MONETIZATION OF FRINGE BENEFITS AND EMPLOYEE PRODUCTIVITY (A STUDY OF NNAMDI AZIKIWE UNIVERSITY AWKA, ANAMBRA STATE)

ABSTRACT:This study examined monetization of fringe benefits and workers productivity: A study of Ministry of works Anambra State. The objectives of this study are to examine the implication of monetization of fringe benefits on workers’ productivity. During the course of the, relevant literature were reviewed, a sample size of 334 was gotten from the population using simple random sampling. Data was generated using five scaled structured questionnaire ranging from strongly agree to strongly disagree. Hypotheses were formulated and tested using the Chi Square analysis. Findings revealed that Findings from the study reveal that Monetization of fringe benefits has a significant effect on the employee’s residential accommodation in Ministry of works Anambra State; Monetization of fringe benefits has a significant effect on worker’s transportation allowance in Ministry of works Anambra State. Findings from the study also revealed that Monetization benefits are not commensurate with workers medical allowance in Ministry of works Anambra State. Based on the findings, it was recommended that government should be responsible to account for all deductions from workers salaries so that the workers would be confident that their contributions are not wasted. Also, government should build housing units and allocate them to desired workers at low costs so that the appropriate deductions would not be a burden to the beneficiary.

AN OVERVIEW OF FRINGE BENEFITs MONETIZATION & EMPLOYEE PRODUCTIVITY

CHAPTER ONE

• Introduction
  • Background of the Study

Monetization policy is a form of policy which means benefits being enjoyed by civil servants would be paid in monetary term. Interestingly, some of these benefits had become fully or partially monetized before 1999 (Ekaette, 2003; Saka, 2004; Uniamikogbo & Anthony, 2001). Some of these benefits include leave grant, meal, subsidy, entertainment allowance, duty tour allowances for domestic servants. The list also includes residential accommodation, provision of vehicles (both fuelling and maintenance), provision of medical treatment, utilities (electricity-, water and telephone) and personal aids. The idea of monetization of fringe benefits in the public service is intended to cut costs, because over the years capital projects which is the main driving force of the economy towards achieving sustainable growth and development have not been implemented due to high cost of running political, public and judicial office holders.

The government is implored to pay an amount that would be equal to workers benefits in terms of material item which should have been at their disposal in course in course of performing government functions. If the workers’ interest is not taken into consideration, there would be evidence of it in the area of their productivity level. The amount of monetized benefit should be similar with the property or the materials expected to be enjoyed by the civil servant, his benefits thereby increasing productivity. The purpose of the policy as contained in the government white paper (Ekaette, 2003; Ramachandran, 2003) is to remove the burden of providing basic amenities for public officers who have contributed significantly to the continuous increase in government recurrent expenditure, learning very little for capital development; it is further argued that it will encourage efficient allocation of resources and equity in the provision of amenities for public officers; it will also provide site and services schemes in satellites town nationwide to assist public servants and the programme would stop the culture of waste in the guise of maintaining government housing estates. Workers are essential to the means of production (Drucker, 2010): they deserve to be treated with respect and given proper welfare packages and incentives (Noguera, 2005).

Available research evidence has shown that overall employee satisfaction results from a mix of rewards rather than from any single reward. The evidence suggests that extrinsic rewards (e.g., money and promotion) and intrinsic rewards (which accrue from performing the task itself) are both important and cannot be directly substituted for each other (Beer and Walton, 2008). External rewards vary and include direct compensation such as wages and salaries and employee or indirect / fringe benefits. Total compensation, which includes direct cash payment, indirect payments in the form of employee benefits, and incentives to motivate employees to strive for higher levels of productivity, is a critical component of the employment relationship. Total compensation is affected by forces as diverse as labour market factors, collective bargaining, government legislation, and top management philosophy regarding pay and benefits. However, available discussions indicate that organisations need to balance the elements between direct compensation and employee benefits if they are to effectively motivate employees and attain high performance levels (Schuler, 1996; Armstrong, 2003; Onasanya, 1999; Arthur, 1995; Cole, 2001). Thus a marked departure from the needed balance in the direction of either direct compensation or benefits can have major implications for motivation, job satisfaction and organisational performance.

In addition to basic wages and salaries, organisations typically pay for a wide variety of supplementary items, sometimes called fringe benefits. Increasingly however, such benefits take up a large proportion of the total compensation package (French, 2002). As at 1986, these benefits accounted for between 18% and 65% of the payroll of many companies (Rosenbloom and Hallman, 2009). Over the years, the importance of these benefits has increased for employees (Armstrong, 2003). For this reason, both students and practitioners in the area of compensation and rewards have elected to replace the word ‘fringe’ with ‘employee’ benefits. The idea in the change of name is that the items covered by the benefits have moved from the ‘periphery’ to the ‘centre’ of concern of both employers and employees. Although there are differences about the actual definition of employee benefits, there is some agreement that they include ‘nonwage payments and benefits’ (Rosenbloom and Hallman, 2009) or ‘items over and above bare remuneration, which increase the well being or wealth of employees at some cost to the employer’ (Cunningham, 2005).

Monetization of employee benefits is the payment of money in lieu of the provision of the various forms of employee benefits accruable to an employee by his/her employer. Given the fact that direct compensation and employee benefits meet different employee needs, the monetisation of benefits could create a situation in which some employee needs will no longer be adequately met. In the long term, inadequacies in meeting these needs could have major consequences for an organisation. As an example, we can take the case of the monetisation of the medical benefits of junior employees. The money equivalent will usually be paid at a given point in the year; however, the medical needs of the employee may have to be met at different points in time during the period. The employee may, in the meantime, have diverted the monetised medical benefits to some other need thus making it difficult if not impossible to meet the health needs as they arise. These difficulties could well translate into performance problems for the individual employee and the organisation.

Monetization policy in Nigeria was given a legal backing by the political, public and judicial office holders (salary and Allowance) Act 2002, which has now been extended to the civil servants. The law took effect from 1^st July, 2003.   The committee on the monetization of fringe benefits in the public service of the federation was set up by President Olusegun Obansanjo on November 11, 2002, under the chairmanship of the then secretary to the government of the federation, Chief U.J. Ekaette, CFR; (Aluko 2003:1). On October, 2003, the president approved increment ranging from 4% to 12.5% for federal public servants and the minimum wage was increased to ₦9, 500 per month, (Fayil 2006). The president accepted most f the recommendations of the November 27, 2003 of the national income and wages commission, but rejected the provision of entertainment allowance because; they were made at a time when the personnel enrollments of senior public servants were very low vis-à-vis their responsibilities.  Ever since then the topic has attracted the attention of different scholars.

Monetization policy was introduced by the federal government in an attempt to reduce the burden of providing basic amenities for the public office holders and to curb the abuse and misuse of public facilities decided to convert all those benefits enjoyed by the public servants into monetary rewards. Saka (2010) observed that the spirits behind monetization policy as far as Nigeria is concerned are:

1. To reduce the high cost of governance in view of the fact that the present and past regimes are riddled with corruption which make the part of administration of government affair too costly.
2. To make public servants adopt a better productive approach to public property.
3. The prevalent mismanagement of public property by public servants would be over as such persons would be offered money to acquire such property elsewhere.
4. The policy also offered the government the opportunity to renovate and add value to its property in order to generate income for the business of governance.

The drive towards monetisation may be initiated by employees because their current wage levels do not enable them to meet basic needs. Monetisation of benefits may thus provide employees with an immediate increase in monetary wages that allows them to meet these needs. In essence, employees may act to attain gratification in the short term even when they are also conscious of the longer term consequences. This behaviour was observed long ago among car assembly workers who deliberately chose unpleasant work because of the higher wages that the work paid (Goldthorpe 2001).

• Statement of the Problem              

Commitment of worker is the most important ingredient to an effective work output. Aside from completing tasks for the joy of doing them, it has been discovered that motivation drives people’s behaviour to attain a specific outcome. This explains why developing an effective and efficient compensation system becomes an important part of the human resource management process in advanced countries. The attitude of Nigerian workers in term of output compared to the more developed countries in recent times is becoming alarming. This could be attributed to uneven reward system, poor income and unfavourable social, economic and political infrastructure of the country. Rewards are an ever-present and always controversial feature of organizational life in Nigeria. Universities in Nigeria are losing their staff at a rate that should give concern to all the agencies responsible for staffing the universities and in fact to the nation as a whole. They complain of poor job satisfaction. Nowadays, university teachers not only transferred from one university to another in large numbers within and outside the country, but they also leave their jobs in the universities for the industries and the private sectors where they are well catered for. Some prefer political appointment to their academic positions and leave at earliest opportunity.

The result is that there is a great depletion of the academic staff and a shortage in the vital areas to the extent that some important departments of a university may lose their viability. One is immediately tempted to suspect that this attrition in university staffing may be related to a lack of satisfaction on the part of the academic staff.

• Objectives of the Study        

The broad objective of this study is to examine the effect of monetization of fringe benefits implementation on workers’ productivity in Nnamdi Azikiwe University Awka.

Specific objectives of this study include the following:-

1. To ascertain the effects of monetization of fringe benefits on the employee’s productivity.
2. To find out if monetization benefits are commensurate with workers socio-economic needs in Nigeria.
3. To determine the effect of monetization of fringe benefits on workers’ job satisfaction in Nigeria universities.
4. To examine the policy as it affects productivity in the Nnamdi Azikiwe University.

• Research Questions

The following research questions have been formulated to guide this study.

1. What effect does monetization have on workers’ productivity?
2. Are monetization benefits commensurate with workers socio-economic needs in Nigeria?
3. What effect does monetization have on workers job satisfaction in Nigerian universities?

• Research Hypotheses

The following hypotheses have been formulated to guide this research work.

Hypothesis one

H₀: There is no significant effect of monetization on workers’ productivity

H₁: There is a significant effect of monetization on workers’ productivity.

Hypothesis two

H₀: There is no significant relationship between worker’s socio-economic needs and fringe benefits.

H₁: There is a significant relationship between worker’s socio-economic needs and fringe benefits.

Hypothesis three

H₀: There is no significant effect of monetization on workers job satisfaction in Nnamdi Azikiwe University Awka.

H₁: There is a significant effect of monetization on workers job satisfaction in Nnamdi Azikiwe University Awka.

• Significance of the Study

This study justifies the actual situation Nigerian university workers are facing as a result of the monetization policy implemented.

Actually, the significance of this study is evidenced from the effort to contribute to existing literature with regards to the effect of monetization of fringe benefits implementation on workers in Nigerian public service. The study proffers useful suggestions to have proper view of monetization and the right mode of implementation to achieve the best monetization policy can offer to not only workers in the public service but also to all Nigerian people.

• Scope of the Study

This study focuses on Monitization of fringe benefits and employee productivity, us Nnamdi Azikiwe University Awka as a place of study.

• Limitations of the Study

In the course of carrying out this study, the researcher encountered some difficulties, the researcher discovered that the resources needed to carry out this research was limited, moving from one library to another. Also the questionnaire had to be typed and administered to selected respondents of the organization not as one thought process, it required the personal involvement of the researcher to motivate the worker to fill the questionnaire, explain certain words and answer. Another constraint is lack of total cooperation from the respondents in Nnamdi Azikiwe University Awka, who was unwilling to co-operate with the researcher because they felt that they had nothing to gain from the study. Another serious constraint is finance, because of economic difficulties Nigeria is passing through, it was difficult to get enough money to achieve ones crucial desires. A research of this nature involves a lot of fund e.g for typing, distributing and collecting the questionnaire, and other necessary data for the study.  Others, when interviewed refused to disclose certain information relating to their organization for fear of victimization from the authority of the organization.

In spite of all these limitations, however, data collected were able to provide enough insight for the study.

• Definition of Term

1. Monetization Policy: This is a governmental policy whereby value (money) is given to civil servants in place of certain amenities enjoyed by them.
2. Workers Productivity: This means the rate at which employees yield output in the organization.
3. Fringe Benefit: It is an additional service or advantage given with job besides the wages.

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