All through history, the problem
of suitable reward for work done has always presented some difficulties. The
essence of investment is to create wealth, and for wealth to be created, the
manager must plan the best way to combine the available organizational
resources: land, labour, money, management and technology to achieve the
organizational goals. When the wealth is created, different portions of its goes to the different factors
of production, referred to above as organizational resources. The part that
goes to human capital(workers) accrues to them as wages or salaries and other
welfare packages.
According to Cole(2002),
organizations will use their wage system to retain and motivate such employees.
Of course, pay is not the only factor involved in attracting, retaining and
motivating employees, but it is an extremely important factor. Pay can also be
used to encourage employees to work productively and with particular attention
to the quality of their work.
In his contribution, Ogunna(1999: 258)opined that:
Wages/salary is the cost of the employee’s service the employer. Its
primary purpose to the employee is to provide him with means of subsistence;
while on the other hand, its primary purpose to the employer is to motivate the
worker in order to provide performance for organizational efficiency and
productivity.
An appropriate reward programme
is designed to motivate and reward good performance. Where wages and salary
administration is carried out in a manner in which increases in pay are made on
the basis of merit, those who put in low performance are given low
remuneration. Wage and salary plan would serve as a powerful instrument of
motivation.
According to Edward, Susan and
Gerald (1998 :156):
The … feature of reward systems that is crucial
for employee involvement, concerns how the base pay of individuals is
structured and set.
In order for a pay system to
support employee’s involvement, it needs to send the proper message about
individual development, growth, learning and the organizational culture.
Whitney (1994: 345) in his book,
“The Trust Factor” opined that:
Companies should begin with some base pay
and give all
employees the same percentage
merit
rise. Doing so, he says, sends out the
message
that everyone in the company is important.
However, the above view may work
out to some extent, but it would on the long-run encourage idleness, as some
lazy workers may relax, believing that when increment comes, everybody is bound
to benefit equally.
In this vein, Alan,
Robert and Terence (1999: 447) posit
that: “A salary structure defines the different pay levels existing within an
organization, and has two key components”:
- Grades or level into which jobs of equivalent ‘value’ or ‘size’ are grouped.
- Pay ranges associated with each grade or level that are calculated according to the organizations desired market and market positioning (according to the reward strategy).
For effective reward
administration, whatever should serve as wage, salary or welfare package must
be good or reasonable enough as to enable the worker and his dependents
maintain a good living.
Meanwhile, no matter how low the
employees’ performance may be, there is a level at which the wage cannot fall
below, because at a pay rate below that level, employees would react
negatively; though restriction of output, massive labour turn-over,
absenteeism, production of many rejects etc.
Naturally, labour is not demanded
or supplied for direct satisfaction of a particular need or task; rather the
demand for labour is a derived demand which means that it is demanded and
supplied based on the productivity or services it renders. In consonance with this,
Bratton (1999: 320) opined that:
The supply of human resources focuses on
many factors
including the wage rate for the particular occupation,
its status, the qualification of employees and
preference of people regarding paid work and leisure.
In support of the above view,
other major factors that determine the reward for labour are skill,
qualification, experience, the size of the industry/firm, the nature of the
task, the productivity and the cost of the goods to be produce or the services rendered
or to be rendered.
This goes to buttress the fact
above, that one of the factors that determine what an employee receives as a
reward is determined by the quality or cost of the goods or services to be
produce or produced. However, in Nigeria situation, there are many that produce
very highly values products or services but are paid poorly, maybe as a result
of the economic melt-down or selfishness of the entrepreneur or the government
as the case may be.
Aluko, Odugbesan, Gbadamosi and
Osuagwu (1998: 178) while contributing on Business Policy and Strategy in a
book “Organic Business Functions” revealed that one of the ways that an
organization can succeed is:
To offer a remuneration package of pay and
benefits which
compares favourably with other firms, within a
structure based on recognized differentials and reward for
individual merit.
In Nigeria, since the Udoji
Commission of 1974, there have been so many other salary review commission and
panel, yet the Nigeria worker is still regarded as the least paid, besides all
these salary/wages reviews, productivity seems to be diminishing after every
subsequent salary increase. This goes to explain and confirm the facts raised
earlier, that apart from rewards, factors such as skills, experience etc, play
a prominent role in employees’ performance.
Brown and Welsh (1995:360) while
discussing on labour market said thus:
In a perfect market for labour, management
would have no discretion over what to pay. If pay
fell below the ‘going rate’ or if the level of
effort demanded rose above what was normal, the employees
would according to traditional economic theory
start to leave and the employer will then have to move back
to be in line with others, in order to remain in
business.
In line with the above
postulation, employers try to pay the going rate in order to remain in
business. In fact, many Nigerian organizations due to the economic crunch which
has occasioned unemployment pay anything they like believing that the employee
has no option.
Telgan (2001), stated that
without wage transparency. Market pressures cannot work their true magic and
ensure that compensation reflects real value.
To differ from those that regard
money as the only major source of reward, Bakke (2001:288) advised:
Money shouldn’t be used as a weapon in the fight for talent. People should join the
company because they value an environment where they can use all their gifts and skills without
being squelched.
Appleby (1994) in his
contribution advised that “wages or reward policy and methods cannot and should
not be considered in isolation from country’s economic policies”. He noted that wages may account for up to 80
percent of total cost in some industries. He identified some of the objectives
of reward as follows:
- To attract and retain sufficient staff of the required caliber to meet the organization’s objectives
- To provide staff with incentives for better work
- To have a policy which is logical and consistent, easily understandable and flexible.
In the government sector, wage
and salary structure is usually represented as a pay ranges, each consisting
one or more rates or steps. There is a casual relationship that exist among an
organization’s wage and salary structure, reward policies and objectives, the labour
market in which the organization is situated and organizational job-evaluation
plan. Policy decisions include the objectives of reward: membership, merit or
performance, equity, market value, and organizational job value. These
decisions are carried out through the wage and salary plan.
One way to determine whether an
organization’s salaries are competitive with comparable positions in other
companies is to participate in salary surveys. Salary survey may be conducted
by one organization or sponsored by associations to which a company is a
member, or by group of firms that are willing to share and compare data
(Arthur, 1995).
In Nigeria, the present system of
wage determination was largely inherited from the colonial era. Based on its
own historical experiences, the British home government wanted wages and
working conditions in all sectors of the colonial economy to be determined by
collective bargaining with minimal government intervention.
Sim (2001:250) while contributing
on the best way to fix workers salary stated thus:
Employees should be involved in theDevelopment of the system, contributing ideas on the salary ranges of different jobs
and on how merit is actually measured… the system
should be open, so that employeesknow their
salary range and have a clear idea of where their job fit into the company’s
pay structure.
However, the insatiable nature of
man makes one to disagree with Sim, because man in his real nature is never
satisfied with any condition, the more you involve him, the more he would
agitate.
Cascio (1995:160) recommended
that:
The actual remuneration (reward) plan should
not be strictly a matter of what is being paid
in the market place. Instead wages and salary plan
must drive from an assessment of what must be
paid to attract and retain the right quality of
employees, what the organization can afford, and what
would be required to meet the organization’s
strategic goals.