CHAPTER 1

INTRODUCTION

1.1 Background of the Study

In the business world, the main purpose of the organization is profit and efficiency.Employee Performance has to do with accomplishment standard of accuracy, completeness, cost and speed. Performance is seemed to be the fulfillment of an obligation in a manner that release the performer from all liabilities under the contract. This means that an employee must be properly, evaluated in term of their productivity, skills taken decision and total commitment to their job so as to enable the organization to achieved expected goals (Kuvaas, 2006). Employee performance is derived from the word job performance that means real work produced an employee within a specific time period. Performance is a comparison between the work of the real compared to the standard set by the company (Dessler, 2000). Performance is the quantity and quality of produced or services rendered by a person in doing the job (Luthan, 2005). Performance is the work of behavior (Armstrong, 1999). Performance is the relationship betweenwork and behavior.

Employeeperformance is the working result of the employee within a certain time period. Performance is the degree to which the employee reaches the job requirements (Simamora, 1995). Performance is the achievement record resulting from the acquisition of a particular job function or activity during a specific time period (Luthan, 2005).

Employee performance measurement include: quality (fineness, cleanliness, accuracy), the speed of time, the number and kinds of jobs, skills in using tools, and knowledge of the work. Luthan, (2005). One of the ways an organization can enhance employee performance is through fringe benefit.

According   to   Mathis   and   Jackson (2003), fringe   benefits   are   forms   of   indirect compensation given to an employee or group of employees as a part of organizational membership.  Bratton and Gold (2009) define them as that part of the total reward package provided to employees in addition to base or performance pay.  Fringe benefits focus on maintaining (or improving) the quality of life for employees and providing a level of protection and financial security for workers and for their family members. Like base pay plans, the major objective for most organizational fringe compensation programs is to attract, retain and motivate qualified, competent employees (Bernardin, 2007).  Mathis and Jackson (2003) continue to state that an employer that provides a more attractive benefits package often enjoys an advantage over other employers in hiring and retaining qualified employees when the competing firms offered similar base pay.  In fact, such benefits may create “golden handcuffs,” making employees more reticent to move to other employers. Some common examples are; retirement or pension plans, medical and dental insurance, education reimbursement, time off, paid vacation and use of company car.

According to a study carried out by the US Chamber of Commerce in (2006), fringe benefits in the U.S., were not a significant part of most employees’ compensation packages until the mid-twentieth century.   For example, in 1929, benefits comprised only about 3 percent of total payroll costs for companies.  However, employee benefits in the U.S. now comprise approximately 42 percent of total payroll costs.  Several things account for the tremendous increase in the importance of employee benefits in the U.S.  In the 1930s, the Wagner Act significantly increased the ability of labor unions to organize workers and bargain for better wages, benefits, and working conditions.  Labor unions from the 1930s to 1950s took advantage of the favorable legal climate and negotiated for new employee benefits that have since become common in both unionized and non-union companies.

Fringe benefits have generally constituted a higher proportion of total employee compensation in Europe than in the United States.   In Europe, they are most often the result of legislation, whereas in the United States collective bargaining has been more important in gaining such benefits for workers.  The prevalence of fringe-benefit programs increased sharply during World War II because controls on this type of compensation were less stringent than controls on wages (Martocchio, 2006).

According to Long (2006), Benefits are a form of indirect pay within a compensation system.  They are rewards (other than wages, salaries or performance-related payments) that employees receive in return for their continued service to the organization. They are designed to protect employees and their families from loss of income due to health problems or other work-related financial disruptions, and can improve the employees‟ general quality of life through special programs and services in the workplace.

In many organizations in Africa, the approach towards pay and benefits differentiates between staff at different levels of employment hierarchy.   The factors which affect employees‟ salaries  and  wages  can  be  categorized  into  two;  those  controlled  by  the employer and those imposed from external forces such as the government.  In both cases, the salaries and wage components are identified among others as; fringe benefits given as a result of being an employee of an organization in the form of hardship allowance in remote area,  house rent allowance, medical benefits, provident funds, gratuity funds, pension funds, superannuation benefits in the form of group linked insurance scheme, accident and death compensation while on duty, statutory funds (wage deductions), leave with pay, education allowance, and company cars.  Fringe benefits are also called perquisites and are either provided by the employer on his own initiative or they are the result of a collective bargaining agreement or state legislative.  They are provided to motivate the workers and retain them for organizational efficiency and effectiveness (Monappa, 1999). From the foregoing therefore, the study was determined to examine the relationship between fringe benefits and employee performance in some selected commercial banks in Port Harcourt, Rivers State.

1.2 Statement of the Problem

Numerous surveys and experience of human resources professionals have shown that while employees are concerned about how to earn more pay and enjoy attractive conditions of service, employers on the other hand would be striving to cut costs so as to post impressive profit at the end of the accounting period (Milkovitch and Newman, 2004).   Meanwhile, studies have shown that provision of motivators has been resulting in employees’ increased interest in the job, enthusiasm and increased productivity at work and absence of motivators has been the other way round (Mathis and John, 2003).

Research into employee benefits and  employee commitment is becoming more important because some researchers have examined the relationship between them (Christoph, 1996) and also the relationship between employee benefits, motivation and productivity (Hong, et al., 1995).  There is however, still some debate over fringe benefits on whether they facilitate in employee productivity leading to organizational performance and  do  benefits  impact  on  an  organization‟s ability  to  attract,  retain  and  motivate employees leading to productivity and improved organizations‟ performance (Milkovitch and Newman, 2004).

From the initiation of globalization, the foremost confront for manager is to expertise different strategies to boost firm’s performance (Habib, Khurram &Idress, 2010).    For    the    strength   of   an    organization   job satisfaction plays a vital role which has significant effect on employee performance. And the word performance we used to pass on   the   individual aptitude to  be inspired,  stirring, pioneering and to determinant to achieving the  goals on  an  organization (Walumbwa & Hartnell,  2011). Form the foregoing therefore, the study seeks to examine the relationship between fringe benefit and employee performance.

The main objective of the study is to examine the relationship between fringes benefit and employee performance.

1.       To examine the relationship between long services award and employee performance.

2.       To examine the relationship between staff loan schemes and employee performance.

3.       To examine the relationship between leave allowances and employee performance.

1.4 Research Questions

The following research questions are posed to guide the study:

1.       To what extent does long services award associate with employee performance.

2.       To what extent does staff loan schemes associate with employee performance.

3.       To what extent does leave allowances associate with employee performance.

1.5 Statement of Hypotheses

The following hypotheses were formulated to guide the study:

HO: There is no significant relationship between fringe benefit and employee performance.

HA: There is a significant relationship between fringe benefit and employee performance.

1.6 Significance of the Study

There is some debate over fringe benefits on whether they facilitate organizational performance and whether they impact on an organization‟s ability to attract, retain and motivate employees. Conventional  wisdom  also  says  that  fringe  benefits  can  affect recruitment and retention, but there is little research to support this conclusion.   This statement indicates that there is a gap which has not been explored and therefore this study was undertaken to seek to establish whether fringe benefits really do have an effect on employee performance and make appropriate recommendations on how to address the problem.

The researcher benefitted from the study as it added on to the growing body of knowledge on the roles of fringe benefits in organizations. The study will also act as a source of reference for further studies to be done on human resource in most organizations in Nigeria.

Employees will also benefit much from this study. Fringe benefits being one of the huge components in determination of organization performance, most of the employees will use the recommendations given to enhance high level of cooperation in their various job groups.

The study will also help the Government and other employers with information which will help them come up with policies and legislations on the administration of fringe benefits. Future researchers will also benefit from this study because it will provide them with relevant information on the topic.

1.7     Scope/Delimitation of the Study

The study is delimited under the following heading: content scope, geographical scope and unit of analysis.

Content Scope: The content scope of this study involves an investigation to ascertain the relationship between fringe benefits and employee performance. The dependent variable is employee performance, measures by productivity, effectiveness and efficiency. While independent variable is fringe benefit measure by long service award, staff loan schemes and leave allowances.

Geographical Scope:This study is delimited in deposit money banks in Port Harcourt Metropolis with special reference to some selected deposit money Banks.

Unit of Analysis: The unit of analysis in this research involves the individuals at the time of carrying out the study. The scope of this study is to ascertain the relationship between fringe benefit and employee performance. Hence it is a micro level study.

1.8     Limitation of the study

In carrying out an investigation of this native the researcher must of necessity be faced the following constraint.

Firstly, the time constraint’s the time frame provision for this study was short.

Secondly, Financial constraints. Usually, a study of this nature involved some level of expenditure therefore, finance was also a limiting factor.

Thirdly, Poor response from the respondent and inability to access the entire population of the study. In the next segment significance of the study will be discussed. Lastly, poor measurement instrument.

In the next segment, definition of the study will be discussed.

1.9     Definition of Terms

The following terms has been defined:

EFFECTIVENESS:- This is the capability of producing a desired result or the ability to produce desired output. When something is deemed effective, it means it has an intended or expected outcome, or produces a deep, vivid impression.

EFFICIENCY:- This it is the ability to avoid wasting materials and time in doing something or in producing a desired result.

EMPLOYEE PERFORMANCE:- This is defined as the real work that an employee produced within a specific time period.

FRINGE BENEFIT:- This is the indirect compensation given to an employee or group of employees as a part of organizational membership.

LEAVE ALLOWANCES:- This is the allowance paid for time off work granted by employers to employees to be used for whatever the employee wishes.

PRODUCTIVITY:- This it is the successful transfer of input to output at the lowest possible cost. Productivity implies both efficiency and effectiveness.

STAFF LOAN SCHEMES:-   This it is the financial support given to employee in terms of loan for emergency or financial difficulties.