In order to increase employee morale in organizations, it is necessary to create appropriate foundation in the organizational environment. In such organizations, where effective factors in the building of employees morale, are implemented completely and correctly, efficiency has been observed to be at its peak. The research provides reward techniques for business organization to understanding what motivate employee through remuneration practices of the organization. The research followed an in depth questionnaire administered to employees of a telecommunication organization. The result suggested that a careful consideration of job security, prospect of career progression apart from monetary rewards is essential for organizational development and change in employee initiative and boost in employee morale. Keywords: employee morale, remuneration practices, telecommunication, reward techniques, business organizations

Bashiru, Bello

Ogedegbe, Rukevwe Juliet

English

International Institute for Science, Technology and Education (IISTE): E-Journals

European Journal of Business and Management                                                                                                                               www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol.6, No.16, 2014  112 Fostering Employee Morale through Effective Remuneration Practices  Rukevwe Juliet Ogedegbe 1*  Bello Bashiru2 1. Ajayi Crowther University, Department of Business Administration, Oyo. Oyo State, Nigeria 2. Bells University of Technology, Department of Business Administration, Ota, Ogun State, Nigeria *Email: rogedegbe@yahoo.com     Abstract In order to increase employee morale in organizations, it is necessary to create appropriate foundation in the organizational environment. In such organizations, where effective factors in the building of employees morale, are implemented completely and correctly, efficiency has been observed to be at its peak. The research provides reward techniques for business organization to understanding what motivate employee through remuneration practices of the organization. The research followed an in depth questionnaire administered to employees of a telecommunication organization. The result suggested that a careful consideration of job security, prospect of career progression apart from monetary rewards is essential for organizational development and change in employee initiative and boost in employee morale. Keywords: employee morale, remuneration practices, telecommunication, reward techniques, business organizations.     1. INTRODUCTION One task of human resource managers in today’s world is to motivate and retain employees. Owing to the present challenges faced by business, management of organizations in an attempt to maintain their place in the competitive market, are beginning to focus on factors that make an organization’s workforce willing to go the extra mile to achieve firm goals and objectives. The Association of British Insurers, Principle and Guidelines on remuneration (2000), stated that “for good and bad economic times, maximizing the contribution from every employee is vital to organization’s success”. It is thus apparent that for such organization’s success, motivation of the employees is a key factor. Motivation is a company’s life-blood (Sharma, 2006:1). It has been seen to reduce turnover, increase productivity, reduced absenteeism, increase revenue and improved performance (Pei Yu Lin, 2007). Frederick Herzberg in his ‘Two factor theory” which is subcategorized into ‘hygiene factors’ and ‘motivators’, is a notable contribution to the management of employee motivation. Individuals in the organization are found to view reward differently (La Belle, 2005).While some individuals may consider cash enough for their effort, others may give considerations to holidays and material incentives or even a recognition for their efforts. These considerations on the part of the employees help them to assess how the organizations value them and they are able to review their self worth which becomes a driving force of satisfaction or dissatisfaction. Employee remuneration covers how people are rewarded in accordance with their value to the organization. It is about both financial and non-financial rewards and embraces the strategies, policies, structure and processes used to develop and maintain the reward system. Effective remuneration practices can be seen as means to meet organizational objectives, such as increasing morale and retaining and attracting good employees (Steere, 2000; Laabs, 2000, Kurlander and Barton, 2003).  The evolvement of remuneration arrangement reflects the drive of management to strong corporate performance. Therefore boards constantly re-evaluate their firms’ remuneration structures in order to respond to changes in their operations and to evolving best practices in their home markets and beyond (Ferrarini, Moloney and Ungureanu 2009). Thus the main focus of this study is to determine the relationship between employee morale and remuneration practices in the organization.  In view of the issues above the following hypotheses were examined: Hypothesis 1: There is no significant relationship between wages and salaries and employee morale. Hypothesis 2: There is no significant relationship between incentives payment and benefit and employees’ morale    Hypothesis 3: Wages and salaries, incentive payments and Employee benefit will jointly and independently predict employee morale.   2. REVIEW OF LITERATURE AND THEORTICAL FRAMEWORK Employee remuneration is the reward or compensation given to the employees for their work performances. It is a method of promoting morale, increasing motivation and foster team cohesion. Remuneration can motivate employees to be more productive but does not have to necessarily be compensation based; it could be praise or recognition given to an employee. A reward helps to resolve conflict between organizational objectives and European Journal of Business and Management                                                                                                                               www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol.6, No.16, 2014  113 individual expectations and aspirations.  According to Dessler (1995) compensation is divided into 3 kinds: (1) direct financial payment in the form of wages, salaries, incentives, commissions, and bonuses, (2) indirect payment in the form of benefits such as insurance and vacations on the fund company, (3) non-financial rewards such as more challenging job, working hours more flexible, more prestigious offices. Effective, organizational reward systems should provide four things: a sufficient level of rewards to fulfill basic needs, equity with the external labor market, equity within the organization, and treatment of each member of the organization in terms of his or her individual needs (Lawler, 1989).  According to Prasetya and Kato (2011) whiling sighting (Bernardin & Russell, 1993) opined that “compensation has a big influence in the recruitment of employees, motivation, and productivity and employee turnover”. Therefore, the level and magnitude of compensation should be of concern to management because the level of compensation will determine the lifestyle, self esteem, and the value of the company. Cascio (1991) describes the principles that must be considered in granting effective compensation which include: The principle of fairness, taking into account the ratio between the highest and lowest salaries, cost of living, and so forth; the principle of justice, where there should be a good element of justice in connection with the element of working time and job performance. The employees who perform similar tasks get the same compensation as well.  2.1 Employee Morale and Remuneration practices  According to Keskonis and Siddiqi, “Morale is the behavior of employees wanting to belong to the organisation and who are being happy with their organization”. Thus, morale is an important emotional perception whereby an improvement of morale in employees induces happier, more productive, and higher performance employee.  Ngaraja, (2007) states that, morale ranges from very high to very low. High Morale is evident from the positive feelings of employees such as enthusiasm; desire to obey orders, willingness to co-operate with coworkers. Poor or low morale becomes obvious from the negative feelings of employees such as dissatisfaction, discouragement or dislike of the job. The application of skill or competence leads to performance and performance is the criterion for evaluating effectiveness. Therefore, a pay-for-competence program enhances productivity and product quality, reduces absenteeism, turnover, and accident rates (Jyothi and Venkatesh, 2006). Remuneration increases overall employee morale provided the benefits are regarded as equitable. Overall morale improves if each employee is granted a chance to reach a set of goals instead of setting high goals that only one employee can achieve. In the study of Nawab and Bhatti (2011), employee compensation and job satisfaction were found to have a positive and significant relationship with each other. Also, it was shown that financial reward was strongly related to normative and continuous commitment but non financial compensation has a strong influence on affective commitment on the employees. The analysis of the study (salary, incentives, benefits, promotion, self development, and work environment) conducted by Arik and Masanori (2011) indicated that there are significant influences both from financial and nonfinancial compensation to the employee performance.  The survey results conducted by McLean and Tanner (Hays, 1999) showed that 70% of Chief Executive Officer and 58% of human resource managers said that the company can implement compensation programs to improve performance or productivity of employees. Shezad et al. (2008) did a study on impact of HRM practices on perceived performance of university teachers of Pakistan. It was hypothesized that compensation, promotion and performance evaluation practices are significantly and positively related to perceived performance of university teachers of Pakistan. Compensation and promotion practices were found to be significantly correlated with perceived performance of university teachers of Pakistan. Performance evaluation practice was found to be insignificantly correlated with the performance of university teachers of Pakistan.  3. METHODOLOGY Research Design  The design of this study is the survey design which measured the independent variable of remuneration practices (wages and salaries and incentive pay and benefits), and dependent variable as employee morale.  Sample  The study comprise of employees of Starcomms Nigeria limited in Ibadan Oyo state. A sample size of 200 employees was selected using purposive sampling techniques. Questionnaires were administered to management, senior, and junior staff of the organization of which only one hundred and fifty are found usable for the study. These comprise of male (55) and female (95), aged between 20 and 50 years.  Research Instruments  The study made use of questionnaire which is in two parts. Section A: measures the demographics data of respondents and Section B measures the variables of remuneration practices. The questionnaire which was self-administered was validated by a group of conference experts. Validated result and the Cronbach alphas are 0.68 for wage and salary, 0.74 for incentive payment, and 0.73 for Employee benefits.  Data Analyses  The demographic data were analyzed using frequency counts and simple percentages. The objectives of the European Journal of Business and Management                                                                                                                               www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol.6, No.16, 2014  114 study were achieved by testing the hypotheses 1 and 2 using Pearson correlation while hypothesis 3 was analyzed using multiple regression.  4. RESEACH FINDINGS AND DISCUSSION  There will be no significant relationship between Employee Morale and Wages and Salaries Variable Mean Std. Dev. N    R P Remark  Employee Morale  Wages and Salaries 8.3600  3.2800 2.2711  1.0499  150  .205*  0.12  Sig  * sig at .05 level It is shown in the above table that there was significant relationship between Employee Morale and Wages and Salaries (r = .205*, N= 150, P < .05). Therefore the null hypothesis is rejected.       There will be no significant relationship between Incentive Payment and Benefits and employee morale. Variable Mean Std. Dev. N    R P Remark  Employee Morale  Incentive Payment and Benefits 8.3600  5.2600  2.2711  1.4856  150  .358**  .000  Sig  ** sig at .01 level It is shown in the above table that there was significant relationship between Incentive payments and Benefits and employee morale (r = .358**, N= 150, P < .05). The null hypothesis is therefore rejected.   There will be a joint effect of Wages and Salaries, Incentive Payment and Employee Benefits on Employee Morale Model Sum of Squares DF Mean  Square F Sig. Regression Residual  Total  296.424 472.136 768.560 3 146 149 98.808 3.234 30.555 .000 R = .621 R2 = .386 Adj R2 = .373 It was shown in the table above that the joint effect of Wages and Salaries, Incentive Payment and Employee benefits on Employee Morale  was significant (F(3,146) = 30.555; R = .621, R2 = .386, Adj. R2 = 0.373; P < .05). About 39% of the variation was accounted for by the independent variables while the remaining 51% was not due to chance. There will be a relative effect of independent variables (Wages and Salaries, Incentive Payment and Benefits) on Employee Morale Model Unstandardized Coefficient Standardized  Coefficient t Sig. B  Std. Error Beta (Constant) Wages and Salaries Incentive Payment     Employee benefits 1.036 .144 -5.163E-02 .471 .815 .145 .125 .062  .066 -.034 .622 1.272 .991 -.412 7.552 .205 .323 .681 .000  Table 3 shows the results of the regression analysis based on the sign of the coefficient and the t-ratio. From the analysis the constant has a t-ratio of 1.27. This indicates that the other factors that affect Employee morale and have not been included in the model are statistically significant in encouraging morale. The result above also shows the relative contribution of each of the independent variables on the dependent: Wages and Salaries (β = .066, P >.05), Incentive Payment (β = -.034, P >.05) and Employee benefit (β = .622, P <.05), respectively. Hence, Employee benefits were found significant while Wages and Salaries, and Incentive Payment were not.  5. Conclusion Over the globe, management in all organisations, have agreed to the fact that, having a competitive advantage requires the attraction and retention of talented employees. Therefore it is important to know and understand what motivates employees and make them stay on the job. The preposition that a satisfied worker will in turn put in his best, will only be true if when the issues of poor remuneration are given serious considerations. Employee morale will be increased when managers try to understand the problems faced by their workers and find a way of satisfying their needs and aspiration.    The study outcomes suggest that both intrinsic and extrinsic rewards are equally important in ensuring that European Journal of Business and Management                                                                                                                               www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol.6, No.16, 2014  115 employees do their best. However, employee benefits such as holidays, challenging jobs, work environment have seems to be more acceptable to employees. If only cash rewards are given to employees, the tendency is that, workers feel they only been given their worth. Employees like organizations are dynamic in nature since they reside in an ever-changing environment due to the continued competition and globalization. On this basis, a continuous improvement process involving everyone, managers and workers, the leadership or management should come up with strategies or policies that will involve all the stakeholders so as to achieve the desired objectives, and hence has the following advantages: reduced turnover; increased productivity; reduced absenteeism; increased revenue; and improved performance.  291 Reference Association of British Insurers, Principles and Guidelines on Remuneration (December 2004) Bernardin, H.J. and Russell, J.E.A. (1993). Human Resource Management: An Experiential Approach., McGraw-Hill, Inc., Singapore. Canadian Coalition for Good Governance, Good Governance Guidelines for Principled Executive Compensation – working paper – (June 2005) Cascio, W.F. (2006). Managing Human Resources: Productivity, Quality of Work Life, Profits, New Delhi: Tata McGraw-Hill. Dessler, G., (1999). How to Earn Your Employees’ Commitment. Academy of Management Executive, 13(2), 58-66. Ferrarini, Moloney and Ungureanu 2009. Understanding Directors’ Pay in Europe: A Comparative and Empirical Analysis www.ecgi.org/wp Ferrarini,  Moloney and  Ungureanu 2009. Understanding Directors’ Pay in Europe: A Comparative and Empirical Analysis www.ecgi.org/wp Ferrarini, G. and M.C. Ungureanu (2009), Fixing Bankers’ Pay in Europe: Governance, Regulation and Disclosure, Proceedings of the “Symposium on Building the Financial System of the 21st Century. An Agenda for Europe and the US”; Unimanagement Torino, 27-28 March 2009 (Program on International Financial Systems, Harvard Law School). Hayes, E. (1999). Winning at Diversity, Executive Excellence, New Delhi: Sage, July, p. 9. Keskonis, P.  Siddiqi, K. M Empowering Workforce to Achieve their Maximum Potential. Southern Polytechnic State University, Marietta Georgia U.S.A. Kurlander, P. and Barton, S. (2003), “Benefits performance?”, Workspan, Vol 46 No 11, pp. 31-6. Laabs, J. (2000), “Demand performance for benefits”, Workforce, Vol 79, pp. 42-6. Pei Yu Lin (2007). The Correlation between management And Employee Motivation in Sasol Polypropylene Business, South Africa. Thesis, University of Pretoria. Prasetya, A., & Kato, M. (2009). The effect of financial and non-financial compensation to the employee performance. Thesis, Asia Pacific University, Japan. Retrieved from http://www.studymode.com Sharma, S 2006, A right way to motivate an employee is to win his heart, <http://www.bpoindia.org/research/win-heart.shtml. Steere, R. (2000), “Vision care: An important employee benefits”, Compensation and Benefits Management, Vol 16, No 1, pp. 46-50. Shahzad K, Bashir S, Ramay MI (2008). Impact of HR practices on the perceived perfroamce of university teachers in Pakistan, Int. Rev. Bus. Res. 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Fostering Employee Morale through Effective Remuneration Practices

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Fostering Employee Morale through Effective Remuneration Practices

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