The Impact Of Incentive Plans On Employee Performance

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The Impact Of Incentive Plans On Employee Performance


Abstract


The study was designed to provide information to organisations and establishments in either the Private or Public Sector in appreciating the impact of incentive plans on the performance of employees. The population of this study consisted of 50 respondents (38 males and 12 females) in age range of 21‑60 years with a mean of 33years who have been working in their respective offices. The sample of the study consistent of 40 Junior State and 10 Senior Staff that were randomly selected using the random sampling technique. The study was in two phases, the first phase was on standardization of the test instrument while the second phase was on assessment. The result of findings revealed a positive significant reliability of co‑relation co‑efficient of the instrument used. It was also recommended that a periodic review of both monetary and non‑monetary incentives should be done in order to monitor the changing nature of the work force towards improving employee performance.


Chapter One


Introduction

1.1 Background of Study

Developing the compensation package of an organization is a complex and continuous assignment of the personnel department. This possibly accounts for the reason why all personnel department structures, whether for a small or big organization, each has a section a signed with the function of ensuring that people are fairly and adequately remunerated.

Compensation therefore refers to the payment of fair and adequate remuneration to employees.

Direct compensation refers to money paid to a worker for his performance of his job assignment Le salaries and wages, while.

Indirect compensation includes incentives, fringes benefits and other kinds of benefit paid to workers.
Incentive are there fore rewards (outside salary or wages) which are given to an employee with the aim of motivating or stimulating him to work harder.

However salary/wages are used to attract employee and they are money paid for work done (Burack and Smith) stress that an incentive scheme is a plan or programme to motivate individual or group performance. An incentive programme is most frequently built on monetary rewards e.g. bonus or incentives pay but it may also include a variety of non‑monetary rewards or prize. It includes many kinds of inducements offered to employees to make work even beyond acceptable standards and time.

This research work will look at the development of incentive schemes which is a sub‑function of the personnel department. However it must be discusses that incentives are paid of a motivation system this great emphasis will be laid on motivation with incentive being a contribution to motivation.


1.2 Statement of Problem

The use of incentives in organization or industries today has become increasingly essential considering the dynamic nature of the business world. There are a number of reasons. The first is an economic. Economic theories of Benefit and Compensation. Administration, Wages are strictly on the down side when the company faces, hard times it is hard or impossible to lower the wages of current employees. In this way wages become a fixed. Cost. The only way, the employer has to lower this cost is to layoff workers for the past twenty years, this has been a way of life for American business. Incentive pay can soften this necessity to lay off members of workers by lowering the wage bill for all workers to some degree.

A second reason is continued in the “payment for results or performance” concept if the company relates pay to the desires outcome then this will increase the probability of obtaining that outcome. This may be through the employee working smarter faster or longer. As companies have laid off employee they have had to become learner and more efficient. Getting more accomplished with fewer people makes the promises of incentive pay very attractive to companies today.

Third, as union influence, has declined and the ideas of participate management has spread, there is a significant desire to tie the employees into, not only doing better on their job but being interested in how well the total organization is doing, including contributing to the overall company success some incentive pay plans focuses, mainly on trying to get the employee to join with management to create a successful company. Therefore there is every need to motivate workers in order to increase their productivity and performance for attainment of overall organizational objectives such as profit sharing holiday premium job enrichment flexible work hours.

Profit sharing: Is another popular organization‑wide program that is often classified as gain sharing plan. This type of plan can be made much more simple than a cost sharing plan. Nor does it requires the revolution in employee‑ management relationships that cost‑savings plans do with profit sharing, management hopes to change employee attitudes toward the employee. The idea behind profit sharing is to instill in the employee a sense of partnership with the organization. But most plans go beyond this and use profit sharing as a way to keep valuable employees and to encourage thrift in employees.

Clearly the relationship between effort and performance becomes very tenuous in any organization ‑wide incentive plan. Even if the performance (profit or cost savings) and the reward (an amount of the profit or savings based on salary) are clear, their connection with what the employee does every day is not clear. Infact, most organization ‑ wide plans fit the membership model better than they do the performance motivation model.

This enhanced membership motivation appears to be the greatest strength of profit sharing. The profit sharing objective of instilling a sense of partnership is met to the extent that employees want to continue their membership and to make the additional contributions that enhanced membership implies.


1.3 Purpose and Objective of the Study

The major objective of this study is to investigate the impact of incentive plans on employee performance. This study will also identify various ways of implementing incentive plan for improved employee performance. However the specific purpose of the study are to

  1. To ascertain if employee performance would be increased through good working condition as incentive.
  2. To determine if the provision of benefit packages as incentives would lead to personal satisfaction and sense of accomplishment this leading to improved employee performance.
  3. To determine if the rewards of superior work of employees as an incentive would improve performance.
  4. Determine if junior worker would improve their performance if there are mechanisms for comments, suggestions grievances as a way of motivating them.
  5. Ascertain the specific types of incentives workers want.
  6. Highlight the specific problems encountered by personal departments in the use of incentives as a motivational tool.
  7. Proffer solutions to the problems highlighted above.

However in identifying various ways, of implementing incentive plan for employee motivation must first be considered. Motivation fundamental Element in employee performance the job of a manager in a work place is to‑ get things done through employees. To do this the manager should be able to effectively motivate them. But, that is easier said their done. No employee ever get up in the morning and said “I am going to work really hard today because I’ve got health insurance” Yet an employee could have no difficulty giving extra effort for a manager who shows a level of trust and respect, commitment and support on a daily basis and in a timely sincere and specific way, such as through an incentive program.

Motivation is also a very personal element. What motivates people varies from person to person and it varies over time with the same person. For this reason, how to motivate employees is a moving target. Research however indicates that, regardless of the size or types of business, the best motivation is manager‑initiated and based on performance. Performance is considered a product of both ability and motivation.

Ability, dependent on education, experience and training, can be a show and long process. Motivation however, can be improved quickly through a varity of influential strategies motivated employees don’t happen by accident an organization has to have a plan to reinforce the behaviour that they want. It is important to remember that employees are people. And, people will usually do what they want to do or otherwise. Motivated to do so.
Motivated employees tend to reach their full potential and encourage co‑workers with their enthusiasm and passion to reach new heights.


1.4 Research Questions

In order to achieve the purpose of this research work, there would be an attempt to provide answers to the following research questions:

  1. Would employee performance be increased if there are good working conditions as incentives towards personal satisfaction?
  2. Does the provision of benefit packages as an incentive lead to personal satisfaction and a sense of accomplishment thus improving employee performance.
  3. What specific problems do personnel department is encounter in the use of incentives as a motivational tool?
  4. Would junior worker’s performance be increased if there are mechanisms for comments, a suggestions grievance as a way of motivating them?
  5. What specific types of incentives of workers want in order to improve performance.
  6. Does the reward of superior work as an incentive lead to improved employee performance having achieved personal satisfaction.

1.5 Research Hypothesis

In an attempt to investigate the impact of incentives on employee performance, the following hypotheses were tested

H01: That good working condition as an incentive improves employee performance in male workers than in female workers.

H02: That the provision of benefit packages an incentive would lead to personal satisfaction thus improving employee performance in junior staff more than in senior staff.


1.6 Scope of the Study

Organisations abound in every from whether large or small, sole proprietorship or partnership or public liability company. This fact reveals that attempting a research work to cover every organization is not only Herculean but totally impossible hence there is needs to draw out an area of study which this becomes the scope of the study.

For this research work therefore, the scope shall be a union Bank Nigeria Plc branch operating in Lagos State of Nigeria. This branch has at least 10 senior staff and at least 40staff of junior rank.


1.7 Relevance of the Study

The relevance of this research is to make a theoretical and practical contribution to organizations on the impacts and importance of intensive plans on the performance of employees.

The study will also provide useful contributions to organizations on how to motivate their employee towards improved performance for efficiency in the every dynamic business world. Emphasis was laid on trying to identify the reaction of employees towards certain incentive plans while also trying to pin-point the exact incentives that workers want.


1.8 Operation Definition of Terms

For effective communication, it is pertinent to operationally define some of the salient concepts in this study.

Incentives:

These are rewards (out side salary and wages) which are given to employee with the aim of motivating or stimulating him to work harder.

Intrinsic Incentives:

These are incentives that are non-monetary in nature i.e job enrichment participation in decision making etc.

Extrinsic Incentives:

These are incentives which are monetary in nature i.e pay for time not worked.

Short Term Plans:

Those are incentive plans which are based on output be increased production.

Long Term Plans:

These are incentives plan which are based on group performance out-011-t

Employee Performance:

This is the amount of work done by a worker or an individual in an organisation.


Chapter Five


Summary, Conclusions and Recommendations:

5.1 Introduction

This chapter summarizes the findings on the impact of incentive plans on employee performance using Union Bank Of Nigeria Plc. Marina as case study. The chapter consists of summary of the study, conclusions, and recommendations.


5.2 Summary of the Study

In this study, our focus was to examine the impact of incentive plans on employee performance using Union Bank Of Nigeria Plc. Marina as case study. The study is was specifically focused on ascertaining if employee performance would be increased through good working condition as incentive, determining if the provision of benefit packages as incentives would lead to personal satisfaction and sense of accomplishment this leading to improved employee performance, if the rewards of superior work of employees as an incentive would improve performance, if junior worker would improve their performance if there are mechanisms for comments, suggestions grievances as a way of motivating them, ascertaining the specific types of incentives workers want, highlighting the specific problems encountered by personal departments in the use of incentives as a motivational tool and proffering solutions to the problems highlighted above.

The study adopted the survey research design and randomly enrolled participants in the study. A total of 50 responses were validated from the enrolled participants where all respondent are staff of Union Bank Of Nigeria Plc. Marina, Lagos State.


5.3 Conclusions

With regard to the findings of the study, the following conclusions emerged.

  1. The performance of employees would increase if there are good working conditions as incentives towards personal satisfaction.
  2. The provision of benefit packages as an incentive leads to personal satisfaction and a sense of accomplishment thus improving employee performance.
  3. The problems personnel department encounters in the use of incentives as a motivational tool include; poor communication about the plan, they sometimes result to diminishing performance, they crushes creativity, they sometimes encourages cheating, shortcuts & unethical behavior and they become addictive to employees.
  4. Junior worker’s performance will increase if there are mechanisms for comments, a suggestions grievance as a way of motivating them.
  5. Productivity Linked Wage Incentives, Conducive and convenient working environment, Praise or recognition, Job enrichment, Dearness allowance and house rent allowance among others are specific types of incentives which can trigger workers performance.
  6. The reward of superior work as an incentive will lead to improved employee performance having achieved personal satisfaction.
  7. Good working condition as an incentive does not improves employee performance in male workers than in female workers.
  8. The provision of benefit packages as an incentive would not lead to personal satisfaction thus improving employee performance in junior staff more than in senior staff.

5.4 Recommendation

Based on the findings the researcher recommends that;

  1. A periodic review of both monetary and non‑monetary incentives should be done in order to monitor the changing nature of the work force towards improving employee performance
  2. Effective and good employee financial incentives schemes should be designed to include a mix of both financial and non-financial incentives.
  3. Organization should strive to improve on non- monetary package giving to their employees in order to get the best out of them.
  4. Efforts must also be intensified to ensure that employees are giving what is due to them without any delay.
  5. Employers of labour should use career development incentives from time to time to motivate their employees.
  6. Since career development increased success of quality projects, reduction of project failures and defects, reduction of staff turnover, minimal supervision needs, ability to progress, greater capabilities to carry out more projects and changes in employee behavior.
  7. There is need for continuous and regular provision of incentives to improve performance and productivity for all categories of staff.
  8. Other factors such as job satisfaction, loss of control over work, no clear goals from management, assigned creativity goals, supervisory support and job characteristics need to be taken into consideration for enhanced employee performance.

The Impact Of Incentive Plans On Employee Performance


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