Abstract

This study investigates the impact of non-financial incentives on employee performance within the Buea Council, focusing on key variables such as job promotion, career development, and training opportunities. The motivation behind this research stems from observed issues of poor employee performance, including absenteeism and lack of engagement.

Despite financial incentives being in place, these challenges persist, prompting an exploration of how non-monetary factors influence staff productivity. The research aims to establish a clear link between non-financial incentives and enhanced employee performance. By analyzing the significance of appreciation, job security, and opportunities for growth, the study seeks to provide actionable insights for municipal councils in Cameroon.

A sample of 120 respondents was selected.  The PCA, with inbuilt ability to check for composite reliability, was used to obtain composite indices for both the dependent and independent variables. Descriptive statistics was applied to get the mean weighting of the data and the simple linear regression estimation used to examine the impact of various non-incentives indicators on employee performance and the results revealed that job promotion and career development positively influence employee performance while the reverse was true for training and development.

The study thus recommended the need for increase in the implementing both job promotion  and career development schemes while a reduction of training and development schemes will bolter performance in councils around Cameroon.

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

In every organization be it public or private, its objective is to attain a high level of productivity, gain a greater market share, and even have a competitive edge over its competitors. This can only be achieved when the organization has a talented team of staff who are well-motivated and committed to achieving organizational goals.  They make use of an effective reward system to motivate, retain, and attract employees. Worker quality is an essential need in achieving an organization’s growth and it is affected by the characteristics of reward policies in line with the corporate strategy of such an entity (Biruk, 2017). Employees are motivated to give their best to the organization or to perform well through various means including both financial and non-financial incentives.

In the simplest sense, incentives are motivational schemes out of the normal wage designed for employees. These incentives are meant to push and challenge employees to increase their production capabilities and as such foster the growth of the institution.

Productivity and growth are the common objectives of every organization; big or small, and are propelled by incentives. Nevertheless, Sek-Chooet al. (2016), held that, contrary to the notion of the prime importance of incentives, many small-business owners and some public institutions mistakenly believe they cannot afford to offer benefits out of normal wages to employees oblivious to the fact that incentives are amongst the most important components of running a successful business. This is because it keeps employees happy thus, motivating them to contribute maximally to organizational productivity.

In the business world today, there are positive and negative incentives as well as monetary and non-monetary incentives. According to Armstrong, (2016), positive incentives ensure that employees will receive something they desire in exchange for doing their work well. Common positive incentives applied by management in firms and organizations include; recognition, promotions, praise, and so forth.

On the other hand, negative incentives are meant to correct mistakes or discourage certain behavior that deters growth in organizations and they include reprimands, demotions, pay decreases, and other kinds of penalties. The classification of incentives into monetary and non-monetary terms is another important strand to distinguish incentives. Monetary incentives have been proven to be the best kind of positive reinforcement that motivates employees to put in their best contributions for the general growth of the organization.

It has been noticed that financial reward has a huge effect on organizational performance (Achie, & Kurah, 2016), companies are indeed found to give non-monetary remuneration to enhance employee encouragement, but such is limited in several economies around the world.

Common monetary incentives include any additions to normal pay packages such as profit sharing, bonuses, stock options and commissions, scheduled bonuses such as Christmas and performance additions, and vocation allowances. Non-monetary incentives on their part are intrinsic rewards received by employees in organizations.

They do not involve money and common ones include; words of praise and appreciation, promotions, recognition and awards, job security, career development opportunities, etc. Other benefits that are non-monetary but excite employees include; flexible working conditions, public recognition, time off, experiential rewards, fringe benefits, time for volunteering, and so on.

The notion of incentives and wages stems from the fact that there exists a link in every corporation between owners and agents as demonstrated by the agency theory with each party trying to maximize his benefit or increase the state of his welfare. And the basis for understanding this link (employment relationship) lies in the concept of social exchange, which is the most basic concept explaining social behavior (Sek-Chooet al., 2016). According to Homans (1961) in Sek-Chooet al. (2016), all social behavior can be seen as “an exchange of an activity (work effort)”, tangible (visible performance), or intangible (motivation and commitment), and more or less rewarding or costly (pay and benefits), between at least two persons (employee and employer). Thus social exchange in the employer-employee relationship is one in which the employer offers inducements such as wages and employee benefits or better still; incentives in return for employee contributions such as performance and commitment (March and Simon, 1993 in Sek-Chooet al., 2016).

The employer – employee relationship can be witnessed in every organization. It is seen in national governments, in corporate organization, in small and medium size enterprises and in municipal councils as each of these organizations strives for increased productivity. As earlier noted, incentives are drives to spur hard work and subsequently increased productivity.

The survival, growth and development of these organizational setting (corporations, SMEs, national governments and local governments) can stem on the one hand, from government policies including tax incentives and rebates, subsidies among many others and on the other hand by internal policies of these organizations. Therefore, as per the later proposition (internal policies) and for continuous growth, increased productivity and competitiveness, organizations should introduce concise incentives to maximize employee dedication and loyalty to the company (Armstrong and Taylor, 2014). According to McMath, (2011) in Sek-Chooet al. (2016), research has proven that a happier workforce is more productive and causes people to stay longer in their jobs.

In this same line, Radisicet al. (2017) added that organizations, including municipal councils always take significant positions in many developmental activities and are the driving force of economic growth producing important effect on the economic activity. As a result, a well-designed compensation policy on employees’ satisfactions is important factor in the development and performance of organizations. Therefore, it would be useful to implement a concrete incentive framework to boost competencies of employees in organizations.

The employer – employee relation in municipal councils is nothing different from business organization, since it is expected that employees put in their best in return for wages, salaries and incentives.

As claimed by Zhang, (2018), institutions including municipal councils are engines of growth, playing critical roles in the society; evident by the number of employees they hold in their effectives. These councils provide democratic and accountable government to local communities, ensure the provision of services in a sustainable manner, promote social and economic development, ensure a safe and healthy environment to the people, and encourage community development spirit among others.

In The UK for example, municipal councils use Competence Performance Assessment to design incentives to employees. In this case and as according to Lockwood and Porcelli (2011), these Competence Performance Assessment base incentives approach to employees of municipal councils had boosted performances and ensure great productivity in municipal councils in many cities in the UK.

In the Chinese economy; and in their development quest, local governments and councils set up a “top – down place – base competition and award” (TDPBCA) as incentives for local government officials. In this system, hierarchy places award and other motivation facets to bottom staff who achieve a standard at their different duties.

This had motivated hard work and excellence at the Chinese local governments with increased productivity as the culminating impact (Bingqin, 2015). Unlike in local governments, and as stipulated in Zhang, (2016), internal policies of some small and medium size enterprises in China did not recognize incentives (both financial and no-financial) as a growth strategy. This had impeded employee enthusiasm despite the rapid growth in the Chinese economy.

In Sub-Saharan Africa, Cameroon in particular, local governments (municipal councils) are equally supposed to play critical roles in development. In this regard, the government of Cameroon created a Ministry in-charge of local councils (The Ministry of Decentralization and Local Government); a service for supervising municipal councils and other local government structures, and the necessity of developing a sector strategic plan for the promotion to excellence; the activities of local councils. This is particularly true because of the critical role local governments and municipal councils play in the growth and development of the Cameroonian economy in particular.

Cameroon being a developing country with infrastructural deficits, there is the need for production excellence in municipal councils with incentives being the push factor. To spur and maintain performance in these local governments institution remuneration packages designed to its employees exists. Added to remuneration packages, some of these councils with heavy financial backings designed both financial and non-financial incentives to its employees.

Streamlining the discussion, Buea municipal council is one of the 374 local councils in Cameroon with staff strength of above 200. The basic functions of municipal councils include; the provision and regulation of administrative, economic and social development. They also define and enforce work practices to ensure efficiency in the provision of services.

They are also responsible of promoting training and retaining of council employees (Ministry of Decentralization and Local Government, 2024). As in other organizations, the performance of these employees among other parameters depends on both the financial and non-financial incentives put at their disposal. Examples of non-financial incentives at the disposal of employees here included; study leaves as well as in-service training, recognition for longitivity through the award of labour medal, free distribution of labour and women day’s fabrics, advance salary and also thirteenth month salary in some exceptional years.

As a result, this study focuses on examining non-financial incentive variables such as job promotion, career development opportunities, appreciation, job security etc, in order to demonstrate how each affects employee performance in the public sector like Buea Urban Council.

1.2 The Problem Statement

Organizations in their quest for growth designed and implemented motivational schemes to spur employees to perform well in their respective duties. Motivational schemes can be in the form of financial and non-financial incentives. An incentive is a positive motivational influence on an employee that helps improve his/her performance.

From preliminary investigation by the researcher, the Buea Council has recorded massive negative attitudes of staff, ranging from loitering during work hours, idleness, absence, lateness to work, etc which goes a long way to affect the performance of the council. The fact remains that unmotivated employees hold back their performance level and it is not clear if the poor performance of the employees at the Buea Council has any connection with the motivational practices in place.

Some scholars argue that the effect of financial incentives on the employees is temporal, and does not have a far-reaching impact on their psychology yet it costs a lot of money which is very scarce in the present economic conditions and this seems to be the case with the Buea Council as workers received their financial motivation but performance has still not been at the best as stated by the Mayor of the council.

Based on this backdrop of poor performance and added to the limited study on non-financial incentives on employees’ performance particularly using the Buea council as a Case study, the research was motivation to find out if this poor performance has any connection with the non-financial incentives within the council. Therefore, the focus of this study came as a result of the above conditions and factors and becomes imperative to study the effect of non-financial incentives on the performance of employees in the Buea Council.

1.3. Research Question

1. How do employee job promotion practices influence employee performance in the Buea Council?
2. What is the influence of Career Development Practices on employee performance in Buea Council?
3. what is the influence of training and development plans on employee performance in the Buea Council?

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