EFFECT OF FINANCIAL INCENTIVES ON EMPLOYEES’ MOTIVATION

1.1. Background to the Study Financial incentive is a concept in human resource management that plays a key factor in employees’ motivation. Financial incentive refers to the tangible recognition and appreciation offered to employees in the form of monetary rewards. These rewards hold the power to influence not only individual motivation but also the overall performance and engagement levels within a workplace. Employees expect financial and caring attitude from employer, appreciation and non-financial rewards for their services and efforts. This type of recognition motivates the employee to put in their best. The healthy working conditions of equitable pay, training and development foster a professional relationship between supervisor and employee. The non-availability of financial incentives can lead to dissatisfaction of workers when the performance of workers exceeds the financial rewards which usually leads to high employee turnover. One of the major issues confronting contemporary organizations’, whether private or public, in developing countries such as Nigeria, is ensuring that workers are highly motivated to achieve organisational goals and objectives. The rationale is that most workers in these establishments often have personal goals that are divergent from those of the organisation. Because well-motivated workers are essential assets that carry out organisational activities that enhance the attainments of set goals and objectives, their motivation is therefore crucial. Management of organisations that want to remain vibrant and competitive and achieve set targets and goals must consequently understand the relevance of employees’ incentives that motivate propellers to align policies direction towards that effect (Ramlall, 2018). The fate of an organisation is usually determined by its employee, so it sounds logical to understand how employees can be motivated (Susan, 2019). Therefore, organisations require well-motivated workers to be successful in their operations, besides other factors, because they are enthusiastic about the organisation’s success. One instrument often used to motivate employees is an incentive. An incentive is any resource or means that seeks to persuade, stimulate or drive workers to work harder and improve and sustain high-performance levels on the job. The motivation is subdivided into financial and non-financial. It is generally believed that the effect of financial incentives is unambiguously positive; a sizeable financial incentive improves employee performance (Susan, 2019). According to Rina and Siti. (2018) , Ramlall (2018) and Patric and Elena (2018) , higher rates of employee job satisfaction and employee retention lead to greater organizational performance and lower organizational turnover rate. As such, the knowledge of factors related to employee satisfaction can have a significant effect upon a wide range of issues for employees and employers. Thus, employees of an organisation have motives and inner desires that are expressed in the form of actions and efforts towards job roles to meet their needs. Employee motivation is the energy, commitment, and creativity that a company’s workers apply to their job. Researchers divide motivation into two categories, intrinsic and extrinsic. Extrinsic motivation comes from external factors such as financial rewards and must be refilled regularly not to lose its effect. Intrinsic motivation comes from inside an individual and is the kind of motivation every organisation wishes their employees would have (Armstrong, 2010). Ideally private universities in Nigeria should depend not only on intrinsic and extrinsic motivation to attract employees connected with the job and do much better. This claim is supported by Bagraim, et al. (2017), who identified the effect of financial incentives on information and communication technology professionals. Profit-sharing plans, premium pay and cash bonus are the economic benefits these professionals enjoy, enhancing their motivation to work. Contrarily, Susan (2019) stated that, in most businesses and other organisations, money is used to keep an organisation adequately staffed and not primarily as a motivator. Any bonus scheme for manual workers should be related to criteria that are meaningful to the employees and capable of being measured consistently. The incentive to achieve one particular objective, for example, increased volume, should not act as an incentive to worsen other achievement standards like quality. Bruce (2012) stated that employees would do their best only when they feel their hard work will be rewarded, especially using the financial incentive method. Motivation through rewards is of crucial importance. Many superiors believe that using motivational techniques encourages employees to produce better output. In any case, motivating employees may enable private university owners to remain competitive. Private universities, such as Adeleke University, Ede, Osun State, have played a significant role in job creation and economic growth in Nigeria. Lack of motivation can negatively impact the business (Susan, 2019). Hence, financial incentives are instrumental to employee motivation and productivity as they have great benefits and a high potential to motivate workers to do their best in any given task. To this end, the study investigates the effect of financial incentives on employees’ motivation, using Adeleke University, Ede, Osun State, Nigeria as a case study. 1.2 Statement of the Problem Proprietors of Private Universities in Nigeria experience low employee productivity and lost profits when they cannot motivate employees. An organisation may negatively impact productivity and profitability when employees lack motivation and job satisfaction. The general business problem is that owners who do not motivate employees to reduce turnover may experience lost profits. Still, some problems are associated with financial incentives on workers’ performance by workers and managers in various business organisations. These are; poor incentives packages, which have been a significant factor affecting employees’ commitment and productivity; employees’ lack of willingness to increase their performance because they feel that their organisations do not well recognize their contributions and management also lacks the necessary skills that could help in the formulation of a sound financial incentive policy. Any organisation’s success and survival are determined by how its workers are remunerated and rewarded. The reward system and motivating incentives will evaluate employees’ commitment and attitude to work. According to Rina and Siti (2018), incentives are the compensation for doing work well given to a worker through financial and non-financial incentives. However, for any business to achieve its objective in any competitive society, employers of labour must thoroughly understand what drives the employees to perform efficiently and reward them accordingly. There is an increasing need for Private Universities to develop reward systems that motivate staff to work harder. Ramlall (2018) has examined the nexus between financial and non-financial incentive and employee motivation in the Universities and Polytechnics. The study by Nelson (2019) addressed employees’ motivation on the performance of Small and Medium Enterprises in the Private Sector in Nigeria. Patric and Elena (2018) specifically addressed the effect of motivation on productivity in small and medium enterprises in Kaduna state. It can be observed that these studies specifically failed to address issues around financial incentives as a motivating factor for employees’ performance and productivity in the Nigerian Private Universities, which this study considers quintessential. It is in the light of the foregoing that this study examines the effect of financial incentives on employees’ motivation using Adeleke University, Ede, Osun State, Nigeria as a case study. 1.3 Objectives of the Study The main objective of the study is to examine the effect of financial incentives on employees’ motivation using Adeleke University, Ede, Osun State, Nigeria as a case study. The specific objectives are to: (i) Examine the effect of merit pay on workers’ motivation in Adeleke University, Osun State, Nigeria; (ii) Investigate the effect of wages and salaries on the productivity of employees of Adeleke University, Osun State, Nigeria; (ii) Assess the effect of bonuses on workers’ motivation in Adeleke University, Osun State, Nigeria. 1.4 Research Questions The following questions will be addressed in the study: (i) What is the effect of merit pay on workers motivation in Adeleke University, Osun State, Nigeria? (ii) How doeswages and salaries affect the productivity of employees in Adeleke University, Osun State, Nigeria? (ii) To what extent does bonuses affect workers motivation in Adeleke University, Osun State, Nigeria? 1.5 Hypotheses The following hypotheses will be tested in line with the stated objectives: Hypothesis One Ho: There is no significant effect of merit pay on workers motivation in Adeleke University, Osun State, Nigeria H1: There is a significant effect of merit pay on workers motivation in Adeleke University, Osun State, Nigeria. Hypothesis Two Ho: There is no significant effect of wages and salary on workers productivity in Adeleke University, Osun State, Nigeria H1: There is a significant effect of wages and salary on workers productivity in Adeleke University, Osun State, Nigeria. Hypothesis Three Ho: Bonuses have no significant effect on workers motivation in Adeleke University, Osun State, Nigeria H1: Bonuses have significant effect on workers motivation in Adeleke University, Osun State, Nigeria. 1.6 Significance of the Study This study examines the effect of financial incentives on employees’ motivation in Adeleke University, Ede, Osun State, Nigeria. The study will be significant to the management of Adeleke University, Ede, Osun State, Nigeria as they will be able to recognize the importance of motivation as a tool for encouraging workers to feel that their efforts and welfare have been recognized in an organization. This study will also give the employees (workers) the idea of what to expect the management to do for them and also serve as a guide that will enable them to set limits to their unnecessary demands. The findings of the study will not only be useful at a practical level but also in the theoretical aspect where it will assist in propagating knowledge in workers’ job satisfaction. It will also constitute a useful and interesting text in the library. The study will also provide a database for future research work. The findings of the study will serve as a reference for future researchers who may wish to explore the subject. This will enable them to get feedback regarding the effectiveness of the subsequent policy formulation and planning. 1.7 Scope of the Study The scope of the study is limited to only the academic staff of Adeleke University, Ede, Osun State, Nigeria. The study examines the effect of financial incentives on employees’ motivation. Academic staff of Adeleke University will be chosen for this study because they are the backbones of every institution. If not properly taken care of through financial incentives, may result to a high labour turnover. There are many motivational tools available in satisfying workers of various categories in most establishment or organization. However, the effect of financial incentives on motivation will be examined in this study. It is believed that AdelekeUniversity will serve as a good representative of other private Universities in Nigeria, where workers motivation is sacrosanct. The study will span through year 2015-2023. 1.8. Operational Definition of Terms Motivation: Motivation refers to what activates, directs human behaviour and how this behaviour sustained to achieve a particular goal. It can be defined as the set of processes that arouses, directs and maintains human behaviour towards attaining some goals. Financial incentives:This involve granting of rewards in terms of money such as commissions, bonuses, given to employees whose production level exceeds predefined standards. Bonuses: Bonus pay is the sum of money employers give to employees beyond their existing wages Employee satisfaction: This refers to the positive or negative aspects of employee’s altitude towards their jobs or some features of the job. Organizational Goals: This is a concept, which refers to the focus of attention and decision-making among employees of a sub-unit. Employee attitudes: This refers to the mental state of readiness for motive arousal. Performance: This is the act of doing something successfully; using knowledge as distinguished from merely possessing it; A performance comprises of an event in which generally one group of people (the performer or performers) behave in a particular way for another group of people. Efficiency: The ratio of the output of any system. Economic efficiency is a general term for the value assigned to a situation by some measure designed to capture the amount of waste or “friction” or other undesirable and desirable economic features present.