THE EFFECT OF NON-MONETARY INCENTIVES ON EMPLOYEE PERFORMANCE ( A CASE STUDY OF HEALTH GATE FOODS AND DRINKS CO. LTD UYO)
The Concept of Financial and Non Financial Incentives
Financial incentives are monetary rewards or compensation use in motivating employees in organization. Financial incentives consist in organization. Financial incentives consist of direct financial and indirect financial compensation. Direct financial compensation consist of salary, wages, bonuses and commissions. The indirect financial compensation are also called benefits, which are all financial compensations. The non financial compensations consist of employee satisfaction, such as responsibility, opportunities for recognition, the chance of promotion, or form psychological and physical environment in which the employee works, such as a pleasant work environment, sound policies, a cafeteria, work sharing compressed work week and free time (Monday and Noe, 2003).
Micheal and Harold (2006) states that financial incentives refers to monetary terms in from of wages and salary use to compensate and motivate workers in an organization. Wages are financial rewards based on time units. The wage rate is multiplied by the number of the units worked. Time unit plans are used when work schedule is irregular e.g factory workers, mine workers, farm labourer etc. while salaries on the other hand are paid from one data to another irrespectively of the amount of time another irrespectively of the amount of time they work between those dates. Salaries are used when the hours of work are so regular that there is little reason to count e.g management salaries, professional salaries etc. And commissions are financial rewards based on direct measure of productivity.
However, Dessler (2005) opined that non financial incentives are remuneration or benefits in from of services. This include medical services, insurance programmes, recreational facilities, subsidized cafeteria, discount on purchase of company’s product, education assistance to staff children and special awards for long services. Non financial incentives in form of fringe benefits are many and varied, however may be classified into four main types of incentives. Individual schemes, groups incentive schemes, factory wide productivity bargaining where workers are allowed to form committee (Aliyu, 2007).
In the same vein Lawal (2006) opined that financial and non financial incentives are means of eliciting additional effort of the workers and are tied to performance. He further opined that there are four main types of incentives plans:
- Indivdiual schemes which include measured day work, piece rates, commission and suggestion schemes
- Groups incentive schemes-similar to the individual ones but places emphasis on group cooperation.
- Factory wide productivity bargaining is an incentive scheme were workers are allowed to form committees. These committees provide suggestions about methods, machines, plant layout material etc.
- Profit sharing schemes make allowance for employees to share in the company’s profit depending on the state of the company’s profit for the year.
Financial incentives are monetary incentives such as salaries, wages, commission, profit sharing and bonuses while non financial incentives are compensation in the form of services offered to employees to enhance their performance services such insurance, health care, paid time not worked etc.
Concept of Employee Performance
The performance of employee is the achieved results of operations with the capabilities of the employee who acts in certain situations. According to Byars (2005) employee performance is a combined result of effort, ability and perception of tasks. High performance is a step towards the achievement of organizational goals. Therefore, efforts are needed to improve employee performance. Dharma (1991) stated that performance is something that is done on the products/services produced or provided by any persons or group of people.
