The study attempted to examine the
influence of compensation management on the performance of the employee as well
as the overall efficiency of the organization. Relevant literatures were
reviewed to highlight the subject matter. Pz Cussons Nig. Plc was selected for
testing in the study selected representative comprising of staff and management
formed the sample size examined. The simple random sampling techniques were
used. The questionnaire was used to collect data. 75 questionnaires were
properly answered and returned from the initials 100 questionnaires. And
respondents responses were presented in frequency tables and simple percentages
was used for demographic data, while the chi – square (X2) method of
data analysis was employed for hypothesis testing. The growing emphasis on
employee engagement as critical to organizational performance means that the
concept of total reward is exerting more and influence on reward strategy.
Reward management however, is
concerned with the formulation and implementation of strategies and policies
that aim to reward people fairly, equitably and consistently in accordance with
their value to the organization. It deals with the design, implementation and
maintenance of reward process and practices that are geared to the improvement
of organizational, team and individual performance.
Consequently, it was proffered that
compensation should be goal driven for instance, Pz Cussons should place more
emphasis on financial reward, this will aid workers to evaluate his performance
towards the organization, thereby promoting organizational performance and
Title page i
Table of content vi
1.1 Background of the study 1
1.2 Statement of Problem 3
1.3 Objectives of the study 4
1.4 Research questions 5
1.5 Research hypothesis 6
1.6 Significance of the study 6
1.7 Scope of the study 7
1.8 Limitation of the study 7
1.9 Operational definitions of terms 8
2.1 Literature review 9
2.2 Employee benefits 11
2.3 Incentive plans 14-
2.4 Total reward 17 - 18
2.5 Profit sharing 21
2.6 Linking efficiency to compensation 21
2.7 Growing result for pay for performance 22
2.8 Contingent pay for individual 22
2.9 Pension Schemes 24
3.0 The theories of compensation
3.1 Process theory
25 – 27
3.2 Content theory
27 - 32
3.3 Introduction 33
3.4 Research design 33
3.5 Population of the study 33
3.6 The sample size 34
3.7 The sampling techniques 34
3.8 Research instrument 34
3.9 Method of data collection 35
4.0 Method of analysis adopted 35
4.1 Restatement of research hypothesis 36
4.2 Historical background of PZ 37
ANALYSIS AND INTERPRETATION OF RESULTS
4.3 Introduction 38
4.4 Presentation of demographic variable of
respondents 38 – 41
4.5 Analysis of questions based on
compensation management 41 – 48
4.6 Testing of Hypotheses 49
SUMMARY OF FINDINGS,
CONCLUSION AND RECOMMENDATIONS
4.7 Introduction 57
4.8 Summary of findings 57
4.9 Conclusion 58
5.0 Recommendations 58
5.1 Suggestion for further studies 59
Books and Reports 61
Journal Articles 62
Appendix 63 – 65
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
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
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 addressed and 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
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
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 Pz Cussons plc, 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.
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: -
1. To find the different compensation
packages that exists in Pz Cussons Nigeria
2. 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.
3. To identify the particular
compensation package that motivates employee to
4. The study also seeks to find out
different view of the employees in the
compensation packages operating in the company.
5. To identify the Strategic Business
Unit (SBU) structure adopt by the company for its efficiency and performance.
6. To find out the relationship between
workers reward and their level of
(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
(d) Which compensation package
motivates employee to highest level of
(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
(h). What are the perceptions of
worker concerning compensation packages in Pz
(i). Does employees pay commensurate
with their performance?
(j). what suggestion/ recommendation
would be proffered for the organization
(k) Would poor working condition,
lack of promotion and inadequate salary
structure, reduce the
output of employees?
Poor compensation packages will not reduce workers morale and will not affect
their productivity adversely.
Poor compensation packages will reduce workers morale and will affect their
Effective remuneration structure will not aid organization in achieving high
level of performance.
Effective remuneration structure will aid organization in achieving high level
There is no relationship between workers reward and their level of performance.
There is a positive relationship between workers reward and their level of
SIGNIFICANCE OF THE STUDY
The findings of this research are
partial and theoretical significance not only with the reference to the members
of the work organization studied, but also with regard to the available
knowledge about problems of compensation management.
The research also enhances and
broadens the knowledge of the management that attained of organization goals is
aimed at involving all parties in the organization, the management, the
employees and the customers/suppliers. The significant derived from this study
will enable the management to realize that poor working condition, lack of
promotion, inadequate salary structure e.t.c. will immensely reduce the output
of employees. This study is a contribution to the body of knowledge existing.
In the field of human resources management especially in wages and salaries,
administration because of the approach brought to bear upon the research which
may see compensating management in different light from much of the existing
literature on compensation of workers in Nigeria. The importance of this
study is to see the relationship (if any) between salaries, wages, and other
staff motivations and organizational performances.
SCOPE OF THE STUDY
The study tries to examine
compensation management and organizational performance and how employees reward
could be linked to efficiency and higher productivity with a particular
reference to Pz Cussons Nigeria plc. The scope of the research is limited in both
depth and coverage, the study concerning the examination of independent
variable affecting compensation of employees and organizational performances in
Pz Cussons Nigeria plc. The study will not cover all the variety of products
producing in the company because of the problem that may be encountered when
administering questionnaires on employees in all the industries all over Nigeria.
As such, this study will adhere strictly to Pz Cussons Nigeria plc detergent and cleaners producing
plants in Nigeria.
LIMITATION OF THE STUDY
This research is affected by non
availability of fund. This however, is caused by the poor standard of living in
the country which emanated from economic situation of the country and high rate
of inflation which has caused prices in commodities and other materials needed
by the researcher to increase.
§ The time fame scheduled for the
completion of the research is too limited.
§ It is difficult to retrieve
information from the populace because people prefer to keep their privacy. In a situation where data over the year are
needed, such data are not often possible to collect.
OPERATIONAL DEFINITION OF TERMS
Ø Pay: This is a
generally rewards as the most important form of compensation because of the
role it plays in employees motivation of putting all his effort towards
organization productivity. Pay is the basic compensation employee receives
usually inform of wages or salary.
Ø Incentives: These
are rewards designed to encourage and reimburse employees for effort beyond
normal performance expectations. It includes bonus, commission, profit sharing,
plans, piece work, stock option, cost reduction, suggestion plan, production
bonus plan e.t.c. incentive pay has the following benefit:
Motivation: linking pay to performance increase
employees motivation to perform i.e superior performance is encouraged and
inferior. Performance is discouraged
Retention: high performance is more motivated to
stay with an organization.
Productivity: because incentive pays encourage
superior performances, an organization’s productivity can be highly improved
Organizational goals: it helps to designing individual
goals with organizational goals.
Ø Benefits: These are rewards available to employees as
part of organizational membership. These includes free medical treatment,
vocational or leave pay, call back pay, lay off pay, rest period pay, lunch
subsidy, accident insurance, disability insurance, scholarship for staff’s
According to flippo (2002),
increasing management is accepting the idea that group as well as individual
can be motivated to work more effectively. Thus most of them embark on employee
compensation program which are designed to attract capable employees to the
organization, motivates them into superior performances and retain. This
service over an extended period of time. Services increase inefficiency and
higher productivity is one of the goals of an organization effective, compensation
management is a step towards achieving the goals.
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