Effect Of Compensation Management In Improving Employees Performance In An Organization

Project and Seminar material for Public Administration

Effect Of Compensation Management In Improving Employees Performance In An Organization


Abstract


This study was carried out to examine the effect of compensation management in improving employees performance in an organization using Nigeria Ports Authority (NPA), Apapa Lagos State as a case study. The study was specifically carried out to determine whether there is a significant relationship between compensation management and employees performance, find out whether adequate financial compensation enhances employees’ performance in an organization, find out whether adequate non-financial compensation improves employees’ performance in an organization, and determine whether there is an effective compensation management in Nigeria Ports Authority (NPA). The survey design was adopted and the simple random sampling techniques were employed in this study. The population size comprise of staff of Nigeria Ports Authority (NPA), Apapa Lagos State. In determining the sample size, the researcher conveniently selected 57 respondents and 50 were validated. Self-constructed and validated questionnaire was used for data collection. The collected and validated questionnaires were analyzed using frequency tables, and mean scores. While the hypotheses were tested using Pearson correlation statistical tool, SPSS v23. The result of the findings reveals that there is a significant relationship exist between compensation management and employees performance. The study also revealed that adequate financial compensation enhance employees’ performance in an organization. Therefore, it is recommended that the management of organizations should provide for every new employee a copy of the compensation manual and discuss the items therein during orientation. And for existing employees periodic workshops and training should be organized to get them educated on the compensation policies and packages. To mention but a few.


Table of Content


  • Title Page
  • Certification
  • Dedication
  • Acknowledgement
  • Table of Content
  • List of Tables
  • Abstract

Chapter One:

Introduction

  • 1.1 Background of the Study
  • 1.2 Statement of the Problem
  • 1.3 Objective of the Study
  • 1.4 Research Questions
  • 1.5 Research Hypothesis
  • 1.6 Significance of the Study
  • 1.7 Scope of the Study
  • 1.8 Limitation of the Study
  • 1.9 Definition of Terms
  • 1.10 Organisations of the Study

Chapter Two:

Review of Literature

  • 2.1 Conceptual Framework
  • 2.2 Theoretical Framework
  • 2.3 Empirical Review

Chapter Three:

Research Methodology

  • 3.1 Research Design
  • 3.2 Population of the Study
  • 3.3 Sample Size Determination
  • 3.4 Sample Size Selection Technique and Procedure
  • 3.5 Research Instrument and Administration
  • 3.6 Method of Data Collection
  • 3.7 Method of Data Analysis
  • 3.8 Validity of the Study
  • 3.9 Reliability of the Study
  • 3.10 Ethical Consideration

Chapter Four:

Data Presentation and Analysis

  • 4.1 Data Presentation
  • 4.2 Analysis of Data
  • 4.3 Answering Research Questions
  • 4.4 Test of Hypotheses

Chapter Five:

Summary, Conclusion and Recommendation

  • 5.1 Summary
  • 5.2 Conclusion
  • 5.3 Recommendation
  • References
  • APPENDIX
  • QUESTIONNAIRE

Chapter One


Introduction

1.1 Background of the Study

One of the fundamental tasks in human resources management is compensation management. It is a complex task that occurs periodically, demand accuracy and must not be delayed. Compensation management requires integrating employees’ processes and information with business process and strategies to achieve optimal organizational goals and objectives. This can be attributed to the fact that compensation management is an essential tool to “integrate individual efforts with strategic business objectives by encouraging employees to do the right things with ever improving efficiency”. (ASH, 1993). In other words, compensation management is a powerful means of focusing attention within an organization. They send clear messages to all employees of the organization informing them about expected attitudes and behaviors (Schell and Solomon, 2007).

Furthermore, researchers have argued that compensation management system can create and sustain a competitive advantage for organizations (Milkovich and newsman, 2002). In recent years, the inclusion of non-financial measures has gained some popularity in compensation management, while some schools demonstrate positive effects of incorporating non- financial measures into the compensation management system empirically (Widmier, 2002). He further states that, human resources model of compensation generally assume that higher performance requires greater effort or that is in some other ways associated with disutility on the part of workers. In other to provide incentives, these models predict the existence of reward systems that structure compensation so that a worker expected utility increase with observed productivity. These reward can take many different forms including praise from suspensor and co-workers, implicit promise of future promotion opportunities, feelings of self esteem that comes from superiors achievement and recognition and current and future cash rewards related to performance.

Koln (2003), argues that failure of compensation system is due to inadequate assumption about human motivation, reason for this can be attributes rather to the measurement of employee satisfaction and employee loyalty to the organization. Hence, there is a strong need for the development of a holistic reward and performance measurement model enabling an organization to derive company specific success drivers and identify cause and effect relationship when linking rewards to measure such as employees satisfaction and loyalty. Thus, Dalton McFarland (2008), asserted that among the various devices for eliciting the loyalty, cooperation and effort of individuals are the various forms of economic rewards’.

According to Ojo (2007) there are three components of employees compensation in an organization which are (i) the basic pay (ii) the fringe benefits and (iii) performance incentives or bonus. The basic pay is the basic wage in form of salary, fringe benefits are supplementary compensation awarded to employers over and above the basic wage or salary. Since the coming of the term “Fringe Benefits” during world war ii, the scope of employees benefits has widened markedly in both developed and developing countries. Such benefit covers a wide range of rewards which provides security, deferred remuneration and various services for employees.

The significance of the subject matter, Compensation emanates mainly from the fact that it provides income to workers and constitutes an important cost item to the employers, the largest single cost item for many organizations. For the workers, wage provides the means of satisfying their wants and needs.


1.2 Statement of the Problem

The relationship between organizational compensation system and employees performance is indispensable, though some surrounding factors may determine the satisfaction one derives from the other. The high inflation rate which has led to high cost of living, low income and purchasing power can be a reason for poor performance. In order to achieve the needed output level, the Nigerian managers faces an uphill task in trying to fashion out a reward system which does not have to necessarily be totally monetary inclined to motivate and bring out the best in employees to whom morale would have been affected by the bad state of socio-political and economic sphere of the country.

The question now is, can there be a reward system that could adequately have an effect on workers performance? How often is this system reviewed? Would a fixed organizational compensation system bring out the required performance? Does the system reward the right set of employees? Would the outlined reward solve the immediate problems of workers in order to boost performance? Can the reward system stand out the test of time?

Most times, only good behavior is rewarded while performance based reward is ignored. Also, some organizations confuse activity with action and reward those who seem busy, yet the quiet employees may have been doing the bulk of the work. From this, there is need for management to build its reward system along the line of actual performance and actual level of work, input and productivity. Therefore, the problem of trying to figure out these loopholes with intent of correcting them forms the basic for this research.


1.3 Objectives of the Study

Generally, this study seek to examine the effect of compensation management in improving employees performance in an organization.

Specific objectives of the study are stated below.

  1. Determine whether there is a significant relationship between compensation management and employees performance.
  2. Find out whether adequate financial compensation enhances employees’ performance in an organization.
  3. Find out whether adequate non-financial compensation improves employees’ performance in an organization.
  4. Determine whether there is an effective compensation management in Nigeria Ports Authority (NPA).

1.4 Research Questions

The research questions were directed specifically to address the following issues;

  1. Does a significant relationship exist between compensation management and employees performance?
  2. Does adequate financial compensation enhance employees’ performance in an organization?
  3. Does adequate non-financial compensation improve employees’ performance in an organization?
  4. Is there an effective compensation management in Nigeria Ports Authority (NPA)?

1.5 Hypothesis

  • Ho: There is no significant relationship between compensation management and employees performance.
  • Ha: There is a significant relationship between compensation management and employees performance.

1.6 Significance of Study

The information from this research will add to the study of the knowledge and theories on the subject matter of compensation.

This study was brought about by the persistent quest for higher employees performance by several organizations especially Nigeria ports Authority at Apapa. The basic question to date is how well the use of compensation packages relates positively to employees performance. Finally, the outcome of this study will pose a challenge for future researchers or students who may be interested in carrying out more research in this area and it will also serve as reference materials for students.


1.7 Scope of the Study

The study shall be carried out within the Nigeria public sector, specifically the Nigeria Ports Authority (NPA), Apapa Lagos State.

The project is intended to cover the compensation management system and how it relates to the individual employee in the organization and also to the organization.


1.8 Limitation of the Study

Like in every human endeavour, the researcher encountered slight constraints while carrying out the study. Insufficient funds tend to impede the efficiency of the researcher in sourcing for the relevant materials, literature, or information and in the process of data collection, which is why the researcher resorted to a limited choice of sample size. More so, the researcher simultaneously engaged in this study with other academic work. As a result, the amount of time spent on research will be reduced.


1.8 Definition of Terms

Compensation:

This refers to direct and indirect rewards given to employees on the basis of the value of the job, their personal contributions and their performances.

Performances:

The extent to which an employee or group of employees have gone in achieving the set goals or standards.

Employees:

Person who work for compensation weather direct or indirect for another in return for stipulated series.

Organisation:

A group of people who form a business in order to achieve a particular aim.

Public Sector:

The area of the nation’s affairs under governmental rather than private control.

Policy:

A course of action adopted and pursued by an organization, government, ruler, political party etc.

Target:

A result arrived at a goal or objectives aim at something.

Productivity:

The measure of the output of goods and series relative to resources available.


1.10 Organizations of the Study

The study is categorized into five chapters. The first chapter presents the background of the study, statement of the problem, objective of the study, research questions and hypothesis, the significance of the study, scope/limitations of the study, and definition of terms. The chapter two covers the review of literature with emphasis on conceptual framework, theoretical framework, and empirical review. Likewise, the chapter three which is the research methodology, specifically covers the research design, population of the study, sample size determination, sample size, and selection technique and procedure, research instrument and administration, method of data collection, method of data analysis, validity and reliability of the study, and ethical consideration. The second to last chapter being the chapter four presents the data presentation and analysis, while the last chapter(chapter five) contains the summary, conclusion and recommendation.


Chapter Five


Summary, Conclusions and Recommendations:

5.1 Introduction

This chapter summarizes the findings on the effect of compensation management in improving employees performance in an organization using Nigeria Ports Authority (NPA), Apapa Lagos State as a case study.The chapter consists of summary of the study, conclusions, and recommendations.


5.2 Summary of the Study

In this study, our focus was to examine the effect of compensation management in improving employees performance in an organization using Nigeria Ports Authority (NPA), Apapa Lagos State as a case study.The study was specifically carried out to determine whether there is a significant relationship between compensation management and employees performance, find out whether adequate financial compensation enhances employees’ performance in an organization, find out whether adequate non-financial compensation improves employees’ performance in an organization, and determine whether there is an effective compensation management in Nigeria Ports Authority (NPA).

The study adopted the survey research design and randomly enrolled participants in the study. A total of 50 responses were validated from the enrolled participants where all respondent were staff of Nigeria Ports Authority (NPA), Apapa Lagos State.


5.3 Conclusions

Based on the findings of this study, the researcher concluded that;

  1. There is a significant relationship exist between compensation management and employees performance.
  2. Adequate financial compensation enhance employees’ performance in an organization.
  3. Adequate non-financial compensation improve employees’ performance in an organization.
  4. There is no effective compensation management in Nigeria Ports Authority (NPA).

5.4 Recommendations

Based on the findings of the study, the following recommendations are proffered.

  1. The management of organizations should provide for every new employee a copy of the compensation manual and discuss the items therein during orientation. And forexisting employees periodic workshops and training should be organized to get them educated on the compensation policies and packages.
  2. Basic Pay is one of the motivational tool, organizations used as internal and external controllable affairs of the organization to appreciate the effort of the employees.
  3. Recognition is used by management to relate to employees stability in the organization. Management should also encourage them with awards and gifts in order for them to happy and put all best efforts in the organization objectives and goals.
  4. Bonuses/allowances/allowances are a way management encourages employees in order to maintaining a favourable reputation of the employees in the organization. Firms should adopt cash bonus strategy as a way of motivating employee so as to spur them to increase their sales volume and meet their target always.
  5. Fringe benefit is one of the ways to promote and retain an employee in the organization and management should be able to sense the active employees and create ways of appreciating the employees’ effort put into action in the organization.

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