EXECUTIVE COMPENSATION PACKAGES AND JOB SATISFACTION
ABSTRACT
The study examines executive compensation packages and job satisfaction of fast consuming goods companies.
Precisely, the study focused on Cadbury, Nestle and Dangote Nigeria Plc. The study employed descriptive survey
method. The population of the study comprises of all management staff of Cadbury, Nestle and Dangote Nigeria Plc.
The study adopted simple random sampling technique to select the sample for the study. Data for the study were collected through the use of structured questionnaire.
The data collected were analyzed through the use of descriptive statistics of mean and standard deviation while the hypothesis was tested using regression techniques. All analysis was carried with the aid of SPSS. The result from the
analysis reveals that executive compensation packages such as long term incentive and retirement plan has positive
and significant effects on job satisfaction of fast consuming goods companies. It was also found out that annual
incentives, bonuses and supplemental retirement plan has negative and significant effects on job satisfaction of
management staff of fast consuming goods companies. It was recommended that Fast consuming goods companies
should encourages long term incentives plan and retirement plan for their management staff as it increases job satisfaction for the management staff.
CHAPTER ONE
INTRODUCTION
1.1 Background to the study
In contemporary organizations, employees are the main resources through which all the other objectives are
achieved. There are various classes of employees in organizations today and their job satisfaction promotes
effectiveness. Millan (2011) argued that employees in US will demonstrate pleasurable positive attitudes when they
are satisfied with their job. Thus, high job satisfaction will increase the productivity of an organization, in turn
increasing the organizational overall performance. When not satisfied, employees on their part become nonchalant
about their work duties which invariably have negative impact on performance of the organization.
According to Bozeman & Gaughan (2011), the perception of being paid what one is worth predicts job satisfaction in
Ghana. They further state that there is a positive significant relationship between executive compensation and job
satisfaction. Job satisfaction is perceived as an individual’s attitude and behavior towards aspects of his own
job. Personal job satisfaction is an affective or emotional response toward various facets and outcomes of
one’s job, meaning that personal satisfaction in relation to a job is not unitary, as a person may be satisfied with one
aspect of his or her job and dissatisfied with the rest.
According to Adamaechi & Romaine (2012) job satisfaction is very essential in any kind of group or organisation in
Nigeria and it can mean the difference between success or failure of any group or joint activity. Hence for enterprise
to achieve its goals employee job satisfaction such enterprise must adequately compensate the workers.
According to Popoola (2007), in the 21st century people pay much attention to their life style and the money they
earn from the work than their predecessors. However, it remains unclear whether many of them would continue
working, if it were not for the money they receive Employee expectations of a compensation plan are that it is fair and
equitable, that it provides them with tangible rewards commensurate with their skills and further, provides
recognition and livelihood.
Executive compensation, in today’s organizations in France, is a major consideration in Human Resource
Management, and how it is allocated sends a message to the top employees about what the organizations
believe to be important and worth encouraging (Rodgers & Gago 2013). For employers, the executive compensation
usually represents a sizeable proportion of operating costs. However, some employers view this only as a cost,
while failing to consider the strategic benefits of a well-considered executive compensation and benefits plan.
Executive compensation therefore, is a critical element of human resources management system in South Africa,
and should be designed to work together with other elements of the system (for instance, organizational goals,
professional development, principal leadership, worker recruitment and selection) to enhance performance
(Dulebohn & Werling, 2007). Money not only helps people to attain their basic needs, but it is also instrumental
in providing higher level need satisfaction as observed by (Dulebohn & Werling, 2007). As a result, most
employees value work according to how much they gain from it.
It is important to note that both managers and subordinates are working towards the goal of ensuring organizational
profitability to ensure their pay and compensations. The researcher is suggesting that job satisfaction is worth
considering when especially when executive compensation package policy is in place in the organization. In Nigeria,
executive compensation packages differs substantially from typical pay packages for either hourly workers or salaried
management and professionals in that executive pay is heavily biased toward rewards for actual results (Akindele,
2014). Hence if a company underperforms, the executives typically receive a smaller fraction of their potential pay.
Conversely, if a company meets its annual objectives and the stock price responds long term, the executives stand to
receive a much larger payout. There is no doubt on the fact that any manager that receive poor pay must surely force
the subordinates into serious work without much consideration for their welfare. Executive compensation package is
structured to reward company performance and align executive pay with shareholder value. As a result, unlike most
other employees, a majority of executive pay is at-risk; in other words, executives may never receive it. However, if
executives and the company perform well, they along with the company’s shareholders stand to gain much more from
superior performance. Based on all all these facts, the research found it worthwhile to examine executive
compensation packages and its effect on authoritarian management style in selected fast consuming good company in Nigeria.
1.2 Statement of the problem
Several studies have failed to examine the issue of job satisfaction from the frequent adoption of executive
compensation packages in organizations. Executive compensation has a great impact on productivity. To achieve
effective work performance calls for job satisfaction among the workers. In Nigeria, there have been a lot of
complaints about performance of organizations due to economic crises. The performance and productivity of
organizations is the determining factor in executive compensation, hence, job satisfaction of top staffs might be
hinged on the performance of the company. In this scenario, pay promotion, incentives, autonomy and comfort are the hallmark of job satisfaction. Although, this
might be driven by the organizational policy of executive compensation packages, a situation whereby the annual
incentives and bonuses, long term incentive plans, retirement plans and supplemental executive retirement plans
which are particularly determine the financial performance of the organization. Therefore, managers are left with their
abilities to satisfy their employees in order to ensure high productivity that will eventually secure their future. Most
multinational companies, especially those producing fast consuming good utilizes executive compensation package
with motives of ensuring workers job satisfaction. However, the researcher has seen the need to examine executive
compensation packages and job satisfaction in fast consuming goods companies since no academic has been
conducted on it all over the world.
EXECUTIVE COMPENSATION PACKAGES AND JOB SATISFACTION