COMPENSATION MANAGEMENT AND ORGANIZATIONAL PERFORMANCE

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO THE STUDY

The compensation of employees at all level has become one of the major functions of human resource management. It is one of the most important, complex and problematic issues in managing human resources in any organization. Every business enterprise that wants to gain competitive advantage over its competitors must attract the services of high quality employees. According to M.C Faraland (2001) ‘Man is a rational animal covered with maximizing his economic gains’. He continuously put forth effort to satisfy his personal needs ranging from physiological needs to self actualization.

Maslow states that it is the way to desire to satisfy the needs that motivate workers into higher performances and productivity,they strive to increase their output and efficiency in order to acquire the means for satisfying these needs.

Mutter &Donald (2003) describes remuneration as payment system based on effort, performance and productivity in essence; remuneration refers to salary or wages and the allowanced and financial benefits payable to employee, either in cash or kind in return for his service. In a nutshell remuneration is the price of labour. Essentially, employees work to produce reward for their performances. Thus, the exchange of labour for financial reward is the heart of the compensation process. However, formal compensation can be offered using three types of reward namely;

Pay, Incentives and Benefits.

Compensation management is an integral part of management. Compensation management is a systematic approach to providing monetary values to employees in exchange for work performed. It may achieve several purchases assisting in recruitment, job performance and job satisfaction. It is an organized practice that involves balancing the work employee relation by providing monetary and non monetary benefits to employees. It is a tool used by management for a variety of purpose to further the existence and growth of the company. It may be attuned according to economic scenario, the business needs goals and available resources.

Compensation management contributes to the overall success of the organizations in several ways. To be effective, the managers must appreciate the value of competitive pay, to maintain and retain quality employees while recognizing the need to manage pay roll costs.

There are two different types of compensation management:

DIRECT COMPENSATION is typically comprised of salary payment and health benefit. The creation of salary ranges and pay scales for different positions within the company are the central responsibility of compensation management staff. Effective compensation plan are routinely compared with other firms in the same industry or against published bench marks. Although some jobs are unique within a specific firm, the vast majority of positions can be compared to similar jobs in other firms or industries. Thus, direct compensation that is in line with industry standard provides employees with the assurance of fair compensation. This helps the employer avoid the costly loss of trained staff to a competitor.

INDIRECT COMPENSATION focuses on the personal motivations of each person to work. Although salary is important, people are most productive in jobs where they share the company’s values and priorities. Common types of indirect compensation include free staff development courses, subsidized day care, opportunity for promotion or transfer within the company. Public recognition, ability to effect change in the work place and service to others.

An effective compensation package has a combination of direct and indirect compensation. Compensation management programs often include salary range for each position, with incremental increases and annual reviews. During these review sessions, both type of compensation management are addressedand presented to the employee as part of the total package.

Compensation is the combination of monetary and other benefits provided to an employee in return for their time and skill.

The field of compensation management provides management with the ideal combination of different remuneration types. The purpose of these types of program is to retain and motivate good employees

1. STATEMENT OF PROBLEM

Non availability of staff buses to conveniently covey workers from their various areas to make sure the meet the resumption time. Apart from this cafeteria is a place where food is served, bought and eating during the break time, but this facility is lacking in the organization. Irregular promotion/advancement for workers upgrade has become a threat worrying the workers. The practice of man knows man/favourism. The workers complain has taken over the organization. Some of the workers complain to have in one position over 4 – 5 years, while some of their colleagues get rapid and regular promotion. This act is the outcome of God’s fatherism and man know man. The less privilege seldom gets their promotion. The term work environment encompasses different aspects such as physical work environment, management attitude towards employees, relationship with colleagues and working condition. Recent research has highlighted the hypothesis that an employee’s work environment can have a dramatic effect on his or her performance and attitude to work. In addition to physical attributes of a work, place, hostile work environment are like cancer that can eat through the core.

Productivity and employee performances faster and more devastating than any other work associated instance which the company in question seriously need to deal with as it is extremely disruptive to the work force. Teamwork is often viewed as an efficient condensing the individual contributions of individuals into cohesive outcome. The term ‘Self directed work teams have been used since the 1950s to describe teams of employees working together toward one common goal. In the typical work environment like PzCussonsplc, a self directed work should be encouraged in employee’s work life for a greater performance. Also workers complained there is inadequate remuneration and incentives to commensurate with the nature and importance of the job they perform. Employees look forward or anticipate certain rewards from management which are not forth coming. There should be differentiation in pay due to our region, skills, talent and capacities as well as a business overtime payment and retirement e.t.c.

1. OBJECTIVES OF THE STUDY

The study can be viewed as a contribution to greater understanding of compensation as an instrument that can be employed to increase efficiency and productivity and the value to secure and retain labour service. Other objectives include: -

To find the different compensation packages that exists in PzCussonsNigeria

plc.

To find out from different employee’s view type of reward those reimburse

their morale for highest degree of performance, either monetary or non-monetary reward.

To identify the particular compensation package that motivates employee to

higher productivity

The study also seeks to find out different view of the employees in the

organization concerning compensation packages operating in the company.

To identify the Strategic Business Unit (SBU) structure adopt by the company for its efficiency and performance.
To find out the relationship between workers reward and their level of

performance

1. RESEARCH QUESTION

(a). Does workers compensation propelled organization performance?

(b). Does employees compensation contribute to effectiveness of the organization?

(c). Does hostile work environment improves employees performance in Pz

Cussonsplc?

(d) Which compensation package motivates employee to highest level of

productivity?

(e). Can reward system increase employees level of performance?

(f). How can reward be linked to employee efficiency and productivity?

(g). Could reward be linked to job satisfaction?

(h). What are the perceptions of worker concerning compensation packages in Pz

CussonsPlc

(i). Does employees pay commensurate with their performance?

(j). what suggestion/ recommendation would be proffered for the organization

compensation management?

(k) Would poor working condition, lack of promotion and inadequate salary

structure, reduce the output of employees?

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