Effect of Financial and Non Financial Incentives on Staff Productivity

Chapter One of Effect of Financial and Non Financial Incentives on Staff Productivity

Background of the study

All organizations are concerned with what should be done to achieve high level of productivity through staff motivation using the right kind of incentive. Consequently the effect of financial and non financial incentive becomes a burning issue in human resource management.

As such a lot of theoretical concept, 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 incentive 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 labour turnover rate because of comparative value for alternative employment while non financial incentive has 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 incentive on workers productivity, the subject matter still remains complex. Hence, the need to undertake a survey on the effect of financial and non financial incentives on staff productivity in Nigeria Postal Services Kaduna.

Statement of problem

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

Objectives of the Study

The central objectives of this study are to examine the effect of financial and non financial incentive on staff productivity in NIPOST Kaduna.
Specifically the study is set out to:

1. Identify whether NIPOST remuneration is based on incentive schemes that motivate staff to perform.
2. Examine all financial incentives NIPOST give to it staff and their effect on worker productivity.
3. Identify non financial incentives used in boosting staff productivity in NIPOST Kaduna.
4. Find out the constraints militating against NIPOST incentive scheme and make recommendations to the identified problems.

Significance of the Study

This study brings to light the effect of financial and non financial incentives on staff performance in organization. The study will therefore be beneficial to the organization understudy (NIPOST) in area of policy formulations as regard 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.

Research Questions

This study  provide answers to the following research questions:

1. Is NIPOST remuneration based on incentive scheme that motivate staff performance?
2. What kind of financial incentive do NIPOST give to its workers and what are their effect on workers productivity?
3. What kind of non financial incentive do NIPOST use to boost workers productivity?
4. What are the constraints militating against NIPOST incentive scheme and how can these constraints be overcome?

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 2006-2011.

Limitation of the Study

The study is limited to bias in respondent opinion about the subject matter as well as the use of a single study area and the uncertainly about the generalization of finding sequel to the use of a single research design as well as instrument.
For the fact that only NIPOST was used as the sole area of study it is no certain if the same result would be obtained in other organization.

Respondent bias and non  challant attitude also constitute a greater limitation to this research.
For the fact that questionnaire constitute the only instrument use to collect data and survey research design the sole  design used for the study. It is not certain if the same result will be used if other type of design as well as instrument  were used. All these factor constitute a greater limitation to the research.

Definition of Term

Financial Incentives: Monetary reward or compensation use to motivate workers.    
Non Financial Incentives: Other incentives apart from monetary rewards.
Performance Incentive: Rewards that motivates worker to put in more efforts.
Productivity: The rate at which employee work and their yield in their organization.