abstract
The study is on effective reward system in the improvement of performance in public organizations. This study therefore sought to ascertain the extent of the relationship between reward system and organizational performance, identify the major implications of effective reward system on employee performance, determine the extent to which effective reward influence employees’ behaviour, and ascertain whether monetary rewards influence employee behaviour more than non –monetary rewards. This study adopted survey research design. Simple random technique was used in selecting the ministries in Enugu State. The ministries selected were: Ministry of Transport, Agriculture, Finance and Budget/Planning. A sample of 288 respondents was determined from the population of one thousand and thirty-three (1033) drawn from the senior and junior staff of the selected ministries using Taro Yamane’s sample size determination method. The sources of data for the study were primary and secondary. The main instrument used for primary data collection was questionnaire and interview. The secondary data were sourced from journals, textbooks and internet. The questionnaire was structured in five-point Likert scale in line with the objectives of the study. Content validity approach was used to ensure that the variables measured were all covered. The instrument was checked for reliability using test-re-test method. The result gave reliability co-efficient of 0.98% showing high degree of item consistency. The total number of the questionnaires distributed for this study was two hundred and eighty-eight (288) copies, while two hundred and sixty five (265) copies representing 92% were completed and returned. The research design adopted was survey design. The data generated from the field survey were presented and analyze using frequency distribution table and simple percentages. The hypotheses were tested using Z-test and Chi-square. The findings indicate that there is a significant relationship between reward system and organizational performance; Low labour turnover and improved performance are the major implications of effective reward system; the extent to which reward influence employee behaviour is high and that monetary rewards influence employee behaviour more than non-monetary rewards. The study recommends that reward system should be carefully drawn to reflect equity or fairness as compensation usually has several meanings to employees; to ensure that ministries provide reward that is both competitive and equitable, compensation experts or specialists in the human resource department should be created to develop, administer and oversee the reward system. The study concludes that reward system focuses on positive reinforcement, because it stimulates people to take actions since they get something of value for doing it.
TABLE OF CONTENTS
Title Page – – – – – i
Approval – – – – – ii
Certification – – – – – iii
Dedication – – – – – iv
Acknowledgements – – – – – v
Abstract – – – – – vi
Table of contents                          –          –          –          –          –          vii
List of Tables – – – – – x
Lists of figures                          –          –          –          –          –          xii
CHAPTER ONE: INTRODUCTION
1.1 Background of the Study – – – – – 1
- Statement of the Problem – – – – – 3
1.3 Objectives of the Study – – – – – 3
1. 4    Research Questions          –          –          –          –          –          4
1.5     Research Hypotheses        –          –          –          –          –          4
Significance of The Study                 –          –          –          –          –          4
1.7 Scope of the Study – – – – – 5
1.8      Limitations of the Study            –             –             –             –             5
1.9     Historical Background of the Ministries understudied   –          6
1.10 Definition of Terms – – – – – 7
References
CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1     The Concept of Reward Systems           –          –          –          9
2.2      Effective Reward System     –          –          –          –          10
2.2.1 Reward Systems and Human Resource Processes and Practices – 11
2.3      The Theories of Reward System and Motivation          –          12
2.3.1  Maslow Theories of Reward     –          –          –          13
2.3.2   Hertzberg’s Theory of Motivation.            –          –          –          14
2.4      Total Reward Defined –          –          –          –          –          15
2.4.1.  The Significance of Total Reward  –          –          –          –          16
2.5      The Expectancy Theory Model              –          –          –          17
2.6      Designing Reward Systems for Competitive Advantage       –          22
2.6.1   Strategic Design of Reward Systems     –          –          –          23
2.7      Criteria for an Effective Reward System     –          –          –          23
2.8     Types of Payment Scheme   –          –          –          –          24
2.8.1   Time Rates               –          –          –          –          –          25
2.8.2  Payment by Result        –          –          –          –          –          26
2.8.3  Plant/Enterprise-Based Scheme            –          –          –          29
2.8.4   Performance –Related Pay              –          –          –          31
2.9     Corporate Culture, Innovation And Rewards            –          –          32
2.9.1 How Employee Reward System Promote Organizational Performance 33
2.10    Organizational Goal              –          –          –          –          34
2.11    Employee Retention             –          –          –          –          –          34
2.12    Organizational culture             –          –          –          –          34
2.13   Flexibility                –          –          –          –          –          35
2.14    Gap in Knowledge            –          –          –          –          –          35
References
CHAPTER THREE: RESEARCH METHODOLOGY
3.1      Research Design           –          –          –          –          –          40
3.2      Sources of Data           –          –          –          –          –          40
3.3      Population of the Study        –          –          –          –          –          40
3.4     Sample Size Determination  –          –          –          –          –          41
3.5      Description of the Research Instrument    –          –          –          43
3.6      Data Analysis Techniques      –          –          –          –          44
3.7      Validity of the Research Instrument       –          –          –          44
3.8      Reliability of the Research Instrument            –          –          45
CHAPTER FOUR: PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA
CHAPTER FIVE: SUMMARY OF MAJOR FINDINGS, CONCLUSION AND RECOMMENDATIONS
 5.1     Summary of findings          –          –          –          –          70
5.2      Conclusions             –          –          –          –          –          70
5.3      Recommendations          –          –          –          –          –          70
5.4      Contribution to knowledge       –          –          –          –          71
5.5      Suggested areas for further research –             –          –          71
Bibliography
Appendix 1
Appendix 2
LISTS OF TABLES
TABLES
Table 2.1 A checklist for assessing the effectiveness of reward strategy 24
Table 3.1        Population distribution          –          –          –          41
 Table 3.2      Breakdown of sample size         –          –          –          43
Table 3.3        Correlation coefficient of reliability  –       –          –          45
Table 4.1 Distribution and Return of the Questionnaire – – 47
Table 4.2        Sex Distribution of Respondents           –          –          47
Table 4.3        Age Distribution of Respondents           –          –          45
Table 4.4        Marital Status of Respondents     –          –          45
Table 4.5       Academic Qualifications of Respondents         –          49
Table 4.6 Extent of relationship between reward system and
organizational performance.          –          –          –          50
Table 4.7 Extent of relationship between reward system and
organizational performance. – – – – 50
Table 4.8 Extent of relationship between reward system and
organizational performance. – – – – 51
Table 4.9 Condensed outcome of the three questions administered for
research question 1 – – – – 52
Table 4.10      Aggregate Response for the three Ministries    –          52
Table 4.11 The major implications of effective reward on employee
performance. – – – – 53
Table 4.12 The major implications of effective reward on employee
performance. – – – – 53
Table 4.13 The major implications of effective reward on employee
performance. – – – – 54
Table 4.14 The major implications of effective reward on employee
performance. – – – – 55
Table 4.15 Condensed outcome of the four questions administered
for research question 2 – – – – 55
Table 4.16     Aggregate Response for the three Ministries       –          56
Table 4.17 The extent to which effective reward influences
employee’s behaviour. – – – – 56
Table 4.18 The extent to which effective reward influences
employee’s behaviour. – – – – 57
Table 4.19 Condensed outcome of the three questions administered
for research question 3. – – – – 57
Table 4.20      Aggregate Response for the three Ministries       –          58
Table 4.21 Wheithermonetary rewards influence employee behaviour
more than non- monetary rewards. – – – – 58
Table 4.22 Wheithermonetary rewards influence employee behaviour
more than non- monetary rewards. – – – – 59
Table 4.23 Wheithermonetary rewards influence employee behaviour
more than non- monetary rewards.        –          –          59
Table 4.24 Condensed outcome of the three questions administered
for research question 4. – – – – 60
Table 4.25      Aggregate Response for the three ministries   –          60
Table 4.26 Relationship between effective reward system and
organizational performance response Cross tabulation – 61
Table 4.27 Z-Tests – – – – 61
Table 4.28     Descriptive Statistics     –          –          –          –          61
Table 4.29     One-Sample Kolmogorov-Smirnov test table      –          62
Table 4.30 Factor Analysis – – – –
Table 4.31     KMO and Bartlett’s test table             –          –          63
Table 4.32     Correlation Matrix table      –          –          –          63
Table 4.33     Communalities Total Variance Explained table    –          64
Table 4.34 Influence of reward on employee behaviour * response
Cross tabulation – – – – 66
Table 4.35     Chi-Square test table        –          –          –          66
Table 4.36     Descriptive Statistics        –          –          –          67
Table 4.37     One-Sample Kolmogorov-Smirnov test table     –          67
LISTS OF FIGURES
Figure 2.1     The Expectancy Theory Model                –          –          21
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Over the years, managers are increasingly realizing that they have to establish a balance between employees’ contribution to the organization and the organization’s contribution to the employees. Developing this balance is one of the main reasons to reward employees. Organizations that follow a strategic approach to creating this balance focus on the three main components of a reward system, which includes, compensation, benefits and recognition. A key focus of recognition is to make employees feel appreciated and valued. Research has proven that employees who get recognized tend to have higher self-esteem, more confidence, more willingness to take on new challenges and more eagerness to be innovative.
Reward system is an important ingredient in managing innovation in a company. It is essential for the firm’s success to reward innovators for their contributions, to reward people who collaborate as well as individual performers. Rewards can be given in many different forms. Profit sharing programs that result from gains achieved through innovation are an outstanding means of rewarding individuals for improving the company’s standing but the down side is that all employees generally get an equal reward proportion that does not recognize their individual contributions. More specific options are merit rating and bonuses based on performance evaluations because they take into account individual innovation and collaboration. Reward practice deals with many different recognition programs both intrinsic and extrinsic than can be used. Many firms that achieve high levels of innovation relate short and long term bonus awards to rate of innovation achieved (Harden et al, 2008).
Reward system is an important tool that management can use to channel employee motivation in desired ways thereby improving the performance of the organization. In other words, reward systems seek to attract people to join the organization to keep them coming to work, and motivate them to operate at peak performance. The reward system consists of all organization components – including people, processes, rules and decision making activities involved in the allocation of compensation and benefits to employees in exchange for their contribution to the organization. As a result, compensation programs are in steady transition. Organizations are experimenting with different types of structures. Research suggests that reward systems can influence a company’s success in many ways (Bernardin, 2007:253). The way, amount of pay, and the way it is packaged or delivered to employees can motivate, energize, and direct behavior. Reward is a psychological force that determine the direction of a person’s behavior in an organization, a person’s effort, and a person’s level of persistence in the face of obstacles (Gennard and Judge, 2005:13).
The concept of reward in organizations needs to be clearly understood by managers who would have to communicate components of who, what and when to reward to their employees for improved performance.
Reward systems are often used as a management tool for achieving desirable objectives. One of the most common purposes is to motivate employees to perform better (Pepitone and Bruce, 1998). This can be achieved through monetary and non-monetary rewards. Monetary rewards can be either short-term incentives in form of bonus based on one year’s performance or long-term incentives based on performances over a time period greater than one year and are often received in form of options or shares. A third type of reward is salary increase. The non-monetary part includes rewards such as development possibilities, promotion and extra vacation days (Donaldson, 1997). Some people may want promotion and the extra responsibility it attracts while others may want extra vacation days.
Unfortunately, in Nigeria, particularly in the public organization, the current financial crisis being experienced has made reward system, to only focus on bonuses and variable remuneration.
1.2 STATEMENT OF THE PROBLEM
