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A study of non-monetary rewards as a motivation tool 1

A study of non-monetary rewards as a motivation tool

By Irfan Iftekhar

Abstract

The study examines the role of reward system in motivating employees for effective


performance and higher productivity in First Bank of Nigeria Plc. It employed a case study

approach to study how rewards management system motivates the employees of First Bank of

Nigeria Plc. The researcher identified incentives, commendation, prize awards, promotion,

compensation, salary increase, bonus, share value safe working conditions, fair treatment,

medical system and involvement in decision making process, are some of the rewards system

used by First Bank of Nigeria Plc. This paper recognized motivation (intrinsic or extrinsic to

workers) as an instrument for efficient and effective execution of a project. The paper examined

if workers are highly motivated, the motivational factors that mostly affect workers’

performance,

CHAPTER-1 Introduction

In today’s competitive business environment companies are facing many challenges and

among those challenges acquiring right workforce and retaining it, is of utmost importance. In

order to get the efficient and effective result from human resource, employee motivation is

necessary. Employee will give their maximum when they have a feeling or trust that their efforts

will be rewarded by the management. There are many factors that affect employee performance

like working conditions, worker and employer relationship, training and development

opportunities, job security, and company’s overall policies and procedures for rewarding

employees, etc. The First Bank of Nigeria Plc. (FBN) was incorporate 31st March 1894, as the

Bank of British West Africa in Liverpool, United Kingdom (Fry, 1976), by Alfred Lewis Jones

in the office of Elder Dempster & Company in Lagos (FBN UK, 2007), to serve his shipping and

trading agencies in Nigeria. The bank was incorporated as a Limited Liability Company, with a

head office in Liverpool and began operations with an initial paid-up capital of £12,000, after it


acquired African Banking Corporation (FBN UK, 2007). In 1957, the Bank of British West

Africa was change to Bank of West Africa (Fry 1978). In 1965, Standard Bank acquired Bank of

West Africa and reincorporated it as Standard Bank of West Africa.

1.1 Background to the Research

The Nigerian banking industry has witnessed some revolutionary policy initiative right

from 2004 up to now when the Central Bank of Nigeria began some restructuring programs

directed towards resolving the existing problems of the industry. Adegbaju and Olokoyo (2000)

observed that the banking sector reforms, especially the recapitalization policy was a deliberate

policy response designed to correct perceived or impending banking sector crises that might

trigger banking industry failures, which may result directly from insolvency and weak corporate

governance, and others (Ernest, 2012). Ernest added that the asset size of an average bank which

was N42.172billion (US$0.3174 billion) in 2004 has grown geometrically to N267.482billion

(US$2.0856billion) within one year after the consolidation exercise, which indicates a growth

rate of 534.27 per cent. All over the world especially in developing countries like Nigeria,

workers are becoming more and more displeased due to unsatisfactory working conditions

occasioned by economic downturn. The intense competition demands not just high quality

products, but best quality workforce who must be highly trained, rewarded and required to work

within a cooperative environment. To obtain workers’ cooperation requires a lot of motivation

and motivating workers can be very challenging because workers are animate. To execute a

project which consist of interrelated and interdependent activities that need to be planned,

coordinated, monitored, and controlled for the project’s goal to be efficiently and effectively

attained, involves a lot of herculean task, perseverance, motivation and cooperation of the project


team who must work in harmony to attain the project’s goal within the scheduled time, budget

and to meet up to a specified standard

According to Okafor (2009) the period of banking recapitalization in Nigeria from July

2004 till the last month of 2005, was the harbinger of various types of concerns for employees in

the banking industry. Ernest (2012) observes some banks that raised funds from the Stock

Exchange concentrated huge funds on media advertising, focused attention on acquisition of

weaker banks, and struggling to garner available funds they could muster to meet the

recapitalization target and the December 2005 deadline, while relegating the welfare of their

employees (Okafor, 2009). However, some of the new banks, especially First Bank of Nigeria

Plc. redesigned their reward and compensation management systems by increasing employees’

salaries including promoting employees, and awarding prizes and giving bonuses to them.

The post-consolidation reward management system of the First Bank of Nigeria Plc. informed

the desire of the researcher to investigate how the reward management system of the bank has

motivated its employees to enhance their performance effectiveness, achieve their performance

outcomes and increase their productivity. What motivate workers cannot be generalized because,

what motivate workers differs from one worker to another. In fact what motivates an individual?

worker today, may seize to motivate him tomorrow because human needs are insatiable asserted

that monetary incentives would make workers carryout their assigned tasks correctly and meet a

defined target rate of output. His expectancy theory is of the opinion that workers expectation of

reward for the efforts they put in a job has turned out to be part of motivation for employees in

every place of work’s “Hawthorne’s study” established that workers’ productivity was not reliant

only on monetary reward but on social needs (need for safety, recognition, belonging to informal


group, etc.) achieved by mingling with co-workers, and supervisors at the place of work also

supported Mayo’s study.

Reward systems are vital strategic tools that management of an organisation uses to direct

behaviors, attitudes and motivate their employees in desired ways to enhance corporate

performance. Am organization’s reward system may include incentives, processes, and decision

making about the allocation of compensation and benefits to employees, in order to drive a

positive urge in them to voluntarily and enthusiastically contribute their skills and experiences to

the attainment of an organization’s goals. A good reward system enables an organization to

attract the best talents to join its workforce, motivate them to promote productivity and

encourage them to stay for as long as possible.

For a business organization to address employees’ expectations effectively, it must

understand those things that stimulate employee motivation.

1.2 Research questions

Research question is always central to the completion of a successful research study,

hence the following research questions will be explored by the researcher:

1) How do non-monetary rewards act as a motivation tool for improving employee's

performance?

2) How do reward systems encourage employees and reduce staff turnover?

1.3 Research aims and objectives

Deeprose (1994) argued that the motivation of employees and their productivity can be

enhanced through providing them effective recognition which ultimately results in improved


performance of organizations. In view of the above, the aims and objectives of this study are:

1) To discuss the role of the reward systems in motivating employees for higher productivity in

the banking industry.

2) To identify how the reward systems stimulate employee’s commitment at work.

3) To determine how the reward systems enhance employee’s job satisfaction in the bank.

4) To analyze how the reward systems reduce employee turnover in the banking industry.

1.5 Statement of the problem

Recapitalization exercise in Nigerian banking industry during 2004-5 has tailored the

banking structure. In view of this, the researcher decided to investigate the role of reward

management systems of First Bank of Nigeria Plc. in motivating its employees for higher

productivity.

1.6 Significance of the study

This study is important to bank policy makers, RH professionals, scholars, management

of banking and other organizations, including line managers involved in the supervision of other

employees, because it will reveal:

1) Whether reward systems enhance employee performance.

2) How management can best use reward systems to motivate employees to accomplish their

performance outcomes.

3) How organization can spur employees to attain higher productivity and organizational

performance targets. Researcher decided to investigate the role of reward management systems

of First Bank of Nigeria Plc. in motivating its employees for higher productivity.

1.7 Justification of Research


Companies and organizations everywhere need employees to work with. However, while

getting employees can easily be done by means of recruiting practices, there is the more difficult

task of keeping them motivated to work hard to achieve improved performance and to attain both

organizational and personal goals.

1.8 Research methodology

Research methodology is the systematic process adopted by a researcher to solve a

research problem. In this study the researcher used interpretive approach and qualitative research

methodology. Unstructured personal interview was held with more than one hundred members of

staff who were purposively selected based on insight from the personal interview held with the

personnel manager, their educational qualification and years spent on the job. The interview was

held prior to the distribution of the questionnaire. The result from the interview increased the in-

depth knowledge of the researcher on questions to be included in the questionnaire and how the

questions would be framed to the understanding of the respondents and enable adequate

information from the respondents. Time spent with each respondent depended on the depth and

quality of information, and patience of each of the respondent. However, the time range was

between 4 to 10 minutes.

Research philosophy

Research philosophy involves the epistemology that a researcher employed in a research study to

produce knowledge or reality based on the worldview of the participants. The researcher used

interpretive philosophy so as to maintain the researcher as a passive collector and expert

interpreter of data, while she tries to maintain research objectivity.

Research approaches

There are two popular research approaches commonly used by scholars and researchers;


Inductive research approach will be discussed below.

Inductive research approach

The inductive approach (Bryman and Burgess, 1994) to research study is a form of qualitative

research method this has helped in conducting analysis, interpretation and formulation of some

themes and patterns.

Qualitative research methodology

Myers (1997) contends that qualitative research is one of the two major approaches to

research in social sciences. Additionally, Rajasekar, Philominathan and Chinnathambi (2006)

state that qualitative research involves qualitative phenomenon; In this study, I used qualitative

research methods for the purpose of understanding the interviewee’s experiences including the

social contexts in which they live (Myers, 1997).

1.9 The scope and limitation of the study

Qualitative research depends, to a large extent, on the skills of the researcher, whose

personal biases and idiosyncrasies may affect the study outcomes.

There is the possibility that some respondents may not willingly cooperate to supply vital

information.

CH. 1 Summary

First Bank of Nigeria was incorporated as a Limited Liability Company, with a head

office in Liverpool and began operations with an initial paid-up capital of £12,000, after it

acquired African Banking Corporation (FBN UK, 2007).In 1957, the Bank of British West

Africa was change to Bank of West Africa (Fry 1978). In 1965, Standard Bank acquired Bank of

West Africa and reincorporated it as Standard Bank of West Africa. The Nigerian banking

industry has witnessed some revolutionary policy initiative right from 2004 up to now when the


Central Bank of Nigeria began some restructuring programs directed towards resolving the

existing problems of the industry. Ernest added that the asset size of an average bank which was

N42.172billion (US$0.3174 billion) in 2004 has grown geometrically to N267.482billion

(US$2.0856billion) within one year after the consolidation exercise, which indicates a growth

rate of 534.27 per cent.

According to Okafor (2009) the period of banking recapitalization in Nigeria from July

2004 till the last month of 2005, was the harbinger of various types of concerns for employees in

the banking industry. However, some of the new banks, especially First Bank of Nigeria Plc.

redesigned their reward and compensation management systems by increasing employees’

salaries including promoting employees, and awarding prizes and giving bonuses to them. The

post-consolidation reward management system of the First Bank of Nigeria Plc.

CHAPTER-2 Literature Review

Herzberg (1957) proposed that employees are influenced or driven to work by two factors

(motivators and hygiene factors). Hygiene factors ensure that employees do not become

dissatisfied but does not lead to high motivation, but without them; Salary is one of the hygiene

factors hence money does not lead to high levels of motivation but impact on motivation in a

way. As stated in Value based Management (2008) a combination of the two factors results in

four scenarios which are important in the relationship between employee motivation and


rewards.

These include:

High hygiene + High motivation= employees feel motivated and give high performance.

- High hygiene + low motivation = no complains but not highly motivated.

- Low hygiene +High motivation = lot of complains and low motivation

- Low hygiene + low motivation = result in unmotivated



Management is dependent upon rewards like money as the main factor of motivation because

according to Maslow’s hierarchy of needs, money is a unique reward that can satisfy different

needs such as physiological need for food. Non-monetary rewards on the other hand attract

persons with a high need for affiliation through verbal recognition, and high achievers through

challenging jobs. Skinner in 1953 argued that, the use of rewards in the classic work

performance paradigm is based primarily on the reinforcement theory which focuses on the

relationship between a target behavior such as high performance and its consequences for

example pay. This study was framed from Herzberg’s two factor theory and Skinner’s

Reinforcement.

Employee motivation and rewards are divided into two groups; the importance of money as a

motivator has been consistently downplayed by most behavioral scientists like Herzberg who

point out the value of challenging jobs, feedback, cohesive work teams and other nonmonetary

factors as stimulants to motivation. Wallace and Zeffane (2001) noted, management depend upon

rewards like money as the main factor of motivation because according to Maslow’s hierarchy of

needs, money is a unique reward that can satisfy different needs such as physiological need for

food. Bates (2006) indicates, for money to motivate, merit pay rises must be at least seven

percent of base pay for employees to perceive them as motivating and to catch anybody’s

attention. Recent studies on the four methods of motivating employees indicated that money

rated the second among lower-level employees. Such evidence demonstrates that money may not

be the only motivator, but it’s difficult to argue that it doesn’t motivate. This therefore opens up


the debate that non-financial rewards such as recognition, decision making and job security have

a role to play in the internal motivation of employees that monetary rewards cannot address. To

assume that financial incentives will always motivate people to perform better is therefore as

simplistic as to assume that they never motivate people to perform better. The only issue that is

certain about this is that multiplicities of interdependent factors are involved in motivating

employees ranging from money to non-monetary.

2.1 Theories of motivation

Some scholars have developed some theories that help to explain the psychological processes

and approaches that underlie motivation. I will discuss few of those theories below.

2.1.2 Scientific management theory of motivation

Taylor (1911/34) proposed that workers are motivated mainly by salary. In his theory of

scientific management, Taylor contended that employees did not naturally enjoy tasks, therefore,

they needed close supervision and control by their managers. It does not encourage individual

creativity and high productivity as lazy workers may hide and take solace under team work.

2.1.3 Neo-human relation theory of motivation

Maslow (1943) began the neo-human relation theory of motivation in the 1950s. Maslow’s

theory was based on the psychological needs of the employees by proposing hierarchy of five

human needs that employees must fulfilled at workplace. Maslow argued that once a lower level

of a worker’s need has been fully satisfied, an employee would be motivated by the desire to

satisfy the higher need up in the hierarchy. Maslow contended that the lowest needs are

physiological needs (food, drink, shelter, sex, and sleep); the second higher needs are safety

needs (protection from elements, security, and stability); the third higher needs are love needs

(relationship, work group, family, and affection); the fourth higher needs are esteem needs (self-


esteem, achievement, status, dominance, and prestige), while the fifth highest needs are self-

actualization needs (achieving personal potential, self-fulfillment, and realising personal growth).

However, Maslow's definition of self-actualization is difficult to test scientifically; Maslow's

hierarchy of needs theory has some weaknesses. The hierarchy of needs theory is not universal

applicable because human needs may vary across cultures, individual differences and availability

of resources.

2.1.4 Two factor theory of motivation

Herzberg et al. For example, an employee will be motivated to turn up for work if an

employer provides a fair pay and safe working conditions, but they will not influence him to

work harder at his/her job.

Motivators are factors whose presence motivates employees to worker harder in order to

increase productivity. Also, increased pay in terms of overtime and piece rates might be a

motivator for some employees to some extent, and might not be for others.

2.1.5 Needs theory of motivation

McClelland‘s (1961) theory of needs identifies three types of human needs called

achievement, power, and affiliation. McClelland argues that the need for power is caused by the

need to make people behave in a particular way that they would not have behaved. Because

effective managers must positively make an influence on other also, he asserts that top managers

must seek power coupled with a low need for affiliation (Kreitner, 1998).

2.1.6 Equity theory of motivation

Adams’ (1965) equity theory is based on the principle of balance or equity. When employees

are evaluating equity/fairness, the employees often compare the job input (performance

contribution) to outcome (rewards and compensation), and they often compare the same with that


of their co- workers on the same cadre, category or position on organisational structure.

Equity theory reveals that employees are concerned not only with the amount of rewards they

receive for their performances, but also make comparison with the amount of rewards such as

salary increases, recognition and commendation which their colleagues receive. The resulting

tension forms the basis for motivation as employees are driven by their desire for what they

perceive as equity and fairness.

Ramlall (2005) contends that equity theory is based on three assumptions. First, equity theory

suggests that employees develop ideas about outcomes that constitute fair and equitable returns

for their performance contributions to their jobs and organizational objectives. Second, equity

theory states that employees compare what they perceive to be the exchange they receive on their

performances with their co-workers. Third, when employees perceive that their own rewards and

compensations are not equitable and fair relative to the exchange (rewards and compensations)

they perceive their colleagues on the same position or cadre are receiving, they will be motivated

to take actions they deem appropriate.

One of the weaknesses of the theory is managers should not always consider fairness in

determining all employee matters.

2.1.7 Expectancy theory of motivation

One of the assumptions of expectancy theory is that employees join organizations with

expectations about their needs, motivations, and past experiences. Expectancy theory observes

that motivation is a combined function of employees’ perception that their inputs will lead to

performance and of the outcomes that may result from the performance (Ramlall, 2005).

Vroom (1964) believes that employees behavior results from conscious choices among

alternatives referred to as Valence, Instrumentality, and Expectancy. Valence is the value


employees place on the rewards based on their needs, goals, and values, including sources of

motivation. Instrumentality is low when the employee perceives that the reward offered is the

same for all performances given.

One of the limitations of expectancy theory is that the relationship between effort and

performance is not perfect because they are moderated by employees’ skills and knowledge,

including the difficulty of the task. Also, employees’ skills and knowledge play an important role

as more skilful and more knowledgeable employees will find it easier to complete the job.

2.1.8 Intrinsic motivation

Hennessey and Amabile (2005) argue that intrinsic motivation refers to the desire to act in

one’s own interests or simply for the enjoyment of a particular activity. The proponents of

intrinsic motivation argue that employees are motivated to do their tasks because of the pleasure

or satisfaction that they get in performing their job functions. This motivation comes from within

an employee rather than from external rewards such as monetary incentives and others.

2.1.9 Extrinsic motivation

The extrinsic motivation consists of performing some activities with a feeling of being

pressured or anxious in order to ensure that a person achieves some results that he/she desires.

For example, extrinsic motivation causes employees to go to work because of the wages they

receive from their employers.

2.2.1 Rewards management theory

Having briefly discussed some theories of motivation above, it is important to discuss how

reward systems motivate employees in an organization. That is, highly compensated and

motivated employees serve as the competitive advantage for their organization because their


performance effectiveness leads an organization to accomplish its corporate goals. Entwistle

(1987) believes that if employees accomplish their performance outcomes successfully, it leads

to organizational rewards and performances; Akerele argues that wage differential between high

and low income earning employees is the root of low commitment and low efficiency.

Nwachukwu (1994) linked low productivity of workers to failure of some employers to

provide adequate compensation for hard work, which maybe demoralizing to some employees,

and can cause them to reduce their productivity. Therefore, good remuneration has been

identified by some scholars as one of the policies and organization can utilize to increase their

workers performance and ultimately increase the productivity of an organisation.

Flynn (1998) posits that reward and recognition programmes keep high spirits and

enthusiasm among employees, enhance their morale and produce a linkage between performance

and motivation. Ramlall believes that rewards enhance the level of productivity and performance

of employees on their jobs.

In conclusion, the above reviewed literature provided useful conceptual background on how

reward systems can motivate employees to achieve their performance outcomes and productivity.

2.2.1 Introduction

Throughout time, many have attempted to develop detailed theories and studies of

motivation. It would be very difficult to try to pinpoint one theory or even one technique that

seems to work better or is more effective for a certain organization. I hope to make some

judgment about the effectiveness of styles of motivation and satisfaction from one’s job under

these specific managerial levels.

2.2 Motivation

Although money may not be the most important consideration in the turnover intent of


some skilled employees, nevertheless, money remains an important factor in turnover decisions.

Kinnear and Sutherland (2001: 17) argue that skilled employees in South Africa need to earn a

competitive package and also have the opportunity of earning performance based bonuses. They

want their efforts to be rewarded and to have a fair share of the organisation’s success in

monetary terms. This argument also reflects the outcome of a research finding by Patron (2004:

21) who found that, although money may no longer be the most important motivator among

career professionals, nevertheless, it remains a good combination in the retention equation. In a

similar research conducted by Consumer Insight Agency (cited in Cruz, 2006: 24) it was found

that the black talent in various organisations want to earn enough money in order to start their

own businesses and become Chief Executive Officers (CEO). In their effort to retain critical

employees, various organisations have shifted their attention to determining the variables that

impact most favourably on the retention of core employees. The Towers Perrin study (cited in

HR Focus, 2003:3) shows that variables that motivate talented employees to remain in an

Organisation, are a mixture of both intrinsic and extrinsic factors such as performance-based pay,

employee stock ownership, and profit-sharing bonuses.

The First Bank has put into practice many of Herzberg's 'motivators' and shows it too.

Similarly Maslow's higher levels of need are less obvious and less easy to explain but of great

importance. Social needs are but a fact that we wish to feel part of something we share in. The

First Bank creates the opportunity for its community of employees worldwide to share in its

common goals and vision for the group. It is done by means of rewarding the people who

contribute to its success through their commitment and hard work. The next level 'esteem' -

refers to our need to feel valued, that what we do matters. The mindset at this bank is that

employees can 'make it happen' for themselves and for this there are opportunities for all


employees through promotion or training and then recognises their achievements.

One of the most interesting fact about the First Nigerian Bank is that the bonus structure

is one of the techniques it uses to motivate its employees and has proven to be extremely

effective, the bank also absolutely recognizes that there is more than just the dollars and cents.

Therefore the bank as a whole tries to address those more personal or intangible techniques to

motivation as well, such as a plaque or a gift for winning a contest for number of loans.

Individual-based rewards to highlight that person’s achievements is sometimes all a person will

need. The bank also offer performance incentive pay which is a motivational tool for the staff

which has successfully helped them achieve goals, Employees performance is measured along

with the key performance indicator (KPI) and constantly monitored through the performance

monitoring system. Staff are appraised at the end of every quarter based on individual key

performance indicator. Staff that meets 80% to 100% of their performance goals earn the full

payment of the performance incentive pay. This bank follows motivation theories and turns those

into practice like according to Herzberg meeting hygiene factors would only eliminate

dissatisfaction, but would not result in actual motivation. This can be achieved only by fulfilling

motivator factors, such as recognition, achievement, the work itself (i.e. meaningful, interesting,

and important work), responsibility, and growth, this is the gist of the motivation practices used

by this bank.

2.3 Human Resource Management

During the last decade, the personnel/HRM field has shifted from a micro focus on

individual HRM practices to a debate on how HRM as a more holistic management approach

may contribute to the competitive advantage of the organizations. Three different perspectives

have been used in recent researches on the relationship between HRM practices and performance


of the organisation, retention by the organisation and strategies of the organization.

2.4 Rewards

According to Salisu (2012, 2-3) financially packaged incentives and other monetary rewards are

frequently used by Nigerian banks as motivations for better performance. Stating further, he said

the performance of Nigerian banks could be linked to the kind of employees’ monetary

motivation systems implemented in the banks. Salisu (2012, 2) however stated that incentives are

intimately related to motivation and are inducements placed along the course of ongoing

relatives that keeps the activities directed towards one goal rather than another. He posited

further that “as the success of banks” performance hinged on the kind of employees they

possessed, employee motivations produce a well-motivated workforce for higher performance of

the banks. Babaita (2011,96),stated that the Nigerian banks actually take the motivation issues so

seriously to the point that it was stated briefly in their Annual Reports and Accounts as what they

statutorily do for all their employees. He added that “some of the Nigerian banks indicate that

they provide family medical cover for the work-force”, why some state that “when an employee

acting within the scope of his/her employment accidentally injures a third party, Isiaka

mentioned that some of the banks show the efforts of the workers through prompt promotions,

granting of staff loans for cars, houses, share purchase, land purchase loans, massive in-service

training, recognition of dedicated and loyal staff through long-service awards, and continuously

reviewing employees’ remuneration package. To that extent, it is clear and conclusive that the

banking industry in Nigeria takes the use of motivation and incentives deployment as a very

strong weapon to enunciate extra performances from their employees. At this bank almost every


role can be described in terms of specific job targets.

Then the performance of the employee is judged and duly reported, only to be followed

by a review of performance when the years ends. For the sake of high performance the payment

for such results are a great motivator. When the target is achieved the reward is made by means

of payments and subsequently named a bonus. When someone gets a target to gain a given

number of new customers or business every year. If she or he achieves this then the bonus is

given. While tougher targets entails to a higher bonus because achieving these stretch targets is

difficult.

2.6 The value of non-monetary rewards to employees

Reward package by the First Bank, like most other banks, offer funding of pension

schemes, health insurance, paid holidays. This package additionally offers each employee the

benefits of a choice of working hours and perks. At the heart of the package lies a highly

competitive salary package with perks which depends on their skills and professional expertise

regardless of any social stigma. Graded progression remains one of the best motivators for the

employees of this bank... The heart of the package is a competitive salary based on skills and

experience regardless of any social stigma. One of the most important motivators for the

employees is the recognition of good performance by graded progression...

2.5 Ways employers can motivate employees

A very crucial motivator for First Bank employees is good performance recognition and

graded progression where the employee are encouraged to 'make it happen' through personal

development. The bank trains and encourages its employees to develop their skills and

competency and their advanced professionalism helps the bank. It also helps its employees to

give back something to the community they live in and hence the bank tried to be involved in the


development of the community, this forms a better image of the bank the employee is thereby

motivated by the whole community to work more sincerely.

2.7 Major benefits of non-monetary rewards

If any bank employee who delivers the project ahead of time and within budget and the

organisation does due to this well and the individual performs well too, the additional payments

may be quite substantial. The major benefits for staff at the First Bank include:

- For good work employees get recognition:

- A collective sense of success is achieved when the business goes well

- Additional responsibility and development is obtained by them by means of doing well

regularly- When people do well in their work, the organisation rewards them.

2.8 Monetary motivation versus non-monetary motivation

There is a strong backing for money as a motivating factor. But there are research studies

which disagree with money being the only key motivator, stating that money only does not

significantly affect employees' motivation. Non-monetary rewards if used correctly are equally

as important. According to some studies significant management style, like the one found in First

Bank and also the dialect used by senior directors and executives are as important tools in

motivating the employees.

2.9 Conclusion

In most organizations workers are motivated through various rewards and incentives

including First Bank, these incentives are tangible or monetary, like salary compensation, some

incentives are intangible or non-monetary rewards like the sense of success or achievement

(Spector, 2003). Organizations like First Bank are improving retention and motivational

concerns and diminish employee turnover through various monetary and non-monetary rewards.


Salary is one of the hygiene factors hence money does not lead to high levels of motivation but

impact on motivation in a way. These include, Wallace and Zeffane (2001) noted, management

depend upon rewards like money as the main factor of motivation because according to

Maslow’s hierarchy of needs, money is a unique reward that can satisfy different needs such as

physiological need for food. Wallace and Zeffane (2001) noted, management depend upon

rewards like money as the main factor of motivation because according to Maslow’s hierarchy of

needs, money is a unique reward that can satisfy different needs such as physiological need for

food. Maslow’s theory was based on the psychological needs of the employees by proposing

hierarchy of five human needs that employees must fulfilled at workplace. The fourth higher

needs are esteem needs (self- esteem, achievement, status, dominance, and prestige), while the

fifth highest needs are self- actualization needs (achieving personal potential, self-fulfillment,

and realising personal growth).

However, Maslow's definition of self-actualization is difficult to test scientifically; the

hierarchy of needs theory is not universal applicable because human needs may vary across

cultures, individual differences and availability of resources.

Two-factor theory of motivation-Herzberg et al. Also, increased pay in terms of overtime

and piece rates might be a motivator for some employees to some extent, and might not be for

others.

Needs theory of motivation-McClelland‘s (1961) theory of needs identifies three types of

human needs called achievement, power, and affiliation. Because competent managers must

positively make an impact on others, McClelland recommends that senior managers should have

a thirst for power coupled with a low need for affiliation (Kreitner, 1998).


Equity theory of motivation- Adams’ (1965) equity theory is based on the principle of

balance or equity. When employees are evaluating equity/fairness, the employees often compare

the job input (performance contribution) to outcome (rewards and compensation), and they often

compare the same with that of their co- workers on the same cadre, category or position on

organisational structure.

Chapter 3

3.1- Introduction

The primary purpose of this research was to analyse whether designing a reward

programme with combined focus on both monetary and non-monetary rewards will result in the

increased employee motivation. This chapter refers to the design of the objectives of the study.

The chapter presents and in-depth analysis and interpretation of the results from the findings of

the study.

3.2- Research Method

This study specifically covers three branches of First Bank in Nigeria. The choice of this

case study is not unconnected with the fact that this bank has one of the largest employers of

labour in the financial industry in Nigeria. A total number of 150 questionnaires (50 for each

branch) were considered. The questionnaires were distributed among the staff and management

of the selected business branches. The random sampling technique was employed in the

distribution of the questionnaires. It suggests that each person who is eligible has the opportunity

of getting selected until the desired sample size is obtained. For data analysis reasons, the likert

scale responses have been accordingly coded. Subsequently the data thus collected were

analysed by making use of descriptive as well as quantitive methods.

These research hypothesis which are testable include:


1. H0: Compensation strategy has no negligible effect on Employees’ Productivity.

2. H0: Compensation strategy has negligible effect on Organizational Performance.

In research hypotheses testing, a model was identified which closely followed the idea conveyed

in the works of Butler et al (1997), and Butler and Gardner (1994). Butler et al (1997), and

Butler and Gardner (1994) have tested the hypothesis that managers disown the workers who

show low productivity, through the workers’ compensation program.

3.2.1- Research Design

The mixed method questionnaire was employed as the primary research instrument in the data

collection period to gather information from respondents at the First Bank. Majority of the

questions in the survey were of closed-ended type for the convenience of respondents and also

to achieve higher reliability under controlled observations. In order to test the validity of the

questionnaire after it was designed, a pilot study was conducted among random staff members

at the First Bank who have completed at least one year of their service to the bank. Then

appropriate amendments were made and the questionnaire was then released to the sample

population. The purpose of the cross-sectional research is descriptive; usually it has no

hypothesis, but the aim is to describe a population or a subgroup within the population with

particular focus an outcome or a set of risk factors (Levin, 2006).


3.2.2- Research Approach

What motivate workers cannot be generalized because, what motivate workers differs

from one worker to another. The reason for this is that individual needs, wants, desires, interests,

goals or aspirations differ from one individual to another. The research method used is primarily

quantitative approach but also used qualitative features. It focuses on numbers than words and

can be achieved with the use of questionnaires. Twenty (20) questions were carefully drafted

about incentives as a motivational tool and how it contributed to employees’ job positively or

negatively in First Bank. The qualitative part is included for respondents to give their opinion

outside the fixed option. There are two popular research approaches commonly used by scholars

and researchers; they are inductive and deductive approaches (Saunders et al, 2003). In view of

this, I decided to use inductive (qualitative) approach (Bryman and Burgess, 1994) in this study.

The inductive approach (Bryman and Burgess, 1994) to research study is a form of

qualitative research method. It gives room for research findings to emerge from the frequent and


significant themes in the raw data, without the limitations required by structured methodologies

(Thomas, 2003). In this study, I applied inductive approach to data collection and analysis of

interview transcripts; this assisted me in conducting analysis, interpretation and formulation of

some themes and patterns.

3.2.3- Research Philosophy

Research philosophy involves the epistemology that a researcher employed in a research

study to produce knowledge or reality based on the worldview of the participants. There are three

types of popular research philosophy commonly used by social scientists, including those in

business/management; they are positivism, interpretivism and realism (Saunders et al., 2003). In

this study, I decided to use interpretive philosophy. Interpretive epistemology is the assumption

or belief that meaning is socially influenced by culture and history and reality is constructed

subjectively. The researcher used interpretive philosophy so as to maintain the researcher as a

passive collector and expert interpreter of data, while she tries to maintain research objectivity.

3.3- Data sources/ information gathering

The population consist of any middle to senior level officer or professional at the First

Bank who working there and who has experienced a reward programme consisting both the

elements, the monetary and the non-monetary of rewards. Validity is an extent to which the data

are found to be true. Validity is one if the obtained results are truthful and believable. To

determine the validity, a series of questions are posed by the researcher who often will look for

the answers in the research of others to know whether the measurements are accurate or not.

(Ukssays 2003- 2013), Reliability is the extent to which results are consistent over time and an

accurate representation of the total population under study is referred to as reliability, if by using

another similar methodology the same results are obtained, then this research instrument is


acknowledged as correct and reliable, with which an individual's scores remain relatively the

same. (Ukssays 2003-2013). The reliability of this study was tested with the use of questionnaire.

3.3.1- Data collection/sample size

A basic decision about sampling which has to be decided is who or what population of

interest is (Czaja & Blair, 2005). According to Zikmund (2003) sampling procedure is something

which uses a few number of population of a population in order to make a conclusion about the

entire population. The sample population for the study at the Fist Bank consisted of a random

selection of bank employees. The questionnaires were e-mailed to nearly 200 employees who

have completed at least one year of job at this bank and included locals as well as those who

belonged to other districts. Those who did not wish to participate in the study were asked to

ignore the message. 150 respondents participated. There a confidentiality clause included to the

questionnaire and the participation was entirely voluntary. Although the technique of sampling is

a convenience sampling, yet the database represented a wide portion of respondents from

different age groups, job positions and expertise.

3.3.2- Questionnaire design/ interviews

The research questionnaire was designed in a way as to analyse whether monetary and

non-monetary rewards programme will result in the increase of the motivation of employees. The

questionnaire was used to answer the following questions

1) What do you think about rewards in workplace?

2) Do reward systems motivate employees to enhance their productivity?

3) What are the reward preferences by the employees, monetary or non-monetary?

Zikmund (2003) in his research states that the main objective of a research analysis is to know

the cause and effect linkage among variables. This study attempts to know the major factors that


causes the working individual to behave differently as compared to other persons. Shao (1999)

argued that research questions should designed in a way that involve questions with a choice of

specific responses so that the answer can be measured and analysed subsequently. When the

response was obtained by means of emails, random interviews were conducted to ascertain the

authenticity that the respondent is the same person who has replied to the email and not another

person.

3.3- Validity and reliability of the questionnaire

Validity is the measure to which a proof confirms the interpretations of the data are

correct and the manner of interpretation is appropriate. To know validity, it is necessary to post

series of questions by the researcher, after which answers are deduced in order to know whether

the measurements are correct. The research analysis in this study can be considered to be valid

due to the fact that the respondents played an effective role in answering the questions and the

respondents at the First Bank were given enough time to send the answers at their own comfort

and privacy.

Reliability is the extent to which the acquired results are unfailing over time, the real

representation of the population which is studied, is known as reliability. If the study has a

consistency with which an individual's score remain the same and can be determined by the help

of test-retest method at two different times, then it is reliable (Ukssays, 2003-2013). This study's

reliability was tested with the use of strategically designed questionnaire. A connection was then

found for the questionnaire and result gathered from respondents.

3.4-Data analysis

Respondents were required to give their own opinion about rewards in First Bank.

According to the findings by means of data collected, the majority of the junior and middle staff


consider rewards in the workplace in this bank as a major motivator which enhances the morale

of the employees and entice them to give their best in their respective job functions. While the

senior staff revealed that non-monetary rewards for hard work also increased productivity.

Rewards, however, are taken as an enhancer that enhances employees to work with even

more effort to attain a set target and helps drive performance to attain a difficult task. Most of the

respondents also suggested that the bank should attract and retain employees with both monetary

and non-monetary rewards.

No one disagreed that there was a great satisfaction which was obtained through getting

incentives or rewards.


Although everyone agreed to getting rewards, whether monetary or non-monetary, but

the choice of area where the wanted to avail this award differed.

The third part of the research is important because it establishes a fact as to whether non-

monetary rewards also boosts performance. All the respondents received incentives, however

some respondents partially agreed to this but no one disagreed. 70 of the respondents prefer

promotion, 40 respondents choose job performance, 20 of the respondents wanted profit sharing

and 30 of the respondents choose others. 60 percent of the respondents choose monetary reward

while 20 percent choose non-monetary rewards saying that it also goes a long way to support

employees’ performance. When investigated about the relationship between organisational

rewards systems and achieving performance targets at work, it was asked to explain how the

reward systems of the bank motivates the employees to meet their performance. More than 90

percent of the participants agreed that the bank’s reward systems drive employees to meet their

performance targets.

3.5- Limitation of the study.

There are many other factors which may affect the level of employee retention but to


time constraint other factors are not taken for research. The sample size was also limited. In the

study no intervening or moderating variables are considered. It is therefore recommended that a

consistent study and assessment of individual worker’s needs, wants, desire, hierarchical level

and their performance level should be carried out in order to know what motivates every worker

at every point in time, whether lower level or management staff, and therefore take necessary

actions to stimulate their efforts towards high standard performances, efficient, and effective

project execution, timely project completion, and reward them accordingly. Our regression

results revealed that an effectively formulated and implemented compensation strategy has the

potential beneficial effect of enhancing workers’ productivity in specific and the overall

organizational productivity in general.

CH-4 Findings

Introduction

The primary aim of this study was aimed at analyzing whether designing a reward

programme with the joint focus on both monetary and non-monetary rewards will result in

increased employee motivation and organisational benefits. To address this need, this study

explored the impact of non-monetary and monetary reward programmes on the motivation of the

workers by means of an administered survey. In this chapter an in-depth analysis as well as

assimilation of results from the finding of the study, is presented. The participants' responses

gathered from this survey were sufficient to address all the mentioned three research questions

laid out in this study. As discussed earlier, the aim of this study was to understand about those

factors which act as 'motivators' for the employees and also how much these factors contribute to

the employees’ motivation. The findings suggest that rewards have a great motivation potential


which go a long way in motivating the employees to an extent where they stretch their efforts to

achieve targets.

Discussion

What are the reward preferences by employees? The mean (average) ranking of the

different benefit categories is shown below. The ranking scale was 1=most important; 7=least

important. It is clear that financial benefits rated most highly with employees and these were also

the reward structures rated highly by organisations. The research is supported by findings in the

study conducted by Thumbran (2010) and Nienaber (2009), which indicated the most important

reward category was monthly salary/guaranteed remuneration. It was the second place where the

ranking of performance recognition came up. As discussed in this chapter, while some

organisational benefits (retirement benefits, medical aid) were rated highly by the organisations,

organisational benefits as a whole were not rated highly by employees when ranking their own

reward structure. The same was true for learning opportunities and environs of work. The study

is supported by findings in the study conducted by Thumbran (2010) and Nienaber (2009), which

indicated the least important reward category was quality work environment.

Career development and work life balance appeared to have been rated more highly by

employees than the importance attached to these benefits by organisations. These results suggest

that organisations could pay more attention to these rewards particularly in South Africa. It can

be assumed that given the educational disparity between the South African workforce, and

increased focus on the Broad Based Black Economic Empowerment, there is an expectation that

these elements are up weighed. There are further opportunities for organisations to test and

survey this finding for future application.

It can further be assumed that due to the current economic climate and the demographic


nature of the population sample, male dominant; majority of the respondents fell within the range

of 30-39 years of age; non-white dominant; it is these factors which have partially resulted in

financial benefits being ranked the highest. It can be assumed that the majority of the

respondents are in their wealth creation’ phase in their lives. Economic and knowledge creation

is what these respondents strive for.

Organisations are cost cutting and restructuring with the aim of getting leaner. Fit for

purpose structures are being put in place to ensure no job duplication and accountability over

responsibilities makes it harder for employees to benefit financially to the extent they would

have done so in the past. Furthermore, as most of the participants worked in the financial sector,

and sales positions it can be assumed that yearly increases and performance bonuses are not as

high in recent years as was in the past. Due to this, there has been a significant strain on

disposable income of households; increased inflation and increases in fuel costs. It is with this in

mind that respondents may have indicated financial benefits as being the most important reward

category benefit in this study.

Motivation of the Banking Staff

The data was analysed into means based on 14 motivating variables and ranked in a

decreasing order of importance to the motivational level of the staff. The results show that the

staff motivational level is generally high ( X =3.59) in the banks of the Cape Coast Metropolis.

This is mainly due to the high affirmative perception ( X = more than 3.51) by the workers that

they are provided with free medical by the bank; travelling and transport allowances opportunity

to improve their competencies through training and the provision of necessary tools to

effectively carry out their work. The rest include opportunity to attend workshops, seminars and

conferences; opportunity to work in areas of great interest; and adequate transportation


(official/private) for their work (Table 5). This finding is similar to what Storwall (2004) as

quoted by Bergström and Ternehäll (2005) found in his study that bank and insurance industries

have the most motivated workers. Majority (44 representing 54.3%) of the respondents agreed to

the fact they were being provided with free medical care whilst 37 (45.7%) disagreed. This could

mean that the staff place much importance on their health and any attempt to ensure they are

healthy.

Thus, a critical look at the health and safety policies of the banks of the Cape Coast

Metropolis can improve the bank staff motivation in the Metropolis. In support of this finding,

Cole (2000) was of the opinion that companies which cater for their workers through the

provision of welfare facilities are likely to reduce the incidence of labour turnover as it is the

belief of the respondents too. Of the 81 bank staff who participated in the study, majority

(76.5%) of them agreed that providing them with opportunities to improve their competencies

through training will improve their motivation. This finding confirms the assertion by Franco,

Bennett, Kanfer and Stubblebine (2000) that managers should ensure that staff improve their

competence (through training) in order to be motivated in their jobs.

Although the overall motivational level was high, the results show that the following factors only

contributed averagely ( X between 2.51 and 3.50) to the overall staff motivation. These include

the staff receiving negotiated salary for their work; having the opportunity to take part in

decisions; receiving appropriate recognition from the banks and receiving promotion

immediately when they are due. Others are the staff being provided with accommodation or

support to secure one; being assured of study leave when desired and receiving other monetary

reward besides their salaries.

Over half of the respondents (57%) expressed their agreement to receiving appropriate


recognition. Thus, the importance of receiving appropriate recognition from the banks was

averagely scored ( X =3.30). This implies that the staff perceived that receiving appropriate

recognition would generously affect their overall motivation and thus, it should be maintained.

This finding is consistent with Herzberg’s two factor theory of recognition being a satisfier (job

related) which increases the satisfaction at work.

Work Environment:

In the case of work environment, the overall model was also not significant. However;

the effect of tenure was marginally significant. Pairwise multiple comparisons (of all possible

pairs) of Tenure categories, using Tukey-Kramer’s multiple comparison adjustment for the p-

values and confidence limits, showed that respondents with a tenure of 3-5 years rated the

importance of work environment higher than those with a tenure of 6-8 years (controlling for the

effects of the other demographic variables). Although not significant, the overall trend appears to

be that those with a shorter tenure rated work environment as more important than those with a

longer tenure.

The staff were of the view that receiving promotion immediately when they are due

contributed averagely ( X =3.26) to their motivation. A total of 53 (65.4%) out of the 81 agreed

to receiving timely promotion. Last but not least, the results revealed that the respondents

perceived receiving monetary reward besides their salaries to have averagely contributed to their

level of motivation. Comparatively, those who agreed were more (54.3%) than those who

disagreed (45.7%) to receiving monetary reward.

This finding conforms to Herzberg’s theory that feelings of job satisfaction is more

important than money in achieving high motivation (Herzberg et al., 2004). This study is backed


by findings from the Saratoga Institute which acknowledged the practices of employment which

aided retention and motivation. One of the most important drivers in employment retention and

motivation was ‘culture and work environment’.

Learning Opportunities

In the case of Learning Opportunities, the overall model was marginally significant. The

effect of Role was significant. Respondents from the Sales and Technical roles may be confined

to one type of skillset and are in requirement of further competencies that may be marketable in

the workplace. It is for this reason that they may have highlighted Learning Opportunities as

significant.

Summary

Career development and work life balance appeared to have been rated more highly by

employees than the importance attached to these benefits by organisations. These results suggest

that organisations could pay more attention to these rewards particularly in Nigeria.

Compensation strategy is seen as one of the most important strategies in the human resource

management function as it influences the productivity and growth of an organization. Hence,

modern corporate organizations have deemed it imperative to incorporate effective compensation

strategies for workers as part of their corporate goals and objectives. This is believed will shape a

work force focused on strategic performance goals and capable of achieving them.

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