INTRODUCTION:

How to inspire employees to perform better is one of the main challenges that companies,
in both the public and commercial sectors, face. Most economists believe that financial
incentives lead to better performance. Financial awards for employee achievement,
sometimes known as monetary incentives, are crucial in motivating staff in a cutthroat
workplace. The economic research claims that cash rewards are a very popular way for
organizations and businesses to improve employee performance. For a number of
reasons, financial benefits are crucial to improving employee performance. This
particular study analyzes the proper monetary incentives and the importance of monetary
incentives to enhance performance in a competitive business environment. The purpose
of this study is to determine the importance of understanding monetary incentives, the
reasons for introducing monetary rewards in the business market, the nature of monetary
rewards, and the benefits they provide to employees. The objective of the study focuses
on how the business market has changed as a result of the monetary incentive system.
The literature review in this paper deals with an important aspect of the process of
monetary incentive policy to improve employees. The objective of the study focuses on
how the business market has changed through the monetary incentive system.
Organizational performance is a complex phenomenon largely affected by the ability and
motivation of the workforce in any firm. One of the major problems facing most
employers in both public and private sectors is how to motivate their employees in order
to improve performance. The field of Economics is largely based on the assumption that
financial incentives improve performance (Igbaekemem, 2014). In consideration of the
era of global hyper competitiveness in the business world, incentives are fundamental
imperatives to derive maximum employee inputs, retention, commitment from workers
and industrial harmony between the workforce and manufacturing concerns. It is
generally believed that effect of financial incentives is unambiguously positive; a large
monetary incentive improves employee performance. Thus, employees of an organization
have motives and inner desires that are expressed in the form of actions and efforts
towards job roles to meet their needs. Employee motivation is the level of energy,
commitment, and creativity that a company's workers apply to their job (Ebrurajolo,

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2004).

The issue of employee performance cannot be over emphasized. The most important
thing for an organization is the devotion and loyalty of its employees, which is achieved
if the employees are paid with better rewards. Rewards are highly concerned to overcome
dissatisfaction and to increase performance of employees (Mehta, 2014). Despite the fact
that reward management has received substantial research attention, this has dwelt more
on developed and emerging economies (Carton, 2004; San, Theen, & Heng, 2012), with
little done in the developing economies (Agwu, 2013). Various researchers have come up
with various ways to motivate people at work. However, because human beings are
different from one another in terms of needs, culture, religion etc. so does what motivate
them also varies. Some employees are motivated by financial and other incentives and
some non-financial incentives. Managers continuously seek for ways to create a
motivating environment where employees will work at their optional levels to achieve the
organizational objectives. Since human resource is the most valuable resource of any
organization, it must activate, train, develop and above all motivate in order to achieve
individual and organizational goals. According to Silverman (2004), the central tenet of
the distinction is that rewards are promised from the outset, whereas recognition is
afforded in a post hoc manner. He also posits that the essential distinction is that
incentives are forward looking while rewards are retrospective and that the difference is
necessary when defining the objective of pay for performance.

In most business and other organizations, money is actually used in keeping an

organization adequately staffed and not primarily as a motivator. Any bonus scheme for
manual workers should be related to criteria which are meaningful to the employees and
which are capable of being measured consistently. The incentive to achieve one particular
objective for example, increased volume, should not act as an incentive to worsen other
standards of achievement like quality. It is therefore, important to know what induces a
worker most, as many people have different needs and aspirations.

The success and the survival of any organization are determined by the way the workers

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are remunerated and rewarded (Adams, 2013). The reward system and motivating
incentives will determine the level of employees’ commitment and their attitude to work.
As noted by Akerele, (2011) poor incentives packages have been a major factor affecting
employees’ commitment and productivity. Organizational performance comprises the
actual output or results of an organization as measured against its intended outputs
(or goals and objectives). According to Campbell & Chia, (2013) organizational
performance encompasses three specific areas of firm outcomes: financial performance
(profits, return on assets, return on investment, etc.); product market performance (sales,
market share, etc.); and shareholder return (total shareholder return, economic value
added, etc.). Specialists in many fields are concerned with organizational performance
including strategic planners, operations, finance, legal, and organizational development.

In recent years, many organizations have attempted to manage organizational

performance using the balanced scorecard methodology where performance is tracked
and measured in multiple dimensions such as: financial performance (e.g. shareholder
return), customer service, social responsibility (e.g. corporate citizenship, community
outreach), employee stewardship, performance measurement systems, performance
improvement and organizational engineering. Business organizations including the oil
and gas sector exist to produce goods and services, which they hope to exchange for
money to maximize profit. In pursuit of these defined objectives, the organization
procures resources and processes them into output. Of the resources acquired, Chabra,
(2011) noted that the human factor is the most significant because if not properly
managed, it can deliberately retard operational performance of an organization. Evidence
abounds to attest to the fact that all employees do not exert the same effort towards
organizational goals or in other words, some employees achieve better results than others.
To achieve results, employees will exhibit the required job behaviour. Gerhart, Minkoff
& Olsen, (2012) noted that the dilemma that managers face in today’s business world is
how they could get employees to exhibit the required job behaviour in the work place.
Since it has been established that all behaviours except involuntary responses are goal
directed, managers can apply the use of compensation packages such as directors’
remuneration, salaries and wages and employee benefit scheme to direct the job

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behaviour of employees towards the goal of the establishment. Therefore, for any
organization to record any degree of meaningful success in the pursuit of its goals and
aspirations, it must have the ability to create values enough to compensate for the burdens
imposed upon the staff. Such value or motivators can come in the form of good training
policies, facilities or monetary incentives such as fringe benefit, promotion, status symbol
etc. so as to satisfy the needs of the staff for enhanced operational performance (Gibson,
2004).

Hameed, Ali & Arslan, (2014) noted that monetary incentives are financial incentives
used mostly by employers to motivate employees towards meeting their targets. Money,
being a symbol of power, status and respect plays a big role in satisfying the social–
security and physiological needs of a person. From the foregoing it is evident that
monetary incentives therefore go a long way in promoting workers’ performance in
Nigeria organizations.

OBJECTIVE OF THE STUDY:

The objective of the study of monetary incentives and their importance in increasing
employee performance is to play an active role in the economic market. The monetary
incentive for an employee has a direct impact on the market chain. The way employees
are rewarded changes the morale of an employee. This positive mentality affects the
productivity of the company, which is the most important thing in any business. The main
subject of this study or analysis paper is the importance of monetary incentive system for
employees to increase their performance in a company and the process of competitive
market exploration using a monetary incentive. The area of the subject of this study on
monetary incentive system shows the various positive meanings of financial rewards for
an employee. And this area of analysis also describes the process of increasing employee
performance every year (Qi e al. 2021). According to an economic report, the use of
monetary rewards for employees has resulted in various positive changes in the business
world. Below are some examples.

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  Increase the quality of work and business productivity through an incentive
system.
 Build a good relationship between colleagues and customers to increase the
company's productivity.
 The incentive method promotes a positive attitude among employees toward
their performance.
 The active mentality of the employees increases the productivity of the
company through the incentive process.

IMPORTANCE OF THE STUDY:

The primary subject we concentrate on is the examination of financial reward, the

significance of financial reward and monetary incentives, and the method of raising
employee performance through monetary reward in the cutthroat market chain. The
study's goal is to identify the system of financial rewards. (Wilson et al. 2018). This
section of the analysis goes into detail about the value of financial rewards in raising
employee performance as well as the advantages that rewards offer an employee. The
study's goal is to examine closely the statement about financial incentives that is made
below.

Relationship Between Monetary Incentives And Employee Performance- The global

economy as well as a worldwide business environment is based on a high level of market
competition and employee performance. According to the economic study, monetary
incentives or rewards can help motivate employees to perform well in their work. In a
large business environment, incentives and rewards build a strong relationship between
the business platform and employees. This positive relationship creates a healthy business
bond between monetary incentives and an employee's performance.

Importance of monetary incentives to enhance employee performance- The monetary

incentive system does a responsible job of boosting employee performance in the global
economic market. Rewards make employees happy and motivate them to work. Monetary

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incentives determine the performance rate and further steps towards career opportunities
(Dugre et al. 2018). This mental support generally increases employee performance
through monetary incentives.

In the pursuit of enhanced employee efficiency and productivity, organizations

continually seek innovative strategies. While various approaches have been employed to
foster employee motivation, achieving sustained commitment toward work-related goals
remains challenging. A prevailing debate centers around motivation, with some asserting
its intrinsic nature, thereby rendering it resistant to external influences. Conversely,
others posit that many methods exist to enhance employee motivation, contingent upon
discerning individual preferences. A fundamental approach frequently adopted by
employers is the provision of monetary incentives, recognized for their potential to
elevate motivation, efficacy, and productivity (Ballentine et al., 2003; Mittal, 2022).
These incentives are designed to reward exceptional job performance through financial
means. The research underscores the diversity of desired monetary incentives shaped by
employees' career stages and generational characteristics. Given the centrality of human
resources to organizational success, motivating, training, and developing employees
assumes paramount significance, as motivated individuals equipped with skills and
knowledge demonstrate superior performance.

In developing countries, such as Nigeria, where the cost of living is high and quality of
life may be compromised, the appeal of monetary rewards as a motivator is pronounced.
Notably, economic considerations underpin a substantial portion of human activities.
Consequently, monetary incentives hold a substantial influence over work engagement
and commitment. Nevertheless, the efficacy of these incentives can be contentious,
especially when confronted with circumstances wherein financial rewards are withdrawn.
The Nigerian context exemplifies this dynamic, where employees persist in their work
despite prolonged delays in salary disbursement due to the expectation of eventual
compensation (Adegboyo, Keji, & Fasina, 2021). Historically, salary and wages have
been the oldest forms of monetary incentives. This tradition endures in Nigeria, where
both public and private sector employees endure protracted delays in compensation yet

6
persist in their roles. While this may reflect primarily economic motivation, it signifies
the intricate interplay between financial remuneration and job commitment (Ajibade &
Salako, 2021; Calvin, 2017).

The present research seeks to explore the impact of monetary incentives on employee
performance within the Nigerian Automobile Industry. In this context, employees
represent invaluable assets essential for attaining organizational objectives, yet, their
underutilization remains a concern. Poor motivation has been identified as a key
contributor to diminished employee performance, prompting investigations into
motivating factors to ameliorate this issue. Monetary incentives emerge as a crucial
consideration, with their application warranting examination for optimal performance
enhancement.

The historical background of the studied companies is provided below:

• Elizade Motors Limited: Elizade Motors, initially established as an automobile

marketing company in 1971, underwent incorporation in 1976 as Elizade Nigeria
Limited. It emerged as Nigeria's sole franchise dealer for Toyota vehicles and parts.
Under its robust management structure, Elizade Nigeria Limited effectively
positioned Toyota as the preferred car brand within the country. Collaborating with
the East Asiatic Company of Japan, the parent company of Toyota Motors, in 1986
led to the formation of Toyota Nigeria Limited. This strategic partnership enabled
Toyota Nigeria Limited to become the exclusive distributor of Toyota vehicles in
Nigeria, managing a Semi Knock Down Assembly. With an annual turnover of N33
billion, an authorized share capital of approximately N750 million, and total assets
totaling around N8.1 billion, Elizade solidified its status as a pioneering Automobile
Franchise in Nigeria. The company's headquarters are situated in Lagos, with
branches spanning all six geopolitical regions of the nation (Elizade, 2023).

• Coscharis Motors Limited: Incorporated in 1977, Coscharis Motors Limited

embarked on its journey as a servicing parts dealership, progressing to full-fledged

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 vehicle sales operations in 1982. The company has gained prominence for providing
luxury vehicle brands, including BMW, Jaguar, and Land Rover. Coscharis Motors
Limited also holds the exclusive franchise for Ford Motors in Nigeria, with a Semi
Knock Down Assembly plant in Lagos. Its distribution system has effectively
established Ford vehicles as sought- after offerings in the Nigerian auto market. The
company's headquarters are located in Lekki, Lagos, with regional branches spanning
all geopolitical zones in the country (Coscharisgroup, 2023).

• Stallion Motors Limited: Stallion Motors stands as a prominent automotive brand in

Nigeria, overseeing the franchise for the Hyundai vehicle brand. The group, founded
by an Indian family that settled in Nigeria during the early 1950s, has diversified its
portfolio to encompass esteemed vehicle brands such as Volkswagen, Porsche, Audi,
and Honda. The company's commitment to becoming a leading vehicle brand in
Nigeria and Africa is reflected in its vision. With a Semi Knock Down Assembly
Plant established in Lagos, Stallion Motors has created a robust distribution network
that ensures its presence across all geopolitical zones in the nation (Stallion, 2023).

The primary research objectives encompass a comprehensive investigation into employee

motivation and performance dynamics within the Nigerian Automobile industry. Firstly,
the study analyses the impact of Cash Bonuses (Sales Commission) as a monetary
incentive on employee performance. Secondly, it explores the correlation between
retirement benefits and employee job satisfaction. The research also endeavors to
scrutinize the efficacy of Pay rise in elevating the overall performance levels of
individual workers within the Nigerian automobile sector. Lastly, the study intends to
discern the significance of Profit Sharing as a determinant of workers' performance in the
Nigerian automobile industry. Through these objectives, the research sheds light on the
intricate interplay between monetary incentives and employee engagement, ultimately
contributing to a deeper understanding of organizational performance factors.

executing incentive packages, ensuring transparency and equitable treatment across the

8
workforce.

Types of Monetary Incentives:

Incentives represent crucial drivers that influence employee behaviour. When viewed
through the lens of fostering successful strategy implementation, an effective incentive or
reward program. These accomplishments can revolve around bolstering organizational
proficiency, encompassing aspects such as flawless manufacturing, punctual delivery,
expedited cycle times, elevated customer satisfaction, reduced costs, and other related
dimensions.

In research conducted within a Nigerian factory, Oloko (1977) categorized reward

elements according to their decreasing frequency of mention. The items included the
following: Opportunities in the company for advancement, job security, salary or wages,
medical and health facilities, working on the job you prefer, pension scheme, credit for
the job you do - recognition, good people to work with, supervisor's temperament and
attitude, vacation and holiday practice, housing, company's attitude toward employees,
incentive schemes, physical working conditions. This list reflects the diverse elements
individuals value and respond to within the workplace, highlighting the multifaceted
nature of incentives in shaping employee engagement and performance.

Monetary incentives constitute external factors that wield influence over motivation.
Diverse forms of monetary incentives exist, with several prominent types outlined below,
accompanied by succinct explanations:

i. Salary or Wages: This stands as one of the most time-honoured and paramount
motivational factors in human history. It encompasses monetary compensation
received at the conclusion of a stipulated work period, typically bi-weekly or
monthly. Notably, salary and wages should be both reasonably fixed and
punctually disbursed (Resca & Munandar, 2022).

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 ii. Bonus: A bonus encompasses an additional payment beyond the regular salary.
Its purpose lies in incentivizing employees who achieve their sales targets or
teams that successfully complete projects within stipulated timelines or exceed
production benchmarks. Companies might also grant year-end bonuses or long-
service bonuses as tokens of recognition for loyalty. It is crucial to underscore
that bonuses are intrinsically linked to organizational profitability and
productivity (Sorn, Fienena, Ali, Rafay, & Fu, 2023).

iii. Pay Raise: A pay raise signifies an augmentation of an employee's salary. Such
increments are extended to employees who have either demonstrated outstanding
performance over a duration or have offered long-standing service to the
organization. Furthermore, pay raises are granted to individuals who have been
promoted to higher roles within the company (Coron, 2020).

iv. Profit Sharing: This represents an admirable means of rewarding staff members.
It entails the distribution of a portion of the company's profits among employees,
with the allocation contingent upon position and years of service within the
organization. Profit sharing cultivates a sense of belonging among employees
(Cheadle, 1989).

v. Stock Option: Under this arrangement, employees receive company shares under
preferential terms, culminating in financial gains for the employee (Bergman &
Jenter, 2007).

vi. Allowances: Allowances encompass varied financial incentives extended to

employees based on merit and requisites. Illustrative examples include Traveling
Allowance, House Rent Allowance, Training Allowance, and Education
Allowance for employees' children.

vii. Retirement Benefits: This involves monthly contributions from both employers
and employees, constituting a percentage of the employee's salary. Managed by a

10
 dedicated fund manager, this sum is set aside and accessible to the employee
upon retirement from the company. In everyday parlance, this is commonly
referred to as a pension (Hansen, 2010).

Concept of Monetary Incentives:

An incentive is a reward given to a person to stimulate his or her actions to a desired

direction (Opara, 2013). Incentives have motivational powers and are widely utilized by
individuals and large organizations to motivate employees. They can either be monetary
or non–monetary. Lazear, (2006) is of the view that monetary Incentives are financial
incentives used mostly by employers to motivate employees towards meeting their
targets. Money, being a symbol of power, status and respect plays a big role in satisfying
the social–security and physiological needs of a person. Money however, seizes to be a
motivator when the psychological and security needs are satisfied. At that point it
becomes a maintenance factor (Shuja, Li, and Shamim, 2016).

When creating a reward program to motivate employees, decision makers and company
owners need to understand that the reward or incentive neither guarantees quality output
nor loyalty but just a bonus that encourages workers to meet their goals without
compromising on quality. Guerrero, Andersen, and Afifi. (2007) explains some of the
common examples of monetary incentives as thus:

1. Piece Rates – This is mostly used in production industries where employees are
given a certain amount of money on each produced piece. Piece rates motivate
employees to work harder and quickly to produce more pieces as each has a
monetary incentive attached to it. However, when issuing piece rates, production
supervisors must ensure quality is not compromised.

2. Pay Raise – These are mostly offered to employees who have worked in a
company for a considerable longer period of time. Some companies also give pay
rises to employees who have reached a certain level of production or those who

11
 have completed the required training programs. Some offer annual salary
increment to loyal workers.

3. Bonuses – Another good form of monetary incentive is issuance of bonuses. These

might be bonuses to individuals who have met their sales quotas or even bonuses to
teams that have completed their projects in time or have surpassed their production
targets. Some companies give yearly Christmas bonuses to long serving employees
as a way of rewarding loyalty.

4. Sharing Profits – This is another excellent way of rewarding employees. A small

profit portion is shared with employees based on their position, duration with the
company and input in attaining the overall set goals. Profit sharing is preferred by
most companies since it gives employees a sense of belonging and ownership.

5. Contests – These are mostly offered to sales and production personnel. An

additional price or bonus is given to the employee or to a team with the highest
production level. Again, employers can offer cash rewards to employees with best
suggestions just to encourage more input in terms of positive ideas that improve on
sales, production or performance.

Other than the above forms of monetary incentives, others may include; retirement and
education funds, off duty payments and payments to different employee training
programs among others.
Hameed, Ali & Arslan, (2014) highlights the benefits of monetary incentives as thus:

1. Boosts morale – employees like to be recognized and rewarded for improved

performances. Monetary rewards not only boost morale for high performance
but also improve productivity. This is because employees will always work
hard to surpass their employers’ expectations so as to earn an incentive.

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 2. Easy and direct – monetary incentive is a straightforward way of rewarding
deserving employees. It is easily noticed and adoptable.

3. Improves the working environment – it makes employees develop a feeling

that their work is noticed and that they will be paid for further accomplishments
and achievements. This improves the working environment as employees build
a positive approach to work and become more innovative in adopting different
ways of operation.

4. Element of life control – some employees consider monetary incentive as an

extra source of income or side hustle. This offers an element of control to their
income since they know they can increase their overall earnings and still get
recognized for it.

5. No personalization – Non- monetary incentives need to be tailored to

suit individual preferences. This is not the case for monetary incentives as
almost every need has money value attached to it and therefore will provide
direct satisfaction to employees.

The Concept of Workers Performance:

Entwistle, (2007) defined performance as the level of an individual's work achievement

after having exerted effort. Job performance can be viewed as an activity in which an
individual is able to accomplish the task assigned to him/her successfully, subject to the
normal constraints of reasonable utilization of the available resources.

Aswathappa, (2007) defined job performance as the overall expected value from
employees’ behaviours carried out over the course of a set period of time. This definition
according to Ojeleye & Okoro, (2016) although fairly technical, includes specific ideas
that are worth breaking down: • Performance is a property of behavior, or, plainly stated,
what people do at work • An employee’s behavior adds expected value to the

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organization – that is, an employee’s behaviors may be distinguished as helping or
hindering an organization, but the outcomes of employee behaviors are rarely measured
so their value is merely expected. Performance can further be broken down into two
distinct types: Task Performance and Contextual performance. Task Performance is the
action that contributes to transforming raw materials to goods and services, the things that
are typically included in job descriptions. Examples include selling clothes, drilling holes,
or teaching a class. Contextual performance is the behavior that contributes to overall
effectiveness through supporting the social and psychological climate of the workplace.

Akerele, (2011) defined operational performance as the performance of the company

against prescribed standards, such as compliance with regulations, waste
reduction, productivity, etc. Sajuyigbe, Olaoye & Adeyemi, (2013) stated that
Operational Performance Measurements are the key metrics which are used to measure
the operational performance of a company. Different companies have different metrics to
measure their own performance but few of the metrics are common across the entire
business environment. Few of these metrics include:

* Customer Satisfaction Index

• Employee Satisfaction Index
• Revenue Generation
• Productivity
• Gross Profit

Keeping in mind the above few mentioned points and points specific to the industry to
which the company belongs, a company generally evaluates itself and is evaluated by
other agencies in terms of operational performance. Generally keeping a high index or
score on all the above mentioned points indicate that the company’s operational
performance is good. These metrics which cumulatively determine the operational
performance of the company are very useful and important as these help the company to
identify the particular area in which the company is lacking and it tries improving on
these aspects. A company with a high operational performance is seen in good light by

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all, customer, employees and investors so all companies are continuously trying to
improve this.

Directors’ Remuneration and Workers’ Performance:

In any organization tasks are performed with the help of resources; material, machine,
money and most importantly men. All other resources except for human beings as
employees are non-living. Employees make use of these resources to generate output
without them other resources will be useless, dormant and will not produce anything.
Therefore, human resource is the greatest asset any organization can have and should be
given the highest priority (Ojeleye & Okoro, 2016). Similar view is supported by
Hameed, Ali & Arslan, (2014), they argued that human resource provides basis for an
organization to achieve sustainable competitive advantage. Since organizations are
operating in a dynamic and competitive business environment, they need to develop
strategies to acquire and retain the competent workforce. He also emphasized, nowadays
human asset considered to be the most important asset of any organization and in order to
get the efficient and effective result from human resource motivation is necessary
Remuneration is traditionally seen as the total income of an individual and may comprise
a range of separate payments determined according to different rules (Naseem & Khan,
2011). Organizations need highly performing individuals in order to meet their goals, to
deliver the products and services they specialize in, and finally to achieve competitive
advantage. Accomplishing tasks and performing at a high level can be a source of
satisfaction, with feelings of mastery and pride. Low performance and not achieving the
goals might be experienced as dissatisfying or even as a personal failure. Moreover,
performance if it is recognized by others within the organization is often rewarded by
financial and other benefits. Performance is a major although not the only prerequisite for
future career development and success in the labor market. Although there might be
exceptions, high performers get promoted more easily within an organization and
generally have better career opportunities than low performers.

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Employee Benefit Scheme and Workers’ Performance:

Employers should always ensure that the organization is perceived as a great place to
work meaning that it becomes an employer of choice, that is one for whom people want
to work. There is a desire to join the organization and once there, to want to stay.
Employees are committed to the organization and engaged in the work they do. To
acquire a national, even a local reputation as a good employer takes time, but it is worth
the effort. Akerele, (2011) stated that the objective of employee benefits and practices of
an organization are to provide an attractive and competitive total remuneration package
which both attracts and retains high quality employees. Turnover of key employees can
have a disproportionate impact on the business and the people organizations wish to
retain are probably the ones most likely to leave. Turnover is an expensive organizational
outcome and companies expend considerable time and resources in attempts to reduce
turnover particularly dysfunctional turnover (Campbell & Chia, 2013). It is caused
primarily by poor supervision, a poor work environment and inadequate compensation.
Excessive employee turnover often engenders far reaching consequences and at the
extreme may jeopardize efforts to attain organizational objectives.

Sajuyigbe, Olaoye & Adeyemi, (2013) indicated that when an organization loses a critical
employee, there is a negative impact on innovation, example consistency in providing
services to guests may be jeopardized and major delays in the delivery of services to
customers may occur. Employee remuneration is not just about pay, that is wages and
salaries. It is also concerned with non-pay benefits or benefits in kind. These non-pay
benefits are usually known as employee benefits and sometimes as fringe benefits or
perks. The former refers to the more important benefits such as pensions and include
those which are widely applied in the organization.

Salaries and Wages and Workers’ Performance:

Different definitions have been advanced on salaries and wages usually to show the
differences that exist between both terms. Hameed, Ali & Arslan, (2014) noted that basic

16
salary is a fixed periodical payment for non-manual employees usually expressed in
annual terms, paid per month with generally no additions for productivity. Wage refers to
payment to manual workers, always calculated on hourly or piece rates. Chhabra, (2011)
also defined salary as a fixed amount paid to the employees at regular intervals for their
performance and productivity whereas wages are the hourly- based payment given to the
labor for the amount of work finished in a day. He further argued that while Salaried
persons are generally said to be doing “white collar office jobs” which implies that an
individual is well educated, skilled and is employed with some firm and holds a good
position in the society, whereas the waged persons are said to be doing “blue collar
labour job” which implies that an individual is engaged in the unskilled or semi-skilled
job and is drawing wages on a daily basis. One purpose of a person as an employee of a
company is to earn income in the form of wages or compensation. Lazear, (2006) argued
for the importance of salaries and wages in Nigeria, he stated that wages should not only
be adequate but they must also show some element of equity, this is particularly true from
the point of the employees. Anything short of a fair and equitable wage or reward can
quickly attract the wrath of employees in an economy such as Nigeria. For many
Nigerian employees, wages or salaries are highly critical issues. They are decisive
because without them in sufficient quantities, life becomes extremely precarious for the
worker and members of his/her family. As direct financial rewards, wages and salaries
are the most emphasized by the employees, thus they sort of take a centre stage in the
scheme of things as far as rewards for work is concerned.

Effects of Monetary Incentives on Workers’ Performance:

One of the major problems facing most employers in both public and private sector is
how to motivate their employees in order to improve performance. Economics is largely
based on the assumption that monetary incentives improve performance. It is generally
believed that effect of monetary incentives is unambiguously positive as large monetary
incentive improves employee performance (Adams, 2013). The issue of employee
performance cannot be over emphasized. The general believe is that employees will not
perform to the best of their ability unless they are motivated to do so. Various researchers

17
have come up with various ways to motivate people at work. However, because human
beings are different from one another in terms of needs, culture, religion etc. so does what
motivate them also varies. Some employees are motivated by financial and other
incentives and some nonfinancial incentives. Naseem & Khan, (2011) states that recent
studies have shown that a combination of financial and non-financial incentives can
motivates employee to perform well on their job. Managers continuously seek for ways to
create a motivating environment where employees will work at their optional levels to
achieve the organizational objectives. Work place motivators include both monetary and
non-monetary incentives. Monetary incentives can be diverse while having a similar
effect on associates. The purpose of monetary incentives is to reward employees for
excellent job performance (Egbunike, 2015). Since human resource is the most valuable
resource of any organization, it must activate, train, develop and above all motivate in
order to achieve individual and organizational goals. Motivation is the willingness to
work. It is the drive and stimulation, which enables individual to perform their work.
Some individual defines motivation as money and most people are motivated by money.
Monetary rewards as a motivator is high in developing countries due to high cost of
living and low quality of lives which they are facing. Most activities of man are related to
making money.

Hameed, Ali &Arslan, (2014) asserts that money remains the most significant
motivational strategy. Hendra and Rezki, (2015) describes money as the most important
factor in motivating the industrial workers to achieve greater productivity. He advocates
the establishment of incentive wage systems as a means of stimulating workers to higher
performance, commitment, and eventually satisfaction. Money possesses significant
motivating power in as much as it symbolizes intangible goals like security, power,
prestige, and a feeling of accomplishment and success. Christopher, (2015) demonstrates
the motivational power of money through the process of job choice. He explains that
money has the power to attract, retain, and motivate individuals towards higher
performance. Anarado, (2015) states that many managers use money to reward or punish
workers. This is done through the process of rewarding employees for higher productivity
by instilling fear of loss of job (e.g., premature retirement due to poor performance). The

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desire to be promoted and earn enhanced pay may also motivate employees. Akerele,
(2011) notes that devising effective methods for motivating employees is one of the
major factors in improving the performance of an organization. Organizations are more
successful if their employees are constantly seeking new ways to improve their work, and
getting workers to reach their full potential can be achieved by providing them with
motivation. For this reason, the development of policies for remunerating employees
appropriately so as to improve their motivation is considered imperative for
organizational growth (Abdul, Zubair and Arslan, 2014).

Clearly, it would be difficult to overestimate the significance of monetary incentives in

contributing to employee satisfaction. They have always been indispensable in
stimulating employees’ performance. Financial incentives are used to attract competent
people to join an organization in the first place, to persuade them to remain there
subsequently, and finally to give them an incentive to achieve a high level of
performance (Abah, 2013). However financial “stimulation” is not the only important
factor; it is just one element of the system for motivating personnel. There are, in fact,
many different options available for increasing the motivation of individuals to carry out
their responsibilities. It is clear that techniques for improving motivation are not
necessarily permanent in terms of their effectiveness. Moreover, a single factor elicits
different reactions in different people ˗ what may increase one employee’s productivity
may actually undermine the motivation of another. This confirms the importance, and
indeed the necessity of studying the needs of the individuals, including their attitudes,
desires and priorities, in order to develop an effective system of employee remuneration.

The managers use the following methods for controlling the behaviour of the employees:

Positive Reinforcement- This implies giving a positive response when an

individual shows positive and required behaviour. For example - Immediately
praising an employee for coming early for job. This will increase probability
of outstanding behaviour occurring again. Reward is a positive reinforce, but
not necessarily. If and only if the employees’ behaviour improves, reward can

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 said to be a positive reinforcement. Positive reinforcement stimulates
occurrence of a behaviour. It must be noted that more spontaneous is the
giving of reward, the greater reinforcement value it has.

Negative Reinforcement- This implies rewarding an employee by removing

negative / undesirable consequences. Both positive and negative reinforcement
can be used for increasing desirable/required behaviour.

Punishment- It implies removing positive consequences so as to lower the

probability of repeating undesirable behaviour in future. In other words,
punishment means applying undesirable consequence for showing undesirable
behaviour. For instance - Suspending an employee for breaking the
organizational rules. Punishment can be equalized by positive reinforcement
from alternative source.

Extinction- It implies absence of reinforcements. In other words, extinction

implies lowering the probability of undesired behaviour by removing reward
for that kind of behaviour. For instance - if an employee no longer receives
praise and admiration for his good work, he may feel that his behaviour is
generating no fruitful consequence. Extinction may unintentionally lower
desirable behaviour.

Reinforcement theory explains in detail how an individual learns behaviour. Managers

who are making attempt to motivate the employees must ensure that they do not reward
all employees simultaneously. They must tell the employees what they are not doing
correct. They must tell the employees how they can achieve positive reinforcement.

ADVANTAGES OF MONETARY INCENTIVES:

Monetary incentives offer a range of advantages that significantly impact employee

motivation and overall organizational performance. In the context of this study, we will

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delve into ten distinct advantages of monetary incentives. One of the primary advantages
of monetary incentives lies in their simplicity and straightforwardness. Implementing
monetary incentive schemes provides a clear and uncomplicated approach to reward
employees who consistently exhibit high levels of productivity (Read, 2005). Such
schemes are not only effective in acknowledging hardworking employees but also serve
as a direct means of influencing desired employee behaviours. Unlike certain incentive
methods that demand personalized approaches, monetary incentives require no individual
customization. The uniform nature of compensation ensures that each employee is
adequately rewarded for their contributions, making it a convenient avenue for
organizations to express appreciation and incentivize performance (Atmaja, Zaroni, &
Yusuf, 2023; Hackethal, Kirchler, Laudenbach, Razen, & Weber, 2023).

Nearly every employee aspires to be acknowledged and rewarded for their exceptional
performance. Employing monetary incentives elevates their productivity levels and
provides an effortless mechanism to offer extra compensation. This, in turn, enhances
employee morale, encouraging them to maintain high levels of dedication and effort (de
Walque et al., 2022). Monetary incentive programs cultivate an environment where
employees feel their efforts are recognized and appropriately compensated. This dynamic
fosters a sense of assurance among employees that their achievements will be rewarded,
motivating them to devise innovative approaches to accomplish targets and enhance
overall performance. Consequently, the organization benefits from a more positive and
motivated workforce (Pancasila, Haryono, & Sulistyo, 2020).

Monetary incentives gratify employees and significantly impact their productivity levels
(Mdhlalose, 2022). Given that financial incentives drive many employees, the prospect of
earning such rewards propels them to intensify their efforts, thereby augmenting their
overall productivity. Monetary incentives serve as a just and impartial tool for evaluating
employee performance. Those employees who consistently deliver quality work within
stipulated timeframes are often the ones to achieve the organization's objectives. Utilizing
monetary incentives as rewards provides a fair assessment of performance, enabling the
recognition of diligent employees based on their accomplishments. Monetary incentives

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offer employees an element of control over their earnings (B. J. Ali & Anwar, 2021).
This autonomy empowers employees with the belief that their hard work can directly
translate into increased income. The prospect of enhanced financial reward becomes a
driving force that propels employees to amplify their work efforts, leading to improved
outcomes. They are an excellent means to reward high-performing employees. Often,
organizations have multiple employees who consistently contribute at a commendable
level. In such instances, monetary rewards can be extended as a direct acknowledgement
of their exceptional efforts, thereby motivating them to sustain their high level of
performance. Promotions are not always frequent, creating a dilemma for management
when dealing with employees who consistently excel before the scheduled promotion
cycle. In these scenarios, monetary incentives present an immediate and practical
solution. As these incentives deliver immediate gratification, they can be bestowed upon
employees who warrant recognition without necessitating a promotion (Asaari, Desa, &
Subramaniam, 2019).

Monetary incentive programs prove to be advantageous not only for rewarding existing
employees but also for attracting new talent. Highlighting an organization's incentive
plans during recruitment becomes an effective strategy to entice skilled candidates. The
prospect of earning monetary rewards can serve as a persuasive factor for potential
recruits, fostering a more competitive recruitment process. Incorporating these
advantages into the study's framework illuminates the multifaceted impact of monetary
incentives on employee engagement, motivation, and organizational success
(Acheampong, 2021).

The following are some benefits of money as an incentive:

1. Boosts morale – employees like to be recognized and rewarded for improved

performances. Monetary rewards not only boost morale for high performance but
also improve productivity. This is because employees will always work hard to
surpass their employers’ expectations so as to earn an incentive.

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 2. Easy and direct – monetary incentive is a straightforward way of rewarding
deserving employees. It is easily noticed and adoptable.

3. Improves the working environment – it makes employees develop a feeling that

their work is noticed and that they will be paid for further accomplishments and
achievements. This improves the working environment as employees build a
positive approach to work and become more innovative in adopting different
ways of operation

4. Element of life control – some employees consider monetary incentive as an

extra source of income or a side hustle. This offers an element of control to their
income since they know they can increase their overall earnings and still get
recognized for it.

5. No personalization – Non- monetary incentives need to be tailored to suit

individual preferences. This is not the case for monetary incentives as almost
every need has money value attached to it and therefore will provide direct
satisfaction to employees

DISADVANTAGES OF MONETARY INCENTIVES:

Despite all the above positives of using monetary incentives, there are negative aspects
attached to it as explained below:

 Creates Inequality – Fiscal rewards are usually given to best performing

employees. Those who are not rewarded orless rewarded may feel that they are
treated unequally and that may disrupt togetherness and team work.

 It May Demotivate Instead – It may happen that an organization may not be able
to give monetary incentives to all deserving employees. If such a situation arises,
employees who are not rewarded or who are given a different incentive may feel

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 demotivated. It is also possible that employees who had exceeded their targets but
not rewarded due to market factors are most likely to work less hard next time.

 AnEntitlement – When employees are used to monetary rewards, most of them

will take it as an entitlement rather than a motivational reward. Consequently,
others may only be interested in fiscal based incentives rather than any other form
of reward that the organization is offering.

 Monetary Incentive Plan – Coming up with a monetary incentive plan or

structure that is fair to all departments and employees and in all aspects takes a lot
of time. Theseschemes require a lot of resources and may not be easy to execute
to the satisfaction of all stakeholders.

 Effectiveness – In some situations, monetary incentives may not be very effective

or may not work positively for the organization. A good example is when an
employee works from home or is working late hours but not from office; keeping
the track record of productivity of such an employee may not be easy and
therefore creating a monetary incentive plan for these kind of employees becomes
difficult as well.

STRUCTURING MONETARY INCENTIVE:

The strategic dimension of this study underscores the pivotal role of monetary incentives
within organizational dynamics. The foremost objective behind any monetary incentive
facilitated by management is to drive specific outcomes that culminate in enhanced
profitability and heightened productivity for the organization. The configuration of the
monetary incentive scheme holds sway over its effectiveness on employees and its
ensuing advantages for management. Designing the scheme demands a strategic approach
that resonates with employees, engendering a sense of anticipation and elevating
productivity, thereby aligning with the desired organizational objectives. Examples
elucidate the versatility of such structuring.

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Industry standards can serve as a foundational reference when structuring the monetary
incentive scheme. For instance, in sales programs, incentives often manifest as
commissions or bonuses contingent on sales achievements. These may take the form of
per-sale rewards or cumulative aggregates over a specified period. A team-oriented
approach might involve setting collective goals and rewarding the team upon successful
attainment. Consider an illustration where the accounting team sustains an error rate
below two per cent for a month, warranting a reward of N2000 for each team member.
Such an approach nurtures teamwork, fostering an environment where mutual support is
valued—a prime example of a team-based incentive structure.

Furthermore, the scheme could encompass all employees, as exemplified by year-end

bonuses or profit-sharing mechanisms tied to performance evaluations. Over time,
employees come to rely on these bonuses, incorporating them into their holiday budgets.
This integration underscores the potent influence of such incentives, bolstering employee
commitment to their duties. A meticulously structured payment scheme harmonizes
management's objectives and monetary incentives' purpose, facilitating their seamless
alignment. Organizations can harness their transformative potential by strategically
embedding such incentives to propel productivity, nurture commitment, and accomplish
defined strategic outcomes (Cheese, Thomas, & Craig, 2007).

NON-MONETARY INCENTIVES:

Although our study is focused on monetary incentives, other incentives are given to
employees which are not monetized. These incentives are known as non-monetary
incentives. Non-monetary incentives are also effective in employee motivation and
performance (Abdullah & Wan, 2013; Jeffrey, 2004). We will only list the various types
available but will not go into details as it is not the focus of our study. The major types of
non-monetary incentives are medical incentive schemes ( popularly known as HMO),
company transport schemes, staff quarters, work from home, vacations, free meal
vouchers, children scholarship schemes, loan assistance, career development schemes,
recognition on birthdays, outstanding employee plaques, life insurances schemes, and

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free mobile phones.

Employee Motivation:

While motivation theories have not been immune to criticism, it is noteworthy that
managers frequently build their pay and reward systems upon these theoretical
foundations. Moreover, these theories underscore the acknowledgement of individual
differences, thereby linking rewards to performance, contributing to a more personalized
approach to motivation strategies.

Repenning (2002) exploration reveals a significant nexus between innovation failures and
motivational challenges within organizations. He highlights three pivotal feedback
processes—reinforcement, diffusion, and normative pressure—that wield decisive roles
in shaping innovation dynamics. Although these processes' constituents and
interconnections are well-documented in the literature, their synthesis provides an
innovative, streamlined perspective on the implementation of innovation.

As per Moon (2000), managerial reform has brought forth key concerns centering on
motivation, organizational efficacy, and performance-driven management. This
encompasses areas such as pay-for-performance, performance measurement,
participatory decision-making processes, and adaptable organizational cultures. The
concept of pay-for-performance, for instance, has been embraced by numerous public
agencies as an avenue to invigorate motivation and elevate organizational performance
within the public sector, particularly under the Performance Management and
Recognition System (PMRS). A core premise underpinning pay-for-performance is its
direct correlation between performance and financial rewards, with the intent of
bolstering public employees' organizational commitment, fostering enhanced
effectiveness and job satisfaction.

Scholars across diverse disciplines exhibit profound interest in human motivation and
organizational commitment. Motivation constitutes a focal point of research attention

26
within public administration studies. Triggered by concerns about dwindling morale and
motivation among public employees, numerous scholars have focused on motivational
quandaries, job satisfaction, and organizational commitment within public institutions.
Despite existing studies exploring the interplay between motivation and organizational
commitment, a plethora of conceptual and methodological uncertainties persist. For
instance, the term "organizational commitment" lacks a singular, precisely delineated
definition. Angle and Perry (1981) consolidate diverse interpretations of commitment by
encapsulating it within a comprehensive framework based on prior studies. The
multifaceted nature of the concept is evident, encapsulating a willingness to invest energy
and loyalty in social systems, a sense of bound identity, and an emotional attachment to
an organization beyond utilitarian considerations. Variations of commitment, including
organizational identification and involvement, have also emerged. Nonetheless, despite
the nuanced interpretations, organizational commitment remains more apt for gauging
human behaviour within organizations compared to related metrics like job satisfaction or
involvement, as Crewson (1997) affirms.

Wittmer (1991) study underscores distinctions in values and reward preferences between
public and private sector managers. Monetary incentives wield greater sway over
motivation among private sector managers, while factors such as promotion, prestige, co-
worker camaraderie, and opportunities for public service exhibit no significant sectoral
variance. Falcone (1991) delves into job satisfaction disparities among public, private,
and hybrid organizations, positing that public entities often exhibit lower job satisfaction
levels. Nagin, Rebitzer, Sanders, and Taylor (2002) insights delve into economic
incentive models, which revolve around the notion that employees, as "rational cheaters,"
gauge their actions' consequences and shirk if perceived benefits outweigh the costs.
Organizations counter this behaviour through monitoring and incentive pay strategies,
rendering shirking unprofitable. This perspective, prevalent in economics, is met with
skepticism by human resource practitioners and other social science disciplines engaged
in employment relationship studies. In addressing shirking tendencies, economists
propose incentive payment systems. Benabou and Tirole (2003) advocate that the rational
cheater model's validity is empirically verifiable, albeit challenging. If rational cheating

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holds, reduced monitoring should yield heightened shirking, particularly among
employees for whom the employment relationship's value is lower. However, empirical
assessment of this model encounters obstacles, including rational cheaters' penchant for
engaging in hard-to-detect shirking behaviour and disentangling monitoring effects from
other unobserved factors within the firm's human resource system.

In conclusion, the synthesis of these theories and insights highlights the intricate tapestry
of motivation within organizational contexts. The interplay between theory and practical
application underscores the complex nature of employee motivation and its vital role in
shaping organizational outcomes.

Impact of Commission on Employees Performance:

Appropriately planned deals commissions are generally used to spur deals

representatives. The mix of straight compensation and commissions ought to be
painstakingly adjusted to accomplish ideal deals volume, productivity, and consumer
loyalty. The commission plan is diverse for each job and for each office. Commission
past deals to clients is the commission paid to deals faculty which are lined up with the
association's system and centre skills. Thus, other than deals volume, the commission is
dictated by clients' fulfilment and outreach group results, for example, meeting income or
benefit objectives. In numerous organizations, the check of deals representatives is a
blend of a base compensation furthermore, commissions. Deals commissions include
compensating deals representatives with a level of deals volume or benefits produced.
Deals commissions ought to be planned cautiously to be predictable with organization
destinations.

CONCLUSION:

Every organization's success hinges on its employees being happy in their jobs. Given the
importance of work satisfaction in determining a company's performance, every business
should identify and apply the variables that contribute to it. Non-Monetary and monetary

28
incentives are two aspects that have a significant impact on employee job satisfaction.
Both contribute to a worker's understanding of his or her place within the company.
These incentives will have no impact if they are misused by either the employees or the
company. Therefore, the design of an incentive package should be completely objective
and stable. The amount of satisfaction employees receive from non-monetary incentives
is higher since these create inner motivation. Both sorts of incentives are crucial
foundations for the level of job satisfaction at the workplace. The way an employee treats
his or her coworkers and the company is a direct reflection of how he or she is being
treated at work. Disappointment sets in and performance suffers if they feel excluded and
discriminated against. As long as they get paid, these workers are not interested in putting
in the extra effort that could help the company become more productive. To them, the
labor is a hassle. Because of this, non-monetary incentives are essential. They will only
perform at their best if they see themselves as an integral component of the group. When
employees are given non-monetary incentives, they are more likely to feel that they are
part of the team. The majority of their time is spent working with a positive attitude and
having a good time.

The investigation inferred that chiefs compensation have huge impact on the performance
while pay rates and wages influence the presentation of associations and representative
advantage plot have critical impact on the presentation of associations.

Money related motivating force is viewed as quite possibly the most significant
methodologies in the human asset the executives work as it impacts the efficiency and
development of an association. Henceforth, present day corporate associations have
considered it basic to fuse powerful financial motivation plot for labourers as a feature of
their corporate objectives and destinations. This is accepted to shape a work power
zeroed in on vital execution objectives and equipped for accomplishing them. This
research work is likewise about money related impetuses and labourers execution. The
absolute motivating force conspire depends on a reconsidering of representative impetus
and speculation frameworks into a worker driven framework. Money related Incentive
plan have been bringing up issues about the construction of existing and frequently

29
inflexible compensation frameworks for quite a while. Thusly, this current investigation's
concept of money related motivating force goes past pay alone to propose an impetus
framework - a gathering of factors that together envelop the assortments of sorts of
financial motivations that the present representatives need from work. Pay is among
them, of course (counting both base compensation, or pay, and one-time pay gotten in
type of additional time or rewards). Yet, notwithstanding money related impetus,
contemporary representatives need and are progressively requesting impetus variety and
motivating force decision. In the present different, bosses are finding that representatives
need a scope of various things from the work place. Workers will even trade some degree
of base compensation to get a portion of different things they need.

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