LITERATURE REVIEW OF REWARD SYSTEM AND PERFORMANCE MEASUREMENT

The aim of this chapter is to review related literature on “Reward Systems and Performance Measurement in Nigerian Organizations “with a focus on the latest and most current relevant theoretical positions and models in management literature. The rationale is to anchor on previously existing knowledge, in a bid to developing both theoretical and empirical support to our ongoing study. In this study, the different reward theories would be reviewed chronologically, with latest empirical evidences on all sides of the debate.

2.1. Theoretical Framework

Reward policies and practices are largely founded on assumptions about the factors affecting the motivation of people to join and stay with the organization and to work hard and effectively, while they are there. Reward policies can be no better than the motivational theories and beliefs upon which they are based, indeed reward systems are designed on the assumption that the only thing that motivates people is money. Of course money is important, but it is not as simple as that. Those managers who have heard about Herzberg (1957) know that his two-factor model of motivation indicates that money can create dissatisfaction, but is not as good as other non-financial motivators at producing lasting satisfaction. The desire to excel and pride of ownership gives workers a more lasting satisfaction.

The need theory states that it is an unsatisfied need that motivates behaviour. The best known needs theory is the one propounded by Abraham Maslow (1954) which suggested that five different needs apply to human beings, such as basic needs which he refers to as Physiological needs; safety need, social affiliation need, Esteem or Ego need and Self Actualization.

Maslow in his theory stated that when a lower need is satisfied, the next higher one takes over to be a motivator of behaviour. Although in the need theory, money is not mentioned as a need, yet money is a reward for a job done; and all the basic needs of life may be satisfied with money.

The study of motivation is concerned with what determines behaviour and directs it towards goals. The issue of reward is all about what motivates employees to be committed. According to Irene (2006) the feeling of recognition has a direct relationship with productivity and one of the media through which an organization expresses the acceptance of an employee is through the provision of good reward and other fringe benefits.

The process of motivation can be described in terms of needs and goals theory. However, theoretically this study is going to be based on Maslow’s theory of need, while other theories would also be taken into consideration.