Magoosh GRE

An Evaluation of the impacts of Non-financial Rewards on Employee Engagement: Chevron Nigeria

| March 7, 2015


1.1 Background to the Study
In view of the importance of employee engagement for organizational performance and effectiveness, organizations constantly seek to determine the most effective ways of ensuring that employees are motivated and committed enough to apply themselves passionately to their work. In a general sense, employee engagement describes the level of involvement, attachment, commitment, and enthusiasm that employees feel towards their jobs, the organization, as well as the values of the organization. Engaged employees tend to possess greater awareness of business contexts, and often work harmoniously and enthusiastically with their colleagues in order to enhance performance within their respective roles for the overall benefit of the organization (Vazirani, 2007; Robinson et al., 2004). Accordingly, interest in employee engagement is based on the idea that it is a strong determining factor in employee performance, which ultimately translates to organizational performance and effectiveness (Ilgen and Pulakos, 1999; Baumruk, 2004).

In view of the importance attached to employee engagement, and its implications for organizational performance, organizations constantly have to determine the most effective ways of enhancing employee engagement through motivational incentives such as rewards and recognition. Indeed, the importance of rewards as motivational devices in the workplace cannot be overemphasized, especially as it is an effective way of combating employee burnout that may diminish the fulfilment experienced by workers (Schaufeli et al, 2002). Employees constantly engage in a social exchange process in which they contribute their efforts in exchange for rewards (Kanfer, 1990). Furthermore, they often consciously or unconsciously compare their contributions towards the achievement of certain tasks with the rewards that they receive afterwards. Accordingly, employees’ perceptions about the reward climate of their work environment may represent a significant influence on their attitudes towards the organization and the commitment they demonstrate within their jobs (Babakus et al, 2003). In this regard, rewards are deemed integral to a relationship of reciprocity between employers and employees in which the organization sufficiently accommodates employees’ need and reward them for their positive efforts, while the employees reciprocate by increasing their level of commitment towards their work and the employers (Gouldner, 1960).

Although the comparative effectiveness of different forms of reward has been severally discussed and debated in the human resource literature, many organizations may find it necessary to adopt both financial and non financial incentives to boost employee engagement – depending on specific organizational contexts as well as the values and culture that prevail in particular organizations (Richman, 2006). However, there is little consensus on the comparative efficacy of financial and non-financial reward systems in terms of their impacts on employee engagement and performance, and this has continued to generate diverse perspectives on how best to apply incentive or reward systems in order to achieve the goals of the organization. In the past, financial rewards were largely considered as the most important forms of incentive that motivate employees towards greater commitment and performance within their jobs. However, an increasing number of studies have punctured this claim by suggesting that the best paid employees do not necessarily turn out to be the most engaged or highest performing, suggesting that monetary rewards may not always be the most effective form of motivation (see for instance Adams and Hicks, 2000; Hansen et al, 2002).

Non-financial rewards have received greater attention as possibly more effective means of motivating employees and facilitating improved employee engagement in organizations. This form of reward generally relate to the incentives that do not involve direct cash or monetary payments, used by an organization to motivate or compensate its employees. Meacham and Wiesen (1969) have suggested that there are three broad categories of non-financial or non-monetary rewards that can be used to motivate employees in an organization: tangible non-monetary incentives, social non-monetary incentives, and job related non-monetary incentives. Tangible non-monetary incentives refer to a wide range of tangible items that the organization makes available to employees, including gift items, discounted goods, clothing, key chain, coffee mugs, free beverages and food, bus service, childcare centre, club privileges, etc. These forms of non-financial rewards may serve the purpose of recognizing good performance and contributions by employees, or creating a positive working atmosphere in the organization as a means of motivating employees.

On the other hand, social non-monetary incentives mostly pertain to the relationships between superiors and subordinates as well as the social activities that take place within the organization. These include a caring and sincere communication between superiors and subordinates, informal and formal recognitions of employee efforts, social activities that promote cordiality among employees in informal settings, and a convivial work setting in which employees and managers see themselves as part of an entity that cares about them. Lastly, job related non-monetary rewards offer an intrinsic form of reward for employees, considering that elements such as flexibility of working hours, nature of job responsibilities/tasks, career development opportunities, participatory decision making, degree of autonomy on the job, etc. are also very important in ensuring employee engagement if workers perceive their jobs as being satisfying and worthy of putting more effort into. In view of the foregoing explanations, the aforementioned three categories of non-financial rewards may potentially meet the motivational needs of workers and facilitate greater employee engagement without the need for direct financial rewards. This is a primarily the reason why the effectiveness of non-financial rewards and the extent to which they help enhance employee engagement has received greater attention in recent times.

It has been suggested that most people generally like to be recognized for making positive contributions to their jobs or tasks, and this makes non-financial rewards such as recognition and praise very effective motivators for employees (see for instance Wiscombe, 2002). Although financial rewards are also important and inevitable means of compensating employees for their efforts, non-financial reward often leads to increases in morale, stress reduction, and reduced absenteeism (Nelson, 2001). It is therefore a potentially cost-effective way of achieving competitiveness and enhancing productivity for the organization. However, in order for non-financial rewards to have the desired effect on employee engagement, it is important to determine the extent to which such rewards are relevant to the peculiar needs of respective employees. This is in view of the idea that all employees may not necessarily have similar motivations, needs, perceptions, characteristics, and psyches. Accordingly, different employees may react differently to financial or non-financial rewards, depending on how they react to the specific forms of rewards that the organization uses as motivational devices (Atkinson, 1964; Kovach, 1999). In this regard, it is worthwhile to understand the circumstances or contexts in which it may be more effective to use either financial or non-financial rewards. This may involve understanding the psychological make-up of employees in order to ascertain their main motivations and needs, and to adopt the best form of reward system that would lead to greater engagement (Muchinsky, 2000). It is for this reason that this study focuses closely on non-financial rewards with a view to determining how effective it as a motivating factor for enhanced employee engagement in a company like Chevron Nigeria. Doing this necessarily takes into consideration the environmental and contextual factors in the Nigerian employment landscape in general and Chevron Nigeria in particular, in order to understand the issues that are likely to have the greatest effect on employee motivation and engagement. This would help in establishing just how effective non-financial rewards are in stimulating employee engagement in the environmental and organizational context of Chevron Nigeria.

1.2 Significance of the Research
Many previous studies have focused on the relationship between financial rewards and employee motivation, and the majority of these studies suggest that such financial incentives represent perhaps the most basic and ineluctable form of motivation for employees (see for instance Baron, 1983; Prendergast, 1999). However, the increasingly complex nature of the labour market, evolution of the modern work environment, as well as the increased pressure on organizations to maximize employee performance have led to greater interest in non-financial rewards as equally important means of employee engagement. It has become increasingly clear that it takes more than money alone to motivate workers and make them enthusiastic about their work, which often leads to better performance in their positions within the organization. In this regard, the different non-material measures that organizations take in order to entrench a greater sense of belonging and well-being in their workers are increasingly being acknowledged as critical factors in bringing out the best in employees by boosting their involvement and passion for the job. This is especially because one of the key objectives of using non-monetary rewards is to encourage specific employee behaviours that exceed expectation – particularly with regard to job tasks. Accordingly, the use of non-financial rewards may create a valuable opportunity for the organization not only to recognize employees who perform above expectations, but also to reinforce any specific job-related behaviour that contributes to the attainment of organizational objectives. On another level, non-financial rewards may address important employee needs such as belongingness, social interaction, feelings of self-worth and achievement, attention and other such emotional or psychological needs that may be difficult to achieve with monetary incentives.

In view of the above background, the significance of this study lies in its attempt to establish the relative effectiveness of non-financial rewards in general, and determine the extent to which they enhance employee engagement. In doing this, the study is based on the realization that employee engagement is not an end in itself but a means to an end. Employees that are fully engaged in the organization are more passionate about their jobs, and are therefore likely to be more efficient and productive in a way that helps actualize the business objectives of the organization (see Baumruk, 2004). As such, it is critical for any organization that seeks improved performance and competitiveness to explore the best possible means of motivating its workforce in order for each employee to contribute to the best of their ability towards the organizational goals. Considering the notion that non-financial rewards have the potential of influencing employees by boosting morale and raising their positive perceptions about the job and the organization (Nelson, 2001), it is worthwhile to evaluate the pros and cons of its use in organizations and to investigate its ultimate implications for employee engagement. This research is therefore significant because it sheds light on the dynamics of non-financial rewards in a way that makes it easier to determine how useful and relevant they might be for employee engagement.

Furthermore, the fact that the study focuses principally on Chevron Nigeria makes it possible to understand the implications of non-financial reward systems in a specific cultural and organizational context in which one can determine the extent to which such rewards successfully facilitate employee engagement (from the perspective of employees) in varying situations. This is because the extent to which any kind of incentive or reward system is successful depends largely on the degree to which it matches employees’ preferences and values. If certain contextual or personal factors make it preferable for employees to prioritize monetary incentives, then there might be considerable limits to the effectiveness of non-financial rewards in encouraging greater employee engagement. Accordingly, the rationale for this study also lies in the fact that it seeks to examine the reward preferences of Chevron Nigeria employees in order to determine the kind of impacts that the use of non-financial reward systems may have on them. In general, the results of this research may prove useful in exploring the motivational and utilitarian value of non-financial rewards in international companies, as well as the contextual factors that may reduce the relevance of non-financial incentives.

1.3 Statement of the Problem
Arguably, the success of any organization and the effectiveness/efficiency with which it realizes its objectives is heavily dependent on the performance of its human resources. To a large extent, an organization’s competitive potential may be difficult to achieve if its employees do not put in their best efforts, with sufficient motivation and commitment. This makes it imperative to focus on the elements that influence employee performance, as well as the factors that underpin their level of commitment to the organization and its principal objectives. In this regard, it is worthwhile to note that employee performance is based on diverse elements that generally involve ability, motivation, and opportunity (see for instance Ivancevich and Matteson, 1988). While ability refers to the range of skills, training, education, and experience that is required for a given job, opportunity pertains to the organizational infrastructure that enables the performance of roles associated with the job. On the other hand, motivation involves the desire on the part of the employees to apply themselves and exert the effort necessary to perform their job optimally towards achieving set goals and enhancing organizational effectiveness. Motivation reflects the willingness and capacity of employees to be fully engaged in their job in a way that makes them perform up to or even beyond expectation, thus facilitating desirable outcomes for the organization. The factor of motivation is particularly essential because of the fact that, irrespective of ability and opportunity, the absence of the willingness and enthusiasm to be engaged in the job (brought about by motivation) may result in employee underperformance.

In view of the foregoing, organizations constantly grapple with the problem of determining the best means of motivating their employees to be more engaged in their jobs. Although a lot of emphasis is placed on the importance of remuneration and monetary incentives as factors that may drive employee performance, organizations often find that monetary incentives are not always sufficient for employee engagement, as financial rewards may not have clear impacts on the level of enthusiasm and involvement that employees feel for their jobs. This inevitably calls for alternate approaches to employee motivation, and it is in this regard that non-financial rewards represent a potentially influential factor for greater employee engagement. However, it is not sufficient to conclude that non-financial rewards may be more motivating to employees especially in terms of boosting their level of engagement within their organizational positions. A wide range of contextual factors may affect employees’ reaction to any kind of reward system; while non-financial rewards may be effective in certain circumstances, monetary rewards may best serve the interests of employees in other situations. As such, organizations must contend with the challenge of determining the specific contexts in which non-financial rewards are viable and more effective alternatives than financial rewards – especially in terms of which reward system has the greater impact on employee engagement. This is because motivational devices such as financial and non-financial reward systems cannot be deemed successful if they do not achieve the ultimate aim of engaging employees in a way that makes them perform beyond expectations for the good of the organization.

Rewards generally serve two key purposes: recompense for a job well done, and incentive to sustain or improve on one’s efforts. Indeed, it may even be argued that recompense and incentive go hand in hand, given that a recompensed employee is motivated to repeat the behaviour that earned him or her such recompense – which is the same feeling that incentives also engender. As such, rewards essentially act as stimuli for the employee to try to work harder, perform better, and expend more effort and energy if need be in order to realize set goals. Monetary rewards such as commissions, cash payments, bonuses, etc are based on the idea that employees may be propelled into greater performance if they receive more financial incentives. However, a number of studies have challenged this notion, and suggested that the correlation between incremental money-based rewards and employee performance/engagement is tenuous and inconsistent (see for instance Jenkins et al, 1998; Heneman, 1992). Increasingly, it has been acknowledged that psychological well-being is critical to employee performance, and that there is a limit in the extent to which money can increase the subjective well-being of workers (Diener and Biswas-Diener, 2002). For employees that value elements such as social acceptance and a positive, cordial working environment, the psychological well-being they gain from such non-financial rewards may prove more motivating than monetary rewards. It is therefore important to evaluate the dynamics and implications of non-financial reward systems with a view to understanding how they affect employee engagement in a well-established company such as Chevron, with specific focus on the company’s Nigerian operation.

1.4 Aims and Objectives of the Research
Byman (2001) rightly points out that research aims and objectives provide clear focus to the whole research process, and gives concrete meaning to the study in its entirety. Without specifying a clear purpose for the research, it risks drifting over the contextual phenomena that constitutes its main subject of interest. Accordingly, the fundamental purpose of the present research is to examine thoroughly the impacts and implications of non-financial rewards for employee engagement, particularly in the context of Chevron Nigeria. Achieving this fundamental purpose involves breaking it down into a number of mutually reinforcing analytical units, all of which altogether constitute aggregate objectives of the study. In this regard, the aims and objectives of this dissertation are as follows:
1. To investigate the diverse forms of non-financial rewards used by organizations in the attempt to boost employee engagement
2. To establish the relationship between non financial rewards and employee engagement
3. To ascertain the efficacy of non-financial rewards by measuring the levels of engagement through survey of employee attitudes in chevron Nigeria
4. To establish the findings of the report based on the analysis, and suggest possible recommendations on how best to make non-financial rewards relevant to employee engagement

1.5 Research Questions
As has been plausibly noted by Newman (1997), research questions are critical in academic studies because they provide investigative frameworks for analysis, and effectively guide the research process to prevent deviations from the core research purpose. Accordingly, and in line with the research purpose, the research questions for this study should be such that facilitate an in-depth evaluation of non-financial rewards to determine whether it is really more effective than monetary rewards in enhancing employee engagement. As such, the most relevant research questions for this dissertation are itemized as follows:

 To what extent are non-financial rewards capable of stimulating greater engagement in employees?
 What factors and considerations cause employees to respond more positively to non-financial rewards than to monetary rewards?
 Are there specific types of non-financial rewards that employees value most?
 What are the key determinants of the best forms of rewards to use in particular situational contexts in the organization?

1.6 Organization of the Research
The present study is organized into five distinct chapters. Chapter 1 is the introductory chapter, which features a general background to the issues that underpin the research, as well as the statement of the problem, significance of the research, the aims and objectives, and the research questions for the study. Chapter 3, the literature review, presents a theoretical framework that consists of the main concepts, theories, insights, and academic perspectives on sundry aspects of non-financial rewards and employee engagement that have been offered by diverse authors. Chapter 3 is the methodology chapter that describes the research process, states the data collection methods and procedures, and indicates the reliability of the research as well as the limitations to the study. Chapter 4 features the presentation of findings and data analysis, in which the primary research data obtained from the case study organization (Chevron Nigeria) are presented, interpreted, and analyzed thematically. Chapter 5, conclusions and recommendations, is the final chapter in which the findings of the research are evaluated and measured against the research objectives. It also consists of recommendations on how non-monetary rewards may best be applied in order to achieve the desired goal of employee engagement, as well as suggestions for future research in that area. Subsequently, the references used for the entire research are presented at the end of the dissertation, along with relevant appendices.


2.1 The conceptual Bases for Rewards and Incentives
In the context of employee motivation and engagement as discussed in the academic literature, the use of the terms ‘rewards’ and ‘incentives’ are largely complementary and interrelated. However, Prendergast (1999) suggests that, at least in theory, it may be possible to differentiate between incentive and reward in that, while incentive is meant to motivate employees to behave in a certain way in the future, reward essentially refers to the appreciation offered for already accomplished behaviour, and acts as reinforcement for such behaviour. Atkinson (1964) contends that incentive is a broad term that encompasses the gamut of strategies that employers may use to stimulate employees’ desire to try harder and exert themselves more in order to perform better within their job. On the other hand, Zigon (1998) explain that rewards refer to anything that “increases the frequency of employee action”. This indicates that rewards serve the primary purpose of improving performance.

In spite of these attempts at distinguishing both interrelated concepts, the use of ‘reward’ in this study also loosely includes the idea of incentive. In any case, the explanations offered above in the attempts to contextualize incentive and reward clearly indicate that the principal purpose of any form of reward or incentive system is to provide motivation for employees to maintain or improve good performance (Scott, et al. 2007).

Accordingly, it is worthwhile to point out that motivation can be at the individual, societal, and organizational levels. The individual level refers to the idea that employees may be driven by their own personal desires, believes, and moral persuasions. Individual motivation has been generally conceptualized in the literature as involving intrinsic motivation (activated internally) and extrinsic motivation (activated externally) (see for instance Sansone and Harackiewicz, 2000; Bruce and Pepitone, 1999). At the societal level, motivation derives from employees’ need to identify with others and possess a functional sense of belonging to the organization and its members. This is because organizations are essentially social units that depend on inter-relationships between its members in order to achieve common goals. Individuals typically depend on others, and often develop a certain loyalty to any group that they belong. At the organizational level, motivation arises out of the conditions present within the organization that serve to encourage employees to be more motivated for better performance within their jobs (see Capacity Development Group, 2006; Parker, et al. 2000).

The use of rewards in organizations has different implications for both employees and managers. In this regard, Babakus et al. (2003) suggest that whilst employees’ perceptions about the reward climate of the organization they work for is a significant influence on their attitudes towards their employer, the way that managers reward their employees is also a crucial indication of their commitment towards their organization.

2.2 Financial and Non-Financial Reward Systems
The literature is replete with diverse arguments on the comparative effectiveness of financial and financial rewards with regard to employee motivation and engagement. While some perspectives argue that financial rewards produce better results for employee motivation, others contend that well designed non-financial rewards programs motivate employees more meaningfully than monetary rewards. Irrespective of the kind of reward system that an employer chooses to adopt, Rozycki (2006) suggests that there are three basic ways by which reward programs can be structured: open-ended reward programs, close-ended reward programs, and plateau programs. The open-ended reward programs allow employees that achieve specific goals to earn a reward for such achievement. This kind of reward structure is such that sets a specific goal to each employee, in a way that makes clarifies the job objectives and performance measures of each employee. On the other hand, close-ended reward programs permits a specified number of employees to qualify for rewards under certain aggregate performance criteria. The plateau reward program is one in which rewards are offered to employees at different performance levels. According to Rozycki (2006), this structure of rewards has the benefit of motivating employees to push themselves harder towards achieving a goal when they are close to achieving the next reward increment. Similarly, Allen and Helms (2002) explain that in order for reward systems to achieve the desired goals, they should be closely aligned to organizational strategies. For instance, a firm whose operations is based primarily on a product differentiation strategy may find it more useful to design their reward practices to foster innovation for the aim of producing unique products or services. On the other hand, a firm that employs a cost reduction strategy might choose to focus on rewards for ideas that minimize or eliminate costs as well as employee stock awards that foster an on-going emphasis on cost reduction.

Financial rewards generally include elements such as profit sharing, scheduled bonuses, project bonuses, and stock options, and they typically serve as recompense for good performance and stimulate employees to improve performance (Ballentine, 2003). In discussing the relative benefits and advantages of money as a means of reward, it is important to distinguish between employees’ inevitable need for money for the purpose of providing comfort and security for themselves and their families, and using money purely as a incentive for appreciating and motivating employees for good performance. In this regard, Skinner (1969) suggests that the use of money as a financial incentive is based essentially on reinforcement theory, which emphasizes the relationship between a given behaviour (for instance work performance) and the consequences of such behaviour (for instance monetary reward).

On the other hand, non-financial rewards include such incentives as pleasant working environment, sense of belongingness and cordiality amongst workers, flexible working hours, training and career development opportunities, recognition, etc. which aim at encouraging employees to perform excellently and demonstrate more commitment to their jobs and to the organization. Of the diverse forms of non-financial rewards in existence, one that has received arguably the most attention in the academic literature is recognition. As defined by Rose (1998), non-financial recognition refers to a “non-monetary award given in recognition of employee accomplishment or performance such as customer service efforts or support of colleagues, which is not dependent on achievement of a predetermined target”. Silverman (2002, p.4) points out that there are various ways that managers can recognize employees without recourse to monetary incentives. Some of these methods include saying a heartfelt thank you, formal written letters of thanks and appreciation, public appreciation of a deserving employee in team meetings, special dinners, or organizational newsletters, and special recognition programmes such as ’employee of the month or year’ awards. Indeed, the IDS (2002) insists that at the heart of non-financial recognition is the very act of recognizing employees for a job well done, as well as the esteem and sense of self-worth it engenders in the recognized employees. Additionally, Silverman (2002) contends that non-financial rewards such as recognition schemes are likely to be more memorable than mere monetary awards that employees may simple subsume into their salary.

There has been considerable focus on the effectiveness of non-financial rewards; and different authors have expressed different views on the subject. For Keller (1999), non-financial recognition can be very motivating for employees because it helps in building feelings of satisfaction and confidence and satisfaction. On another level, Jimenez (1999), citing an ASTD report on employee retention research, suggests that consistent recognition of employees is an important factor that helps organizations retain their high-performing workers. Furthermore, Nelson (2004), on the basis of previous research findings, indicate that the kind of recognition that employees tend to appreciate most is the recognition by those that they work for. Nelson further reports that many employees (in the research samples) expressed the importance of being recognized by their managers when they believe that they have performed creditably. In this regard, the most preferred, and arguably the most effective form of non-financial recognition is genuine praise given by a manager or senior colleague to a deserving employee. Indeed, research by Allen and Helms (2002) buttresses the foregoing by establishing the effectiveness of consistent expressions of appreciation by managers to encourage desired behaviour of employees with regard to the attainment of strategic goals.

Considering that organizations design and implement reward systems for the purpose of boosting their performance and capacity to realize business objectives through employees’ behaviours, it is worthwhile to also examine the benefits of non-financial rewards for organizations. According to a survey by World at Work (2002), organizations seek to achieve several key objectives through their employee reward schemes. The main objectives as well as their frequency of mention among the survey respondents are enumerated in Table 1.

Table 1: Key Organizational Objectives of Employee Reward Schemes

*Source: World at Work (2002)
Rose (1998), based on a survey of eighty-one large organizations in the UK, sought to determine the key rationales that organizations have for devising and implementing non-monetary reward schemes, and established that there are at least fur reasons for the implementation of such reward systems. According to Rose (1998), these reasons include: acknowledgement of performance beyond the norm; enhancement of customer service; recognition of achievement; and provision of support for line managers. For Silverman (2004), the benefit of non-financial reward schemes for organizations is that it encourages strategic behaviours, it is cost efficient, its impact and application is immediate, it boosts the reputation and branding of the organization, and it facilitates the retention of top-performing employees.

2.3 The Concept of Employee Engagement and its Significance
There is considerable ambiguity in the meaning of employee engagement in terms of its usage both in the academic literature and among human resource practitioners. This is perhaps because the concept of employee engagement is arguably a relatively new one that academic authors and researchers are gradually getting used to; and this possibly explains the inconsistent interpretations of the construct (Macy and Schneider, 2008). Consequently, there are several definitions of employee engagement derived from both practice and research driven human resource literatures. A common notion that underpins most of the available definitions of engagement is that it is a positive condition that connotes employee involvement, enthusiasm, passion, focused energy, sustained effort, and commitment towards their job or an organizational cause; this implies that employee engagement has both behavioural and attitudinal dimensions (see Baumruk, 2004; Macy and Schneider, 2008).

One of the earliest conceptualizations of employee engagement was done by Kahn (1990, p.692), who described it as the “harnessing of self” by each organizational member to their respective work roles. Kahn further explained that individuals typically express and apply themselves cognitively, emotionally, and physically when engaged, leading to enhanced efforts during their role performances. Following Kahn’s (1990) conceptualization, subsequent definitions of employee engagement have largely operationalised diverse contextual constructs in their attempts to provide categorical descriptions of the term. For instance, in line with the idea expressed by Kahn, authors such as Harter et al. (2002) suggest that employee engagement is a measure of workers’ job involvement as well as the combination of individuals’ satisfaction with, and enthusiasm for their work. On the other hand, whilst Goddard (1999) refers to employee engagement simply in terms of the time continuum measured by the length of time that an employee spends on a job, Halbesleben (2003) perceives engagement in terms of a continuum of stress associated with work, as a sort of anti-thesis of employee burnout. For some other researchers and authors (e.g. MacCashland, 1999) the concepts of employee engagement and commitment seem to connote the same meanings, given that they are used interchangeably.

Kahn (1990) contends that there are three key psychological conditions associated with employee engagement or disengagement at work, namely: meaningfulness, safety, and availability. The idea being conveyed in this regard is that employees are typically more engaged at work when the prevailing situation is such that offers them greater psychological meaningfulness and psychological safety, in addition to them being psychologically available. In other words, the extent to which employees feel inclined towards engagement or disengagement may depend on their psychological notions of how meaningful the job design/characteristics/conditions are, how safe they feel within the organization’s work/social environment, and how predisposed they are (depending on personal work-life contexts) they are towards being involved enthusiastically in their jobs.

A number of authors in the management literature, in conceptualizing employee engagement, do not only emphasize the feelings present within the employee, but also point out the importance of the organization in the dynamic that produces engagement. In this regard, Daniel (2004, p.1) defines employee engagement as “positive, two way relations between the employee and the organization, in which both parties recognize their own needs as well as the needs of the other, and provide support for each other to fulfil such needs”. Additionally, Daniel (2004) contends that employees and organizations that are engaged in this way are more likely to go the extra mile in pursuing mutual goals with the aim of reaping mutual benefits. Similarly, Lanphear (2004, p.2) has defined employee engagement simply as the “bond that employees have with their employer or organization”. He further argues that when employees share a bond with their organization, they tend to care about the business that the organization is involved in, and are more likely to put in extra effort while working for the organization.

Another important issue that has been addressed in the literature has to do with the ‘source’ of employee engagement. Most authors seem to suggest that engagement entirely originates out of the employee’s reaction to intrinsic and extrinsic factors. However, the significant role of managers in stimulating engagement has increasingly received attention among a number of researchers and theorists, some of who contend that employee engagement is even entirely dependent on the actions and behaviours of managers. Lanphear (2004), for instance, argues that the work environment becomes “highly engaged” when managers adopt the servant leadership philosophy in its dealings with employees. This is based on the idea that creating a highly engaged work environment requires that managers must themselves be engaged, and that employees may not respond to efforts to engage them if the managers are not engaged. Similarly, authors such as Blizzard (2003), and Leiter and Harvie (1997) suggest that employee engagement tends to depend substantially on factors like the relationship that employees have with their managers and supervisors, as well as their confidence in the organization and in managers’ engagement with work. On another level, some authors (e.g. Lloyd, 2002), claim that employee engagement mainly depends on the level of empowerment offered to workers, as well as the extent to which jobs fit the interests of employees.

Indeed, some descriptions of employee engagement seem to indicate that the term refers to those elements that cause an employee to exceed expectations. In other words, it is not merely the same as an employee doing that which he or she is employed (and paid) to do, but instead, the extra effort committed to one’s work that could only have emanated from passion and enthusiasm – not necessarily because of the hope of remuneration. This idea is captured succinctly by Frank et al.’s (2004) description of employee engagement as the amount of discretionary effort that employees exhibit in the performance of their jobs. The phrase ‘discretionary effort’ represents a uniquely important way of evaluating the concept of employee engagement because it suggests that self-will is critical to determining how much employees are willing to exert themselves while performing their job, and the extent to which they are inclined to go the extra mile to achieve certain results. It is in line with this idea that the significance of employee engagement can be evaluated. Harter et al (2002) argue that an employee that is highly engaged is likely to deliver beyond expectations on a consistent basis. Furthermore, Vazirani (2007) contends that the capacity of an organization to manage employee engagement effectively is closely related to its capacity to achieve high performance and achieve superior business results. Vazirani (2007, p.6) further outlines some of the benefits of having engaged employees as follows: greater staff retention, possibilities for increased profitability, enhancement of trust in the organization as well as employees’ alignment with organizational strategies and objectives, promotion of business growth, and developing employees as positive brand ambassadors for the organization.

Some researchers have also suggested that employee engagement cannot be adequately discussed without reference to what they consider its opposite i.e. ‘burn out’. For instance Maslach et al. (2001) point out that employee engagement is characterized by involvement, efficacy, and energy – elements that are direct opposites of the three main characteristics of employee burnout, i.e. cynicism, inefficacy, and exhaustion. Similarly, Gonzalez-Roma et al. (2006) established that two of the core dimensions of burnout (i.e. cynicism and exhaustion) are directly antithetical to the main employee engagement dimensions of dedication and vigour.
Indeed, Maslach et al. (2001) explain that burnout essentially has to do with the erosion of employees’ engagement with their jobs, and suggest about six areas of employees’ work life that may result in either engagement or burnout: rewards and recognition, workload, perceived fairness, values, community and social support, and control. Maslach et al. further argue that employee engagement is associated with these six factors, and that it is expected, just like burnout, to mediate linkages between these work life factors as well as diverse work outcomes. The key interpretation that can be made from the foregoing perspective is that there are possibly only two outcomes that results from an employee’s duration of work in a given job or organization. Either the employee experiences burnout (perhaps due to the absence of any or all of the above six work-life factors) or becomes engaged because of the positive presence of any or all of those factors.

2.4 Impact of Rewards on Employee Engagement
In line with the objectives of the present study, it is essential to review different perspectives in the academic literature pertaining to the kind of impact that rewards in general, and non-financial rewards in particular have on employee engagement. In evaluating the impact of rewards on engagement, it is perhaps worthwhile to note that some authors have made a contextual distinction between job engagement and organization engagement (see for instance Saks, 2006; Kress, 2005). While job engagement has to do with the degree of enthusiasm and involvement exhibited by the employee towards his or her job or role, organization engagement refers to the extent to which the employee is passionate and happy about working for his or her employer. Saks (2006, p.6) argues that, irrespective of the type of engagement, there is a strong positive correlation between rewards and recognition and employee engagement, particularly because employees feel a certain sense of a ‘return on investment’ for the efforts they put in when they receive rewards and recognition in exchange for their meaningful work. This indicates that there is a sense in which employees may be said to base their engagement on expectations of reward; workers may therefore be more inclined to engage themselves more at work provided that they stand to receive a certain amount of rewards for their performing their roles creditably. Indeed, Maslach et al. (2001) reinforce this perspective by suggesting that although a lack of rewards and recognition may facilitate burnout, suitable recognition and reward is crucial for bringing about employee engagement. They also maintain that when employees are rewarded and recognized by their organization, they may feel obliged to respond with even higher levels of engagement – thus enhancing the possibility of achieving organizational goals more effectively.

Scott and McMullen (2010), based on the results of their survey of compensation professionals, determined that efforts to engage employees through rewards programs reduces employee complaints about pay fairness and equity, and also reduces turnover, absenteeism and other employee problems that diminish engagement. Insisting that reward systems highly affects the degree of employee engagement, Scott and McMullen (2010) further contend that rewards are strongly correlated to the effectiveness of organizations in their attempts to foster employee engagement and motivation. As such, organizations that can link their employees’ engagement to their reward systems are more likely to motivate and engage employees more effectively. Similarly, Towers Perrin (2003), in its special report on employee engagement, notes that organizations need to implement the full portfolio f both traditional and non-traditional rewards – encompassing both monetary and non financial rewards in order to stimulate and maintain high levels of engagement across board. While pointing out that financial rewards are often not enough to activate the tendency towards engagement, Towers Perrin (2003) suggests that it is crucial for organizations to its reward systems are holistic, and designed to match the specific context of their business and human resource strategies in order for such reward systems to be relevant to engagement. The report further indicates that the impact of rewards on employee engagement may be strongest if employers or managers emphasize different forms of rewards at different phases of the employment relationship within the organization.

However, another interesting perspective in the literature is that which suggests that employees that are truly engaged do not need external encouragement in form of rewards to motivate them, since the task or job activity in itself is sufficient to spur them on. In this regard, Csikszentmihalyi (1990, p.36) introduces the concept of “flow” that is supposedly associated with engagement, and which refers to the “holistic sensation that employees feel when they act with total involvement”. Csikszentmihalyi (1990) further argues that individuals that are so engaged in their job or organization as to experience a flow may not need external rewards for motivation because the job itself typically presents them with constant challenges. The problem with this perspective, as Kahn (1990), and Holbeche and Springett (2003) have pointed out, is that the concept of flow connotes a momentary cognitive involvement of the employee in an activity, while most definitions of engagement imply a more holistic, longer-term involvement of the employee in job tasks.


3.1 Structure of the Research Process
The research methodology that is employed for this dissertation is mainly based on the ‘research process onion’ structure developed by Saunders et al. (2003). According to this paradigm, a researcher needs to determine and establish a research philosophy, research approach, research strategy, time horizon, and methods of data collection that altogether constitute the research process (see Figure 1). Accordingly, the present research work incorporates the structural elements suggested Saunders et al. (2003) in their research process onion model.

Figure 1: The Research Process ‘Onion’

*Source: Saunders et al. (2003)

3.2 Research Philosophy
The basis for the adoption of a research philosophy derives from the idea that knowledge is a phenomenon that is complex, and whose development is influenced by diverse contextual variables. As such, a research philosophy essentially represents the researcher’s beliefs and perceptions with regard to the construction of knowledge (Saunders et al, 2003). It is a reflection of the way that a researcher views the world (as well as the phenomena that is under investigation), and it has a considerable influence on the manner in which the researcher perceives, investigates, and understands the phenomena that is being researched (Johnson, 2006). In order to understand the contextual factors that determine individuals’ response to certain reward systems, as well as the complex elements that underpin their level of engagement, it is necessary to adopt a research philosophy that enhances the researcher’s interpretation and comprehension of nuanced and complicated information. This is even more necessary in view of the observed differences in individuals’ motives and motivations with regard to their reasons for working and attitudes to their jobs – arising from a variety of personal and situational circumstances (see for instance Bruce and Pepitone, 1999; Lanphear, 2004; Kahn, 1990).

In view of the foregoing background, the research philosophy of interpretivism is adopted for this study because it permits the researcher to apply critical interpretations of information about the researched phenomenon (Remenyi et al, 1998), and facilitates a qualitative and systematic analysis of “socially meaningful action” (Newman, 1997, p.68). The analysis of socially meaningful action in this regard pertains to the observation of individuals’ behaviours with the aim of understanding the motivations behind such behaviours as well as the patterns and processes through which certain factors influence their behaviours. As such, the adoption of a research philosophy based on interpretivism for the present dissertation enhances the researcher’s quest to investigate factors that influence employee engagement in order to ascertain how important non-financial rewards are in generating higher levels of engagement. Indeed, the amenability of interpretivism to rich and subjective data, qualitative methods, and use of relatively small samples (Borg and Gall, 1989; Hussey and Hussey, 1997) makes it easier for the researcher to attempt a focused and in-depth evaluation of employees’ attitudes towards reward non-financial rewards with regard to how it affects their level of engagement. Using the interpretivist philosophical framework, the researcher is able to gain an insightful and contextual view of the main factors that underpin employee engagement. Arguably, only such a detailed perspective can make it possible to determine just how important non-financial rewards are for employees – specifically in Chevron Nigeria.

3.3 Research Approach
As is evident in Saunders et al.’s (2003) research process onion, two main research approaches are available to academic researchers – deductive research and inductive research. While the deductive research is mostly used in scientific research, and involves the use of quantitative methods towards hypothesis development and theory testing (Hussey and Hussey, 1997), the inductive approach makes use of subjective and qualitative data to test existing theory and investigate the complex issues underpinning the researched phenomenon (Remenyi et al, 1998). The present study adopts the inductive research approach because of its compatibility with the philosophy behind this research process as well as its capacity to facilitate a thorough investigation and understanding of the research subject. As such, the researcher is able to make evaluate the complex dynamics involved in employee motivation and engagement, and make subjective interpretations of the factors that may influence employees’ reactions to non-monetary rewards and incentives. Although the sample size in inductive studies is often smaller than sample size of deductive studies, the dynamic and flexible nature of inductive research facilitates an optimization of the relatively small sample through the generation of in-depth and diversified information that enhances the researcher’s understanding of the research findings.

Indeed, the inductive research approach is renowned for the flexibility it affords the researcher in modifying the research emphasis based on emergence and accruing of new information in the findings throughout the course of the research (Easterby-Smith et al., 2002). Since the data supplied by respondents in the course of the research may contain relevant information with new dimensions and insights that facilitate a broader and more balanced understanding of the research findings, the inherent flexibility of the inductive research approach represents a vital advantage in the context of the present dissertation.

3.4 Research Strategy
Research strategy refers to the means by which a researcher analyses the data collected for the research in order to obtain information systematically. It may also be regarded as the tool(s) employed by the researcher to address the research questions. Several research strategies have been identified in the academic literature, and these include case study, ethnography, grounded theory, action research, survey, and experiment (see Saunders et al, 2003). The adoption of a research strategy typically depends on elements such as existing knowledge or information available to the researcher, the amount of time and resources available, and the nature of the research questions (see Kumar, 2005).

The research strategy that is employed for the present dissertation is the case study strategy which, as Robson (2002, p.146) explains, essentially involves the “empirical investigation of a specific contemporary phenomenon within its real-life context using multiple sources of evidence”. The case study strategy is particularly useful in the context of the topic of this dissertation because it facilitates an in-depth examination of a phenomenon (i.e. non-financial rewards’ effect on employee engagement) that involves ‘how’ and ‘why’ questions about contemporary events that the researcher has no control over. Indeed, the strategy is compatible with the inductive/qualitative approach chosen for this dissertation because, as Yin (1984) rightly points out, the case study method and qualitative research approach both focus on examining the ‘why’ and ‘how’ questions associated with human behaviour. As such, the case study strategy not only helps the investigation of a phenomenon within its real life context, it also it helps the researcher explore existing theory by gaining information from real life actors with practical experience on the issues related to the researched phenomenon. Although alternative strategies such as ethnography and grounded theory are also compatible with the inductive approach, and may be applicable for the present research subject, they were deemed inappropriate for the scope and purposes of this study because of their time consuming nature (Kumar, 2005).

The case study for the present study is principally based on Chevron Nigeria, which is a major international oil company and in fact the third largest oil producer in the Nigerian oil and gas industry (Chevron, 2011). Chevron Nigeria engages in diverse exploration and production activities, as well as a business portfolio that encompasses operations in onshore and offshore, deep water, natural gas, as well as community development activities. This makes the company one of the biggest employers of labour in the Nigerian oil and gas sector with over 6000 full-time and contract employees (Chevron, 2011), and therefore represents a worthwhile case study for ascertaining the factors that affect employee engagement. Considering the reputedly attractive compensation and pay packages associated with international oil companies such as Chevron in the Nigerian labour market, an in-depth examination of employee engagement in the company presents an interesting opportunity to evaluate the extent to which engagement is influenced by financial or non-financial rewards. This affords the researcher the chance to learn about the preferences and motives of employers in such an organizational environment with regard to what really motivates them to become more involved and passionate about their job and their company.

3.5 Time Horizon
Evidence in the literature indicates that two main categories of time horizon are available to researchers – cross sectional time horizon and longitudinal time horizon (Saunders et al, 2003). Whereas research based on a cross-sectional time horizon examines a specific phenomenon as it exists or occurs at a particular point in time, research based on longitudinal time horizon examines a the phenomenon of interest over an extended period. In view of the nature of the research topic, available resources, and the research objectives, the present study is based on a cross-sectional time horizon for the evaluation of the impacts of non-financial rewards n employee engagement. There are several reasons why the adoption of the cross-sectional research horizon is inevitable for this study. However, the most important reasons have to do with the limited period of time allowed for the conduct of the research – which effectively eliminated the possibility for a longitudinal investigation, as well as the fact that the research questions are not interested in establishing the variance of the research variables over a stretch of time.

3.6 Data Collection Method
As Allright (1998, p.10) aptly pointed out, data collection is not only essential to any research, but is in fact the “central methodological question” that underpins a research work. Accordingly, it is critical for a researcher to use appropriate methods for the collection of both primary and secondary research data that generates extensive information upon which meaningful analysis and findings are based. While the present dissertation relies on open sources such as journals, books, electronic databases (e.g. Emerald Insight, Jstor and Google Scholar), and internet publications for secondary data, the principal means of collecting primary data is the interview method – specifically semi-structured interviews with select Chevron Nigeria Employees. Interviews are quite useful for the generation of sufficient primary information on the phenomenon that the research focuses on. Also, the fact that interviews allow the researcher to engage respondents directly (either face to face or through telephone or email interviews), helps in reducing misinterpretation, given that the researcher can seek instant clarifications for equivocal or unclear information offered by a respondent (Brenner et al, 1985). Specifically, the semi-structured interview is used as the primary data collection method because it ensures that the researcher guides the interview process and probe for context-relevant answers and explanations. Semi-structured interviews also permits the respondents to provide information that they consider significant to the interviewer (Marshall and Rossman, 1999), thus reducing the amount of irrelevant and voluminous data that the researcher would analyze.

3.7 Trustworthiness of the Research
The need to verify the integrity of the research data, interpretation, analysis, and conclusion is widely considered an important aspect of the research process. This is based on the need for researchers to demonstrate to their audiences that the findings and outcomes of their research are, according to Lincoln and Guba, 1985, p.290), “worth paying attention to”. Although the constructs of ‘reliability’ and ‘validity’ are widely used as measures of integrity especially in deductive research, Guba and Lincoln (1989) have suggested that the term ‘trustworthiness’ is more appropriate for inductive studies as a measure of the qualitative rigour applied by a researcher. The elements that characterize such qualitative rigour and thereby demonstrate trustworthiness in the research include adequacy of referential materials, structural corroboration, negative case analysis, and confirmation of results with the participants (Guba and Lincoln, 1989; Morse et al, 2002). Accordingly, the elements were implemented in the research process for the present dissertation in order to maintain the integrity of the process, and ensure that the research findings, analysis, and conclusion were sufficiently trustworthy.

3.8 Limitations of the Research Methodology
Although the inductive research approach and other elements of the adopted research methodology are largely appropriate for the present study because of their perceived advantages, it is nonetheless worthwhile to admit that a number of limitations that may slightly affect the overall quality of the research outcomes also characterize the methodology. For instance, the inductive research approach is marked by the problem of replicability; indeed Saunders et al. (2003) have pointed out that the contexts, events, conditions and situations that form the basis for a qualitative research may be difficult to replicate in different circumstances or periods, and this significantly detracts from the reliance and reliability of the research findings. Additionally, the case study strategy, which is a key aspect of the research methodology for this dissertation, has a certain degree of proneness to bias because of it relatively narrow focus and subjective exposure to studied case. This perhaps explains why some critic of the case study method suggest that it is may be an unreliable method that is more useful merely as an exploratory tool (see for instance Eisenhardt, 1989).

Furthermore, the unavoidable inadequacy of time and resources also constrained the researcher’s ability to widen the scope of the study to include a greater number of respondents and case studies for evaluation. In spite of these limitations however, the adopted research methodology is largely effective in helping the researcher accomplish the aims and objectives of the study. This is particularly because of the fact that it facilitates a great deal of depth, flexibility, collection and interpretation of rich and subjective data, and a nuanced, dynamic understanding of the complex elements that relate to employee engagement and the extent to which it is influenced by non-financial rewards.


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