Effect of Financial Incentives on Employee Morale and Motivation of Small and Medium Scale Enterprises in Ekiti State

Abstract

The study investigated the effect of financial incentives on employee morale and motivation of small and medium enterprises (SMEs) in Ekiti State, Nigeria, to establish whether merit pay and bonuses significantly affect employee morale and motivation of SMEs in Ekiti State, Nigeria. The study employed a survey research method to obtain the needed data. Data on merit pay and bonuses represented the financial incentive measurement, while employee morale and motivation of SMEs represented the dependent variable which was sourced primarily through a well-structured questionnaire. The study administered the structured questionnaire to two hundred and forty respondents who were SME owners, managers, and employees in Ado-Ekiti, Ekiti State, Nigeria. The collated data were analysed through descriptive statistics and ANOVA regression statistics. The result of multiple regression showed that merit positively and significantly affects employee morale and motivation ages of SMEs with the t-statistics and probability of (t = 7.288; 0.000 < 0.05); bonuses positively and significantly impact employee morale and motivation of SMEs showing t-statistics and probability of (t = 3.147; 0.002 < 0.05. The study concluded that financial incentive has a significant effect on employee morale and motivation of SMEs in Ekiti State, Nigeria.