THE IMPACT OF COMPENSATION POLICY ON ORGANISATIONAL PERFORMANCE IN NIGEIRA

(Business Administration and Management)

THE IMPACT OF COMPENSATION POLICY ON ORGANISATIONAL PERFORMANCE IN NIGEIRA

(A CASE STUDY OF FIRST BANK OF NIGERIAN PLC ENUGU)

 ABSTRACT

In all organisation, productivity is based on the design of the compensation variables to balance among various management levels.  There are several compensation variable that could motivate people to work to their optimal level and when these variables are not there, their productivity will greatly affected, this may come in the form of a will packed remuneration, still others may not necessarily be motivated with a well packaged compensation scheme the group believe that “money is not everything”.  First Bank of Nigeria Plc is not an exceptional

            In generating data needed to achieve the objectives of the study, descriptive survey research design was adopted.  Questionnaire was used as the major instrument for primary data collection.  To broaden the researcher depth of  knowledge in the study area the researcher embarked upon review of related literatures with data drawn from secondary sources.  Data generated in the study was presented on frequency tables and analysed using simple percentage while the hypothesis  were tested with z test.

            It was realized at the end of the research work that most organizations can not get the best out of their workers or attain their organizational goals and objectives because of absent of adequate compensations, workers are not allowed to joint in deciding affairs that concern them etc. arising from the findings, the study recommended  that monetary compensations apart from other types of compensation  the used by the organization, effective administration  of compensation schemes and participatory management should be encouraged.

            Finally, the study concluded that monetary compensation make the workers satisfied with the treatment given to them, the organization will achieve its goals, targets and objectives in a very short time.

 

 

 

TABLE OF CONTENT

CHAPTER ONE:  INTRODUCTION                                           

1.1         Background of the study                                       

1.2         Statement of the problem                                      

1.3         Purpose of the study                                                          

1.4         Scope of the study                                                  

1.5         Research question                                                 

1.6         Research Hypothesis                                                        

1.7         Significance for the study                                     

1.8         Limitation of the study                                                        

References                                                              

CHAPTER TWO: REVIEW OF RELATED LITERATURE                

2.1         Meaning and Concepts of compensation Schemes    

2.2         Types of compensation scheme practiced in organisation

2.3         Compensation and Productivity                           

2.4         Compensation Policies and practices in organization

2.5         First Bank of Nigeria compensation schemes               

References.                                                                                     

CHAPTER THREE: RESEARCH DESIGN AND

METHODOLOGY                                                                                       

3.1         Research Design                                                                                        

3.2         Areas of the study                                                               

3.3         Population of the study                                         

3.4         Sample and sampling process                                         

3.5         Instrument of data collection                                                        

3.6         Validation of the study                                                       

3.7         Reliability of the instrument                                              

3.8         Method of data collection                                      

3.9         Method of data analysis                                                    

CHAPTER FOUR: DATA PRESENTATION & ANALYSIS

4.0         Data presentation and analysis                                       

4.1       Presentation and analysis of data                                               

4.2         Testing of hypothesis                                                                     

4.3          Summary of results                                                           

CHAPTER FIVE: DISCUSSIONS, CONCLUSIONS AND RECOMMENDATION                                                                         

5.0         Discussion, Conclusions and Recommendation         

5.1       Discussions of results/Findings                                      

5.2         Conclusion                                                                                      

5.3         Implications of Research findings                                               

5.4         Recommendations                                                             

5.5         Suggestions for further Research                                               

Bibliography                                                                        

Appendix                                                                                          

Questionnaires                                                                   

 

CHAPTER ONE

INTRODUCTION

            Sometimes, one wonders why some people perform more than others on the job or better still why people work hard. Man in his natural form is somehow lazy and always tries to gravitate towards his comfort zone unless some kind of force or situation confronts  him it is this force or situation that  arouses his desire to move out of this comfort zone in order to avert negative consequences or reap a positive reward as the case may be, this force of situation now becomes the motive for his working towards his set target (motivating factor)

            Given the above illustration, management scholars have tried define what motivation is all about

The Webster Encyclopedic Dictionary of the English language (1995) said that motivation relates to the sense  need to fear etc, that prompts and individual to act.  Also, Wole Adewunmi (1992) defined motivation as “the liner stimulus that induces one to behave the way he does”.  It has to do with that inner state that energizes, activates or moves and therefore directs behaviour towards goals.

In all organization, productivity is beckoned on the design of its compensation variables to balance among various management levels, there are several compensation variable that could motivate people to work to their optimal level and when these variables are not there, their productivity will be greatly affected.  This may come in the form of a well packaged remuneration.  Still others may not necessarily be motivated with a well-packaged compensation scheme the group believe that” money is not everything”.

            Starke (1976:35) is of the opinion that “people work for  broadly defined rewards”, these rewards can be broken down into two general classes known as intrinsic and extrinsic  rewards

            Extrinsic rewards include figure pay proportion, compliments e.t.c, and are often independent of the task performed and are controlled by other people. Intrinsic rewards on the other hand include the feeling of accomplishment of task and is administered by the individual doing the task however, workers performance in an organization depends on these rewards among other compensation which may one way or other command job satisfaction

1.0              BACKGROUND OF THE STUDY

Compensation are objectives or goals which are capable of satisfying  what the employee views as need, drive or desire, it includes accelerated payment for improved productivity as well as environment conditions.  For example, infrastructures, transportation facilities, canteen services etc, though they do not directly provide income to workers, but are necessary for their effective performance. In other words, compensation do not only refer to wages payment but other things like job enrichment, free flow of information, good relationship among junior and senior officers.  Above all, the recognition accorded to individuals by society to their contribution also goes a long way to induce and energize them to work harder to achieve not only the organizational goals but societal goals.

It is worthy of not that such compensation like monetary rewards which may motivate the younger people who are beginners or the lower class of people in the society may not necessarily be motivating factor for some middle class and upper class of people in the society.  People in various positions, even though at a similar level, must be given compensation that reflect their individual performance and expectations.

A higher performance must be rewarded more than the lower performance for a feeling of equity to prevail.  Given this, money is likely to be a motivator.  Variables remuneration has been favoured as the means of giving employees compensation to produce or sell increased volume or to improve the quality of their performance.

In most business and other organizations money is actually used in keeping an organization staff adequately and not primarily as a motivator.  Any bonus scheme for manual workers should be related to criteria which are meaningful to the  employees and which are capable of being measured consistently.  The compensation to achieve one particular objective for example, increased volume, should not act as an compensation to worsen other standards of achievement like quality.  It is therefore, important to know what induces a worker most, as many people have different needs and aspirations. People work for various reasons, depending on what they want or what they are looking forward to achieving. Here, it is the duty of the management of any organization to find out the needs of its employees and then channel efforts toward attaining them.

            Compensation which may be seen as payment or reward for work or services rendered have been a common  feature in Nigeria establishment to which First Bank of Nigeria (FBN) Plc is not an exception.  It is therefore, the objective of this that could  motivate workers to greater achievement

            Management scholars and other employers of labour will also find this work very useful as it wound enable them to very vast of the value of compensation to performance of workers, if appropriately applied this will in effect being greater efficiency of workers if adequately employed.

            Furthermore, students and other people who wish to  carry out a similar study in other establishment will find this work beneficial as the ideals exposed in this work will be a guide in the right direction   First Bank of Nigeria Plc, for over a century, has distinguished itself as a leading banking Institution and a major contributor to the economic advancement and development of Nigeria, this bank was founded in 1894 by a shipping magnate from liver pool, Sir Alfred.

1.1       CONTINUATION OF BACKGROUND

            Jones, the Bank commercial as a small operation in the officer of Elder Dempster and company in Lagos.  It was incorporated as a limited liability company on Mary 31, 1894, with Head office in Liverpool.  It started business under the corporate name of the Bank of British West Africa (BBWA) with a paid up capital of 12,000 pounds sterling, after absorbing its predecessor, the African Banking Corporation, which was established earlier in 1892,  this signaled the pre-eminent position which the Bank was to establish in the banking industry in West Africa.  In the early years of operations, the Bank recorded an impressive growth and worked closely with the Colonial Government in performing the traditional, function of a Central bank, such as issue of specle   in the West African sub-region.

            To justify its west Africa coverage, a branch was opened in Accra, Gold Coast (now Ghana) in 1896 and another in Freetown, Sierra Leone in 1898, these marked the genesis of the Bank’s international banking operations.  The second branch of he Bank in Nigeria was in the old Calabar in 1900 and two years later, services were extended in Northern Nigeria.  With a network of 315 branches spread throughout the federation, including one in the city of London, the bank maintain the  largest branch net work in the industry.

To satisfy the needs of its customers, First Bank has diversified into a wide range  of banking activities and services, these include corporate and retail Banking, Registrar-ship, Trusteeship and Insurance Brokerage.  Over the years, the Bank has experienced phenomenal growth with a share capital of N55.6 million in 1980, the bank share capital grew to N650.385 million as at 31 March, 2000.  the Bank total asset base was N180.553 billion while its deposit base stood at N127.230 billion as at 31 March, 2000.

            To reposition and to take advantage of opportunities in the changing environment, the bank embarked on several restructuring initiatives,   In 1957, it changed its name from Bank of British West Africa  to Bank of West Africa.  In 1969, the Bank was incorporated locally as the standard Bank of Nigeria limited in the line with the companies’   decree of 1968.  Changes in the name of the Bank also occurred in 1979 and 1991, to first Bank of Nigeria limited, First bank of Nigeria Plc, respectively.  In 1985, the bank introduced a decentralized structure with the regional administrations.  This was reconfigured in 1992 to enhance this Bank’s operational efficiency.  In 1996, the Bank introduced the FBN century II project to revolutionalise its operations in line with dynamics of the environment.  FBN got listed in the Nigeria stock exchange (NSE) in March 1971 and has won the NSE president’s merit award nine times for the best financial report in the banking sector.  During the year, it also wont he first Institute of chartered accountants of Nigeria (ICAN) award for excellence in the corporate category.  The Bank has continued to be a leader in financing long term investments in the economy, which was demonstrated in 1947 when he first long term loan was advanced to then colonial government.  To demonstrate its commitment to its customers and the development of the Nigeria economy, the Bank has since broadened its loan and credit portfolios to various sectors of the economy, the Bank has improved tremendously judging from a number of parameters including number of branches,  growth in deposit base, asset size and size of loans and advances.

            Furthermore, its track record of profitability and reliability in sound banking has continually placed to Bank in its leadership position.  In line with its mission, statement “remain true to our name by providing the best financial services possible”.  The Bank will consistently transform itself as if for go ahead in its second century of qualitative banking to the nation

1.2              THE STATEMETN OF THE PROBLEM

It is fundamentally unrealistic to assume that people wound continue to find satisfaction in co-operating in organization affairs, if no interest is shown in their individual needs and problems, it is agreed that in spite of whatever gains must have been achieved in ensuring adequate compensation among workers around the world, existing compensation programmes have failed to attract, hold and motivate employee because the individual worker is not considered and he did not  participate in the planning and designing of such compensation before its execution or implementation.  However, the economic and social development of Nigeria depends to a great extent on the ability of the public services to attract and retain the services of  qualified man power.  Therefore, the concept of total compensation programme has economic, social, behavioural and legal basis or consequences.  To what extent is this recognized by the First bank of Nigeria Plc compensation scheme on the performance of workers in the company?

1.3              PURPOSE OF THE STUDY

The above problems bring to fore the following sub-problems.

(a)        What type of compensation schemes are available in First bank of Nigeria Plc?

(b)        Are employees of the company actually reaping  benefits which provides job satisfaction from these scheme?.

(c)     Is First Bank of Nigeria Plc attaining the main objectives for administering these scheme?

(d)       To examine the different types of compensation scheme put in place by the First Bank of Nigeria Plc

(e)        To do  an indepth analysis of the First Bank of Nigeria Plc.  Compensation scheme and productivity trend over the years.

(f)        To examine the extent to which these compensation scheme lead to attainment of job satisfaction and motivation  of workers.

(g)        To test the effectiveness, adequacy and relevance of these compensation schemes to the overall  performance of individual worker or group of  workers.

(h)        To examine the extent the organization is achieving its objective for administering these compensation scheme

1.4              SCOPE OF THE STUDY

This study is aimed at investigating the impact of compensation policy of the  performance  of workers in an organization.  First Bank of Nigeria Plc, Enugu as a model organization was used. Because of resource constraints, a branch of First Bank of Nigeria Plc was studies.  All the department and cadres of employees were covered in the study, to examine compensation and its administration in first Bank Plc,  the study will also evaluate the appropriateness of the programme with a view to ascertaining how they  influence workers to perform efficiently which results in an increase in the organizational productivity.  Finally, the study will also address the impact of the compensation on  existing workers as well as those that have left the organization.

1.5              RESEARCH QUESTIONS

(1)        To what extent is the effectiveness, adequacy relevance of these compensation schemes to the overall performance?

(2)        To what extent are these different types of compensation schemes put in place by the FBN Plc?

(3)        To what extent do the existing compensation programmes

failed to attract, hold and  motivate employees?

(4)        To what extent is the compensation schemes lead to attainment of job satisfaction and motivation of the workers?

(5)        To what extent are the employees of he company actually reaping benefits who provides job satisfaction from the schemes?

(6)        To what extent is first Bank of Nigeria Plc attaining the main objectives for administering these schemes.

1.6              RESEARCH HYPOTHESIS

Hypothesis have been formulated to guide the collection of data

HYPOTHESIS ONE:

(a)        First Bank of Nigeria Plc’s compensation scheme has no impact

on the employee’s job performance

(b)        First Bank of Nigeria Plc’s compensation scheme has an impact

on the employees job performance

HYPOTHESIS TWO

(a)        All Cadres of workers in First Bank of Nigeria Plc are not involved in planning the compensation scheme

(b)        All Cadres of workers in first Bank of Nigeria Plc are involved in planning  the compensation scheme.

1.7              SIGNIFICANCE FO THE STUDY

It is hoped that this study when completed will assist business enterprises in their operations and enable them to employ compensation schemes and other motivational variables that wound optimize the productivity and performance of their operations.  The study when completed will identify the motivational factors and compensation variables, if any, that are currently militating against the smooth operation of the firm in area of its job performance and productivity, that management find useful or future planning.  This work will be of assistance to the management of first Bank of Nigeria Plc as it will enable them to restructure their compensation scheme so as to reflect the aspirations and need of their workers.  Beside, it will be of great important to other organizations, since it will expose them to some of the compensation

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