The Impact Of Differential Wage Rates On Job Satisfaction

Project and Seminar Material for Industrial Relations and Personnel Management

The Impact Of Differential Wage Rates On Job Satisfaction


Abstract


This project aims at examining importance of difference in wages rate at different level of workers in an organization. It will also look into how salaries will motivate to put in their best, to get the best outcome in an organization. The influence of the differential wage system on the employee satisfaction in Local government structure has not been examined. The objectives of the study were the examination of the role of recognition, allowances, training and promotion on employee satisfaction in Local government of Somolu. The study was based on the Hertzberg’s Two Factor Theory, McGregor’s Theory X and Theory Y, and the Maslow’s hierarchy of needs Theory. Descriptive research design was used in this study. The target population of this study was5,100 staff working for the Local government of Somolu. A sample size of 371 respondents was utilized. This study used a questionnaire for the purposes of data collection. The pilot study was undertaken in Somolu L.G.A, Lagos state using 10% of the respondents that is 37 respondents. The validity of the data collection instrument was examined during the pilot study using a set of experts in the area of wage management and employee satisfaction as well as the supervisors. The reliability of the data collection was examined through the use of the Cronbach alpha coefficient of a threshold of 0.7 and above. In respect to the recognition metrics, the study concluded that there are diverse practices used in recognition practices across the Local government of Somolu. The study concluded that there were no harmonized practices in relations to allowances issued at the Local government of Somolu. The study concluded that there are very low satisfaction levels with the training opportunities within the Local government of Somolu. The results indicated that the unit increases (individually) in recognition, allowances, training and promotion while keeping the other three independent variables constant would lead to a negative influence on the employee satisfaction levels. This is due to regression coefficient (B) values of -0.079, -0.132, 1.498, and -0.647 for recognition, allowances, training, and promotion respectively. These results suggest that the four independent variables don’t have the capacity to positively and individually influence employee satisfaction without the input of the other variables. Therefore the following model was used; Employee Satisfaction = 6.045-0.079 (Recognition)-0.132 (Allowances)-1.498(Training)- 0.647 (Promotion).


Chapter One


1.0 Introduction

Human resources are the life wire of any given company without which organisations (Banks) will not be possible. In other words, for any company/organisation to achieve maximum services or even survive, it has to motivate members of its work force through wage rate. Accordingly, it is important that employers do these things, which they hope will satisfy the derives and desire of the employees in other to ultimately induce them to work harder for maximum services.

The Nigerian economy has passed through hard times lately as Neboh A. E (1996:1) wrote “the national economy has been battered by adverse balance of payment” problem, dividing oil revenue, unemployment, inflation and the depreciation of the value of the naira. This has led to a drastic decline in the fortunes of the companies.

Employees have also had a ‑grapple with low standard of living, increased taxation, and dividing purchasing power. This had forced them to perpetually seek new and better employment or look beyond their income, so we will find some of them selling various items ranging from textiles, jewelleries, whose, wires, etc. The both of them are fellow workers and visitors in the office.

Significantly the employees have learnt to battle with retrenchments, lay‑offs, non‑payment of salaries and benefit lack of promotion and difference in wage rate base on their qualification etc. This situation has made it difficult to harmonize the goals of the employers with these of the employees, since the success of the organisation can ensure that the employees achieves his goals of satisfying his needs. This is known to affect stage motivation and moral negatively.

Workers are always anxious to take jobs whereas they will be well paid and satisfied. The most prominent factors for job satisfaction is money and this is paid as wage rate.


1.1 Background of the Study

Wages are regular amount of money that is earned usually every work, for work or services ‑ Oxford Advanced Learners Dictionary (6th edition). In a nutshell, it is the reward for labour.

Differential wage rate is related to differences and the likes given to workers as a result of certain factors that influence a person’s perception of what his reward level should be include skills’ abilities, training and performance. A person who believes his job make a great demand of him expects more. Thus, people with high job inputs must receive more rewards than people with low job inputs or they’ll be dissatisfied C.C. Nwankwo. However, job satisfaction may mean different things to different workers. Some are satisfied with the job environment because it is very conducive; others are satisfied with the type of management and their techniques. Some others are satisfied with the nature of the job they do.

The basic requirement for job satisfaction may include comparatively higher pay, an equitable payment system, real opportunities for promotion, considerate and participative management – Michael Armstrong 2001 a satisfied worker is not necessarily a high producer and a high producer is no necessarily a satisfied worker. Money in the form of pay or some other sort of remuneration is the obvious extrinsic reward. Money cannot provide most people’s wants.

In Nigeria, Waithaka (2013) examined employee satisfaction amongst employees of government departments of Isiolo State. The study noted that amongst the aspects influencing the job satisfaction levels included promotion aspects, training and development aspects, and financial compensation. On the other hand, Muindi (2014) examined Influence of Governance Practices on Employee Job Satisfaction at Teachers Service Commission Headquarters Lagos, Nigeria. The study noted that amongst the factors that influenced satisfaction amongst the TSC officials included remuneration and involvement in decision making. In respect to remuneration, the study found that 39 % of the respondents indicated that remuneration influence job satisfaction at TSC to a very great extent, 28.3% indicated that remuneration influence job satisfaction at TSC to a great extent, 19.7 % indicated that remuneration influence job satisfaction at TSC to a moderate extent, while 13 % indicated that remuneration influence job satisfaction at TSC to a low extent.


1.2 Statement of Research Problem

Virtually speaking, the human resources in any human organizations have been considered as the most valuable assets which ultimately account for the overall organizational success and impactiveness that is why every organization Will always strive to ensure a well packaged and highly motivated incentives including both extrinsic and intrinsic modes of motivation to constantly facilitate the desired work behaviour from their employees.

Meanwhile, the means to motivate workers to elicit the expected improved work behaviour have not been fully utilised. Although, most to ensure constant employee satisfaction, however the application of managers of various organization have tried quite a number of methods to ensure constant employee satisfaction, however the application of these methods such as wage rate have raised so many questions, which consequently, open room for further research on their impact on worker’s attitude.

Thus, the wage rate that is satisfactory to one worker may not be satisfactory to another. So the use of differential wage rate, according to experts have been considered on the account of certain factors which include differences in skills, abilities, training and performance on the workers. Nonetheless, it is observed that workers take up jobs for various needs and which the use of differential remuneration may not be able to actualize them all. Hence, there is need to research into why workers still remain unsatisfied in spite of high wages or remuneration packages, and why do some members of the organizations feel they are still marginalized or not well remunerated, despite their high input into organizational success and goal achievement so the need for us to investigate the impact of differential wage rate on workers, most especially as applied to banking institutions has called for this research project with a view to explaining or providing possible answers to various questions regarding the subject matter. This study therefore seeks to examine the influence of the differential wage system on the employee satisfaction in relation to Local government of Somolu.


1.3 Objectives of the Study

1.3.1 General Objective

The general objective of the study was to examine impact of differential wage rate on employee satisfaction in Somolu L.G.A, Lagos state, Nigeria.

1.3.2 Specific Objectives

The study was guided by the following research objectives;

  1. To examine the role of recognition on employee satisfaction in Local government of Somolu
  2. To find out the impact of allowances on employee satisfaction in Local government of Somolu
  3. To establish the influence of training on employee satisfaction in Local government of Somolu
  4. To determine the role of promotion on employee satisfaction in Local government of Somolu

1.4 Research Hypothesis

The study was based on the following research hypothesis;

  1. There is no statistically significant influence of recognition on employee satisfaction in Local government of Somolu.
  2. There is no statistically significant influence employee satisfaction in Local government of Somolu.
  3. There is no statistically significant influence employee satisfaction in Local government of Somolu.
  4. There is no statistically significant influence promotion on employee satisfaction in Local government of Somolu.

1.5 Significance of the Study

This study is of significance to diverse stakeholders including Local government, national government, scholars, and human resource practitioners. The findings in this study are of great importance to the national government especially the ministry of devolution and the Public Service Commission (PSC)in productivity aspects of employees. These organs are critical in enhancing capacity building to the Local government to enable it better deal with the aspects of differential wage systems and help create long term solutions to the challenges.

The study is of importance to the Local governments in helping them gain an insight into the role of differential wage systems on the employee satisfaction aspects. This is critical in the Local government formulating policies and practices that address the challenges in a comprehensive and conclusive manner. The human resource practitioners gain an understanding on the way in which the differential wage rate influences the employee satisfaction levels.

The human resources practitioners may use the information for drafting policies and best practices to address the challenges. The scholars gain through having an expansion of knowledge on the issue of differential wage rate and employee satisfaction.


1.6 Scope of the Study

The study was geographically limited to Somolu L.G.A, Lagos state due to the limitations of funds and times to visit numerous counties. The study examined the role of recognition, allowances, training and promotion on employee satisfaction in Local government of Somolu which defined the content scope of this study. In the context of the time scope, the study was undertaken in the first six months of 2017 due to the time limitations as the study was meant for an academic purpose. The methodology scope of the study will be descriptive research design.The employees that were of interest to this study were 5,100 Local governments of Somolu employees which defined the population scope of the study.


1.7 Limitations of the Study

The study would have faced low response rate to the questionnaires due to fear of victimization by their employees. This limitation was mitigated through the use of a consent statement that advised the respondents that the data was being collected for the purpose of an academic exercise only, and that their information would be kept anonymous and confidential. The expansive area of the Somolu L.G.A, Lagos state would also have been a limitation of the study due to financial challenges and also time scope of the study. This limitation was mitigated through sampling to ensure that the number of the respondents is manageable. The researcher also used research assistants to issue the questionnaires that reduced the total time that could have been spent in data collection if the researcher solely collected the data.


1.8 Organization of the Study

This study research project has five chapters. The first chapter gives the introduction of the study whereby background of the study, statement of the problem, objectives of the study, research hypothesis, significance and scope of the stud, and limitations of the study are discussed. Chapter two contains the literature review. This chapter examined the theoretical review of the study, the empirical review, summary of review literature, and conceptual framework.

Chapter three contained all the methodological aspects of the study. The research design, study population and sample size, data collection and data analysis techniques are some of the key aspects discussed in chapter there. Chapter four presented the results from data analysis whereby both the descriptive and inferential statistics were used in the chapter. Chapter five was the last chapter of this research project where the summary of findings, conclusion and recommendations were made.


1.9 Operational Definition of Terms

In the course of writing this research work certain unfamiliar terminologies are used and for clarity, they are thus defined.

Wage Rate:

It is the number of occasions within a given period of time when something happens or is done or when reward in monetary terms giving to workers after the successful completion of a specified task or job.

Job Satisfaction:

When someone has pleasure or he/she is content with what ever he/she is doing for a living.

Incentive:

These are things or tools used by management to increase the efficiency of work performance of an employee or employees in an organization.

Workers / Bankers:

Used as an encompassing terms for all workers, earners, and management staff.

Performance:

Doing something very well.


Chapter Five


Summary, Conclusions and Recommendations

5.1 Introduction

The study sought to examine the impact of differential wage rate on employee satisfaction in Somolu L.G.A, Lagos state, Nigeria and was guided by four objectives. The objectives included examination of the role of recognition, impact of allowances, influence of training, and role of promotion on employee satisfaction in Local government of Somolu. A total of 304 questionnaires were used for data analysis.

The study found that 45.1% of the respondents were male compared to 54.9% female respondents. Examination of the education levels of the respondents found 19.1% of the respondents had postgraduate education levels, 23.4% had graduate levels of education levels, and 50.0% had college levels education while 6% of the respondents had secondary school level education. The results indicated that 22.4% of respondents had worked for 1-3 years while 77.6% had worked for over three years. The results indicated that a majority of 77.3% were married, 19.1% were single and 3.6% were divorced. The study found that 14.8% were 25 to 35 years, 50.7% were 36 to 45 years, 26.6% were 46 to 55 years and 7.9% were over 55 years. Most of the respondents (54.7%) said they were not satisfied with their current employment status while those who responded to the affirmative were 45.7%.


5.2 Summary of the Results

The summary of the study was examined based on the objectives of the study.

5.2.1 Recognition and Employee Satisfaction

The recognition and employee satisfaction was examined using various metrics. In this context the average personal recognition for work well done, recognition of work practices adopted, recognition for job dedication, recognition of the work results that are acknowledged and recognition from supervisors was 3.2237, 3.4605, 3.2270, 3.2237, and 3.8421. The study found that in terms of recognition, the most satisfying was recognition from supervisors (3.8421) followed by recognition of work practices adopted (3.4605), recognition for job dedication (3.2270), and personal recognition for work well done and recognition of the work results that are acknowledged (3.2237). This study therefore found that on average the respondents were most satisfied by recognition from supervisors and were least satisfied equally by personal recognition for work well done and recognition of the work results that are acknowledged. The logistic regression analysis indicated that the unit increase in recognition would lead to a negative influence on the employee satisfaction levels. This is due to regression coefficient (B) values of –
0.588 for recognition. These results suggest that the recognition variable doesn’t have the capacity to positively and individually influence employee satisfaction without the input of the other variables.

5.2.2 Allowances and Employee Satisfaction

Allowances and employee satisfaction was examined using the various metrics which sought to know whether amount of allowances paid to the respondents are fair for the roles they undertake, the different allowances payable for their role are fair for the roles they undertake, the amount of allowances payable in their role is comparable to colleagues with similar qualifications in the organization, the different allowances payable for their role are comparable to colleagues with similar qualifications in the organization, whether they are happy with the allowances accorded to their roles.

On average, the respondents disagreed that with all aspects on allowances and employee satisfaction due to means of below 2.5. The respondents had moderate consensus that the different allowances payable for their role are not fair for the roles they undertake, and the different allowances payable for their role are not comparable to colleagues with similar qualifications in the organization as they both had standard deviation of between 0.5 and 1. Standard deviations for amount of allowances paid are fair for the roles they undertake, the amount of allowances payable in their role is comparable to colleagues with similar qualifications in the organization, and whether they are happy with the allowances accorded to their roles were above 1.000 which implied no consensus on each of the metrics. The logistics regression analysis results indicated that allowances variable doesn’t have the capacity to positively and individually influence employee satisfaction without the input of the other variable.

5.2.3 Training and Employee Satisfaction

Training and employee satisfaction was measured through examining whether respondents had sufficient access to training opportunities, whether the training opportunities they are exposed to are relevant, whether colleagues with similar qualifications have access to training opportunities that they access, whether they access the training opportunities with ease, and whether colleagues in other departments are able to access training opportunities with similar ease.

On average, the respondents disagreed that they have sufficient access to training and that they access the training opportunities with ease with means 2.2237 and 1.8059 respectively. On average, there was uncertainty on whether the training opportunities the respondents are exposed to are relevant, whether colleagues with similar qualifications have access to training opportunities that they access, and whether colleagues in other departments are able to access training opportunities with similar ease with means between 2.5 and 3.5. The logistic regression analysis indicated that training variable doesn’t have the capacity to positively and individually influence employee satisfaction without the input of the other variables.

5.2.4 Promotion and Employee Satisfaction

The influence of promotion on employee satisfaction was examined using the pace of promotion in respondent’s department, deserving candidates having a fair chance of promotion in my department, ability for colleagues with equal qualifications to have similar pace of promotion, colleagues undertaking equivalent work having similar pace of promotion, and the pace of promotion in the department being similar to other government departments with mean scores of 1.9408, 2.2204, 2.1711, 2.2599, and 2.4868 respectively. The means for the promotion metrics were of between 1.5 and 2.5 which indicated that the respondents on average disagreed with the metrics. Additionally the responses for each of the metrics on promotion were widely distributed with standard deviations above 1 which implied no consensus on any of the metrics. The logistics regression analysis results suggest that the promotion variable doesn’t have the capacity to positively and individually influence employee satisfaction without the input of the other variables.


5.3 Conclusion

The conclusion of the study was based on four objectives as below;

5.3.1 Recognition and Employee Satisfaction

In respect to the recognition metrics, the study concluded that there are diverse practices used in recognition practices across the Local government of Somolu. This was based on the fact that on average four out five metrics had the respondents being uncertain on whether they were satisfied with those individual metrics. These metrics included satisfaction with personal recognition for work well done, recognitions for work practices that have been adopted, and recognitions for job dedication. Additionally, four of the five metrics had very high standard deviations of above 1.0. These metrics included satisfaction with personal recognition for work well done, satisfaction with recognition for job dedication, satisfaction with recognition for work results being acknowledged, and valuing recognition for the recognition from work supervisors.

5.3.2 Allowances and Employee Satisfaction

The study concluded that there were no harmonized practices in relations to allowances issued at the Local government of Somolu. This was in light to the results indicating that the respondents tended to disagree with all the allowances metrics due to means between 1.5 and 2.5. This fact was reinforced by the fact that three metrics for allowances had standard deviations above 1.0.

5.3.3 Training and Employee Satisfaction

The study concluded that there are very low satisfaction levels with the training opportunities within the Local government of Somolu. This is due to very low scores on average in relations to sufficiency of access to training opportunities, relevancy of training opportunities, equitable access of training opportunities amongst colleagues with similar qualifications, ease of access to training opportunities, and ability of colleagues in other departments being able to access training with similar ease.

5.3.4 Promotion and Employee Satisfaction

The study concluded that the Local government of Somolu employees was not satisfied with the promotional aspects in the Local government. The means for the promotions indicated that the respondents on average tended to disagree with the metrics due to means of between 1.5 and 2.5. This was also evidenced by high standard deviations of above 1.0.


5.4 Recommendations

The study recommends that the Local government of Somolu should professionalize on their human resources management and practices.


5.5 Suggestions for Further Studies

The study recommends for further studies an examination of the challenges that the Local government faces in a bid to improve on the human resources management
practices.


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