COMPENSATION MANAGEMENT AS A TOOL FOR IMPROVING ORGANIZATIONAL PERFORMANCE IN THE PUBLIC SECTOR

CHAPTER ONE

INTRODUCTION

• Background of the study

The compensation of employees at all level has become one of the major functions of human resource management. It is one of the most important, complex and problematic issues in managing human resources in any organization. Every business enterprise that wants to gain competitive advantage over its competitors must attract the services of high quality employees. According to Faraland (2001) ‘Man is a rational animal covered with maximizing his economic gains’. He continuously put forth effort to satisfy his personal needs ranging from physiological needs to self-actualization.

Maslow (1970) states that it is the way to desire to satisfy the needs that motivate workers into higher performances and productivity, they strive to increase their output and efficiency in order to acquire the means for satisfying these needs.

Mutter & Donald (2003) describes remuneration as payment system based on effort, performance and productivity in essence; remuneration refers to salary or wages and the allowance and financial benefits payable to employee, either in cash or kind in return for his service. In a nutshell remuneration is the price of labour. Essentially, employees work to produce reward for their performances. Thus, the exchange of labour for financial reward is the heart of the compensation process. However, formal compensation can be offered using three types of reward namely; Pay, Incentives and Benefits.

Compensation management is an integral part of management. Compensation management is a systematic approach to providing monetary values to employees in exchange for work performed. It may achieve several purchases assisting in recruitment, job performance and job satisfaction. It is an organized practice that involves balancing the work employee relation by providing monetary and non monetary benefits to employees. It is a tool used by management for a variety of purpose to further the existence and growth of the company. It may be attuned according to economic scenario, the business needs goals and available resources.

Compensation management contributes to the overall success of the organizations in several ways. To be effective, the managers must appreciate the value of competitive pay, to maintain and retain quality employees while recognizing the need to manage pay roll costs.

An effective compensation package has a combination of direct and indirect compensation. Compensation management programs often include salary range for each position, with incremental increases and annual reviews. During these review sessions, both type of compensation management are addressed and presented to the employee as part of the total package. The field of compensation management provides management with the ideal combination of different remuneration types. The purpose of these types of program is to retain and motivate good employees

1.2.        STATEMENT OF PROBLEM

Non availability of staff buses to conveniently covey workers from their various areas to make sure the meet the resumption time. Apart from this, cafeteria is a place where food is served, bought and eating during the break time, but this facility is lacking in organizations. Irregular promotion or advancement for workers upgrade has become a threat worrying the workers. Workers complain have taken over the organization, some of the workers complain to have been in one position over 4 – 5 years, while some of their colleagues get rapid and regular promotion. This act is the outcome of God’s fatherism and man know man. The less privilege seldom gets their promotion. The term work environment encompasses different aspects such as physical work environment, management attitude towards employees, relationship with colleagues and working condition. Recent research has highlighted the hypothesis that an employee’s work environment can have a dramatic effect on his or her performance and attitude to work. In addition to physical attributes of a work, place, hostile work environment is like cancer that can eat through the core.

Teamwork is often viewed as a collaboration condensing individual contributions into cohesive outcome. The term ‘Self directed work teams have been used since the 1950s to describe teams of employees working together toward one common goal. In the typical work environment like Lagos State Internal Revenue Service [LIRS], a self directed work should be encouraged in employee’s work life for a greater performance. Also, workers complained there is inadequate remuneration and incentives to commensurate with the nature and importance of the job they perform. Employees look forward or anticipate certain rewards from management which are not forth coming. There should be differentiation in pay due to our region, skills, talent and capacities as well as a business overtime payment and retirement e.t.c.