The project examined organizational reward system and its impact in productivity with particular reference to Nigerian National Petroleum Corporation. The objective of the study attempts to identify the various organizational reward systems and to determine the extent to which reward scheme have led to high increase in productivity, methods used in this study has relied on collection of data method to achieve the desired aims and objectives of the study. Basically, both primary and secondary sources of data were utilized. The research methodology adopted is the survey. It was observed that there could be high level of performance associated with high level of job satisfaction arising from the good reward system as motive. The researcher thereby recommends that the management should provide adequate accommodation for their staff or workers and that the management should adopt the method in which other organizations are using in carrying out their kind of project.

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Organization is a public or private set-up for sales and or services. Production, manufacturing, extracting industries etc. aimed at goal, profit or objectives. (Armstrong, 2016).

Organizations are established with the aim of effectively utilizing various available human and non-human resource to achieve certain objective (Agu, 2013). Among these resources is 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 reward system central in the affairs of emerging students, scholars and human resource management practitioners in the world over (Gilchrist, 2012). 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 (McGregor, 2017). 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 (Lusthans, 2011).  The organizational reward is a make return for good services, good conduct, good relationship, incentive appreciating hard work to increase productivity. It could be seen as an inner drive that moves workers to perform or do more.

In corporate organizations and companies nowadays, working conditions and reward systems have been large, especially since World War II. The statement that working conditions and employee”s reward is the life wire of an organization is not an overstatement.

A well designed and functional reward system is an efficient way to increase employee work motivation. The appropriate type of reward is developed in accordance to the company”s reward philosophy, strategies and policy. However, it might be challenging to find the right way to combine the company”s integrated policies and practices together with the employee”s contribution, skill and competence (Armstrong, 2016).

Reward system is an important tool that management can use to channel employee motivation in desired ways. In other words, reward systems seek to attract people to join the organization to keep them coming to work, and motivate them to perform to higher levels. The reward system consists of all organization components including people processes rules and decision making activities involved in the allocation of reward and benefits to employee in organizations.

Organizational performance is a complex phenomenon largely affected by the ability and motivation of the workforce in any firm. Monetary and non-monetary rewards are provided in organizational setting with a view to motivating and influencing individuals, team and organizational behaviour for the achievement of strategic objectives and performance of organizations (Randhawa 2008).

Reward practices are positively related with retaining and enhancing the skilled employees that are considered assets of an organization. Mondy and Noe (1993) has divided reward in two types” financial reward and non-financial reward. Financial reward is further divided into direct and indirect financial reward. Direct reward includes bounce, good salary packages, profits and commission. Indirect financial reward are all those benefits that are not covered by direct financial reward. Non-financial reward consists of responsibilities, opportunities, recognition promotion, vacations, work place environment, sound policies, insurance, medical and retirement etc. All these rewards affect the performances of the employees in different manners (Uzair, 2011).

Reward system is an important tool that management can use to channel employee motivation in desired ways. In other words, reward systems seek to attract people to join the organization to keep them coming to work, and motivate them to perform to high levels. 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.

In order for an organization to meet its obligations to shareholders, employees and society, its management must develop a relationship between the organization and employees that will fulfill the continually changing needs of both parties (Onyemesim, 2008).

At a minimum, the organization expects employees to perform reliably the tasks assigned to them and at the standards set for them, and to follow the rules that have been established to govern the workplace. Management often expects more: that employees take initiative, supervise themselves, continue to learn new skills, and be responsive to business needs. At a minimum, employees expect their organization to provide fair pay, safe working conditions, and fair treatment (Scott, 2006). Like management, employees often expect more, depending on the strength of their needs for security, status, involvement, challenge, power, and responsibility. Just how ambitious the expectations of each party are, vary from organization to organization.

1.2 STATEMENT OF THE PROBLEM

Most organizations have gone under because their organizational reward systems do not favour employee and thereby not motivating them towards putting their best into jobs. There are many discrepancies that occur in organizations due to an inappropriate reward system. Also as reward system is in the field of human resource, it is an opportunity to increase my knowledge in this complex field.

One of the problems that can be identified in the organization is motivation. This has become a serious concern since organizations are dealing with a fast evolving environment. The work force has adapted to be flexible with new working hours, work with new tools and even being multi skilled, both technical and interpersonal. Moreover work force flexibility is requiring employees to have the ability to adapt with relatively management supervision. The present working environment presents stressful factors where the workforce finds itself more and more pushed to its limits.

Organization without good reward system often finds itself in conditions of high rate of absenteeism. This weights heavy on the balance of the organization since it is not operating at full capacity. In the end, the origination will have no option but to take action against its own employees. This will defiantly cause more trouble and will further affect the proper running of the organization.

Low reward system can lead to low performance of employees in an organization because reward boost the morale of the employees in an organization. Much concern has been put to the rewarding of employees since performance appraisal is carried out. There has always been this concern as rightly rewarding employee has a direct impact on the performance, productivity and satisfaction of the employee”s performance has become a corner stone for rewarding.

1.3 OBJECTIVES OF THE STUDY

The main objective of this study is to determine the impact of reward system on employee productivity with particular reference to Nigerian National Petroleum Corporation.

Specific objectives include;

1.         To ascertain the extent at which wages and salaries impact on the productivity of employees.

2.         To examine the relationship between commissions and employees overall performance.

3.         To find out the impact of promotion on the performance of employees.

4.         To determine the extent at which payment of benefits affects the commitment of employees.

1.4       RESEARCH QUESTIONS

i.          To what extent does wages and salaries impact on the productivity of employees?

ii.         Is there any positive significant relationship between commissions and employees overall performance?

iii.        Does promotion have any significant impact on employee performance?

iv.        To what extent does payment of benefits affect employee commitment to work?

1.5 SIGNIFICANCE OF THE STUDY

The findings of this study is beneficial to management of organizations, staff and future researchers.

The findings of this study will help organizations to know how best to reward their hardworking employees. It will assist organizations to adopt best reward practices and policies to boost their employee productivity.

The findings will also serve as a resource for researchers who might want to improve the scope of the research work in future.

1.6 SCOPE OF THE STUDY

The research is limited to the impact of reward on employees” productivity; this is carried out within the context of large organization such as Nigerian National Petroleum Corporation.

1.7 LIMITATIONS OF THE STUDY

The restricted limitation of the study was due to a number of factors faced by the researcher, these include:

i.          Time: This was one of the constraints the researcher encountered during the period of the work. There was limited time to carry out this research due to the fact that the semester had a lot of academic activities which took their own turn of event with respect to time consumption.

ii.         Finance: Due to financial difficulty prevalent in the country and its resultant increase in price of commodities, transportation fares, research materials etc., the researcher did not find it very easy meeting up with the financial expenses orchestrated by the demands of the research work.

iii.        Inability of workers to give information: The move to collect necessary information for the research work was not easy one. In the organization, disclosing information about their internal operation has always been a difficult for the course of this research work.

1.8 DEFINITION OF TERMS

Job Analysis: According to Raymond, et al. (2004) it is the process of getting detailed information about jobs.

Job Description: Is the setting out of the purpose of job, where it fits, in the organization structure, the content within which the job holder function and the principal accountability of job older.

Job Evaluation: Is a systematic process for establishing the relative work within an organization.

Management: This is the process of gathering things done through and with people, its functions include; planning, organizing, staffing, leading, directing, coordinating and controlling available resources toward s achieving a target objective.

Motivation: It is the inner drives that arouse direct and maintain an individual behavior toward accomplishing organizational goals.

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.

Productivity: Productivity is the output unit / per labour input into the production process given the level of existing technology.

Remuneration: This is the financial reward accruing to employee for his or her performance in the 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.

Reward: Reward system consists of organization”s integrated policies process and practices for rewarding its employees in accordance with their contribution skills, competence and their market worth.