Abstract

The reward scheme is an important device not only to monitor performance of employees but it can also be used as a motivation method. Thus, by an adequate reward scheme, an organization can retain employees as well as attract new talent. The main objective of this study is to investigate and analyze how the current reward scheme of Awing Central Cooperative Credit Union Limited (AWICCUL) Buea affects employee productivity. The driving force behind this study is to enable the employees of AWICCUL to give feedback on their productivity and their attitudes towards the reward scheme and hence, perhaps increase their commitment to the organization. In order to achieved the study objectives, a sample of 15 employees were sample using a non-probability sampling techniques by means of a structure questionnaire from Awing Central Cooperative Credit Union. The findings revealed that Reward schemes act as a source of motivation to employees which can result to an increase in their productivity hence increase overall organizational performance. When people are motivated, they can go an extra mile to meet set goals. Thus it was recommended that AWICCUL should set up a reward scheme that is fair enough. Reward schemes should not in be in financial terms. Non-financial motivation also has a lot of role to play in an employee’s productivity.

 

CHAPTER ONE

INTRODUCTION

 

1.1 Background of the study.

Employee productivity is the fundamental aspect of organizational performance. This is because individual performance contributes to the performance of teams or departments and aggregate of all team and departments is the organizational performance, particularly in terms of productivity. The reward scheme is an important device not only to monitor performance of employees but it can also be used as a motivation method. Thus, by an adequate reward scheme, an organization can retain employees as well as attract new talent. Employees’ tasks and duties are designed to achieve organizational goals and objectives and provided that efficiency and effectiveness of employees is optimized, the success of achievement of goals and objectives of the organization is also optimized.

According to Sheilds and associates (2015), rewards should be based on differing needs of employees. The needs of some employees can be fulfilled by cash rewards while others are more interested in other incentives such as house, car, paid holidays, etc. a reward scheme should have an effective combination of both monetary and non-monetary rewards and incentives in order to satisfy the needs and expectations of employees towards management and reward scheme. Positive impact on employee productivity can only be achieved if reward scheme meets the needs and expectations of employees. Typically, a rewards scheme is based on the notion of ‘pay for performance’ which may take the form of promotions, commission, bonus, awards, etc. Typical non-financial incentives are performance appreciation, social recognition, improved working conditions, diversification in job description, increasing responsibilities, etc. (Garg and Rastogi2006). Torrington, and associates (2009) used the term non-material rewards for non-financial or non-monetary rewards and concluded that they increase the overall job satisfaction of the workforce in an organization.

The nature of financial and non-financial rewards is categorized into extrinsic and intrinsic rewards. Rewards having extrinsic nature are generally related to monetary rewards or simply cash rewards while they also include formal recognition such as appreciation letters, other fringe benefits, incentive based payments such as sales commission, and promotion. Rewards having intrinsic nature are typically non-monetary or non-cash rewards, for examples, sharing success stories, recognizing employee of the month or year achievement, providing professional training opportunities. A good balance of extrinsic and intrinsic rewards enables the organization to maximize employee’s commitment, motivation, and job satisfaction which in turn maximizes the performance of employees particularly in terms of productivity (Khan, et al. 2013).

Wang (2004) argued that reward scheme shows the benefits an employee may get in return of performance of his/her job. The authors argued that reward scheme plays various roles, such as to develop and sustain employee commitment towards organization or in other words to maximize employee loyalty. It also plays a critical role in employee satisfaction (Brief and Weiss 2002). Ali & Ahmad (2009) conducted an investigation and found that there is positive relationship between reward and recognition and positive relationship between satisfaction and motivation. The study concluded that by enhancing reward and recognition of employee productivity in an organization can maximize employee motivation and satisfaction. Serwar and Abugre (2013) analyzed the impact of rewards on job satisfaction of service industry employees. They found a positive impact of job satisfaction on employee productivity and concluded that adequate reward scheme maximizes the job satisfaction leading to increase in efficiency and effectiveness of employee productivity. Kaliski (2007) explained that positive relationship between motivation and rewards leads to increase in the job satisfaction of employees. Increase in Job satisfaction, in turn, increases the perception of job success and achievement of an employee. The study also found positive links of job satisfaction with employee productivity, commitment of employees to put effort in job.

Boehm and Lyubomirsky (2008) concluded that rewards have potential to promote job. They focused on Intrinsic and extrinsic nature of rewards and identified that they are determinants of job satisfaction. The study conducted by Andrew and Kent (2007) illustrated that employees are highly conscious of reward scheme as well as performance recognition and thus they are important variables in job satisfaction. Carraher, Gibson, & Buckley (2006) found that in order to retain high performing employees, an organization must have a good reward scheme that has ability to meet the expectations of high performers. Using the expectancy theory, Mendonca (2002) opined that reward and compensation system should be based in the principle that employees have higher motivation to maximize performance if they perceive that existing rewards scheme is linked with performance and productivity.

Similar results were derived by the study conducted by Guest (2002) which concludes that reward scheme is key motivation for employees to meet performance expectations of the management. Tsai (2005) argued that extrinsic rewards such as monetary rewards or cash reward can be used to meet the expectations of individual employees and motivate him/her. Chin-Ju identified the notion of ‘pay for performance’ as the best incentive method for extrinsically driven employees; however, the author also opined that it lacks long-term results. Yousaf and associates (2012) focused on intrinsic nature rewards and concluded that individuals are constantly involved in social exchange processes by putting in efforts to gain rewards. Employees compare the efforts that they put in to gain the rewards with the actual rewards. The study concluded that in order to gain attractive rewards, an employee is likely to be motivated for high performance and thus rewards serve as motivational factor.

Danish and Usman (2010) concluded in their study that an effective reward scheme and adequate recognition of performance in an organization creates favorable working conditions for employees and serve as key motivator for employees to maximize productivity. Performance recognition creates a perception in employees that they are valued and appreciated and consequently the morale of the employees is boosted. High morale leads to increase in productivity of the employees which ultimately maximizes the productivity of the organization. Overall, the study concluded that reward scheme has a vital role in employee productivity and has a positive relationship with the process of employee motivation.

 

1.2 Problem Statement.

The problem being discussed here focuses on making an assessment of the various elements of reward scheme and looking at how these elements can affect employee productivity in Awing Central Cooperative Credit Union Limited (AWICCUL) Buea. As employees, they are the main resource for any organization and these reward schemes directly have an impact on them. Productivity is an intangible and subjective term while reward schemes are objective and clearly well-defined and attempting to relate one subjective concept to an objective one is a daunting task.

Usually, reward scheme was designed by top management. Organizations may design the reward scheme without consulting with the employees and thus, the designed may not be able to satisfy employees need and expectations. So we can say this reward scheme is not well structured and because of that it cannot really fully make employees to improve their productivity in the organization. In case the reward is something that does not have any good for the employee, then it may not be enough to make employees improve their productivity in the organization. As a result, the performance of the organization will be affected due to this problem. Good performance of an organization can really help organizations maintain their recognition so that these appear as positive consequences for showing the desired behavior to make employees improve on their productivity in the organization. In Cameroon, this topic of reward scheme is a bit inadequate and rarely discussed. So that is why these entire problems can arise because of the lack of knowledge on the topic.

So, this study intends to overcome this problem. By assuming independent variable as reward scheme and dependent variable as employee productivity, this study is designed to determine the reward scheme and its role on employee productivity. The sample of employees to be studied belongs to an organization called Awing Central Cooperative Credit Union Limited (AWICCUL) Buea.

Given the above mentioned problem under study, the following research questions may arise:

1. What is the employees` attitude towards the reward scheme at AWICCUL?
2. What is the effect of reward scheme on employee productivity?
3. What are the challenges faced by management in the implementation of the current reward scheme?

 

1.3 Objective of the study

The main objective of this study is to investigate and analyze how the current reward scheme of Awing Central Cooperative Credit Union Limited (AWICCUL) Buea affects employee productivity. The driving force behind this study is to enable the employees of AWICCUL to give feedback on their productivity and their attitudes towards the reward scheme and hence, perhaps increase their commitment to the organization.

The specific objectives of this study include:

1.  To determine the attitude of employees towards the reward scheme at AWICCUL.
2. To determine the effect of reward scheme on employee productivity.

• To determine the challenges faced by management in the implementation of the current reward scheme.

 

1.4 Research Hypothesis

H0: Reward scheme has no effect on employee productivity.

H1: Reward scheme has an effect on employee productivity.

Where H0 is the null hypothesis and H1 is the alternative hypothesis.