REWARD SYSTEM AND EMPLOYEE COMMITMENT (A SURVEY OF SELECTED COMMERCIAL BANKS IN BORI)

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Abstract

The study examined the relationship between reward system and employee commitment. The specific objectives of the study were to examine the relationship between variable pay and employee commitment, to determine the relationship between bonuses and employee commitment and to ascertain the relationship between profit sharing and employee commitment. The descriptive statistics was adopted. The population was made up of 68. The Taro Yemen’s formula was used to determine the sample size of 58. A Self-designed questionnaire on reward system and employee commitment was adopted. The simple percentage was used to analyze the research question. The Chi-Square statistical tool was used to test the hypothesis. Findings reveal that there is a significant relationship between reward system and employee commitment. Based on the findings, it is recommended that the survey research design was employed and toro yemen’s sample size determination was used to draw a simple size of 58 from a population 68 primary and secondary data was utilized and descriptive statistic (simple percentage) was used to analyzed the data while the chi-square (x2) statistical tool was used to test the postulated hypotheses. The findings revealed that management  should be designed in such a way that employee are entitled to percentages of profit earned by the firm as a means of promoting productivity amongst employees. This will enhance creativity and the desire to acquire new knowledge amongst employee.

Table of Contents

-Title Page    i

DECEMBER, 2020. i

Cover Page   ii

DECEMBER, 2020. ii

Declaration  iii

I hereby declare that this research project is my original work under the supervision of DR. Biobele R. Briggs and has not been submitted to any institution for the purpose of awarding a degree, diploma or certificate.      iii

Certification iv

Dedication    v

Acknowledgements           vi

Abstract        vii

Table of Contents   viii

List of Tables            xi

List of Figures          xii

CHAPTER 1   13

INTRODUCTION      13

1.1      Background to the Study 13

1.2      Statement of the Problem           15

1.3 Objectives of the Study         16

1.4      Research Questions           17

1.5      Research Hypotheses        17

1.6      Significant of the Study    18

1.7      Scope of the Study            19

1.8      Limitation of the Study     20

1.9      Definition of Terms            20

CHAPTER 2   22

LITERATURE REVIEW         22

2.1 Conceptual Framework        22

Fig 2.1: A Conceptual Framework on Reward System on Employee Commitment    22

2.1.1  Concept of Reward Systems       22

2.1.2  Dimension of Reward System    26

VARIABLE PAY         26

PROFIT SHARING   28

2.1.3  Concept of Employee Commitment      29

2.1.4  The Role of Reward systems and organization commitment        32

2.2 THEORITICAL FRAMEWORK            34

2.2.1  Social Exchange Theory    34

2.2.2 Expectancy Theory 36

2.3      Empirical Review    37

CHAPTER 3   40

RESEARCH METHODOLOGY        40

3.1      Research Design     40

3.2 Population of the Study        40

Table 3.1 Selected Banks in Bori.           41

Source: Field study, 2020.           41

3.3 Sample Size Determination  41

3.4 Sampling Techniques 42

3.5 Source and Method of Data Collection    43

3.6 Methods of Data Collection 44

3.7 Questionnaire Design            45

3.6      Data Analytical Techniques         45

3.7 Reliability and Validity           46

CHAPTER 4   48

DATA PRESENTATION AND ANALYSIS  48

4.1 Data Collection and Presentation   48

Table 4.1: Questionnaire Administration and Retrieval      48

4.2 Data Analysis    49

Table 4.2: show age bracket of respondents 49

Table 4.3: show sex of respondents     49

Table 4.4: Academic qualification         50

Table 4.5: Marital status  50

Table 4.6: Variable pay relate employee commitment in selected commercial banks in Bori.        51

Table 4.7: Bonuses relate to employee commitment in selected commercial banks in Bori.           52

Table 4.8: Profit sharing relate to employee commitment in selected commercial banks in Bori..            53

Table 4.9: Variable pay relate to affective commitment in selected commercial banks in Bori       54

4.3 Hypothesis Testing     55

Table 4.10: Contingency Table   55

Table 4.11: Chi Square Table      56

4.4 Discussion of Findings           57

CHAPTER 5   60

SUMMARY, CONCLUSION AND RECOMMENDATION         60

5.1 Summary          60

5.2 Conclusion        60

5.3 Recommendations     61

References   62

Appendix I    64

APPENDIX II 65

List of Tables

Table 4.1: Questionnaire Administration and Retrieval      48

Table 4.2: show age bracket of respondents 49

Table 4.3: show sex of respondents     49

Table 4.4: Academic qualification         50

Table 4.5: Marital status  50

Table 4.6: Variable pay relate employee commitment in selected commercial banks in Bori.        51

Table 4.7: Bonuses relate to employee commitment in selected commercial banks in Bori.           52

Table 4.8: Profit sharing relate to employee commitment in selected commercial banks in Bori..            53

Table 4.9: Variable pay relate to affective commitment in selected commercial banks in Bori       54

Table 4.10: Contingency Table   55

Table 4.11: Chi Square Table      56

List of Figures

Fig 2.1: A Conceptual Framework on Reward System on Employee Commitment    22

CHAPTER 1

INTRODUCTION

1.1      Background to the Study

In this present world of globalization where business has gone beyond national boundaries and employees are protected by international laws and engagement, reward systems are fast becoming a competitive tool to many firms. The advent of globalization has brought about greater pressure on business management to be proactive, creative and innovative in order to survive the turbulent business environment that now transcends national boundaries Ezigbo, (2011). Business management has gone beyond routine processes of mass production with the aim of benefiting from economy of scale.

Reward refers to everything the employee perceives to be of value resulting from the employment relationship and includes all types of rewards, direct and indirect, as well as intrinsic and extrinsic. The typical components of reward which make up the levers employers can resort in order to motivate, engage and retain staff are, pay, benefits, learning and developments, and working environment (Armstrong, 2006).

Reward is born as a means to help businesses to satisfy their most important needs which are to attract, retain, motivate and engage staff, not just by means of salary increases, , but in a more effective way capable of producing long-lasting results. The aim of reward therefore, is to maximize the positive impact that a wide range of rewards can have on motivation, job engagement, organizational commitments and job satisfaction (Manus and Graham, 2003).

Reward system has been examined differently by scholars. McShane (1992) sees organisational reward systems as those mechanisms which offer money and other extrinsic and intrinsic rewards to motivate employees toward fulfilling organizational obligations. According to Armstrong (2006) reward system adopts a total reward approach, which emphasizes the importance of considering all aspects of reward as a coherent whole that is integrated with other human resource initiatives designed to achieve the motivation, commitment, engagement and development of employees.

In most organizations poor reward systems lead to lower satisfaction and in turn produces very low organizational commitment (Caruth & Handlogten, 2001). Employees who experience job satisfaction are more likely to be productive, effective performers and committed to the organization. Research has shown that increased job satisfaction improves employees’ organizational commitment, performance and creativeness, and reduces absenteeism and turnover (Oshagbemi, 2010).

Reward systems are made up of compensation, incentives and benefits provided for the employee as a reward for their contribution to the organization (Sims 2002). Poor reward packages are seen by employees as a source of unfairness in the system which causes the employees to become dissatisfied with their jobs resulting into lack of commitment thus affecting their overall performance (Bratton & Gold, 2007).

The significance of employee commitment can be seen in prior research by Bateman and Organ (1983) which stress the relationship between commitment and job satisfaction, Moorman, Niehoff and Organ (1992) work justice, Deluga (1994) trust in and loyalty to the leader and perceptions of supervisor fairness (Niehoff  and Morgan, 1993).Stephen (2016)opines that people do not follow uncommitted leaders. Commitment can be displayed in a full range of matters to include the work hours you choose to maintain, how you work to improve your abilities or what you do for your fellow workers at personal sacrifice.

1.2      Statement of the Problem

Numerous surveys and experience of human resource (HR) 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 rewards 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  &  John,  2003).Over recent years,  the concept  of employee  engagement  has  gained tremendous  impetus  in  the  banks, yet  the academic  community has been  slow  and  late in studying it, leading to a lack of research.

However, employee performance is critical for the success of organizations and the quality of services provided by organizations to their clients. However commercial banks fail to achieve their aims and objectives due to poor performance of their employees for example, absenteeism, late coming for work, disregard for authority, absence from meetings, staff turnover and strikes This poor performance can be attributed to improper reward systems, lack of employee commitment and low job satisfaction.

 1.3 Objectives of the Study

The aim of the study is to examine the relationship between reward system and employee commitment of selected commercial banks in Bori.. The specific objectives of the study are to:

1.        Examine the relationship between variable pay and employee commitment in selected commercial banks in Bori..

2.        Determine the relationship between bonuses and employee commitment in selected commercial banks in Bori..

3.        Ascertain the relationship between profit sharing and employee commitment in selected commercial banks in Bori.

4.        Ascertain the relationship between variable pay and affective commitment in          selected commercial banks in Bori.?

1.4      Research Questions

The following research questions were proposed to guide the study.

1.        To what extent does variable pay relate employee commitment in selected   commercial banks in Bori.?

2.        To what extent does bonuses relate to employee commitment in selected      commercial banks in Bori.?

3.        To what extent does profit sharing relate to employee commitment in            selected commercial banks in Bori.?

4.        To what extent does variable pay relate to affective commitment in     selected commercial banks in Bori.?

1.5      Research Hypotheses

HO1: There is no significant relationship between variable pay and employee           commitment in selected commercial banks in Bori..

HO2: There is no significant relationship between bonuses and employee      commitment in selected commercial banks in Bori..

HO3: There is no significant relationship between profit sharing and employee        commitment in selected commercial banks in Bori..

HO4 There is no significant relationship between variable pay relate to affective     commitment in selected commercial banks in Bori.

1.6      Significant of the Study

 There is a saying that in any field of human endeavour, improvement are achieved by learning about what people do, why they do them, with what role (negatively or positively) and if there is need for adjustment.

The benefit also extends to academicians and organizational administrators.

The government or public sector could use effective managerial control methods to regulate the ailing public sector. It will also enhance profitability in the commercial bank with other employees in commercial banks.

The academicians will benefit because it will widen their horizon of knowledge regarding the motivating factors behind managerial control as the strategy of organizational efficiency.

This study is a complex, multidimensional one. It will add to the existing stock of knowledge in management and administrative science generally.

Thus, this study will be useful to other researchers especially students who want to know more about managerial controls and organizational efficiency. And performance would be adopted for decision-making at the co-operate level.

Other managers and workers in general could fall back upon this work as a guide for better organizational efficiency.

Banks will find the finding of this study significant and useful to enhance operational efficiency.

1.7      Scope of the Study

The study is delimited under the following headings; content scope, geographical scope and unit of analysis

Content Scope: The content of this study examined the relationship between reward system and employee commitment. The independent variable is reward system having a dimension of variable, bonuses and profit sharing while the dependent variable is employee commitment measure by  affective commitment, continuance commitment and normative commitment.

Geographical Scope: This study is delimited to selected commercial banks in Bori. which include Eco Bank located at No. 280 Aba Road, First Bank located at No. 315 Aba Road and Access Bank located at No. 316 Aba Road, Bori..

Unit of Analysis: The unit of analysis is limited to senior and junior staff of selected commercial banks in Bori. at the time of the study. The study is a micro study.

1.8      Limitation of the Study

In carrying out this research work, the researcher was constraint by lot of factors which include but not limited to the following:

The attitude of respondents toward the researcher’s questionnaire was limited, thus the study cover a small portion of the survey population.

The fund available to the researcher was also limited and therefore the study was limited to a small portion of the survey population.

Another limitation is the difficulties, encountered by the researcher in obtaining all needed information and materials from the right source and compilation of data for the project

1.9      Definition of Terms

Affective Commitment: Is defined as the employee’s positive emotional attachment to the organization.

Bonuses:  Is a financial compensation that is above and beyond the normal payment expectations of its recipient.

Continuance Commitment: Is the degree to which you believe that leaving the organization would be costly.

Employee Commitment: Refers to it as the attachment that an employee has on their organization due to their experiences. It can indicate the level of satisfaction, and engagement among employees.

Normative COMMITMENT: Is the degree you feel obligated to the organization or believe that staying is the right thing to do. Here, you believe you ought to stay.

Profit Sharing: Is an incentivized compensation program that awards employees a percentage of the company’s profits.

Profit Sharing: It is refers to the strategy of creating a pool of monies to be disbursed to employees by taking a stated percentage of a company’s profit.

Reward System:     Is a collection of brain structures and neural pathways that are responsible for reward-related cognition, including associative learning (primarily classical conditioning and operant reinforcement), incentive salience (i.e, motivation and wanting, desire, or craving for a reward), and positively-valenced emotions, particularly emotions that involve pleasure.

Variable Pay: Is the portion of sales compensation determined by employee performance.

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