ASSESSMENT OF THE EFFECTS OF FINANCIAL INCENTIVES ON .
ASSESSMENT OF THE EFFECTS OF FINANCIAL INCENTIVES ONEMPLOYEES PERFORMANCE: A CASE OF TANZANIA POSTSCORPORATION AND NATIONAL INSURANCE CORPORATION OFTANZANIA LIMITED MTWARA REGIONDISMAS NZIKUA DISSERTATION SUBMITTED IN PARTIAL FULFILLMENT OF THEREQUIREMENTS FOR THE DEGREE OF MASTER OF HUMANRESOURCE MANAGEMENT (MHRM) OF THE OPEN UNIVERSITY OFTANZANIA2013
iiCERTIFICATIONThe undersigned certifies that he has read and hereby recommends for acceptance bythe Open University of Tanzania titled “assessment of financial incentives onemployees performance: a case of Tanzania Posts Corporation and NationalInsurance Corporation Of Tanzania Limited - Mtwara Region”, in partial fulfillmentfor the award of Master Degree of Human Resource Management of the OpenUniversity of Tanzania. Dr. Chacha Alfred Matoka(Supervisor)Date:
iiiCOPYRIGHTNo part of this dissertation may be reproduced stored in any retrieval system, ortransmitted in any form by any means, electronic, mechanical, photocopying,recording or otherwise without prior written permission of the author or the OpenUniversity of Tanzania in that behalf.
ivDECLARATIONI, Dismas Nziku, declare that this dissertation is my own original work and has notbeen submitted to any other Degree in any University and will not be submitted toany other Higher Learning Institution for an award of a Degree.Signature Date .
vDEDICATIONI dedicate this work to Almighty God, the source of all wisdom and knowledge, myparents, Mr. and Mrs. Nziku of Iringa Region, Mufindi District who are thefoundation of my education, also to my Wife Jennifer and our daughter DeboraNziku, and my close friend Mr. and Mrs. Mel Hochhalter of United States ofAmerica (USA) – North Carolina.
viACKNOWLEDGEMENTSI would like to take this opportunity to extend my sincere gratitude to my almightyGod and Lord Jesus Christ for his guidance and protection throughout my study forMaster Degree.My sincere gratitude, are also extended to my supervisor Dr. Chacha Alfred Matokafor his constructive advice throughout the dissertation process and all staff fromTanzania Posts Corporation and National Insurance Corporation of Tanzania Limited- Mtwara who encouraged me throughout my Master studies, their contributions tomy knowledge are immeasurable and very valuable to my career development. Mysincere gratitude’s are extended to Postal Officers of Tanzania Posts Corporation andthat of Tanzania Insurance Corporation of Tanzania Limited - Mtwara Region fortheir enlightenment and support in data collection.Lastly, but not least is my immeasurable thanks to our family of Mr. and Mrs. Nzikuof Iringa, Mufindi district who taught me how to hold a pencil and have beensupporting and encouraging me throughout my study. Numerous thanks to my wifeJennifer Nziku and our daughter Debora Nziku for their great encouragement whilewas engaged with the University. May God richly bless you and shine his light uponyour endeavors.
viiABSTRACTFinancial incentives are vital factor towards corporations’ achievements in terms ofperformance, efficiency, productivity and effectiveness. This does not assurecorporations existence but also guarantees continual provision of services to thecustomers so as to meet their vision and mission. This research was conducted toexamine the effectiveness of financial incentives towards employees workperformance in the Corporations a focus of Tanzania Posts Corporation and NationalInsurance Corporation of Tanzania Limited – Mtwara Region. In the sample of studyconstituted one hundred (100) respondents, both qualitative and quantitative datawere gathered through questionnaires which were personally administered.Independent and dependent variables were used to measure the aspect at which thefinancial incentives stand as the driving force towards employees’ performance. Forthis case, financial incentive kept as independent variable, whereas employeesperformance regarded as dependent variable where the performance of theemployees depend on the external driving force which is the provision of financialincentives to the staff. On the other hand the study has covered the gap that left byother researchers conducted similar study, which ignored to describe the relationshipbetween financial incentives as the driving force towards employees’ performance inthe corporations. Most of the studies are diverging to explain the concept ofrelationship between “financial incentive” as independent variable and “employees’performance” as the dependent. Instead are trying to explore the relationship of othersimilar variables.
viiiABBREVIATIONSMHPOMtwara Head Post OfficeHPOHead Post OfficePOPost OfficeRMRegional ManagerSMOSenior Marketing OfficerSAOSenior Administrative officerRARegional AccountantSPOSenior Postal OfficerH/EMSHead Expedited Mails ServiceH/COUNTER Head CounterFIsFinancial IncentivesNICNational Insurance CorporationLTDLimited
ixLIST OF TABLESCERTIFICATION .iiCOPYRIGHT . iiiDECLARATION. ivDEDICATION. vACKNOWLEDGEMENTS . viABSTRACT .viiABBREVIATIONS . viiiLIST OF TABLES . ixLIST OF FIGURES . xiiiCHAPTER ONE . 11.0 INTRODUCTION. 11.1 Background Information to the Problem . 11.2 Statement of the Problem . 41.3 General Objective . 51.4 Specific Objectives . 51.5 Research Questions . 51.6 Significance of the Study . 61.7 Limitation of the Study . 71.8 Delimitation of the Study . 71.9 Scope of the Study . 7
xCHAPTER TWO . 92.0 LITERATURE REVIEW . 92.1.0 Definition of Key Terms . 92.1.1 Financial Incentives . 92.1.2. Employee . 92.1.3 Employees’ Performance . 102.1.4 Employees’ Recognition . 102.1.5 Corporation . 112.1.6 Corporation Performance . 112.2 Critical Theoretical Review . 112.2.1 Cognitive Oriented Theory . 122.2.2 Psychological Theory. 122.4 Empirical Studies . 132.5 Research Gap . 152.6 Conceptual Framework for Financial Incentives (FIs) . 16CHAPTER THREE . 193.0 RESEARCH METHODOLOGY . 193.1 Research Paradigm. 193.2 Research Design. 193.2.1 Area of the Study . 203.2.2 Population of the Study . 203.2.3 Sample and Sampling Techniques . 213.3 Data Collection . 233.3.1 Types of data . 23
xi3.3.2 Data Collection Method . 243.4 Data Analysis . 263.5 Validity of Data. 283.6 Reliability of Data . 28CHAPTER FOUR . 304.0 RESEARCH FINDINGS, ANALYSIS AND DISCUSSION . 304.1 Introduction . 304.2 General Information of the Respondents . 304.3 Reasons for the Management of TPC and NIC (T) LTD to Exclude FinancialIncentives to the Employees . 334.4 Methods Developed by the Corporations to Provide Financial Incentives and toInfluence Employees’ Performance . 334.4.1 Types of Financial Incentives Practiced by the Corporations. 354.4.2 The Influence of Financial Incentives Towards Employees Work Performancein the Corporations . 374.5 The Applicability of Financial Incentives in the Corporations . 414.6 Analysis of the Open Ended Questions . 454.6.1 Ways at Which the Staff Receive Financial Incentives from the RespectiveCorporations . 454.6.2 Weaknesses of the Corporation’s management in practicing FIs . 474.6.3 Obstacles Making Employees Not to Perform the Best in the Corporations . 48CHAPTER FIVE . 505.0 CONCLUSION AND RECOMMENDATIONS . 505.1 Discussion of Results with Literature Review . 50
xii5.2 Up-Date of the Conceptual Framework Using the Research Finding of theStudy . 525.3 Implications of Results . 525.4 Recommendations . 545.4.1 Recommendation to Decision Makers . 545.4.2 Recommendation to the Members of the Corporations . 555.5 Area for Further Research . 56REFERENCES . 57APENDICES . 60
xiiiLIST OF TABLESTable 1.1: Employees Provided with Financial Incentives from 1994 to 2011 MtwaraRegion . 2Table 3.1: The Population Profile of Employees in TPC and NIC (T) LTD. MtwaraRegion . 21Table 4.1: The sex of the Respondents . 30Table 4.2: The Age Ranges of the Respondents . 31Table 4.3: The Marital Status of the Respondents . 31Table 4.4: Level of Education of the Respondents . 32Table 4.5: Reasons for Exclusion of FIS to the Employees. 33Table 4.6: Methods of Financial incentives . 34Table 4.7: Types of Financial Incentives Practiced by the Corporations . 36Table 4.8: Level of Employees’ Recognition in the Corporation . 38Table 4.10: Value of the Monthly Earned Income to Finance the General Life. 39Table 4.12: Encouragement of the Financial Incentives to the Employees . 41Table 4.13: Employees to Meet their own Goals while Employed in theCorporation . 42Table 4.14: Recent Changed due to the Effects of Financial Incentives . 44
xivLIST OF FIGURESFigure 1.1: Conceptual Framework for Financial Incentives (FIs). 16
1CHAPTER ONE1.0 INTRODUCTION1.1 Background Information to the ProblemBefore recognition of financial incentives, employees were simply treated as otherinputs under the production of goods and services. There are some scholars whohave undertaken extensive research to recognize how the financial incentivesinfluence the performance of the employees in the corporations to work above theirnormal ability, Luthan (1998). Financial incentive is being observed as extrinsicdriving force to the employees to work hard and efficiently in the organization. Italso stimulates performance and attracts the employees to love the organizations, andto be fully engaged.Koontz, H & Weihrich, H (2004) found that, employees are not motivated solely bymoney and employees’ behavior is linked to their attitudes. For example in TanzaniaPosts Corporation since 1994 to 2004 the employees were not given financialincentives for whatever the best he/she performs for the benefits of the corporation.And from 2005 to 2011 the management of the respective corporations recognizedthat, the employees are doing great annually and are to be provided with financialincentive as recognition for their efficiently performance portrayed in theCorporation. Normally the financial incentives are provided during the WorkersDay, May 1st each year.The table below shows the total number of employees provided with financialincentives for the described period of time.
2Table 1.1: Employees Provided with Financial Incentives from 1994 to 2011Mtwara RegionCorporationYearsNumber of EmployeesTpcNic1994 – 20042005 - 20111994 – 20042005 - 2011016023(Mtwara Region).Source: TPC News 2011& NIC News 2012The period range from the year 2005 to 2011, the employees under TPC and NIC (T)LTD were solely provided with financial incentives. The time range includes eight(8) years; where by the total number of thirty nine (39) employees was provided withfinancial incentives. Source: TPC News (2011) & NIC (2012).Well managedcorporations usually see an average worker as a root source of quality andproductivity gains. The corporation that looks employees as the fundamental sourceof improvement in productivity, they tend to balance between capital investment andemployees treatment (Mine, Ebrahimi, and Wachtel, 1995).Provision of financial incentive is all about twisting employees’ behavior andmaking them to adapt the job’s habit. This is mainly done by making extensiveresearch to understand what do really employees need in the corporations. The mindsof employees can easily be shaped to the job through; learning activity and choice ofassignment, flexible working hours and time off, personal praise, increasedautonomy and authority in their job and time with their manager (Robbins 2005:176).Financial incentives are the direct attracting factors to the employees towards workperformance. It is a sort of reward to the employees which influence the efficiency
3and effectiveness of the employees in the particular organization. If it is practicedwell in the organization automatically will result into the best organization’sperformance. Managers in managing the development of the corporations are tothink much on strengthening manpower and the corporations’ management shouldconsider that; the motivation and employees’ needs are the basic thing and are to befocused at large so as to encourage the employees to work, (Porter 1975).Well financially motivated manpower normally will be the solution towards thebetter progress and performance of the corporations. Financial incentives appear tobe an expense in the Short run while worth in the long run; therefore themanagement should focus much in the long run to harvest better output. This studywill be focusing much into the influence of financial incentives on workperformance. The today’s corporations are in quandary on the way that how to makeemployees to feel comfortable and encouraged to work for the development of thecorporation, because the management itself has not yet recognized for what is to bedone in order to encourage their performance in the corporations, (James 1994).This study will embark on assessing how the financial incentives will influenceemployees to work efficiently for the growth of the TPC and NIC (T) LTD. Thestudy will also provide the possible methods of financial incentives to be adopted bythe two mentioned corporations in running the day to day operations while utilizingthe existing staff, eventually to be the best among many Corporations in Tanzaniaand in the World at large.
41.2 Statement of the ProblemFinancial incentives are the most driving factors towards employees’ performance.The today’s corporations are performing the best in terms of productivity,effectiveness and efficiency resulted from introduction of financial incentives totheir employees in the corporations.TPC and NIC (T) LTD have been providing financial incentives partially to theiremployees for the extra work done, or efficiently recognized employees performingthe best of all with the assumption that performing the best and extra duties are theobligations of the employees, (Postal & NIC News 2012). Partial provision offinancial incentives to the employees performing the best in the corporation hasmade the employees not to engage so much in performing the best because they arenot satisfied from what they receive from the corporation.Robbins, (2005), published an article titled “Organization Behavior” which tried tooverstate about the system of providing the monetary incentive to its employeesmeeting the objectives on time, introducing new skills and creativity. With thatreason the researcher has decided to engage much into assessing the effects offinancial incentives to the employees’ performance in the corporations.TPC and NIC (T) LTD face the problem of effective provision of financialincentives to their employees and also they are among the corporations in Tanzaniawhich involve direct interaction between employees and the customers, in short theyare business oriented corporations. Financial incentives have seen as a majorproblem within the corporations because for the period ranging from the year 1994
5to 2011; TPC has financially motivated 16 (41%) staff whereas NIC (T) LTD hasonly 23 (59%) staff making a total of 39 staff provided with financial incentives.The problem has identified by the researcher by comparing the effectiveness of thementioned corporations from the year 2005 to 2011 where by the corporations hadbeen providing financial incentives to their employees and the impacts onproductions was measured greater than that from the year 1994 to 2004 where therewas no financial attractions at all. Therefore the study will engage much on assessingthe issue of providing financial incentives to the employees in relation to theemployees’ performance in TPC and NIC (T) LTD.1.3 General ObjectiveThe general objective of this study is to assess the effects of financial incentives onemployees’ performance in TPC and NIC (T) LTD (Mtwara Region).1.4 Specific Objectivesi.To assess the reasons for the exclusion of financial incentives by TPC andNIC (T) LTD.ii.To examine how the financial incentives influence the employees’performance in the TPC and NIC (T) LTD.iii.To make recommendations on how the financial incentives have beenaffecting the employees’ performance in the TPC and NIC (T) LTD.1.5 Research Questionsi.What are the reasons for TPC and NIC (T) LTD – Mtwara Region to
6exclude financial incentives to their employees?ii.How do the financial incentives influence employees’ performance in thecorporations?iii.What is to be suggested about financial incentives to the TPC and NIC (T)LTD – Mtwara Region?1.6 Significance of the StudyAccording to the framework of the Hertzberg (2004), said that factors likecorporation’s policy, supervision, interpersonal relations, working conditions, andsalary are hygiene factors rather than motivators. The findings of this study areuseful in different aspects of TPC and NIC (T) LTD, under different cadres as beingexplained hereunder. Through this study, the managements of TPC and NIC (T)LTD - Mtwara Region have appropriate methods to be undertaken in provision offinancial incentives to their employees.The study is helping the managements of TPC and NIC (T) LTD - Mtwara Region tounderstand whether financial incentives lead into making the employees to besatisfied by the work. The study is helping the Managements of TPC and NIC (T)LTD - Mtwara Region to understand the possible problems which may occur in thecorporations as a result of financial incentives.The study is helping themanagements of TPC and NIC (T) LTD - Mtwara Region to develop some strategiesto be dealing with the problems of financial incentives as one of the major factorsthat influence employees’ performance in the corporations.On the other hand, tothe researcher, apart from being a compulsory research paper for fulfillment ofMaster Degree of Human Resources Management is also vital to extend knowledge
7on finding solutions to various social, business, and government problems. Thus thestudy has definitely contribute much on the corporations’ performance andeventually development of stakeholders of the respective corporations.1.7 Limitation of the StudyFor this study, methodology appears to be a very serious problem. The methodologyincludes procedures of collecting data from the samples through methods likeinterviews, questionnaires, and observation. It is a problem because the samples lackuniformity in tasks performing and even in education. Therefore the system ofcollecting data will not be uniform.1.8 Delimitation of the StudyThe researcher has been delimitated to TPC and NIC (T) LTD – Mtwara Region andall findings which have been obtained about the assessment of the effects financialincentives on employees’ performance can not be used as a sample of othercorporations in Tanzania and World at large.1.9 Scope of the StudyThe goal of this research is to describe the impact of financial incentives to theemployees’ work performance. In general the study covered the theoretical aspectsof financial incentives covering both content and process of provision of suchincentives. The empirical section focused on Fredrick Herzberg two – factor contenttheory of motivation to gain insights about the effectiveness of financial incentiveson employees’ work performance in TPC and NIC (T) LTD a case made to Mtwara
8Region. The focus was on financial incentives and strategies to be adopted inprovision of such incentives to the employees in any kind of Corporation existing inTanzania.
9CHAPTER TWO2.0 LITERATURE REVIEW2.1 Definition of Key Terms2.1.1 Financial IncentivesSenge (1990) defined financial incentive as an external driving force designed by theorganization to encourage the creation of high-skill jobs and encourage the growth ofcorporate headquarters and other targeted industries resulted from the effectivenessand efficiency of the employees. James (1994) defines financial incentives asmonetary benefits offered to consumers, employees and organizations to encouragebehavior or actions which otherwise would not take place. A financial incentivemotivates actions which otherwise might not occur without the monetary benefits.Financial incentives are the money provided to the employees for somethingdeveloped by an individual employee and recognized as unique so as to harmonizecreativity, effectiveness, and efficiency of the particular employee in thecorporations.2.1.2 EmployeeRobbins, (2005), defined an employee as the one who contributes to labor andexpertise to an endeavor of an employer and is usually hired to perform specificduties which are packaged into a job. In most modern economies, the term"employee" refers to a specific defined relationship between an individual and acorporation, which differs from those of customer or client.
102.1.3 Employees’ PerformanceBhatti, and Qureshi, (2007) assert that employees’ performance is the productivitymeasure encompassing both efficiency and effectiveness. It is important, therefore,to know who the productive employees are. Productivity is a performance measureencompassing both efficiency and effectiveness. High performing, effectivecorporations have a culture that encourages employee involvement.Porter (1975); defined employees’ performance as the action portrayed by theemployees in the corporation towards the assigned task. The action may be positiveor negative to the organization. The positive action results into better productivity ofthe organization while the negative one leads into poor productivity of theorganization. Aligning the corporation’s objectives with the employees' agreedmeasures, skills, competency requirements, development plans and the delivery ofresults will improve the productivity of the corporations. The emphasis is onimprovement, learning and development in order to achieve the overall businessstrategy and to create a high performance workforce.2.1.4 Employees’ RecognitionKoontz & Wenhrich, (2004) defined Employees Recognition as the most essentiallypositive feedback that lets employees know they are valued and appreciated by theircoworkers and the organization. To have the greatest impact in the workplace,recognition activities should also reinforce and encourage work that advancesemployee, departmental, and/or institutional goals and values. While the Institute aswhole and individual departments is responsible for providing resources andprograms for recognition activities, employee recognition is fundamentally about
11relationships. Employees want their contributions and efforts to be acknowledged bythose they work with on a day-to-day basis, including managers and peers. In fact,employees are most satisfied when recognition comes from a blend of sources.2.1.5 CorporationLuthans, (1998); defined a corporation as a separate legal entity that has beenincorporated through a legislative or registration process established throughlegislation. Incorporated entities have legal rights and liabilities that are distinct fromtheir employees and shareholders, and may conduct business as either a profitseeking business or not for profit business. Most jurisdictions now allow the creationof new corporations through registration. In addition to legal personality, registeredcorporations tend to have limited liability, have shareholders who own or hold sharesof a type of security commonly called stock, and are controlled by a board ofdirectors who are normally elected or appoin
normal ability, Luthan (1998). Financial incentive is being observed as extrinsic driving force to the employees to work hard and efficiently in the organization. It also stimulates performance and attracts the empl
May 02, 2018 · D. Program Evaluation ͟The organization has provided a description of the framework for how each program will be evaluated. The framework should include all the elements below: ͟The evaluation methods are cost-effective for the organization ͟Quantitative and qualitative data is being collected (at Basics tier, data collection must have begun)
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Le genou de Lucy. Odile Jacob. 1999. Coppens Y. Pré-textes. L’homme préhistorique en morceaux. Eds Odile Jacob. 2011. Costentin J., Delaveau P. Café, thé, chocolat, les bons effets sur le cerveau et pour le corps. Editions Odile Jacob. 2010. 3 Crawford M., Marsh D. The driving force : food in human evolution and the future.
