BACKGROUND OF THE STUDY
Organizations are established with the aim of effectively
utilizing various available human and non-human resource to achieve
certain objective. Among these resources in human, which is commonly
seen as the most valuable asset an organization could use to earn
competitive advantage and achieve its objective, hence the need for
human resources management to ensure optimum productivity and
organizational continuous existence.
Human resource has been tagged the most valued
asset of any organization. Its strategic approach emphasized a “tight
fit” between individual needs, rights, ambitions, and goals within the
organization which make compensation system central in the affairs of
emerging students, scholars and HRM practitioners in the world over.
The emergence of human resource management posed great threat to the
conventional personnel management and industrial relation because it
evolved from the core approach or organization relationship. It is an
asset that should be invested upon so as to provide long-term
commitment and high performance in an organization. As organizations
strive to achieve one or more objectives through exhaustive utilization
of human capital, so also, the employee aim toward achieving
individual purpose (objective) while working for the organization.
Reward system is the instrument used to increase
employees’ productivity. It seeks to attract and retain suitable
employees, encourage good management – employee relationship and
commitment and minimizes tension and conflict as it deals with all
forms of final returns, tangible service and mechanism for good
relationship. Furthermore, the major case of industrial conflict is
based on the fact that employees feel their benefit are denied or about
to be denied thus the importance of compensation system is to provide a
good platform for equity and farness. This provides a challenging
environment and increase productivity of employees. The compensation
system ensures that both intrinsic and extrinsic needs of employee at
all levels are adequately provided for compensation develops
organizational integrity, policy, procedures and practices capable of
improving organizational productivity. Reward and compensation is
concerned with employees and organization performance development
through which better result can be achieved by understanding and
managing reward and compensation within an agreed framework, planned
goals, standard and competency requirements.
Petroleum sector plays a great or leading role in
building Nigeria economy since petrol (Crude oil) serves as the major
source of income in Nigeria and is the strength of Nigeria economy. The
role petroleum industry plays cannot be overemphasized, among which
are structuring the capital market, refining of crude oil for local
consumption, provision of employment for both indigenes and foreigners
and the marketing of crude oil and petroleum product. However, the
success of the industry rests so much on its human resources
capability, which is the most valuable asset of any sources capability,
which is the most valuable asset of any organization. The challenging
tasks of every manager at all level are how to build a befitting reward
and compensation system to incorporate both organizational goals and
individual needs, thus, have a motivated workforce and improve
productivity. Therefore, this research work seeks to look into reward
and compensation system and its implication on worker’s efficiency in
the petroleum industry (Total Plc as case study). The industry has
proved to be one of the most valuable in Nigeria economy and the
productivity of the industry cannot be refrained from its rewards and
compensation structure, directly or indirectly.
However, the study examines the impact of reward
and compensation, system on organizational productivity, the base of
good reward and compensation structure, employees expectation at
different levels and how the compensation structure is based on
performance of individual(s) or job requirement of employees. The
researcher therefore tends to draw attention of Board of Directors
(BOD) and management of organization to the need for effective and
efficient reward and compensation system capable of improving
employees’ performance and enhance organizational productivity.
1.2 Statement of the Problem
Some organizations over the years see employee as additional cost
as well as liability to their operations, hence do not remunerate them
appropriately, and where it is more appropriate, the compensation is
not commensurate with the efforts and skills that workers put into the
organization’s activities, instead of paying attention on how employees
will be compensated appropriately, some organizations concentrate more
on other resource, such as materials, machines and money. The effort is
more on how to improve the production process with little or no
consideration for human efforts.
This had led to the inability of such
organizations to attain their set objective, organization success relies
heavy on how much attention pay to its employees’ reward policies. It
is in view of this that the study seeks to know how reward and
compensation system in organization affect the performance of employees
as well as that of the organization in general.
1.3 Objectives of the Study
The major objective of this study is to examine and assess the
impact (if any) of reward and compensation system on the productivity
of employee in an organization. The specific objectives therefore, are
- Draw the attention of management to prompt, timely and adequate compensation of employee
- Analyse the available reward package and how it affect employees and organizational performance
- Ascertain the need for management to create a conducive
working environment by providing both physical and psychological
incentires to make employees more committed to organizational goals
- Encourage a good reward and compensation policy which should be channeled toward increasing organizational productivity.
1.4 Significance of the Study
The importance of this study cannot be overemphasized due to the
fact that, it holds a lot benefit to ensure continuous existence and
survival of organizations, the study will be great benefit to manager
or human resource department of organization regarding the
identification of effective reward and compensation, system, it cost and
benefit on organizational operations, harmonizing employees and
organizational interest to avoid sub-optimality etc.
In addition, the study clarifies the argument on
weather effective reward and compensation system adds value to
organizational activities, which will enable organizations take
profitable side on whether to compensate employees or not. This
research due to adequate review of various up-to-date literature is a
source of material to post and undergraduate student and as well as
researchers who may intend to undergo a study on the subject matter in
Knowledge the say, is power this research work
exposed the researcher to many practical issues on human resource,
reward and compensation system and the respective relationship that
exist between effective reward and compensation system, productivity
customer patronage as well as organization productivity and
profitability. In addition, the study was an avenue for the researcher
to study some materials text book, journals, annual reports etc which
on ordinary activity would not have thought of.
Finally, the study serves and meet one of the pre-national diploma in management from Kaduna Polytechnic Kaduna.
1.5 Research Question
- What are the benefit of prompt compensation to employees in the organization
- How can a reward package affect the performance of an employee in an organization
- How does a conductive working environment make an employee committed in attaining organizational goals
- In what way can employers encourage employees
1.6 Scope of the Study
This research work is undertaken to analyse the impact of reward
and compensation system on the productivity of employees in an
organization though employees reward and compensation system is just
one of the various tools used to ensure effective human resource
management, but the study strictly concerns itself with reward and
compensation, its system and its impact in enhancing organizational
productivity and profit ability.
In addition, the research work is carried out to study the impact
of reward and compensation system on the productivity of employees in
Total Nigeria Plc Kaduna. This therefore shows that the study nether
cover every organization in petroleum industries non has it cover every
branch of total Nigeria Plc but Total Nigeria Plc, Kaduna South.
1.7 Limitation of the Study
A research work of this nature is however unpleasant with numerous
problem that limit the researcher ability especially in Nigeria where
many organizations do not disclose the true information about their
organization to researcher.
The researcher found it difficult to access meaningful data
concerning the organization reward, policy but has to use the limited
information available. Nevertheless, the research work was adequately
covered based on the available information to the researcher though its
difficult to claim a total perfection, therefore the topic is opened
for further build up consideration and research.
1.8 Definition of Terms
Compensation of all form of financial return, tangible services and
benefit an employee receives as part of an employment relationship.
Industry: This is the group of firm that engage in the production of similar product (i.e. goods / services)
Productivity: Productivity is the output unit / per labour input into the production process given the level of existing technology.
Management: This is the
process of planning, organizing, staffing, leading, directing,
coordinating and controlling available resources toward s achieving a
Reward: This is the cor-faced
of an employment relationship. Reward system consists of an
organization’s integrated policies process and practices for rewarding
its employees in accordance with their contribution skills competence
and their market worth.
Remuneration: This is the financial reward accruing to employee for his or her performance in the organization.
Motivation: It is the inner drives that arouse direct and maintain an individual behavior toward accomplishing organization goals.
Research: Is a way of arriving
at a dependable solution to business and management problem through a
systematic way of data collection, data analysis and data
Pay Structure: Is a framework for managing base pay progression over time for employee benefit.
Policy: Is organizational guiding principles that regulate its operation and activities.
Job Analysis: According to Raymond, etal (2004) it is the process of getting detailed information about jobs.
Job Description: Is the
setting out of the purpose of job, where it is fit in the organization
structure the content within which the job holder function and the
principal accountability of job older. Main task the employee has to
Job Enlargement: Is the act of
combining previously fragment task into one job to add greater
autonomy and responsibility to a job and is based on the job
characteristic approach and maximizing the interest and challenges of
Job Evaluation: Is a systematic process for establishing the relative work of job within an organization.
Reward Strategy: It is a
definition of the intention of the organization on how its reward
policies and process should be developed to meet business requirement.