Authorities in academic, reward experts, and management gurus such as Lawler et:al (1999), Nwachukwu (2000), Armstrong (2006), Kinicki and Williams (2003), and Ledford Jr. (1995) have written much about reward. Some are in support that reward affects employees performance, while others run counter of the above view.
According to Martocchio (1998), “when pay is based on knowledge, it provides employees with job enrichment and job security. Job enrichment refers to a job design approach that creates more
intrinsically motivating and interesting work environment.
Besides the lofty advantages of pay for knowledge, experts have criticized it, stating that it increases training cost, labour cost, and overhead cost, these occur because hourly labour often increases because greater skill is translated into higher pay levels for a majority of workers.
Besides theoretical views on rewards and performance, many empirical studies have been carried out on this controversial but all-important issue.
A study by Berlet and Cravens (1991) of the Pay-for Performance Record of 163 United States company from 1987-1989, revealed that the relationships between executive pay and company financial performance was not related.
According to available expert opinion and research results, pay for performance too often fall short of its goal of improved job performance. A study of Bloom and Milkovich in 1998 revealed how incentive pay had a negative effect on the performance of 150,000 managers from 500 financially distressed companies.
According to Jenkins, Gupta, Mitra and Shaw (1998), “a meta-analysis of 38 studies found only a modest positive correlation between financial incentive and performance quantity and non impact on performance quality”.
Linking teachers’ merit pay to student performance, a study by Koretz (1995) and Bates (2002) revealed that an exciting school reform idea, turned out to be a big disappointment: “the bottom line is that despite high hopes, none of the 13 districts studied was to use teacher pay incentives to achieve significant, lasting gain in student performance”.
Performance or incentive pay plans usually yield a positive result on the short run, but fail to achieve the desired goals on the long-run.
A research study conducted by Bevan and Thompson (1991), of the Institute of Manpower Studies, found no link between improved company performance and performance related pay.
Reacting to the effect of reward on performance, Ojo(1997) advanced that “poor wage policy and the types of incentives schemes in the country contribute in no small way to the relatively low level productivity of Nigerian workers. However, this may be true to some extent, but not in all cases.
Differing from Ojo (1997) above, researches have revealed that in Nigeria, since the introduction of Udoji award of 1974, productivity has continually been on downward trend. This therefore supports Herzberg’s view that financial reward is not a major source of employee’s motivation.
An investigation has also revealed that the more workers salary are increased, the more the number of strikes. This is buttressed by the table below as produced by Fashoyin (2002).
|
Wage Commission and Year of Award |
Number of Disputes |
Number of Strikes |
|
Gursuch Commission (1955/56) Mbanefo and Morgan Commission (1956/60) Morgan Commission (1963/64) Elwood Commission (1966/67) Adebo Commission (1970/81) Cookey Commission (1980/81) Onosode Commission (1981/82) |
76 140 n.a 233 270 258 341 |
43 64 196 89 234 234 254 |
Table 1: A Measure of Propensity to Strike
Source: Fashoyin (2002). Industrial Relations in Nigeria, 2nd Edition.
The above table shows that financial reward in its own merit is not the ultimate factor in the bid to enhance employees’ performance, rather other factors play a prominent part.
In another development, a survey of BT of England executives carried out by the Society of Telecom Executives (1991), revealed that only 6% of those responding to the survey thought that performance related pay improved performance, compared to an over-whelming 70% who thought it has not.
To some extent, financial reward may serve as a performance enhancer, but to a greater extent, it can only serve as a cleansing factor, which can only help to build mutual trust between the employer and the employee, which is echoing Herzberg’s theory that classified money under hygiene factor, which will prevent dissatisfaction, but cannot motivate workers to greater performance.
In support of the above statement a research by Marsden and Richards (1991), of London School of Economics, among 2500 Inland Revenue Staff produced the finding that revenue staff generally support the principle of performance related pay (PRP), but a significant majority feel hostile to it … the positive motivation effect of performance pay has been at most, very modest among Inland Revenue Staff. It is hard to see that they have been felt to any degree by more than a small majority of staff.
A study carried out in United States by Lawler (1971), Guzzor et:al (1985, Nalbantain (1987) and Binder (1990), all show productivity increase of between 15 and 35% when incentive scheme has been put into place. These confirm that when reward is seen as being fair, employees would reciprocate by putting their best effort to ensure that the organization succeeds, since they believe that their effort is commensurately rewarded.
In contrast to the above views, research by Armstrong (1993) in United Kingdom proved contrary to the above, as the study revealed an increase productivity from 67 -102 (35 points where 100 is regarded as the norms for a fully effective worker.
A study by Peterson and Luthans (2009), revealed that both financial and non-financial incentives improved employee and store performance. According t
o the study, store profits rose to 30% for those units where managers used financial rewards. Profits also rose to 35% for those stored units where managers used non-financial rewards.
Worthy of note is the fact that no worker ever works just for the sake of love for work, rather the desire to work arises as a result of the desire to satisfy some needs that are pressing to
them, therefore if the worker sees work as a means of satisfying these needs, they would be committed to it. Employees usually see performance related pay as such that link them with the organization’s performance.
Be the first to comment