Relationship between compensation and employee productivity

Thesis Overview

<p> <b><b></b></b></p><p><b><b><b>INTRODUCTION</b></b></b></p><p><b><b><b></b></b></b></p><b><b><b><p><b>1.1 &nbsp; &nbsp; <br></b><b>Background<br>of the study</b></p><p><b></b></p><b><p>&nbsp;An effective employee is one of the biggest challenges<br>for most entrepreneurs. According to them, keeping employees motivated and<br>loyal can be particularly difficult during the early stages of a startup. Argued<br>that those employees who feel that they are cared for by their organization and<br>managers not only have higher levels of commitment, but that they are more<br>conscious about their responsibilities, have greater involvement in the<br>organization, and are more innovative and productive. They suggested that<br>managers and organizations must reward and support their employees for the work<br>that they do because this perceived support allows for more trust and job<br>satisfaction in the organization. These observations brings to the fore the<br>relevance of employee motivation in ensuring productivity. It is an undeniable<br>fact that productivity of an organization depends upon the satisfaction level<br>of its workforce and even more, on the compensation of employees. As a result<br>there has been a great interest in the assessment of compensation variables of<br>employee as they impacts on productivity. According to the study, the concept<br>of compensation has attracted considerable attention over recent years and has<br>become a central objective of human resource management. He indicated that<br>Human Resource Management policies are now being designed to maximize<br>organizational integration, employee commitment, flexibility and quality of<br>work. It is observed that compensation and employee satisfaction drive<br>productivity, indirectly creating profit for an organization. To them, these<br>are also prerequisites for staff retention. They also observed that<br>organizations with higher staff retention rates are naturally better at<br>retaining knowledge, which can lead to better performance and profit for the<br>business. Accordingly, compensation variables improve employee satisfaction,<br>reduce the cost of staff turnover, build brand loyalty with staff and position<br>the company as an employer of choice that attracts talented people to the<br>organization. It is common knowledge that most employees agitate for better<br>conditions of service, while employers complain of low productivity. Employees<br>are always on the lookout for advertisements on what they describe as better<br>jobs. These employees are ready to leave their jobs for other jobs. Others use<br>their present jobs to develop the necessary skills and experience, a<br>requirement for most jobs. Employers also put in several enticing conditions of<br>service and try to create healthy working conditions in an effort to gain the<br>commitment of employees. To remain competitive in today’s market place an<br>organization must retain its employees in order to increase productivity.<br>Retaining employees means offering competitive compensation (both direct and<br>indirect) which will encourage its employees to work well and increase productivity<br>on the market. Age, education, job experience, job fulfillment, marital status<br>and family size are all considerations that determine the attractiveness of<br>fringe benefits. Different benefits appeal to different people. It is important<br>for organizations to remember that the needs of employees differ. For example,<br>a younger employee might be motivated by having the use of a company car<br>whereas an older person may want more status like a title or a professional<br>association membership. To achieve maximum value, organizations have to tailor<br>the benefits to suit both the employee and the job as well as to the business<br>requirements and financial capability. The question that one may want to ask is<br>whether there is any relationship between compensation and productivity.</p><p><b>1.2 &nbsp; &nbsp; <br></b><b>STATEMENT<br>OF THE PROBLEM</b></p><p><b></b></p><b><p>It<br>is sometimes assumed that there is no positive relationship between compensation<br>and employee productivity, or that if there is at all, it is insignificant.<br>However, in organizations where employees are content with their fringe benefit<br>packages there seem to be high performance because employees know that when<br>they increase their productivity they will be well compensated. They<br>are often of the opinion that the effort they put in their work is not<br>commensurate with the indirect compensation they receive and they therefore are<br>not motivated to work hard. Some workers have opined that they would prefer<br>certain benefits to what they are being offered and therefore should be given<br>the opportunity to make choices or management should augment the benefits<br>available. Since employees most times agitate for better fringe benefit<br>packages a number of problems have been arising, some of which are individual<br>disputes to register their dissatisfaction, low productivity, and low morale.<br>it<br>is in view of this that the researcher intends to investigate the relationship<br>between compensation and employee productivity.</p><p><b>1.3 &nbsp; &nbsp; <br></b><b>OBJECTIVE<br>OF THE STUDY</b></p><p><b></b></p><b><p>The<br>main objective of this study is to ascertain the relationship between<br>compensation and employee productivity. But for the successful completion of<br>the study; the researcher intends to achieve the following sub-objectives;</p><p>1. &nbsp; To ascertain<br>factors that determines compensation packages in an organization</p><p>2. &nbsp; To<br>ascertain the effect of compensation on employee performance</p><p>3. &nbsp; To<br>ascertain whether is significant relationship between compensation and<br>productivity</p><p>4. &nbsp; To<br>ascertain the role of management in ensuring employees productivity.</p><p><b>1.4 &nbsp; &nbsp; <br></b><b>RESEARCH<br>HYPOTHESES</b></p><p><b></b></p><b><p>For<br>the successful completion of the study, the following research hypotheses were<br>formulated by the researcher;</p><p><b>H0: </b>there<br>are no factors that determine compensation packages in an organization</p><p><b>H1:</b>there<br>are factors that determine compensation packages in an organization</p><p><b>H02: </b>there<br>is no significant relationship between compensation and employee productivity</p><p><b>H2: </b>there<br>is a significant relationship between compensation and employee productivity</p><p><b>1.5 &nbsp; &nbsp; <br></b><b>SIGNIFICANCE<br>OF THE STUDY</b></p><p><b></b></p><b><p>It<br>is believed that at the completion of the study, the findings will be of<br>benefit to the management of the organizations as the study seek to elaborate<br>on the benefit of compensation as a tool of motivation for employees<br>productivity. The study will also be of benefit to employees of organization as<br>they study seek to educate them on the benefit of putting in their best on the<br>job and the benefit that accrue to it. The study will also be of great benefit<br>to the researchers who intends to embark on research on similar topics as it<br>will serve as a guide. Finally, the study will be of great importance to<br>academia’s, lecturers, teachers, students and the general public.</p><p><b>1.6 &nbsp; &nbsp; <br></b><b>SCOPE<br>AND LIMITATION OF THE STUDY</b></p><p><b></b></p><b><p>The<br>scope of this study covers the relationship between compensation and employee<br>productivity. In the course of the study, the researcher encounters some<br>constrain which limited the scope of the study;</p><p><b>a) AVAILABILITY OF RESEARCH MATERIAL:</b>&nbsp;The research material available to the researcher<br>is insufficient, thereby limiting the study &nbsp; &nbsp; &nbsp; </p><p><b>b) TIME:</b>&nbsp;The time frame allocated to the study does not<br>enhance wider coverage as the researcher has to combine other academic<br>activities and examinations with the study.</p><p><b>c) Organizational privacy</b>:<br>Limited Access to the selected auditing firm makes it difficult to get all the<br>necessary and required information concerning the activities.</p><p><b>1.7 &nbsp; &nbsp; <br></b><b>DEFINITION<br>OF TERMS</b></p><p><b></b></p><b><p><b>RELATIONSHIP</b>: A strong, deep, or close association or acquaintance<br>between two or more people. Correlation and dependence, <em>relationships</em>&nbsp;in mathematics and statistics between<br>two variables or sets of data.</p><p><b>COMPENSATION: </b>Something, typically money, awarded to someone<br>in recognition of loss, suffering, or injury.</p><p><b>EMPLOYEE:<br></b>An individual who works part-time or full-time under a<br>contract of employment, whether oral or written, express or implied, and has<br>recognized rights and duties. </p><p><b>PRODUCTIVITY</b>:<em>Productivity</em>&nbsp;describes various measures of the<br>efficiency of production. A <em>productivity</em>&nbsp;measure<br>is expressed as the ratio of output to inputs used in a production process,<br>i.e. output per unit of input..</p><p><b>1.8 ORGANIZATION OF THE STUDY</b></p><p><b></b></p><b><p>This research work is<br>organized in five chapters, for easy understanding, as follows</p><p>Chapter<br>one is concern with the introduction, which consist of the (overview, of the<br>study), statement of problem, objectives of the study, research hypotheses,<br>significance of the study, scope and limitation of the study, definition of<br>terms and historical background of the study. Chapter two highlights the<br>theoretical framework on which the study is based, thus the review of related<br>literature. Chapter three deals on the research design and methodology adopted<br>in the study. Chapter four concentrate on the data collection and analysis and<br>presentation of finding. Chapter five<br>gives summary, conclusion, and recommendations made of the study.</p></b></b></b></b></b></b></b></b></b></b></b> <br><p></p>