The Impact Of Effective Compensation On The Employees Performance

Project and Seminar Material for Business Administration and Management BAM

The Impact Of Effective Compensation On The Employees Performance


This study examined the impact of effective compensation on the employees performance. Total compensation is a concept which is not usually given attention in many organization. Compensation is mostly viewed as cash and therefore other aspects are neglected viewing compensation as a holistic system to manage for productivity is pertinent to organizational development. The researcher used questionnaire that is carefully designed and administered to the respondents for secondary data. Information were both gathered from libraries and other research units. All information gathered from both sources were later arranged and presented in textual and tabular form and also analysis using percentages. The major findings of the study are: Individual employees requires different motivational techniques in order to be motivated. Incentive and fringe benefit are considered effective in improving performance. Employees are motivated to improve their performance when organization applies the integration the individual objectives with the corporate goal from the foregoing therefore, the researcher concluded that effective compensation has significant impact on workers performance. Major recommendations of the study are due to the rising cost of linking, employees should be compensated and encouraged. This should be through awards, business extra payment for overtime work etc. this will motivate them and result to a high productivity. Promotion should be on merit not by familiarity and relationship when promotion is by merit people are satisfied and happily murmuring and every one will work hard for their own promotion.

Table of Contents

  • Title page
  • Approval page
  • Dedication
  • Acknowledgement
  • Table of content
  • Abstract

Chapter One

1.0 Introduction

  • 1.1 Background of the study
  • 1.2 Statement of problems
  • 1.3 Purpose of the study
  • 1.4 Significant of the study
  • 1.5 Research questions
  • 1.6 Scope of the study
  • 1.7 Definitions of terms

Chapter Two

2.0 Literature review

  • 2.1 Theoretical frame work
  • 2.2 Conceptual frame work
  • 2.3 Summary of literature reviews

Chapter Three

3.0 Research Methodology

  • 3.1 Research methodology
  • 3.2 Design of the study
  • 3.3 Area of the study
  • 3.4 Population of the study
  • 3.5 Sample of the study
  • 3.6 Instrument for data collection
  • 3.7 Validation of the instrument
  • 3.8 Method of data analysis

Chapter Four

4.0 Data Presentation and Analysis Questionnaire Analysis for Workers

Chapter Five

5.0 Summary of Findings, Conclusion and Recommendations

  • 5.1 Summary of findings
  • 5.2 Conclusion
  • 5.3 Recommendations
  • 5.4 Limitations of the study
  • 5.5 Suggestions or further research
  • References
  • Questionnaire
  • Appendix

Chapter One

1.0 Introduction

1.1 Background of the Study

This academic work is based on the impact of effective compensation on the employees performance in Onitsha Cotton Mill Limited, Anambra State, Nigeria apparently, there are different needed among employees that must be achieved through compensation received. It is very pertinent that organizations should strive hard to effectively compensate their workers for motivational reasons which will help in the achievement of organizational goals and objectives.

The study falls within personnel management and personnel management according to Flippo 1986 is defined as the planning, organizing, directing and controlling of the procurement, development, compensation, integration, maintenance and separation of human resources at the end tht individual organizational and societal objectives are accomplished.

It can also be defined as money received for the work performance plus other kinds of benefits and services that the organizations provide for their employees, compensation is recompense, reward, wage or salary given by an organization to person or a group of persons in return to work done, service rendered or a contribution made toward achievement or organizational goal.

Brief History Of General Cotton Mill Limited Onitsha, Anambra State

General Cotton Mill Limited, Onitsha anambra State is a textile manufacturing company that is known with the sales of textile and textile products.

The company was incorporated on the 10th April, 1964 RC 3782, located at Niger bridge Industrial Layout, Onitsha and also has one of its branches at Bloc 4A, Apapa lane, Dolphin Estate Ikoyi, Lagos, having Chief Nolla O. Edun as its chairman, R.N.W. lee (U.S. citizen) as its MD / CEO and also F.A Enechukwu-Deputy managing director.

It is a textile company offering composite textile Mill producing African prints, or fabric materials with spinning, weaving, and printing division producing cotton yarn with a good number of employees at its service.

Cotton as a resources is a miracle fibre that has been spun, woven and dyed since ancient times and it is still the most widely used fibre clothing, it is soft and fluffy, and grows in a boll around the seeds of the cotton plant. Cotton can be used for many products like: clothes, beddings, tabletops, furniture’s and even arts etc.

Department Of General Cotton Mill Limited

According to the structure

R & D centre (Research and Development)

They are in-charge of studying and adopting new technologies, innovation, development of new kinds of production, new methods of production and quality control.

Sales Department:

Their work consists of organizing production sales, attraction of new buyers and partner registration of export operations, contracts on local markets control of shipment and delivery of goods / contained

Purchasing Department:

They provide purchases from the local and foreign markets, declarations and also registration of import contracts and customs documents.

Financial and Accounting Department:

They handle the registration of financial operations, accounting report, production cost, payment system, vouchers, bank operations, payment forms, delivery of salary and works with plastic cards.

Corporate Planning Department:

These are the department in charge of planning and organization of company projects, works with company werb-site, public relation, making of business plan (statistics) organization of charitable actions and company events.

Cotton Purchasing Department (Cotton Team):

They do the Identification and selecting of raw materials of the best quality for further production. Conclusion of raw materials delivery contract.

Personnel and Salary Departments:

They provide the process of salary calculation, registration of salary documentation, the conclusion and the termination of labour contracts, wages ratifying, personnel selection also.

Tashkent Office:

Realization of export transactions, attraction of new potential partners and clients, control on registration of export documents and shipments, i.e delivery of production and payment of all shipment carried out by the collective of the Tashkent office.

The study with the departments has a total population of (900) workers in general cotton mill Nigeria Limited Onitsha.

2Commercial dept180
5Labour committee80
6Cooperate planning100
7Personnel & salary40

1.2 Statement of the Problem

Certain conditions or factors can make workers to perform effectively or ineffectively on their jobs. It has been observed that a number of factors seems to be responsible for job dissatisfaction among workers. They includes lack of interest in the jobs poor salaries poor conditions of service and lack of fringe benefits.

General Cotton Mill Limited workers tend to be affected by the factors enumerated above. It has also been observed that as a result of lack of compensation as a motivational factors there is growing shortage and loss of competent hands in general cotton Mill Limited Onitsha in particular. In the study, on the effect of compensation on the performance of workers in Onitsha Cotton Mill Limited Anambra in particular tends to find out what compensation service have to do in motivating workers.

This study is faced with the problems of finding out the importance of compensation to workers but equal knowing how adequate is that compensation towards effort workers are putting towards achieving the organizational objectives, therefore, this study has on the performance of workers on business organization.

1.3 Purpose of the Study

The core purpose of the study is to point out some of those things that could aid compensation if the organization wants to achieve it’s set goals and objectives.

  1. Identify factors in the organizational structure that could affect managerial effectiveness.
  2. To determine whether there is problem in the design of the department within the organization.
  3. To find out if the level of education of subordinate influence the way a manager structures his department.
  4. To identify the links between the above variable and the manager degree of effectiveness in meeting up the objectives he is expected to achieve.
  5. To structure out ways in which managers can work towards achieving a better compensation is unfair or inadequate.

Finally, attention should be given to the topic if the organization wants to achieve it’s goal and objectives.

1.4 Significance of the Study

The findings from this study would serve as good reference material to educationist. It would serve as a good material for people studying human relation as it affected by compensation. It would be a good reference material to those in the research institutes that would be future practicing managers in piloting the affairs of the organization. It would also serve as a good materials for policy makers to help improve their subsequent policy formulations and planning.

The employees themselves would also find this study very useful. This would not only give them idea on what to expect management to do for them, but it would serve as guide enable them strive toward a greater performance as it would be in a position to compensate them adequately.

1.5 Research Questions

  1. What is compensation?
  2. Are compensation given to workers adequate ?
  3. Does compensation help to retain your ends period of time?
  4. Is your pay in the organization commensurate to your productivity performance.
  5. Does the promotion system in the organization inspire to higher productivity?
  6. Do the management provide adequate transport?

1.6 Scope of the Study

In order to carry out their study, the following scope have been formulated the help to generate data required for analysis.

  1. When employees receive basic compensation, as equitable, hey increase their peformcne if not they will not.
  2. When management gives to he workers the incentive they will increase their performance, if not, they will not.

1.7 Definition of Terms


This is the process fo planning, organizing, leading, and controlling the effort of an organization members, making use of organization resources to achieve its objectives. As postulated by Edward Flippo.


This is a system that consists of an organization integrated policies process and practices for rewarding its employees in accordance with their contribution skills competence and their market worth.


Compensation may be defined as money or any kind of benefits received for the performance of work.


It is the inner drives that arouse direct and maintain an individual behaviour toward accomplishing a goals.


This is a social unit of people that is structured and managed to meet a need or to pursue collective goals.


This is a cause, venture or aim activity that supports or encourages.


As much as or as good as necessary for some requirement or purpose fully sufficient, suitable etc.


The basic goal and objective of action chosen to reach those goals and objective and the allocation necessary for carrying out those goals.


This is the process of thinking about an organization, the activities required to achieve a desired goal.


Is an average measure of the efficiency of production a measure of the efficiency of a person, machine, factory, system, etc.

Chapter Five

5.0 Summary of Findings, Conclusion and Recommendations

5.1 Summary of Findings

The research set out in this study to analyse the effect of compensation on workers performance, it was found that, the majority of the workers in the organization are not adequately compensated, thereby leading to many dysfunctional behaviour of the workers like lateness divided loyalty etc. the researcher also found out some other fact which includes;

  1. Lack of awareness of total compensation packages: It shows that there were either no avenues for the available compensation packages to be communicated to employees or the avenues existed but not being managed.
  2. Lack of a system to measure employee performances since the performances system is absence, it hampers the smooth administration of the compensation in the organization.
  3. Inefficient or no communication on compensation issue

The study also reveled that issues concerning employee compensation were not communicated effectively through the institution and employees also did not have a forum to be heard on the issues they have concerning their compensation packages and their management. Employees therefore were not involved in the formulation and implementation of policies concerning compensation in the company.

Also it was discovered that compensation is not been given to workers based on their level of performance which made some of the workers to say that they don’t know what compensation really is

5.2 Conclusion

In conclusion, compensation of workers is the vital aspect of any organization.

Lack of compensation of workers reeds accidents and rate negative lack of direction, irrationalism and even aggression.

In this situation, some employees indulge in action that negate the attainment of the organization goal. No manager is prepared to forfeit the objectives of his organization, this he strives to give the workers the required incentive that will spur them to channel their effort towards improving productivity.

On the other hands, goods, compensation is crucial for achieving organizational objectives some experts have supported this stand point. Unfortunately, the workers need have been fully recognized by the authorities concerned. The workers of these organization are poorly compensated, their salaries are poor, their loyalty efficiency and performance are not taken into consideration in promotion of staffs and workers in the industry.

Based on the findings the researcher discovered that compensation is an inevitable functions of a management in an organization. Management compensate by providing an environment that induces subordinates to contribute to the organization. Compensation is a job. Satisfaction is not much present in some cotton mill in Anambra State no understanding between the senior and junior staff.

In Nigeria to day, money is a strong compensation to all grade of workers as against what is obtained.
In the developed ones, like United State of America, workers in Nigeria have not yet satisfied, their basic needs such as foods, shelter, and safety.

The Nigeria economy in recent years has witnessed constant increase in the cost of living that is, “economic melt down” An average workers in a country is finding it very difficult to feed 3 times in a day. This has restricted a lot of irrational behaviours. A great deal of man hour are lost as workers leave their desk. Office or work location in order to escape the high degree of discomfort associated with the poor physical structure.

Therefore, it is the opinion of the researcher that unless management of these company are unable to make the company a good place for workers, the image of the company will continue to remain poor in the eyes of the public, thus afflicting its operation in various ways.

Finally employees usually do not have the whole picture of their entitlement when it comes to compensation and this could be as a result of their employer’s not providing them with the relevant policy manuals to read and educate themselves or their own lack of interest in reaching those manuals when they are provided for them.

5.3 Recommendation

Based on the study findings, the following recommendation could be considered to address the issue revealed by the study.

  1. The management of the general cotton Mill Onitsha in Anambra State should always look into workers need and linkage between effort and performance also reward and individual needs satisfaction this will no doubt enable them to derive appropriate compensation strategies for increase productivity.
  2. The employees should also be paid fair and equitable salaries based on the prevalent economy and social conditions. These salaries should be the type that workers could perceive as being fair and equitable.
  3. The manager is equally to decide properly on laid down promotion policy promotion should be seen to be reward for skill intelligence or initiative which involve experience and not length of series.
  4. The study revealed a lack of performance management system in the organization hence a good deficiency in the administering of performance. It is therefore recommended that management prioritize the implementation of a performance management system to measure the output of employees and that should be used as a tool to reward the compensation packages to employees. The researcher believes this will ensure fairness.

5.4 Limitations of the Study

The researcher encountered many problem in the course of data collections and in writing the project.

The problem encountered however, and due to lack of enough financial, has limited numbers of questionnaires to be administered to the respondents.

Finally, the few questionnaires that was produced and distributed for data collection has some problems some respondents refused to fill them, those who did fill their own had some negative responses. The researcher is constrained therefore with a lot of problems thus, there is every tendency for a degree of errors to occur in the final data evaluation.

5.5 Suggestions for Further Research

Owing to the limited time for this research work, the researcher could not carry out an exhaustive research on such areas of observing on some of the compensational technique.

The research therefore recommends of future researchers to study the areas. Another areas of future research is to identify the views and why most managers try to eliminate “compensation” as one of their functions.

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