ABSTRACT
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.
This study attempted to examine
compensation management as a tool for improving organizational performance in
public sector. Relevant literatures were reviewed to highlight the subject
matter. State Internal Revenue Service [LIRS] was chosen as the case study.
Selected representative comprising of staff and management of LIRS formed the
sample size examined. A sample of one hundred (100) was drawn from the population.
Simple Random Sampling technique was used in selecting the sample. A structured
questionnaire was used to collect data. Respondents responses were presented in
frequency tables and simple percentages was used for demographic data, while
correlation method of data analysis was employed for hypotheses testing.
Two hypotheses were formulated and
tested accordingly. The test resulted to rejecting the two null hypotheses and
concluding that poor
compensation packages affects workers morale and productivity in public sector.
And effective remuneration structure aids organization in achieving high level
of performance.
Consequently, it was proffered that
compensation should be goal driven for instance, State Internal Revenue Service
[LIRS] should place more emphasis on
financial reward, this will aid workers to evaluate his performance towards the
organization, thereby promoting organizational performance and profitability.
TABLE OF CONTENTS
TITLE PAGES
Title page i
Certification ii
Dedication iii
Acknowledgement iv
Abstract v
Table of content vi
CHAPTER ONE: Introduction
1.1
Background
of the study 1
1.2
Statement
of problem 2
1.3
Objectives
of the study 3
1.4
Research
questions 4
1.5
Research
hypotheses 4
1.6
Significance
of the study 5
1.7
Scope
and limitations of the study 6
1.8
Operational
definition of terms 6
CHAPTER TWO: Literature Review
2.1 Introduction
8
2.2 Conceptual
Framework 10
2.2.1 Concept
of compensation and compensation management 10
2.2.2 Conceptualizing
performance 12
2.3 Current
literature review 16
2.3.1 Principal
types of compensation benefits 16
2.3.2 Principles
of compensation management 17
2.3.3 Compensation
strategy 18
2.3.4 Components
and objectives of organizational compensation
Management
systems 19
2.3.5 Compensation
determination process 21
2.3.6 Determining
the actual compensation 22
2.3.7 Compensation
management and organizational performance 23
2.3.8 Pay
determination in the public service 23
2.3.9 Recent trend in compensation management in
Nigeria
Civil service 24
2.4 Theoretical
framework 26
2.4.1 Content
theories of motivation 26
4.4.2 Process
theories of motivation 33
4.4.3 Compensation
and motivation 36
2.4.4 Compension
and employee performance (Relationship) 37
2.5 Summary
of the chapter 38
References
39
CHAPTER THREE: Research Method
3.1 Introduction
42
3.2 Restatement
of research questions and research hypotheses 42
3.3 Research
hypotheses 43
3.4 Research
design 43
3.4 Characteristics
of the study population 43
3.5 Sample
and sampling techniques 44
3.6 Method
of data collection 44
3.7 Data
collection instruments and its administration 45
3.8 Validity
and reliability of the research instruments 45
3.9 Techniques
of data analysis 45
CHAPTER FOUR: Data Presentation and Analysis
4.1 Introduction
48
4.2 Respondent’s
characteristics and classification 48
4.3 Response
of respondents to the problem areas 51
4.4 Data presentation and analysis according
to research
hypotheses 60
4.5 Discussion
of findings 65
CHAPTER FIVE: Summary of Findings, Conclusion and Recommendations
5.1 Introduction
66
5.2 Summary
of findings 66
5.3 Conclusion
67
5.4 Recommendations
67
5.5 Suggestion
for further studies 68
References
69
Appendix 72
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 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
(1970) 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 allowance 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.
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. 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
1.2.
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 organizations. Irregular promotion or advancement for
workers upgrade has become a threat worrying the workers. Workers complain have
taken over the organization, some of the workers complain to have been 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.
Teamwork
is often viewed as a collaboration condensing individual contributions 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 Lagos State Internal Revenue Service
[LIRS], 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.
1.3.
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 examine the relationship between
compensation packages and workers morale and productivity.
2.
To identify if effective remuneration
structure will aid organization in achieving high level of performance
3.
To investigate if relationship exists between
workers reward and their level of performance
4.
To identify the particular compensation
package that motivates employee to higher productivity
1.4.
RESEARCH
QUESTIONS
This
study attempt to provide answers to the following questions.
· Is
there any relationship between compensation packages and workers morale and productivity?
· Does effective remuneration structure aid
organization in achieving high level of performance?
· Does
relationship exists between workers reward and their level of performance?
· Which
compensation package motivates employees to higher productivity?
1.5.
RESEARCH
HYPOTHESES
1. H0: Poor compensation packages will not affect
workers morale and
productivity
in the public sector.
H1: Poor compensation packages will affect workers
morale and productivity in public sector.
2.
H0: Effective remuneration structure will not
aid organization in
achieving
high level of performance.
H1: Effective remuneration structure will aid
organization in achieving
high
level of performance.
1.6 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 in attaining organization goals. This study
will enable the management of public organisations 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
existing knowledge 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.
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.
1.7 SCOPE AND LIMITATIONS 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 Lagos State Internal Revenue Service [LIRS]. 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 Lagos State Internal Revenue
Service [LIRS]. 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.
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.
1.8 OPERATIONAL DEFINITION OF TERMS
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.
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.
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
children.
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