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
TABLE OF CONTENT
1.1 Background of the study
1.2 Statement of Problem
1.3 Objectives of the study
1.4 Research questions
1.5 Research hypothesis
1.6 Significance of the study
1.7 Scope of the study
1.8 Limitation of the study
1.9 Operational definitions of terms
2.1 Literature review
2.2 Employee benefits
2.3 Incentive plans
2.4 Total reward
2.5 Profit sharing
2.6 Linking efficiency to compensation
2.7 Growing result for pay for performance
2.8 Contingent pay for individual
2.9 Pension Schemes
3.0 The theories of compensation
3.1 Process theory
3.2 Content theory
3.4 Research design
3.5 Population of the study
3.6 The sample size
3.7 The sampling techniques
3.8 Research instrument
3.9 Method of data collection
4.0 Method of analysis adopted
4.1 Restatement of research hypothesis
4.2 Historical background of PZ
DATA PRESENTATION, ANALYSIS AND INTERPRETATION OF RESULTS
4.4 Presentation of demographic variable of respondents
4.5 Analysis of questions based on compensation management
and organizational performance
4.6 Testing of Hypotheses
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
4.8 Summary of findings
5.1 Suggestion for further studies
Books and Reports
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
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
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
1.2. 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 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.
1.3. 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 find the different compensation packages that exists in PzCussonsNigeria
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
organization concerning 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
1.4. 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
(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 satisfaction?
(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?
1.5. RESEARCH HYPOTHESES
H0: Poor compensation packages will not reduce workers morale and will not affect their productivity adversely.
H1: Poor compensation packages will reduce workers morale and will affect their productivity adversely.
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.
H0: There is no relationship between workers reward and their level of performance.
H1: There is a positive relationship between workers reward and their 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 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.
1.7. 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 PzCussons
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
CussonsNigeriaplc detergent and cleaners producing plants in Nigeria.
1.8. 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.
1.9. 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
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 children.
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