alexa Employees Views on Payroll Computerization and Its Impact on Their Productivity: A Grounded Theory Approach

E-ISSN: 2223-5833

Arabian Journal of Business and Management Review

  • Research Article   
  • Arabian J Bus Manag Review 2018, Vol 8(2): 340

Employees Views on Payroll Computerization and Its Impact on Their Productivity: A Grounded Theory Approach

Ahmad A Palladan* and Nuhu Y Palladan
School of Business Education, Federal College of Education (Technical), Gombe, Nigeria
*Corresponding Author: Ahmad A Palladan, Lecturer, School of Business Education, Federal College of Education, Gombe, Nigeria, Tel: +234-8033004199, Email: aapal[email protected]

Received Date: Apr 17, 2018 / Accepted Date: May 11, 2018 / Published Date: May 24, 2018

Abstract

The study investigates employee views on payroll computerization and its impact on their productivity. The researchers used qualitative research design to conduct the study. Grounded theory was also adopted for theory building. Eleven employees were carefully selected from three different institutions to participate in the study. A taped interview was conducted using semi structured questions. A peer review rates of the transcript suggest ≥ 86% agreement. The study reveals among other things that accuracy in reward computation, job enrichment as well as timely payment of employee’s benefits increases employee’s productivity. The study proposes some recommendations and suggests other avenues for further research as well.

Keywords: Employees; Productivity; Grounded theory; Tertiary institutions; Computerised payroll system

Introduction

The emergence of computers and other information communication technologies (ICT) was considered perhaps to be the single biggest initiative that impacted on education institutions in the past decades. Information Technology (IT) is enormously contributing to the quality of educational institutions globally and it is one of the factors that are leading the dramatically changes taking place in the educational sector [1]. Advancements in information communication technology (ICT) tools have allowed tertiary institutions to use computers to carry out their salary calculations that were hitherto are manually performed [2]. Therefore, improvements in the information technology and advancement of computer and computer software have facilitated the use of computerized pay-rolling in Nigerian tertiary institutions.

Elekwa and Eme [3] opined that payroll is a list of employees including the wages or salaries due to each employee. Computer payroll system as personnel system also provide broad range of personnel and payroll processing like keeping employees records, pay band, savings deduction, taxes and others using a computer database [4]. The database comprises of current and prior salary payment information as well as another employee’s information [4]. This contradict the manual pay-rolling systems where processing of data is sluggish and tantamount to error [5-7].

Emolument payment system in any organization is very essential [3]. When employee’s payroll data is recorded and processed efficiently by the organizations, there is every likelihood that the entire organization will be run smoothly [8]; and it will certainly go a long way in boosting employee’s productivity [9,10]. Seif and Qasim [9] and Mark and Todd [11] posit that use of computers and pay-rolling software will lead to a positive impact in raising the effectiveness and productivity of employees in an entire organization. The elements associated with computerised pay-rolling that enhance productivity and effectiveness includes appropriateness, flexibility, and accuracy in salary calculation [9,12]. Manual pay-rolling takes a lot of time and energy to process and there is room for errors that can be costly [8]. The errors could be in the form of omission of names or underpayments of employee’s benefits; and this will certainly hamper employee’s productivity and effectiveness [4,11]. Thus, several scholars are on the agreement that one of the top factors that affect employees’ productivity is hitch free salary payment [13-15].

Employees’ productivity in any organization is a critical issue. Through employee’s productivity an organization can grow and achieve its objectives [16]. Unfortunately productivity among employees in the Nigeria public tertiary institutions is reported to be low [17]. One of the factors attributed to this ugly development is manual pay-rolling that gives room for several nefarious acts like delay in salary payment, omission of employee’s name during salary preparation, questionable and unnecessary deductions by payroll officers [13].

It is an undisputable fact that productivity of employees in an organization depends upon the satisfaction level of its workforce and to a larger extends their compensation [18]. Hence, there has been a great interest in the assessment of variables related to employee’s compensation as they impact on productivity [19]. Yamoah [20] argued that there are several factors that are tipped to have been influencing the productivity of employees in organizations. These factors comprise of managerial factors and employee’s motivation, among others. Effect of compensation and the way it’s paid could have a strong impact on employees’ productivity [21]. Perry [19] stated that good compensation that is paid smoothly to employees can stimulate the emergence of fresh ideas and innovation among employees. Hence, the effect of compensation and how it paid on employee’s productivity and performance is very glaring [20].

Previous studies on payroll computerization like Dalci and Tanis [2], Noertjahyana and Rahardjo [22], Kaurs and Grover [4], Abdulah et al. [12] Sight and Jain [8], Kristal [23], Alfred [24] as well as Bayern and Nasamu [25] devoted their studies on how to develop specific software for pay-rolling. None of them looked at how payroll computerization influences employee’s productivity, despite the monumental effect of productivity to organizations whether for profit or not [26]. This study is considered very timely since the extent of computer use and impact on employee’s wages is still not quite clear [27]. Hoffman and Mehra [28] aver that identifying factors that affect employee’s productivity from the employee’s point of view can enhance the understanding of how to best to improve productivity.

Methodology

This study opted for a modernist approach of qualitative research. The approach could be traced back from the post-war years, the 1970s, as well as the mid-1980s [29]. Denzin and Lincoln [30] argued that modernist variety of qualitative research generates high influential “formalised” methods. Schurink [31] posited that the approach is characterised by the understanding social reality. In line with the above, data collection and analysis in this study was done using grounded theory [32]. The grounded theory is part of modernist variety of qualitative research [33]. This study represents a larger significant part of grounded theory that was aimed at searching for employees’ productivity practices triggered by computerised payroll system. Grounded theory stands for the theory that emerges from this particular type of study that is grounded in the data [34]. The grounded theory approach has been practiced and employed in the field of management and behavioural science research since 1970 [35]. Although productivity is an abstract concept, it could be enhanced in a dynamic process rather than a static situation. Therefore, a grounded theory approach is the preferred methodology for this study.

Participants and Data Collection

The participants for this study comprised of 11 employees (both bursary staff and non-bursary staff) drawn from the three institutions. Eleven participants were deemed adequate based on Elliott and Timulak [36] argued that “unlike quantitative research, qualitative research typically tries to sample broadly enough and to interview deeply enough that all the important aspects and variation of the studied phenomenon are captured in the sample whether the sample be 8 or 100”. In order to meet the criterion for saturation [36], a purposeful sampling was adopted [37]. This suggest that, the researchers were very careful in selecting the research participants by ensuring that different tribes, literacy level, and other ethical issues (cadre, salary grade level, cultures, and gender) are put into consideration [29].

The researchers at the beginning employed purposive sampling techniques and later theoretical sampling was used to codes the categorizations as they emerged. The entire payroll staff that work with the manual payroll and all the employees that witnessed the manual payroll system from the institutions were considered as potential participants of the study. Data collection began by interviewing 3 and 2 of the non-payroll and payroll employees respectively. After the interview and the transcription, coding was made and categories related to organizational variables, and employees’ education was spelt out. Then the researchers proceed with interviewing participants. At the end, a sum of 4 payroll staffs and 7 non-payroll staffs were interviewed. All participants had experienced the old manual payroll and the present computerised payroll system. To allow maximum level of expression of the participant views, the participants were permitted to use the language they felt comfortable with. Most of the participants preferred to use English, but few used Hausa language.

Conducting the Interviews

The researchers contacted each of the participants to explain the research objectives. In line with that, the meaning of productivity was also explained as it was conceptualized by this study. If the participant accepts to partake in the study, a consent form is given to him or her and a taped interview was conducted. At the process of the interview the, the researchers take written notes. Participants were interviewed in the comfort of their offices using a semi structured interview format. The interview made up of several semi-structured open-ended questions to allow participants to fully explain their own opinions, perceptions and experiences. At the beginning, the participants were asked to voice out their opinion and experience on manual payroll in comparison with the present computerised payroll system. Subsequently, they were requested to explain their views on how the computerised payroll system “relate to their productivity”, as well as the “factors responsible”. Typical examples of these questions are:

1. Does your productivity have anything to do with method of salary payment?

2. How does computerised payroll system affect your productivity?

3. Do you feel yourself to be more productive after your institution computerised its payroll system?

4. Can you explain some of the areas you felt computerised payroll system enhance your productivity?

5. Tell me, from your experience, how can you become more productive through computerized payroll system?

The duration for the interviews varies from one participant to another. It ranges from 35 to 45 minutes. The interview was transcribed verbatim as well as translations for the interviews not conducted in English. Brief notes were taken on the issues raised and questions asked spontaneously on issues not clarified. The data was collected and analysed in the period of four months from January to April 2017.

Data Analysis

As suggested Strauss and Corbin [32], data collection, data analysis, and data interpretation went concurrently in line the requirement of grounded theory. Each interview was transcribed verbatim and analysed before the next interview took place. Therefore, each interview provided direction for the next. Open, axial, and selective coding was applied to the data [32]. At the process of open coding, codes were fetched out from the transcript interviews. To achieve that, the transcribed interview was read several times and codes that were found to be similar in concept, in nature or related in meaning were categorised in the same group.

In the furtherance of the analysis, axial coding was also employed. Axial coding refers to identifying then relationships among the open codes and the connections among them. The process permits the researcher to establish links between categories to their subcategories, while selective coding leads to the development of main categories [38]. Though several and different categories of employees were interviewed in the study, the themes that were consistent across interviews were considered.

Interviewing closed when data saturation occurred. Interview and data coding were considered “saturated” when no more codes could be identified and the category was “coherent” [38]. Data gathering came to an end after conducting the last two interviews since no new data emerged.

Data Validity and Reliability

Quantitative researchers play high emphasis on internal validity in their research; while qualitative gives more emphasis on the credibility of their participants. Participant credibility is very essential for attaining valid results [39]. Qualitative researcher must again focus on dependability rather than reliability [39]. Thus, the researchers maintain a field journal which was used to write down the content and the process of contacts, including reactions to numerous events. The journal is the record for relationships and avail the researchers with material for reflection. Polit et al. [40] posited that prolonged engagement as well as persistent observation enhanced data credibility. In line with that, the participants were contacted after the analysis and the full transcript, coded interview as well as the emergent themes was given to them for them to ascertain whether the codes and themes were true to participants’ experience. More so, for further validity check, two experts from University Utara Malaysia and Ahmadu Bello University Zaria, Nigeria did a peer checking on ≈ 42% of all transcripts. There was ≥ 86% agreement between the two raters.

Ethical Considerations

The Research and Development Unit (R &D) of Federal College of Education (Tech) Gombe approved the research proposal as the study was part of Tetfund sponsored research. All participants were informed of the purpose of the study, and that their participation was strictly voluntary. Participants signed a written consent form to be in the study and permission was obtained from the institutions management for their staff to participate in the study. For each of the institutions that partake in the study and introduction letter was collected from the R&D unit.

Findings

Employees views on the relationship between payroll computation and employees productivity

Almost all the employees are on the agreement that payroll system or payroll computerization has direct effect on employee’s productivity. The employees used different words to show how pay-rolling affect their productivity. The participants used different words to describe how the olden manual payment system adversely affects employee’s performance. They used word likes lack of accuracy, omission of employee’s names during salary preparation, as well as in a-accurate calculation of employees’ allowances. One of the participants said that in-accurate computation of employees’ benefits at the end of month associated with the old manual payroll system lowered employees’ morale and performance. He further observed that the previous manual system was characterized by in-accurate calculation of employee emoluments, and that happens almost every month when salaries were due to be paid. This uncertainty, he claimed was tantamount to undermining the employees since no one was assured of what he was going to receive as his alary at the end of the month. One participant lamented:

Wani za’a cire masa kadan wani kuma a cire masa da yawa (for some, the underpayment was much, while for others it was a small amount) (Non-Teaching Staff).

Another area of relationship between payroll computation and employee’s productivity according another participant was delay in salary payment that pushes the employees into severe hardship. Because salary was calculated manually that time, it normally takes the payroll staff several days to compute. The stress caused by this kind of practice was enormous and was tantamount to affecting employee’s productivity. One of the bursary staff asserted:

During those days, we painstakingly took 29 days or so compiling salary manually!

But now within few while we can compute the whole salary of our organization; error free! (Non- Teaching Staff).

Computerized payroll related factors that hampers or improves employee’s productivity

Factors like accuracy of reward calculation, timely response to employees complains, employee’s satisfaction with their job and delay in salary payment were identified as factors affecting the productivity of employees in the workplace.

Accuracy in reward computation: Available empirical evidence literature suggests that accuracy in monetary rewards is among the most powerful factors that affects employees’ motivation and performance [41]. For instance, Locke et al. [42] observed 30% increase of employees’ productivity after an introduction of accurate individual monetary incentives. From the interview conducted in this study, a considerable number of the participants indicated that accurate payment of salaries and other benefits that devoid from rancour contributes a lot towards employees’ decisions to stay in or leave the organisation. They stated that they were sometimes motivated to go the extra miles if they knew that they would be financially rewarded accurately. One of the employees categorically stated:

We are most contended with our job now because we are sure of what we are going to get at the end of the month. And the contention encourages us to work harder (Teaching Staff).

Another employee sharing the same sentiment also opined:

It encourages some of us to remain in the system because now there is a trust. Lack of trust force people to look for a greener pasture since people are not satisfied because people are not sure of what they will get. (Non-Teaching Staff)

Job enrichment: Job enrichment is one of the valued goals to achieve employee’s performance and serves as well as a valuable tool for fostering and enhancing employees’ success [43]. Saleem et al. [44] argued that job enrichment is step used to make an employee feel that his organization actually owns him. This boosts his performance on the job, and has a direct impact on his satisfaction level in the organization while enhancing his productivity [44]. Most of the participants, that is, almost everyone who took part in this study from the Bursary departments acknowledged the fact that their job has been enriched by the introduction of computerized payroll system. They explain that introduction of computers and payroll software into the main stream of their day to day activities makes their work next to perfect and makes them feel more relevant to their organizations. A staff from the Bursary staff among the participants spoke:

Before now, most of us did not understand how to operate computer very well. This system affords us the opportunity to do an excellent job without much supervision. This makes us happier and more productive (Teaching Staff).

Also, another participant observed that the emergence of cooperative societies in these institutions was solely due to the introduction of computerized payroll system. They said that the cooperative societies enhance employees’ welfare and satisfaction that culminated to increment of employees’ productivity.

Timely payment of employee’s benefits: Aguinis [45] suggest the need to reward employees in a timely manner. Concurred Aguinis et al., [41] they said is better to reward employees immediately after showing exemplary behaviours so that the behaviour-reward link is established more clearly. Computerized payroll system has led to timely payment of employees’ remuneration as it contradicts the old system of manual payment that takes several days to prepare to the detriment of the employees. One concerned and worried woman lamented that during the manual payroll system, whenever it comes to payment of employees arrears or alike, it took time before the employees receive the payments because of the lengthy process involve in calculation the benefits were done manually by the payroll staff. Another male participates also observed that the computerized payroll system reduced drastically the number time taken in computing salaries as well as nit reduce fraud and conspiracy. A participant noted:

Untimely payment of benefits cause fatigue among employees that leads to the reduction of their performance. (Non-Teaching Staff)

A bursary staff explaining how they timely response to employee’s complaints asserted:

Koda record dinka ya kai shekara goma ko ashirn, cikin dan lokaci kadan zaka ga reord dinka ya fita kuma kai aikin dakake so kayi akansa (Even if your record is 10 to 20 years old, by pressing a bottom you can retrieved it in seconds and work on it) (Teaching Staff).

The Grounded Theory Methodology

Grounded theory methodology provides systematic and flexible guidelines for data collection and analysis for theories development that entails conceptualizations of abstract substantive problems which people experience [46]. Consequently, grounded theory was chosen to investigate the impact of computerized payroll on employee’s productivity, because it allows researchers to ‘explore a phenomenon and build theory or theoretical models for contexts going through change processes and transitions.’ [47].

The participants participated in this study emphasized that the introduction of computerized payroll system is one of the main factors that facilitate employee’s productivity in the colleges under study. The outcomes of payroll computerization system that influences employees’ team productivity include accuracy of employees benefits calculation, job enrichment due to the introduction of computers, (hardware and software), reduction of employees turnover due to job satisfaction, quick response to employees complaints among others. Based on grounded theory development approach employed by this study, the following were hypotheses devised:

1. Accuracy in reward computation can enhance employee’s productivity

2. Employee’s productivity could be boost through job enrichment

3. Timely payment of employee’s benefits increases their productivity

Discussion

Our participants believed that employee’s productivity is contingent with the introduction of computerized payroll system in their institutions. They also believed that old manual payroll system hinders their productivity. Findings from this study are similar to other studies conducted in other part of the world using quantitative methods, despite the geographical and sample differences. Meer and West [48] observed that accurate minimum wage payment to employees reduce demand for new workers and raise the marginal cost of an employee.

More so, Butali et al. [49] discovered that economically, staff turnover that accurate payment of employees’ remuneration curtailed increases work for the remaining staff in an organization and that brings about customer dissatisfaction and consequently decrease organizational income due to reduction in productivity. They further argued that from social perspective, staff turnover adversely affects staff morale and leads to gaps in the social groupings. The level and how employees pay is distributed in an organization is tantamount of having reasonable effect on the efficiency of the organisation, as well as the morale and productivity of its workforce.

Additionally, participants in this study are on the view that job satisfaction brought about by accurate calculation of employees entitlement boost their productivity. In his study, conducted on nonteaching staff in one of Nigerian public universities, Inuwa [50] found that job satisfaction has a positive and significant effect on employee performance. He observed that increase in the level of job satisfaction led to increased and higher performance.

Majority of the participants from the Bursary staff in this study suggest that job enrichment due to introduction of computerized payroll system enhance their productivity. In this vein, from data obtained from four big cities of Pakistan, Dost and Khan [51] discovered that when jobs of the employees of an organization are enriched, the level of their commitment will also increase positively and that will increase their productivity level as well in the public and private sectors.

Conclusion and Recommendations

The study reveals employee’s views on the relationship between payroll computerization and employee’s productivity as well as how payroll computerization affects their productivity. The findings from this study are essential both theoretical and in management situations. Managers especially from developing economies that ae still using manual payroll system can learn to benefit from the opportunities avails by computerized payroll system when it comes to payment of employee remunerations. The opportunity lays in the enhancement of their employee’s productivity as discovered by this study. The results of this study have equally enhanced our knowledge on productivity and thus help managers to direct personnel better. Theoretically, the study adds up to the existing literature on employee productivity as it relates to grounded theory approach.

Due to dynamic nature of organisations, future studies are recommended to replicate the study in different organizational settings. Literatures on human resource management and organizational behaviour much often include sections on culture differences among countries as well as the implications of such differences. Hence, this kind of study is recommended to be carried out in different environment and context. It is equally essential to conduct this similar study using quantitative research methods to confirm the findings herein. Finally, proper and well-articulated mode of monetary rewards payment system can be a powerful motivator of employee’s productivity as will help in attracting and retaining top performers. This is very true because proper payment of monetary rewards helps the employees satisfy a wide range of low- and high-level of their needs.

References

Citation: Palladan AA, Palladan NY (2018) Employees Views on Payroll Computerization and Its Impact on Their Productivity: A Grounded Theory Approach. Arabian J Bus Manag Review 8: 340.

Copyright: © 2018 Palladan AA, et al. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.

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