THE EFFECTS OF REWARD SYSTEMS ON EMPLOYEE’S PERFORMANCE: CASE STUDY CREDIT FONCIER DU CAMEROON (CFC) BUEA BRANCH

ABSTRACT

Employees remain the greatest asset of any organization – whilst they provide performance, organizations offer rewards.

A well-designed system for rewarding labour greatly has a bearing on the output of employees and therefore impact the performance of the organization as a whole.

The study aimed at providing an objective view of organizations’ reward systems and their impact on employees’ performance. It evaluated the reward system of the Credit Foncier Du Cameroun Buea branch (C.F.C) and established whether their current reward systems have any bearing on employees’ performance.

The research gathered data from two main sources namely secondary and primary sources. The main technique employed in gathering the primary data was questionnaires. It was found out from the study that, there was a positive relationship between reward and employee’s performance.

The majority of respondents indicated that reward stimulates them to work harder and they are prepared to work harder if they are given more incentives or paid more salary.

It was also revealed from the study that there were enormous reward packages in the organization but some of the respondents (staff members) were not aware.

It was recommended that compensation packages should be linked to employee satisfaction. The rewards should provide value for money.

In other words, more should be derived from the reward in terms of productivity and profitability than the cost of rewarding.

Again, organizations needed to create extrinsic as well as intrinsic reward systems for the motivation and retention of the best quality of staff. Employees should also be made aware of the reward components in their employment contracts.

Key Words:

• Performance
• Employees
• Reward system

CHAPTER ONE:

BACKGROUND OF THE STUDY

Today’s organizations are operating in a very dynamic and highly competitive environment. To remain relevant in the market, they have to be able to respond quickly to ever-changing customer demands.

Reward management is one of the ways used by organizations for attracting and retaining suitable employees as well as facilitating them to improve their performance. The management has established rewards in their organizations in pursuit of increasing performance to ensure quality service.

Employee rewards refer to “all forms of pay and rewards received by employees for the performance. This study therefore aimed at determining the effect of rewards on employee performance.                                 

 Reward management is one of the strategies used by human resource managers for attracting and retaining suitable employees as well as facilitating them to improve their performance through motivation and to comply with employment legislation and regulations. As a result of these pressures,  to design reward structures that facilitate the organization’s strategic goals and the goals of individual employees. Reward systems are very crucial for an organization (Maund, 2001). Rewards include systems, programs and practices that influence the actions of people. The purpose of reward systems is to provide a systematic way to deliver positive consequences. The fundamental purpose is to provide positive consequences for contributions to desired performance (Wilson, 2003). Establishing this balance is one of the main reasons to reward employees. Organizations that follow this approach to create this balance focus on the two main components of a reward system which are Intrinsic and Extrinsic rewards. That is compensations, benefits, appreciation and recognition. Studies that have been conducted on the topic indicates that the most common problem in organizations today is that they miss the important component of reward, which is the low-cost, high-return ingredient to a well-balanced reward system  (Pratheepkanth, 2011). 

A key focus on recognition is to make employees feel appreciated and valued. Research has proven that employees who get recognized turn to have higher self-esteem, more confidence, more willingness to take on new challenges and more eagerness to be innovative (Pratheepkanth, 2011).

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

The reward system consists of all organizational components including people, processes, rules and decision-making activities involved in the allocation of compensations and benefits to employees in exchange for their contribution to the organization.

For an organization to meet its obligations to shareholders, employees and society, its top management must develop a relationship between the organization and the employees that will fulfil the continually changing needs of both parties.

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, the employees expect the organizations to provide fair pay, safe working conditions and fair treatment.

Like management, employees often expect more depending on the strength of their needs for security, status, involvement, challenges, power and responsibility. Just how and ambitious the expectation of each party are, vary from organization to organization.

For organizations to address these expectations, an understanding of employees’ reward systems (motivation) is required. Mills and al. (1984), defines motivations as “a set of processes concerned with the force that energizes behaviour and direct it towards attaining some goal”.

Kreither and Kinicki (1992) postulate that motivation represents “those psychological processes that cause the arousal, direction and persistence of voluntary actions that are goal-directed”.

It is the goal of the managers to successfully guide employees towards accomplishing their goals, that is organizational objectives, they must understand these psychological processes.

Schermerhorn and al. (1991) conceptualized motivation as based on content and process approaches. The content theories of motivation emphasize the reasons for motivating behaviour and what causes it.

These theories specify that the correlates of motivated behaviour that is, states, feelings or attitudes associated with motivated behaviour help to represent psychological deficiencies that an individual feels some compulsion to eliminate.

Establishing this balance and meeting these needs is one of the first reasons according to Deeprose (1994) to reward and recognize employees. Formal reward programs which denote financial rewards such as salaries, cash bonuses, fringe benefits, bonuses, promotions or share options play a significant role but employees accept these as intrinsic factors for the job. 

 Every company needs a strategic reward system for employees that are address these four areas: compensation, benefits, recognition and appreciation.

The problem with reward systems is that many businesses today are missing one or more of these elements (usually recognition or appreciation) and the elements that are addressed are not properly aligned with the company’s corporate strategies.

From the above views, it can be thought that rewarding employees (motivation) are of a greater value to the employee’s behaviour toward performance (work).

It is, therefore, necessary that the management of organizations have this at the back of their mind during planning.

1.2 STATEMENT OF PROBLEM

Reward management is one of the strategies used in organizations to improve organizational performance. It is therefore important to find out what motivates its employees so that it can plan a suitable reward system and gain better results.

In viewing the increase in productivity in the work today, which has resulted in economic growth, most African countries like Cameroon for instance has witnessed a consistent drop in their productivity. This is due to the lack of some of the reward systems by some of the organizations to reward their employees. This study (researcher) is therefore intended to analyze the effect of intrinsic and extrinsic rewards on employees’ performance towards organizations.(CFC BUEA) which will later lead to efficiency and effectiveness.

More specifically, this study also aims to find out which element of the reward systems functions well and which element could be further developed and improved to increase employees satisfaction. The driving force behind these studies is to enable employees of CFC BUEA to give feedback on their work motivation and their attributes towards the reward systems and perhaps increase the commitments to the organization. Based on this information, this research is therefore structured to provide answers to the following questions. The main research question is.

• To what extent does the reward system affects the employee’s performance of CFC?

The specific research questions are:

• What is the effect of promotion on the performance of employees of CFC?
• How salary does affect employee’s performance in CFC?

1.3 OBJECTIVE OF THE STUDY

The main objective of this study is to investigate the effects of reward systems on employees’ performance at work. More specifically, the research sets out:

• To examine the effects of promotion on the performance of employees in CFC.
• To examine the effects of salary on the performance of the employees in CFC.

1.4 RESEARCH HYPOTHESIS

The following hypotheses are tested. 

H₁:  Salary affects employee’s performance

H₂:  Promotion affects the performance of employees.

1.5 SIGNIFICANCE OF THE STUDY

This research work is not only important to the researcher but also other parties like; the management of organizations, the government and other enterprises. The research is important to the management of organizations in that, it helps the management when planning for the organization.

They would have to know the reward systems (motivational incentives) which are an important factor to employees and to boost the performance of the organization, employees must be satisfied.

It is also important to other parties (enterprises) in that, it would point out the role (effectiveness and good performance) played by employees’ satisfaction in the performance of the business and hence the survival.

This research would also help as a source of secondary data to other researchers. The result of this study would go a long way to create awareness about the weaknesses in the implication of this system and the suggested way forward.

It is thereby hoped that this study will contribute constructively towards increasing organizations as well as the employee’s understanding and acceptance of the impact of reward systems on individual performance and therefore corporate performance in CFC.

Finally, this research would help the government in its taxations and subsidy policies.

This is the amount of tax and subsidies to be levied and given to organizations and enterprises depending on the various reward systems given to employees and in what amount.