MIDLANDS STATE UNIVERSITY

FACULTY OF SOCIAL SCIENCES

DEPARTMENT OF HUMAN RESOURCE MANAGEMENT

AN INVESTIGATION INTO THE EFFECTIVENESS OF FINANCIAL REWARDS

IN IMPROVING ORGANISATIONAL PERFORMANCE. A CASE OF ALTRAN
SECURITY COMPANY

BY

MASVISVI BELINDAH

R223201C

SUBMITTED IN PARTIAL FULFILMENT OF A BSC HUMAN RESOURCE

MANAGEMENT HONOURS DEGREE

JULY 2024
 CHAPTER 1: INTRODUCTION AND BACKGROUND OF STUDY

1.1 Introduction

The effectiveness of financial rewards as a strategy to improve organizational performance

has been a topic of considerable interest and research in management studies. Organizations,
particularly in competitive industries, continuously seek ways to motivate their employees to
enhance performance and productivity. Financial rewards, such as salaries, bonuses,
commissions, and other monetary incentives, are among the most direct and impactful tools
available to employers. This study aims to investigate how financial rewards influence
employee performance at Altran Security Company, a major player in Zimbabwe's security
sector. Understanding the dynamics of financial rewards can provide critical insights into
effective human resource management practices and contribute to the overall success of
organizations in similar contexts.

1.2 Background of the Study

1.2.1 Global Perspective

Financial rewards have long been recognized as a key factor in organizational management
and employee motivation. Historically, the concept of financial incentives as a driver of
performance can be traced back to classical economic theories. Adam Smith, in his seminal
work "The Wealth of Nations" (1776), emphasized that individuals are motivated by self-
interest and the pursuit of financial gain. This early notion laid the groundwork for later
theories that underscore the importance of monetary rewards in driving employee behavior.

Frederick Taylor's Scientific Management theory in the early 20th century further cemented
the role of financial rewards in enhancing productivity. Taylor (1911) advocated for the use
of performance-based pay to motivate workers to achieve higher levels of efficiency. His
approach involved breaking down tasks into smaller, more manageable parts and
compensating workers based on their output, thus directly linking financial rewards to
performance.
Modern organizational behavior theories have built on these foundational ideas. Vroom’s
expectancy theory (1964) posits that employees are motivated to perform well when they
believe their efforts will lead to desirable outcomes, including financial rewards. This theory
highlights the relationship between effort, performance, and reward, suggesting that clear and
attainable financial incentives can drive employee motivation and performance.

Herzberg’s Two-Factor Theory (1968) identifies financial rewards as hygiene factors, which
can prevent dissatisfaction but do not necessarily serve as primary motivators. According to
Herzberg, while adequate compensation is essential to prevent job dissatisfaction, other
factors such as job satisfaction, recognition, and opportunities for growth play a more
significant role in motivating employees.

Globally, the application of financial rewards varies across different cultural and economic
contexts. In Western countries, performance-related pay and bonuses are widely used to
motivate employees. For example, in the United States and Europe, financial incentives such
as bonuses, profit-sharing, and stock options are common practices aimed at aligning
employees' interests with organizational goals (Gerhart & Fang, 2015). These incentives are
designed to boost performance by providing tangible rewards for achieving specific targets.

In contrast, many Asian countries prefer collective rewards and seniority-based pay systems,
reflecting a more collectivist cultural orientation (Hofstede, 1980; Trompenaars & Hampden-
Turner, 1997). In Japan, for instance, the emphasis on group harmony and long-term
employment relationships often leads to a focus on group bonuses and seniority-based pay,
rather than individual performance incentives.

Recent research has underscored the complexity of financial rewards and their impact on
performance. A meta-analysis by Cerasoli et al. (2014) found that financial incentives can
boost performance, but their effectiveness is influenced by factors such as task complexity
and the intrinsic motivation of employees. For instance, financial incentives may be highly
effective for routine tasks but less so for complex tasks that require creativity and problem-
solving skills.

1.2.2 Regional Perspective

In the African context, financial rewards play a critical role in employee motivation and
organizational performance. The economic and cultural diversity across the continent
influences the design and implementation of financial reward systems. In Sub-Saharan
Africa, for example, there has been a growing interest in performance-based pay systems as
economies modernize and the private sector expands. Countries such as Kenya, Ghana, and
Nigeria have witnessed significant economic transformations, necessitating more
sophisticated reward systems to attract and retain talent (Ncube, 2014).

Research in African countries suggests that financial rewards are often perceived as primary
motivators due to economic conditions and high levels of income disparity. In many African
countries, job security and financial stability are paramount concerns for employees, making
financial incentives particularly effective. A study by Nyaga (2015) on Kenyan organizations
found that financial incentives significantly impacted employee motivation and performance.
The study revealed that employees responded positively to performance bonuses, salary
increments, and other monetary benefits, leading to improved productivity and job
satisfaction.

In South Africa, the introduction of performance-based pay systems in the public sector
aimed to improve service delivery and accountability. The South African government has
implemented various financial reward schemes to enhance public sector efficiency and
motivate employees. However, the success of these initiatives has been mixed, highlighting
the challenges of aligning financial incentives with public sector goals and employee
expectations (Rasool & Botha, 2011). Issues such as transparency, fairness, and the alignment
of rewards with performance metrics have been identified as critical factors influencing the
effectiveness of financial reward systems.

In Zimbabwe, financial rewards are also a crucial component of organizational management.

The country’s economic challenges, including hyperinflation and high unemployment rates,
have made financial stability a key concern for employees. Organizations in Zimbabwe have
had to navigate these economic conditions while designing reward systems that motivate and
retain employees. A study by Chikowore et al. (2016) found that financial incentives such as
performance bonuses and salary increments were significant motivators for employees in
Zimbabwean organizations. The study highlighted the need for fair and transparent reward
systems to ensure employee satisfaction and motivation.

1.2.3 National Perspective

Focusing on Zimbabwe, financial rewards are a critical aspect of organizational management.

Zimbabwe’s economic environment, characterized by high inflation, currency fluctuations,
and economic instability, necessitates effective reward systems to attract and retain talent.
The Zimbabwean workforce is diverse, with varying expectations and attitudes towards
financial rewards influenced by cultural, economic, and social factors (Maphosa, 2015).

Studies on Zimbabwean organizations have shown that financial rewards can significantly
enhance employee performance and organizational outcomes. For instance, a study by
Mutsvunguma and Gwandure (2011) on the banking sector in Zimbabwe found that
performance-related pay and bonuses were effective in motivating employees and improving
productivity. The study highlighted that employees in the banking sector were highly
motivated by financial incentives, leading to increased job performance and organizational
commitment. However, the implementation of these reward systems often faces challenges
such as transparency, fairness, and consistency. Employees have raised concerns about the
fairness of performance appraisals and the distribution of rewards, which can undermine the
effectiveness of financial incentives.

The mining industry in Zimbabwe also provides insights into the effectiveness of financial
rewards. Given the high stakes and competitive nature of this industry, companies like
Zimplats and Mimosa have developed comprehensive financial reward packages to
incentivize employees. These packages often include not just base salary and bonuses but
also long-term incentives such as stock options and profit-sharing plans (Nhuta &
Kapfudzaruwa, 2018). The competitive compensation packages are designed to attract and
retain top talent in an industry characterized by high volatility and significant risks.

In the manufacturing sector, financial rewards have been used to drive productivity and
innovation. Companies such as Delta Corporation have implemented performance-based pay
systems and other financial incentives to motivate employees and enhance performance.
These initiatives have led to improved productivity, reduced turnover rates, and increased
employee satisfaction (Nyanga, 2016).

1.2.4 Industry Perspective

In the security industry, financial rewards are particularly important due to the demanding
nature of the job and the risks involved. Security companies globally and in Zimbabwe face
the challenge of maintaining high levels of performance and motivation among employees
who work in high-stress environments. The nature of the security job, which often involves
long hours, physical risk, and high stress, makes financial rewards a crucial component of
employee motivation and retention strategies.

The effectiveness of financial rewards in this industry is influenced by several factors,

including the nature of the job, employee expectations, and the competitive landscape.
Studies have shown that security personnel are highly motivated by financial rewards, which
can enhance job satisfaction and reduce turnover rates. For instance, a study by Davis and
Kromidha (2013) on the security industry in the United States found that financial incentives
such as hazard pay, bonuses, and overtime pay were effective in motivating security
personnel. The study highlighted that financial rewards were critical in retaining employees
in a high-risk and high-turnover industry.

In Zimbabwe, the security industry has experienced significant growth due to increasing
demand for security services in response to rising crime rates and security challenges.
Companies such as Altran Security Company have implemented comprehensive financial
reward systems to attract and retain skilled security personnel. These reward systems
typically include base salary, performance-related bonuses, overtime pay, and other financial
incentives such as housing and transportation allowances.

However, the design of these reward systems must consider the unique challenges of the
industry. Security personnel often face high-stress situations and physical risks, making job
satisfaction and motivation critical for performance. Non-financial rewards such as
recognition, career advancement opportunities, and training and development programs are
also important in enhancing employee motivation and performance. The balance between
financial and non-financial rewards is crucial in designing an effective reward system in the
security industry.

1.2.5 Case Study: Altran Security Company in Zimbabwe

Altran Security Company, a leading player in the Zimbabwean security industry, provides a
pertinent case study for investigating the effectiveness of financial rewards in improving
organizational performance. Established in 2005, Altran Security has grown to become one of
the most respected security firms in the country, offering a wide range of services including
personal security, corporate security, and event security. The company employs over 500
security personnel. Given the critical role of employee performance in the security sector, it is
imperative to identify strategies that can enhance motivation and productivity. This study
aims to investigate the effectiveness of financial rewards at Altran Security Company,
identifying the specific challenges and opportunities for improvement. By exploring
employees' perceptions and experiences, the study seeks to provide actionable insights that
can inform the design of a more effective reward system. It is therefore against this
background that the researcher proposes to conduct this study.

1.3 Problem Statement

Employee performance at Altran Security Company has been reportedly suboptimal,

contributing to reduced client satisfaction and overall organizational inefficiency. Preliminary
observations and internal reports indicate that the current financial reward system may not be
effectively motivating employees, leading to issues such as high turnover rates, low morale,
and poor job performance. This problem is significant because it affects not only the
company's profitability but also its reputation and ability to retain clients. The study seeks to
identify the specific weaknesses in the financial reward system and to propose actionable
recommendations for improvement. By addressing these issues, Altran Security Company
can enhance its operational effectiveness and competitive advantage in the security sector.

1.4 Research Objectives

1.4.1 General Objective

To evaluate the impact of financial rewards on the overall organisational performance of

Altran Security Company in Zimbabwe.

1.4.2 Specific Objectives

1. To examine the relationship between financial rewards and employee motivation at

Altran Security Company.
2. To assess the influence of financial rewards on employee retention rates at Altran
Security Company.
3. To analyse the effectiveness of different types of financial rewards (e.g., bonuses,
salary increments, overtime pay) in enhancing job performance among Altran
Security Company employees.
 4. To explore employees' perceptions of the fairness and transparency of the financial
reward system at Altran Security Company.

1.5 Research Questions

1.5.1 Main Research Question

How do financial rewards impact the overall organizational performance of Altran Security
Company in Zimbabwe?

1.5.2 Specific Research Questions

1. What is the relationship between financial rewards and employee motivation at Altran
Security Company?
2. How do financial rewards influence employee retention rates at Altran Security
Company?
3. Which types of financial rewards are most effective in enhancing job performance
among employees at Altran Security Company?
4. What are employees' perceptions of the fairness and transparency of the financial
reward system at Altran Security Company?

1.6 Justification of the Study

The significance of this study lies in its potential to provide practical solutions to improve
employee performance through effective financial rewards. For Altran Security Company, the
findings can lead to the development of better reward management practices, which are
crucial for reducing turnover rates, increasing job satisfaction, and enhancing overall
organizational performance. Additionally, this research will contribute to the academic field
by filling the existing gap in literature regarding the impact of financial rewards in the
security sector in Zimbabwe. The insights gained can also be beneficial to other security
companies and industries with similar challenges, offering a blueprint for improving
employee motivation and performance through financial incentives.

1.7 Limitations

This study may face several limitations, including limited access to comprehensive financial
and performance data due to confidentiality policies at Altran Security Company.
Additionally, financial constraints may limit the scope of data collection, particularly in
conducting extensive fieldwork or interviews. The reliance on qualitative data might also
introduce subjectivity in responses, affecting the generalizability of the findings. However,
these limitations will be mitigated through careful research design, use of triangulation
methods, and maintaining ethical standards in data collection and analysis.

1.8 Delimitations

The scope of this study is confined to Altran Security Company, located in Harare,
Zimbabwe. The focus will be on both managerial and non-managerial employees to get a
comprehensive understanding of the financial reward system's impact. The research will
cover the period from January 2023 to December 2024, providing a contemporary view of the
issues and potential improvements. By focusing on a single company within a specific
timeframe, the study aims to provide detailed and context-specific insights that can be
directly applicable to the organization.

1.9 Organisation of Chapters

 Chapter 1: Introduction, providing an overview, background, problem statement,

research objectives, questions, justification, limitations, and delimitations.

 Chapter 2: Literature Review, synthesizing existing research, identifying gaps, and

establishing theoretical and conceptual frameworks.

 Chapter 3: Research Methodology, detailing the research design, data collection and
analysis methods, and ethical considerations.

 Chapter 4: Data Presentation and Analysis, presenting the collected data and
analysing the results.

 Chapter 5: Conclusions and Recommendations, summarizing the findings and

providing actionable recommendations.

1.10 Chapter Summary

This chapter has introduced the study's focus, outlining the importance of financial rewards in
enhancing employee performance, and providing a foundation for the research objectives and
questions. The next chapter will delve into a comprehensive review of existing literature,
establishing the theoretical and empirical context for the study.

while maintaining a consistent structure across interviews (Bryman, 2016). The interview
guide will include questions related to the types of financial rewards, their perceived
effectiveness, and the challenges in managing employee performance. Additionally,
secondary data from company reports, performance records, and industry publications will be
used to complement and validate the primary data.

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