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Journal of Contemporary Research (Jocres) Research Article VOL. 1 (1) ISSN:2814-2241
Journal of Contemporary Research (Jocres) Research Article VOL. 1 (1) ISSN:2814-2241
Journal of Contemporary Research (Jocres) Research Article VOL. 1 (1) ISSN:2814-2241
www.unicrossjournals.com
Date Accepted: 30th June, 2022
Compensation is sometimes defined as direct and between skill based pay and employee creativity,
indirect monetary and non-monetary awards determine the relationship between seniority
given to employees based on the importance of based pay and employee job satisfaction.
the job, their personal contributions, and their
Research hypotheses
performance. These incentives must satisfy both
The formulated hypotheses were tested in null
the organization's ability to pay and any
form.
applicable legal regulations.
There is no significant relationship between
The growing acknowledgment and agreement
performance-based pay and employee
that remuneration enhances productivity is
commitment
consistent with Abdullah's (2012) early work,
which claimed that happy people are productive There is no significant relationship between skill-
workers. Private service compensation in Nigeria based pay and employee creativity
has become a driving force in seeking work in the
There is no significant relationship between
industry. As a result, it is critical that firms create
seniority-based pay and employee job satisfaction
and implement a remuneration structure that can
drive employees to work while not depleting the 1.3 Significance of the study
organization's resources. The findings of this study will be significant in
the following ways: The findings will benefit
According to Shaw (2014), most people are
Cross River State government and other
motivated by money, at least for their basic needs
organizational leaders to ensure that its
and desires. Employees can be motivated by
employees are valued and rewarded for their
remuneration in a variety of ways, including
effort in the service. The study will help policy
salary, bonuses, commission, profit sharing, and
makers in Cross River State and other
other perks such as trips, automobiles, and other
organizations The study will contribute to
tangible objects used as rewards.
development and application of development
1.1 Statement of the problems thinking in the private. It will benefit private
These organizations are today confronted with sector, policy makers and managers of
numerous obstacles, including inadequate organizations This study will equally provide
infrastructure, a lack of an enabling research opportunity for further research and also broaden
environment, disparities in compensation and the frontier of knowledge.
allowances, and uneven policy execution, which
2.0 Literature review
may have an impact on their levels of job
Conceptual framework
satisfaction. Compensation is typically limited to
Compensation management is an essential
cash, and as a result, companies have a tunnel
component of the human resources management
vision when it comes to employee compensation
approach to organizational productivity. It is
difficulties. Other parts of remuneration that
concerned with the design, implementation, and
comprise the complete compensation package for
management of general compensation systems
employees receive less attention. Employees
aimed at improving the performance of
themselves fail to grasp that their compensation is
companies, teams, and individuals (Yadav &
a bundle and not solely monetary. As a result of
Aspal,2014). According to Milkovich and
the aforesaid concept of compensation, it is
Newman (2010), remuneration is an important
poorly managed and, most of the time, negatively
tool for attracting and retaining bright individuals
affects performance.
who are committed to their roles within the firm.
1.2 Objectives of the study
Compensation management strives to advance
The specific objectives were to; examine the
business goals by attracting, motivating, and
relationship between performance based pay and
retaining hardworking personnel (Petera 2011). It
employee commitment, examine the relationship
JOURNAL OF CONTEMPORARY RESEARCH (JOCRES) VOL. 1 (1)
refers to the procedure through which employees examples of this. Remuneration is defined as the
are compensated for their contributions at work. direct and indirect compensation received by
employees in an organization in order to increase
Compensation is a type of compensation given as
employee happiness and retention while also
a result of a work well done or effort put in to
improving performance. Incentives, medical
reach a specific objective, and it serves as a
benefits, housing allowance, annual leave
motivator for an individual to put more energy or
allowance, and training opportunities are all part
devotion into his or her employment (Alex, Uno
of direct remuneration.
& Lebo,2020). In most firms, the primary goal of
remuneration is to inspire employees to behave in Performance base
a specific way (Rizman, Farooq & Ulah, 2010 ). Is a type of remuneration that is based on an
As a result, a business not only wants to employee's contributions to the company. This
incentivize employees to stay with the company, type of remuneration structure ensures that only
but also reinforces employee achievement the best performers survive. Performance-based
through suitable and encouraging compensation pay is an efficient technique to inspire and reward
(Abolade, 2012). your staff for being more productive. The benefits
include enhanced staff retention, improved
Compensation is defined as the whole sum of
recruiting, and improved performance. Monthly
wages or salaries, employee benefits, non-
performance pay will be about 25% of monthly
recurring financial prizes, and non-pecuniary
compensation, and quarterly performance pay
rewards; on the other hand, compensation is
will be based on unit and business performance in
defined as financial returns on tangible services
that quarter (Abolade, 2012).
and benefits received by employees as part of an
employment relationship (Salman & Muhammad, Performance-based pay provides monetary
2010). Employees' compensation includes both reward based on individual or group performance.
intrinsic and extrinsic benefits for accomplishing It is concerned with how financial rewards are
their duties. Employees' psychological mind sets distributed to employees. In contrast to fixed
that arise from executing their professions are compensation, performance pay compensates
reflected in intrinsic compensation, whereas employees based on their individual contributions
extrinsic compensation comprises both monetary rather than the worth of the role itself. Individual
and non-monetary incentives. performance pay, which is frequently associated
with commission-based sales staff, and skill-
Armach (2012) proposed that compensation is the
based pay, in which income is linked to
human resource management function that deals
competency, are two types of pay. Some
with every type of reward individuals receive in
businesses use profit-sharing, which means that
exchange for performing organizational tasks,
employees earn a part of the company's profits.
with a desired outcome of an employee who is
One of the primary goals of remuneration is to
attracted to the work, satisfied, and motivated to
encourage employees to give their all. This
do a good job for the employer; a double input-
objective became more important as firms
output exchange between an employee and an
realized they were in danger of losing market
employee; and a double input-output exchange
share to competitors. Performance pay refers to
between an employee and an employee (Ahlstron,
pay plans that incentivise and reward employees
2010). Compensation is the monetary and non-
depending on their performance.
monetary payment paid by an employer in
exchange for services completed. It could be Skill base
financial incentives, which are any monetary It is a remuneration system that provides
incentives that go above and beyond basic salary. additional benefits to employees in exchange for
formal certification of the employee's mastery of
These bonuses are not included in the base wage.
skills, knowledge, and/or competencies.
Financial incentives, bonuses, and recognition are
Knowledge is learned, information is employed
EMPIRICAL STUDY ON COMPENSATION MANAGEMENT AND EMPLOYEE PERFORMANCE IN SELECTED
ORGANIZATIONS IN CROSS RIVER STATE Effiong, et al.
in executing activities, and skill is acquired and In organizations with low (high) levels of
observable expertise in performing tasks. A performance-based pay and job seniority,
salary structure that bases an employee's pay on seniority-based pay boosts productivity. A
his or her expertise, experience, education, or seniority-based pay scale offers some advantages
specialized training is known as skill-based pay. over a performance-based pay scale, and it is
Depending on the organization, the employee commonly employed in government and with
may also be paid more for obtaining formal unionized jobs. Seniority-based pay does not
certification in his or her field. Companies can assist private, non-union firms in developing a
use skill-based pay to examine market and high-performing staff that increases overall
compensation data and establish pay based on the company performance. Other considerations
assessed value of a person within an organization. supplement the seniority-based compensation
system. Employees, for example, can contract to
Skill-based compensation is a pay system in
take on responsibilities that exceed their regular
which pay increments are connected to the
wage grade, with a corresponding increase in pay.
number of depths of skills an employee obtains
and utilizes. It is a method of promoting broader
Compensation management on employee
and deeper skills among the workforce. These
performance
raises are in addition to, not in place of, general
Employees today demand more than just a
salary. The growth is typically based on
paycheck; they expect "extra." Employee benefits
horizontal skills, which entail expanding abilities
are what these extras are called. Employee perks,
in terms of work range, vertical skills, which
often known as fringe benefits, are non-monetary
require obtaining higher level skills, and depth
forms of compensation provided in addition to a
skills, which involve a high degree of skills in
cash income to enrich people's lives. Employee
specialized areas relevant to the same job. Skill-
benefits in general have no direct effect on
based pay is a person-based approach rather than
employee performance; however, poor benefits
a job-based system. It recognizes a person for
contribute to employee dissatisfaction and
who he or she is rather than what the job is worth.
increase absenteeism and attrition (Femi, 2010).
A basic rate of compensation for minimum skills
As a result, you would need to carefully craft
reflects job worth, however pay growth is directly
your benefits package.
related to kills acquired.
Your package could include providing each
Seniority base
employee with a cell phone, taking them to a
Seniority-based compensation is one in which the
training workshop or lecture, giving them a day
employee's tenure is the key foundation for pay
or two off per month, and so on. Choosing a
increases. Loyalty, retention, and stability of all
benefits package can assist an organization attract,
staff members, regardless of performance levels,
motivate, and retain people. A well-planned
are some of the advantages of seniority-based
compensation and benefits package will help the
remuneration. Employees on a seniority-based
company or employee in the following ways.
pay system are given a base salary and get the
same rise at regular intervals. There is no Employees would be happy with their jobs and
differential based on how well a person does a would want to work for such an organization if
job; just how long the individual has been in the they were compensated fairly for their efforts.
position is considered. One of the benefits of a
They all have distinct demands in terms of
seniority system is that it encourages employee
motivation. Some of them desire money for the
loyalty. People understand that if they stay with
group, which will pay them more. Some people
the company, they will have access to greater pay
value accomplishments over money, and they
and advancement prospects, which will result in
choose to work for companies that provide more
lower staff turnover and all of the related
opportunities for advancement, learning, and
replacement costs.
development. A pay plan that meets the demands
JOURNAL OF CONTEMPORARY RESEARCH (JOCRES) VOL. 1 (1)
retention. We used both primary and secondary satisfaction and minimize significant labor
sources. turnover among employees.
A questionnaire was used to collect necessary and Onuoran, Okeke, and Ibekwe (2019) conducted
relevant data from respondents. The strategies research in Nigeria on salary management and
were utilized to reduce the challenges connected employee performance. Descriptive survey
with data collecting while still ensuring that the research was used to collect primary sources of
results are apparent and devoid of bias as desired. data. The study's population consists of 257
Interferential and descriptive statistics were used Anambra public secondary schools. A
to analyze the data. The descriptive statistics used questionnaire and the Z-test were utilized. In
in this study include a frequency table and a Nigeria, it was discovered that equity-based
Likert scale, while the hypotheses were tested compensation has no negative significant effect
using analysis of variance (ANOVA). on employee performance. The study
recommended that every business adopt equity-
The findings reveal an f-statistic of 32.222,
based compensation a mandatory policy because
indicating that the model is statistically
equity-based compensation is more widely
significant. It has been demonstrated that there is
employed in firms to ensure maximum
a significant association between good welfare
performance.
service and job performance. According to the F-
statistic, there is a considerable association
between compensation management and
3.0 Methodology
increased production. According to the survey,
The design employed in this study is survey
organizations must ensure that there is a cordial
research design. The study adopted simple
and positive interaction between the employer
random sampling technique and the selection of
and the employees.
the organizations was judgmental. However, to
Premalultia (2014) evaluated the effect of pay determine the sample size, the study adopted Taro
systems on employee performance. Research with Yamane sample size:
a focus on the service sector. The goal of n = N
competent pay for performance is to attract
qualified candidates while also retaining present 1 + N(e2)
employees as assets. The Chi Square statistical
Where n = Sample size
method was used to investigate the effect of
N = Actual population
independent variables on dependent variables.
e = Limited tolerable error
According to the findings, compensation
The total population of the selected organizations
management has a direct impact on employee
is five hundred and seven (507) which was
performance. It was suggested that employees
obtained from company’s Records.
have faith that their efforts will be recognized.
N = 507
Adewale, Adenika, Hezekiah, and Heirsmac e = 5 percent
(2014) evaluated the effect of remuneration 1 = constant
packages on employees' job performance and N
n=
retention in a selected private institution in Ogun 1 + N(e)2
state, Nigeria's south-west. In this investigation, a 507
=
simple percentage was used. The results of the 1 + 507(0.05)2
dependent and independent variables that were 507
=
tested (salary, bonus, incentives, allowances, and 1 + 507(0.0025)
fringe benefits). The study recommended that 507
=
management reassess compensation packages at 2.2675
various levels in order to gain employee = 224
JOURNAL OF CONTEMPORARY RESEARCH (JOCRES) VOL. 1 (1)
performance Employees’
base commitment
Pearson correlation 1 .872**
Sig. (2-tailed) .000
.250 .236
Covariance
196 196
N
.872** 1
Pearson correlation
Sig. (2-tailed) .000
.336 1.51
Covariance
196 196
N
EMPIRICAL STUDY ON COMPENSATION MANAGEMENT AND EMPLOYEE PERFORMANCE IN SELECTED
ORGANIZATIONS IN CROSS RIVER STATE Effiong, et al.
Table 2: Correlation result of relationship between skill base and employees’ creativity
Skill baseEmployees’
creativity
Pearson correlation 1 .845**
Sig. (2-tailed) .000
.421 .305
Covariance
196 196
N
.845** 1
Pearson correlation
Sig. (2-tailed) .000
Covariance
.305 .201
N 196 196
**. Correlation is significant at the 0.01 level (2-tailed).
Source: SPSS analysis by Researcher,2021
and employees’ job satisfaction. The conclusion was that seniority base significantly related with
employees’ job satisfaction.
Table 3: Correlation result of relationship between seniority base and employees job satisfaction
.517 .404
Covariance
196 196
N
.809** 1
Pearson correlation
Sig. (2-tailed)
.000
196 196
N
**. Correlation is significant at the 0.01 level (2-tailed).
Source: SPSS analysis by Researcher,2021
5.0 Conclusion/Recommendations
Summary of findings The study empirically examined compensation
Based on the analysis of the results, the findings management and employee performance. The
were summarized thus; study revealed that performance base, skill base
i. There was a significant relationship and seniority base affected the performance of
between performance base pay and employee in the selected organizations.
employee commitment Compensation is often regarded as direct and
ii. There was a significant relationship indirect monetary and non- monetary rewards
between skill base and employee given to employee on the basis of the value of the
creativity job, their personal contributions, and their
iii. There was a significant relationship performance.
between seniority and employee job
Compensation management is an integral part of
satisfaction
human resources management approach to
EMPIRICAL STUDY ON COMPENSATION MANAGEMENT AND EMPLOYEE PERFORMANCE IN SELECTED
ORGANIZATIONS IN CROSS RIVER STATE Effiong, et al.
productivity in the organization. It deals with the word. London: South-Western, Cengage
design, implementation and maintenance of Learning, EMEA.
compensation system that are geared to the Alam T (2012). Factors affecting job satisfaction,
improvement of organization, team and motivation and turnover rate of Medical
individual performance. It is one of the central Promotion Officer (MPO) in
pillars of human resources management (HRM). pharmaceutical industry: A Business
It is concluded that compensation management is Review, 1(1); 126-131.
all about developing a positive employment Alex, B. E., Uno, L. A. & Lebo, M. P. (2020).
relationship and psychological contract that Impact of Reward system as a motivating
adopts a total compensation approach which tool on employees’ performance. A study
recognizes that there are a number of ways in of University of Uturu, Abia State,
which people can be compensated. Nigeria. Journal of Management and
Interdisciplinary Studies
In line with the findings, the following
(JOMANS),2(1),92-103
recommendations are made;
Armach, J. (2012). Effect of compensation and
1. Performance pay is a compensation that is tied
other motivational techniques on
to employee’s contributions in the company.
organizational performance. Franklin
Therefore, it should be adopted to motivate
Business and Law Journal, March (1),
employees and reward them for being more
88-96.
productive.
Brevis T, Vrba M (2014). Contemporary
2. Management should develop broader and
Management Principles. South Africa:
deeper skills among the workforce and also
Juta and Company Ltd.
encourage their employees based on their
Ellis, I., Chinedu, U & Akpunonu, E(2011).
individual skills.
Compensation management as tool for
3. Seniority based pay increases productivity in
improving organizational performance in
firms with low (high) degrees of performance-
the public sectors: A study of the civil
based pay and job seniority. Therefore, pay
service of Anambra State of Nigeria.
scale should be based on seniority in the
Sacha Journal of Policy and Strategic
different organizations.
Studies 1(1), 109-120
Femi, B. (2010). Compensation management
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