COMPENSATION MANAGEMENT AND EMPLOYEE’S PERFORMANCE IN PUBLIC SECTOR, NIGERIA (A CASE STUDY OF UNIVERSITY OF JOS)

Abstract

Compensation is the reward workers receive for their service or contribution to the organisation. A literature reviewed showed that compensation packages have relationships with workers’ job satisfaction. A study established a theoretical framework based on equity theory and used it to examine how different compensation packages might be influencing workers’ job satisfaction. The Positivist paradigm; which holds principles that knowledge is arrived at through the gathering of facts that provide the basis of laws, guided this empirical research, focused on the public University of Jos, Plateau State, Nigeria. A questionnaire was developed, pilot-tested and administered to gather the data on workers’ job satisfaction regarding four compensable aspects, namely: salary, allowance, gratuity and pension. A total of 100 questionnaires were administered and 100 were collected, representing a response rate of 98%. No questionnaire was invalid or returned uncompleted. The respondents were selected using the stratified random sampling technique. The data collected was analysed using simple percentage method. The findings of the study revealed that compensation impacts positively to employee’s performance in public sector.

CHAPTER ONE:

INTRODUCTORY BACKGROUND

1.0 INTRODUCTION

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 (1993,4). 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 (1997, 4).

Furthermore, researchers have argued that compensation management system can create and sustain a competitive advantage for organizations Milkovich and Newsman (2002,4). 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 in to 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. This 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 (1993), 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 (1998), 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 (1997) there are three components of employees’ compensation in an organization which arc (i) the basic pays (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 bath 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 emanate mainly from the fact that it provides income to workers and constitutes an important cast item to the employers, the largest single cast item for many organizations. For the workers, wage provides the means of satisfying their wants and needs.

1.1 STATEMENTS 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, law 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 basis for this research.

1.2 OBJECTIVES OF THE STUDY

Specifically, the purposes of the study are as follows;

1. To investigate the different compensation packages that exists in the public sector most especially in Nigeria.

2. To assess the effect or impact or these compensation packages on employees performance.

3. To identify the compensation packages that motivates employees to the highest degree of performance.

4. The study seeks to determine the perceptions of employees concerning the compensation packages.

5. To offer suggestions on how the public sector can provide an effective compensation packages.

1.3 RESEARCH QUESTIONS

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

1. How is compensation management at the University of Jos?

2. Does the compensation system have effect on employee’s performance?

3. How often is the compensation system at the University of Jos being reviewed?

4. Are there any other factors by which employee’s performance can be improved upon through compensation packages?

5. What are the factors being considered in carrying out compensation policy exercise at the University of Jos?

1.4 SCOPE OF THE STUDY

The study shall be carried out within the Nigeria public sector.

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.

1.5 SIGNIFANCE 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. 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.

The significant of is than it is a portal requirement for the award of National Diploma in business studies of Plateau state poly barki ladi

1.6 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.

ORGANIZATION: A group of people who form a business ill 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 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 resource’s available.