Over the years, rewards and job satisfaction have been issues of concern to employers and employees in various organizations globally. Outsourced service providers in Jos, Plateau State are not exceptions. Besides, inadequate reward factors such as pay, fringe benefits, recognition, promotion and job security are some of the major reasons responsible for employees’ dissatisfaction and intention to leave their current organizations. Moreover, the immediate precursor of lack of satisfaction or dissatisfaction of employees of outsourced service providers has been caused by low or poor rewards which raises great concern for both academic administrators and human resource managers in Nigeria. In light of the above, this research sought to examine the relationship between rewards and employees’ job satisfaction of selected outsourced service providers in Jos Plateau State.
A survey research design was adopted. The population consisted of all the employees of the five (5) selected outsourced service providers in Jos, Plateau State. The sampling technique used was census. A census method was used to study thepopulation which stood at 541being the entire employees of the five selected outsourced service providers. A total of 541 copies of the questionnaire were distributed; out of which a total number of 448 (82%) were properly filled and returned, while 93 (17.2 %) were not returned. A validated questionnaire was used as the research instrument. The result of the reliability test utilizing Cronbach’s Alpha test ranges from 0.762 to 0.956. Simple regression analysis and Pearson product moment correlation test were used to test the hypotheses.
The findings of this study revealed that pay (R2 = 0.665, p<0.05), fringe benefits (r=0.747, p<0.05), Recognition (R2 = 0.558, p<0.05), Promotion (R2 = 0.683, p<0.05), and Job Security (R2 = 0.711, p<0.05)have positive significant effect on employees’ job satisfaction of selected outsourced service providers in Jos, Plateau State.
The study concluded that, all the reward factors had a significant positive relationship with employees’ job satisfaction of the outsourced service providers in Jos, Plateau State. It is therefore, recommended that management of these outsourced companies improve on these rewards that have a direct and significant effect on employees’ job satisfaction (pay, fringe benefits, recognition, promotion and job security) in order to reduce the level of dissatisfaction among employees which could lead to low performance and productivity.
Keywords: Rewards, Pay, Fringe Benefits, Recognition, Promotion, Job Security, Employees’ Job Satisfaction, Dissatisfaction, Outsourced Service Providers.
Word Count: 429
TABLE OF CONTENTS
Title Page i
Table of Contents vii
List of Tables xi
List of Figures xii
CHAPTER ONE: INRODUCTION
1.1 Background to the Study 1
1.2 Statement of the Problem 3
1.3 Objective of the Study 5
1.4 Research Questions 6
1.5 Hypotheses 6
1.6 Scope of the Study 7
1.7 Significance of the Study 7
1.8 Operationalization of Variables 8
1.9 Operational Definition of Terms 9
CHAPTER TWO: REVIEW OF LITERATURE
2.1 Conceptual Review 10
2.1.1 Rewards 10
2.1. 1.1 Pay (Salaries and Wages) 18
18.104.22.168 Fringe Benefits 23
22.214.171.124 Recognition 25
126.96.36.199 Promotion 26
188.8.131.52 Job Security 28
2.1.2 Job Satisfaction 30
184.108.40.206 Relationship between Rewards and Employees’ Job Satisfaction 34
2.2 Theoretical Review 35
2.2.1 Job Satisfaction Theories 36
220.127.116.11 Affective Event Theory 36
18.104.22.168 Maslow’s Hierarchy of needs theory 37
22.214.171.124 Need/Fulfillment Theory 39
126.96.36.199 Herzberg Two Factor Theory 40
2.2.2 Rewards Theories 42
188.8.131.52 Equity Theory 42
184.108.40.206 Expectancy Theory 44
2.3 Empirical Review of Rewards and Job Satisfaction 46
2.3.1 Empirical Review of Pay and Job Satisfaction 46
2.3.2 Empirical Review of Fringe Benefits and Job Employees’ Satisfaction 48
2.3.3 Empirical Review of recognition and Employees’ Job Satisfaction 52
2.3.4 Empirical Review of promotion and Employees’ Job Satisfaction 54
2.3.5 Empirical Review of Job security and Employees’ Job Satisfaction 56
2.4 Summary and Gaps in the Literature 58
CHAPTER THREE: METHODOLOGY
3.1 Research Design 60
3.2 Population 60
3.3 Sample size and sampling Technique 61
3.4 Method of Data Collection 61
3.5 Research Instrument 61
3.6 Pilot Study 62
3.6.1 Validity of Research Instrument 63
3.6.2 Reliability of Research Instrument 64
3.7 Method of Data Analysis 64
3.7.2 Apriori Expectation 66
3.8 Ethical Consideration 66
CHAPTER FOUR: DATA ANALYSIS, RESULTS AND
DISCUSSION OF FINDINGS
4.1 Data Presentation (Response to Questionnaire) 68
4.2 Data Analysis, Interpretation and Discussion 68
4.2.1 Frequency and percentages of percentages of participants’ Responses to Pay 69
4.2.2 Frequency and percentages of percentages of participants’ Responses to
Job Satisfaction 71
4.3.1 Test of Hypothesis One 72
220.127.116.11 Frequency and percentages of percentages of participants’ Responses to
Fringe Benefits 75
18.104.22.168 Frequency and percentages of percentages of participants’ Response to Job
4.3.2 Test of Hypothesis Two 78
22.214.171.124 Frequency and percentages of percentages of participants’ Response to
4.3.3 Test of Hypothesis Three 82
126.96.36.199 Frequency and percentages of percentages of participants’ Responses
to Promotion 85
188.8.131.52 Frequency and percentages of percentages of participants’ Responses to
Job Satisfaction 87
4.3.4 Test of Hypothesis Four 88
184.108.40.206 Frequency and percentages of percentages of participants’ Responses to
Job Security 90
220.127.116.11 Frequency and percentages of percentages of participants’ Responses to
Job Satisfaction 92
4.3.5 Test of Hypothesis Five 93
CHAPTER FIVE: SUMMARY, CONCLUSION AND
5.1 Summary 97
5.2 Conclusion 99
5.3 Recommendations 100
5.4 Implications of the Study 101
5.4.1 Management 101
5.4.2 Government 101
5.4.3 Employees 102
5.4.4 Academics 102
5.5 Contribution to Knowledge 102
5.5.1 Theory 103
5.5.2 Concept 103
5.5.3 Empirics 104
5.6 Limitation of the Study 104
5.7 Suggestion for Further Studies 104
LIST OF TABLES
3.1: Population 61
3.2: Validity of Research Instrument 63
3.3: Reliability of Research Instrument 64
3.4: Researcher’s Apriori Expectation 66
4.1: Response to Questionnaire 68
4.2: Descriptive Analysis of Pay based on questionnaire 70
4.3: Descriptive Analysis of Job Satisfaction 71
4.4.: Regression Results for the Effect of Pay on Employees’ Job Satisfaction
of Selected Outsourced Service Providers in Jos, Plateau State 72
4.5: Descriptive Analysis of Recognition based on questionnaire 75
4.6: Descriptive Analysis of Job Satisfaction 76
4.7 Summary of Pearson Product Moment Correlation Between Fringe
Benefits and Employees’ Job Satisfaction of Selected Outsourced Service 77
Providers in Jos, Plateau State
4.8: Descriptive analysis of recognition based on questionnaire 80
4.9: Descriptive Analysis of Job Satisfaction 81
4.10: Regression Results for the Effect of Recognition on Employees’ Job
Satisfaction of Selected Outsourced Service Providers in Jos, Plateau State 82
4.11: Descriptive Analysis of Promotion based on questionnaire 86
4.12: Descriptive Analysis of Job Satisfaction 87
4.13: Regression Results for the Effect of Promotion on Employees’ Job Satisfaction
of Selected Outsourced Service Providers in Jos, Plateau State 88
4.14: Descriptive analysis of Job Security based on questionnaire 91
4.15: Descriptive analysis of Job Satisfaction 92
4.16: Regression Results for the Effect of Job Security on Employees’ Job
Satisfaction of Selected Outsourced Service Providers in Jos, Plateau State 93
LIST OF FIGURES
1: Maslow’s Hierarchy of Needs Theory 38
2: Conceptual Model showing Gaps 59
3: Conceptual Model 65
1.1 Background to the Study
The human resources of every organization have been identified as the most important assets of that organization as its success depends largely on their effective and efficient contributions. Thus, in today’s competitive business environment and global workplace, one of the strategies that successful companies use to attract competent, skilled and qualified human resources, retain top talent, and maintain a highly motivated and satisfied workforce is rewards (Wekesa& Nyaroo, 2013; Nadia, Syed, Humera & Khalid 2011; Mujtaba &Shuaib, 2010).
Rewarding employees is a fundamental function of human resource managers in an organization as they deal with assessment of job values, the design and management of payments (expenditures), job satisfaction, pay system, employees’ benefit and pensions. Mujtaba and Shuaib (2010); Kock (2007) asserted that effective, appropriate, timely and market-driven rewards tend to motivate both managers and employees. Khalid, Salim and Loke (2011) also explained that rewards are received as an exchange of services between employees and employers. Hence, the rewards offered by employers have been found to significantly improve employees’ motivation towards their job and consequently increase job satisfaction (Negash, Zewude & Megersa, 2014; Khalid et al., 2011; Rafikul & Ahmad, 2008; Milne, 2007). Organizations and human resource managers nowadays recognize rewards as important factors that motivate employees to act willingly and exert considerable effort on behalf of the organization as they maintain strong relationship, which in turn increase their job satisfaction (Zaini, Nilufar & Syed,2009).
Job satisfaction is a yardstick for quality work experience. It is a positive emotional feeling, a result of one’s evaluation of his job experience by comparing what he expects from his/her job and what he actually gets. Generally, job satisfaction describes how happy employees are with their jobs and the feelings that they have towards the various aspects of their jobs. Job satisfaction has become a very significant feature in every organization because of its importance to the behaviour of employees in the work place. Therefore, human resources managers tend to seek for total reward programs that could enhance employees’ job satisfaction and in turn increase organizational performance and productivity (Galanou, Georgakopoulos, Sotiropoulos & Dimitris, 2010; Mujtaba & Shuaib, 2010). The use of effective rewards has been found to have a direct relationship with job satisfaction and motivation of the employees in organizations (Priya & Eshawar, 2014; Rehman, Khan, Ziauddin & Lashari, 2010).
Wekesa and Nyaroo (2013); Aktar, Sachu and Ali (2009); Luthans (2008); Agu, 2003; Malik, Maira & Muhammad (2011) assertedthat pay (salaries and wages), fringe benefits, recognition, promotion and job security are the various types of rewards that are provided to employees by their employers with the view of enhancing their job satisfaction.This study however, focused majorly on the following types of rewards: pay (salaries and wages), fringe benefits, recognition, promotion and job security as the factors responsible for significantly influencing employees’ job satisfaction in their work place. Thus, pay (salary and wages) refers to a form of periodic financial payment provided to an employee by his employer, which is usually specified in the employment contract (Sharma & Bajpai, 2011). Chepkwony and Oloko (2014) describe fringe benefits as elements of remuneration given to employees in addition to the various forms of cash pay, while recognition is the identification and appreciation of an employee for a job well done (Chepkwony & Oloko, 2014). Furthermore, promotion is defined as the shifting upward of an employee to a job of higher significance and higher compensation (Lazear, 2000). Job security is one’s expectation about continuity in a job situation and it has to do with employees’ feelings over loss of job or loss of desirable job features such as lack of good current working conditions, as well as long-term career opportunities (Akpan, 2013).
Rewards have over the years continued to be recognized as powerful determinants of job satisfaction and as a source of increasing the well-being of employees in their work place (Rafiq, Javed, Khan, & Ahmed 2012; Abdulla et al., Ahmed, Muddasar &Perviaz, 2012).Thus it is not surprising thatorganizations both public and private have adopted the use of rewards as a tool for enhancing employees’ job satisfaction and performance (Bako, 2010). However, rewards have continued to be source of problems for employees of outsourced service providers in Jos, Plateau State;because the companies over the years see their employees as additional cost as well as liability to their operations. Thus, outsourced service providers do not provide adequate rewards (remuneration) that are commensurate with the efforts, skills and timetheir employeesput into the work, thereby causing lack of job satisfaction among their workforce.
It is obvious that rewards and job satisfaction have enjoyed massive popularity among the theorists and human resource practitioners in the last century. Extant literature has effectively shown the relationship between rewards and employees’ job satisfaction (Abayomi & Ziska, 2014; Nazir, Khan, Shah & Zaman, 2013, Kalleberg & Loscocco, 1983). It is for this reason that this study intends to evaluate the relationship between rewards and job satisfaction of selected outsourced service providers in Jos, Plateau state.
1.2 Statement of the Problem
In spite of the increasing interest of organizations toprovide effective reward programs that can motivate employees to work harder and increase their job satisfaction, most employees in Nigeria appear to be dissatisfied with their rewards. Thus, the intention of any reward system is to attract, retain and maintain a satisfied workforce that will always stay focused on producing quality products or services in an efficient manner (Mujtaba & Shuaib, 2010; Karami, Dolatabadi & Rajaeepour, 2013). Consequently, a substantial number of literature have been developed, to advance the understanding of reward system and the extent to which it influences the level of employees’ work related factors such as job satisfaction, commitment, performance, motivation (Galanou, Georgakopoulos, Sotiropoulos, & Dimitris 2010; Chepkwony,2014). This is because reward system remains a controversial and difficult issue for both human resource managers and employees in the work place (Galanou et al., 2010; Mujtaba & Shuaib, 2010).
Failure in designing appropriate reward has continued to have a negative effect on employees’ job satisfaction and overall effectiveness of many organizations (Neo, Hollenbeck, Gerhart & Wright 2006).Similarly, Chepkwony and Oloko (2014) asserted that rewards and job satisfaction of employees currently remain a problem of most organizations. Nevertheless, employees’ job satisfaction is critical for the success of any organization as well as quality of products or services provided by the organization to their customers or clients respectively. However, outsourced service providers have continually failed in their efforts at achieving organizational goals and objectives due to lack of job satisfaction (dissatisfaction) of their employees as a result of poor formulation and implementation of reward policies (Armstrong 2006; Chepkwony & Oloko, 2014).
Amah, Nwuche and Chukwuigwe (2013); Okafor (2007);Wright and Bonnett (2007); Arokiasamy, Tat and Abdullah (2013) confirmed in their separate researches that low employees’ job satisfaction and performance in the work place are attributed to low pay. Similarly, poor or inadequate pay (salaries and wages) has been found to be responsible for the strained employer employee relationship, threatened industrial peace and have been attributed to about 80% of industrial actions experienced in Nigeria (Fapohunda 2012a; Akomolafe, 1993).
Ahmad, Yei, and Bujang (2013); Amah et al., (2013) affirmed that inadequate fringe benefits have been identified to lower employees’ quality of work life, reduced employees’ job satisfaction and consequently led to financial insecurity, an inability to plan for the future which often result in severe emotional and psychological stress (Okafor, 2012).
Outsourced service providers also referred to as non-standard employment are gaining momentum globally and Nigeria is no exception (Mutiat, Oladapo & Kabiru, 2013). In Nigeria, it is an avenue for enhancing Government revenue as well as providing job opportunities to the unemployed Nigerians of working age (The National Outsourcing Policy and Institutional Framework 2007). In spite of this, outsourcing companies in Nigeria are presently undergoing some challenges, among them is high level of employee turnover due to lack of employees’ recognition which has successively led to lack of job satisfaction (Mutiat et al., 2013; Mutia & Sikalieh, 2013;Sun, 2013).
Arokiasamy, Tat and Abdullah (2013) recognized that lack of promotion and mundane work has significantly contributed to employee’s lack of satisfaction and intention to leave the organization. Inadequate or lack of promotion opportunities into positions of higher responsibility has caused lack of satisfaction and negative consequences such as lower commitment, high employee turnover and absenteeism among employees. Similarly, those employees who remain in one position with no opportunities for moving to higher positions have been said to exhibit negative attitude towards their work and their organizations (Arokiasamy et al., 2013).
Furthermore, arbitrary dismissal or lay off of workers in private outsourcing companies (non-standard employment) has been a source of worry to employees and government in this sector. Recent survey has identified job insecurity as one of the significant factors that drives workers to develop poor attitude and withdrawal tendencies in their organizations and reduces employees’ job satisfaction (Fapohunda 2012a; Senol 2011; Yih & Htaik 2011; Suleiman, 2013; Preuss & Lautsch, 2002). Furthermore, Fatimah, Noraishah, Nazir and Khairuddin (2012) asserted that threat to employees’ job security negatively affects their job satisfaction and well-being as well job performance.
The researcher’s pilot report (2016) of three outsourced services providers(Crown Security Company, M & U Company and Kings Guard Security)in Kano, showed that there is general lack of job satisfaction among the employees as a result of low wages and salaries, few fringe benefits, lack of recognition, low promotions and lack of job security. This report is consistent with the research studies of (Okougbo,2004; Mokwenye, 2008; Ogundare & Elijah, 2011; Daljeet, Manoj & Dalvinder, 2010). Similarly, Akinbode and Uwem (2013) asserted that the rewards of outsourced organizations studied in Lagos state remain unstructured because what the client’s company pays determines what the staff is paid;this suggests that employees in the same level might receive different salaries or wages which often creates dissatisfaction among employees (Mutiat et al., 2013). Thus, rewards have continued to be a major source of problem for employees of outsourced companies in Jos, Plateau State. It is therefore, the aim of this study to examine the relationship between rewards and job satisfaction of employees of Selected Outsourced Service Providers in Jos, Plateau State.
1.3 Objective of the Study
The main objective of the study is to examine the relationship between rewards and employees’ job satisfaction of selected outsourced service providers in Jos, Nigeria. The specific objectives are to:
- examine the effect of pay onemployees’ job satisfaction of selected outsourced service providers in Jos;
- ascertain the relationship between fringe benefits and employees’ job satisfaction of selected outsourced service providers in Jos;
- investigate the effect of recognition on employees’ job satisfaction of selected outsourced service providers in Jos;
- examine the effect of promotion on employees’ job satisfaction of selected outsourced service providers in Jos
- determine the effect of job security on employees’ job satisfaction of selected outsourced service providers in Jos.
1.4 Research Questions
For the purpose of this study the following research questions were formulated.
- What is the effect of pay on employees’ job satisfaction of selected outsourced service providers in Jos?
- What is the relationship between fringe benefits and employees’ job satisfaction of selected outsourced service providers in Jos?
- How does recognition affect employees’ job satisfaction of selected outsourced service providers in Jos?
- How does promotion affect employees’ job satisfaction of selected outsourced service providers in Jos?
- What is the effect of job security on employees’ job satisfaction of selected outsourced service providers in Jos?
The following hypotheses were derived from research question and are written in the null format
Ho1: Pay has no significant effect on employees’ job satisfaction of selected outsourced service providers in Jos.
Ho2: There is no significant relationship between fringe benefits and employees’ job satisfaction of selected outsourced service providers in Jos.
Ho3:Recognition has no significant effect on employees’ job satisfaction of selected outsourced service providers in Jos.
Ho4:Promotion has no significant effect on employees’ job satisfaction of selected outsourced service providers in Jos.
Ho5:Job security has no significant effect on employees’ job satisfaction of selected outsourced service providers in Jos.
1.6 Scope of the Study
The study focused on the relationship between rewards and employees’ job satisfaction of five selected outsourced service providers in Jos with special interest in two security companies and three cleaning companies respectively- Strike Force Nigeria limited, Active Security Limited, Masters and General (M & G), Confer Limited and Kelstrad Nigeria limited. The research design that was adopted for this study is survey research method. The target population of the study consisted of all employees of the five selected outsourced companies which stand at 541 as extracted from the companies’ pay rolls as at (March 2016).
1.7 Significance of the Study
The findings of this study would help management on how to deal with the challenges of rewards and how it affects employees’ job satisfaction in the work place and also how to design an effective reward system that would attract, retain and maintain a competent and satisfied workforce in different organizations. The result obtained from the study would give management of outsourced companies a better understanding of the numerous reward packages and practices available that will motivate and enhance their employees’ job satisfaction. It would also help them to know how to respond to their employees’ needs with the view of satisfying such needs. The study hopes to come out with a template that would help government to develop basic rules and guidelines (laws and policies) on employees’ rights and privileges in private outsourcing industry especially with respect to their rewards in other to protect them from unfair labour practices and to also ensure compliance with the laws of the land. In addition, the findings would add knowledge and trigger additional research in the field of human resource management as it could be referenced in other related future studies to either support or reject their findings.
1.8 Operationalization of Variables
Y = f (X)
Y = Dependent Variable
X = Independent Variable
Y = Job Satisfaction
X = Rewards
Y = (y)
X= (x1, x2, x3, x4 x5)
Y = Job Satisfaction (JS)
x1= Pay (P)
x2 = Fringe benefits (FB)
x3 = Recognition (R)
x4 = Promotion (PR)
x5=Job security (JC)
Y= α0 + β1x1 + µ—————————————- Equation 1
Y= α0 + β2 x2 + µ—————————————-Equation 2
Y= α0 + β3x3 + µ—————————————-Equation 3
Y= α0 + β4x4 + µ—————————————-Equation 4
Y= α0 + β5x5 + µ—————————————-Equation 5
β= regression parameter, which measures the coefficient of the independent variable, each of these indicators measures the effect of a given change in the independent variable on the dependent variable.
α0= constant or intercept of the independent variable, this is the average value of the dependent variable when the independent variable is equal to zero.
µ= error term or stochastic variable, this is included in the model to accommodate the influence of other variables that affect the dependent variable but which are not included in the model.
1.9 Operational Definition of Terms
Reward: Reward refers to what an employee receives from his employer as payment or compensation for performing a job.
Reward system: Reward system refers to the different types of rewards available and provided to employees by their organizations.
Job Satisfaction: Job satisfaction is the extent to which an employee like or dislike his work.
Motivation: Motivation is the positive drive that leads a worker to perform his work willingly.
Commitment: Refers to the attachment and loyalty that an employee has to the organization.
Outsourced service providers or outsourcing: outsourced service providers are those companies that perform certain operations or services on behalf of their client organization for a fee.
Pay: Pay is the financial reward that an employee receives from his employer in an employment relationship.
Promotion: Promotion is a shift in upward direction in organizational hierarchy with more responsibility and pay raise.
Fringe benefits: Fringe benefits are those rewards that an employee receives from the organization other than wages and salaries.
Recognition: Recognition refers to the praise and appreciation that an employee receives from his organization for performing a task.
Job security: Job security refers to the assurance of the continuity of one’s job in the future.
Employee: An employee is the person that performs a task for a fee.
Job: Job refers to the task or work that is carried out by an employee.
Non- standard employment: Non- standard employment is a type of employment that is an aberration from the standard employment (pensionable), they include contract, casual, outsourced and month to month which do not conform to the labour standards.
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