Abstract
There are two ways to ensure job performance in the realms of rewards; pecuniary and nonpecuniary. This paper examines the relationship and causality between reward system and job
performance in the health sector in Lagos State, Nigeria. Survey research design was adopted and
data collected through questionnaires. The impact of effective reward system on health workers job
Performance was analyzed using the regression analysis method. The study revealed the existence of
a positive relationship between reward system and employee job performance, most especially
where agreement reached with the workers union on salary and incentives are implemented, That
Government does not include workers union in decision making when formulating employee reward
package, That well-managed and implemented reward package will motivate an employee to
perform better at work. The study recommended that reward package should be reviewed timely so
as to continue to enhance the performance of workers.
between the employees and employers. In situation of high competition in the business
environment, the attainment of high organisational productivity must recognize the need to inspire
and motivate the employees via the design, establishment and implementation of a robust reward
system that calls out the best in the employees in terms of their performance, commitment,
dedication and loyalty. The process of effectively managing any organizations reward systems is
undoubtedly one of the most complex and problematic issues in human resources management.
Thus, this study was embarked upon to determine how reward system impacts on job performance
with special reference to health sector in Lagos state.
2. Objectives of the Study/ Research
This study has as its main objective, the evaluation of the impact of reward system on employee job
performance among health workers using Lagos State Government Hospitals as case study. The
specific objectives are:
1. To identify and evaluate the relationship between reward system and employee job
performance
2. To identify the actual impact reward system has on the workers performance
3. To proffer necessary policies for possible implementation
The hypothesis of this study is; there is no significant relationship between effective reward system
and employee job performance. At the end of this study, it is expected that the study will add to the
knowledge of business management by examining the practices, problem and approaches to
implementation of reward system. The data generated from Lagos State Government General
Hospital will be used to determine the impact of effective reward system on employee job
performance.
This study is divided into four sections, with section one dealing with the introduction, statement of
problem, objectives and research hypothesis. Section II deals with the literature review while section
III deals with the methodology, analysis and discussion of result. Section IV deals with the
conclusion.
and implementing a high profile rewards system, problems start to surface and companies now find
themselves with compensation systems that have negative impacts. To avoid such ugly incidents,
Whittlesey and Maurer (1993) provided an insight into some common mistakes in compensation
management and some precautionary guidelines so as to avoid the resultant financial and
operational negative impacts on the company. The common mistakes are:
(1)
Copycat Tendencies
Quite often, compensation managers fail to take account of the peculiar nature of their companies,
their products and labour market and even their industries before adopting a compensation plan
because it works somewhere else. Often times, they become aware of a grandiose incentive plan
through a friend, a competitor or through newspaper article. They often think that what worked for
Paul will work for Peter. Whereas this incentive plan worked for company A because it has
specifically been designed to work for it, company B jumps on the bandwagon without thoroughly
studying the system and making sure that it will work there as well.
Adopting an existing compensation plan is not in itself a bad idea. What is bad is the companys
failure to align the existing compensation plan with its current business strategies or the companys
operational needs. A company must not just adopt all existing incentive plan hook and sink but
must undertake a careful study of it and ensure that it will fit into its own company needs, strategies
and capability.
(2)
Putting up a Permanent Compensation Formular
The authors argued that having a fixed or permanent compensation formula may not be in the long
term interests of the company as such strategy would result into payoffs that exceed the value
initiated when the company was small and labour costs were within manageable range. Furthermore
any achievement made during such period were greatly appreciated and comfortably rewarded due
to the size of the firm. The operation of a permanent compensation formula becomes problematic
as the company grows and the staff becomes large and both competition and staff overheads
become unbearable. The permanent compensation formula thereby results in substantial costs. It is
better for companies to avoid the excruciating impacts of excessive costs that a permanent
arrangement will inflict on them by instituting compensation arrangement for a defined single
measurement period, with inbuilt provision for a review of the plan prior to its continuation for
additional periods. A flexible rather than a permanent compensation formula can save the
organization the likelihood of heavy financial burden often associated with the permanent formula.
(3)
Failure to Analyze Financial Impact
Quite often, managers start operating many incentive plans without first analyzing their financial
impacts on earnings and cash flow. It is like putting the cart before the horse. An example is a
change in the piece-rate system from NI .00 to N 1.50 for every unit produced in excess of the daily
required output of 250 units per day or a change in the overtime rate from 2.0 per hour to N2.5 per
hour. The full implication of this new compensation plan must be meticulously worked out and be
certain that such a plan will not unleash untold pressure on the firms financial capability.
(4)
Peoples Problem and Fear of Employee Reaction
Many a times the fear of employees reaction and the need to alleviate employees problem, may
force managers into implementing incentives plans that cannot be sustained for long. Compensation
managers must not be couched into entering into incentives plans that cannot be sustained. Rather,
they should always consider the long- term implications of such plans on their compensation budget
before embarking on any incentive plan.
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(5)
Lack of Formal Control
Lack of formal control over the implementation of compensation plan is always a serious mistake on
the part of the compensation managers. It is needless to say that the implementation of any
incentive plan needs adequate and tight control, as all money matters usually require. Except the
company can ensure that adequate monitoring control over the implementation of compensation
plans is put in place, compensation costs may shoot through the roof in a short time and may spell
serious danger to the firms liquidity position. To avoid this ugly situation, managers must ensure
that every aspect of the compensation plan is closely monitored and corrective action put in place to
keep compensation costs under control.
From the series of studies reported by Howell and Dipboye (1986) that examined the satisfactionperformance relationship, there is a clear indication that job satisfaction and job performance are
positively correlated, at least to some degree as increase in one tends to be associated with increase
in the other.
A happy worker causes the least resistance to managerial efforts aimed at increasing productivity
and high performance. On the other hand, an unhappy worker could be very problematic in this
regard. For example, employees who manifest satisfaction with their jobs are less likely to terminate
their employment or engage in absenteeism than those employees who express dissatisfaction with
their jobs.
(iii)
Capability
In special cases, financial compensation and rewards are paid for the unique capability,
resourcefulness and the reputation of key individuals who provide peculiar services to the
organisation. In Nigeria and the world over, many organisations keep many distinguished people or
experts on their Boards and their payrolls in recognition of the unique capability of such
personalities. Many US companies, for example, keep Peter Drucker on their Boards in recognition of
his world-wide acknowledged capability in management. In Nigeria, prominent management experts
like Mr. Gamaliel Onosode, Dr. Christopher Kolade and Chief Michael Omolayole enjoy similar
recognition. Prospective investors only need to pick up an annual report of a company or the letter
headed paper just to see who is who on the Board. Once such names like Onosode, Kolade, and
Omolayole are identified with any company, the investor can put his money in the company and can
afford to go to sleep. This is because such individuals have penchant and long standing reputation
for competence, capability and effective performance. It is their unique reputation for capability and
thoroughness that is actually being rewarded.
6. Research Methodology
Research Design
Descriptive survey method was adopted in the carrying out this study. Data were obtained through
the use of questionnaires. The questions were done in simple and clear language to remove
ambiguity. The response to each of the statements was on a 5 point Likert ordinal scale. The
questionnaires (see appendix) were intended to generate responses that will assist the researcher to
address the research problem, objectives, questions and hypothesis.
Population of the Study
The population of this study was made up of doctors, nurses, laboratory scientists and
administrative staffs of Lagos State Government General Hospital Staff. The total population as at
the time of the study was found to be 1270
Sample Size and Sampling Technique
A sample size of 250 was selected using stratified random sampling given the heterogeneous nature
of the staff population. The sample size chosen is presumed to be fairly large enough for meaningful
analysis.
Data Analysis Method
Ordinary least square regression method of analysis was adopted to show the causal relationship
between reward and job performance. In this study, job performance was made the dependent
variable while reward was the explanatory variable. The model for analysis is;
JPM = f (RWD) (i)
JPM = 0 + 1 RWD + ei . (ii)
where JPM = job performance
RWD = reward
0 and 1 = are the regression coefficients to be determined.
ei = the error term
variations in the values of the dependent variable, job performance. Reward as explanatory variable
in the model was found to exhibit positive relationship with job performance and significant with tvalue of 8.43 at 5% confidence level. It is however important to note that the transformation rate of
reward to performance is inelastic meaning that to achieve a unit increase in job performance via
reward, such reward has to be doubled.
JPM = 0.124 + 0.51RWD (iii)
(0.385) (8.43)*
4. Government should ensure that the reward put in place must balance between extrinsic and
intrinsic needs of the individual employees.
5. Government should quickly as much as possible respond to the needs of the employee to
avert constant strike action
Appendix I
TABLE 1:
DESCRIPTIVE STATISTICS
Mean
PERFORMANCE
2.8164
REWARD
3.7106
TABLE 2:
Std. Deviation
.66143
.46235
N
207
207
CORRELATIONS
PERFORMANCE REWARD
Pearson Correlation
Sig.(1.tailed
PERFORMANCE
REWARD
PERFORMANCE
REWARD
PERFORMANCE
REWARD
TABLE 3:
1.000
.507
.507
1.000
.000
.000
207
207
207
207
MODEL SUMMARY
Model
.507a
R
Adjusted
Square R Square
.257`
.254
Std.Error
of the
Estimate
.57142
R.
Square
change
.257
Change Statistics
F.
Df1 Df2 Sig. F. Durbin.
Change
Change Watson
71.009
a.
Predictors: (Constant), REWARD
b.
Dependent Variable: PERFORMANCE
TABLE 4:
ANOVA (ANALYSIS OF VARIANCE)
Model
Sum of squares
Df
Mean Square
1
Regression
23.186
1
23.186
Residual
66.938
205
.327
Total
90.124
206
a.
Predictors: (Constant), REWARD
b.
Dependent Variable: PERFORMANCE
205
.000
1.523
F
71.009
Sign
.000a
16
1 (Constant)
REWARD
Un-standardized
co-efficient
B
Std.
Error
.124
.322
.726
.086
Standardized
Coefficients
Beta
.507
Sig.
.385
8.427
.701
.000
.759
895
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