FRINGE BENEFIT AND SUBORDINATE JOB PERFORMANCE

FRINGE BENEFIT AND SUBORDINATE JOB PERFORMANCE

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ABSTRACT

The study was determined fringe benefit and subordinate job performance. The case study approach was adopted. The population of the study was made to be one hundred (100). The Taro Yemen’s formula was used to determine the sample size of 80. The instrument used in the data collected is interview and questionnaire method. Findings reveal that there is a significant relationship between fringe benefit and subordinate job performance. Based on the findings of the study summary, conclusion and recommendations were made that the management should continue providing security benefits to all subordinate, as it will positively influence subordinate and raise overall performance in the organization, management should continue providing health protection benefits to its employees since it will help them create a sense of loyalty and encourage their performance, management should review the current retirement package since a good retirement package will attract and retain employees in the public sector and also improve their performance and public organizations need to improvise employee recognition programs for jobs well done, this will motivate employees thus enhancing employee productivity in the public sector.

 

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

According   to   Mathis   and   Jackson (2003), fringe   benefits   are   forms   of   indirect compensation given to an employee or group of employees as a part of organizational membership.  Bratton and Gold (2009) define them as that part of the total reward package provided to employees in addition to base or performance pay.  Fringe benefits focus on maintaining (or improving) the quality of life for employees and providing a level of protection and financial security for workers and for their family members. Like base pay plans, the major objective for most organizational fringe compensation programs is to attract, retain and motivate qualified, competent employees (Bernardin, 2007).  Mathis and Jackson (2003) continue to state that an employer that provides a more attractive benefits package often enjoys an advantage over other employers in hiring and retaining qualified employees when the competing firms offered similar base pay.  In fact, such benefits may create “golden handcuffs,” making employees more reticent to move to other employers. Some common examples are; retirement or pension plans, medical and dental insurance, education reimbursement, time off, paid vacation and use of company car.

According to a study carried out by the US Chamber of Commerce in (2006), fringe benefits in the U.S., were not a significant part of most employees’ compensation packages until the mid-twentieth century.   For example, in 1929, benefits comprised only about 3 percent of total payroll costs for companies.  However, employee benefits in the U.S. now comprise approximately 42 percent of total payroll costs.  Several things account for the tremendous increase in the importance of employee benefits in the U.S.  In the 1930s, the Wagner Act significantly increased the ability of labor unions to organize workers and bargain for better wages, benefits, and working conditions.  Labor unions from the 1930s to 1950s took advantage of the favorable legal climate and negotiated for new employee benefits that have since become common in both unionized and non-union companies.

Fringe benefits have generally constituted a higher proportion of total employee compensation in Europe than in the United States.   In Europe, they are most often the result of legislation, whereas in the United States collective bargaining has been more important in gaining such benefits for workers.  The prevalence of fringe-benefit programs increased sharply during World War II because controls on this type of compensation were less stringent than controls on wages (Martocchio, 2006).

According to Long (2006), Benefits are a form of indirect pay within a compensation system.  They are rewards (other than wages, salaries or performance-related payments) that employees receive in return for their continued service to the organization. They are designed to protect employees and their families from loss of income due to health problems or other work-related financial disruptions, and can improve the employees‟ general quality of life through special programs and services in the workplace.

In many organizations in East Africa, the approach towards pay and benefits differentiates between staff at different levels of employment hierarchy.   The factors which affect employees‟ salaries  and  wages  can  be  categorized  into  two;  those  controlled  by  the employer and those imposed from external forces such as the government.  In both cases, the salaries and wage components are identified among others as; fringe benefits given as a result of being an employee of an organization in the form of hardship allowance in remote area,  house rent allowance, medical benefits, provident funds, gratuity funds, pension funds, superannuation benefits in the form of group linked insurance scheme, accident and death compensation while on duty, statutory funds (wage deductions), leave with pay, education allowance, and company cars.  Fringe benefits are also called perquisites and are either provided by the employer on his own initiative or they are the result of a collective bargaining agreement or state legislative.  They are provided to motivate the workers and retain them for organizational efficiency and effectiveness (Monappa, 1999).

1.2 STATEMENT OF THE PROBLEM

Numerous surveys and experience of human resources professionals have shown that while employees are concerned about how to earn more pay and enjoy attractive conditions of service, employers on the other hand would be striving to cut costs so as to post impressive profit at the end of the accounting period (Milkovitch and Newman, 2004).   Meanwhile, studies have shown that provision of motivators has been resulting in employees’ increased interest in the job, enthusiasm and increased productivity at work and absence of motivators has been the other way round (Mathis and John, 2003).

Research into employee benefits and organizational commitment is becoming more important because some researchers have examined the relationship between them (Christoph, 1996) and also the relationship between employee benefits, motivation and productivity (Hong, et al., 1995).  There is however, still some debate over fringe benefits on whether they facilitate in employee productivity leading to organizational performance and  do  benefits  impact  on  an  organization‟s ability  to  attract,  retain  and  motivate employees leading to productivity and improved organizations‟ performance (Milkovitch and Newman, 2004).

From the initiation of globalization, the foremost confront for manager is to expertise different strategies to boost firm’s performance (Habib, Khurram & Idress, 2010).    For    the    strength   of   an    organization   job satisfaction plays a vital role which has significant effect on subordinate performance. And the word performance we used to pass on   the   individual aptitude  to  be inspired,  stirring, pioneering and to determinant to achieving the  goals on  an  organization (Walumbwa & Hartnell,  2011).

Given the absence of empirical evidence on the relationship between employee benefits and productivity and the escalating cost of benefits, it is clear that there is a research gap and that further research needs to be carried out, in order to find out whether fringe benefits really do have any effect on subordinate job performance on selected hospitality firms in Port Harcourt.

1.3 OBJECTIVES OF THE STUDY

The main objective of the study is to examine the relationship between fringe benefit and subordinate job performance in hospitality firms in Port Harcourt. The specific objectives area follows:

  1. To determine whether employment security benefits influencesubordinate job performance in the hospitality industry.
  2. To find out whether health protection benefits  have  an  effect  on  subordinate job performance.

iii. To examine whether retirement benefits have an effect on subordinate job performance.

Iv. To assess whether recognition does enhance employee subordinate job performance.

1.4 RESEARCH QUESTIONS

  1. Does employment security benefits influence subordinate job performance in the hospitality industry?
  2. Does health protection benefits have an effect onsubordinate job performance?

iii. Do retirement benefits have an effect on subordinate job performance?

  1. Does employee recognition enhance subordinate job performance?

1.5 SIGNIFICANCE OF THE STUDY

There is some debate over fringe benefits on whether they facilitate organizational performance and whether they impact on an organization‟s ability to attract, retain and motivate  employees.    Conventional  wisdom  also  says  that  fringe  benefits  can  affect recruitment and retention, but there is little research to support this conclusion.   This statement indicates that there is a gap which has not been explored and therefore this study was undertaken to seek to establish whether fringe benefits really do have an effect on subordinate job performance and make appropriate recommendations on how to address the problem.

The researcher benefitted from the study as it added on to the growing body of knowledge on the roles of fringe benefits in organizations. The study will also act as a source of reference for further studies to be done on human resource in most organizations in Nigeria.

Employees will also benefit much from this study. Fringe benefits being one of the huge components in determination of organization performance, most of the employees will use the recommendations given to enhance high level of cooperation in their  various job groups.

The study will also help the Government and other employers with information which will help them come up with policies and legislations on the administration of fringe benefits. Future researchers will also benefit from this study because it will provide them with relevant information on the topic.

1.6 SCOPE OF THE STUDY

The study examines the relationship between fringe benefit and subordinate job performance. The scope of the study is limited to some selected Hospitality firms in Port Harcourt, Rivers State.

1.7 DEFINITION OF TERMS

Fringe Benefits: Fringe benefits are forms of indirect compensation given to an   employee   or   group   of   employees   as   a   part   of organizational membership.

Subordinate: A person under the authority or control of another within an organization.

Performance: The action or process of performing a task or function.

Compensation: Workers’  compensation  is  a  form  of  insurance  providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee’s right to sue his or her employer for the tort of negligence.

Retirement benefits: This is the amount  paid  regularly  to  a  person,  typically following retirement from service. There are many different types of retirement benefits, including defined benefit plans, defined contribution plans, as well as several others.

Overtime: Overtime is the payment over and above the normal salary and wage rates where the premium may be one and a quarter to two times.

Annual leave: Annual leave is a period of time off work that an employee is entitled to after every 12 consecutive months of service with an employer.

 

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