Impact Of Salary/Wages Compensation And Fringe Benefits On Employee Performance

INTRODUCTION

“Generally, every organisation consists of both tangible and intangible elements: the environment, vision and mission, values, objectives, strategies, authorities, work, people and other resources (land, labour, capital, entrepreneurship and technology, especially, ICT). The only living thing among these elements are the human beings, who have entered into contractual relationship with the organisation to offer their human endowments in exchange for some forms of rewards” (Muo, 2007:197). Some forms of rewards talking in terms of what will be referred to in law as consideration and in simple term as wage or salary. Wage, when it is paid daily and salary, when it is paid weekly, fortnightly or monthly.

Esien (2002) went further in drawing distinction between wage and salary. He opined that “in the past, important distinctions existed between wages and salary, but today, the words are used interchangeably, reflecting the convergence of method of paying skilled and unskilled employees that has happened over 40 years. Esien (2002)  define  salary defined as a fixed annual amount, paid monthly. Wages in contrast were variable weekly payments (usually made in cash) that fluctuated in value through overtime, bonuses, and piecework rates. Salaries were determined individually; wages through management/union collective bargaining”. Today, however, many salaried workers are unionized and paid according to union negotiated salary scales, with annual increment; while large numbers of wage earners now receive relatively stable time based earnings.

Also, going the other way, it is a common belief nowadays that human existence dated back to the days of first man and woman on this planet, earth – Adam and Eve, were punished for eating the assumed forbidden fruit and the punishment for doing that was a pronouncement from their assumed creator that they shall eat from their sweat. Hopefully, this event leads us into working for ones living till date. Again, an Economic principle showed it as labour, a factor of production, as such; production of goods/services cannot be achieved without the element called labour. In Sule, 2012, it was opined that “no organisation can survive in isolation. Organisations need to relate with people, bodies and organisations in order to survive. Their continuous existence depends largely on their resources (including labour or human) to break-even at worst. Thus, it is very significant that the workforce is a stakeholder in every organisation”.

If truly the workforce is a stakeholder in every organisation and since what is accrued to entrepreneur is profit, then, the issue now is what are the benefits accrued to workers. Muo, 2007:197 emphasized that workers entered into contractual relationships with organisations to offer their human endowments in exchange for some forms of rewards. In law, one who engage in a work or service not for a reward is said to be engaged in a ‘gratuitous’ service. Therefore, for there to be a valid contract between two parties known in law as employer and employee, Section 7 of the Nigeria Labour Code Act of 1946 stated that “the wages of the workers (employee) must be paid in legal tender and it is illegal, null and void if made payable in any other manner”.

Again, payment of wage or salary to employees by the employer is mandatory by law but not just for the fun of it. It must be noted that such wage or salary paid is an instrument of motivation or ‘driver’ for the workforce to keep the body and soul together and possibly make them a stakeholder in the organisation. It is a common knowledge that when you are a stakeholder in an organisation, such employee will always want the survival of such organisation at all times. This is one of the challenges of motivation within organisations. Motivation is one of the greatest challenges facing managers across the globe because it influences workers’ performance and thus the extent to which organisations are able to achieve their objectives and justify their existence.

Cummings (1978) argued that the management of human resources is “concerned with obtaining the best staff for an organisation, and having got them, looking after them so that they will stay and give of their best to their jobs”. This is pointing to the fact that proper recruitment process must be strictly adhered to, as ascertained in Sule and Ugoji (2013); recruitment process in organisation and after getting the best staff, the next thing is looking after them so that they will stay to give their best in terms of their input for optimal organisational development. This is talking about motivating the workforce to steer the best attributes in them. Note, the writer presumes the best way to motivate in Nigeria today is for the worker to be paid adequately and promptly.

Therefore, there is need for us to see and to review how and why wages and salaries paid to workers help to motivate on the job. Another issue is that, do wages and salaries really motivate workers on the job such that if not paid, there will be no difference in the attitude of such workers.

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