, security needs, belonging needs, esteem needs, and self-actualization need.

According to Milton (2013), incentives are variable rewards granted according to variations in the achievement of specific results. It is also called a stimulus to greater action. They may be used to incite action or greater effort. An incentive is anything which can be given in addition to wages. Incentives are therefore motivations for work. They could be financial or non-financial rewards. Incentives provide zeal in the employee’s for better employee’s productivity. It is a natural thing that nobody acts without a purpose behind. Therefore, a hope for a reward is a powerful incentive to motivate employees. Besides monetary incentive, there are some other stimuli which include job satisfaction, job security, job promotion, and pride for accomplishment.

The public sector of the society sees to the needs of the society at large. The primary aim is rendering of services to the public and taken care of the public welfare, such as construction of roads, building of hospitals and maternity homes, public sector to achieve the organizational objectives of societies through the institutional structure of the government, there must be highly skilled personal, capitals and materials. However, the availability of materials and high caliber personnel is not sufficient achieving efficiency and productivity in public sector management without influencing and encouraging the human involved.

Hence, management must examine the factor that promotes workers out put one of which is financial incentives. In other to achieve or improve on a particular productivity level of management must derive full potential benefits from the available human resources and this work and produce maximum productivity in order to achieve organization objective. Difference institution, ministries, parastatals have difference financial incentives. However, not all financial factors aimed at financial employees achieve this purpose. In certain cases some financial incentives applied on employee serves as incentives and wasted financial resources.

In this research, some financial factors used by the Kwara State Ministry of works will be examined and based on findings relate or determine whether these factors lead to job satisfaction and job satisfaction in terms leads to high productivity in the Kwara State Ministry of works Ilorin.

1.3 Statement of Problems

Investigation revealed that financial incentives have created a lot of challenges to employee’s input and output in organization. The negligence of adequate structure in pay incentive, fringe incentive, and bonus and over time benefits has caused a lot of inequitable justice on the administration of incentive scheme. The resultant effect on employee productivity could be negative.

The negative attributes can be seen as poor turnover, poor product quality improvement, job dissatisfaction, low morale, low commitment, absenteeism, low turnover intentions to stay with the organization and poor employee’s productivity that affects input and output.

For public organization to be efficient, employee needs to be financed in other to put in their very best because public organization are not profit maximizing organization but their aim is to satisfy the needs of the people.

Another problem is to know the best method to use in finance employee of organization. There are many way is which an employees can be finance such as better salary, job security, spirit of belonging and other kind of benefits.

1.4 Aim and Objectives of Study

The aim of the study is to examine the Impact of Financial Incentives on Employee Productivity in Public Sector using Kwara State Ministry of Works Ilorin as a case study. In achieving this aim, the following specific objectives were laid out as follows:

1. To examine the employee financial incentive that leads to increase productivity in the area under review;
2. To examine financial factors and evaluate how they can lead to job satisfaction and increase productivity;
3. To identify the cause of low productivity in the area under review; and
4. To know the type of record that actually finances the Nigeria works in to action for production.

1.5 Research Questions

The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:

• Does an employee financial incentive lead to increase productivity?
• Is there relationship between the related position and job satisfaction?
• Is there any significant relationship between the means of job security and policy formulation?

1.6 Research Hypothesis

In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.

Hypothesis One

• H0: An employee financial incentive does not lead to increase productivity.
• H1: An employee financial incentives lead to increase productivity.

Hypothesis Two

• H0: There is no significant relationship between the means of job security and policy formulation.
• H1: There is significant relationship between the means of job security and policy formulation.

Hypothesis Three

• H0: There is no relationship between the rank position and job satisfaction.
• H1: There is relationship between the rank position and job satisfaction.

1.7 Significance of Study

This study will go a long way in helping future researches and student who have interest in studying employee’s financial incentives in public organization so as to increase productivity and efficiency.

It will help in suggesting adequate financial incentive style practices for manages and employees who are interested in improving their employee or subordinate performances in order to achieve organizational objectives.

Also it will helps in organization areas of problem which may winder efficient performance and to make suggestion and solution with a view to making useful recommendation which can improve the productivities of workers in Kwara State Ministry of works in Nigeria.

1.8 Scope of Study

The scope of the research is focused on the Impact of Financial Incentives on Employee Productivity in Public Sector using Kwara State Ministry of Works Ilorin as a case study.

The study will also examine past and present literature on the related concept of the study. The findings are mainly restricted to the Kwara State Ministry of work with exclusion of the other ministry of works in Nigeria.

1.9 Limitations of the Study

During the course of this study, many things militated against its completion, some of which are:

1. Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
2. Research material: availability of research material is a major setback to the scope of the study.
3. Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
4. 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).

1.10 Definition of Terms

Financial Incentive: It is the management responsibilities to create condition under which employee will willingly and voluntarily work toward organization objective because they enjoy the work and feel it’s importance to do a good work.

Management Responsibility: Thing that management must do. It can also be refer to as the duties of management.

Need: These are thing that people want.

Physiological Need: It can also refer to as physical need i.e. thing that can be seen or touch e.g cloth, food etc.

Security Need: Need to ensure against deprivation or any other accident, it can also be referred as safety i.e. to protect the live of people life people against evil.

Hierarchical Order: Arrangement of needs according to desire of people.

Belonging Need: It can also be referred as social or love need. This is how to relate with other people i.e. show to associate with them. to express feelings, to talk with others, to accept and to be accepted.