CHAPTER ONE
INTRODUCTION
1.0 Background of the Study
According to Banjoko (2012), compensation is the centerpiece and the manifestation of an exchange relationship between the employee and the employer. The process of effectively managing any organization’s reward system is one of the most complex and problematic issues in human resources management. Given the whole ambit of human resources management, hardly is any other issue more important, relevant and crucial to an employee than what he receives in exchange for his labour and services to the organization. Rarely had any matter led to strained labour-management relations or led to violent strikes, picketing or work stoppages much more than compensation-related issues. Without money, hardly can any employee work. This is because of the benefits that money offers to the individual employee. According to Banjoko (2006), money performs several functions to an individual employee which include the following:- economic role is perceived from the point of what money can buy. An individual’s pay serves as a medium of exchange or a means for acquiring necessities, luxuries and needs for himself and his family. The size of his pay will determine how much of his economic needs he can afford to meet. For instance his pay size will determine whether he will live at Victoria Garden City or at Mushin Olosha, whether he will spend his Christmas holiday with his family at a five star hotel in Dubai or at Ajeromi Ifelodun Town Hall. Money also acts as a social classifier. It classifies individuals into social strata. The amount of an individual salary will classify somebody into income class say salary grade level 14 or salary grade level 5. It provides other roles like psychological roles, serving a tool of inducement to certain behavior as well as a weapon for punishing any deviant or unwholesome behavior or attitude on the part of the employees. Money therefore serves as a tool for inducing certain desired behavior. No wonder employees’ compensation is the heart of every employee.
According to Wardly and Hodges (2008), in this fast-paced world of commerce, sales compensation has become only more complex and critical to a business’ growth and success. Businesses that fail to put in place the appropriate incentive systems to measure and compensate individuals for their outstanding sales contributions can risk losing their top performers to competitors. On the other hand, businesses that automate their sales incentive compensation processes, thus providing visibility into critical compensation data, have a far greater opportunity to not only retain their key sales staff but also recruit valuable, new salespeople to help them drive sales.
Compensation according to (Bernadin, 2007) cited in Odunlade (2012) refers to all forms of financial returns and tangible benefits that employee receives as part of employment relationship. Compensation can be divided into two parts which include cash compensation which is the direct pay provided by employer for work performed by the employee and fringe compensation which refers to employee benefit programs. Cash compensation has two elements which include base pay and pay contingent. Base pay has to do with hourly or weekly wages plus overtime pay, shift differential and uniform allowance while pay contingent is concerned Compensation are those monetary and non monetary payments paid to employees by their employers as a result of their contributions towards organizational success.with performance allowances such as merit increases, incentive pay bonuses and gain sharing. Fringe compensation on the other hand refers to employee benefits programs. Fringe compensation also has two parts to it which are legally required benefit programs and discretional benefits, Odunlade (2012) noted.
Compensation and Corporate Performance
Some research findings have shown that high compensation management is positively related to corporate performance. According to Leslie and Oyer (2009), stronger incentives at Private Equity-backed firms mitigate agency problems and improve performance and profitability.
According to Hodges (2009) Sales incentive compensation applications help align selling processes more directly with organizational objectives and contribute greatly to improving sales performance. An optimal sales reward system encourages specific activities consistent with a firm’s overall marketing and sales force objectives and strategies. It also can be used to attract and retain competent salespeople, thereby enhancing long-term customer relationships. Further, this system allows the kind of adjustments that facilitate administration of the reward system by providing an acceptable ratio of costs and sales force output in volume, profit, or other objectives. Well articulated compensation programmes enable an organization to attract, retain, reward, and motivate skilled and well talented individuals towards achieving organization’s long-term success. Compensation is a key component of an organization’s human capital strategy, in support of corporate overall goal, and to align employee interests with shareholders.
The need to reward the employees fairly and competitively based on performance is balanced with the requirement to do so within the context of principled behavior and actions, particularly in the areas of risk, compliance, and control. Compensation contributes to the achievement of the organization’s objectives in a way that does not encourage excessive risk-taking or the violation of applicable laws, guidelines, and regulations, taking into account the capital position and economic performance of the firm over the long term.
1.2 Statement of Problems
Compensation plays important roles in the employee-employer relations. It also plays important roles in boosting employee’s level of morale which is contingent on productivity. Hardly is there any issue in industrial relations that has led to conflicts and disagreement between trade unions and management than compensation related issues popularly referred to as “butter and bread issues”. Employee’s compensation, no matter the form it takes is at the heart of every employee. This is because of the roles it plays in the life of every employee. The amount of compensation an employee receives is an indication of the value the organization places on such employee; money is also a social classifier, it classifies people into social strata in the society; employee’s compensation also determines the quality of living that can be enjoyed by such employee. Therefore, as it was noted earlier, employee’s compensation is a major determining factor in the type of industrial condition that can exist in any given organization. Compensation if not well managed can lead to serious industrial acrimony and work stoppages. Unfortunately, in most organizations, because of the divergent nature of the interest of the parties in industrial relations – employees and their trade unions and employers and their representatives in management, the spate of conflicts that have been resulting in industries have ever been on the high increase. For instance, the employees always want high remuneration, job security and few working periods. By receiving very fat salaries and wages, the more they shall be able to meet up with their needs and those of their families and also be able to attain higher social status in the society where they find themselves. Consequently, high remuneration is what is so paramount to them. The employer on the other hand wants to minimize the cost of production so that he can maximize his profit. Cost of production includes cost of raw materials, cost of labour and other overhead costs. The higher the wage (labour) rate, the higher the cost of production and invariably the lower the profit that will accrue to the employer. The employer therefore, must of necessity strive to bring down the cost of labour through whatever strategies that are at his disposal. These divergences in the interests of the parties in industrial relations have often time led to industrial conflicts and work stoppages. As noted above, compensation, if not well managed can lead to serious problems in organizations.
1.3 Aims and Objectives of the Study
The cardinal aim of this study is to find out the impact of compensation on corporate performance. Other objectives of the study are to:
i. highlight how compensation can contribute to employees’ level of productivity.
ii. identify the various forms of compensations that organizations can use to boost the employees’ working morale.
iii. find out whether employees’ prefer monetary compensations to non-monetary compensations.
iv. Identify the reasons why compensations related issues have led to serious conflicts between trade union and management in industries.
1.4 Relevant Research Questions
The following questions were asked in this study:-
i. What are the impacts of compensation on corporate performance?
ii. How can compensation contribute to employees’ level of productivity?
iii. What are the various forms of compensations that organizations use to boost the employees’ working morale?
iv. Do employees prefer monetary compensations to non-monetary compensations? v. What are the reasons why compensations related issues do lead to serious conflicts between trade union and management in industries?
1.5 Relevant Research Hypotheses
The following hypotheses were tested in this study:-
H01: Compensation does not improve corporate performance.
H02: Employees’ compensations do not increase employees’ level of productivity.
H03: Employees’ do not prefer monetary compensations to non-monetary compensations.
H04: Good organizational compensation programme does not increase employee’s level of commitment.
1.6 Significance of the Study
The roles that compensations play in attracting, retaining and motivating well skilled employees to an organization are unquantifiable. No singular factor has the effect of motivating employees to higher level of productivity than money related issues. Compensation is at the centre-point of employee-employer exchange relationship. Hardly has any other issue led to strained relationship between management and trade unions than money related issues. This study shall explore the impact of compensation on corporate performance. The researcher shall also examine how compensation can affect employees’ level of motivation and thereby influencing the overall corporate productivity. Efforts shall be geared towards highlighting the various compensation programmes being adopted among Nigerian organizations to remunerate the employees. The researcher shall also identify the reasons why compensations related issues have led to serious conflicts between trade union and management in industries and suggest approaches that can be adopted to reduce the pace of industrial conflict between labour and management. This study shall also offer suggestions to organizations on strategies that they can use to improve their future compensation management programmes. This study when completed shall be made accessible to both organizations and other interested parties by placing this project in the library and also on the internet. This study shall also serve as a useful tool for future referencing by scholars and researchers.
1.7 Scope and Limitations of the Study
The scope of this study is restricted to the impact of compensation on corporate performance, a case study of Nigerian Breweries Plc. This study examines how compensations impact on corporate performance. The researcher limits herself to examining how compensation do affect employees’ level of motivation and invariably impacting the overall corporate performance. The study also highlights the various compensation programmes being adopted among Nigerian managers to remunerate their employees. The researcher also identifies the reasons why bread and butter related issues do lead to serious strained relationship between labour and management in organizations.
As with studies of this nature, time constraint and lack of research resources in terms of money and personnel, inhibited this study. This study was further limited due to the uncooperative attitudes of the respondents who were in most instances reluctant in providing data needed for successful completion of this project just because they were skeptical about the purpose of this study irrespective of the fact that the researcher attaches a covering letter to the questionnaire explaining the purpose of the study.
1.8 Organization of the Study
This project was carried out in five chapters. Chapter one focuses on introduction under which the researcher shall treat topics like background of study, statement of problems, objectives of Studies, research questions and research hypothesis, significance of study, scope limitation of Study and definition of terms.
Chapter two focuses on literature review in which various literatures were reviewed which are works carried out by different authors and researchers relevant to the researcher’s area of study. This was presented under two headings: Theoretical Framework of the Study and Empirical framework of the Study.
Chapter three focuses on Research Methodology in which the researcher shall highlight the nature of the research method, research design to be used in this study, population, sample and sample design, research instrument to use, the reliability and validity of the research instrument, procedure for research instrument administration and method of data presentation and analysis.
Chapter four focuses on presentation and analysis of data. The various data that were gathered from the field shall be presented and later analyzed using various statistical tables, pie charts, frequency tables, chi square analytical tools. Subsequently the hypothesis earlier stated in chapter one shall be tested also in this chapter.
In chapter five, the researcher shall focus on summary, conclusions and recommendations during which she shall present detailed summary of the works to be carried out in this project. Subsequently, the researcher shall present some conclusions she shall draw from this project and shall make recommendations to Management and suggestions for further studies.
1.9 Definition of Terms
1. Employees: These are the people that work in an organization
2. Organization: This is a consciously coordinated social entity with a relatively identifiable boundary that function to achieve some goals.
3. Performance: The ability and the act of increasing in level of growth and achievement of meaningful success and adapting to circumstance through human effort.
4. Power the s the ability to control others, to hire, to fire, to determine who uses what resources. It is the tool to influence one to behave in a particular way. The purpose of power is to control and influence others to direct employees wills and to command respect.
5. Productivity: This is the ratio of output to the input of labour.
6. Compensation: This is salaries and wages that are paid to the employees as members of an organization.
7. Subordinate: A person who works under someone else. He is inferior or a junior to a person above him in the organization hierarchy.
REFERENCES
Agburu John (2012), Recent Trends in Wage and Salary Administration in Nigeria: A Synopsis on Theoretical and Empirical Challenges, International Journal of Basic and Applied Science, Vol. 01, No. 02
Banjoko Simbo A. (2012), Managing Corporate Reward Systems, Lagos: Pumark Nigeria Ltd
Bernadin, (2007) cited in Odunlade, R.O. (2012) Managing Employee Compensation and Benefits for Job Satisfaction in Libraries and Information Centres in Nigeria, Lagos: Library Philosophy and Practice, http://unllib.unl.edu/LPP
Ernst & Young Global Limited (2013), Managing global compensation Time to take control?
Fayomi, Ikeoluwapo Omolara, (2013), Monetization policy in Nigerian public service: The perspective and challenges, International Journal of Educational Research and Development Vol. 2(5), pp. 105-113, http://www.academeresearchjournals.org/journal/ijerd
Kiabel B. D. and Nwokah N. G. (2009), Boosting Revenue Generation by State Governments in Nigeria: The Tax Consultants Option Revisited, European Journal of Social Sciences – Volume 8, Number 4.
Odunlade, R.O. (2012) Managing Employee Compensation and Benefits for Job Satisfaction in Libraries and Information Centres in Nigeria, Lagos: Library Philosophy and Practice, http://unllib.unl.edu/LPP
Olatunji Eniola Sule and Aminu Sarat Iyabo (2014) Wages and Salaries Administration as Motivational Tool in Nigerian Organisation (A Case Study of Nestle Nigeria PLC), Journal of Business Theory and Practice, Vol. 2, No. 2, 2014 www.scholink.org/ojs/index.php/jbtp
INFORMATION ABOUT THIS PROJECT:-
| No. of Pages | 90 |
| References | 10 |
| Project Level | B.Sc./HND |
| Fee | N40,000 |
For More Information about this project call this number 234-08028177177
For other Projects visit www.danikingconsulting.com
No comments:
Post a Comment