Abstract

This study aimed at determining the Effects of reward systems on employee performance in CDC Limbe. The study made use of two objectives. The first objective was to examine the effects of financial reward on employee performance in CDC Limbe; and the second to determine the effects of non-financial reward on employee performance in CDC Limbe.

This study made use of the survey research design aimed at investigating the types of reward systems and providing detail explanations on their effects. The study made use of primary source of data collection while questionnaires were used as an instrument to collect the said data. The targeted population of this study was 150 staff members (that is, Human Resource Managers, unit and departmental managers, management and other employees) and the sample size was 109. The Ordinary Least Squares (OLS) Regression was used in analysing the data.

The study revealed that both financial and non-financial awards have a favourable impact on staff performance at CDC Limbe. Also, with regards to demographic characteristics, the findings conclude that most employees are married, have undergone university studies, are of male gender and are between 30 and 40 years of age. It is, therefore, recommended that: First, to enhance employee performance at CDC Bota, Limbe, it is essential to implement a balanced reward system that effectively integrates both financial and non-financial incentives.

CDC should develop a more financial and non-financial reward schemes such as bonuses, allowances, incentives, recognition, appreciation, and employee training and participation in decision making so as to encourage them to be more performant. In addition to developing a diverse reward structure, CDC Bota, Limbe should prioritize employee involvement in the decision-making processes and solicit feedback on incentive programmes. Engaging employees in shaping the reward systems not only enhances their sense of ownership but also ensures that the incentives provided are relevant and meaningful to them.

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

The dynamic nature of global business has a significant impact on how organisations position themselves for performance and reward systems. Poor employee performance is harmful to any organisation, whereas successful employee performance is a major source of organisational success (Muchiri, 2016). Most modern organisations link awards directly to employee performance (Zaman, 2011). Employee awards have been utilised for decades to recognise and thank employees while improving their performance. Early research on employee awards found a direct relationship between motivation and performance.

As a result, staff members’ awards are determined in accordance with the United Nations (UN) Common System of Salaries and Allowances. The Common System is an agreement among most UN organisations to follow a standardised set of personnel pay and allowances. The Common System organisations include the United Nations, its subsidiary organisations, and specialised agencies. The Bretton Woods institutions, which include the World Bank and the International Monetary Fund (IMF), as well as their related organisations, are not protected by this arrangement.

Employee rewards began in Europe and the United States of America (USA) in the 1950s, with Skinner’s (1953) reinforcement theory, which suggested that positive rewards boost employee performance. In other words, when employees are highly compensated for their efforts, they tend to reinforce the excellent behaviour that earned the awards. Abraham Maslow (1943) created Maslow’s hierarchy of needs, which proposed that employees’ performance improves when their needs are addressed. Employees who are adequately motivated by rewards outperform those who are not.

Africa as a continent has used rewards since pre-colonial times. However, Africa’s pre-colonial employee awards were not as sophisticated as the monetary extrinsic rewards utilised in Europe (Dewhurst et al. 2010). Employees who worked on farms were given bigger prizes when the harvest was plentiful as a method of expressing gratitude and recognition. According to Ali and Ahmad (2009), awards have been utilised throughout Africa to improve employee performance and organisational competitiveness. In East Africa, most Kenyan enterprises have been at the forefront of establishing employee rewards to encourage employee success (Kabak et al. 2014).

Lawler et al. (2004) found that delivering both financial and non-financial rewards has always been successful for human resources in the business process. In terms of employee performance, awarding has always been a source of motivation and engagement.

In a study conducted by Pratheepkanth (2011), he explored human nature and how an individual in an organisation performs effectively when he is motivated, with effective reward systems in the organisation serving as the primary source of motivation. He went on to explain that in the field of neuroscience, the reward system is defined as the recognition and functioning of the human brain, which is in charge of reward-related recognition. In this system, the human brain recognises items like compensation, reward, salary, or incentives as a result of outstanding performance.

The incentive system in organisations plays an important role in human resource management since it helps the organisation achieve its goals (Alfandi and Alkahsawneh 2014). Galtress et al. (2012) examined two categories of rewards: financial and non-financial. Financial incentives refer to monetary prizes such as compensation, increased pay, housing allowance, automobile allowance, and so on. Non-monetary benefits include job promotion, gratitude, acknowledgement, an appreciation lunch or supper, and so on.

Today’s organisations face numerous obstacles in order to remain competitive and acquire a sustainable competitive edge. Employee retention has become more difficult as a result of globalisation, since organisations increasingly manage people from many countries with diverse cultural backgrounds. Retaining a high-quality employee has been regarded as one of the most lasting competitive advantages. However, in today’s corporate world, it has become a difficulty for organisations (Armstrong 2013).

Employee performance is an important aspect of organisational performance. This is because individual performance effects overall organisational performance, notably productivity. The incentive system is critical not only for tracking employee performance but also for encouraging them. Thus, an effective compensation system can assist a company in retaining personnel while also attracting new talent. Employees’ occupations and duties are designed to achieve organisational goals and objectives; if employees are efficient and successful, the organization’s goals and objectives will be reached as well.

According to Shields & Associates (2015), awards should be based on the various demands of employees. Some employees’ needs can be met with financial awards, while others prefer other incentives such as a house, a car, paid holidays, and so on. A reward system should include an effective mix of monetary and non-monetary awards and incentives to meet employees’ requirements and expectations of management and the reward system.

A positive impact on employee productivity can only be accomplished if the compensation system matches employees’ requirements and expectations. Non-monetary incentives include performance acknowledgement, social recognition, improved working circumstances, job diversification, increased responsibility, and so on (Garg & Rastogi, 2006). Torrington and associates (2009) introduced the term non-material rewards to refer to non-financial or non-monetary benefits and concluded that they improve overall job satisfaction in a company.

Financial and non-financial incentives are divided into two categories: extrinsic and intrinsic. Extrinsic rewards are typically monetary or cash in nature, but they can also include official recognition such as appreciation letters, other fringe perks, incentive-based payments such as sales commissions, and promotion.

Intrinsic rewards are often non-monetary or non-cash rewards, such as sharing success stories, celebrating employee of the month or year achievement, or offering professional development opportunities. A proper combination of extrinsic and intrinsic rewards allows the organisation to enhance employees’ commitment, motivation, and job satisfaction, which in turn maximises employee performance, notably productivity (Khan et al. 2013).

Wang (2014) claimed that a reward system demonstrates the benefits that an employee may receive in exchange for performing his or her work. The author believed that a reward system serves several functions, including developing and maintaining staff commitment to the business, or, in other words, maximising employee loyalty.

It also contributes significantly to employee happiness (Brief and Weiss, 2014). Ali and Ahmad (2009) conducted research and discovered that there is a positive association between reward and recognition, as well as a positive correlation between satisfaction and motivation. The study concluded that improving employee performance reward and recognition can help a business maximise employee motivation and happiness.

Serwar and Abugre (2013) investigated the effects of rewards on job satisfaction among service industry employees. They discovered a positive relationship between job happiness and employee performance and concluded that an optimal compensation system maximises job satisfaction, resulting in increased efficiency and effectiveness of staff output. Pratheepkanth (2011) found a positive link between rewards and motivation.

They focused their research on Sri Lanka’s commercial banks. Mishra and Dixit (2013) discovered that both financial and non-financial awards have a significant positive association with employee motivation. Kaliski (2007) explained that a good relationship between motivation and rewards leads to increased job satisfaction among employees. Increased job satisfaction leads to an employee’s view of job success and achievement. The study also discovered beneficial relationships between job happiness and employee productivity, as well as employees’ willingness to put out effort.

Boehm and Lyubomirsky (2008) concluded that rewards have the ability to increase job satisfaction. They examined the intrinsic and extrinsic nature of rewards and concluded that they are factors of job satisfaction.

Andrew and Kent (2007) found that employees are highly aware of reward systems and performance recognition, making them crucial variables in job satisfaction. Carraher et al. (2006) discovered that in order to retain high-performing personnel, a company must have a good compensation system that can match the expectations of high performers. Using the expectancy theory, Mendonca (2002) concluded that reward and pay systems should be built on the notion that individuals are more motivated to maximise performance if they think that existing the reward system is linked with performance and productivity. Similar results were derived by the study conducted by Guest (2002) which concluded that a reward system is a key motivation for employees to meet performance expectations of management.

Tsai (2005) contended that extrinsic rewards, such as monetary or cash prizes, might be used to match individual employees’ expectations and motivate them. Chin-Ju identified ‘pay for performance’ as the best incentive strategy for extrinsically motivated personnel; nevertheless, the author also believes it lacks long-term results.

Yousaf and colleagues (2012) focused on intrinsic nature rewards and concluded that individuals are continually active in social exchange processes by exerting effort to obtain rewards. Employees compare their efforts to the actual benefits they receive. The study concluded that in order to receive an appealing reward, an employee is more likely to be motivated for good performance, and so rewards serve as a motivator.

Danish and Usman (2010) concluded in their study that an efficient incentive system and enough performance recognition in an organisation produce ideal working conditions for employees and serve as a significant motivator for employees to maximise productivity. Employee morale is raised as a result of performance acknowledgement, which promotes the idea that they are respected and appreciated. High morale leads to increased staff productivity, which in turn maximises organisational productivity. Overall, the study indicated that a reward system plays an important role in staff productivity and has a good association with employee motivation.

Similarly, Schaufeli and associates (2012) emphasised the importance of reward systems in minimising staff burnout. Employee burnout is a condition that affects virtually all types of employees at all levels. Burnout has a negative impact on employee job satisfaction, motivation, and productivity.

Bidwell and Associates (2013) discovered a link between pay and organisational profitability. The study’s findings show that compensation differentials are associated with employee morale, dedication, and productivity. The link is positive; so, better compensation leads to higher morale, dedication, and production, and vice versa. Kehoe and Wright (2013) conducted statistical tests and discovered a substantial correlation between incentive systems and performance recognition, as well as motivation and work satisfaction. The study demonstrated that adjusting the rewards and recognition leads to a corresponding change in employee motivation and job satisfaction.

Aktar and Ali (2012) investigated the link between rewards and employee performance, as well as the relationship between extrinsic and intrinsic rewards. The study also investigated the elements that influence extrinsic and intrinsic rewards and their impact on employee performance in the commercial banking industry. The results revealed statistically significant connections between all independent variables and all dependent variables. All of the connections observed were positive, implying that increasing one variable causes an increase in the other. For example, increasing compensation leads to an increase in staff productivity.

In Cameroon organisations, a variety of reward packages are employed, including monetary (financial) and non-monetary (non-financial) benefits. For example, in terms of monetary compensation, a salary rise is regarded as critical to employee satisfaction (Jones, 2014). It has been noted that greater results in terms of performance and engagement can be achieved if motivation is used, as workers show a lack of interest when there is no adequate reward system in place (Alfandi & Alkahsawneh, 2014).

Soutschek et al. (2017) found that motivation and improved performance result from a reward system that is not gender-specific or influenced by diverse cultures or backgrounds. However, the priority of receiving money or non-financial benefits can be influenced by the aforementioned elements, often known as intrinsic and extrinsic rewards (Shields et al., 2015). As a result, the study focusses on both aspects of the reward system (extrinsic and intrinsic), but it also investigates the effect of intrinsic reward systems on employee performance and the interaction between extrinsic reward systems at CDC Limbe.

Inadequate motivation and the presence of a bad reward system have undesirable repercussions such as low employee satisfaction, lack of concentration at work, high employee turnover, early retirement, and unsatisfied consumers. Most businesses invest more in training and staff development to attract more skilled individuals (Karami et al. 2013). Human resource management is a strategy to employee hiring and retention that considers people as an asset, often known as human capital. This asset’s worth can be increased through investment.

The present issues in human resource management include retaining and attracting excellent employees, a skills shortage, and higher market-competitive compensation. These issues are widespread in private enterprises as a result of growing competitiveness and industrialisation. Firms are expanding globally, necessitating the recruitment of a large number of qualified professionals who can offer value to their organisations. However, to ensure employee satisfaction, the company must take proactive actions to address employee demonisation (Ngwa et al., 2019).

The organisation must provide effective planning and administration in order to create a rewarding system. The company’s human resources department and upper management collaborate to establish reward programs. It is critical for the organisation to have a system capable of retaining more quality workers and sustaining them for an extended term.

As globalisation and technology have advanced, there are numerous options for businesses to keep their staff motivated and engaged in a more effective manner (Ojeleye & Okoro, 2016). As a result, the most crucial corporate investment is in people, who serve as the organization’s true backbone. This study, therefore, aims to identify the different types of financial and non-financial rewards given in CDC Limbe and its effects on the performance of employees in CDC Limbe.

1.2 Statement of the Problem

The Cameroon Development Corporation (CDC) faces a substantial problem in optimising staff performance through reward systems. While rewards are recognised as critical motivators that can favourably influence employee behaviour and performance, the effectiveness of the CDC’s present reward strategies in achieving targeted performance goals is unknown. This ambiguity represents a serious issue that must be addressed.

The specific issue is assessing how the CDC’s reward systems affect staff performance and if these systems are consistent with organisational goals and employee expectations. There is a dearth of information about the sorts of prizes provided by CDC, their perceived value by employees, and their actual influence on performance measures like as productivity, job satisfaction, and engagement.

Furthermore, the impartiality and transparency of the CDC’s allocation mechanisms are being questioned. Employees who perceive injustice in incentive distribution may become demotivated, have worse morale, and eventually perform worse. As a result, the problem entails assessing the fairness and openness of the CDC’s reward systems, as well as the implications for employee motivation and performance.

Another component of the difficulty is the cultural milieu in which the CDC works. Employees’ impressions of the effectiveness and fairness of reward systems may differ depending on their cultural norms, values, and expectations. Understanding and addressing these cultural differences is critical when developing compensation methods that appeal with employees and promote desired performance outcomes.

Budget limits and economic volatility provide additional problems for the CDC when designing and implementing effective reward programs. Balancing the requirement to provide competitive awards with financial sustainability is a strategic quandary that must be carefully considered and resolved by CDC management. The level of output per worker at CDC has decreased.

Finally, the problem statement emphasises the need to address research gaps in the efficacy of the CDC’s current reward systems, employee views of rewards, and the amount to which rewards contribute to overall performance.

This includes evaluating the impact of various types of rewards (financial and non-financial) on performance variables such as job completion, work quality, innovation, teamwork, and customer satisfaction. CDC Bota-Limbe’s situation remains controversial, despite the various benefits of instituting an incentive system. Thus, the purpose of this study is to look at the impact of reward schemes on staff performance at CDC Bota-Limbe.

1.3 Research Questions

1. What is the effect of Financial Rewards on the performance of employees in CDC Bota-Limbe?
2. To what extent do Non-Financial Rewards affect employees’ performance at CDC Bota-Limbe?

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