The Effect of Compensation on Employees Productivity

Background Of The Study

1.0 Introduction

Remuneration in form of money seems most acceptable to people in an industrial society where paid jobs are common. Money can buy basic needs; it can also buy power and social status, it is a reward to work. For jobs that are generally challenging, nor very interesting, or for those that do not require much training and skill, and are not offering lifelong career, money is the only motivator. A person in a paid employment in a managerial capacity normally has some motivation that makes him spend his day at work this may be in form of offer of additional reward, prospect of promotion, or other specific incentives, that add value to his basic needs of reward and security.

Human resources management strives to achieve organizational goals and the goals of the employees through effective personnel programs policies andprocedures. Successful performances of the personnel function can greatly enhance the bottom line of any organization. The personnel practitioners however are challenged more today than at any time in the history by a changing and more demanding labour force that has high expectation about the work place. At the same time, rapidly advancing technologies and outside influences are changing the nature of our jobs. It is thus more critical and more difficult to maintain a work environment that motivates and satisfies human resources.

Edward (1976) states that personnel management is the planning, organizing, directing and controlling of the procurement, development compensation, integration, maintenance and separation of human resources to the end that individual organizational and social objectives are accomplished.

According to Wayne (1980) “compensation which includes direct cash payment, indirect payments in form of employee’s benefits and incentives to motivate employees to strive to higher levels of productivity is a critical component of the employment relationship. Compensation affected by forces as diverse as labour market factors. Collective bargaining, government legislation and top management philosophy regarding pay benefits.

Compensation is recompense, reward, wage or salary given by an organization to persons or a group of persons in return to a work done, services rendered, or a contribution made towards the accomplishment of organizational goals, and any organizations who fail to compensate its employee adequately may not be able to achieve.

Its set objective because a good compensation package is a good motivator. Hence, the primary responsibility of the Human Resources manager is to ensure that the company’s employees are well paid.

1.1 Objectives Of Reward

1. To attract capable applicants
2. To retain employees so that they don’t quit
3. The employees is motivated for better performance
4. Reward desire behaviour
5. To ensure equity
6. To control cost
7. Facilitate easy understanding by all i.e. employee operating manages and human resources personnel

1.2 Statement Of Problem

Organization is defined as a group of people working together to achieve a common goal and for the organization to be able to achieve the common or set goal, its personnel which is the most important factors of production, should be compensated or reward adequately for them to be able to do their work effectively, because it is the personnel that will plan, organize, control and coordinate all the other factors of production, and it is very important for any management that want to survive or achieve its goal to be concerned about the welfare of its employees.

Research has also shown that a well-paid / motivated employee has the tendency to bring out his or her best in the work place than an employee that is not well motivated .Abraham, (2000)

From one research noted by Cole, (2005) .It is assumed that causes of employee been motivated is different in Radisson blue hotel ltd Victoria Island Lagos

This study therefore intends to evaluate the effect of compensation on employees’ productivity.

1.2 Research Questions

1. Does compensation has any impact on workers performance?
2. Can compensation package be used to reduce the rate of labour turnover?
3. Does reward system has any impact on shareholders dividend?
4. Can reward policy be used to ensure desired behaviour?
5. This research work will also bridge the gaps in knowledge/curiosity for future research

1.3 Aim And Objectives Of The Study

The purpose of this study is as follows:

1. To evaluate the effect of compensation of employees productivity.
2. To shed more light on the various ways of compensating workers
3. To estimate the extent at which a very good compensation policy can be used to achieve organizational goal
4. To fulfill the requirement for the award of bachelor degree in industrial and personnel management department of Lagos state university Ojo Lagos.

1.4 Significance Of The Study

This study will be of a great importance to the following:

1. It will serve as a guide to management in the area of how to prepare compensation package that will be fair to both the management and its employees.
2. This research work will also be useful to policy makers, in terms of making policies that will be favourable to both employees and the employees
3. This study will also contribute to knowledge by adding to the literature review of the research topic /
4. This study will also explore the area of recruitment and selection that has not been reached.

1.5 Limitations Of The Study

This study was limited by the following key factors:

i. Time:

The time frame given for the submission of this project is too short.

ii. Finance:

There is no enough financial backup for the researcher for carrying out a comprehensive report of this nature.

iii. Response:

The response of some of the respondents IS not encouraging at all, due to fear on the part of the respondents.

1.6 Operational Definition Of Terms

i. Assets:

These are the properties owned by an individual or a business, which can be used or sold to pay a debt

ii. Authority:

Authority is the right to give orders and the power to ensure obedience.

iii. Business Organization:

This is an enterprise that provides goods and services for the satisfaction of human needs.

iv. Capital:

Is a source of income that cannot be consumed without affecting the income.

v. Communication:

Communication is the process of transmitting of information from one person to another in a language they both understood.

vi. Compensation:

Can be defined as the money received for the performance of work plus many kind of benefits and services that organizations provide for their employees.

vii. Delegation:

Delegation can be defined as the assignment of authority, duties and operating responsibilities to another person for carrying out specific activities.

viii. Effective:

It is the ability to determined appropriate objectives, doing the right thing. Organizations effectives can be explained as the efficient and effective co-ordination of functions in order achieve a desire effect or result.

ix. Efficiency:

The ability to minimize the use of resources or achieving the organizational objective “doing things right”.

x. Finance:

Finance is the provision of money when and where needed

xi. Leadership:

Leadership is the process of influencing others to work willingly toward an organizational goal with confidence and keenness

xii. Labour Turnover:

Labour turnover is a measure of the number of employees leaving / being recruited in a period of time (day / year) expressed as a percentage of the labour force.

xiii. Management:

Management is the art of getting things done through other people.

xiv. Organization:

Organization is a collection of people who have come together to achieve a common objective and a specific goal.

xv. Production:

Production can be defined as the process of coordinating the efforts of men and materials with the aim of converting raw materials to finished goods and services that will satisfy human wants and needs.

xvi. Recruitment:

Is the process of looking for the right persons, the identification of appropriate personnel in internal and external labour markets.

xvii. Selection:

Refers to a choice among alternate applicants (external) or candidates (internal) for operations.

xviii. Research:

Research is a quest for knowledge pertinent to an identified area of interest or problem through the application of scientific process.

xix. Responsibility:

Responsibility is an obligation to use authority to see that the duties are performed.

xx. Personality:

Personality is the total pattern of characteristic ways of thinking, feeling and behaving that constitute the individual’s distinctive method of relating to the environment.

xxi. Services:

Any activity or benefit that one part can offer to another that is essentially intangible and does not result in the ownership of anything.

xxii. Job Analysis:

Is the process of examining jobs in order to identify the key requirements of each job.