CHAPTER ONE
BACKGROUND OF THE STUDY
1.1 Introduction
Organizations are established with
the aim of effectively utilizing various available human and non-human resource
to achieve certain objective. Among these resources in human, which is commonly
seen as the most valuable asset an organization could use to earn competitive
advantage and achieve its objective, hence the need for human resources
management to ensure optimum productivity and organizational continuous
existence.
Human resource has been tagged the
most valued asset of any organization. Its strategic approach emphasized a
“tight fit” between individual needs, rights, ambitions, and goals within the
organization which make compensation system central in the affairs of emerging
students, scholars and HRM practitioners in the world over. The emergence of
human resource management posed great threat to the conventional personnel
management and industrial relation because it evolved from the core approach or
organization relationship. It is an asset that should be invested upon so as to
provide long-term commitment and high performance in an organization. As
organizations strive to achieve one or more objectives through exhaustive
utilization of human capital, so also, the employee aim toward achieving
individual purpose (objective) while working for the organization.
Reward system is the instrument used
to increase employees’ productivity. It seeks to attract and retain suitable
employees, encourage good management – employee relationship and commitment and
minimizes tension and conflict as it deals with all forms of final returns,
tangible service and mechanism for good relationship. Furthermore, the major
case of industrial conflict is based on the fact that employees feel their
benefit are denied or about to be denied thus the importance of compensation
system is to provide a good platform for equity and farness. This provides a
challenging environment and increase productivity of employees. The
compensation system ensures that both intrinsic and extrinsic needs of employee
at all levels are adequately provided for compensation develops organizational
integrity, policy, procedures and practices capable of improving organizational
productivity. Rewardis concerned with employees and organization performance
development through which better result can be achieved by understanding and
managing rewardwithin an agreed framework, planned goals, standard and
competency requirements.
Petroleum sector plays a great or
leading role in building Nigeria economy since petrol (Crude oil) serves as the
major source of income in Nigeria and is the strength of Nigeria economy. The
role petroleum industry plays cannot be overemphasized, among which are
structuring the capital market, refining of crude oil for local consumption,
provision of employment for both indigenes and foreigners and the marketing of
crude oil and petroleum product. However, the success of the industry rests so
much on its human resources capability, which is the most valuable asset of any
sources capability, which is the most valuable asset of any organization. The
challenging tasks of every manager at all level are how to build a befitting reward
system to incorporate both organizational goals and individual needs, thus,
have a motivated workforce and improve productivity. Therefore, this research work
seeks to look into reward system and its implication on worker’s efficiency in
the petroleum industry (NTA as case study). The industry has proved to be one
of the most valuable in Nigeria economy and the productivity of the industry
cannot be refrained from its rewards and compensation structure, directly or
indirectly.
However, the study examines the
impact of reward and compensation, system on organizational productivity, the
base of good rewardstructure, employees expectation at different levels and how
the compensation structure is based on performance of individual(s) or job
requirement of employees. The researcher therefore tends to draw attention of
Board of Directors (BOD) and management of organization to the need for
effective and efficient reward system capable of improving employees’
performance and enhance organizational productivity.
1.2 Statement
of the Problem
Some organizations over the years
see employee as additional cost as well as liability to their operations, hence
do not remunerate them appropriately, and where it is more appropriate, the
compensation is not commensurate with the efforts and skills that workers put
into the organization’s activities, instead of paying attention on how
employees will be compensated appropriately, some organizations concentrate
more on other resource, such as materials, machines and money. The effort is
more on how to improve the production process with little or no consideration
for human efforts.
This had led to the inability of
such organizations to attain their set objective, organization success relies
heavy on how much attention pay to its employees’ reward policies. It is in
view of this that the study seeks to know how reward system in organization
affect the performance of employees as well as that of the organization in
general.
1.3 Objectives
of the Study
The major objective of this study is
to examine and assess the impact (if any) of reward system on the productivity
of employee in an organization. The specific objectives therefore, are to;
1.
Draw
the attention of management to prompt, timely and adequate compensation of
employee
2.
Analyse
the available reward package and how it affect employees and organizational
performance
3.
Ascertain
the need for management to create a conducive working environment by providing
both physical and psychological incentires to make employees more committed to
organizational goals
4.
Encourage
a good rewardpolicy which should be channeled toward increasing organizational
productivity.
1.4 Significance
of the Study
The importance of this study cannot
be overemphasized due to the fact that, it holds a lot benefit to ensure
continuous existence and survival of organizations, the study will be great
benefit to manager or human resource department of organization regarding the
identification of effective reward and compensation, system, it cost and
benefit on organizational operations, harmonizing employees and organizational
interest to avoid sub-optimality etc.
In addition, the study clarifies the
argument on weather effective reward system adds value to organizational
activities, which will enable organizations take profitable side on whether to
compensate employees or not. This research due to adequate review of various
up-to-date literature is a source of material to post and undergraduate student
and as well as researchers who may intend to undergo a study on the subject
matter in future.
Knowledge the say, is power this
research work exposed the researcher to many practical issues on human
resource, reward system and the respective relationship that exist between
effective reward system, productivity customer patronage as well as
organization productivity and profitability. In addition, the study was an
avenue for the researcher to study some materials text book, journals, annual
reports etc which on ordinary activity would not have thought of.
Finally, the study serves and meet
one of the pre-national diploma in management from Kaduna Polytechnic Kaduna.
1.5 Research
Question
1.
What
are the benefit of prompt compensation to employees in the organization
2.
How
can a reward package affect the performance of an employee in an organization
3.
How
does a conductive working environment make an employee committed in attaining
organizational goals
4.
In
what way can employers encourage employees
1.6 Scope
of the Study
This research work is undertaken to
analyse the impact of reward system on the productivity of employees in an
organization though employees reward system is just one of the various tools
used to ensure effective human resource management, but the study strictly
concerns itself with reward and compensation, its system and its impact in
enhancing organizational productivity and profit ability.
In addition, the research work is
carried out to study the impact of reward system on the productivity of
employees in NTA Kaduna. This therefore
shows that the study nether cover every organization in petroleum industries
non has it cover every branch of NTA but NTA, Kaduna South.
1.7 Limitation
of the Study
A research work of this nature is
however unpleasant with numerous problem that limit the researcher ability
especially in Nigeria where many organizations do not disclose the true
information about their organization to researcher.
The researcher found it difficult to
access meaningful data concerning the organization reward, policy but has to
use the limited information available. Nevertheless, the research work was
adequately covered based on the available information to the researcher though
its difficult to claim a total perfection, therefore the topic is opened for
further build up consideration and research.
1.8 Definition
of Terms
Compensation: Compensation of all form of
financial return, tangible services and benefit an employee receives as part of
an employment relationship.
Industry: This is the group of firm that
engage in the production of similar product (i.e. goods / services)
Productivity: Productivity is the output unit /
per labour input into the production process given the level of existing
technology.
Management: This is the process of planning,
organizing, staffing, leading, directing, coordinating and controlling
available resources toward s achieving a target objective.
Reward: This is the cor-faced of an
employment relationship. Reward system consists of an organization’s integrated
policies process and practices for rewarding its employees in accordance with
their contribution skills competence and their market worth.
Remuneration: This is the financial reward
accruing to employee for his or her performance in the organization.
Motivation: It is the inner drives that arouse
direct and maintain an individual behavior toward accomplishing organization
goals.
Research: Is a way of arriving at a
dependable solution to business and management problem through a systematic way
of data collection, data analysis and data interpretation.
Pay Structure: Is a framework for managing base
pay progression over time for employee benefit.
Policy: Is organizational guiding
principles that regulate its operation and activities.
Job Analysis: According to Raymond, etal (2004)
it is the process of getting detailed information about jobs.
Job Description: Is the setting out of the purpose
of job, where it is fit in the organization structure the content within which
the job holder function and the principal accountability of job older. Main
task the employee has to carry out.
Job Enlargement: Is the act of combining previously
fragment task into one job to add greater autonomy and responsibility to a job
and is based on the job characteristic approach and maximizing the interest and
challenges of work.
Job Evaluation:Is a systematic process for
establishing the relative work of job within an organization.
Reward Strategy: It is a definition of the intention
of the organization on how its reward policies and process should be developed
to meet business requirement.