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1.1 BACKGROUND OF THE STUDY
Paying employees for productivity has been the cornerstone of industrial and business development for centuries. Financial reward has always been important in managing employee’s performance, but over the last 25 years other elements of compensation have developed to provide employers with a broad scope to reward, and thus motivate employees. Armstrong and Taylor (2010) states that performance is defined as behavior that accomplishes results. Performance management influences performance by helping people to understand what good performance means and by providing the information needed to improve it. Reward management influences employee performance level which can on the long run foster the actualization of an organization’s goals and objectives.
The purpose of this research study is to attempt to identify how these reward systems impacts employee performance in an organization. Torrington (2011) describes the importance of workplace rewards as clearly central to the employment relationship. While there are a lot of people who enjoy working and who claim they would not stop working even if they were to win a big cash prize in a lottery, Most people work hard because of the nature of the reward system used in an organization. How much employees are paid and the nature of reward system used to reward deserving employees is essential (Torrington, 2011)
The rewards that we apply to both individual and team performance is critical in determining how effective employees are. Wilson, (2003) describe rewards and their purpose as including systems, programmes and practices that influence the actions of people. The purpose of reward systems is to provide a systematic way to deliver positive consequences. Its fundamental purpose is to provide positive consequences for contributions to desired performance. Defining the concept of human resource management in the mid-1980’ led to a greater appreciation for the value your workforce could make to the overall business goals of the organization and how it could be groomed and cultivated to add most value to competitive advantage. This made the usage of effective reward systems necessary. Weightman (2004) argues that “the importance of reward management is to ensure the optimum performance of employees .”
Rewarding employees is associated with the motivation of the workforce of organization for better performance. However, what type and mix of rewarding tools to use is a challenge for organizations. Several studies have demonstrated that rewards have positive impact on employees’ commitment level. It is one of the factors that increase employee engagement in the workplace, which is the key element in the work performance (Furtado, 2009).
It is the concern of organizations all over the world to adopt effective human capital strategies to enhance their productivity. It is clear that employee’s productivity in the expanding organization is a key factor in a organization . Employees technically known as human resources in modern organization are rightly considered as the most important assets for banking industry success, (Lawler & Worley, 2006).Therefore, effectively rewarding them is important.
The rationale behind the use of reward to employees is that motivated employees become satisfied in terms of fulfilling their wants, both financial and non financial; failure to do so, employees will be tempted to leave the organization. (Azasu, 2009). On one hand, some employees prefer receiving intrinsic rewards in terms of praise and recognition for certain work accomplishments, while other employees are happy with extrinsic reward in terms in salaries, bonus and incentive offered to employees (Lawler, 2008, Sajuyigbe, Bosede & Adeyemi, 2013)
1.2 STATEMENT OF THE PROBLEM
The basic aim of every business organization is to achieve objectives, goals or targets successfully. Goals set by organizations will be in vain if much attention is not paid to reward of employees for successful accomplishment of set tasks. In other to achieve set goals and objectives successfully, there is the need to focus on different reward packages. Reward systems should be attractive to employees so as to ensure a high productivity level.
The researcher observed that the management of Zenith Bank Nigeria PLC, Ekpoma, Edo State has failed to adopt the usage of effective reward systems. This organization has failed to apply the usage of reward systems that aligns the need of the organization with that of employees. They have failed to apply the usage of extrinsic reward elements like money, remuneration, promotion and performance bonuses familiar to Nigerian employees. They do not use intrinsic reward packages like additional responsibilities and challenging jobs that can spur the performance level of higher level employees. This by extension has negatively inhibited the performance of this organization.
Employees are the life blood of every business organization; therefore their welfare should be of paramount interest to business organizations. If management does not invest much into the welfare of their workers, issues like low commitment to work, low morale and low productivity of employees are bound to evolve. This could directly impact the long term growth and survival of these business organizations and the banking industry.
The non-challant attitude of the management of Zenith Bank Nigeria PLC Ekpoma, Edo State towards effectively rewarding their employees cannot be ignored. It is against this back drop that this study seeks to ascertain it’s effect on organizational performance.
1.3 RESEARCH QUESTIONS
1.4 OBJECTIVES OF THE STUDY
The broad objective of the study is to determine the effect of reward system on the performance of Zenith Bank Nigeria PLC Ekpoma, Edo State
The Specific objectives are:
1.5 RESEARCH HYPOTHESIS
The following hypothesis were formulated by the researcher:
Ho: There is no significant relationship between the reward systems currently used in Zenith Bank and employee performance.
Hi: There is significant relationship between the reward systems currently used in Zenith Bank PLC and employee performance.
Ho: There is no significant relationship between employees view of reward system used by Zenith Bank of Nigeria PLC and organizational performance.
Hi: There is significant relationship between employee’s view of reward system used by Zenith Bank of Nigeria PLC and organizational performance.
Ho: Extrinsic reward (salary, bonus and promotion) has no significant effect on the performance of Zenith Bank Nigeria PLC Ekpoma, Edo State.
Hi: Extrinsic reward (salary, bonus and promotion) has significant effect on the performance of Zenith Bank Nigeria PLC Ekpoma, Edo State.
Ho: Intrinsic rewards has no significant effect on the performance of Zenith Bank Nigeria PLC Ekpoma, Edo State.
Hi: Intrinsic rewards has significant effect on the performance of Zenith Bank Nigeria PLC Ekpoma, Edo State.
1.6 Significance of the study
The study was carried out to enable all staff, especially those in management positions of the organization of study to understand and appreciate the effect of reward system on employee performance.
The study will also be of immense benefit to other Nigerian business organizations as it will give them an insight of the effect an effective reward system has on the performance of employees.
The study will also be of immense benefit to students as well as future researcher who intend to carry-out a related study as it will serve as an existing body of knowledge.
This study is centered on the impact of reward system on the performance of Zenith bank Nigeria Plc, Ekpoma, Edo State as the organization of study.
1.8 LIMITATIONS OF THE STUDY
The following limitations were encountered by the researcher during the study:
1.9 ORGANIZATION OF THE STUDY
The study was organized into five chapters. Chapter one introduced the study by giving the background information on the research problem, objectives, the scope and limitations of the study. Chapter two dealt with the review of relevant literature and the theoretical framework of the reward system in organizations. Chapter three discussed the research methodology adopted for the study and relevant justifications. Chapter four presented the findings on the impact of reward systems on employees’ performance in Zenith bank PLC. Chapter five also presented the conclusion drawn from research findings and recommendations.
1.10 ORGANIZATIONAL CORPORATE PROFILE (HISTORY OF THE BANK)
Zenith bank was established in May 1990. It started its operation in July the same year. It became a Public Limited Company on June 17th 2004. The bank currently has a share holder base of over one million and is currently the bank with the highest shareholders’ in Nigeria. Its head quarters are in Lagos. It has over 500 branches and business offices including the one located in Ekpoma, Edo State. The bank has built a brand as a reputable international, financial institution, recognized for innovation, superior customer service and performance.
1.11 DEFINITION OF TERMS
REWARD SYSTEM: This is group renewal structures responsible for incentive salience (i.e, wanting, desire or craving) pleasure (i.e, hedonic liking) and enforcement learning (i.e, positive reinforcement)
Employee performance is a composite assessment of how well organization employees performs on their most important parameters
CORPORATE PERFORMANCE ANALYSIS : This is a subset of business analytics/ business intelligence that is concerned with the health of the organization which has traditionally been measured in terms of financial performance . However, in recent years the concept health of corporate health has become broader
PERFORMANCE: This is the act of contributing ones measure to output and production
BANKING INDUSTRY: It is the section of the economy devoted to the holding of financial assets for others, investing those financial assets as leverage to create more wealth, and the regulation of those activities by government agencies
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