CHAPTER ONE

INTRODUCTION

1.01 Background to the Study

Rewarding is an essential component of any organization, institutions and business of any

nature. This system has been part of childhood when children in schools are rewarded on
their good performance. The study of Lawler (2004), proved that rewarding both financial
and non-financial has always been effective for human resource in the business process. In
relevance to employee performance, rewarding always served as a source of motivation and
increased engagement. Pratheepkanth (2011) discussed human nature that an individual in
organisation performs well when he is motivated and the primary source of motivating
employees is effective reward systems in the organisations. Pratheepkanth (2011) further
discussed that in the field of neuroscience rewarding or reward system is referred to as the
recognition and functioning of human brain which is responsible for reward-related
recognition. In this system, the human brain recognizes things as compensation, prize,
remuneration or incentive as a result of outstanding performance. The reward system in
organizations has a central function in human resources management, as it is used in meeting
the organization's objectives (Alfandi and Alkahsawneh 2014). The study of Galtress
Marshalland Kirkpatrick (2012) examined two forms of rewards, namely financial rewards
and non-financial rewards. The financial rewards are related to monetary prizes such as
compensation, increased salary, home allowance, car allowance etc. whereas non-financial
rewards are job promotion, appreciation, recognition, appreciation lunch or dinner etc.
(Galtress, Marshall and Kirkpatrick (2012).

It has been observed that better outcomes in terms of performance and engagement can be
attained if it is based on motivation because the workers show a lack of interest when there is
no proper reward system in the organization (Alfandi and Alkahsawneh, 2014). The study of
Soutschek (2017) shows that motivation arises from a reward system and is not gender-
specific or concerned with different culture or backgrounds. However, the priorities of getting
financial or non-financial rewards can be dependent on the abovementioned factors; also
known as intrinsic and extrinsic rewards. In addition to this, it is also said that rewards do not
always mean monetary benefits, sometimes they are based on recognition, appraisal or
appreciations (Shields, 2015). The research therefore focuses on both facets of the reward
system (extrinsic and intrinsic), but to explore the effect of the intrinsic reward systems on

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employee performance and the relationship of extrinsic reward system in some selected
microfinance banks in Abeokuta, Ogun State, Nigeria.

According to Trunk, Babnik and Breznik (2012) in order to understand the challenges of
reward system it is important to understand the vital role of Human resource management.
Authors Trunk, Babnik and Breznik determine that human resource is important part of
organization that can fulfill the needs of employees. There are many practices of human
resource management one of which is managing the rewards system efficiently. Perogamvros
and Schwast (2012) stated that "reward system in any organization determines the set of
procedures through which the management can control the behaviour of employees at work".
Lam and Khare (2010) also discussed that HR professional evaluate the employee
performance aligned with business objectives to reward them. Lam and Khare highlighted
that this reward system must have a positive value to be received by the employees otherwise
it will not be regarded as reward.

It has been observed by Martono (2018) that employee performance can become a low
standard if there is inadequate motivation. In order to attain a firm's productivity and generate
more revenue, it is important that the employees should be well engaged and motivated
towards the work. Rewarding not only enhance their motivation but also help them to support
their extra expenses that every individual desire. Study highlighted various advantages that
are associated with the effective rewarding system such as good performance and increased
motivation (Martono, 2018). Not just in terms of good performance and employee
productivity it has been observed that motivated employees also keep the customers satisfied
by meeting their expectations. Because a good performance that is rewarded by the
organization is more likely to be repeated, in comparison to those are left unrecognized or
unappreciated. In return, consistent customer satisfaction generates more revenue to help
companies to gain a competitive position on the market with an increasing reputation and
loyal clients (Gungor, 2011).

On the other hand, the inadequacy of motivation and poor reward system results in negative
consequences in terms of a low level of satisfaction in employees, lack of concentration in
work, high employee turnover rate, taking early retirements and dissatisfied customers. Most
companies spend more in training and employee development to get more skilled workers
into the business (Karami, Dolatabadi and Rajaeepour 2013). Human resource management
of an organization has an approach for employee staffing and retaining considering people as

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an asset also known as human capital. The value of this asset can be enhanced through
investment. The current challenges in human capital management include retention and
attraction of quality individuals, scarcity of skills and increased market-competitive salaries.
In private firms, these challenges are very common because of increased competition and
industrialization. The firms are moving to a global level and thus require many skilled
workers that can add value to their organization. But to ensure that employees are satisfied,
the firm must take effective steps that can overcome the issues of demonization in employees
(Ngwa, 2019).

The organizations must ensure proper planning and management to formulate a rewarding
system. Rewarding systems are developed with the integrated efforts of the company's human
resource department and higher management. It is important for the company to create a
system that has the ability to preserve more quality workers and sustain it for a longer period.
Since the globalisation has increased and technology has improved, there are many
opportunities for the enterprises to keep their employees motivated and engaged in a more
efficient manner (Ojeleye and Okoro, 2016). Therefore, the most important investment of the
business is investing in people because they are the actual backbone of the company. It is
more advisable to establish a good rewarding system rather than spending on hiring new
employees because of the high turnover rate. Lack of a good reward system, low job
satisfaction level and non-competitive salaries are the key reasons because of which
employees look to find other job opportunities and switch when they find one that is more
attractive in terms of financial and non-financial benefits (Wilson, 2005). This study,
therefore, aims to identify the different types of intrinsic and extrinsic rewards given in some
selected microfinance banks in Abeokuta, Ogun state and the impacts on the performance of
employees in the selected microfinance banks.

The selected microfinance banks used in the research study is continuously improving their
key strategic human resource management area in terms of establishing a new and better
reward system. Meanwhile, the selected microfinance banks used as the study area in this
research work is looking for a more cost-effective strategy and therefore it is planning to cut
the cost in the Remuneration area. Remuneration is defined simply as the money paid for
work which can be in the form of salaries, bonuses, incentives etc. The company must look
for other effective strategies in order to keep their employees motivated.

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1.02 Statement of the Problem

Employees nowadays are more educated and are more aware of their rights and
responsibilities. As employer expects that workers should work more efficiently and
consistently improve quality of work, in the same way, employees also have increased
expectations from the owners in terms of financial and non-financial rewards. Therefore,
employees always look for more incentives in the form of rewards (Alalade and Oguntodu,
2015). The selected microfinance banks used as the study area is maintaining a worldwide
network of professional firms in different parts of the country, while managing 207,050
employees. It provides different consultation services regarding audits, accounting and
finance, risk management, tax and other advisory services. It has been reported that the
selected microfinance banks spends around $976 to $32,000 annually on employee
compensation and bonuses (from annual report, 2020).

Though rewards and benefits are crucial part of human resource management yet there exists
a wide gap between the reality rhetoric aspects. In the theories given by Terera and Ngirande
(2014) and Ibrar and Khan (2015), it is mentioned that compensation is important for
employee motivation yet, in a practical scenario, it has been observed that companies pay less
attention to this aspect. Considering this scenario, the research is aimed to identify what type
of extrinsic and intrinsic rewards are given in the selected microfinance banks and how they
are impacting the employee performance in relevance to the case of the selected microfinance
banks used as the study area. Through Glassdoor reviews of employees, the company
provides good compensation and benefits, yet this study explored how extrinsic and intrinsic
rewards influence their performance (Glassdoor Review, 2020).

1.03 Objectives of the Study

The purpose of this study is to examine the effect of compensation strategy and reward

system on employees.

i. To access the relationship between salaries and wages and employee satisfaction in

manufacturing industry.

ii. To identify the influence of fringe benefits on employee satisfaction in manufacturing

industry.

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 iii. To ascertain the relationship between training and development and employee

satisfaction in manufacturing industry.

iv. To examine the effect of job promotion on employee satisfaction in manufacturing

industry

1.04 Research Questions

In pursuit of the research objective of the study, the following research questions have been
formulated.

i. Is there relationship between salaries and wages and employee satisfaction in

manufacturing industry?

ii. Does fringe benefits have influence on employee satisfaction in manufacturing

industry?

iii. What is the relationship between training and development and employee satisfaction

in manufacturing industry?

iv. Does job promotion effect on employee satisfaction in manufacturing industry?

1.05 Research Hypotheses

The following hypotheses will be tested in this study, the study formulated the following null
hypotheses to guide the study:

H01: There is no significant relationship between salaries and wages and employee

satisfaction in manufacturing industry.

H02: Fringe benefits does not have influence on employee satisfaction in manufacturing

industry.

H03: There is no significant relationship between training and development and employee

satisfaction in manufacturing industry.

H04: Job promotion does not have effect on employee satisfaction in manufacturing

industry.

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1.06 Significance of the Study

The significance of the study includes;

In order to clarify the interaction between the reward system and the performance of
employees in the organization of the study area, it is hoped that work would improve
knowledge and appreciation of the effects of the reward system on employees’ performance
in the organization. As discussed below, the following would significantly benefit from the
study:

The suggestions that appear in the study should be helpful to the organization policymakers
as they provide management the knowledge on the subject matter. It will improve operational
processes/personnel efficiency and performance, for private and public employees. It is also
hoped that industry companies will use the findings of the current study to develop and
implement strategies aimed at enforcing fair reward systems designed to better the individual
and group performance of employees and help improve the long-term efficiency and
effectiveness of organizational processes.

Employees would also be more informed of the reward problems within the organization, so
they are correctly informed of what their boss wants to minimize hostility between them and
their employer. A harmonious working environment requires high efficiency and productive
output. This study will also explore the impact of non-monetary and monetary reward
programmes on organizational staff performance thereby contributing to the increased overall
performance of the organization.

The Future Researchers: The study will be useful to those who will carry out studies in
related areas in future. It will serve as a reference material to them. Even, the findings can
provide the bases for further studies.

1.07 Scope and Limitation of the Study

This study is limited to the employees of organization of some selected microfinance banks in
Abeokuta city, capital of Ogun state. It will also cover the organizational reward system and
consequent staff performance.

Limitation of the study

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

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

1.08 Historical Background of the Study Area

1.08.1 Historical Background of AB Microfinance Bank

The AB Microfinance Bank is one of the best financial institutions in Nigeria. It was licensed
by the Central Bank of Nigeria (CBN). Its head office is in Lagos State. Other branches of
AB microfinance bank are within Lagos state, Ogun State, Ondo State, and Oyo State.

The microfinance bank is very passionate and fully committed to helping business owners
and entrepreneurs across Nigeria. AB microfinance bank makes it easy for individuals to
obtain loans.

This financial institution is a Limited Liability Company. It is also regulated by the Central
Bank of Nigeria (CBN).

AB microfinance bank has an outstanding relationship with a group of strong international

shareholders who are committed to making financial services easily accessible in Nigeria.

Some of the shareholders include the African Development Bank, Access Microfinance
Holding AG of Germany, International Finance Corporation of the World Bank Group, and
KfW – the German Development Bank. They worked together to establish to achieve the goal
of setting up and managing microfinance banks in Asia and Africa. Some of the countries
there have been able to achieve this goal are Nigeria, Zambia, Madagascar, Liberia, Tanzania,
Rwanda, Georgia, Brazil, Tajikistan, and Azerbaijan.

1.08.2 History of Lapo Microfinance

In 1987, the Lift Above Poverty Organization (LAPO) started as a non-profit entity at
Ogwashi-Uku in present-day Delta State. The Institution was established as a Non-
Governmental Organization (NGO) by Godwin Ehigiamusoe in response to the effects of the

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implementation of the Structural Adjustment Programme (SAP) in 1986. In 1991, the Ford
Foundation gave a grant to LAPO. LAPO was formally incorporated as a non-profit, non-
governmental organization with the Corporate Affairs Commission, a federal agency, in
1993. In 2004, LAPO scaled up as a sustainable and effective lending institution drawing
inspiration from best practice model of Grameen and ASA methodology in Bangladesh.

In Nigeria, LAPO has partnered with the Grameen Bank. In 2010, LAPO transformed its
Microfinance activities into a regulated microfinance bank, LAPO Microfinance Bank
limited, while the remaining activities continued under the LAPO NGO.

In 2010, LAPO Microfinance Bank obtained the approval of the Central Bank of Nigeria
(CBN) to operate as a state microfinance bank and in 2012, it got an approval as a national
microfinance bank. It celebrated their one millionth client and one billion dollars cumulative
disbursement in 2013. In 2014, LAPO MfB was awarded ‘Microfinance Bank of the Year
2013’ by Business Day and Leadership Newspaper.

LAPO stands for “Lift Above Poverty Organization” was originally established as a Nigerian
NGO in 1987 with a determined mission to help local Nigerians to move out of poverty. It
was expanded as an MFI in 1990, and was registered as a microfinance bank in 2007.

LAPO was formally incorporated as a non-profit, non-governmental organization with the

Corporate Affairs Commission, a federal agency, in 1993. In 2004, LAPO scaled up as a
sustainable and effective lending institution drawing inspiration from best practice model of
Grameen and ASA methodology in Bangladesh.

LAPO MfB is the largest microfinance bank in Nigeria with 1.1 million clients and 327
branches currently operating in 26 out of 36 states in the country.

The Nigerian government cued into this popular thinking in 2005 when it inaugurated the
microfinance banking scheme. This was founded to provide finance to economically active
poor excluded from financing by conventional banks, provide employment, engender rural
development and reduce poverty.

LAPO is a Nigerian organisation with a microfinance bank dedicated to self-employment

through microfinance and an NGO, a non-governmental, non-profit community development
organization focused on the empowerment of the poor and the vulnerable.

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LAPO focuses on assisting the poor, especially the women, in raising their socio-economic
statuses. It not only acts as a microcredit institution, but also assists clients in overcoming
problems beyond the lack of funds (Business capital), such as illiteracy and environmental
degradation (which often aggravates poverty). Moreover, it aims to enhance leadership skills,
literacy status and political participation among poor women. It empowers women by
providing opportunities for them to learn income generating skills such as sewing, food
processing and soap making.

1.09 Operational Definition of Key Terms

Compensation: This refers to direct and indirect rewards given to employees on the basis of
the value of the job, their personal contributions and their performances.

Performances: The extent to which an employee or group of employees have gone in

achieving the set goals or standards.

Employees: Person who work for compensation weather direct or indirect for another in
return for stipulated series.

Organization: A group of people who form a business in order to achieve a particular aim.

Public Sector: The area of the nation’s affairs under governmental rather than private control.

Policy: A course of action adopted and pursued by an organization, government, ruler,

political party etc.

Target: A result arrived at a goal or objectives aim at something.

Productivity: The measure of the output of goods and series relative to resources available.

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 CHAPTER TWO

LITERATURE REVIEW

2.01 Conceptual Review of Relevant Concepts

2.01:1 Concept of Reward System

Reward system applies to all workplace resources available which can be used to recruit,

maintain, motivate (inspire) and reward workers (Armstrong, 2013). The lack of rewards can

create an uncomfortable atmosphere, undermining the workers' ability to work and may lead

them to flee their careers. Organizations also use financial rewards to reduce attrition in the

workforce and motivate workers, but this may not be the best long-term motivator

(Armstrong and Brown, 2011). This is the material and psychological achievement that

enhances satisfaction with a well distributed reward (Mbah, Mgbemena, Ejike 2015).

Thompson (2002) has defined reward as an appreciation for employees' additional

contributions in cash or in kind to the organization and this rewards could be intrinsic or

extrinsic in nature.

Intrinsic Rewards

These are inherent rewards within the work itself. For example: achievement, diversity,

challenge, independence, accountability, personal and professional development. They also

include the status, recognition, praise and self-esteem of the superior and the colleagues

(Mahaney and Lederer 2006). Intrinsic benefits improve self-esteem and satisfaction.

Intrinsic rewards are drawn from the nature of the task itself and include aspects such as

pleasant, difficult tasks, self-management and responsibility, diversity, imagination,

opportunities to make use of talents and skills, and a proper contribution to the success of

actions. It is known that employees are motivated to work hard and achieve higher results

10
when they are proud of their work and believe they make a significant contribution to the

business's performance and have fun, challenging and rewarding tasks (Mahaney and

Lederer, 2006).

Extrinsic Rewards

Extrinsic rewards go beyond the task itself. They include pay, fringe benefits, workplace

security, promotions, private office space and the social climate. Some examples are fair

salaries, salary increases, incentives for performance, and indirect forms of payment such as

compensatory off-time (Mahaney and Lederer 2006). Extrinsic rewards are used to

demonstrate that the business takes teams' commitment to quality seriously. Components of

employees' reward systems based on the study aims are, however, to be discussed, including:

pay reward, recognition, a conducive working environment and the development of staff.

2.01:1 Pay Reward

Pay reward can be related to the encouragement of extrinsic. This is largely due to external

influences of a financial nature. The advantages and rewards have been discussed whether

they really inspire or drive workers to work. According to Ryan and Deci (2012), the word

"extrinsic motivation" is different from the success of a case. Extrinsic motivation encourages

employees to work for the prize. In other areas, rewards encourage people to receive rewards.

In their opinion, the ultimate strategic objective is to help them achieve their organizational

objectives, ensuring that they have the qualified, competent, motivated and committed

individuals they need. The basic philosophy of the strategy is to recompense people for their

benefit. The purpose is therefore to create incentives based on the principles that the values of

the organization are willing to pay for. Ejumudo (2014) reports that there is still a debate

about whether money motivates, however, there is the argument that money can take on

different levels, since it can serve large requirements.

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2.01.2 Employee Recognition

Employee recognition is a kind of non-financial/non-cash payout which can be in social

approvals and which really appreciates a well-documented work (Okwudili, 2015); Lotta

(2012 ) argues that financial rewards generally motivated employees to increase their work,

adding that the non-financial benefits of employees are greater compared to the effectiveness

of Nelson (2014). Bruce and Walton (1992) receive many non-monetary rewards, such as

donations, prizes, trips and other incentives, which are more visible and/or comparable with

financial advantages. The less tangible incentives, for example, relate to work flexibility,

work independence, recognition of work and improvement potential. Non-monetary rewards

should therefore be used for obvious purposes, particularly for workplaces or team

opportunities.

2.01.3 Conducive Work Environment

Although Ryan (2013) has not shown empirical evidence, it claims that non-financial rewards

in the form of a favorable working environment can have a higher impact on the satisfaction

and motivation of employees than traditional financial rewards. His statement is based on the

findings of the Hay Group report. The study mainly revealed that many employees have left

their jobs due to the management's poor attitude towards "climate career development,

appreciation, and other non-financial benefits." Eisenman (1995) says: "The environment the

workplace provides is a source of worker influence. In other words, the hierarchy is clear and

one assumes that those controlled by a person must strictly comply with the requirements of a

person with greater authority. He pointed out that another approach is to question what makes

a good or poor work. A more sophisticated approach is to discuss and then check how happy

they are. Failure to conduct the workplace could detect employee dissatisfaction. This might

be obvious to him if a worker considers him to be refused the position, to be inadequately

12
organized, to have insufficient training for workers, to be a senior officer assigned to the job

of a junior officer, to have unsatisfactory pay and inconsistent wages, etc.

2.01.4 Staff development

Staff development is recognized as a key element for achieving organizational objectives and

goals. In order to sustain economic and efficient performance, it is important to improve

employee contributions to the goals and goals of an organization (Rajah, 2016). Anitha

(2014) said organizations require training and career development to ensure that staff remains

committed, help employees build confidence in their work skills and increase their degree of

engagement. If the company does not use people development as a strategic tool, both the

employee and the company can be destroyed (Caplan, 2014). Organizations must ensure that

career development plans for all employees are implemented and that the grade and difficulty

of present roles and a vision for future roles are recognized and development opportunities

addressed to meet their individual needs and ambitions.

2.01:5 Employee Performance

Performance is the quality of a function that is evaluated for accuracy, completeness, cost and

expectations of time. Performance measures enable organizations to understand, manage and

improve business. Efficient performance measurement helps organizations to see how well

they do, to determine if these organizations meet their objectives, to meet their customers, to

monitor their systems and to change the situation (Richard, 2009). In Elger's (2007) words,

"performance is the implementation of a complex series of measures which combine the

skills and know-how to achieve an outcome that pays off; and participant's performance is

defined as an individual or a group of people engaged in a collaborative effort."

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The performance of employees includes everything that affects employees and contributes

directly or indirectly to their work. Performance demands behavior as well as results. The

action emanates from the performer, which translates the product of representation into

motion. Activity is not only a performance indicator but also its own outcomes, which can be

measured independently of the impact of physical and mental activity on activities. The

instructions should be consistent with the real practice of high-performance systems and

translated into actual practice.

Employees need training in group dynamics and interpersonal relations and in systems to

better understand the coincidence and interaction of all aspects of their business. Trainers

play an important role in guiding staff in their performance and financial results.

2.01:6 Adaptive Performance

The extent to which someone adapts to changes in the working environment or roles is

described as adaptability (Griffin, Neal and Parker, 2007). For example, it involves creative

problem solving, addressing uncertain or unpredictable job situations, learning new tasks,

technologies and procedures, and adapting them to other people's cultures or physical

environments. Many researchers have argued that adaptive performance differs from the

individual elements of successful work place (Allworth and Hesketh, 1999; Griffin, 2007;

Pulakos, Arad, Donovan and Plamondon, 2000). In addition, Sinclair and Tucker (2006) saw

adaptive performance as a different part of their work performance. Many authors also used

various names for adaptive performance.

2.01:7 Counterproductive Work Behaviour

Koopmans (2011) defined counterproductive working behavior as behaviour that affects the

well-being of a company and includes activities. Fox, Spector and Miles (2001) identified

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harmful working activities involving aggressive acts such as violence and robbery, or subtle

acts, such as a voluntary refusal to comply with orders or abuse. In addition, Robinson and

Bennett (1995) described workplace deviance as a conduct that violates voluntarily

organizational standards and undermines the well-being of the organization and its members.

This definition characterizes the absence of any moral values at work, but that conduct

deviates from formal and informal rules imposed by practices, policies and regulations. This

approach actually argues that deviant behavior should in fact at least be able to damage the

organization's well-being and its members, eliminating breaches of decorum such as bad

manners and other social mistakes.

2.01:8 Contextual Performance

Contextual performance refers to activities which do not contribute to the technical core, but

help the psychological and social organization, and fulfill the organizational goals

(Koopmans 2011). Contextual success not only involves acts such as helping colleagues or

being a trustworthy member of an organization, but also ideas on how to enhance work.

There are three key assumptions about task-based differentiations between task and

contextual performance:

i. Task-relevant activities vary from one role to another whereas contextual performance

can be fairly comparable across occupations.

ii. Task performance is related to ability whereas contextual performance is linked to

personality and motivation. Contextual strategies for "stabilizing" include actions of

organizational citizenry with five elements: altruism, empathy, civic virtue, courtesy

and sportsmanship and other elements of organizational spontaneity.

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2.01:9 Task Performance

The portion of management / administration includes, for instance, sub-dimensions like;

i. plan and organize,

ii. Guidance, direction and motivation for subordinate and feedback,

iii. Training, coaching and subordinate development, and

iv. Successful communication and consultation (Borman and Brush, 1993).

Some terms sometimes used for tasks include: skills for work-specific job competencies;

professional competencies (Griffin, Neal and Parker, 2007). Task performance also includes

quantity, quality and knowledge of the work of Campbell (2001). Other researchers took care

of specific task performance aspects such as innovation and customer-driven behaviour.

Management work success includes: response feedback (getting something done,

decisiveness), mission structuring (led management, planning) and monitoring, assessment

and assessment (resolving problems). Tett, Guterman, Bleier and Murphy (2000) also

distinguished managers from traditional roles (determination, planning), acumen and

concerns (employment knowledge, amounts and qualities) at work.

2.[Link] Factors reflecting Fringe Benefits and Employee Performance:

Based on the review of literature and expert validation, the following independent dimensions

or constructs reflecting the fringe benefits are Rewards and Recognition, Work Flexible

Schedule, Health and Life Insurance Coverage, Retirement Plan Contribution, Allowance

(Travel and Food) and Dependent and Education Assistance. The dependent factor is the

Employee Performance: (Conceptual model)

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Rewards and Recognition: Organizations use prizes and acknowledgment to propel

representatives and exhibit that they are valued. Frequently, prizes and acknowledgment

appear as additional pay for representatives who complete the exercises in their job depiction

and meet their destinations. Prizes and acknowledgment can likewise be given for group

based achievements or for meeting venture based targets. Prizes and acknowledgment might

be financial (rewards) or non-money related (affirmation in an organization pamphlet or

during a customary group meeting). They may likewise be tokens that cost cash, for example,

blessings or celebratory dinners (Conceptual model)

Work Flexible Schedule: Adaptable working hours are turning out to be increasingly more

typical in the present working environment. A flexi time game plan expects representatives to

be grinding away during a predefined centre period yet lets they in any case organize their

hours to suit themselves. It can assist with decreasing worker turnover and increment

representative confidence and responsibility, (Conceptual model).

Health and Life Insurance Coverage: Health insurance is one of the most desirable benefits

the management can offer to its employees. The most widely recognized incidental

advantages offered to representatives incorporate mixes of protection inclusion. Normally, it

is given to the employees in gathering extra security, short-and long haul inability inclusion,

and medical coverage alternatives. Businesses regularly share the expense of premiums with

representatives with an end goal to counterbalance the all-out expense to the worker. 4.

Retirement Plan Contributions: One of the most significant incidental advantages a business

can offer is commitments to a representative's retirement plan. A few organizations offer

matches on the employee’s salary component, while others make qualified commitments to

retirement plans without expecting workers to make commitments themselves. These plans

can be amazing assets in putting something aside as long as possible and give pay to workers

well beyond their non-fringe benefits such as salaries and perks (Conceptual model)

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Allowance (Travel and Food): An amount paid by your employer to cover expenses such as

accommodation, food, or drinks while you travel for business is typically know as a travel

allowance. There is also another type of allowance, called the living-away-from-home

allowance (LAFHA), which compensates you for additional expenses when you are required

to live away from home due to work duties. Any expenses incurred on meals and incidental

expenses may be deductible against the allowance if certain criteria are met (Conceptual

model)

2.01:10 Job promotion

According to Mathis, Jackson and Valentine (2013), promotion occurs when an employee is

transferred from one position to another in a higher reward, responsibility and level in the

organization. While Robbins and Judge (2013) state that job promotion will provide

opportunities for personal growth, more responsibility, and increased social status. If job

promotion is good, it provides satisfaction to employees. Job promotion is an increase in

workforce or employees in better jobs, compared to previously greater responsibilities,

achievements, facilities, higher status, higher proficiency demands, and additional wages or

salaries and other benefits (Neck, 2018). Hasibuan (2017) defines employment promotion is

an effort to provide an important role for employees even a dream to look forward to, with

the promotion of recognition means that there is confidence about ability and skills relevant

employees to occupy a higher position. Thus the promotion will give social status, authority,

responsibility, and greater income for employees. According to Kinicki and Fugate (2017),

job promotion occurs when an employee moves from one job to another, which is higher in

payment, responsibility and level. Job promotion is one way to motivate employees to work.

Work motivation is generally as awards, prizes for past efforts and achievements. Work

motivation includes unique feelings, thoughts and past experiences that are part of the

company's internal and external relations. Work motivation can also be interpreted as

18
individual encouragement to take action because they want to do it. If individuals are

motivated to work, they will make positive choices to do something, because it can satisfy

their desires. Scandura (2017) argues that work motivation consists of the need for

achievement, the need for strength and the need for affiliation. The research results of

Gathungu, Edith, Iravo, and Namusongeet (2015) show that job promotion affects

significantly on work motivation. In the view of (Robbins, 2018), upgrading is the

progression of a worker’s level or position in an organization’s hierarchical order.

Advancement in work might be an individual’s motivation for a job well done. An event to

promote an individual to a certain rank guarantees that individual employee is capable of

handling the extra duties. Promotion chances are the degree of potential occupational

mobility within an organization. Promotional chances also reduce turnover since an employee

can stay on hopefully eyeing a vacancy. Promotion of staff is a motivator in the sense that an

employee is satisfied even as he performs his duties

2.01:11 Training and Development

Narrowly, training refers to how specific knowledge and skills necessary to perform a

specific job are taught and learned (Crowford 2014). According to McFarland, (2013)

training is the term used to describe the process through which organizations build the skills

and abilities of non-managerial employees. It is from the aforementioned definitions that

training is referred to as the process by which managers acquire knowledge and skills for a

definite task or purpose (Banjoko 2016) stated that training tends to be connected with non-

managerial employees whilst development usually refers to management staff. Thus, to

straighten a distinction between the two terms, some scholars have referred to training as

employee training and development as management development, or executive development

while employee training refers to training given to employees in the areas of operations,

technical and allied areas, management development refers to developing an employee in the

19
areas of principles and techniques of management, administration, organization allied areas,

(Scott, 2007). Other terms sometimes used instead of training and development include

employee development, manpower development, or education and training (Ginsberg, 2012)

argued that training and development activities are an integral and important aspect of human

resource management. Such activities make it possible to adjust as well as enhance the skills

of the workforce, ranging from the lowest to the highest set of employees.

2.[Link] Types of Training

The importance of training and development to employees and managers cannot be quantified

following the changing pattern in technology. Adequate provision of training needs for

employees will go a long way in reducing their intention to leave, absenteeism, industrial

hazard, etc. Training needs are not only restricted to the confinement of new employees

(Hutchins, 2009). The effective training and development of the managers are equally

important to employees' safety, efficiency, productivity, and fulfillment. It has been observed

that continuous training for workers helps to alleviate boredom, fatigue, inefficient and even

unsafe work habits. However, various kinds of training are often used by different

organizations in acquiring and developing the skills and abilities of human resources. The

method adopted is often a matter of convenience and organization policy. Among the option

kinds of training are the most popular or often used type of training as identified by Frayne,

(2010)

2.[Link] On the Job Training

This is also known as direct instruction. It is one of the oldest forms of training. It is the kind

of interpersonal training where somebody who knows the job shows another person how best

to perform it. The on the job training requires direct instruction from the trainer and

specialized knowledge from the trainee (Boxall, 2007). The worker learns as he produces or

20
works. This type of training is conducted either by the worker’s immediate supervision at the

worksite or by an expert from another department. The advantages of this type of training

method are:

i. The workers use the same materials, requirements, and machines for training at the

same time for production.

ii. The worker is subjected to the same environmental constraints under which he will

have to operate.

iii. Only those skills needed are impacted by the worker to completely perform a

particular job.

iv. Apprenticeship training: The method combines on-the-job and regular instructions by

combining the practical and theoretical aspects of the job and the worker acquires

both skills and knowledge.

2.[Link] Off-the-Job Training

These the worker (trainer) is not on the regular job environment but is tough a how to do the

job in an identical situation using prototype that would be used act the job site. This type of

training is more appropriate for impacting complex skills as it produces broad-based trainers

who can apply their skills in a verity of work situations (Butler, 2018). This is another form

of training that takes place outside the immediate workplace. It requires additional abilities

and talents useful to perform a task efficiently (Chiaburu, 2019). This training is often offered

by specialist trainers who may be outsourced to help with the training. The knowledge and

abilities acquired from this training are often used across different areas of the organization.

Examples of the off the job training includes group discussions, case studies, role playing,

conferences, T-Group, programmed instructions, etc

21
2.[Link] Classroom Training

This is interactive learning with a specialist or expert instructor. Classroom training has been

the basis of an employee. Many employees learn best and have the greatest opportunity for

retention (Kinicki and Williams, 2013) most especially when they learn from a live instructor

in a classroom setting. It allows integrating various learning principles and values in a

dynamic environment. It includes lectures, conferences, demonstration, instruction, advanced

information and training session similar to class discussion, workshop e.t.c.

2.[Link] Coaching and Understanding

Coaching is one of the training processes which allows an individual participant to acquire

and obtain the strategic capabilities and core competencies needed to perform a task

efficiently (Kehinde and Oladayo 2017). Coaching is often seen as the most effective way of

providing for the growth and productivity of workers in an organization through the

conscious assessment of ordinates by their immediate boss.

2.01:12 Job Rotation

This method is used whereby a worker over a considerable period work in serious of works or

job, therefore, earning a broad range of skills.

According to Esther (2019), organizations maintain their workforce by providing a better

reward system through training and development as this will motivate them to toil for the

organization hence better work performance. It is therefore significant for the organization to

focus on the best human resource management practices if at all they are to achieve their

goals and objectives and also to survive in the competitive business environment. Training

and development is one of the elements in HR practices may positively contribute to the

sustainable of the organization performance. It is involving the process of adding to the

22
employee’s knowledge, skills and attitudes required by an individual to improve his

performance in the organization. Meanwhile, compensation and rewards is very important to

ensure effective compensation and benefits package by training employees can significantly

increase the motivation of an individual to increase their performance, Hussien Nasir (2015).

2.011:13 Job Satisfaction

Work Satisfaction is a picture of the attitude of an employee either happy or not happy about

rewards that come by, the work that is associated with his own, with his superiors, fellow

employees, as well as environmental work. According to Robbins and Judge (2015) explains

that the satisfaction of work is as feeling positive about the job as a result of evaluation of its

characteristics. Compensation is a reward that is given by the company to the employees on

the work that it generates according to Rivai and Sagala (2011). According to Handoko

(2014) satisfaction of the work is a state of emotional which is fun or not fun where

employees see work them. Satisfaction of work (job satisfaction) is a response to effective or

emotionally to various terms of job a person. According Wibowo (2014) indicators of

satisfaction of work, namely:

Satisfaction on the job its own, the satisfaction on salary, satisfaction over the co- work,

satisfaction on sale, satisfaction on conditions of employment. Research which conducted

Yaseen (2013) with the title of the study " Effect of Compensation on Employee Satisfaction

Factors-A Study of Doctor's Dissatisfaction in Punjab revealed that compensation impact

significantly on the satisfaction of work . In addition to that, the research that is done Salisu

(2015) with the research title “The impact of compensation on the job satisfaction of the

public sector construction workers of Nigeria State of Nigeria" also revealed that job

satisfaction has a positive and significant effect on job.

23
2.04 Conceptual Framework

Organizational Reward System Employees Performance

Benefits Quality

Compensation Efficiency

Incentives Productivity

Promotion Effectiveness

Intrinsic Reward
Responsibilities
Team Planning
Development Program
Achievement

Extrinsic Reward Employees Performance or Motivation

Salary Employee Productivity or Output
Medical Reduced Employee Turnover
Bonus Quality of Output
Accommodation

Career Development Option

In house
Off Job
Award or Qualification

Learning Opportunities
Off Job Training
Scholarships
In job Training
Sources: Author’s Compilation (2022)

24
2.02 Theoretical Framework

Various theories have been developed over the years to understand and explain how

employees' morale can be enhanced through the use of an effective reward system in

accomplishing organisational outcomes and goals. Being that rewards is directly associated

with performance, various theories formed the groundwork of this study however the study

anchored on Expectancy theory. Other theories are discussed as thus:

2.02.1 Hertzberg's Two-Factor Theory

Theoretically, it is being assumed that the central motive of organisations is to keep their

employees motivated and engaged. Motivation contributes highly to empowering employees

to perform high and stay committed to the organisation. This means that a high level of

motivation enhances the overall employee skills which are required for the specific job task.

Thus, more motivated employees tend to perform higher (Alshmemri, Shahwan-Akl and

Maude, 2017). This is being proved through a well-known Hertzberg's two-factor theory. The

theory detailed the importance and necessary existence of two important factors including

motivators and hygiene factors. It is being said that in the presence of motivators employees

remain satisfied. The satisfiers include achievement, responsibilities, rewards, recognition,

the job itself, advancement and personal growth Alshmemri, Shahwan-Akl and Maude,

2017).

On the other hand, hygiene factors are also known as dissatisfiers which mean that in the

absence of these factors the employees may not perform well. These factors are related to

supervisor and co-worker, working environment, policies, remuneration, security and salary.

Hertzberg emphasized on the fact that organisations must ensure the presence and balance of

both the factors to keep the employees motivated and engaged towards their job (Alfayad and

25
Arif, 2017). In addition to this, it must focus on personal development through promotion and

other intrinsic and extrinsic motivational aspects (Khanna, 2017).

In this model there are two influencing factors, one category is Motivator Factors. These

factors impact the job satisfaction level of employees and thus results in enhancing employee

performance. These factors include Achievement, Recognition, Responsibility, Personal

Growth etc. Motivators impact employee performance because they provide a sense of

responsibility in the individual and thus increase the commitment towards work. The

association is found that by improving the motivator, job satisfaction increases (Herzberg,

2017). Alternatively, there is another category of Hygiene Factors; these factors are mainly

responsible for decreasing the job dissatisfaction when they are improved. For example, more

favourable working conditions and strong bonding with supervisors reduce the level of job

dissatisfaction (Alfayad and Arif, 2017). According to Stello (2011), Herzberg theory is

criticized stating that factors leading to dissatisfaction and satisfaction are the same and

cannot be differentiated from each other. Evans (2010) also presented the criticism that

inference of Herzberg theory cannot be accepted completely with respect to the difference in

satisfiers and motivators as it delivers the same results. Generally, individuals attribute causes

of satisfaction with achievements. The criticism of Sambhanthan and Good (2013) on

Herzberg theory was similar to the point highlighted by Stello (2011). Sambhanthan and

Good (2013) determined that factors that lead to employee satisfaction and dissatisfaction are

indistinguishable because recognition, responsibility and achievement are vital factors for

both satisfaction and dissatisfaction. Conversely, dimensions like security, working

conditions are of less importance. Hur (2018) put forward the view that Herzberg's two-factor

theory provides a superficial view of the association between motivation and dissatisfaction

and it is over-simplified. According to the findings of Hur (2018) job satisfaction factors

varies from individual to individual. One factor that is satisfactory for one employee can be

26
dissatisfying for another such as increased responsibility without increasing salary can be a

demotivating factor for employees. The study of Islam (2018) investigated the factors in

information system generating user satisfaction. The theoretical assumption was based on

Herzberg's model. Islam (2018) presented an inference regarding the Herzberg model by

saying that difference between motivators and satisfiers is not entirely acceptable. Individuals

generally affiliate achievement to the cause of satisfaction. However, they are more likely to

associate dissatisfaction with the organisational practices, policies and supervision (Mni,

2015). Despite the criticism received towards Herzberg' theory, its practical application and

implementation as a contribution towards job enrichment and job design techniques that are

used by HR professionals in the companies (Parker, 2015). The study of Oldham and Fried

(2016) determined that Herzberg's theory has provided a new light towards the motivation of

work, job design and employee satisfaction.

2.02:2 Goal-Setting Theory

The next in line is the Goal-setting theory that is also essential in exploring the aspects that is

related to employee motivation, performance and goals. The goal-setting theory of motivation

is formulated and explained by Edwin Locke and Latham in 1979 stating that motivation to

perform a task is directly linked with the goals of an individual (Nurmi, 2012). These goals

can be personal or professional. Achievement of these goals provides support to the

individual and encourages him to deliver higher and better task performance hence, goals-

setting is fundamental to attain the motivational effectiveness. However, Edwin Locke and

Latham emphasized on the point that the goals should be realistic and logical in accordance

with the perspective of the working organization (Aarts, 2019).

The presence of unrealistic goals in employees leads to a more demotivating aspect and lower

productivity. According to Latham and Locke, there are mainly four different mechanisms of

27
goal-setting including distinct directive function, stimulating function, persistence and

encouragement (Latham, Mawritz and Locke, 2018). However, these goals are not limited

and confined to these aspects and can be associated with the employees' expectations of

rewards and recognition. In accordance with the goal-setting theory, Shoaib and Kohli (2017)

explored that the performance of employees is tied with goals and aligned with rewards. The

goals are established to remain focus on the relevant job areas, thereby getting feedback and

coaching from supervisors on the basis of performance (Shoaib and Kohli, 2017). Following

illustration explains the components of the model.

Locke and Latham Goal Setting Theory

Source: Murray Bowen (2010)

28
The above diagram shows that how employees relate and link their motivation to a certain set

of goals in the organization. Each goal has its own significance and thus results in achieving

the level of motivation in accordance with personal and professional goals. These goals are

influenced by proper coaching and training of employees, conducting performance meetings

can also help them in setting job-related goals, supervisor's guidance is also important and

most importantly the goals are aligned with a reward system. The more improved the reward

system of an organisation, the employees will be more goal-oriented and committed to their

jobs (Latham, Mawritz and Locke, 2018).

2.02.3 Towers Perrin Model of Total Reward

The model presented by Armstrong regarding the reward system and reward management

holds a great significance in literature. Many of the organisations have formulated and

designed a well-maintained reward system based on the Towers Perrin Model of Total

Reward. This model is based on four major quadrants in a form of a matrix, having upper two

quadrants as pay and benefits which are mainly tangible aspects and contain a number of

benefits and pay rewards that can be offered to an employee on the basis of performance.

This quadrant is also represented as transactional or tangible rewards (Brown, 2018). They

are normally monetary benefits or financial in nature and helps in attracting, recruiting and

retaining talented staff for the organisation to attain a competitive edge from rivals in the

market. The first quadrant of pay consists of basic pay/salary, cash bonus, contingent pay,

profit-sharing, shares, and long-term incentives. The second quadrant of benefits includes

holiday packages, healthcare facilities, insurance, pensions, work flexibility and other perks.

However, these can easily be copied by competitors (Pregnolato, Bussin and Schlechter,

2017).

29
The lower part of the matrix is based on two quadrants learning and development and Work

environment which are relational or also known as transformational tangible rewards. Unlike

upper quadrants, these are company-specific rewards and cannot be copied easily by the

competitors (Armstrong, 2010). For these types of rewards, companies set their own specific

criteria for achievement and are thus responsible for boosting the morale of the employees

and keep them more engaged and intact with the work. The third quadrant learning and

development include on-job training, task-based training, career development, succession

planning, appraisal system and performance management. The fourth quadrant is work

environment including the culture of an organisation, leadership, core values, internal

communication, work-life balance, diversity management, HR policies and non-financial

recognition (Armstrong, 2010). Conclusively, the model clearly describes the tangible and

intangible reward in a form of total reward system that can be beneficial for an organisation

to make its employees perform well and remain satisfied. According to Armstrong (2012),

the model of total rewards can be a significant factor to retain Generation Y with tangible

rewards whereas the younger generation can be attracted by intangible ones. The following

figure illustrates the Towers Perrin model of total rewards (Armstrong, 2012).

30
 The Towers Perrin Model of Total Rewards

Base pay Pensions

Contingent Pay Holidays

Cash bonuses Healthcare

Long-term incentives Other perks

Shares Flexibility
Profit-sharing

Training Organizational Culture

On-the-job learning Leadership
Performance management Communications
Career development Involvement
Succession planning work-life balance
Non-financial recognition

Source: Armstrong 2010

The above model by Armstrong explains the Towers Perrin Model that is the most effective

approach towards reward management in organisations. There are altogether four quadrants

in the model which include pay, benefits, work environment and learning and development.

In the current study, the research is focused on all four quadrants to evaluate the tangible and

intangible rewards in consistent with the transactional and relational factors. The model also

shows that some rewards are defined at the individual level such as Pay aspect and Learning

and Development while others are more relevant at the Communal level which means, these

aspects like perks and benefits and working environment are the same for all (Armstrong,

31
2012). Recent research in the US shows that this model is effective for making the employees

more focused on their jobs irrespective of the business challenges, job layoffs and tough

economic conditions. Particularly in large organisations, employees are more focused on the

rationale. That is they perform for keeping themselves competitive for their personal growth

and also for the company's achievement (Brown, 2018). This model is a complete framework

of reward system through which a high level of engagement in employees can be exhibited

and key talent can be retained for the long-term based on their performance and capabilities.

The Towers Perrin Model of Armstrong had to face criticism in relation to its transactional

and relational tangible and intangible factors. Tsede and Kutin (2013) stated that the total

reward system cannot be implemented based on its flexibility limitations. In order to attain

the competitive advantage firms might aim to communicate all the rewards and benefits to the

employees for attracting the best talent. However, poor communication and commitment

afterwards become the reason for the failure of the total reward system and its successful

implementation (Tsede and Kutin, 2013). Moller (2013) argued that the idea of total reward

management is nothing new but it is only the integration and merger of conventional

'compensations and benefits'. It is also argued by Nazir, Shah and Zaman (2012) that the

concept of the total reward system has combined all the benefits from financial and non-

financial reward system as one reward mix matrix. However, it has blended together all types

of reward for disengaging the flexibility of employees.

Davids (2018) argued that though many employees do not have the idea of the true value of

benefits and rewards and thus total reward management is entirely in control of management.

It is important that employee understand the basic mechanism of Total Reward system in the

companies about how it is planned and implemented through transparent policies (Al-Jarradi,

2011). In addition to this, Hart and Daughton (2015) determined that many employees

32
encourage flexibility and wide range of benefits in Total reward system however a significant

amount of employees shows resistance.

2.02.4 Expectancy Theory

First, Victor Vroom developed the theory of expectancy to describe employees' motivation at

work and in such a way as to

a. achieve reasonable performance (expectations),

b. performance will be rewarded (instrumentality) and

c. highly positive reward value (valence).

The expectation is an estimation of the probability of an individual to achieve a defined level

of work-related performance. The requirements for the employees are generally measured

between two poles. Probabilities between 0 and 1 are based on expectation.

The devices vary for instrumentality between 0 and 1. For example, if a person has strong

results often helping to improve progress, the method has a value 1. The device is zero if a

good performance rating does not appear to be related to the promotion is a worker's strength.

Valence may be either positive or negative, contrary to perceptions and instrumentality. It is

good value if an individual has a strong desire for a paycheck. Valence, on the other hand, is

undesirable. And 0 is worth it if an employee is insensitive to a reward. The entire scale is

between -1 and +1. Vroom indicates that the equation:

M = E*I * V (motivation = anticipation) is connected to motivation, expectation, resources,

and valence.

33
2.02.5 Equity Theory by Adams (1965)

The theoretical foundation provides an understanding of the concepts of compensation and

employee performance and the linkage between the two concepts. The study is anchored on

equity theory. The theories explain employee’s behavior, attitudes and perceptions arising out

of compensation and employee performance. A linkage between compensation and employee

performance is derived from employee’s behavior to various elements of compensation. This

is because most empirical studies have relied heavily on these theories as the baseline theory

when discussing effectiveness of compensation and employee performance (e.g.; Greenberg,

1990, 1997; Rishipal and Manish, 2013; Antoncic and Antoncic, 2011, and Adams, 1965).

Equity Theory by Adams (1965) is a comparative analysis by an employee of the rewards he

receives in relation to those of others who are in a similar position, with equal qualifications

and carrying similar tasks in form of effort, time and skills requirement. Out of comparison,

employee develops a perception towards the rewards which in turn influence his behavior

towards work and the organization. Equity theory is shaped by two ratios used in the reward

analysis; my pay vs. others pay; and my position on dimension relative to pay vs. others

position on dimensions relative to pay. Inequality arising out of any of the ratios will be

interpreted as inequity leading to dissatisfaction and low level employee performance to work

and the organization. Anvari (2011) points that the consequence of perceived inequalities

results to behaviors of; reduced commitment, psychological stress, reduced quality of out-put

or reduction of effort in an attempt to rationalize the inequality. Rajiv and Tang (2000)

provides a number of moderating factors to the employee perception towards the analyzed

comparison. The internal moderating factors included; valence, clarity of structure, fairness in

salary administration and future plans of an employee. External moderating factors are;

industrial practice, competitors willingness to absorb the employee in case he leaves the

organization and communication channels provided to air the pay grievance. Organizations

34
need to exercise equity in compensation through carrying out salary market survey, adopting

pay-skill-performance system, openly communicating compensation policy of the

organization and promptly dealing with salary grievances (Armstrong, 2001). Rewards

procedural justice serves to influence employee commitment because employees interpret

fairness from the organization where inequities are perceived (Pare, 2007). According to

Adams (1965), equity theory focuses on determining whether the distribution of resources is

fair to both relational partners. It proposes that individuals who perceive themselves as either

under-rewarded or over-rewarded will experience distress, and that this distress could lead to

efforts to restore equity within their national cycle. It focuses on determining whether the

distribution of resources is fair to both relational parties. Equity is measured by comparing

the amount of contributions and benefits of each person within the relationship. Partners do

not have to receive equal benefits or make equal contributions, as long as the ratio between

these benefits and contributions is similar. Equity theory acknowledges that subtle and

variable individual factors affect each person’s assessment and perception of their

relationship with their relational partners (Adams, 1965). In any case, an employee wants to

feel that his contributions and work performance are being rewarded with his pay. If an

employee feels underpaid then it will result in the employee feeling hostile towards the

organization and perhaps his co-workers, which may result in the employee not performing

well at work anymore. It is the subtle variables that also play an important role in the feeling

of equity. Just the idea of recognition for the job performance and the mere act of thanking

the employee will cause a feeling of satisfaction and therefore help the employee feel

worthwhile and have better outcomes. Adams (1965) proposes assumptions of equity theory

as follows: Individuals seek to maximize their outcomes. Groups can maximize collective

rewards by developing accepted systems for equitably apportioning rewards and costs among

members. When individuals find themselves participating in inequitable relationships, they

35
become distressed. Individuals who perceive that they are in an inequitable relationship

attempt to eliminate their distress by restoring equity. The greater the inequity, the more

distress people feel and the more they try to restore equity. Equity theory has been widely

applied to business settings by industrial psychologists to describe the relationship between

an employee’s motivation and his or her perception of equitable or inequitable treatment. In a

business setting, the relevant dyadic relationship is that between employee and employer.

Equity theory in business, however, introduces the concept of social comparison, whereby

employees evaluate their own input/output ratios based on their comparison with the

input/outcome ratios of other employees (Poole, 2007). Inputs in this context include the

employee’s time, expertise, qualifications, experience, intangible personal qualities such as

drive and ambition, and interpersonal skills. Outcomes include monetary compensation,

perquisites, benefits, and flexible work arrangements. The theory was related to the study

because of the set of variables formed into propositions that specify the relationship among

variables, typically in terms of magnitude or direction (Creswell, 2007). A theory explains

how and why the variables are related, there by acting as a bridge between the variables. The

key theories on organizational justice and organizational directed employee performance that

are relevant to the study variables are reviewed in this theory. The concepts of effectiveness

compensation and employee performance are today being supported, developed, and

understood using a variety of theoretical frame workers and models of equity theory

(Greenberg, 1987).

2.02.6 Need Theory

There are various motivational theories but this paper will be anchored on the Need Theory

which is based on expected satisfaction of a level of need. According to Jones and George

(2006), needs-based motivation theory is based on the understanding that motivation stems

from an individual's desire to fulfill or achieve a need. Human beings are motivated by

36
unsatisfied needs, and certain lower needs must be satisfied before higher needs can be

satisfied. In general terms, motivation can be defined as the desire to achieve a goal,

combined with the energy, determination and opportunity to achieve it. The basic premise of

the need theory is that people are motivated to obtain outcomes at work that will satisfy their

needs. It complements the expectancy theory by exploring the depth at which outcomes

motivate people to contribute valuable inputs to a job and perform at high levels. A manager

must determine what needs the person is trying to satisfy at work and ensure that the person

receives outcomes that help to satisfy those needs when the person performs at a high level

and helps the organization achieve its goals. The study adopted motivational theory due to

Abram Maslow (1954) that human resources need to be motivated at every level of the

organizational hierarchy as this will ensure the organizational performance is enhanced hence

achieving its objectives. Human beings are motivated by many needs and these depend on

many factors as they vary from one person to the other and in every situation. Basic needs

are; food, clothing, and shelter but the workplace needs acceptance and self-esteem. Each will

experience these factors in different offering awards when his job is done as expected.

According to Maslow, it is important to be part of a social group that will motivate him

(Wren, 2005). In general terms, motivation can be defined as the desire to achieve a goal,

combined with the energy, determination and opportunity to achieve it. This research will

concentrate on the basis of this theory. The most basic human needs, represented by food,

water, shelter and safety, are considered essential for human existence. According to

(Maslow, 2014), portend five basic constructs from the human hierarchy of needs. There are

physiological needs, security needs, belonging needs, esteem needs and self-actualization

needs. Maslow's conceptualization of needs is represented by a triangle with five levels

which he called the Hierarchy of Needs. Maslow stated that lower-level needs must be

satisfied before the next level. Higher-order needs are those associated with social activities,

37
esteem building, and self-actualization or constant self-improvement. Elaborating further on

this theory, Whittington and Evans (2005) stated that "each of these needs operates at all

times, although one deficient set dominates the individual at any one time and circumstance".

The motivation experienced by humans to fulfill these needs is either derived from internal or

external factors. People who experience internal motivation are influenced by factors that

cause a sense of accomplishment and pleasure, while externally motivated people are

commonly influenced by factors controlled by others, such as money and praise (Deci, 1985).

Maslow's hierarchy of need theory is commonly displayed in a pyramid fashion, with the

basic needs at the bottom and the higher needs at the top. The needs were depicted in this

way to show the significance of each need on the others, with the most important and

broadest category being the physiological needs at the base (Redmond, 2010).

Source: Maslow’s hierarchy of needs (1943)

The theory behind this study was the principle of Expectation Theory by Victor Vroom in

1964. The Victor Vroom Valance theory option has been stated that the problems with the

employee benefit programme, within the philosophic context, can be sufficiently assessed to

improve organizational performance. Valence-Instrumentality-Expectation (VIE) is widely

known. The main theory is that if an event occurs, it will lead to a different event and the

likelihood of an action or activity that results is that the hypothesis is believed. Thus Vroom

clarified: when an individual selects alternative with uncertain results, it seems obvious that

38
their conduct is not only influenced by their desired results, but also by the degree to which

they believe such results can be achieved. The expectation is ... A momentary presumption

that the likelihood of a certain occurrence reflects a certain result.

Expectation is the perception that certain behavior results, while valence refers to the value of

an individual in a certain outcome. Both must be present before there can be a high level of

motivation (Ile, 1999). The principle is more focused on management and employee

preference, which can contribute to desired results (Peretomode 1991). According to Ejiofor

(1984), the statement implies that the reward of a person depends both on expectation and

valence.

It is widely used to explain the dynamic challenges of the management reward system and the

performance of both public and private sector organizations. It is like a social contract where

reciprocity law prevails. The employee wants the manager to be handled fairly in order for

him or her to do better.

2.03 Empirical Review

Relationship between Compensation Strategy and Reward system on Employee

Performance

Mbah, Mgbemena, and Ejike, (2015) examined the impact of effective reward system as a

tool for employee performance in civil service using Anambra state civil service as case

study. As specific objectives, the study examined the relationship between employee

performance and pay reward, employee recognition, conducive work environment and staff

development. Findings from the study shows that pay reward and some non-financial rewards

of employee recognition, conducive work environment and staff development are positively

and significantly related to employee performance in civil service. The study recommended

39
among others that the government at all levels should endeavor to provide employees with

adequate pay incentives to facilitate the achievement of desired high level performance in the

service as obtains in the private sector of the economy. According to Tinaikar (2017), many

past studies had revealed similar outcomes proving that there is a strong connection between

the compensation strategy and the performance and retention of the employee. Sudiardhita,

Mukhtar, Hartono, Sariwulan and Nikensari (2018) had conducted a study using exploratory

research method and respondents of the study were employees. The results of this study

indicated that compensation has a positive and significant impact on the employee’s work

motivation, job satisfaction, and performance. Besides, Jean, Cox and Morris (2017)

conducted a case study was to discover the effect of compensation strategies on employee

performance in Mombasa Cement Limited. Questionnaires were used as the primary research

instrument to collect the data from the selected respondents. The result revealed that

compensation has a significant effect on job satisfaction and employee performance.

Meanwhile, Hameed, Hasiban and Mphilet (2014) and Peprah (2018).

Azman, Shuraimi, Binti and Yunus (2018) conducted quantitative research to collect the data

on the factors related to compensation such as salary, rewards, compensation, and employee

performance. Their outcome also revealed that compensation has a major influence on the

performance of the employee. Masea (2016) has conducted a study by applying the

quantitative research method. The study utilized questionnaires as the primary research

instrument for data collection from the respondents, who are the academic staff in higher

education institutions in South Africa. It was discovered that compensation has a positive

impact on the performance of the employee. A similar outcome was reported by Ramli

(2019) who also utilized the quantitative research method in his study. The respondents who

were involved in the study were the employees of RumahSakitSwasta in Jakarta. The

outcome also demonstrated a similar finding whereby the compensation has a significant

40
effect on job satisfaction and the employee’s performance. Haryono (2019) asserted that

compensation is the organizations’ obligation that must be conducted as a form of

appreciation for the progress made by the employees to the organization. The organization

should respect and acknowledge all the efforts made by the employees by giving them

reasonable compensation based on the tasks they had performed. Thus, compensation does

affect the level of performance done by the employee. In general, good performance and

efficient outcomes are highly demanded in the current globalization era. Therefore, many

organizations are implementing the compensation system. It is believed that effective

compensation is predictable to add value to the employee’s satisfaction, which can

psychologically encourage the employees to perform effectively and efficiently. Another

study that was conducted using a quantitative research method was done by Darma and

Supriyanto (2017). The study was conducted to determine the impact of the compensation

variable on the employee performance variable. The compensations were in the form of

allowances, bonuses, salaries, and wages. Indeed, these compensations do have a significant

impact on the employee’s progress towards work completion. Nwokocha (2016) applied the

compensation strategy in organizations to ascertain their efficacy on the performance of the

employees, retention, and level of productivity. This study had revealed that there is a

positive connection between compensation and the performance of the employees’

performance, retention, and productivity in the organization. Based on this outcome, the

compensation system with articulated strategies should be embedded in the organization‘s

culture. The management should also recognize and understand the employees’

needs/preferences in establishing the compensation structure of the organizations. The use of

these notions matched to a good managerial disposition, which will allow the organizations to

formulate effective and sustainable strategies that will acknowledge the fair and sufficient

reward for employees. This will improve the performance and the progress of the employees,

41
retention, and productivity in the organization. Another study was conducted by Demerouti,

Bakker, Derks, Arnold (2014) to investigate the compensation model with the strategies in

the selective optimization. Based on a few samples of employees, they discovered that the

appropriate technique to hinder the negative impacts on the employee’s performance. This

study had revealed the effective and ineffective techniques that people use to overcome their

burnout symptoms to attain maximum outcomes on the performance of the employees.

Besides, a study by Ibrar and Khan (2015) had similarly discovered that the employee’s

performance can be improved with the implementation of an effective compensation system

in the organization. Questionnaires were used as the instrument of the study to conduct the

descriptive analysis, correlation, and multiple regression tests for the data analysis. Overall,

based on the analysis, the study had concluded that there is a significant connection between

the compensation strategy and the performances of the employee. Larbi’s (2014) study

discovered that there is a significant connection between the overall compensation, the

management, and the performance of employees. In certain circumstances, the employee will

not have a clear picture of their rights when it is related to the matter of compensation. This

situation can be perceived due to the employers are not exposing the employees to the clause

regarding compensation or the employees are not interested to read the policy manuals when

they are provided with the manual. Thus, the management of the organization must ensure

that the employees are aware of the policies related to the matter of the compensation system

and the rewards offered. Other studies done by Brown (2003), Obasan (2012), Lawler and

Worley (2016), and Okeke and Ikechukwu (2019) had also discovered similar outcome that

there is a significant connection between the compensation system and the employee’s

performance in an organization. Salaries, rewards, allowance, and non-financial

compensations bring a major impact on the performance of the employee in the

organizations. Therefore, based on the outcomes of several past studies, it can be concluded

42
that compensation has a positive impact on the employee’s progress and performance in

many organizations. However, there have been debates among scholars relating to the type

and blend of compensation methods that are best for the institutions. A few studies have

exhibited that rewards have positive impacts on the workers’ development and progress as

well as workplace security. It is one of the elements that will be highlighted to increase the

employee’s commitment to task completion (Furtado, 2015; Lawler and Worley, 2016).

Idemobi, Ngige, and Ofili (2017) examined effect of reward system on organizational

performance was aimed at determining the effect; effects of organizations reward system on

workers‟ performance; to determine the relationship between organizations reward system

and workers attitude to work; to determine the relationship between organizations reward

system and job satisfaction; and to find the relationship between rewards system and workers

commitment. The data used was gotten with the aid of a questionnaire and analyzed using the

chi-square test of independence. The result shows that: organizations reward system has a

significant effect on workers‟ performance; there exists a significant relationship between

organizations reward system and workers attitude to work. Also there is a relationship

between organizations reward system and job satisfaction. These led to the conclusion reward

systems have significant effect on workers attitude to work The study recommended

improving the reward system of organizations so as to increase the level of satisfaction

among employees; and making the reward policy of the organization in such a way that it will

compete favorably with those of other organizations in the industry. Ejumudo (2014)

examines pay reward system management and staff performance in Nigeria: using the Delta

sate civil service as a focus. The data utilized in this study were obtained from both primary

and secondary sources. While the primary data were derived from focus group discussions,

the secondary data were obtained from relevant textbooks, journals and government

documents. The findings of the study indicate that the incongruence of the pay reward system

43
of the Delta state civil service and the central guiding principles of fairness, costs of living

and moderation, the in-grained culture of poor performance and the dysfunctional employee

mode of entry have negatively impacted on the performance of staff. The study made some

useful recommendations including the exigency of a fair, moderate, dynamic pay reward

system that should be reflective of the prevailing societal costs of living, the dismantling of

the culture of poor performance and a merit-based employee entry practice. Onuegbu, and

Ngige, (2018) identified organizational rewards system and its effects on employees’

performance in selected polytechnics of South-East Nigeria. The results of the study reveal

that employee rewards policy significantly affects organizational performance. The study

therefore recommended that reward packages must be valuable to the employees and should

be based on realistic and reliable standards.

Uwizeye and Muryungi (2017) examined the influence of compensation practices on workers

performance of tea companies in Rwanda: A case study of Rwanda Mountain Tea.

Competitive environment, compensation system of the company has direct impact on its

workers performance.

2.04 Gap in Literature

There is a large volume of research and literature available that assess the importance of a

business reward scheme in order to improve the efficiency of the workers. Many research

studies have established the relationship of both extrinsic and intrinsic rewards and their

effects. The available literature also shows that microfinance banks have an effective system

of reward management and effective strategies to retain its employees and keep them with the

organization together for a longer period.

Yet, in contrast to intrinsic rewards, there are few studies that illustrate the importance or

desire of extrinsic rewards. Besides this, the banking industry in Nigeria in particular has very

44
limited studies; the studies either are not up-to-date or are not especially focused on the

financial and non-financial aspects. This research is therefore undertaken to fill this gaps. To

fill the literature gap, the study must conduct a survey to collect the primary data from some

selected micro finance banks staff, and questions must be focused on core topics drawn from

literature studies.

However, the existing studies as mentioned above in this relation have concentrated on either

intrinsic or extrinsic incentive system mainly on results, and the related studies have also

neglected to recognize the service industries in Nigeria, such as microfinance banks, which

have deep skills and expertise in audit, tax and advisory services, creating a gap for the

research.

Finally, it was found that very few assessments were performed with respect to the service

industries in Nigeria in terms of the reward system dimension. Although validating several

research studies, this analysis bridged the gap between existing literatures by presenting

evidence on the effect of organizational reward system on employee’s performance of some

selected microfinance banks in Abeokuta, Ogun state.

45
 CHAPTER THREE

METHODOLOGY

3.01 Research Design

Research design is a kind of blueprint that guides the researcher in carrying out the research

work. It contains a description of methods and procedure employed in data collection, design

and validation of test instrument. It x-rays the format employed by the researcher in order to

systematically apply the scientific methods in problem investigation. The domain of this

study is the effect of organizational reward system on employee’s performance.

A descriptive survey design method would be adopted for the study. This is because the

population of the study cannot be covered; therefore a sample is drawn from the whole

population to serve as representative of the population.

3.02 Source of Data Collection and Procedure

The study made use of mainly primary source of data; the primary data would be gathered

from a personal administered questionnaire which is designed specifically to provide answers

to the study research questions.

3.03 The Study Population

The target population for this research work consists of some selected microfinance banks in

Abeokuta. The population of the study includes the entire middle and lower level

management staff of the organizations.

46
 Bank Estimated Population

AB Microfinance bank, Ibara 50

Lapo Microfinance Bank, Oke-Ilewo 50

Total 100

Source: Field Survey (2022)

3.04 Sample Size and Sampling Technique

The size of a sample is very important in the research study. This is because sample size is used where

the sample frame cannot be covered. Sampling enables us to be cost effective and cost efficient

in our research that is spending less in terms of time, money, energy and other resources

(Nnayelugo2001). The size of a sample is very important in the research study. This is

because sample size is used where the sample frame cannot be covered. A simple randomly

sampling technique is used in different Strata to select actual respondent. This implies a

proportion of the population which was taken as a representation of the whole population and

on which conclusion made on them based on the data, which they give was taken to be

peculiar to all members of the whole population. A scientific means or statistical tools where

used to determine the sample size of the study. However, for the purpose of this study the

sample size adopted the Taro Yamani Formula which is used for a finite or known

population.

The sampling techniques can be differentiated into probability and non-probability sampling.

For this research, the researchers adopted convenience sampling, which is one of the

techniques under the non-probability sampling.

47
 Industries Estimated Population Sample size

AB Microfinance bank, Ibara 50 40

Lapo Microfinance Bank, Oke-Ilewo 50 40

Total 100 80

Source: Field Survey, 2022

The Taro Yamane formulae was used in other to obtain the sample size.
n= N where: n = the sample size
1+ N (e) 2 N = population size
e = marginal error (0.05)
n= 100
1 + 100 (0.025)2
n= 100
1 + 0.25
n= 100
1 + 0.25

n = 80
The sample size for each study area is 80.

Thus, 80 in total for sample size of this study

3.05 Research Instrument Specification

The research instrument used in the study was the questionnaire. They were administered in

the Organization. The questionnaire was divided into two (2) sections “A and B”. Section A

relate to personal characteristics of respondents while section B relates to information on

relevant variables. Each questions was rated using four points Likert scale, they are as

follows; Strongly Agreed (SA), Agreed (A), Disagreed (D), Strongly Disagreed (SD).

48
3.06 Measurement of Variables

The major variables of the study are reward, reward system, employee, employee

performance and organization performance would be measured using 4 point liker scale

Strongly Agreed, Agreed, Disagreed and Strongly Disagreed.

3.07 Method of Data Presentation and Analysis

In the study, simple frequency distribution with simple percentage would be employed in

describing the data in relation to the hypotheses to be tested and would be carried out with the

help of With the help of version 23 of the Statistical Package for Social Sciences (SPSS) the

section B which is the inferential analysis, which uses regression analysis to assess the impact

of the independent variable (employee performance) on the dependent variable (reward

system) was carried out.

3.08 Reliability and Validity

The designed questionnaires will be given to our supervisor at first for approval and

corrections; thereafter, distributions within the organization and given to the superior tutors

for eye-see and any further useful suggestions. The reliability measures are high since the

study makes use of primary source of data collection

49
 CHAPTER FOUR

DATA PRESENTATION, INTERPRETATION AND ANALYSIS

4.1 Analysis of Demographic Characteristics of Respondents

The following data presentation is based on the data retrieved from the administered

questionnaire for the purpose of the study. A total number of one hundred (100)

questionnaires were distributed among respondent and the 80 questionnaires were fully filled

and returned. The analysis is based on these responses.

4.2 Data Presentation

The data for the analysis of the hypotheses of this study is being presented in the Tables

below

Table 4.1: Distribution of Respondents Based on Gender

Gender Frequency Percent Valid Cumulative
percent percent
Male 60 75 75 75
Valid Female 20 25 25 100.0
Total 80 100.0 100.0
Source: Field survey, 2024

The table 4.1 above shows that 75% of the respondents are male while 25% are female. This

implies that majority of the respondents are male.

Table 4.2: Age Distribution of Respondents

Years Frequency Percent Valid Cumulative
Percent Percent
18-27 Years 12 15.0 15.0 15.0
28-37 Years 35 43.75 43.75 58.75
38-47 Years 24 30.00 30.00 88.75
Valid
48-57 Years 6 7.50 7.50 94.75
58 And Above 3 3.75 3.75 100.00
Total 80 100.0 100.0
Source: Field survey, 2024

50
The table 4.2 above shows that 15% of the respondents are between the ages of 18 and 27

years, 43.75% are between the ages of 28 and 37 years, 30.0% are between the ages of 38 and

47 years, 6.0% are between the ages of 48-57 Years while 3.75% are over 58 years of age and

above. This implies that majority of the respondents are between the ages of 28 and 37 years.

Table 4.3: Marital Status

Frequency Percent Valid Cumulative
Percent Percent
Single 24 30.00 30.00 30.00
Married 45 56.25 56.25 86.25
Valid Divorced 6 7.50 7.50 96.75
Widow/widower 5 6.25 6.25 100.00
Total 80 100.0 100.0
Source: Field survey, 2024

The table 4.3 above shows that 30% are single, 56.25% are married, 7.5% are divorced while

6.25% are widow or widower.

Table 4.4: Educational Qualification

Frequency Percent Valid Cumulative
Percent Percent
Primary cert - - - -
S.S.C.E Or Equivalent 5 6.25 6.25 6.25
Diploma Or Equivalent 10 12.50 12.50 18.75
Valid 1st Degree Or Equivalent 28 35.00 35.00 53.50
2nd Degree Or Equivalent 22 27.50 27.50 81.25
Professional Qualification 15 18.75 18.75 100.00
Total 80 100.0 100.0
Source: Field survey, 2024

The table 4.4 above shows that none of the respondents possess primary certificate, 6.25% of

the respondents are S.S.C.E or Equivalent holders, 12.5% are Diploma or Equivalent holders,

35% are 1st Degree or Equivalent holders, 27.5% are 2nd Degree or Equivalent while

18.75% are Professional Qualification holders.

51
Table 4.5: Working Experience
Frequency Percent Valid Cumulative
Percent Percent
1-5 Years 8 10.0 10.0 10.0
6-10 Years 40 50.0 50.0 60.0
Valid 11-15 Years 22 27.5 27.5 87.5
16 – 20 Years 10 12.5 12.5 100.0
Total 80 100.0 100.0
Source: Field survey, 2024

The table 4.5 above shows that 10% of the respondents have between 1-5 years working

experience, 50% of the respondents have between 6 –10 years working experience, 27.5%

have between 11-15 years working experience while 12.5% of the respondents have

experience of between 16-20 years or above.

Table 4.6: How Long has the Organization been in Operation

Frequency Percent Valid Cumulative
Percent Percent
1-10 Years 25 31.25 33.3 31.25
11-20 Years 45 56.25 38.3 87.5
Valid
21-30 Years 10 12.50 28.3 100.0
Total 80 100.0 100.0
Source: Field survey, 2024

The table 4.6 above shows that 31.25% of the respondents opined that the organization has

been operating between 1-10 years, 56.25% of the respondents opined that the organization

has been operating between 11-20 years while 12.50% of the respondents opined that the

organization has been operating between 21-30 years.

52
Table 4.7: Distribution of respondent by Company

Valid Cumulative
Organization Name Frequency Percent Percent Percent

Valid AB Microfinance bank, Ibara 50 50 50 50

Lapo Microfinance Bank, Oke-Ilewo 50 50 50 100

Total 100 100.0 100.0

Source: Field Survey, 2024

Table 4.7 above shows that 51.1% of the respondents are staffs of AB Microfinance bank,

Ibara while 48.9% of the respondents are staffs of Lapo Microfinance Bank, Oke-Ilewo.

Therefore equal numbers of respondents’ are sampled from both organizations.

Analyses of Research Questions

Table 4.2.1: My company pays me well

Frequency Percent Valid Cumulative
Percent Percent
Strongly Disagree 3 3.75 3.75 3.75
Disagree 10 12.50 12.50 16.25
Valid Agree 38 47.50 47.50 63.75
Strongly Agree 29 36.25 36.25 100.0
Total 80 100.0 100.0
Source: Field survey, 2024

The table 4.2.1 above shows that 16.25% of the respondents disagreed that the company pays

me well while 83.75% agreed. This implies that majority of the respondents agreed that the

company pays me well.

53
 Table 4.2.2: I believe my overall reward package should provide more
rewards
Frequency Percent Valid Cumulative
Percent Percent
Strongly Disagree 6 7.50 7.50 7.50
Disagree 11 13.75 13.75 21.25
Undecided 3 3.75 3.75 25.00
Valid
Agree 40 50.00 50.00 75.00
Strongly Agree 20 25.00 25.00 100.0
Total 80 100.0 100.0
Source: Field survey, 2024

The table 4.2.2 above shows that 21.250% of the respondents disagreed that his/her overall

reward package should provide more rewards, 75% agreed while 3.75% could not decide.

This implies that majority of the respondents agreed that his/her overall reward package

should provide more rewards.

Table 4.2.3: I am not satisfied with my salary

Frequency Percent Valid Cumulative
Percent Percent
Strongly Disagree 15 18.75 18.75 18.75
Disagree 11 13.75 13.75 32.50
Undecided 9 11.25 11.25 47.35
Valid
Agree 25 31.25 31.25 75.00
Strongly Agree 20 25.00 25.00 100.0
Total 80 100.0 100.0
Source: Field survey, 2024

The table 4.2.3 above shows that 32.50% of the respondents disagreed that they are not

satisfied with their salary while 56.25% agreed that they are satisfied with their salary and

11.25% could not decide. This implies that majority of the respondents agreed that they are

satisfied with their salary.

54
Table 4.2.4: I prefer cash to in-kind reward
Frequency Percent Valid Cumulative
Percent Percent
Strongly Disagree 6 7.5 7.5 7.5
Disagree 10 12.5 12.5 20.0
Undecided 4 5.0 5.0 25.0
Valid
Agree 22 27.5 27.5 52.5
Strongly Agree 38 47.5 47.5 100.0
Total 80 100.0 100.0
Source: Field survey, 2024

The table 4.2.4 above shows that 20% of the respondents disagreed that he/she prefers cash to

in-kind reward, 75% agreed that he/she prefers cash to in-kind reward while 5% could not

decide. This implies that majority of the respondents agreed that he/she prefers cash to in-

kind reward.

Table 4.2.5: I get extra duties and additional work allowances

Frequency Percent Valid Cumulative
Percent Percent
Strongly Disagree 10 12.5 12.5 12.5
Disagree 12 15.0 15.0 27.5
Undecided 8 10.0 10.0 37.5
Valid
Agree 28 35.0 35.0 72.5
Strongly Agree 22 27.5 27.5 100.0
Total 80 100.0 100.0
Source: Field survey, 2024

The table 4.2.5 above shows that 27.5% of the respondents disagreed that he/she gets extra

duties and additional work allowances, while 62.5% agreed he/she gets extra duties and

additional work allowances. This implies that majority of the respondents agreed that prompt

and occasional training of staff increases the performance of staff which in turn brings high

output from employees aligned with the set organizational goals.

55
 Table 4.2.6: I'm all right when I am appreciated for a job well done
Frequency Percent Valid Cumulative
Percent Percent
Strongly Disagree 3 3.75 3.75 3.75
Disagree 5 6.25 6.25 10.00
Valid Agree 40 50.00 50.00 60.00
Strongly Agree 32 40.00 40.00 100.0
Total 80 100.0 100.0
Source: Field survey, 2024

The table 4.2.6 above shows that 10.0% of the respondents disagreed that he/she is all right

when he/she is appreciated for a job well done while 90.0% agreed that he/she is all right

when he/she is appreciated for a job well done. This implies that majority of the respondents

agreed that the are all right when they are appreciated for a job well done.

Table 4.2.7: Once I am recognized, I feel respected

Frequency Percent Valid Cumulative
Percent Percent
Strongly Disagree 6 7.5 7.5 7.5
Disagree 12 15.0 15.0 22.5
Undecided 8 10.0 10.0 32.5
Valid
Agree 30 37.5 37.5 70.0
Strongly Agree 24 30.0 30.0 100.0
Total 80 100.0 100.0
Source: Field survey, 2024

The table 4.2.7 above shows that 22.5% of the respondents disagreed that once he/she is

recognized, he/she feels respected while 67.5% agreed that once he/she is recognized, he/she

feels respected and 10% of the respondents opined for undecided. This implies that majority

of the respondents agreed that once he/she is recognized, he/she feels respected.

56
Table 4.2.8: It stirs my interest in doing ever better
Frequency Percent Valid Cumulative
Percent Percent
Strongly Disagree 5 6.25 6.25 6.25
Disagree 11 13.75 13.75 20.00
Valid Agree 30 37.50 37.50 57.50
Strongly Agree 34 42.50 42.50 100.0
Total 80 100.0 100.0
Source: Field survey, 2024

The table 4.2.8 above shows that 20% of the respondents disagreed that it stirs his/her interest

in doing ever better while 80% of the respondents agreed it stirs his/her interest in doing ever

better. This implies that majority of the respondents agreed that it stirs their interest in doing

ever better.

Table 4.2.9: I prefer recognition to cash reward

Frequency Percent Valid Cumulative
Percent Percent
Strongly Disagree 10 12.50 12.50 12.50
Disagree 13 16.25 16.25 28.75
Valid Agree 35 43.75 43.75 72.50
Strongly Agree 22 27.50 27.50 100.0
Total 80 100.0 100.0
Source: Field survey, 2024

The table 4.2.9 shows that 28.75% of the respondents disagreed that they prefer recognition

to cash reward while 71.25% of the respondents agreed that they prefer recognition to cash

reward. This implies that majority of the respondents agreed that they prefer recognition to

cash reward.

57
Table 4.2.10: I feel fulfilled when management acknowledges my
service years
Frequency Percent Valid Cumulative
Percent Percent
Strongly Disagree 8 10.00 10.00 10.00
Disagree 13 16.25 16.25 26.25
Undecided 5 6.25 6.25 32.50
Valid
Agree 30 37.50 37.50 70.0
Strongly Agree 24 30.00 30.00 100.0
Total 80 100.0 100.0
Source: Field survey, 2024

The table 4.2.10 above shows that 26.25% of the respondents disagreed that they feel fulfilled

when management acknowledges their service years while 67.5% of the respondents agreed

they feel fulfilled when management acknowledges their service years and 6.25% of the

respondents opined of undecided. This implies that majority of the respondents agreed that

they feel fulfilled when management acknowledges their service years.

Table 4.2.11: I enjoy a friendly and conducive working environment

Frequency Percent Valid Cumulative
Percent Percent
Strongly Disagree 1 1.25 1.25 1.25
Disagree 1 1.25 1.25 1.25
Valid Agree 38 47.50 47.50 50.00
Strongly Agree 40 50.00 50.00 100.0
Total 80 100.0 100.0
Source: Field survey, 2024

The table 4.2.11 above shows that 2.5% of the respondents disagreed that they enjoy a

friendly and conducive working environment while 97.5% of the respondents agreed that

they enjoy a friendly and conducive working environment. This implies that majority of the

respondents agreed that they enjoy a friendly and conducive working environment.

58
Table 4.2.12: My firm is doing a great deal to improve the work
environment
Frequency Percent Valid Cumulative
Percent Percent
Strongly Disagree 7 8.75 8.75 8.75
Disagree 8 10.00 10.00 18.75
Undecided 5 6.25 6.25 25.00
Valid
Agree 32 40.00 40.00 65.00
Strongly Agree 28 35.00 35.00 100.0
Total 80 100.0 100.0
Source: Field survey, 2024

The table 4.2.12 above shows that 18.75% of the respondents disagreed that their firm is

doing a great deal to improve the work environment, 6.25% of the respondents opined of

undecided while 75% of the respondents agreed that their firm is doing a great deal to

improve the work environment. This implies that majority of the respondents agreed that their

firm is doing a great deal to improve the work environment.

Table 4.2.13: I enjoy some degree of autonomy in fulfilling my duties

Frequency Percent Valid Cumulative
Percent Percent
Strongly Disagree 10 12.5 12.5 12.5
Disagree 6 7.5 7.5 20.0
Undecided 12 15.0 15.0 35.0
Valid
Agree 30 37.5 37.5 72.5
Strongly Agree 22 27.5 27.5 100.0
Total 80 100.0 100.0
Source: Field survey, 2024

The table 4.2.13 above shows that 20% of the respondents disagreed that they enjoy some

degree of autonomy in fulfilling their duties, 15% of the respondents opined for undecided

while 65% agreed that they enjoy some degree of autonomy in fulfilling their duties. This

implies that majority of the respondents agreed that they enjoy some degree of autonomy in

fulfilling their duties

59
Table 4.2.14: My organization runs regular public health programs
Frequency Percent Valid Cumulative
Percent Percent
Strongly Disagree 15 18.75 18.75 18.75
Disagree 20 25.00 25.00 43.75
Undecided 5 6.25 6.25 50.00
Valid
Agree 10 12.5 12.5 62.50
Strongly Agree 30 37.5 37.5 100.0
Total 80 100.0 100.0
Source: Field survey, 2024

The table 4.2.14 above shows that 14.9% of the respondents disagreed that their organization

runs regular public health programs while 50% of the respondents agreed that their

organization runs regular public health programs and 6.25% of the respondents opined to

undecided. This implies that majority of the respondents agreed that their organization runs

regular public health programs.

Table 4.2.15: My office is comfortable

Frequency Percent Valid Cumulative
Percent Percent
Strongly Disagree 10 12.50 12.50 12.50
Disagree 11 13.75 13.75 26.25
Undecided 5 6.25 6.25 32.50
Valid
Agree 24 30.00 30.00 62.50
Strongly Agree 30 37.50 37.50 100.0
Total 80 100.0 100.0
Source: Field survey, 2024

The table 4.2.15 above shows that 12.50% of the respondents disagreed that his/her office is

comfortable while 67.50% of the respondents agreed that his/her office is comfortable. This

implies that majority of the respondents agreed that his/her office is comfortable.

60
 Table 4.2.16: My company has a training and development policy
which applies to all employees.
Frequency Percent Valid Cumulative
Percent Percent
Strongly Disagree 13 16.25 16.25 16.25
Disagree 12 15.00 15.00 31.25
Valid Agree 29 36.25 36.25 67.50
Strongly Agree 26 32.50 32.50 100.0
Total 80 100.0 100.0
Source: Field survey, 2024

The table 4.2.16 above shows that 31.25% of the respondents disagreed that his/her company

has a training and development policy which applies to all employees while 68.75% of the

respondents agreed his/her company has a training and development policy which applies to

all employees. This implies that majority of the respondents agreed that his/her company has

a training and development policy which applies to all employees.

Table 4.2.17: I have attended Company-sponsored skill training

activities
Frequency Percent Valid Cumulative
Percent Percent
Strongly Disagree 7 8.75 8.75 8.75
Disagree 10 12.50 12.50 21.25
Valid Agree 39 48.75 48.75 70.00
Strongly Agree 24 30.00 30.00 100.0
Total 80 100.0 100.0
Source: Field survey, 2024

The table 4.2.17 above shows that 21.25% of the respondents disagreed that he/she have

attended Company-sponsored skill training activities while 78.75% of the respondents agreed

that he/she have attended Company-sponsored skill training activities. This implies that

majority of the respondents agreed that he/she have attended Company-sponsored skill

training activities.

61
 Table 4.2.18: Supervisors support the use of training techniques learnt
by employees
Frequency Percent Valid Cumulative
Percent Percent
Strongly Disagree 2 2.5 2.5 2.5
Disagree 8 10.0 10.0 12.5
Valid Agree 32 40.0 40.0 52.5
Strongly Agree 38 47.5 47.5 100.0
Total 80 100.0 100.0
Source: Field survey, 2024

The table 4.2.18 above shows that 12.5% of the respondents disagreed that supervisors

support the use of training techniques learnt by employees while 87.5% of the respondents

agreed that supervisors support the use of training techniques learnt by employees. This

implies that majority of the respondents agreed that supervisors support the use of training

techniques learnt by employees.

Table 4.2.19: My company ties its corporate policy with training and
development
Frequency Percent Valid Cumulative
Percent Percent
Strongly Disagree 4 5.0 5.0 5.0
Disagree 6 7.5 7.5 12.5
Valid Agree 40 50.0 50.0 62.5
Strongly Agree 30 37.5 37.5 100.0
Total 80 100.0 100.0
Source: Field survey, 2024

The table 4.2.19 above shows that 12.5% of the respondents disagreed that his/her company

ties its corporate policy with training and development while 87.5% of the respondents

agreed that his/her company ties its corporate policy with training and development. This

implies that majority of the respondents agreed that his/her company ties its corporate policy

with training and development.

62
 Table 4.2.20: Employees who use their expertise are granted priority
for new assignments
Frequency Percent Valid Cumulative
Percent Percent
Strongly Disagree 8 10.0 10.0 10.0
Disagree 12 15.0 15.0 25.0
Valid Agree 38 47.5 47.5 72.5
Strongly Agree 22 27.5 27.5 100.0
Total 80 100.0 100.0
Source: Field survey, 2024

The table 4.2.20 above shows that 25% of the respondents disagreed that employees who use

their expertise are granted priority for new assignments while 75% of the respondents agreed

that employees who use their expertise are granted priority for new assignments. This implies

that majority of the respondents agreed that employees who use their expertise are granted

priority for new assignments.

Table 4.2.21: I try to keep my job knowledge up to date

Frequency Percent Valid Cumulative
Percent Percent
Strongly Disagree 5 6.25 6.25 6.25
Disagree 10 12.50 12.50 18.75
Valid Agree 35 43.75 43.75 62.50
Strongly Agree 30 37.50 37.50 100.0
Total 80 100.0 100.0
Source: Field survey, 2024

The table 4.2.21 above shows that 18.75% of the respondents agreed that he/she try to keeps

my job knowledge up to date while 81.25% of the respondents agreed he/she try to keeps my

job knowledge up to date. This implies that majority of the respondents agreed that he/she try

to keeps my job knowledge up to date.

63
Table 4.2.22: I work to improve my job skills
Frequency Percent Valid Cumulative
Percent Percent
Strongly Disagree 2 2.5 2.5 2.5
Disagree 8 10.0 10.0 12.5
Valid Agree 32 40.0 40.0 52.5
Strongly Agree 38 47.5 47.5 100.0
Total 80 100.0 100.0
Source: Field survey, 2024

The table 4.2.22 above shows that 12.5% of the respondents disagreed that he/she work to

improve my job skills while 87.5% of the respondents agreed that he/she work to improve my

job skills. This implies that majority of the respondents agreed that they work to improve my

job skills.

Table 4.2.23: I show flexibility in carrying out tasks

Frequency Percent Valid Cumulative
Percent Percent
Strongly Disagree 6 7.50 7.50 7.50
Disagree 11 13.75 13.75 21.25
Undecided 3 3.75 3.75 25.00
Valid
Agree 40 50.00 50.00 75.00
Strongly Agree 20 25.00 25.00 100.0
Total 80 100.0 100.0
Source: Field survey, 2024

The table 4.2.23 above shows that 21.250% of the respondents disagreed that he/she shows

flexibility in carrying out tasks, 75% of the respondents agreed that he/she shows flexibility

in carrying out tasks while 3.75% could not decide. This implies that majority of the

respondents agreed that he/she shows flexibility in carrying out tasks.

64
Table 4.2.24: I managed to cope with difficult situations and setbacks at
work well
Frequency Percent Valid Cumulative
Percent Percent
Strongly Disagree 15 18.75 18.75 18.75

Disagree 11 13.75 13.75 32.50

Undecided 9 11.25 11.25 47.35

Valid
Agree 25 31.25 31.25 75.00

Strongly Agree 20 25.00 25.00 100.0

Total 80 100.0 100.0

Source: Field survey, 2024

The table 4.2.3 above shows that 32.50% of the respondents disagreed that they managed to

cope with difficult situations and setbacks at work well while 56.25% of the respondents

agreed that they managed to cope with difficult situations and setbacks at work well and

11.25% could not decide. This implies that majority of the respondents agreed that they

managed to cope with difficult situations and setbacks at work well.

Table 4.2.25: I come up with innovative approaches to new problems at

work
Frequency Percent Valid Cumulative
Percent Percent
Strongly Disagree 6 7.5 7.5 7.5
Disagree 10 12.5 12.5 20.0
Undecided 4 5.0 5.0 25.0
Valid
Agree 22 27.5 27.5 52.5
Strongly Agree 38 47.5 47.5 100.0
Total 80 100.0 100.0
Source: Field survey, 2024

The table 4.2.25 above shows that 20% of the respondents disagreed that he/she come up

with innovative approaches to new problems at work, 75% of the respondents agreed that

he/she come up with innovative approaches to new problems at work while 5% could not

65
decide. This implies that majority of the respondents agreed that he/she come up with

innovative approaches to new problems at work.

4.3 Test of Hypotheses

The hypotheses were tested using Pearson Correlation. The analysis enables us identify

relationship between dependent variable and independent variable.

Decision Rule: Reject the null hypothesis (H0) if the sig. value (0.000) is less than the

conventional 0.01 level of significance and accept if otherwise. The level of strength between

these variables can also be determined as indicated below:

Coefficient value Strength of Association

0.1</r/<.3 Weak Correlation

0.3</r/<.5 Moderate Correlation

/r/>.5 Strong Correlation

Where r means the absolute value of Pearson Correlation Coefficient

66
Hypothesis One

H1: Pay reward impact on the performance of employee task significantly at organization.

Table 4.3.1: Correlations

Pay reward Performance
of employee
Pearson Correlation 1 .935**
Pay reward Sig. (2-tailed) .001
N 80 80
Pearson Correlation .935** 1
performance of employee Sig. (2-tailed) .001
N 80 80
**. Correlation is significant at the 0.01 level (2-tailed).

Source: Field Survey (2024)

It can be inferred from the Pearson correlation table above shows that there is a significant

relationship between Pay reward and performance of employee, this is shown by the

correlation coefficient of .935 and probability error of 0.01 indicating a positive relationship

between the two variables at 1% level of significance. This implies that the null hypothesis

(H0) is rejected. Therefore, there is significant relationship between Pay reward and

employees performance in impact of reward systems on employees’ performance in

microfinance banks

67
Hypothesis Two

H0: Non-commitment of top managers are not one of the problems militating against the

use of Management by Objectives as an instrument for organizational performance.

H2: Employee recognition in organization significantly affects employee contextual

performance.

Table 4.3.2: Correlations

Employee Employee contextual
recognition performance
Pearson Correlation 1 .191
Employee recognition Sig. (2-tailed) .113
N 80 80
Pearson Correlation .191 1
Employee contextual
Sig. (2-tailed) .113
performance
N 80 80
Source: Field Survey (2024)

It can be inferred from the Pearson correlation table shows above that the relationship

between employee recognition is one of the motivating factors that contributes highly to

empowering employees to perform high and stay committed to the organization is significant,

this is shown by the correlation coefficient of .191 and probability error of 0.113 indicating a

positive significant relationship between the two variables. This implies that the null

hypothesis (H0) is rejected. Therefore, there is significant relationship between employee

recognition and organization performance.

68
Hypothesis Three

H0: Conductive work environment in the organization does not significantly affect

employee counterproductive behaviour.

H3: Conductive work environment in the organization significantly affect employee

counterproductive behaviour.

Table 4.3.3: Correlations

Conducive work Achieving set
environment objectives
Conducive work Pearson Correlation 1 .499**
environment Sig. (2-tailed) .000
N 80 80
Employee counter- Pearson Correlation .499** 1
productive behaviour Sig. (2-tailed) .000
N 80 80
**. Correlation is significant at the 0.01 level (2-tailed).

Source: Field Survey (2024)

It can be inferred from the Pearson correlation table above shows that there is a significant

relationship between conducive work environment and employee counterproductive

behaviour in the organisation, this is shown by the correlation coefficient of .499 and

probability error of 0.000 indicating a positive relationship between the two variables at 1%

level of significance. This implies that the null hypothesis (H 0) is rejected. Therefore, there is

significant relationship between conducive work environment and employee

counterproductive behaviour in the organisation.

69
Hypothesis Four

H0: Employee development in the organization does not significantly affects employee

adaptive performance.

H4: Employee development in the organization significantly affects employee adaptive

performance.

Table 4.3.4: Correlations

Employee Employee adaptive
development performance
Employee Pearson Correlation 1 .983**
development Sig. (2-tailed) .000
N 80 80
**
Employee Pearson Correlation .983 1
adaptive Sig. (2-tailed) .000
performance N 80 80
**. Correlation is significant at the 0.01 level (2-tailed).

The results of correlation analysis from table 4.3.4 indicate that Pearson correlation

coefficient between performance appraisal and job satisfaction was r= 0.983 indicating there

is negative correlations between the two variables. The prob. Values (0.000) is lesser than

significance value (0.01) we reject H0 which stated that there is no relationship between

employee development and employee adaptive performance. Therefore we conclude that

there is significant relationship between employee development and employee adaptive

performance at 1% significance level; also the Pearson correlation coefficient (0.983) shows

that there is significant relationship between employee development and employee adaptive

performance.

4.04 Implications of Findings

70
The implications of the study's findings are discussed in the following subheadings:

management practices, industry and society.

Management Practices: The study of management in terms of rewards system and employee

performance is hereby enhanced as different approaches to reward system in the organization

as well as employee performance are provided. Through this, human resource management

practices can affect performance in the areas of setting competitive compensation level,

training and development, recruitment package, performance appraisal and maintaining

morale. Therefore, it should be noted that scholars and management practitioners can include

the findings of this study in their teachings.

Industry: The industry and organizational managers in the industry are hereby enjoined to

create a favourable atmosphere that will generate good employee performance. These include

providing adequate reward and structuring such rewards in order to improve employee

performance.

Society: The society, too, will become a better place when employees work with

organizations that have their best interest at heart. Employees won't need any unrest or

industrial action. So this will keep society at peace.

CHAPTER FIVE

71
 SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION

5.01 Summary of Findings

In this section, the various findings from this study carried out on: the impact of reward

systems on employees’ performance in microfinance banks. In view of these, some

hypotheses were formulated and tested using statistical method to reveal some finding from

the state evaluated based on the plan design.

i. The dependent variable in this research is employee performance which has four sub

variable (quality, efficiency, productivity, effectiveness) and independent variable is

organization reward system which has 4 sub variables (benefits, compensation,

incentives, promotions).

ii. Hypothesis one states that pay reward impact on the performance of employee task

significantly at organization. The result is supported by Hertzberg that emphasized on

the fact that organisations must ensure the presence and balance of both the factors to

keep the employees motivated and engaged towards their job (Alfayad and Arif,

2017).

iii. Hypothesis two states that employee recognition in organization significantly affects

employee contextual performance. This study was meant to confirm the existence of a

positive and significant relationship between employee recognition and employee

contextual performance in keeping with the research work conducted by several

authors. This research also highlighted the role of the supervisor, the main actor in the

performance appraisal process, and often the only appraiser in this process. The high

level of motivation enhances the overall employee skills which are required for the

specific job task. Thus, more motivated employees tend to perform higher

(Alshmemri, Shahwan-Akl and Maude, 2017)..

72
iv. Hypothesis three states that conductive work environment in the organization

significantly affect employee counterproductive behaviour. This argument can be

reinforced by the research finding that is anchored on equity theory. The theories

explain employee’s behavior, attitudes and perceptions arising out of compensation

and employee performance. A linkage between compensation and employee

performance is derived from employee’s behavior to various elements of

compensation. This is because most empirical studies have relied heavily on these

theories as the baseline theory when discussing effectiveness of compensation and

employee performance (e.g.; Greenberg, 1990, 1997; Rishipal and Manish, 2013;

Antoncic and Antoncic, 2011, and Adams, 1965)

v. Hypothesis four states that Employee development in the organization significantly

affects employee adaptive performance. The findings demonstrate positive effects of

action control and results control. A possible explanation for this finding could be that

the strength of the crowding-out effect depends on the context in which it is studied,

which would be in line with Deci (1999)

vi. We therefore summarized that there is a significant relationship between each of the

dependent and independent variable i.e. employee performance (quality, efficiency,

productivity, effectiveness) and organization reward system (benefits, compensation,

incentives, promotions).

5.02 Conclusion

73
The study having established the study's broad objective which was the impact of rewards

system on employee performance in some selected microfinance banks in Abeokuta, Ogun

state. From the data collected, based on the empirical findings, it was concluded that: pay

reward affects employee Adaptive performance significantly in microfinance banks,

employee recognition significantly affects employee counterproductive performance in

microfinance banks, Conducive work environment affects employee Contextual performance

and finally employee development affects employee performance. Therefore, the study

concludes that reward system impacts on employee performance.

5.03 Recommendations

Based on the findings, several guidelines are given;

i. The management of microfinance banks should ensure that they provide the needed

motivation, compensation or remuneration irrespective of employees' level to spur

employees to act towards improving their task performance.

ii. The bank industry should strive to recognize and appreciate employees as much as

possible more often this will help them improve their work.

iii. The bank industry especially or particularly microfinance banks should ensure that

reward needs to be improved so that employee do not indulge in counterproductive

behaviour, but should be motivated to follow up behaviours that will improve the

performance of the organization in which they work.

iv. The bank industry particularly microfinance banks management should pay particular

attention to the work environment as it represents a significant variable that affects the

performance of the employee which will then impact on the efficiency and quality of

the services.

74
5.04 Suggestions for Further Studies

It is suggested that future studies should broaden the scope of the study and future research

should analyze the research variables in other research contexts, industries, countries and

business environments so as to improve the generalizability of the findings. A comparative

study of the relationship and effects of the reward system variables and the performance

variables of employees used in this research in the banking industry will thus open up more

understanding on the topic.

5.05 Contribution to Knowledge

The study has contributed conceptually to the body of knowledge in the concept by broader

outlook on rewards system concepts on employee performance and reward system

approaches as well as employee performance as they improve and bring out the diverse

viewpoints of the scholars. However, empirically, the study examination revealed how the

system of rewards has helped to improve employee performance. This research as such adds

to existing studies. The research made the following contribution to the findings: Pay reward

significantly affects employee Adaptive performance in the microfinance bank industry,

Employee recognition significantly affects employee counterproductive performance in the

bank industry, and Conducive work environment does not affect employee contextual

performance, and employee development in microfinance bank significantly affect the

performance of employee tasks. Therefore, the study concludes that the reward system

significantly influences the work performance of employees.

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