CHAPTER ONE
INTRODUCTION
1.1
Background of
the Study
Compensation
Management is one of the most complex and dynamic issues in organizational
performance. For an organization to achieve its stated objectives, there is the
need to effectively manage compensation, taken into cognizance one of the core
aspect of resource management known as compensation management (Anyebe, 2003).
The ability of a manager to achieve its stated objectives to a large extent
depends on the effective implementation of compensational packages in order to
motivate the subordinates and employees within and beyond their expectation.
Compensation Management plays a crucial and functional role because it is the
heart beat of human resource management. It is also vital to both employees and
the employer (Begbie, Bussin, &Schurink, 2011). This is because employees
typically depend on wages and salaries, and must be equivalent to the work
done. However, to managers, compensation decisions influence the cost of doing
business and thus, their ability to sell at a competitive price in the product
market (Barry et al, 1995) It is an obvious fact that effective implementation
of favorable compensation management will not only aid in stabilizing and
retaining employees but also helps in reducing labour turnover within the
organization. Employees’ compensation can be seen as all forms of financial
returns and tangible benefits that employees receive as part of an employment
relationship. It can be referred to as the totality of the financial and
non-financial rewards an employee receives in return for his/her labor or
services (Bernadin 2005).
Sola &Ajayi
(2001) see compensation management as a process of establishing the structure
of wages level for the various positions designing incentive systems, setting
individual wages and incentives within the established structures. It is an
integral part of human resources management that affects the performance of
employees because it establishes the degree of relationship between employer
and the employee. The manufacturing sector is one of the sectors responsible
for the food and beverage industry. It is one of the sub-sectors of the
manufacturing sector but responsible for the manufacturing of daily products,
beverages, seasoning, convenience foods confectionaries and staple foods
(Harrison, &Liska, 2008).
The turbulent
management-labour crisis over continuous agitation for increased pay in the
public services all over the world is challenging public sector organizations
to utilize their employees more effectively to improve organizational
performance (Hewitt, 2009). In Nigerian Civil Services, pay has become the driving
force for seeking employment in the industry. It therefore becomes imperative
that organizations establish and adopt a compensation system that can motivate
employees to work while at the same time not eating too deep into the
organization’s resources New Delhi (Chiang, &Birtch, (2008). Remuneration
does not simply compensate employees procedures that will attain maximum return
on Naira spent in Compensation is payment in the form of hourly wages or annual
salary combined with benefits such as insurance, vacation, stock options, etc.
that can positively or negatively affect an employee's work performance.
Compensation is the remuneration received by an employee in return for his/her
contribution to the organization. It is an organized practice that involves
balancing the work-employee relation by providing monetary and non-monetary
benefits to employees. Compensation is an integral part of human resource
management which helps in motivating the employees and improving organizational
effectiveness (Danish & Usman, 2010).
Employees
are pivotal to the achievement of organisational goal and enhancing the
competitive advantage of the organisation in the global world and within the
industry where the business firm is operating. Hence the leadership role of the
employee’s in achieving this cannot be underestimated and to this done adequate
measure must be put in place by the organisation through well managed
compensation structure
(Pearce, 2010). Therefore, compensation management
as one of the fundamental functions of human resource department is meant to
attract, retain, developed employees toward attaining organisational
effectiveness, efficiency and competitive advantage in the globalised world
(Adeoye, 2001; Tsai, 2005; Adeoye, Elegunde, Tijani&Oyedele, 2012).
Compensation management is
a veritable instrument that affects the decision of job applicants and
employees within the organisation. It has aided the firms to achieve their
competitive edge over their competitors in the industry (Heneman& Judge,
2000; Ivancevich, 2004; Hyondong, 2006). Furthermore, a lot of monetary
resources are invested on crafting, organising as well as administering
organisational remuneration arrangement. Despite its vital contribution toward
the success and development of the firm, scholars and even practitioners have
lamented that there is a slow pace in the advancement of compensation research
(Heneman& Judge, 2000; Kersley& Forth, 2005). In most recent times, the
plan release cum adoption of reward management, have gone through a major shift
that are dramatic in nature. This has reflected the motivational aspect in the
employees’ leadership roles and performance (Heneman& Judge, 2000; Purcell
et al., 2003).
In the context of
organisational effectiveness, leadership roles cannot be underestimated and the
critical existence of an organisation is largely anchored on the leadership
that exists within the sphere of the firm. It is reiterated that the wire link
between the vision, strategic direction and change of the organisation is leadership.
Leadership has been in existence for as long as people on earth have co-existed
and it is present in all the cultures (Rukmani et al., 2010; Fibuch, 2011).
Bontis and Serenko (2009) and Ilies et al., (2006) viewed leadership from the
managerial perspective and opined that managerial leadership is the grace to be
able to encourage, arouse, mentally excite, propagate, anchor, visibly
coordinates the organisational goals, and show good examples to subordinates.
Articulate leaders must be ready to give feedbacks about the different aspects
of the subordinates’ effort that may have positive result on self-efficacy, job
satisfaction, and commitments of employees with focus on areas of improvement
(Shea and Howell, 2009; Jawahar, 2006; Bontis&Serenko, 2009).
1.2 Statement of the Problem
In
today’s work environment, there is more change and uncertainty, there is
increased need for empowered employees, there is decline in traditional
incentives, there is rise of nontraditional incentives and there is increased
use of variable compensation. In organization, compensation is usually narrowed
to cash and as a result, employers only have a tunneled vision when it comes to
the issues of compensation for their employees. The company has also attempted
to give attention to employee compensation strategies. However, employees
themselves have failed to recognize the fact that their compensation is a
package and not only related to cash. The byproduct of the above understanding
of compensation strategy is that it is managed to a moderate extent and most of
the time employee performance could be affected and vice versa. The study
therefore sought to address this gap by investigating the effect of
compensation management in organizational performance.
1.3 Objective of the Problem
The main
objective guiding the study was to investigate the effect of compensation
management in organizational performance: a case study of Copen Group
The
specific objectives are:
1 to
determine the extent at which compensation management affect employee’s
performance in Copen Group
2 To access the rate at which welfare services affect
employee’s performances in Copen Group
3 To explore relationship between compensation
management and improved productivity in Copen Group
4 To
explore the relationship between compensation management and retirement of
staff in Copen Group
1.4 Research
Questions
1
What is the extent at which compensation management affect employee’s
performance in Copen Group?
2 what is the rate at which welfare services affect
employee’s performances in Copen Group?
3 what is the relationship between compensation
management and improved productivity in Copen Group?
4 what is the
relationship between compensation management and retirement of staff in Copen
Group?
1.5 Hypothesis
Hypothesis One
Ho: Compensation management does not affect employee’s performance in
Copen Group
Hi: Compensation management affect employee’s performance
in Copen Group
Hypothesis Two
Ho: welfare services does not affect employee’s
performances in Copen Group
Hi: welfare services affect employee’s performances in
Copen Group
Hypothesis Three
Ho: there is no significant
relationship between compensation management and organization
Hi: there is a significant relationship between
compensation management and organization
Hypothesis
Four
Ho: there is no significant relationship between
compensation management and retirement benefits of staff
HI:there
is a significant relationship between compensation management and retirement
benefits of staff.
1.6 Scope
of the Study
The study covers
only Copen Services Limited which is articulated and organised firm with
diversified interests in Real Estate, Construction, Services, and Consultancy.
Copen Services Limited is the fruit of the desire of a number of young, honest, knowledgeable and experienced professionals, with over 20 years cognate post-graduation/practical experience in public and private service, to pool together their resources for the service of humanity.
1.7 Significance
of the Study
Compensation management in organization
is an important business approach because it can enhance a company’s ability to
achieve the ultimate goal and gain competitive advantage over its competitors.
This study is important for
organization, employees, academia and even government. Customers will have
access to better and qualitative services from the organization. Employees can
also have improved conditions of service due to better organizational performance.
Organizations can gain in terms of superior performance. The research can also
benefit the academia in terms of addition to knowledge.
1.8 Limitation
of the Study
There always exist many constraints
militating against a good research work. Among these limitations/ constraints
include the unwillingness attitude of some individuals and civil servants to
come up with relevant information, for some reasons best known to them.
Another constraint is that of reaching
to the appropriate respondents. Most of our respondents do not reside where
they can be easily reached and this posed a problem for the researcher.
Besides, some of the respondents
subjected the researcher to some rigorous bureaucratic process thereby making
it hard for the researcher to get some relevant information needed for the
study and this also posed a limitation to the researcher.
However, despite
these constraints, the research was successfully carried out through
persistence and perseverance.
1.9 Definition
of Operational Terms
Compensation: The process of concealing or
offsetting a psychological difficulty by developing in another direction.
Management: the process of dealing with or
controlling things or people
Organization: an organized group of people with a
particular purpose, such as a business or government department.
Performance: the
action or process of performing a task or function.
Business: A business is an organization or
enterprising entity engaged in commercial, industrial or professional
activities. A company transacts business activities through the
production of a good, offering of a service or retailing of already
manufactured products
Profit: a financial gain, especially the
difference between the amount earned and the amount spent in buying, operating,
or producing something
Money: Money is any item or verifiable record that
is generally accepted as payment for goods and services and repayment of debts
in a particular country or socio-economic context.
Productivity: the effectiveness of productive effort,
especially in industry, as measured in terms of the rate of output per unit of
input.
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