IMPACT OF FINANCIAL INCENTIVES IN GOVT OWNED ORGANIZATIONS IN NIGERIA
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IMPACT OF FINANCIAL INCENTIVES IN GOVT OWNED ORGANIZATIONS IN NIGERIA
Chapter One: Introduction 1.1 Background of the Study
Exponents of Scientific Management Taylor (1911) and his followers claimed that the primary motivation of man at labour was economic. Money was viewed as the primary motivating factor.
While the driving pull of money and material incentives could not be disregarded, the emphasis eventually changed from economic to social man. (Ezeani, 2005:135).
The Hawthorne experiment, conducted by Elton Mayo at the Western Electric Company, produced this result. The investigation focused on the impact of group membership and interaction on productivity, attitude, and job satisfaction.
The study sparked the human relations movement, which argued that man does not only work for money, but that other personal and interpersonal factors such as personal worth, recognition, friendship, social pressures from group members, and status are important in determining production and level of job satisfaction.
(Osuji,1985:91). In other words, it has become increasingly obvious that, in addition to economic wants, man has specific social-psychological needs that must be addressed in order to elicit behaviour conducive to improved production.
While traditional management theories, as illustrated by the Scientific Management Movement, emphasise the motivating power of money and material rewards, classical theories acknowledge the latter but place a higher emphasis on meeting the psychological needs of employees.
Wage incentives and fringe perks are motivational elements. Croft (1996:46) defines motivation as “impulses that stem from within a person and lead him to act in ways that will satisfy those impulses”
In other words, the concept of motivation indicates that there is some driving force within humans that causes them to try to achieve a goal or purpose in order to meet their need or requirements. (Croft, 1996: 46).
To suggest that managers motivate their employees means that they do things in the hopes of satisfying their drives and desires and causing subordinates to respond in a desired manner. (Koontz et al. 1983:632). According to Alugbuo (1981:13), people work because they want to be rewarded.
The exchange of labour for cash benefits is central to the pay process. People will not give their all unless they are compensated fairly for their efforts, as dictated by the prevailing social and economic situation.
According to Ubeku (1975:301), paying good salaries and wages is critical to improving the requirement for effective performance. To drive people to work hard, their varied requirements, particularly those related to salaries and other fringe benefits, must be met to the greatest extent possible.
In Nigeria, the compensation structure falls below the amount required to maintain worker efficiency. The compensation structure does not reflect the economic reality. Papola (1970, p. 79) states that “a just minimum wage to maintain not only the life but the health and the vigour of the working people is a law of necessity and knows no other law” .
The single most fundamental commitment of an employer to an employee is to pay his or her wages. Wages, salaries, and other related costs (pensions, for example) often account for approximately 60% of the total costs of operating a large corporation.
Employers are therefore more than just interested in this area of their operations. Other key impacts on these activities include trade unions negotiating higher labour prices, competitors vying for the best employees, and the state attempting to establish minimum working conditions for all employees (Cole, 2005:30).
A benefit is additional remuneration provided to employees as an incentive for joining an organisation. Because fringe benefits cost companies money, it is critical to outline the extent and total costs of offering such perks to employees.
Zolthistsch et al.(1970:136) define it as any financial or non-financial compensation made to employees in excess of their agreed-upon basic salary rate for the minimum expected job performance.
Armstrong etal (1970:36) also said that “fringe benefits when combined with the basic pay of an individual forms that total remuneration which is the entire package of pay and benefits received by each employee, their value to an individual in more accurate basis for comparison with outside market rates than straight salary”.
According to Sunken (2008:20), “motivation and productivity are twin ideas in organisational growth. First, motivation serves as a means to an end of productivity; secondly, motivation is the best cause of productivity as a result of positive effects; and finally, motivation serves as a stimulus to activate productivity as a response.”
People require incentive, just as equipment requires fuel and operators. This is in high demand to ensure that they are constantly in peak operational condition. As a result, productivity will undoubtedly increase. (Sunken 2008:20).
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