THE IMPACT OF EFFECTIVE COMPENSATION ON THE EMPLOYEES PERFORMANCE (A CASE STUDY OF GENERAL COTTON MILL ONITSHA ANAMBRA STATE

TABLE OF CONTENTS

Title page

Approval page

Dedication

Acknowledgement

Table of content

Abstract

CHAPTER ONE

1.0    Introduction

  • Background of the study
  • Statement of problems
  • Purpose of the study
  • Significant of the study
  • Research questions
  • Scope of the study
  • Definitions of terms

CHAPTER 2

Literature review

2.1    Theoretical framework

2.2    Conceptual framework

2.3    Summary of literature reviews

CHAPTER 3

RESEARCH METHODOOGY

  • Research methodology
  • Design of the study
  • Area of the study
  • Population of the study
  • Sample of the study
  • Instrument for data collection
  • Validation of the instrument
  • Method of data analysis

CHAPTER 4

Data Presentation And Analysis Questionnaire Analysis For Workers

CHAPTER 5

Summary of Findings, Conclusion and Recommendations

  • Summary of findings
  • Conclusion
  • Recommendations
  • Limitations of the study
  • Suggestions or further research

References

Questionnaire

Appendix

ABSTRACT

This study examined the impact of effective compensation on the employees performance. Total compensation is a concept which is not usually given attention in many organization. Compensation is mostly viewed as cash and therefore other aspects are neglected viewing compensation as a holistic system to manage for productivity is pertinent to organizational development. The researcher used questionnaire that is carefully designed and administered to the respondents for secondary data. Information were both gathered from libraries and other research units. All information gathered from both sources were later arranged and presented in textual and tabular form and also analysis using percentages. The major findings of the study are: Individual employees requires different motivational techniques in order to be motivated. Incentive and fringe benefit are considered effective in improving performance. Employees are motivated to improve their performance when organization applies the integration the individual objectives with the corporate goal from the foregoing therefore, the researcher concluded that effective compensation has significant impact on workers performance. Major recommendations of the study are due to the rising cost of linking, employees should be compensated and encouraged. This should be through awards, business extra payment for overtime work etc. this will motivate them and result to a high productivity. Promotion should be on merit not by familiarity and relationship when promotion is by merit people are satisfied and happily murmuring and every one will work hard for their own promotion.

CHAPTER ONE

1.0   INTRODUCTION

1.1   BACKGROUND OF THE STUDY

This academic work is based on the impact of effective compensation on the employees performance in Onitsha Cotton Mill Limited, Anambra State, Nigeria apparently, there are different needed among employees that must be achieved through compensation received. It is very pertinent that organizations should strive hard to effectively compensate their workers for motivational reasons which will help in the achievement of organizational goals and objectives.

The study falls within personnel management and personnel management according to Flippo 1986 is defined as the planning, organizing, directing and controlling of the procurement, development, compensation, integration, maintenance and separation of human resources at the end tht individual organizational and societal objectives are accomplished.

It can also be defined as money received for the work performance plus other kinds of benefits and services that the organizations provide for their employees, compensation is recompense, reward, wage or salary given by an organization to person or a group of persons in return to work done, service rendered or a contribution made toward achievement or organizational goal.

BRIEF HISTORY OF GENERAL COTTON MILL LIMITED ONITSHA, ANAMBRA STATE

General Cotton Mill Limited, Onitsha anambra State is a textile manufacturing company that is known with the sales of textile and textile products.

The company was incorporated on the 10th April, 1964 RC 3782, located at Niger bridge Industrial Layout, Onitsha and also has one of its branches at Bloc 4A, Apapa lane, Dolphin Estate Ikoyi, Lagos, having Chief Nolla O. Edun as its chairman, R.N.W. lee (U.S. citizen) as its MD / CEO and also F.A Enechukwu Deputy managing director.

It is a textile company offering composite textile Mill producing African prints, or fabric materials with spinning, weaving, and printing division producing cotton yarn with a good number of employees at its service.

Cotton as a resources is a miracle fibre that has been spun, woven and dyed since ancient times and it is still the most widely used fibre clothing, it is soft and fluffy, and grows in a boll around the seeds of the cotton plant. Cotton can be used for many products like: clothes, beddings, tabletops, furniture’s and even arts etc.

DEPARTMENT OF GENERAL COTTON MILL LIMITED

According to the structure

R & D centre (Research and Development)

They are in-charge of studying and adopting new technologies, innovation, development of new kinds of production, new methods of production and quality control.

Sales department: Their work consists of organizing production sales, attraction of new buyers and partner registration of export operations, contracts on local markets control of shipment and delivery of goods/contained

Purchasing department: they provide purchases from the local and foreign markets, declarations and also registration of import contracts and customs documents.

Financial and Accounting department: They handle the registration of financial operations, accounting report, production cost, payment system, vouchers, bank operations, payment forms, delivery of salary and works with plastic cards.

Corporate Planning department: These are the department in charge of planning and organization of company projects, works with company werb-site, public relation, making of business plan (statistics) organization of charitable actions and company events.

Cotton purchasing department (Cotton Team): They do the

Identification and selecting of raw materials of the best quality for further production. Conclusion of raw materials delivery contract.

Personnel and salary departments: They provide the process of salary calculation, registration of salary documentation, the conclusion and the termination of labour contracts, wages ratifying, personnel selection also.

Tashkent office: Realization of export transactions, attraction of new potential partners and clients, control on registration of export documents and shipments, i.e delivery of production and payment of all shipment carried out by the collective of the Tashkent office.

The study with the departments has a total population of (900) workers in general cotton mill Nigeria Limited Onitsha.

S/NDEPARTMENT NUMBER OF STAFF
1.Accounts100
2Commercial dept180
3Admin100
4Production300
5Labour committee80
6Cooperate planning100
7Personnel & salary40
Total900

1.2   STATEMENT OF THE PROBLEM

Certain conditions or factors can make workers to perform effectively or ineffectively on their jobs. It has been observed that a number of factors seems to be responsible for job dissatisfaction among workers. They includes lack of interest in the jobs poor salaries poor conditions of service and lack of fringe benefits.

General Cotton Mill Limited workers tend to be affected by the factors enumerated above. It has also been observed that as a result of lack of compensation as a motivational factors there is growing shortage and loss of competent hands in general cotton Mill Limited Onitsha in particular. In the study, on the effect of compensation on the performance of workers in Onitsha Cotton Mill Limited Anambra in particular tends to find out what compensation service have to do in motivating workers.

This study is faced with the problems of finding out the importance of compensation to workers but equal knowing how adequate is that compensation towards effort workers are putting towards achieving the organizational objectives, therefore, this study has on the performance of workers on business organization.

1.3   PURPOSE OF THE STUDY

The core purpose of the study is to point out some of those things that could aid compensation if the organization wants to achieve it’s set goals and objectives.

  1. Identify factors in the organizational structure that could affect managerial effectiveness.

2       To determine whether there is problem in the design of the department within the organization.

  1. To find out if the level of education of subordinate influence the way a manager structures his department.
  2. To identify the links between the above variable and the manager degree of effectiveness in meeting up the objectives he is expected to achieve.
  3. To structure out ways in which managers can work towards achieving a better compensation is unfair or inadequate.

Finally, attention should be given to the topic if the organization wants to achieve it’s goal and objectives.

1.4   SIGNIFICANCE OF THE STUDY

The findings from this study would serve as good reference material to educationist. It would serve as a good material for people studying human relation as it affected by compensation. It would be a good reference material to those in the research institutes that would be future practicing managers in piloting the affairs of the organization. It would also serve as a good materials for policy makers to help improve their subsequent policy formulations and planning.

The employees themselves would also find this study very useful. This would not only give them idea on what to expect management to do for them, but it would serve as guide enable them strive toward a greater performance as it would be in a position to compensate them adequately.

1.5   RESEARCH QUESTIONS

  1. What is compensation?
  2. Are compensation given to workers adequate ?
  3. Does compensation help to retain your ends period of time?
  4. Is your pay in the organization commensurate to your productivity performance?
  5. Does the promotion system in the organization inspire to higher productivity?
  6. Do the management provide adequate transport?

1.6   SCOPE OF THE STUDY

In order to carry out their study, the following scope have been formulated the help to generate data required for analysis.

When employees receive basic compensation, as equitable, hey increase their peformance if not they will not.

When management gives to he workers the incentive they will increase their performance, if not, they will not.

1.7   DEFINITION OF TERMS

Management: This is the process of planning, organizing, leading, and controlling the effort of an organization members, making use of organization resources to achieve its objectives. As postulated by Edward Flippo.

Reward: This is a system that consists of an organization integrated policies process and practices for rewarding its employees in accordance with their contribution skills competence and their market worth.

Compensation: Compensation may be defined as money or any kind of benefits received for the performance of work.

Motivation: It is the inner drives that arouse direct and maintain an individual behaviour toward accomplishing a goals.

Organization: This is a social unit of people that is structured and managed to meet a need or to pursue collective goals.

Promotion: This is a cause, venture or aim activity that supports or encourages.

Adequate: As much as or as good as necessary for some requirement or purpose fully sufficient, suitable etc.

Strategy: The basic goal and objective of action chosen to reach those goals and objective and the allocation necessary for carrying out those goals.

Planning: This is the process of thinking about an organization, the activities required to achieve a desired goal.

Productivity: Is an average measure of the efficiency of production a measure of the efficiency of a person, machine, factory, system, etc.

 

CHAPTER TWO

2.1   REVIEW OF RELATED LITERATURE

THEORETICAL FRAME WORK

Psychologist hold the view that there is never a response without a stimulus, therefore the statement that compensation are the life wire of an organization is not an overstatement.

According to Fredrick Hersbeb (1959) in his tow factors theory of motivation classified compensation under “Hygiene factor or maintenance factor, which include adequate salary, working conditions security and fringe benefit. He further stressed that when these factors exist in the environment of work both quantity and quality the worker will experience no dissatisfaction.

From the above, it is under understanding that the amount of effort which workers put in his job is based on the expected award, for the work he is doing will be little, he will put little effort in doing the work while on the other hand if the expected reward is to be much he will put more effort.

The perception of unfairness in the compensation system by Nigeria workers has being one of the major factors that hamper the performance of general cotton Mill Limited Onitsha, Anambra State.

According to Igboeli (1990) direct compensation are used by many companies to satisfy they managers desire for increase income.

Indirect compensation is also called differed payment for compensation by Igboeli in his book.

FUNCTIONAL APPROACH TO MANAGEMENT

Ifeanacho and Egbue (1997) hold the fact, that fair compensation programme is one that is responsive of the managerial and economic objective also ensure acquisition and maintenance of a regular and adequate supply of labour.

They further stress that an ideal compensation structure is one that is design to compensation workers adequately for their contribution and at the same time enable firms make responsible profit.

General Cotton Mill Limited Onitsha, Anambra State in particular, is seen that compensation is often based on some other criteria that is full of bias such as year of service and all that. Those that have been working less seeing the fast workers gain for working harder will be induced to work, the above principles has not been the case in general Cotton Mill Onitsha, Anambra, State instead favourism, nepotism, tribalism, god fatherism and the likes has been rules.

Kate (1975) enumerated the three conditions conductive for effective individual instrumental reward they are:

  1. They must required performance and follow directly on his accomplishment.
  2. They must be many of whom will not receive them.
  3. They must be amount to justify additional.

Druker (1969). Talked of compensation organization by stating that good spirit requires that there must be full scope for individual excellence. Whenever excellence appears, it must be recognized, encouraged and reward and must be made productive for all other members of the organization.

The perception of unfairness in the compensation system by Nigeria workers has been one of the major factors that hamper the performance of general Cotton Mill Limited Onitsha Anambra State. Most of the workers felt that outcome of their effort is not equal to their input and hence they tend to put in less effort in order to counteract the imbalance.

Finally, hazardous unpleasant working condition, such jobs constitute serious health hazard to job holder or that require one throwing his pride to the world should attract higher remuneration than that job in such category that are not hazardous.

2.2   CONCEPTUAL FRAMEWORK

Compensation affected by forces as diverse as labour market factors, collective bargaining, government legislation and top management philosophy regarding pay and benefits. Compensation is recompense, reward or salary given by an organization to persons or a group of persons in return to a work done, service rendered or a contribution made toward the accomplishment of organizational goals, wage, clearness, allowance, bonus and other allowance are examples of monetary compensation while good accommodation, children’s education, transport facilities subsidized nation of essential commodities etc. Come under non-monetary compensation, in short wage or salaries paid to white collar employees can be classified as compensation.

According to Opsahl et al (1996) the effectiveness of incentive plans in general depends upon the workers knowledge between performance and earning. Lack of this knowledge is one of the causes of failure in incentive scheme. This implies that in order to increase the performance of a worker doing a particular job, he has to be assured by management that increased performance would bring to him a commendable increase in reward. A worker always expect that whenever efforts towards his job is increased, management should follow suit by increasing his compensation. This would help to stability the incentive plan of the organization.

According to Flippo (1960) compensation is defined, “As the equitable remuneration of workers for definition of Flippo, a fact is disclosed that remuneration for a worker is compensation and it should be equitable. Rewarded or compensated, his worth must be ascertained. He also stated that the following factors are identified as what influence compensation programme in an organization can go.

The prevailing wages and salary in the industry external competitiveness requires that compensation be comparable with that of other firms in industry. Thus, wages and salaries administered in the firms are expected to be in line with that of other firms in similar nature to avoid the ugly experiences of incessant labour turnover and to motivate employees to superior performance.

Again, firms financial situation, firms financial position also determines the pays to be attached to various jobs. And organization that has sound financial muscle, for example can also afford to pay even above going or competitive rate to attract and retain experience seasoned personnel.

Thirdly, cost of living in hyper-inflationary situation as is being experience in Nigeria and most countries presently, workers naturally will agitate for enhance salary packages to cushion the effect of an inflation.

According to Herzbery (1984) he believes that satisfaction are related to success. He also contends that salary increase can de-motivate if the increase is tried to the success or increase and improved performance.

This is not the case with the organization under sturdy, salaries are increased as a routine exercise as long as he worker complete a specified number of years in the organization. This implies that the compensation system is not based on rate rather it is based on the number of years served.

This by no means increased the performance of the workers in the organization, and this is because as the workers believes he is to be promoted after some years, he see no reason for working harder.

The data obtained form the exercise help management in taking rational decision in such thing as promotion, emotion, transfer, dismissal, termination retirement, training etc of concerned employees.

Job evaluation, the second scheme of equitable compensation is systematic procedure for ascertaining the requirement of various job factors such as skills, efforts responsibility for the purpose of ranking them in their relative worth so as to ensure that job holders are equitably compensated.

British institute of management (1990) said job evaluation is the process of analyzing and assessing the contents of jobs in order to place them in an acceptable rank order which can then be used as basic for a remunerate system.

“Job evaluation therefore is simply a technique design to assist in the development of new pay. Structures by definition relative between job not consistent and systematic based Livy (1997)establishment of equitable rate of job is quite crucial for the survival and growth of any firm because it helps to acquire and retain the services of experience staff. This has been the contention of Shubin 1960 in stating that evaluation is crucial for were are made to understand here, that people should not be paid for what they did work in order for fairness to excel, workers to receive salaries and wages only offer the work they have to be paid for, to endeavour them perform more in order to be paid more.

According to Lawler (1975) in his employees motivation, there Is an industrial objectives probability that directs a given amount o effort towards performing effectively, which result in his obtaining a given reward or positively valued or outcome. This effort reward probability that effort will result in reward. It is an evident form the above that forgiving reward to an employee, reward values the efforts and motivation thus increases.

Efjifor (1984) no matter how good or efficient people who make up the organization are motivated to work. The impetus may be totally internal to the employees, but often it requires the establishment of logical wages and salary differentials has been established, compensation patterns are often irregular and chaotic since they will have to involve traditional attitude arbitrary decisions, expediency and favourism. In such a situation therefore jobs that requires consideration effort, skills, and employees performing, save jobs may receive widely varying compensation.

Morale is consequently low and performance poor since employees perceives there is inequalities and management cannot explain the inconsistencies on a logical basis.

Reward granted to candidate who exhibit interest and activity in development should be appropriate with benefits granted to those who do not put in their effort or best in employers to expert an internal stimulus. No worker will be expected to work unless he is assured that he is to receive an equivalent for the effort he put into his job. If the workers does not expect any reward from his job. He is asked to do, he cannot be expected to do anything for the continued existence of the business organization. Workers have to be motivated to perform towards achieving the organizational goal, but if they are not assured of something in return for the work they do, they can never perform well.

2.3   SUMMARY OF LITERATURE REVIEW

Employees are assets of an organization. This research study deals with identifying the impact of compensation system on employees.

Organizational productivity depends on the employee’s performance. If employees problem are addressed properly organizational productivity will surely increase. The study depicts the relationship of variables as job performance of employees with performance appraisal, job security, reward system, job satisfaction, organizational productivity and employee turnover. Due to this variables. It is easy to identify the common problems of employees n organization. Proper management of employees by giving them incentives, and reward system and also showing concern with their work life balance proves to be productive for an organization.

Furthermore, providing creative environment in the organization can enhance their skills. In this regard HR (Human Resources) department plays a very vital role in many organizations solving the issues of employees and organizational growth.

Finally, organizational productivity mainly depends on the commitment of employees. It will be made strong when there will be less turnover rate and soft approach is applied with employees. Compensation itself stimulates employees to work much harder to increase productivity.