The Degree of Impact of Financial Incentives on the Performance of the

Employees of LGU Alaminos

THE PROBLEM AND ITS BACKGROUND

This chapter presents the different essential elements: the introduction containing the rationale;
the statement of the problem; the purpose of the study, which addresses the reason for conducting the
study; the significance of the study; the scope and delimitation of the study containing major valuables
and indicators; and the definition of terms.

Introduction

This study is an analysis of the degree of impact of financial incentives on government

employees specifically employees of LGU Alaminos. Incentives may involve either cultural norms, or
financial rewards and punishments. Financial incentive however is the form of incentive or award given
to the employee in order to boost productivity and overall performance. Hence, this study focuses on
how financial incentives can directly have an impact on the performance of a government organization
and whether this incentive is always effective on affecting the performance of the employees. Improving
public sector performance has been a development concern across countries, given the critical role of
the government in providing public goods and setting a country’s overall socioeconomic climate. The
effectiveness of public services depends on the performance of the people who deliver them, making
performance management in the public sector critical (World Bank 2014a). Under the Labor Code of the
Philippines, employees are entitled to monetary benefits such as the minimum wage, 13th month pay,
and overtime pay, among many others, in addition to those government mandated financial benefits
also include allowances for.

The use of incentives, such as monetary and nonmonetary rewards, has long been practiced in many
private organizations (Burgess and Ratto 2003; Lewin 2003; Mogultay n.d.) and later adopted in the
public sector. In particular, pay for performance (PFP) started in the private sector and was later
introduced in the public sector to improve productivity, thus producing better results despite limited
government funds. The PFP is grounded on the assumption that goals should be clearly defined and that
rewards for achieving these goals can help motivate employees and enhance their accountability.
Nevertheless, the precise impact of incentives may depend on the nature of the job, career path of
employees, and other key drivers of employment decisions. In addition, the adoption of the PFP from
the private sector to the public sector poses a challenge (Montoya and Graham 2007).
 Statement of the Problem

Incentives importance is clearly apparent in the work area and its reflection on job performance
which in turn, will be reflected on employee’s productivity and loyalty to their organizations. Therefore,
this study came to shed light on an important aspect that contributes to discovering the impact of
Financial Incentives on the performance of government employees and the use of such data for how
performance is affected by the said award.

Impact of Financial Incentives on the Performance of the Employees of LGU Alaminos

1. What are the government-mandated financial incentives?

2. What are the effects of these incentives to government employee performance
3. What are the

Purpose of the Study

The purpose of this study is to investigate the role of financial incentives and its impact on
employee performance in the government sector.

Significance of the Study

This research is conducted with the aim to provide crucial information and knowledge regarding the
chosen topic from the respondents, recent studies or theses, and related sites needed for the expected
importance to the individuals as follow:
The researchers
The