INCENTIVE AS A MOTIVATIVATIONAL TOOL IN ENHANCING ORGANISATIONAL PERFORMANCE IN BANKING INDUSTRY (STUDY OF FIRST BANK PLC UNION BANK PLC AND OCEANIC BANK PLC)

ABSTRACT

Organizations need the service of men (employees) to achieve their objectives. The extents to which these objectives are achieved depend largely on the willingness of employees to put in their best.  Ugbaja (1992: 24)as sited in Tsua (1988:37), states that for the employees to put in their best towards achievement of organizational goals and objectives, they must be adequately motivated. Thus, this research work was carried out to determine the impact of incentive as a motivational tool in enhancing organizational performance in the banking sector of the Nigerian economy. To be able to carry out the above task effectively, three research   questions   and   three   hypotheses   were   raised   and   formulated respectively. The  aim  was  to  find  out  the  sequential impact  of  incentive in motivating workers to achieving greater result in performance, productivity and profitability.  As  data  were  required  to  test  the  formulated  hypotheses  and answer research questions, knowledgeable personnel of  some  selected banks were issued with questionnaire. As well, oral interview was conducted too. Their responses were collected and analyzed using simple pie chart and statistical tool of chi-square (2). The analyses revealed that incentive as a motivational tool has a  positive  relationship with  organizational performance. Following from  the above  analysis,  the  under-listed recommendations were  given:  (1)  Adequate incentive should be used to motivate and engender employees to perform to the best of their ability.   (2) In designing incentive scheme, organizations should not necessarily focus only on monetary base but have  some other non-monetary incentives  like  good  working  environment,   guaranteed  safety  of  job,  good management, employee relationship, good medical attention, employee focused rather than result oriented etc. (3) Implementation of incentive scheme should be well monitored to      check the  excesses of the staffs charged with the duty of administering  it.  Since  this  study  focused  on  the  banking  industry,  it  was suggested that a study of the impact of incentive on motivating employees on the civil service (Federal, State and Local Government) be made. Thus, we concluded that incentive is very vital  in motivating employees towards achieving greater result.

CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND OF THE STUDY

Every organization needs the service of men to achieve its objectives. For the employees to put in their best towards achievement of organizational goals and objectives, they must be adequately motivated (Ugbaja, 1992:24)

Motivation is that energizing force that induces or compels and stimulates the workers to contribute their best towards goal attainment. From the organization’s point of view, motivation deals with everything a manager can use to influence the direction of individual towards goal attainment.

However, of all the several models of motivation propounded so far, on the job motivation has remained a complex issue, hence management is consistently dynamic in devising effective incentive to for its personnel with a view to achieve staff commitment.

Incentive is a form of variable reward targeted at a particular performance outcome. It is designed to reward and encourage positive employee action within clearly defined parameters, to achieve certain business outcome. As  an  addition to  basic pay,  they  are  used to  spur employees in an organization to greater productivity. They are strategies put in place to effectively combine both human and material resources so as to enhance and improve the performance of the organization thereby

enabling it achieves its overall goals. Its motivational effect as extra-income has enjoyed growing interest even in times of recession.

Incentive payment scheme are  sometimes based on  the  simplistic assumption that employees are indifference to corporate needs and require the carrot to bring forward positive and contributive behaviour. Such payment can be made for extra effort in the shop floor, shouldering extra responsibility in the office, getting more than quota in the sales division, or achieving increased profit in the boardroom.

As a motivational tool, incentive can be subdivided into two groups – financial and non-financial and applied to all categories of workers since each group vary in extent to which they motivate workers individually(Arnold, 1994:212).

Nigerian workers, particularly respond to financial incentivesperhaps due to the prevailing socio-economic conditions. According to Ejiofor as sited in Akpala (1993:114) “there is cheap labour in Nigeria, low level of education and satisfaction of basic needs is paramount to workers. Hence managers could influence labour productivity by applying McGregor’s theory X.

In some industries, incentives represent a considerable proportion of the task in managing remuneration. For the individual on incentive, the payment  can  represent  a  significant  element  of  earning.  For  the  trade union, incentives are subject for negotiation, for management, the incentive scheme is designed to some hope of reduction in unit cost of production, in more general  term  an  improvement in  corporate wellbeing (Poole and Warner, 1998).

Moreso,  some  organizations  have  in  place  fringe  benefits  like accident  insurance  policy,  transport allowance,  rent  and  meal,  subsidy among other things. These supplementary compensations are often provided partly to attract and keep good employees, and partly because they are required by law. However, despite the fact that employees do not expect direct tangibleproductive job, it hopes to be rewarded in terms of

low  turnover,  high  morale,  or  some  other  advantages  (Zollitsch  and Langer, 1970). Majority of employees sees these benefits as their first line of defense against illness, unemployment,old age  as  well as  their  holiday (Strauss and Sayles, 1972). According to Herzberg (1964) these could be termed hygiene factors, but if tied  to performance, it  may serve as an incentive to perform.

1.2     STATEMENT OF THE PROBLEM

Worker motivation is supposed to be well planned for the benefit of both workers and organization. Each employee needs one form of motivation or the other at each point in time to sustain the momentum. Lack of motivation is therefore a hindrance to efficient and effective worker performance, and may lead to low productivity. In most organizations, it behoves management to create good organizational condition to induce employees to strive to reach a target goals set by the organization. Workers must not be allowed to complain for incentives before it is provided and should not be victimized for asking for so, hence the workers resort to poor performance for fear of victimization which in turn leads to poor accomplishment of set objectives.

Considering the Nigerian work environment in addition to the prevailing harsh economic conditions where inflation has eroded the purchasing power of naira, it will be very interesting to study how the employers of labour try to improve worker’s productivity using incentives. Hence,  the  problem of  this  study  is  to  investigate the  effectiveness of incentive asamotivational tool  in  enhancing organizational performance using First Bank Plc, Union Bank Plc and Oceanic Bank Plc as our banks of interest.

1.3 RESEARCH QUESTIONS

The following are the research questions used in this work:

1. Is   incentive   as   a   motivational   tool   useful   and   effective   in increasingworkers’ productivity?

2. Does workers performance increase with increase in incentive?

3. Does       incentive      has       any       positive      relationship      with organizational profitability

1.4     OBJECTIVES OF THE STUDY

In view of the above question, this work is set to achieve the following objectives:-

1.       Ascertain the usefulness and effectiveness of incentive as a motivational tool to enhance worker’s productivity in organizations.

2.       To find out if workers performance increase with increase in incentive.

3.       To ascertain whether incentive has any positive relationship with profitability of organization

1.5     HYPOTHESES OF THE STUDY

A hypothesis is a prediction or a conjecture stated well in advanced of observation about what can be expected to occur under stated condition, (Asika, 2001). Onwumere (2009:25) defines it as a tentative statement about phenomena whose validity is usually unknown.  Again Ozo et al (1999:34) sees a hypothesis as an intelligent guess of the solution to the research problem.Thus the following hypotheses are formulated as tools for achieving the objectives of this work.

1.            H0:Incentive as a motivational tool is not useful and effective in increasing workers’ productivity?

H1:   Incentive  as  a  motivational tool  is  useful  and  effective  in increasing workers’ productivity?

2.     H0 Worker’s performance does not increase with increase in incentive?

H1Worker’s performance increases with increase in incentive?

3.H0:Incentive         has          no          positive         relationship         with organizational profitability

H1Incentive          has          no          positive          relationship          with organizational profitability

1.6     SCOPE OF THE STUDY

This research work is expected to cover three banks – two old generation banks i.e. First bank plc and Union bank plc; and one new generation bank

– Oceanic bank international in the commercial banking sector in Nigeria.

A period of ten (10) years starting from 2001 – 2010 will be covered in this research. Again, the geographical boundary of this work will be limited to Lagos state only.

1.7     BACKGROUND OF THE STUDY AREA HISTRORY OF FIRST BANK PLC

First bank Plc. Was incorporated in Liverpool as the bank for British West Africa in 1894. It also acquired African Banking Corporation which was established in 1892 in that same year.   In 1896, the bank opened its first international branch in Accra, Ghana and incorporated locally as the standard bank of Nigeria limited in 1969. In 1971, the Bank was listed on the Nigerian Stock Exchange and established its  first offshore financial

subsidiary of  a  Nigerian  owned bank  in  the  UK  in  in2002.  In  2005  it acquired   two   banks   namely-MBC   international   Limited   and   FBN (Merchant  Bankers)  Limited  and  also  announced business  combination discussions  with  Ecobank.  The  bank  floated  the  ever-hybrid  capital offering out of Africa and the biggest Nigeria’s offer.

FirstBank has been through many seasons since 1894,

     from being the only bank in Nigeria for decades

     weathered the “banking explosion” of the 1930s to 1950s

     followed by an era of government ownership and control

        to a flurry of consolidations and then gradual growth in number of banks up to the early 1980s

        then yet another industry growth spurt in the early 1990s when the banking sector was deregulated

        leading to an industry shake-up in the late 1990s, which reduced the number of banks from 126 to 77

     and later resuscitation and growth to 89 banks

     leading to the recent shake-up to 25 banks

All through the seasons, FirstBank has remained resilient, dependably dynamic and “truly the first”

HISTORY OF UNION BANK PLC

Union bank of Nigerian Plc. was established in 1917 as a Colonial Bank with its first branch in Lagos.in 1925, Barclays Bank Dominion Colonial and Overseas was formed to take over the activities of the Bank. In 1969, the Bank was legally incorporated in Nigeria as a wholly owned subsidiary of  Barclays  Bank  International Limited  and  renamed  Barclays  Bank  of Nigeria Limited. The ownership structure of the Bank remained unchanged

until 1971when 8.33% of the Bank’s shares were offered to Nigerians. In the same year, the Bank was listed on the Nigerian Stock Exchange. As a result of the Nigerian Enterprises Promotion Degree of 1972, the Federal Government of Nigeria acquired 51.67% of the Bank’s shares, which left Barclays Bank Plc. London with only 40%.

A landmark event in the Banks history occurred in 1979 when the Barclays Bank sold 50%of its share-holding in the Bank to Nigerians. This resulted in the change of the Bank’s name from Barclays Bank of Nigeria Limited to UNION BANK OF NIGERIA LIMITED to reflect its new image and ownership structure. The remaining shareholding of Barclays Bank was disposed of in 1989. Today, it is noteworthy that Union Bank is the publicly quoted banking institution that is 100%owned and managed by Nigerians.

HISTORY OF OCEANIC BANK INTERNATIONAL PLC

Oceanic Bank International Plc. is one of Nigeria’s foremost financial services institutions. The Bank was incorporated on March 26, 1990 under the Companies & Allied Matters Act (1990) of Nigeria as a private limited liability company and was granted a commercial banking license on April

10 1990. It commenced business on June 12, 1990. Fourteen years later, on June 4, 2004, Oceanic Bank converted to a public liability company. Its shares were listed on the Nigerian Stock Exchange on June 25, 2004. Over the years, Oceanic Bank has built its success on excellent service, delivered in a friendly environment through professional staff, leveraging on world- class technology. Today, Oceanic Bank serves customers spread across all tiers of government, corporate organisations, small & medium enterprises and individuals. The Bank’s commitment to value creation for all its stakeholders has earned it a solid reputation as a responsible corporate citizen and employer of choice. With a strong presence in asset management, commercial banking, health management, insurance, investment banking, pensions, registrar services, savings & loans and trustee services, as well as over 370 business offices spread across Nigeria,

Cameroun, the Gambia and Sao Tome & Principe, Oceanic Bank is one of the most recognized financial services brands in West Africa.

1.8     SIGNIFICANCE OF THE STUDY

The significance of this study can be viewed from two major angles  –

practical and academic.

a)      Practical significance

This kind of study will assist in broadening understanding of the following or scope of knowledge of the following:

       To banker in general, it will expose the relationship between our relevant  variables,which will  be  of  interest to  them  in  their  respective banks.

       Specifically,to bankers in the banks under study, it will expose to a large extent the goings-on in their organization with regard to our relevant variables and a comparative analysis of their actions over some relevant years.

       To policy makers and regulators in industry, it will present a scheme through its analysis that could assist them in enunciating policies that will not only positively impact on banks but also remain relevant to the economy by performing such function as productivity stimulation, among others.

       To   government,   it   will   bring   to   lime   light   the   directions   of productivity (after introduction of incentive) to gross domestic product (GDP), hence promulgate law to regulate incentives.

b)      Academic significance

       It will contribute to the enrichment of the literature on the effect of incentive to motivation.

       It will throw more light on the effect of incentive as a motivational tool in enhancing performance.

       The study will serve as a body of reserve knowledge to be referred to by researchers.

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