Effect of Financial and Non-Financial Incentives on Staff Productivity

Effect of Financial and Non-Financial Incentives on Staff Productivity

1.0 Background of the study

All organizations are concerned with what should be done to achieve a high level of productivity through staff motivation using the right kind of incentive. Consequently, the effect of financial and non-financial incentives becomes a burning issue in human resource management. As such a lot of theoretical concepts, principles, and techniques of management have evolved in response to these challenges/ but most scholars suggest that more conceptual and empirical work is required to show the link between financial and non-financial incentives and staff productivity is still vague but some studies have documented in their work that financial incentive is readily perceived as having a high instrumental value that makes putting forth extra effort worthwhile and its has a long term effect in terms of labor turnover rate because of comparative value for alternative employment while non-financial incentive has a less initial impact as the pragmatics of financial gain, they seem to have a steady, sustainable impact. Despite the growing body of literature and empirical study on the effect of financial and non-financial incentives on workers’ productivity, the subject matter remains complex. Hence, the need to survey the effect of financial and non-financial incentives on staff productivity in Nigeria Postal Services Kaduna.

1.2 Statement of the problem

Nigeria Postal Services (NIPOST) like other public enterprises is constrained by the problem of using non-performance-based elements like salaries to compensate its staff as against performance-related pay structure which has hampered productivity because it does not make workers put extra effort into their work. This is so because their compensation is not based on incentive schemes that elicit additional effort from workers sequel to unfriendly government legislation on wages clause and bureaucratic inefficiency. Hence the need to examine the effect of financial and non-financial incentives on staff productivity in Nigeria Postal Services Kaduna.

1.3 Objectives of the Study

The central objectives of this study are to examine the effect of financial and non-financial incentives on staff productivity in NIPOST Kaduna. Specifically, the study is set out to: Identify whether NIPOST remuneration is based on incentive schemes that motivate staff to perform. Examine all financial incentives NIPOST gives to its staff and their effect on worker productivity. Identify non-financial incentives used in boosting staff productivity in NIPOST Kaduna. Find out the constraints militating against the NIPOST incentive scheme and make recommendations for the identified problems. H0: there is no effect of the NIPOST incentive scheme on the productivity of staff H1: there is an effect of the NIPOST incentive scheme on the productivity of staff.

1.4 Significance of the Study

This study brings to light the effect of financial and non-financial incentives on staff performance in an organization. The study will therefore be beneficial to the organization under study (NIPOST) in the area of policy formulations as regards staff incentive schemes and remuneration. To education, the study will contribute to already existing knowledge on the effect of financial and non-financial incentives on workers’ performance. Finally, to those in academics and human resource research, the study will serve as a springboard for further investigations.

1.5 Research Questions

This study provides answers to the following research questions: Is NIPOST remuneration based on an incentive scheme that motivates staff performance? What kind of financial incentive does NIPOST give to its workers and what is their effect on workers’ productivity? What kind of non-financial incentive does NIPOST use to boost workers’ productivity? What are the constraints militating against the NIPOST incentive scheme and how can these constraints be overcome?

1.6 Scope of the study

the study covers an empirical investigation of the effect of financial and non-financial incentives on staff productivity in NIPOST Kaduna. The time frame for this investigation covers NIPOST incentive schemes from 2006 to 2011.

1.7 Limitation of the Study

The study is limited to bias in respondent opinion about the subject matter as well as the use of one study area and the uncertainty about the generalization of finding sequel to the use of a single research design as well as instrument. The fact Because only NIPOST was used as the sole area of study it is not certain if the same result would be obtained in other organizations. Respondent bias and nonchalant attitude also constitute a greater limitation of this research. The fact that questionnaires constitute the only instrument used to collect data and survey research design is the sole design used for the study. It is not certain if the same result will be used if another type of design, as well as instrument, were used. All these factors constitute a greater limitation to the research.

1.8 Definition of Term Financial Incentives

Monetary rewards or compensation are used to motivate workers. Non-Financial Incentives: Other incentives apart from monetary rewards. Performance Incentive: Rewards that motivate the worker to put in more effort. Productivity: The rate at which employees work and their yield in their organization.