CHAPTER ONE
INTRODUCTION
1.1. Background to the Study
First Bank of Nigeria: A Pillar of the Nation's Financial Landscape
The banking sector in Nigeria stands as a linchpin in the nation's economic framework, facilitating growth, investment, and financial stability. At the heart of this dynamic landscape lies First Bank of Nigeria, an institution steeped in history and resounding with a legacy of service spanning over a century. Established in 1894, First Bank emerged as the pioneering financial institution in the West African region, charting a course that would significantly influence the trajectory of banking in Nigeria. Originally known as the Bank of British West Africa, it has transformed and adapted over time, evolving into a cornerstone of the nation's financial ecosystem.
First Bank's journey mirrors the narrative of Nigeria's economic evolution. From its humble beginnings as a branch of a British bank in Lagos, it has grown to become a behemoth with a sprawling network of branches and subsidiaries, spanning not only Nigeria but also various international markets. Today, it is not merely a bank but an institution intertwined with the economic aspirations and financial well-being of millions of Nigerians.
The Significance of First Bank in the Nigerian Banking Sector
The footprint of First Bank in the Nigerian banking sector is imprinted with a profound significance. It stands as a testament to the resilience and adaptability of an institution in the face of dynamic economic and regulatory environments. Its extensive reach, comprising thousands of branches and a vast network of ATMs, has transcended geographical boundaries, ensuring that even the farthest corners of Nigeria are touched by the benefits of modern banking. This reach is a critical pillar of financial inclusion efforts, ensuring that a significant portion of the population gains access to formal financial services.
Beyond accessibility, First Bank's impact resonates in the realms of economic empowerment and development. Through its extensive lending programs and financial solutions, the bank has played a pivotal role in fostering entrepreneurship, supporting small and medium-sized enterprises (SMEs), and fueling the engines of economic growth. Its contributions extend to vital sectors such as agriculture, manufacturing, and infrastructure, underpinning the nation's progress and prosperity.
The Nexus of Financial Reward and Workforce Productivity
Employee Productivity: The Cornerstone of Organizational Success
Within the multifaceted domain of banking, employee productivity emerges as a linchpin of organizational success. A bank's operations are intricately tied to the competence, motivation, and efficiency of its workforce. In an era characterized by technological advancement and fierce competition, the human element remains irreplaceable. Employees are not mere functionaries; they are the lifeblood of the institution, orchestrating the symphony of financial services that underpin the economy.
The importance of a motivated and productive workforce in the banking sector cannot be overstated. From frontline personnel interfacing with customers to the back-office experts navigating intricate financial landscapes, each role contributes to the seamless functioning of the institution. Customer satisfaction, operational efficiency, and compliance with regulatory frameworks hinge on the capabilities and dedication of the workforce.
The Paradigm of Financial Rewards: Catalysts for Productivity
In recognizing the pivotal role of employees, financial institutions like First Bank deploy a spectrum of reward mechanisms designed to incentivize, motivate, and retain top talent. Financial rewards encompass an array of components, including salaries, bonuses, commissions, profit-sharing, and various forms of incentives. These components are strategically structured to align the interests of employees with the objectives of the bank, fostering a symbiotic relationship where individual success contributes to the collective triumph of the institution.
The efficacy of financial rewards in enhancing employee productivity has been a subject of extensive research and scholarly inquiry. Studies have delved into the psychological underpinnings of motivation, exploring how monetary incentives influence performance, job satisfaction, and organizational commitment. Moreover, the design and implementation of reward systems have emerged as strategic tools for talent acquisition and retention in a competitive employment landscape.
1.2. Statement of the Problem
The banking sector stands as a linchpin in the economic framework of Nigeria, playing a pivotal role in facilitating growth, investment, and financial stability. Within this dynamic landscape, First Bank of Nigeria, with its extensive legacy and influence, occupies a central position. Established over a century ago, First Bank has witnessed and actively contributed to the evolution of the Nigerian banking industry. However, as the banking sector continues to navigate a rapidly changing global economy, it confronts a host of challenges that demand critical examination.
Workforce Productivity: A Crucial Determinant of Banking Success
In the intricate tapestry of banking operations, workforce productivity emerges as a pivotal factor that can make or break an institution. The efficacy with which employees execute their responsibilities, interact with customers, and navigate complex financial landscapes directly influences customer satisfaction, operational efficiency, and adherence to regulatory frameworks. However, despite its critical significance, the issue of workforce productivity in the Nigerian banking sector, specifically within First Bank, has not been comprehensively addressed in existing literature.
The Paradox of Financial Rewards and Productivity
Financial rewards, including salaries, bonuses, commissions, and other incentives, constitute the cornerstone of employee motivation and engagement. These mechanisms are strategically designed to align the interests of employees with the organizational objectives, thereby fostering a culture of high performance. However, the intricacies of how these rewards systems operate within the context of First Bank, and how they impact workforce productivity, remain underexplored.
Gaps in Understanding and Implementation
While extensive research has been conducted on employee motivation and productivity in various industries, the specific nuances of the banking sector in Nigeria, and more specifically, within First Bank, have been overlooked. This gap in the literature is further compounded by the dearth of empirical studies that rigorously analyze the relationship between financial rewards and workforce productivity in the context of First Bank.
Furthermore, the evolving nature of the banking industry, characterized by technological disruption, regulatory changes, and shifting customer expectations, necessitates a nuanced understanding of how these external factors intersect with internal reward systems to impact employee performance. Without a comprehensive analysis, it becomes challenging for First Bank to fine-tune its reward strategies and optimize workforce productivity in alignment with its strategic goals.
The Imperative for Research
Addressing these critical gaps in knowledge and understanding is paramount not only for the success and sustainability of First Bank but also for the broader banking sector in Nigeria. By unraveling the intricacies of financial rewards and their impact on workforce productivity, this research aims to provide actionable insights and evidence-based recommendations that can inform strategic decisions within First Bank and potentially serve as a blueprint for other financial institutions in Nigeria.
1.3. Objectives of the Study
The primary objective of this study is to examine the effect of financial reward on workforce productivity in First Bank of Nigeria, PLC. In order to achieve the primary objective, the following specific objectives are to:
I. assess the effect of pay on efficiency of workforce productivity in First Bank of Nigeria, PLC .
II. examine the effect of bonus on effectiveness of workforce productivity in First Bank of Nigeria, PLC
III. ascertain the effect of allowance on profitability of workforce productivity in First Bank of Nigeria, PLC
IV. determine the effect of incentive on innovation of workforce productivity in First Bank of Nigeria, PLC
1.4. Research Questions
The following research questions are poised for the study.
I. What is the effect of pay on efficiency of workforce productivity in First Bank of Nigeria, PLC?
II. How does bonus affect effectiveness of workforce productivity in First Bank of Nigeria, PLC?
III. What is the effect of allowance on profitability of workforce productivity in First Bank of Nigeria, PLC?
IV. What is the effect of incentive on innovation of workforce productivity in First Bank of Nigeria, PLC?
1.5. Research Hypotheses
The research hypotheses for this study are formulated in their null form.
Ho1: Pay has no significant effect on efficiency of workforce productivity in First Bank of Nigeria, PLC.
Ho2: Bonus has no significant effect on effectiveness of workforce productivity in First Bank of Nigeria, PLC.
Ho3: Allowance has no significant effect on profitability of workforce productivity in First Bank of Nigeria, PLC.
Ho4: Incentive has no significant effect on innovation of workforce productivity in First Bank of Nigeria, PLC.
1.6. Operationalization of the Variables
The dependent variable is workforce productivity, represented by Efficiency (EF), Productivity (PD), Effectiveness (ET) and Innovation (IN). On the other hand, financial reward being the independent variable is represented by Pay (PA), Bonus (BS), Allowance (AL), and Incentive (IC).
Where Y= Dependent variable
X= Independent variable
α˳ = Constant
ꞵ1 ꞵ3 = Coefficient of independent variable
µᵢ = Stochastic value or error terms
Y= f(X)
X= Financial Reward
X= f(x1, x2, x3, x4)
x1 = Pay (PA)
x2 = Bonus (BS)
x3 = Allowance (AL)
x4 = Incentive (IC)
Y= Workforce Productivity
Y= f(y1, y2, y3, y4)
y1 = Efficiency (EF)
y2 = Effectiveness (ET)
y3 = Profitability (PT)
y4 = Innovation (IN)
The four specific objectives are operationally expressed as:
Y1 = b0 + b1x + u ……………………………… equation 1
Y2 = b0 + b2x + u ………………………………. equation 2
Y3 = b0 + b3x + u ……………………………….. equation 3
Y4 = b0 + b4x + u ……………………………….. equation 4
1.7. Scope of the Study
The study seeks to examine the effect of financial rewards on workforce productivity in First Bank of Nigeria, PLC. The reason for using First Bank of Nigeria, PLC is because of its high quality service and popularity. The population for this study is given as 8,968 employees of First Bank of Nigeria, PLC, Ikeja Branch of Lagos State, for the units of analysis are employees at junior, Middle, Senior, and Management level employees. The sample size for the study is given as 383 employees. The simple random sampling technique will be adopted to administer the questionnaire in order to ensure that both male and female employees have equal chance of being selected for the study, while design adopted for the study is a survey research design.
1.8. Significance of the Study
This study will be important to the management of First Bank of Nigeria, PLC as it will offer ways through which the management can review their existing motivation packages with the aim of enhancing employees’ productivity. In addition it will be important to organization as it will provide them with adequate information on the importance of financial rewards such as increase in pay, bonuses for performance, allowance and other incentives in enhancing the productivity of employees and organization performance as a whole.
This study is important to the industry in that, it will increase and expand the industry level of knowledge on the present motivation packages in the Nigerian banking sector, and offer them with vast understanding and knowledge on deciding a minimum pay for employees in the banking sector.
The study is important to the government since they have the capacity to formulate policy and guidelines that will be of positive interest to employees. Thus, the government can formulate policy that will enhance employee minimum pay across all sectors in the country.
The findings of this study will be of benefit to University authorities as it will provide them with information that will be useful to motivate its employees both academic and non-academic staff. In addition, findings will be of benefits to students and other researchers who will want to carry out future research in relation to the study.
1.9. Definition of Operational Terms
Pay: refers to the weekly or monthly payment an employee received for his services to the organization (Ojoromi, 2016)
Reward: refers to when an employee is offered reward packages such as bonuses, salary increment, etc in order to enhance his or her job performance (Sajuyigbe, Olaoye, & Adeyemi, 2016)
Effectiveness: refers to the level of results from the action of employees and managers(Prokopenko, 2017)
Motivation: refers to an inner drive that energizes activities compels and moves an individual to act or behave positively on a certain manner (Leshabari, Muhondwa, Mwangu, & Mbembati, 2017)
Performance: is defined as the ability to achieve result or given objectives (McKersie, & Hunter, 2017)
Bonus: is the extra amount of money paid by the organization when the employee performance is outstanding over the whole year (Obiora, 2016)
Efficiency: refers to an employee 'doing the right things or occupying oneself with the right things towards task accomplishment (Agustiningsih, Thoyib, Djumilah, & Noermijati, 2016)
Profitability: refers to the state of an employee being productive in his or her output in achieving profit(Bernardin, 2015)
Incentive: provides a platform through which the organization can motivate its employees to improve their productivity (Aisha, 2015)
Innovation: refers to the act of employees being creative or innovating in the organization(Hawley, 2016)
