Influence of Intrinsic Reward on Employees’ Performance in Deposit Money Banks in Ondo State, Nigeria ()
1. Introduction
To get the best out of an employee, the place of a robust reward system by the organisation cannot be overemphasized. A reward system is essential to the organisation as it has become important in managing employee’s performance (Noorazem et al., 2021). Not only does reward system benefit the employees alone, but it has also been observed likewise to be a potent tool to enhance the performance of an organisation. Barber and Bretz (2000) posit that in as much as reward systems have a huge impact to retain and motivate the employees, it likewise aids organisations in achieving high levels of performance. Thus, organisations must develop programs such as reward systems to fulfill employees’ needs and motivate them to work. There are many factors that affect employee performance, among all those factors which affect employee performance, motivation that comes with rewards is of utmost importance (Akhtar, 2007). Reward is described as all monetary, non-monetary, and social benefits that an organisation provides for its employees (Bartol & Locke, 2000). In an organization, rewards can be extrinsic or intrinsic or social in nature. Extrinsic rewards are tangible rewards and these rewards are external to the job or task performed by the employee. External rewards can be in terms of salary/pay, incentives, bonuses, promotions, job security, etc. Intrinsic rewards are intangible rewards or psychological rewards like appreciation, meeting the new challenges, positive and caring attitude from employer, and job rotation after attaining the goal. Rewards include systems, programs and practices that influence the actions of people (Wilson, 2003). Performance is very crucial same as to reward system because when employees achieve their high level of performance, they want an adequate reward in return (Segel, 2005). Anitha (2014) defined employee performance as an indicator of financial or other outcomes of the employee that has a direct connection with the performance of the organisation as well as its achievement.
An essential responsibility of Human Resource Management (HRM) within an organisations is to motivate employees by rewarding high performing individuals and encouraging low performers through robust reward management system. However, most organisation have problems to decide the right reward systems and which reward system suit the most for the employees (Noorazem et al., 2021). Similarly, the inability to decide the amount of salary that aligns with the needs of the employees often result in low performance among the employees (Kanzunnudin, 2007). More so, inability of employees to meet up with expenditures which their pays will not be able to offset often lead to their low performance (Eastman, 2009). While several studies have been conducted to establish the level of ties between reward system and employee performance in the education sector (Ajayi, 2019) and even banking sector (Nkashi, 2014), however it is observed there is dearth in literature on the evaluation of rewards system on employee performance in banking industry in Southwest Nigeria. Against this backdrop, this study seeks to evaluate rewards systems (both intrinsic and extrinsic) that best motivate employees to work round the clock with utmost expected result.
The main objective of the study is to evaluate the effects of intrinsic rewards on employee performance in selected DMBs in Akure, Ondo State, with specific reference to job autonomy, praise and recognition, challenging work, and promotion as they affect employees’ performance in the banking sector.
This study focused on the relative contribution of intrinsic reward on employee performance in selected DMBs in Ondo State. The opinion of the staff (comprising of junior and middle-ranked employees) of the organization was sought on the study subject matter. The deposit money banks used for the study are First Bank Plc, First City Monument Bank, Polaris Bank, United Bank for Africa, Unity Banks, and Union Bank Plc. The choice of the deposit money banks was based on the fact that the banks had more of the deposit money domicile in them. Also, the choice was based on the fact that the majority of the banks’ headquarters are based in Akure as far as Ondo State is concerned.
2. Literature Review
Employee Performance
Performance is the behaviour exhibited or something done by the employee. According to Motowidlo, Borman and Schmidt (1997) cited in Onukwube (2010) job performance is the behaviour that can be evaluated in terms of the extent to which it contributes to organisational effectiveness. Anitha (2014) suggested that employee performance is an indicator of financial or other outcomes of the employee that has a direct connection with the performance of the organisation as well as its achievement. Hence, people in management such as top, middle, and lower management contributes significantly in performance (Xanthopoulou et al., 2009). In an organisational context of performance, employee performance is defined as the degree to which an organisational member contributes to achieving the goals of the organisation. Employee performance is vital to an organisation as they play as an imperative mechanism that contributed to the success of an organisation. According to Motowidlo, Borman and Schmidt (1997) cited in Onukwube (2010) job performance is the behaviour that can be evaluated in terms of the extent to which it contributes to organisational effectiveness. Similarly, Hillriegel, Jackson and Slocum (1999) found in Jaafar et al. (2006) see job performance as individual’s work achievement after having exerted effort. Guest (2001) regard it as the behaviour and outcomes that employees engage in or bring about that are linked with and contribute to organisational goals. It is clear from these definitions that job performance is related to the extent to which an employee is able to accomplish the task assigned to him or her and how the accomplished task contributes to the realization of the organisational goal. Job performance is not a single unified construct but a multidimensional construct consisting of more than one kind of behaviour. Most organisations can measure employee performance through the quantity of output, quality of output, timeliness of output and labor productivity (Armstrong & Murlis, 2004).
Intrinsic Reward System
Human resources assist the organisations in achieving its goals and objectives and since most of the organization are working in a competitive environment, it is the responsibility of the organization to look for ways in retaining its workforce. Human resources have been identified as the most vital asset of an organisation and by so doing they need to be treated as part of the organization to achieve their aim. In doing so, the organization must reward an employee effectively to get the best out of them.
Ajmal et al. (2015) was of the view that intrinsic rewards are those rewards which are non-cash rewards or not having any physical existence such as employee recognition, acknowledgement, professional growth, authority to immediate tasks, respect and appreciation. Hatice (2012) viewed intrinsic rewards are those that exist in the job itself which includes achievement, variety, challenge, autonomy, responsibility, and personal and professional growth. Similarly, Mahaney & Lederer (2006) observed that intrinsic rewards include status, recognition, praise from superiors and co-workers, personal satisfaction, and feelings of self-esteem. Employees are thought to be motivated to work hard to produce quality results when they have pride in their work, they believe their efforts are important to the success of the team, and their jobs are fun, challenging, and rewarding (Mahaney & Lederer, 2006). This implies that an employee can as well be acknowledge not in monetary terms for them to give in all their best to the development of the organization. The intrinsic rewards therefore are found helpful for the acknowledgment of employees and that recognition is a motivation point for the employees to the work engagement.
The following conceptual model was used for this study. This model will illustrate the relationship between rewards system on employee performance. The intrinsic rewards are independent variables, while employee performance is dependent variable as illustrated in Figure 1.
Theoretical Review
Hierarchy of Needs Theory
As the most known theorist of motivation, Maslow postulates that people are motivated to satisfy needs and that these needs can be arranged in a hierarchy of importance. According to Maslow, people constantly desire better circumstances; they always want what they do not yet have. Maslow’s theory on the hierarchy of needs is one of the most popular theories of motivation. Maslow (1943) stated that employees had five levels of needs and that human needs were
in the form of a hierarchy ascending from the lowest to the highest namely: 1) Physiological Needs, 2) Safety Needs, 3) Social Needs, 4) Esteem Needs, 5) Need for Self-Actualization. Physiological needs are the basic biological needs like air, water, food and shelter. In the organisational setting, these are reflected in the needs for adequate heat, air and a base salary to guarantee survival. Safety needs are the needs for security and protection from danger. In an organisational workplace, safety needs refer to the needs for safe jobs, fringe benefits and job security. Social needs are the needs for interaction with other people, belongingness, love etc. These needs reflect the desire to be accepted by one’s peers, have friendships, be part of a group and be loved. In the work environment, these needs affect the desire for good relationships with co-workers, participation in a work group and a positive relationship with supervisors. Esteem is the desire for respect, which is affected by the person’s standing reputation, his need for attention, recognition, achievement and appreciation etc. Maslow illustrated two versions of esteem needs, a lower one and a higher one. The lower one is the need for the respect of others, the need for status, recognition, attention, reputation, appreciation, and dignity. The higher form involves the need for self-respect, including such feelings as confidence, competence, achievement, mastery, independence, and freedom. Within organisations, esteem needs reflect a motivation for recognition, an increase in responsibility, high status and appreciation for contributions to the organisation. Self-actualization refers to the desire for self-fulfillment; it is a drive for individuals for self-development, creativity and job satisfaction. They are related to developing one’s full potential, increasing one’s competence and becoming a better person. Providing people with opportunities to grow, to be creative, and to offer training for advancement are the means that self-actualization needs can be met with in the organisation.
Empirical Review
Aktar, Sachu and Ali (2012) on the impact of rewards on employee performance in commercial banks of Bangladesh. The study adopted survey research design using well-structured questionnaire to elicit information 180 respondents (staff of selected commercial banks). The results are investigated in terms of descriptive statistics followed by inferential statistics on the variables. The result indicates that there is a statistical significant relationship between all of the independent variables with dependent variables employee work performance and all the independent variables have a positive influence on employee work performance.
Ishtiaq, A & Sadia, S (2017) on the effect of rewards on employee’s performance in selected commercial banks in Pakistan. This study explores the relationship between rewards system and employee performance of private banks in Pakistan. In addition, it also identifies the impact of rewards system on employee performance. A sample of 92 respondents in three districts (Lodhran, Vehari, Khanewal) of south Punjab, Pakistan was selected. A structure Likert Scale format questionnaire was used for data collection. The result of this study reveals that there is the presence of a relationship between intrinsic and extrinsic rewards on employee performance and has a significant effect of intrinsic and extrinsic rewards difference on employee performance of the banking sector in Pakistan.
Okafor and Okeke (2019) examined reward strategy and employee performance in selected banks in Anambra State. The major purpose of the study was to determine the various strategies, which managers should adopt to improve workers’ morale and productivity in an organisation. The specific objective was to ascertain the influence of training and development on employee performance. In conducting the research, a sample of three hundred and twenty-three (323) respondents responded to the questionnaire. These respondents were selected using a non-probability sampling method (purposive/judgmental method). The data gathered were analyzed using simple regression technique. The result revealed that training and development of employee have significant positive effect on employee performance in the banks under study. It was concluded that training and development always improve employee performance because they give the employees the reason to continue to put in more effort. Hence, it was recommended among other things that the management of banks under study should provide regular courses and adequate training for staff of all categories. This was hoped to sharpen their skills and make them more efficient and productive.
Anku et al. (2018) assessed the concept of reward management, reward system and corporate efficiency. Employees who make up a company remain the organisation’s unique and biggest asset. While they provide performance, organisation aim to reward them in an equitable manner, which are viewed as fair, unbiased and consistent in accordance with the value they create in the organisation. A reward system exists with a specific goal to motivate employees to work towards accomplishing vital objectives which are set by entities. The study clarified the phenomenon of reward systems and corporate efficiency. It additionally reviewed other studies within the scope of reward systems. It assessed emerging and critical issues that inform reward decision making. It again raised issues for example, the issue of measuring comparability and the concern of recognition programmes. The study concluded that the reward system plays an essential role in motivating workers to perform innovatively.
Idemobi et al. (2017) investigated the relationship between organisation reward system and workers’ attitude to work. It was aimed at determining the effects of organisations reward system on workers’ productivity; to determine the relationship between organisations reward system and workers attitude to work; to determine the relationship between organisations reward system and job satisfaction; and to find the relationship between rewards system and workers commitment. The data used was obtained with the aid of a questionnaire and analyzed using the chi-square test of independence. The results showed that: organisations reward system has a significant effect on workers’ productivity. It also showed the existence of a significant relationship between organisations reward system and workers’ attitude to work. Also, there is a relationship between organisations reward system and job satisfaction. These led to the conclusion that reward systems have significant effect on workers attitude to work. The study recommended improving the reward system of organisations for improved employee satisfaction and competitiveness within the industry.
Ajayi (2019) studied employee performance among selected tertiary institution, evidence from intrinsic reward system. Data gathered from 284 respondents from staff of Ekiti State University were analyzed using hierarchical regression models. The result showed that consultative participation significantly affect institutional stability as it was significant on institutional stability (t = −1.303, t = 5.429, t = 2.108, t = 6.365 and t = 3.078, p < 0.05). Thus, in conclusion, it was shown that all the constructs of the explanatory variable were significantly and positively related to employee performance of selected university in Ado-Ekiti.
Eziokwu and Onuoha (2021) studied reward system and organisational performance of deposit money banks in Rivers State. The study aimed to establish the relationship between reward systems and organisational performance using Pearson’s Product Moment Correlation technique. Findings revealed that reward systems dimensionalized using pay/salary contributed significantly towards employee satisfaction and customer satisfaction as measures of organisational performance. In the light of the findings, the study concluded that reward system is a critical and highly imperative factor in sustaining organisational performance.
3. Methodology
This study was carried out in Akure metropolis among a selected deposit money bank in Ondo State. The method used in the study is a survey research design which involved the collection of quantifiable data that allow descriptive and inferential analysis by establishing relationship(s) between variables and to produce models of these relationships. The sample size was 240 members of staff from the entire population of 1130 which was later distributed among the banks. Taro Yamane distribution formulae were used to calculate the sample size used to distribute the questionnaire. Questionnaire was used as a research instrument and it was divided into two sections (Bio-data and main content). Analysis of data was done using the descriptive statistics and inferential statistics. The demographic characteristics of the respondents were analyzed with frequency distribution, percentages and tables. Multiple Regression analysis and Analysis Of Variance (ANOVA) was used for testing of hypotheses.
Yamane (1967) formular for determination of sample size was used in selection of the sample based on the number of population
where n is the sample size, N is the population size and e is the margin of error (5%). Therefore, substituting in the values;
where: n = Sample Size, N = Population Size, e = Margin of Errors = 5% = 0.05.
4. Data Presentation and Analysis
This section presents the results and discussion of the study on reward system and employee performance with reference to some selected in DMBs in Akure, Ondo State. Two hundred and ninety five (295) copies of questionnaire were administered for the purpose of the study using simple random sampling technique. The total number of questionnaires returned for the analysis was two forty (240), representing 81.36% response rate. The results of the study as presented in Table 1 shows that 6 banks were the selected retail banks for the study and FCMB with FBN has the highest percentage of 25.0%, Unity bank and UBN with 18.8% and 16.3% respectively. UBA has 11.3 with Polaris bank as the least with 3.8%. More of male participated in the study than the female with a 56.3% as compared with the 43.8% for the later. This implies that more of the male participated in the study than the female. Also, more of the respondents are married with 58.8% as compared with the single respondent with 41.3%. This shows that more of the respondents are married and matured. The result further more shows that the cashier represents the highest percentage of 55.0% with the technical, manager and clerical staff with 23.8%, 12.5% and 8.8% respectively. This shows that more of the staff are with the cashier unit. Most of the staff have spent 3 - 5 years with the banks and this earned them a higher percentage of 37.5% as compared to others with various range of years of experience. Finally, majority of the respondents are educated with most of them having a first degree with a percentage of 83.8%. This implies that most of the respondents are educated.
Effect of Intrinsic Reward on Employee Performance
Objective one of the study evaluates the influence of intrinsic reward on employees’ performance in the study area through the use of multiple regression analysis. Multiple regression also assists in determining the relative contribution of each of the independent variables of intrinsic reward (job autonomy, praise and recognition, challenging work and promotion) to the dependent variable, employees’ performance measured in terms of efficiency, effectiveness and Job satisfaction.
R according to Table 2 was 0.675 which means that the predictor variables (job autonomy, praise & recognition, challenging work and promotion) fairly explain the level of employees’ performance in the study area. The coefficient of determination, R2 is 0.856 which implies that only 85.6 per cent of the variance in employees’ performance in the study area was caused by the job autonomy, praise and recognition, challenging work and promotion, 24.4 per cent can be explained by variables not included in the model.
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Table 1. Demographic characteristics of the respondents.
Source: Field survey, (2022).
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Table 2. Effect of intrinsic reward on employee performance.
a. Predictors: (Constant), Promotion_1, JobAutonomy_1, Praise and recognition, Challengingwork_1.
Additionally, Table 3 shows that only praise and recognition (β = 0.442, p < 0.05) have significant and highest effect on employees’ performance. Job autonomy (β = 0.087, p > 0.05), challenging work (β = 0.158, p > 0.05) and promotion (β = 0.108, p > 0.05) were not significant. At 95% confidence level, on intrinsic reward relating to praise and recognition made a unique and significant contribution to the performance of employees in deposit money bank. Taking all the intrinsic reward variables into account (job autonomy, praise & recognition, challenging work and promotion) constant at zero, employees’ performance will be 1.591. Taking all other independent variables at zero, a unit increase in praise and recognition will lead to a 0.344 increase in the employees’ performance compare to job autonomy, challenging work and promotion that produced insignificant effects. This means that job autonomy, challenging work and promotion have not been attractive enough to motivate the employees to work effectively and efficiently in the deposit money banks. Therefore, the best fitting model is given as:
where
Ep = Employees Performance; pr = Praise and Recognition; Ja = Job Autonomy; Cw = Challenging Work; P = Promotion
Testing of Hypothesis One
Test of Hypothesis
The hypothesis one is postulated in relation to intrinsic reward and employee performance.
H01: Intrinsic reward do not have significant effect on employee performance.
The ANOVA result generated from the regression analysis was used to test this hypothesis. According to Table 4, the model is statistically significant F (3, 76) = 13.899; p (0.00) < 0.05. The significance probability which is 0.00 is less than 0.05, thus the model is statistically significant in predicting the effect of intrinsic reward measured by salary, bonus and incentives/fringe benefits on employee performance in deposit money banks. The null hypothesis was therefore rejected. Intrinsic reward significantly affects employees’ performance in the study area. The implication of this is that the performance of the employees in the study area had been affected by their intrinsic reward system.
Discussion of Findings
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Table 3. Contribution of intrinsic reward to employees’ performance.
a. Dependent variable: Performance_1.
a. Dependent variable: Performance_1; b. Predictors: (Constant), Incentive_1, Salary_1, Bonus_1.
The intrinsic reward variables include job autonomy, praise & recognition, challenging work and promotion. They respondent indicate that consideration of employees’ suggestion in making decision in an organization as a mean score of 2.58 while entrusting absolute coordination of certain task to high performing employee care has a mean score of 2.80 and high performing employees are given total independence in delivering their task with a mean score of 2.41. This implies that employees’ ideas and suggestion should be considered in an organization and this will make them feel more important and be part of the organization which will bring more improvement to the organization. The study explain that awards and professional laurels are given to high performing employees in the organization with a mean score of 3.16 while effort of employee is often appreciated at regular intervals with a mean score of 2.93. This implies that employees should be recognized at regular interval for their contribution in the organization. Other aspects of the intrinsic rewards that motivate employee performance include challenging work and promotion and this gave rise to a mean score of 2.86, 3.53, 3.10, 3.31 and 3.50 respectively. This reveals further that when an employee is been promoted as at when due, more effort will be put to their task in an organisation.
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5. Conclusion and Recommendations
The study is an evaluation of intrinsic rewards and employee performance of selected deposit money banks in Ondo State. The study examines the effect of intrinsic reward on employee’s performance, on employee performance in the study area.
Primary data were collected with the aid of a well-structured questionnaire. The sample size used for the study was 240 employees of the selected DMBs in Akure, Ondo State. The data collected were analyzed using both the descriptive and inferential statistic. The descriptive includes frequency, percentage distributions, tables and mean score while the regression analysis is the multiple regression analysis. The hypotheses were tested using ANOVA and multiple regression analysis. The study concludes that among the various forms of intrinsic reward challenging work is the most form of intrinsic reward that has more impact on employee performance in the banking sector in Ondo State.
Based on the conclusion, the study recommends that workers on deposit money banks should be given more challenging task as this will bring the best out of them and as result their current position or status would be upgraded. Also, the staff of DMBs should be promoted as at when due because this will encourage them to put in more of their best in the growth and development of the organization.
The study further recommends that salaries of workers should be given utmost priority as this will gear them up to work when for such organization and by so doing both the organization and the staff will achieve their aims and objectives and they should not be denied access to various fringe benefit that will enhance their performances.