Effect of Financial and Non-Financial Incentive on Staff Productivity as Case Study of the Church of Pentecost – Headquarters, Accra Ghana
Objective of Study
This part provides the general and specific objectives of the study.
The main objective of the study is to investigate the effect of incentive on employees’ Performance at the Church of Pentecost
Based on the general objective the followings are specific objective;
- To examine the relationship between financial incentive schemes and employee performance
- To determine the relationship between non-financial incentive schemes on employee performance
- To assess the employees perception towards the incentive schemes practices and employee performance
The chapter provides the literature review of all findings related to this research. The theoretical foundation has explained on the theory that is closely related with this research. Also, a review of past empirical studies which is related to this research topic is also included in this chapter. The proposed conceptual framework or research model and hypothesis were developed.
Definition of Concept and Terms
The following operational definitions were used for the purpose of this study.
Compensation: The results or rewards that the employees receive in return for their work.
Employee Perceptions: An individual gives meaning and interpreting to the work environment.
Employee Performance: A person executes their specific job duties and responsibilities well.
Financial Incentives: Money based rewards given when an employee meets or exceeds expectations.
Incentive: Something that motivates employees to achieve certain objectives or meet a target.
Incentive Schemes: A mechanisms that has been designed to recognize some specific change in behavior.
Motivation: The realization that individuals have needs or expectations that they want to meet.
Non-financial Incentives: A compensation given in a transaction that does not involve cash.
Performance Based Incentive: Any incentive scheme that seeks to link pay to individual or group performance based on pre-established criteria and goals.
Performance Management: a process that contributes to the effective management of individuals and teams in order to achieve high level of organizational performance, as such, it establishes shared understanding about what is to be achieved and approach to leading and developing people that ensure that it is achieved.
Rewards: Recognition to employees for their achievements and contributions.
Overview of the Incentive Scheme
Compensation is integral and utmost part of any organization and the management periodically and annually examines it in detail. Myers and Souza (2020) state that the compensation comprises incentives, salary, bonus and other benefits that a firm has to give to their workers. In the 21st century the work scenario has been changed, the employee not only demands monetary rewards but extra benefits also. Satisfied employees with their work and salary are more motivated and they work harder because they know that after completing a certain level of goals they would be rewarded (Chammas and Hernandez, 2019). Dissatisfaction from job and incentives demotivate the employee that lead to increasing in absenteeism, and job turnover rate in the organisation.
Incentive schemes are special pay programs designed to motivate high performance. Incentive schemes attempt to link at least a portion of pay to job performance to encourage higher productivity (Nizam et al., 2019). Incentives as often called should be aligned with the behaviors that help achieve organisational goals or performance, incentives are either individual or group (organisation wide) (Sitopu et al., 2021). In this study, financial and non- financial incentives are designed to motivate employees to improve their performance, to increase effort and output and by producing better results expressed in such terms as objectives for profit, productivity, sales turnover, cost reduction, quality customer service and on time delivery.
Research Methodology and Design
Background of the Church
The church of Pentecost is a church in Ghana. The church provides a wide range of financial services including current, savings and checking accounts, time deposits, overdraft facilities, term loans, merchandise loans, letters of credit, guarantees, and money transfer.
The church based its roots in a larger number of shareholders than any other church has had during the time and has become a pioneer for the churches that came later. The then 3,739 shareholders have subscribed a capital of 432.5 million and have had an initial paid-up capital of 108.2 million;
To be the leading church in Ghana by 2035
In as much as we are committed for the shareholders’ value, we care for the satisfaction of the public’s, partners’, and employees’ needs through service excellence, innovation, passionately focused team, sustainable practice, and providing diversified banking services to our patrons globally.
- Social Responsibility
- Innovation and Learning Organisation
- Customer Satisfaction
- Employee Satisfaction
The church of Pentecost is an equal opportunity employer that currently has created an employment opportunity for above 3570 employees. The church of Pentecost is fully cognizant that its success entirely hinges on the professional quality, vigilance and customer affability of its employees.
The study conducted as a quantitative study approach to research in order to depict the effect of incentive schemes on employee performance. Quantitative survey is the most appropriate one to use if the purpose of an investigation is to describe the degree of relationship that exists between the variables. Besides, it also helps in examining and describing the interactions among those variables. Therefore, employees of the church of Pentecost. have been chosen as the statistical population. The choice of this approach is determined by the fact that this study has attempted to answer questions about the relationship between incentive schemes and employee productivity.
The purpose of the study is to assess and examine the effect of incentive schemes on employee performance. The study is a survey in which data were collected from the targeted population. Research design is essentially a statement of the object of the inquiry and the strategies for collecting the evidence, analyzing the evidences and reporting the findings, with the view to address its objectives, the study used a quantitative method.
The research conducted two research designs these are descriptive and explanatory research designs. A descriptive research design was applied to describe the data and characteristics of the samples in order to understand and systematically describe the incentive schemes of the case organization and to identify the most influential variables that affect employee’s performance. On the other hand, explanatory research also conducted to get an understanding and identification of the study variables. A research that focuses primarily on the construction of quantitative data follows a quantitative method. The researcher were not going to develop theories nevertheless to test research hypothesis that demand the researcher to use numerical data which is one of the characteristics of a quantitative method.
The target population is defined as a collection of elements or objects that possess the information sought by the researcher.The study population was comprised of 287 representatives of the church of Pentecost. was chosen as a unit of analysis for this study. The specific company was selected because it is one of the profitable banks in the country the researcher could easily access data. Target populations a r e employees of the company located in Accra Branches since the researcher could easily manage his time to utilize data and the results obtained from this particular research are expected uniform with over all the northern region office branches. All complete lists of employees’ relevant data obtained from headquarters, Human Capital Department of the company.
Data Presentation, Analysis and Interpretation
This chapter presents the analysis of data from the survey. Once the raw data was obtained it was coded and entered into the computer program. In addition to this, background information of respondents was presented in different format.
The Statistical Package for Social Sciences (SPSS) version 20 was used to analyze the data. Descriptive statistics were used to summarize, organize and simplify the findings in a systematic way. The results are presented in figures, percentages and tables and the summary statistics such as means, standard deviations are computed for each incentive schemes dimensions and employee performance in this study. This is followed by presentation of inferential statistics based on each hypothesis formulated for the study.
SUMMARY OF MAJOR FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
This is a concluding chapter. It provides the summary, conclusion and recommendations and including suggestions of further studies.
This chapter presents a summary of the major findings gathered from the analysis of the data. Conclusions have been drawn from the study and recommendations put forward that may help to deal with the challenge of the effect of incentive schemes on employee performance at the church of Pentecost, headquarter, Accra Ghana
Summary of Findings
The main objectives were to assess the employee’s perception towards the incentive schemes, to examine the relationship between incentive schemes and employee performance and to determine the effect of incentive system on employee performance in the church of pentecost. Generally, descriptive, correlation and multiple regressions analysis were performed in order to conduct the research analysis.
According to the findings 37.3% and 62.3% from the total population of 75 respondents were female and male respectively. With regard to age distribution 78.7 % and 17.3% were in the ages between 25-35 and below 25 years respectively. Based on the findings on educational qualification 89.3% were first degree holder and the result show that on the job category 76% and 10.7% from the respondents were Customer Service Officers and Pastor in Charge respectively.
As regards to descriptive statistics mean result, the average mean value of financial incentives is 3.93, non-financial incentives is 3.74 and employee performance is 4.23 this shows that employees in the church of pentecost. highly and moderately motivated towards on employee performance. Incentives are offered in order to focus the employee’s attention to the business objectives of the employer.
In this study it is observed that the absence of practice on Staff Mortgage Loan and Staff Automobile Loan and the variables are below average mean 3.93, has a significant influence on the service and overall company performance.
As a result showed and the literature in regards to opportunity for career development (promotion) and training and the variables are below average mean 3.74, has an impact on high performance employee.
Results from person product moment correlation coefficient revealed that, there is high (substantial) and moderate and statistically significant relationship between financial and non-financial incentive schemes and employee performance. The model summary of multiple regression analysis it was 74.4% and also showed that the proportion of the variation in employee performance explained by the liner combination of financial and non-financial incentive schemes is 55.3% (from r2 value) which is statistically significant at 99% confidence level as indicated from F-statistic.
There is high relationship between financial incentives and employee performance as it was 68.7% positive and significant relationship and can make 47.2% variance. Monetary incentive as the amount paid to employees, either in lump sum or monthly payment which makes individuals perceive as an immediate feedback of their effort contributed. The reason behind for employees to have great emphasis on monetary incentives might be due to the impact that monetary incentive brings in terms of better living standard and stronger sense of security.
There is moderate relationship between non-financial incentives and employee performance as it was 67.4% positive and significant relationship and can make 45.4% variance on employee performance. Non- financial tangible incentives are effective because they are very visible. The reason for employees to prefer non-financial incentive might be that it brings greater satisfaction psychologically.
Accordingly, results express that both financial and non-financial incentive schemes has a positive effect on employee performance. Organizations that provide effective incentives are more likely to have satisfactory job performance from employees. Incentive schemes do have significant correlation with employee performance motivation and productivity in organizations.
The purpose of the study to examine the effect of incentive schemes on employee performance and from the findings and the results it can be concluded that, incentives play a major role in enhancing performance in an organization. While goals and feedback clearly boosts performance, adding an incentive will enhance job interest and persistence. The results show that both financial and non-financial incentives are used and perceived in terms of importance, almost satisfactorily at the church of pentecost. In relation to employee performance, results show that many employees in the church of pentecost believe incentives have a positive effect on employee performance.
The following conclusions can be drawn:-
The first research objective was to assess the employees’ perception towards the incentive schemes. Employees perceive incentives given are not rightful. Since non-management employees take the large number to the responses, it is conclude that non-management employees are moderately satisfied with the incentives of the company
The main objectives were to examine the relationship between incentive schemes and employee performance and to determine the effect of incentive system on employee performance. According to the result of descriptive mean analysis, correlation coefficient analysis and regression analysis proved that the incentive scheme which means financial and non-financial incentive schemes are valuable predictors and have an effect on employee motivation and performance. More over when each variable is seen based on computation of means of the different financial and non-financial schemes in relation to employee performance showed that they are satisfactorily satisfied. However, the church of pentecost employees’ performance is affected by the mentioned factors because the mean value the mentioned variables are below average. The respondents think that the items are not acceptable and competitive relative to both the market and the in church.
Based on the results of the study it was understand that financial incentive schemes influences employee job performance more than non-financial incentive schemes in aggregate. However, it is important to note that only financial or non-financial types are not sufficient to motivate employees to attain best perform level, employees should implement a combination of both types of incentive schemes to get the best out of their employees.
Incentive schemes can be regarded as the fundamental expression of the employment relationship, commitment, engagement, satisfaction and company performance development.
The researcher therefore concludes from the findings that the effect of incentive schemes on employee performance is of paramount important to the company. In turn, human performance of any sort is improved by designing, implementing, reviewing and adjusting the incentive schemes system that is appropriate and satisfying.
Incentive schemes are fast becoming increasingly a popular technique in attracting, motivating, developing, and retaining employees in organizations. Experience has shown that organizations that provide effective incentives are more likely to have satisfactory job performance from employees. Based on the findings and conclusions of this study, there are recommendations forwarded for better improvement of employees work performance:-
As per the findings of the descriptive research results are concerned, the incentive system of the church of Pentecost has been to bring motivation of employees slightly above the neutral point this implies that employees are moderately motivated. This calls for a work to be done in the HR policy makers of the church. Those in a responsible position to amend and implement the incentive policies have to see best bench marking practices.
Management may come up with short-term employee attraction and retention mechanisms. The company cannot go far with unmotivated employees. If employees are not doing their best to the company and they don’t consider that the company as the best of all possible organizations for which to work, implies employees loosing motivation and commitment to the work and the company.
Performance goals can be clearly defined and regular reviewing of the performance of employees against performance target standards and recognize accordingly.
Management is supposed to seek and obtain feedback on the measure of employee satisfaction survey on how employees perceive incentives. Feedback combined with appropriate incentive schemes produce the strongest effect on employee performance after identifying the incentive schemes, which motivates employees most.
The management needs to develop rightful incentive schemes that include a mix of both
financial and non-financial incentives. Incentive type would influence performance differently when applied to the employee. Managers will therefore need to strategically identify incentives that lead to high performance among the employees.
Bonus payment is important but it is not the single most important factor for motivating employees. There are some other important factors that could maximize employee performance should be taken into consideration such as commission and stock ownership based on the nature of the job and the role of the employee.
The company may improve on staff mortgage and automobile loan to increase the performance of the employees.
The company may create opportunities for employee promotion (career development) and training by providing cross border job opportunities and skill development that may be provided to boost up employee performance.
Financial incentives are keys in employee incentive schemes, non-financial incentives supplement the same to maximize job productivity, quality and quantity. The company may come up with long-term incentives strategy.
The company be supposed to design mechanism that helps to recognize the top performer employees by the management in an individual and group level based on work performance makes a significant difference in terms of the overall productivity of the company.
Finally, it is important to suggest that incentive schemes would be more effective when implemented consistently, fairly and transparently. This would work with organizational policies, procedures and structure supported by the top management.
Recommendation for further research
This study examined the effect of incentive schemes on employee performance at the church of pentecost by selecting specific variables. However, there are so many variables not included in this study. Thus, it is recommended for future researchers to further assess factors affecting employees work performance by incorporating additional variables. To this end therefore, a further study should be carried out to identify other factors which may affect performance but which have not been studied to determine their effect.
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