AN ANALYSIS ON THE USE OF REWARD MANAGEMENT AS AN INCENTIVE FOR THE RETENTION OF STAFF WITHIN THE HIGHER EDUCATION SECTOR ( A CASE STUDY OF SELECTED HIGHER INSTITUTIONS IN OSUN STATE)

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

The Key employee retention is for many organizations a strategic intention as the war for talent plays out in the labour market. Retention of critical skills is a prerequisite to the success of an organization in the medium to long term. Acquisition of key skills and talent therefore forms an important aspect of organization success and provides a key competitive advantage. Organizations develop various reward strategies and practices to ensure that critical human capital resources are not only attracted but also retained and fully exploited for the benefit of the organization. Reward is one of the most important components of an organizations retention strategy. Therefore, the retention of employees has become of paramount importance and a critical issue for an organization as there is extensive evidence regardless of the organization facing retention challenges in today competitive labour market during the extreme economic downturn. Armstrong (2009) states that rewarding people involves reward management practices concerned with design, implementation and maintenance of reward systems that are geared to the improvement of organizational, team and individual performance. It includes both financial and non-financial rewards. Reward management is term related to factors that can satisfy and motivate the employees to deploy themselves towards an organization to achieve organizational goal, building up trust and being committed toward the organization, which can induce them to be retained long term in the organization. It is imperative therefore those organizations develop and install reward strategies and practices that motivate staff to remain in the organization. Organizations should adopt the all-encompassing approach of total reward, as this is likely to provide a greater attraction and retention to a greater number of employees. Reward is a critical motivator towards an employee’s choice to remain in an organization. Rewards have been shown to motivate performance when certain conditions exist, Blinder (1990). Individuals are best motivated when they believe that their behaviours will lead to certain outcomes that are attractive and that performance at a desired level is possible. Vroom suggests that individuals will choose behaviours they believe will result in the achievement of specific outcomes they value. In deciding how much effort to put in work behaviours, individuals are likely to consider three things; valence, instrumentality and expectancy. All these factors are referred to as VIE and are considered to influence motivation in a combined manner. According to Ryan and Pointon (2015) managers should attempt to assure their employees that increased effort will lead to higher performance which will lead to valued rewards. Recently, research revealed that employee retention is enhanced by the compensation and reward system, Rashid and Zhao (2009). A research findings by Metcalf et al (2015) found that in 2014-2016 approximately 87% of academic staffs were working in the same institution those who worked in the previous year and recruitment rate was 13% and this figure include a high percentage of those that were new to the institution. It was reported that nearly 7% of academic staffs has left. At the same time the number of staffs recruited has greater than the number leaving. These figures indicate that the degree of differences between these two figures under-recording of leavers and that leaving would be closer to the level of new recruitment. Therefore, the turnover rate in academic jobs was similar or slightly higher than that for all professional employees in the economy which was 13% in 2014. A comparison study has had been found that between the period of 2010-1995 and 2014-2016 the turnover rate was between 2.8% and 5.3% per annum (PREST, 2011). Another evidence of a growth in academic staff’s turnover comes from the findings of the Independent Review of Higher Education Pay and Conditions, which was in 2014 at 6.4% (Bett, 2012). The Academics in the developed countries were situated about in the middle of the developed countries in term of academic salaries in pounds sterling. A study by the Dolton and vander Klaauw (2010, 2012) found that “the higher the teachers’ salaries the less likely they were to leave and the higher the expected wage elsewhere, the more likely they were to leave. However, expected wages only affected the propensity to leave teaching for a non-teaching job, they had no influence on the exit probability into non-employment“. The retention of the academic staffs in the higher Institute has recently been extended by Chevalier et al. (2011) to examine these effects in five cross-sections of university graduates covering the period 1960 to 2011. It shows how a time-series approach is a particularly powerful way to identify the effects of relative pay. According to this study it has been found cyclical differences in relative pay for teachers and that the wage effects of alternative employment were stronger in periods when they were higher relative to teachers’ salaries. A lot of research has been done in the public and private sectors on the employee retention by the reward management. Therefore, there has been need to examine the use of reward management as an incentive to retention of staff within the higher educator sector.

1.2 STATEMENT OF THE PROBLEM

Researches point out that employees in general and more experienced employees specifically are motivated through non-financial rewards like work life balance, personnel appreciation, challenging tasks, special projects etc. (Jeffords et al., 2016; Hytter, 2007). There are contradictory views as to the effectiveness of monetary rewards.  Thus, organizations are engaged in developing innovative compensation packages that not only includes financial benefits but also non-financial benefits to attract and retain employees (Zingheim & Schuster, 2007). However, compensation packages in form of total rewards are tied skills and capabilities of individuals rather than experience in modern knowledge based economy (Chen & Hsieh, 2009; Bates, 2012). Retention is not only problem for profit oriented organizations but not for profit organizations such as universities are also facing the dilemma of retaining capable and qualified academic staff. The internationalization of education has made higher education institutions competitive in their respective fields. Universities are in run for skilled staff with attractive reward packages. High quality academic staffs are the corner stone of any successful educational institution, as these are the highest source of knowledge and awareness production institutions in the country (Khalid, Irshad, and Mahmood, 2012). Previous researches highlight that academic staff focus more on their intrinsic satisfaction than extrinsic (Wu and Short, 2011; Place, 2016). However, research also emphasizes that both intrinsic and extrinsic satisfaction predict satisfaction of academic staff (Dvorak and Philips, 2014). The present study investigates the use of reward management as an incentive for the retention in the higher education institutions. Higher education system is highly competitive with more than 135 institutions in public and private sector are competing for the students and funding. In this scenario, having a capable, qualified and skilled academic staff on their payroll will not only enhance their prestige and ranking in the country but also helps them enrol more students and are competitive. However, these educational institutions are competing among themselves as well as with the industry to attract and retain qualified employees. According to an estimate there is a high level of turnover of teaching staff in higher education institutions especially public sector universities. Thus, retention presents a huge problem for many higher education institutions in Nigeria, and is true for many developing countries as well.

1.3 AIMS OF THE STUDY

The major purpose of this study is to examine the use of reward management as an incentive for the retention of staff within the higher education sector. Other general objectives of the study are:

1. To examine the difference in methods of reward system use in higher education sectors in Nigeria.

2. To examine the role of reward management (RM) in employee retention

3. To examine the impact of reward management on staff retention within the higher education sector.

4. To examine the rate of employee turnover in higher education sector.

5. To examine the relationship between reward management and staff retention within the higher education sector.

6. To suggest ways in which management of the higher education sector will aid in improving the reward system of Nigerian tertiary institutions.

1.4 RESEARCH QUESTIONS

1. What is the difference in methods of reward system use in higher education sectors in Nigeria?

2. What is the role of reward management (RM) in employee retention?

3. What are the impacts of reward management on staff retention within the higher education sector?

4. What is the rate of employee turnover in higher education sector?

5. What is the relationship between reward management and staff retention within the higher education sector?

6. What are the ways in which management of the higher education sector will aid in improving the reward system of Nigerian tertiary institutions?

1.5 RESEARCH HYPOTHESES

Hypothesis 1

H0: There is no impact of reward management on staff retention within the higher education sector.

H1: There is a significant impact of reward management on staff retention within the higher education sector

Hypothesis 2

H0: There is no significant relationship between reward management and staff retention within the higher education sector

H1: There is a significant relationship between reward management and staff retention within the higher education sector

1.6 SIGNIFICANCE OF THE STUDY

The significance of the current study lies in its theoretical and practical contribution as follows:

1. It will make a significant contribution to the body of knowledge on non-monetary and monetary rewards and provide useful suggestions in terms of designing a better reward program and strategies to higher education sector and other organization in Nigeria.
2. The study is also important in the sense that it is aimed at sensitizing policy makers and planners to have a comprehensive view in total reward system in our Universities, public and private organization.
3. The study is important because it will serve as a reference point for both present and future researchers who intend to carry on similar study.

1.7    SCOPE OF THE STUDY 

The study is based on the analysis of the use of reward management as an incentive for the retention of staff within the higher education sector: case study of selected higher institutions in Osun state

1.8 LIMITATION OF STUDY

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.8 DEFINITION OF TERMS

Reward: Can be defined as something given or received in recompense for worthy behaviour or in retribution for evil acts. It can also be defined as the return for performance of a desired behaviour; positive reinforcement.

Reward Management: It deals with the design, implementation and maintenance of reward processes and practices that are geared to the improvement of organizational, team and individual performance.

Productivity: Productivity is the output unit / per labour input into the production process given the level of existing technology.

Remuneration: This is the financial reward accruing to employee for his or her performance in the organization.

Motivation: It is the inner drives that arouse direct and maintain an individual behaviour toward accomplishing organization goals.

Pay Structure: Is a framework for managing base pay progression over time for employee benefit.

Reward Strategy: It is a definition of the intention of the organization on how its reward policies and process should be developed to meet business requirement.