CHAPTER 2

LITERATURE REVIEW

This chapter is to critically examine relevant literature that would assist in explaining the research
problem and furthermore recognize the efforts of scholars who had previously contributed immensely
to similar research. The chapter intends to deepen the understanding of the study and close the
perceived gaps

Precisely, the chapter will be considered in three subheading:

Conceptual review

Theoretical review

Empirical review

Conceptual framework

According to McCormick and Tifflin (2009), motivation can be either intrinsic or extrinsic. Intrinsic
motivation stems from motivations that are inherent in the job itself and which the individual enjoys as
a result of successfully completing the task or attaining his goals. While extrinsic motivations are those
that are external to the task of the job, such as pay, work condition, fringe benefits, security, promotion,
contract of service, the work environment and conditions of work. Such tangible motivations are often
determined at the organizational level, and may be largely outside the control of individual managers.

Intrinsic motivation on the other hand are those rewards that can be termed “psychological motivation”
and examples are opportunity to use one’s ability, a sense of challenge and environment, receiving
appreciation, positive recognition, and being treated in a caring and considerate manner. An intrinsically
motivated individual, according to Ajila (2007), will be committed to his work to the extent to which the
job inherently contains tasks that are rewarding to him or her. And an extrinsically motivated person will
be committed to the extent that he can gain or receive external rewards for his or her job. He further
suggested that for an individual to be motivated in a work situation there must be a need, which the
individual would have to perceive a possibility of satisfying through some reward. If the reward is
intrinsic to the job, such desire or motivation is intrinsic. But, if the reward is described as external to the
job, the motivation is described as extrinsic.

Good remuneration has been found over the years to be one of the policies the organization can adopt
to increase their workers performance and thereby increase the organizations productivity Dawson
(2004). Also, with the present global economic trend, most employers of labour have realized the fact
that for their organizations to compete favorably, the performance of their employees goes a long way
in determining the success of the organization. On the other hand, performance of employees in any
organization is vital not only for the growth of the organization but also for the growth of individual
employee.

An organization must know who are its outstanding workers, those who need additional training and
those not contributing to the efficiency and welfare of the company or organization. Also, performance
on the job can be assessed at all levels of employment such as: personnel decision relating to
promotion, job rotation, job enrichments etc. And, in some ways, such assessment is based on objective
and systematic criteria, which includes factors relevant to the person’s ability to perform on the job.
Hence, the overall purpose of performance evaluation is to provide an accurate measure of how well a
person is performing the task or job assigned to him or her. And based on this information, decision will
be made affecting the future of the individual employee.Therefore, a careful evaluation of an
employee’s performance can uncover weak-nesses or deficiencies in a specific job skill, knowledge, or
areas where motivation is lacking. Once identified, these deficiencies may be remedied through
additional training or the provision of the needed rewards.

The view that specific rewards will encourage increases in production has not always been
substantiated, even though management has often attempted to spur production by such offerings and
has often attributed production increase to them. Throughout the years production has increased for
many reasons in addition to the particular motivation and has erroneously over simplified a highly
complex phenomenon. Since then psychologists have been is especially concerned with understanding
an individual through his motives and acquired a body of knowledge in this field that often differs from
the layman’s knowledge. It is necessary to review briefly, from the psychologist’s point of view what is
known about motivation at the present time Gbadamosi (2000). In Nigeria, interest in effective use of
rewards to influence workers performance to motivate them began in the 1970s. So many people have
carried out researches in this area, some of which are (Oloko, 1997) and (Ajila 2007)

The performance of workers has become important due to the increasing concern of human resources
and personnel experts about the level of output obtained from workers due to poor remuneration. This
attitude is also a social concern and is very important to identify problems that are obtained in industrial
settings due to non-challant attitudes of managers to manage their workers by rewarding them well to
maximize their productivity.

Though several techniques of measuring job performance have been developed, in general, the specific
technique chosen varies with the type of work Root (2005). All these issues call for research efforts, so
as to bring to focus how an appropriate reward package can jeer up or influence workers to develop
positive attitude towards their job and thereby increase their productivity.

Possibly the best means of understanding workers motivation is to consider the social meaning of work.
In this respect, short-term goals and long-term goals of employees and employers may affect production
variously. Accordingly, giving attention to the manner in which rewards given to workers are perceive is
preferable to assuming that reward means the same thing to all.

EMPLOYEE’S PERFORMANCE:
Employee Performance Management is a process for establishing a shared workforce understanding
about what is to be achieved at an organisation level. It is about aligning the organizational objectives
with the employees’ agreed measures, skills, competency requirements, development plans and the
delivery of results. The emphasis is on improvement, learning and development in order to achieve the
overall business strategy and to create a high performance workforce. It is a measure of effectiveness
and efficiency of an employee in justifying the pay he receives at the end of every month as agreed in
the conditions of service.

Performance appraisal properly describes a process of judging past performance and not measuring that
performance against clear and agreed objectives. Performance management shifts the focus away from
just an annual event to an ongoing process. Figure 2.1 is a process diagram that provides a graphical
view of the major difference between the two processes.

Bernard (2002) looks at workers in an organized endeavour, putting in time and efforts for personal,
economic, and non-economic satisfaction.

MEASUREMENT OF EMPLOYEES’ PERFORMANCE

Most organisations have some type of employee appraisal system, and many are experiencing the
shortcomings of manual staff evaluation systems. When discussing workforce performance the most
commonly asked question is “How does Performance management differ from performance appraisals
or staff reviews”? Performance Management is used to ensure that employees’ activities and outcomes
are congruent with the organisation’sobjectives and entails specifying those activities and outcomes that
will result in the firm successfully implementing the strategy (Noe et al. 2000, p.55). An effective
Performance Management process establishes the groundwork for excellence by:

 Linking individual employee objectives with the organisation’s mission and strategic plans. The
employee has a clear concept on how they contribute to the achievement the overall business objective,

 Focusing on setting clear performance objectives and expectations through the use of results, actions
and behaviours,

 Defining clear development plans as part of the process, and

 Conducting regular discussions throughout the performance cycle which include such things as
coaching, mentoring, feedback and

assessment

Some of the areas where performance can be measured are in the areas of:

 Turnaround time

 Punctuality to work

 Customer Relationship
 Promptness to customer enquiry

 Meeting marketing targets with deadline

 Employee ability to work under little or no supervision

If Performance Management is implemented correctly with specific objectives tied to the strategic and
operational plan, organizational performance outcomes will likely increase very quickly. For example, if
the CEO asked for a 3% increase in gross margin, this objective would be cascaded down to every
department, team and individual who can influence the increase in gross margin. Those who are
successful at achieving this objective will get a favourable review, those that could not, will get an
unfavourable performance evaluation in the absence of extenuating circumstances. The process of
Performance Management therefore drives organizational performance outcomes. Employees that
achieve the organizational goals are rewarded with favourable reviews and bonuses in line with the
banks policies.

THE SIGNIFICANCE OF PERFORMANCE MANAGEMENT IN THE BANKING INDUSTRY

Performance Management began around 60 years ago as a source of income justification and was used
to determine an employee’s wage based on performance. Organizations used Performance
Management to drive behaviour from the employees to get specific outcomes. In practice this worked
well for certain employees who were solely driven by financial rewards. However, where employees
were driven by learning and development of their skills, it failed miserably. The gap between
justification of pay and the development of skills and knowledge became a huge problem in the use of
Performance Management. This became evident in the late 1980s; the realization that a more
comprehensive approach to manage and reward performance was needed. This approach of managing
performance was developed in the United Kingdom and the United States much earlier than it was
developed in Australia.

In recent decades, however, the process of managing people has become more formalized and
specialized. Many of the old performance appraisal methods have been absorbed into the concept of
Performance Management, which aims to be a more extensive and comprehensive process of
management in recent years are the differentiation of employees or talent management, management
by objectives and constant monitoring and review. Its development was accelerated by the following
factors:

 The introduction of human resource management as a strategic driver and integrated approach to the
management and development of employees; and

 The understanding that the process of Performance Management is something that’s completed by
line managers throughout the year – it is not a once off annual event coordinated by the personnel
department.

In thinking about benefits as part of total compensation package, a basic question arises: why do
employers choose to channel a significant portion of their compensation away from cash (wages and
salaries) into benefits? Economic theory tells us that people prefer to hold cash over the equivalentin
form of specific commodity because the cash can be used to purchase the commodity or something
else. Thus, cash is less restrictive. However, several factors have contributed to less emphasis on cash
and more on benefit in compensation (Fajana, 2000).

Some of the factors that emphasis organizational benefits according to Fajana (2000) are:

1. Modification of the tax structure in such a way that will make other benefits, such as workers’
compensation (for injuries) and

unemployment insurance mandatory is a major facilitator of the sustained trend.

2. Wage and price controls instituted during World War II combined with labour market shortages,
forced employers to think of

new ways to attract and retainemployees. Because benefits were not covered by wage controls,
employers channeled more

resources in this direction. Once institutionalized, such benefits tended to remain even after wage and
price controls were lifted.

3. Tax treatment of benefits programmes is often more favourable for employees than the tax
treatment of wages and salaries, meaning that any amount spent on benefits has the potential to
generate more value for the employees than the same amount

spent on wages and salaries.

4. The cost advantage that groups typically realize over individuals. Organisations that represent large
groups of employees can

purchase insurance (or self insure) at a lower rate because of economics of scale, which spread fixed
costs over more employees

to reduce the cost per person.

5. The growth of organized labour from the 1930s through the 1950s. this growth was as a result of the
Trade Union Ordinance

(1938) and the World Wars. Indeed, this trend is sustained in contemporary times as it is estimated that
more than a third of Nigerian workers who were engaged in strike actions in the early 1990s did so over
issues of benefits.

In some organizations, the management assumes that, if employees are given as many fringe benefits
as possible in addition to their wages, the efforts of trade unionist will be neutralized. This is common in
organizations where they are afraid of trade unions, because, today, initiative for fringe benefits is
generally with the union and they arise as a result of collective agreement (Fajana, 1994).
Banjoko (2002) identified five facts that led to the growth of benefits in Nigerian industries. These
factors are:

I. Governmental influences on the improvement of employees’ welfare by putting pressures on the

II. The power and pressure of labour unions in obtaining many supplementary benefits for their
members

III. The impositions of wage ceilings and restriction on the amount of dividends that could be declared
and the freezing of wages and

salaries increase.

IV. The advent of industrialization and more technological breakthroughbrought about increased risks
relating to employee’s safety and

health on the job. Besides, the processes of many organizations necessitated continuous working for 24
hours a day (e.g. NEPA, and

steel rolling mills and hospital), and a result, the need for shift premium or allowances arose.

V. The need to make employees more comfortable thus becoming more committed, dedicated and loyal
in their attitude towards the

organization is also one of the factors that led to the growth of fringe benefits.