Abstract

Compensation is the reward workers receive for their
service or contribution to the organisation. A literature reviewed showed that
compensation packages have relationships with workers’ job satisfaction. A
study established a theoretical framework based on equity theory and used it to
examine how different compensation packages might be influencing workers’ job
satisfaction. The Positivist paradigm; which holds principles that knowledge is
arrived at through the gathering of facts that provide the basis of laws,
guided this empirical research, focused on the public University of Jos,
Plateau State, Nigeria. A questionnaire was developed, pilot-tested and
administered to gather the data on workers’ job satisfaction regarding four
compensable aspects, namely: salary, allowance, gratuity and pension. A total
of 100 questionnaires were administered and 100 were collected, representing a
response rate of 98%. No questionnaire was invalid or returned uncompleted. The
respondents were selected using the stratified random sampling technique. The
data collected was analysed using simple percentage method. The findings of the
study revealed that compensation impacts positively to employee’s performance
in public sector.

CHAPTER
ONE:

INTRODUCTORY
BACKGROUND

1.0
INTRODUCTION

One
of the fundamental tasks in human resources management is compensation
management. It is a complex task that occurs periodically, demand accuracy and
must not be delayed. Compensation management requires integrating employees’
processes and information with business process and strategies to achieve
optimal organizational goals and objectives. This can be attributed to the fact
that compensation management is an essential tool to “integrate individual
efforts with strategic business objectives by encouraging employees to do the
right things with ever improving efficiency” ASH (1993,4). In other words,
compensation management is’ a powerful means of focusing attention within an
organization. They send clear .messages to all employees of the, organization
informing them about expected attitudes and behaviors Schell and Solomon (1997,
4).

Furthermore,
researchers have argued that compensation management system can create and
sustain a competitive advantage for organizations Milkovich and Newsman (2002,4).
In recent years, the inclusion of non-financial measures has gained some
popularity in compensation management, while some schools demonstrate positive
effects of incorporating non- financial measures in to the compensation
management system empirically Widmier (2002). He further states that, human
resources model of compensation generally assume that higher performance
requires greater effort or that is in some other ways associated with
disutility on the part of workers. In other to provide incentives, these models
predict the existence of reward systems that structure
compensation so that a worker expected utility increase with’ observed
productivity. This reward can take many different forms including praise from
suspensor and co-workers, implicit promise of future promotion opportunities,
feelings of self-esteem that comes from superiors’ achievement and recognition
and current and future cash rewards related to performance.

Koln (1993), argues that failure of compensation system is
due to inadequate assumption about human motivation, reason for this can be
attributes rather to the measurement of employee satisfaction and employee
loyalty’ to the organization, Hence, there is a strong need for the development
of a holistic reward and performance measurement model enabling an organization
to derive company specific success drivers and identify cause and effect
relationship when linking rewards to measure such as employees satisfaction and
loyalty. Thus, Dalton McFarland (1998), asserted that among the various devices
for eliciting the loyalty. Cooperation and effort of individuals are the
various forms of economic rewards’

According to Ojo (1997) there are three components of
employees’ compensation in an organization which arc (i) the basic pays (ii)
the fringe benefits and (iii) performance incentives or bonus. The basic pay is
the basic wage in form of salary; fringe benefits are supplementary
compensation awarded to employers over and above the basic wage or salary.
Since the coming of the term “Fringe Benefits” during World War II,
the scope of employees’ benefits has widened markedly in bath developed and
developing countries. Such benefit covers a wide range of rewards which
provides security, deferred remuneration and various services for employees.
The significance of the subject matter, Compensation emanate mainly from the
fact that it provides income to workers and constitutes an important cast item
to the employers, the largest single cast item for many organizations. For the
workers, wage provides the means of satisfying their wants and needs.

1.1 STATEMENTS OF THE PROBLEM

The relationship between organizational compensation system
and employees performance is indispensable, though some surrounding factors may
determine the satisfaction one derives from the other. The high inflation rate
which has led to high cost of living, law income and, purchasing power can be a
reason for poor performance. In order to achieve the needed output level, the
Nigerian managers faces an uphill task in trying to fashion out a reward system
which does not have to necessarily be totally monetary inclined to motivate and
bring out the best in employees to whom morale would have been affected by the
bad state of socio-political and economic sphere of the country. The question
now is, can there be a reward system that could adequately have an effect on
workers performance? How often is this system reviewed? Would a fixed
organizational compensation system bring out the required performance? Does the
system reward the right set of employees? Would the outlined reward solve the
immediate problems of workers in order to boost performance? Can the reward
system stand out the test of time? Most times, only good behavior is rewarded
while performance based reward is ignored. Also, some organizations confuse
activity with action and reward those who seem busy, yet the quiet employees
may have been doing the bulk of the work. From this, there is need for
management to build its reward system along the line of actual performance and
actual level of work, input and productivity. Therefore, the problem of trying
to figure out these loopholes with intent of correcting them forms the basis
for this research.

1.2 OBJECTIVES OF THE STUDY

Specifically, the purposes of the study are as follows;

1. To investigate the different compensation packages that
exists in the public sector most especially in Nigeria.

2. To assess the effect or impact or these compensation
packages on employees performance.

3. To identify the compensation packages that motivates
employees to the highest degree of performance.

4. The study seeks to determine the perceptions of employees
concerning the compensation packages.

5. To offer suggestions on how the public sector can provide
an effective compensation packages.

1.3
RESEARCH QUESTIONS

The
research questions were directed specifically to address the following issues;

1.
How is compensation management at the University of Jos?

2.
Does the compensation system have effect on employee’s performance?

3. How often is the compensation system at the
University of Jos being reviewed?

4. Are there any other factors by which employee’s
performance can be improved upon through compensation packages?

5. What are the factors being considered in carrying out
compensation policy exercise at the University of Jos?

1.4 SCOPE OF THE STUDY

The study shall be carried out within the Nigeria public
sector.

The project is intended to cover the compensation management
system and how it relates to the individual employee in the organization and
also to the organization.

1.5 SIGNIFANCE OF STUDY

The information from this research will add to the study of
the knowledge and theories on the subject matter of compensation.

This study was brought about by the persistent quest for
higher employees performance by several organizations especially Nigeria. The
basic question to date is how well the use of compensation packages relates
positively to employees performance. 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.

The significant of is than it is a portal requirement for the
award of National Diploma in business studies of Plateau state poly barki ladi

1.6 DEFINITION OF TERMS

COMPENSATION: This refers to direct and
indirect rewards given to employees on the basis of the value of the job, their
personal contributions and their performances.

PERFORMANCES: The extent to which an
employee or group of employees have gone in achieving the set goals or
standards.

EMPLOYEES: Person who work for
compensation weather direct or indirect for another in return for stipulated
series.

ORGANIZATION: A group of people who
form a business ill order to achieve a particular aim.

PUBLIC SECTOR: The area of the
nation’s affairs ‘under governmental rather than private control.

POLICY: A course of action adopted and
pursued an organization, government, ruler, political party etc.

TARGET: A result arrived at a goal or
objectives aim at something.

PRODUCTIVITY: The measure of the
output of goods and series relative to resource’s available

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