Executive Compensation Packages And Job Satisfaction

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Executive Compensation Packages And Job Satisfaction


Abstract


The study examines executive compensation packages and job satisfaction of fast consuming goods companies. Precisely, the study focused on Cadbury, Nestle and Dangote Nigeria Plc. The study employed descriptive survey method. The population of the study comprises of all management staff of Cadbury, Nestle and Dangote Nigeria Plc. The study adopted simple random sampling technique to select the sample for the study. Data for the study were collected through the use of structured questionnaire. The data collected were analyzed through the use of descriptive statistics of mean and standard deviation while the hypothesis was tested using regression techniques. All analysis was carried with the aid of SPSS. The result from the analysis reveals that executive compensation packages such as long term incentive and retirement plan has positive and significant effects on job satisfaction of fast consuming goods companies. It was also found out that annual incentives, bonuses and supplemental retirement plan has negative and significant effects on job satisfaction of management staff of fast consuming goods companies. It was recommended that Fast consuming goods companies should encourages long term incentives plan and retirement plan for their management staff as it increases job satisfaction for the management staff.


Chapter One


Introduction

1.1 Background to the study

In contemporary organizations, employees are the main resources through which all the other objectives are achieved. There are various classes of employees in organizations today and their job satisfaction promotes effectiveness. Millan (2011) argued that employees in US will demonstrate pleasurable positive attitudes when they are satisfied with their job. Thus, high job satisfaction will increase the productivity of an organization, in turn increasing the organizational overall performance. When not satisfied, employees on their part become nonchalant about their work duties which invariably have negative impact on performance of the organization.

According to Bozeman & Gaughan (2011), the perception of being paid what one is worth predicts job satisfaction in Ghana. They further state that there is a positive significant relationship between executive compensation and job satisfaction. Job satisfaction is perceived as an individual’s attitude and behavior towards aspects of his own job. Personal job satisfaction is an affective or emotional response toward various facets and outcomes of one’s job, meaning that personal satisfaction in relation to a job is not unitary, as a person may be satisfied with one aspect of his or her job and dissatisfied with the rest.

According to Adamaechi & Romaine (2012) job satisfaction is very essential in any kind of group or organisation in Nigeria and it can mean the difference between success or failure of any group or joint activity. Hence for enterprise to achieve its goals employee job satisfaction such enterprise must adequately compensate the workers.

According to Popoola (2007), in the 21st century people pay much attention to their life style and the money they earn from the work than their predecessors. However, it remains unclear whether many of them would continue working, if it were not for the money they receive Employee expectations of a compensation plan are that it is fair and equitable, that it provides them with tangible rewards commensurate with their skills and further, provides recognition and livelihood.

Executive compensation, in today’s organizations in France, is a major consideration in Human Resource Management, and how it is allocated sends a message to the top employees about what the organizations believe to be important and worth encouraging (Rodgers & Gago 2013). For employers, the executive compensation usually represents a sizeable proportion of operating costs. However, some employers view this only as a cost, while failing to consider the strategic benefits of a well-considered executive compensation and benefits plan. Executive compensation therefore, is a critical element of human resources management system in South Africa, and should be designed to work together with other elements of the system (for instance, organizational goals, professional development, principal leadership, worker recruitment and selection) to enhance performance (Dulebohn & Werling, 2007). Money not only helps people to attain their basic needs, but it is also instrumental in providing higher level need satisfaction as observed by (Dulebohn & Werling, 2007). As a result, most employees value work according to how much they gain from it.

It is important to note that both managers and subordinates are working towards the goal of ensuring organizational profitability to ensure their pay and compensations. The researcher is suggesting that job satisfaction is worth considering when especially when executive compensation package policy is in place in the organization. In Nigeria, executive compensation packages differs substantially from typical pay packages for either hourly workers or salaried management and professionals in that executive pay is heavily biased toward rewards for actual results (Akindele, 2014). Hence if a company underperforms, the executives typically receive a smaller fraction of their potential pay. Conversely, if a company meets its annual objectives and the stock price responds long term, the executives stand to receive a much larger payout. There is no doubt on the fact that any manager that receive poor pay must surely force the subordinates into serious work without much consideration for their welfare. Executive compensation package is structured to reward company performance and align executive pay with shareholder value. As a result, unlike most other employees, a majority of executive pay is at-risk; in other words, executives may never receive it. However, if executives and the company perform well, they along with the company’s shareholders stand to gain much more from superior performance. Based on all all these facts, the research found it worthwhile to examine executive compensation packages and its effect on authoritarian management style in selected fast consuming good company in Nigeria.


1.2 Statement of the problem

Several studies have failed to examine the issue of job satisfaction from the frequent adoption of executive compensation packages in organizations. Executive compensation has a great impact on productivity. To achieve effective work performance calls for job satisfaction among the workers. In Nigeria, there have been a lot of complaints about performance of organizations due to economic crises. The performance and productivity of organizations is the determining factor in executive compensation, hence, job satisfaction of top staffs might be hinged on the performance of the company.

In this scenario, pay promotion, incentives, autonomy and comfort are the hallmark of job satisfaction. Although, this might be driven by the organizational policy of executive compensation packages, a situation whereby the annual incentives and bonuses, long term incentive plans, retirement plans and supplemental executive retirement plans which are particularly determine the financial performance of the organization. Therefore, managers are left with their abilities to satisfy their employees in order to ensure high productivity that will eventually secure their future. Most multinational companies, especially those producing fast consuming good utilizes executive compensation package with motives of ensuring workers job satisfaction. However, the researcher has seen the need to examine executive compensation packages and job satisfaction in fast consuming goods companies since no academic has been conducted on it all over the world.


1.3 Objectives of the study

The general objectives of this study is to examine executive compensation packages and job satisfaction in fast consuming goods companies while the following are the specific objectives:

  1. To examine the structure of executive compensation packages adopted by fast consuming goods companies in Nigeria.
  2. To analyze the effects of executive compensation packages adoption by fast consuming goods companies in Nigeria.
  3. To evaluate the effect of executive compensation packages on job satisfaction in fast consuming goods companies in Nigeria

1.4 Research questions

  1. What is the structure of executive compensation packages adopted by fast consuming goods companies in Nigeria?
  2. What are effects of executive compensation packages adoption by fast consuming goods companies in Nigeria?
  3. What are the effects of executive compensation packages on job satisfaction in fast consuming goods companies in Nigeria?

1.5 Hypothesis

HO: executive compensation package do not have significant effect on job satisfaction in fast consuming goods companies in Nigeria.


1.6 Significance of the study

The following are the significance of this study:

The findings from this study will form a policy guideline for government, policy makers, business administrators, shareholders and the general public on executive compensation packages and its effect on job satisfaction. It will also educate on the structure of compensation system in place in many organizations with consideration for the determinants of job satisfaction.

This research will be a contribution to the body of literature in the area of executive compensation package and its effect on job satisfaction in an organization, thereby constituting the empirical literature for future research in the subject area.


1.7 Scope of the study

This study will cover the structure of executive compensation packages in place in fast consuming goods companies in Nigeria and its effect on the job satisfaction.


1.8 Operational definition of terms

Compensation packages:

A compensation package is the combination of salary and fringe benefits an employer provides to an employee. When evaluating competing job offers, a job-seeker should consider the total package and not just salary

Job satisfaction:

A feeling of fulfillment or enjoyment that a person derives from their job.

Motivation:

A reason or reasons for acting or behaving in a particular way.

Retirement:

The action or fact of leaving one’s job and ceasing to work.

Executive:

A person with senior managerial responsibility in a business.


Executive Compensation Packages And Job Satisfaction


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Executive Compensation Packages And Job Satisfaction


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Frequently Asked Questions


How do compensation and benefits affect job satisfaction?

Moderating effect of compensation and benefits on job satisfaction: Shoaib et al. 33 revealed that attractive and competitive remuneration packages still ranked as one of the very important factors that affect job satisfaction because it fulfils the financial and material desires.

What is the most important part of a full compensation package?

For some, health insurance and a 401 (k) plan might be the only must-haves. For others, the ability to telecommute might be very important, or perks such as an on-site gym or tuition reimbursement could seal the deal. The point is that you must know during the job hunt which aspects of the full compensation package are most important to you.

How to evaluate a compensation package and a job offer?

How to evaluate a compensation package and job offer When you have an offer in hand, it’s time to consider the entire package. If the proposed salary is not what you expected, examine the benefits and perks. A top-notch package may make a lower salary more palatable.

How many employees are satisfied with their benefits?

But just over two-thirds (68 percent) of employees indicated that they were satisfied with their benefits. “As the economy continues to improve and job seekers become more confident in securing new positions, organizations must design competitive benefits packages to attract and retain top talent,” said Lee.

How does compensation affect employee performance and efficiency?

On the other hand, employee performance and efficiency can be drastically affected if a good compensation package is absent. Here are a few reasons why: Low job satisfaction – Employees will feel under appreciated and derive low satisfaction from their job.

Do benefits impact job satisfaction?

Benefits do not impact job satisfaction. Compensation is the strong predictor of job satisfaction with a standardized beta value of 0.261. Benefits was found to be non-significant at 99% (p<0.01). Research question 1: Compensation has a positive and significant effect on job satisfaction.

How do compensation and job satisfaction impact employee morale?

Both compensation and job satisfaction impact employee morale. Typically, the supervisor’s leadership style as well as the employee’s skill level and decision-making authority also affect an employee’s attitude toward his job.

Is compensation a good predictor of job satisfaction?

Compensation is the strong predictor of job satisfaction with a standardized beta value of 0.261. Benefits was found to be non-significant at 99% (p<0.01). Research question 1: Compensation has a positive and significant effect on job satisfaction.

What is a compensation package and why is it important?

A compensation package is a summary of all the ways that a company directly or indirectly pays employees. Also known as a total compensation statement, the compensation plan describes details about how the employer pays employees and what non-financial benefits they offer.

What is the most important part of executive compensation packages?

This is the most important part of executive compensation packages for most execs. Top executives look for a long-term compensation package that is generous and provides them with a powerful incentive to put in the long hours needed to make the company successful so they ultimately earn that long-term reward.

What are the different types of compensation packages?

There may be a standard compensation plan that applies to all employees, tiered compensation offerings or customized plans based on each position. A well-rounded compensation package can give you an incentive to work for a certain employer and be committed to your job. What is included in a compensation package?

How to evaluate a compensation package and a job offer?

How to evaluate a compensation package and job offer When you have an offer in hand, it’s time to consider the entire package. If the proposed salary is not what you expected, examine the benefits and perks. A top-notch package may make a lower salary more palatable.

How can I evaluate a compensation package without comparison?

It’s difficult to evaluate a compensation package without a basis of comparison. To get a reliable benchmark for your starting salary and more, check out the Robert Half Salary Guide, which you can download for free. Our Salary Guide provides up-to-date compensation data for hundreds of jobs in a wide range of fields.

What should I consider when reviewing a job offer?

When reviewing a job offer, consider the entire package, including job content, salary, benefits, hours, flexibility, management and company culture, pension plans, and the work environment. If you’re reviewing multiple offers and trying to decide which one to take, evaluate them both and compare to see which comes out ahead.

What is a compensation package?

What is a compensation package? It includes more than just salary — it’s everything of value, monetary and otherwise, that an employer provides in exchange for the work you do. Think incentives, benefits and perks.

What should you ask a prospective employer about compensation?

You can’t be overinformed when it comes to the compensation package from a prospective employer. Ask about everything that’s included — and about things important to you that may not be there. You don’t want to be caught off guard after you’ve started your new job.

How many employees are satisfied with their jobs?

According to one report, only 45 percent of workers said they were either satisfied or extremely satisfied with their jobs. If that number surprises you, any wild guesses you make definitely aren’t helping you improve your organization, and it’s time to learn how to measure employee satisfaction.

How important are employee benefits to job satisfaction?

Sixty percent of employees rated benefits as a very important contributor to job satisfaction, keeping benefits in the No. 3 position. But just over two-thirds (68 percent) of employees indicated that they were satisfied with their benefits.

Should you be measuring employee satisfaction?

Before you rush to measure how satisfied your employees are, it’s best to have a solid base for what employee satisfaction really means and why it’s so beneficial to measure it. Employee satisfaction is a term used to describe how content employees are with aspects of their job like their employee experience and the organization they work for.

How much do salaries matter to job satisfaction?

Only 20% link job satisfaction to salaries, according to employee satisfaction statistics. The majority would rather fulfill their growth opportunity and goals than earn more money. Just imagine, 25% of workers prefer job stability over higher pay. 

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