THE IMPACT OF REWARD SYSTEM ON ORGANIZATIONAL STAFF PERFORMANCE

Introduction

1.1 Background Of The Study

For any organization to experience effective functioning and quality staff performance it should have an in depth understanding of the staff’s needs that should inform the organization’s appropriate reward systems. Hafiza (2011) argued that due to the fact that organizations have to perform optimally and compete effectively, they must maximize on the resources they have, one of which is the human asset and the most important asset any organization can boast of. In order to achieve the required organizational staff performance standards from the human resource, staff motivation through an effective reward system is necessary. Employees will peg their performance to the feeling of trust that their efforts will be rewarded by the management. According to Armstrong (2012) ensuring organizational staff performance is the means of getting better results by understanding and managing employee performance within an agreed framework of planned goals, standards and competency requirements. However, a desired goal and target may only be achieved effectively if the workforce gets a sense of mutual gain of the organization with the achievement of a defined performance target. It’s against this background that an organization must strategically set the reward system to evaluate employee’s productivity at all levels and reward them effectively. Herman (2009) argues that an effective reward system is one that seeks to meet the staff’s specific needs, however, for an employee who have already achieved his/her basic needs through monetary reward, then he/she will tend to value rewards that reinforce his or her self-actualization and hence will be more motivated by relational rewards.

Various organizations staff has shown that they have diverse needs that require a comprehensive total reward system to meet the needs of various employees. As a result the management has been faced with the challenge of implementing and offering competitive rewards to the workforce for the purpose enhancing their performance. According to Shaw (2006), human resource managers must try to develop human resource programs that improve staff performance and enhance organizational effectiveness. One popular approach to enhancing staff performance has been linking rewards to performance through various forms of incentive pay. Such as; special recognition to acknowledge outstanding individual or team achievements with small cash awards, individual performance rewards based on specific employee performance criteria and stock ownership rewards to professionals who meet specific goals.

Organizational staff performance is progressively being determined by the way their employees are treated (Lawler, 2003). Organizations are now recognizing the need to create a balance among individuals influence to the organization and the organization’s influence to the individual. Taking this into consideration, it is reasonable to assume that organizations need to have an understanding of how to reward and motivate and what motivates employees to achieve higher levels of performance and productivity (Amos, Ristow & Ristow; 2004).

Although financial rewards are undeniably an important form of rewarding employees for their exceptional performance, other forms of recognition are often overlooked as part of an organization’s reward system (Luthans, 2002). Nienaber (2009) argues that organizations need to understand the preferences and needs of employees and offer more than just a good pay-check when responding to today’s workplace and employees demands. According to Ferguson & Brohaugh (2009), remuneration is important to employees, however, what really impacts people are the quality of their work experience. Therefore, effective reward system involves a close understanding of employee preferences.

The reward system and reward programmes have broken through the monetary categories and has increasingly shown that some non-monetary rewards have been of importance in the reward structure design. Sarvadi (2005) argues for the importance of non-monetary rewards, as according to Sarvadi (2005), organization’s sometimes miss the most important reward elements of appreciation and recognition, which are the inexpensive and high return elements to a reward programme. Wiscombe’s (2002) study suggests evidence that there exists a robust relationship between non-monetary rewards and employee productivity towards better job performance.

An organization’s reward system is an important tool that can lead to organizational staff performance. Understanding the impact of both monetary and non-monetary rewards, based on employee preferences, is crucial for an organization to deliver growth and shareholder value. Lawler (2003) argues that for a reward system to work, it must be developed with a few limitations. Lawler (2003) states that reward system must provide necessary rewards to motivate employees; provide employees with a clear view of their roles going into the near future; give employees the authority to influence their productivity/performance and deliver on it.

Reward system is largely about managing expectations, what employees expect from their employers in return for their contribution and what employers expect from their employees in return for their pay and the opportunity to work and develop their skills. Expectations are built into the employment relationship, the starting point of which, from the rewards point of view, is an undertaking by an employee to provide effort and skill to the employer, in return for which the employer provides the employee with a salary or a wage.

The purpose of managing the system of rewards within the organization is to attract and retain the human resources the organization needs to achieve its objectives through the staff performance. To retain the services of employees and maintain a high level of performance, it is necessary to increase their motivation and commitment through a better reward system. In effect the organization is aiming to bring about an alignment of organizational and individual objectives when the spotlight is on reward system.

1.2 Statement Of The Problems

Although research on the impact of reward system on organizational staff performance has been a prominent area of interest in human resource management; it has been largely ignored by public sector scholars (Behn, 1995; Reilly, 2003). This may have been occasioned by the fact that the goals of the public sector is different from those of the private sector; and contemporary scholars of public administration (Ajila, 2007; Eze, 2009) believe that while private sector employees are motivated to maximize their own utilities, public sector employees should seek to maximize the social welfare of the people in society (Wright, 2000).

However, past research has shown that poor organizational staff performance is recorded in almost all public sector organizations in Nigeria (Mbogu, 2001; Ezulike, 2001; Iheriohanma, 2006); and findings from other studies do reveal that the poor organizational staff performance associated with Nigeria’s public servants could be raised if a good reward system is in place (Tongo, 2005). However, while these studies have shown the importance of financial rewards in boosting the organizational staff performance of public servants in Nigeria; little or nothing is known about the extent to which non-financial rewards could also be utilized in achieving the same purpose. It is on this note that the present research becomes relevant. Employing both the financial and non-financial rewards is worth examining on the organizational staff performance. Against this backdrop, this research will examine the impact of reward system on the performance of NTA staffs.

1.3 Objectives Of The Study

The general objective of this study is to analyze the impact of reward system on organizational staff performance in Nigerian Television Authority and the specific objectives are:

1. To examine the impact of reward system on organizational staff performance in Nigerian Television Authority.
2. To assess the relationship between the reward system and organizational staff performance in Nigerian Television Authority.
3. To determine whether the reward system enhances organizational staff performance in Nigerian Television Authority.
4. To identify factors in the reward system that impinges organizational staff performance in Nigerian Television Authority.

1.4 Research Questions

1. What is the impact of reward system on organizational staff performance in Nigerian Television Authority?
2. What is the relationship between the reward system and organizational staff performance in Nigerian Television Authority?
3. Does reward system enhance organizational staff performance in Nigerian Television Authority?
4. What are the factors in the reward system that impinges organizational staff performance in Nigerian Television Authority?

1.5 Research Hypothesis

HO1: There is no significant impact of reward system on organizational staff performance in Nigerian Television Authority

HO2: There is no significant relationship between the reward system and organizational staff performance in Nigerian Television Authority

HO3: Reward system does not enhance organizational staff performance in Nigerian Television Authority

HO4: There are no factors in the reward system that impinges organizational staff performance in Nigerian Television Authority

1.6 Organization Of Variables

Dependent variable: Organizational staff performance which is measured by work performance, job quality, number of tasks completed

Independent variable: Reward system which is captured by basic salary, bonuses, promotion, recognition

Y* ₌ f(Y1, Y2, Y3)

Y* ₌ Organizational staff performance

Where:

Y1 ₌ work performance

Y2 ₌ job quality

Y3 ₌ number of tasks completed

X ₌ Reward system

X ₌ f(X1, X2, X3, X4)

Where:

X1 ₌ basic salary

X2 ₌ bonuses

X3 ₌ promotion

X4 ₌ recognition

It can also be stated that the organizational staff performance is a function of reward system.

Y* ₌ f (X1, X2)

Converting this functional relationship into a regression model, it becomes:

Y* ₌ α0 ₊ α1X1 ₊ α2X2 ₊ μ

Α0 ₌ constant term of the regression model

Α1-2 ₌ coefficients of parameter estimates of reward system

μ ₌ Stochastic variable

1.7 Scope Of The Study

This study is limited to the employees of Nigerian Television Authority NTA. It will also cover the organizational reward system and consequent staff performance.

1.8 Limitation Of The Study

In the course of the study, the researcher encountered a lot of limitations. The major limitation encountered in the course of this study was time. This resulted from the nature of the semester, being short and full of academic and social activities; it was not an easy task combining classroom activities with field work to collect materials for the research.

Secondly, another major limitation of this study is the officialdom and secrecy, which characterize Business Service operation. This limited the procurement of relevant data needed for this study.

1.9 Significance Of The Study

The outcome of this study will provide evidence for organizations to construct, develop or structure an enhanced rewards system for their employees through the development of a reward framework.

This study will explore the impact of non-monetary and monetary reward programmes on organizational staff performance thereby contributing to the increased overall performance of the organization. This will serve as guide to entrepreneurs, managers and administrators of both nongovernmental and governmental organization towards improved organizational performance and productivity. It will also add up to the body of literature in the area of reward system and organizational staff performance.

1.11 Definition Of Terms

Reward

A thing given in recognition of service, effort, or achievement.

Performance

Producing or able to produce quality work output.

Motivation

A reason or reasons for acting or behaving in a particular way

Incentive

A thing that motivates or encourages someone to do something.

Remuneration

Money paid for work or a service.