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PROJECT TOPIC: THE EFFECT OF MANAGEMENT OF ECONOMIC INCENTIVES ON WORKERS BEHAVIOUR

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CHAPTER ONE

INTRODUCTION

1.1 Background of Study

The success and the survival of any organization are determined by the way the workers are remunerated and rewarded (Lawler, 2003). The reward system and motivating incentives will determine the level of employees’ commitment and their attitude to work. As noted by Dixit and Bhati (2012) poor incentives packages have been a major factor affecting employees’ commitment and productivity. However, for any organization for achieve it object in any competitive society, employers of labour must have a thorough understanding of what drives the employees to perform efficiently and reward them accordingly (Mueller, 2011). Besides, employees must be motivated through adequate incentives plans and reward systems and this will invariably encourage them to be proactive and have right attitude to work, thereby promote organizational productivity (Armstrong, 2007). However, in a highly dynamic organization, incentives strategies are deployed by employers of labour to ensure that the best brains are retained in the best interest of the organization (Nelson, 2003). Consequently, productivity can only be enhanced if the employees are well motivated through adequate incentive packages that are proportional to their performance (Diener and Biswas, 2002, Stolovich et.al, 2004, Michele and Rob, 2008, Mark 2011). Meanwhile, to avoid wrong perception and controversy by the employees, reward system must be clearly communicated to employees with job measurement which will drive the much needed motivational drive in the employees (Hartman, 2011). Incentives propel and influence employees attitudes in work place and as well stimulate understanding between the employer and the employee which will consequently cumulating into unprecedented performance for both the employees and the organization (Barbara et al. 2003; Heneman 1992). Employee satisfaction and performance are largely influence by incentives packages or reward system put in place by the organization (Osibanjo et al, 2012).

Adequate incentives have been found to be one of the means through which organization can adopt to motivate and increase their workers’ performance. There are many studies in the literature, which examine the monetary and nonmonetary incentives and their effects on organizational variables (Al-Nsour 2012;Scheepers 2009; Pouliakas 2008; Pınar 2008; Arnolds and Venter 2007; Kaya, 2007; Sezen 2002). Incentive programs are put in place by various organisations to compensate and reward performance of employees who perform more than expectation (Schiller 1996). Incentive packages are financial or non-financial rewards offered to employees to compel them to exert more effort into any giving task (National Commission on Productivity and Work Quality 1975). Incentives is a force that cause employees to behave in certain ways and on any given day, they may choose to work as hard as possible at a job, to work just hard enough to avoid a reprimand, or to do as little as possible (Griffin, 2002). Meanwhile, incentives are designed to get the maximum performance from the employees and help retain the most productive among them (Arnold 2013). Organization can consider a variety of ways to reward the employees for their work performance, but an organization need to consider using the best employee incentives to get the desired results. Incentives are an instrumental drive towards employee motivation and performance and it has great benefits and high potentials to motivate workers to put in their best in any giving task (Condly et al. 2003). “High productivity may be determined by workers employees’ ability to work and therefore employees that are not well rewarded produce less” Koontz (1984). Luthans (1998) divided these incentives into monetary incentives and non-monetary incentives which is also known as financial or non-financial incentives.


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