: INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Compensation is the consideration that an employee get or receives

for it effort and commitment towards the achieving the organisational

goals and objectives.

Performance refers to the degree of accomplishment of the task that

make up an employee’s job it reflects how well an employee is

fulfilling the requirement of a job.

An organisation can reinforce the impact of his kind of performance

management by linking compensation in part to performance

measures.

A number of methods for doing this including merit pay gain sharing

and profit sharing. Organisation can improve productivity by linking

bonuses to sales volume employees’ shares.

Compensation system also can help to create the conditions that

contribute to high performance including team work empowerment

and job satisfaction and it can be linked to achievement of team

objectives.

Organisation can increase empowerment and job satisfaction by

including employee in decisions about compensation and by

communicating the basis for decisions about pay. When the

organisation design a pay structure it can set up a task force that

includes employee with direct experience in various types of jobs.

Some organisations share financial information with their employee

and invite them to recommend pay increases for themselves based

on their contributions. From employer’s point of view pay is a

powerful tool for meeting the organisation goals. Pay has a large

impact on employee attitudes and behaviours. It influences which

kinds of employee are attracted to (and remain with) the organisation.

By rewarding certain behaviours it can align employee interest with

the organization’s goals. Employee care about policies affecting

earnings because the policies affect the employee income and

standard of living.

Also employees consider pay a sign of status and success. They

attach great importance to pay decision when they evaluate their

relationship with their employer. For these reasons organisations

must carefully manage and communicate decision about pay.

At the same time pay is a major cost. It share of total cost varies

widely but across all industries pay average almost one fourth of a

company’s revenues. Some organisations spend 40 percent or more

of their revenues on paying employee. Managers have to keep this

cost reasonable. Employees entering the workforce in recent years

are more concerned than their predecessors with the quality of their

work life and with psychological rewards; they will derive from their

employment pay. Therefore is a major concern in human resources

management because it provides employee with tangible

compensation and livelihood. For the employer the payroll

constitutes a sizeable operating cost.

Furthermore compensation motivates the employee and encourages

them to put in their best for the achievement of organisation

objectives.

1.2 STATEMENT OF THE PROBLEM

An effective compensation does not end with pay alone it also

involve certain benefits which employees enjoy so as to boost their

morale to remain in the organisation and achieve it objectives.

It is important that the management gather data in order to ascertain

the degree of commitment satisfaction and performance of they

enjoyed.

However one of the most serious problems militating against the

development of appropriate compensation on employee productivity

in an organisation consists of employing non specialist or non

professionals. Consequently an organisation will continue to find

itself incapable in area of sound decision making on compensation

formulation.

The study makes an attempt to evolve an appropriate and realistic

compensation on employees’ productivity toward achieving the

organisational objectives through sound compensation on employees’

productivity.

1.3 OBJECTIVES OF THE STUDY

1. To analyse the impact of compensation on employees

productivity.

2. To appraise the various forms of compensation used by the

organisation to motivate their workers to higher performance.

3. To find out the impact of compensation on employees job

satisfaction.

4. To find out the factors that determines the compensation policy

of an organisation.

1.4 SIGNIFICANCE OF THE STUDY

The finding of this study will be at great importance it will highlight

the importance of compensation on employees’ productivity in an

organisation.

1. To student: This research will serve as a reference material for

learning among students who may carryout in future research

on similar topics in seeking ways of improving employees

productivity.

2. To the general public: It will assist them to understand the

concept of compensation and it’s impact on employees’

productivity.

3. The research is a prerequisite for completion of Higher National

Diploma in Business Administration in Kaduna Polytechnic.

1.5 RESEARCH QUESTIONS

1. What is the impact of compensation on employees’

productivity?

2. What are the various forms of compensation used by the

organisation to motivate their workers to higher performance?

3. What is the impact of compensation on employees job

satisfaction?

4. What are the factors that determine the compensation policy of

an organisation?

1.6 SCOPE OF THE STUDY

It is very important to state here that the concept of compensation on

employees’ productivity and its relevance to any organisation is a

crucial and large concept with multiple approaches in the

organisation.

The researcher has therefore kept the scope of the study to focus on

the impact of compensation on employees’ productivity. It also

looked at the various forms of compensation used by the Nigerian

Breweries Plc Kaduna south area. This is to enable the researcher

meet with time and to minimize cost.

1.7 LIMITATIONS OF THE STUDY

The response of workers in Nigerian Breweries Kaduna Branch is

not encouraging only few of the workers answer the questions on

questionnaire and the information as they termed it confidential to the

management.

Literature on the subject matter though available but having it at the

right time was the problem encountered at the course of carrying out

the research work.

Low return rate of questionnaire by the staff was another problem in

the course of research.

Time: the limited time within which the research work is to be

completed also a limiting factor.

Finance: Inadequate finance at the course of carrying out the

research work.

One other problem is the issue of adequate information or data

collection; some of the officials wanted to give certain information that

was not available at the time of visit.

1.8 DEFINITION OF TERMS

These are some of key terms abbreviation and words that are used

throughout this study which make their meaning that listeners

interpretation for the readers guidance and clear understanding. The

researcher hereby identified and explains the following reoccurring

ones as follows:

Compensation: All forms of financial returns tangible savings and

benefit employees’ services as part on employment relationship.

Efficiency: The positive ration of output of work performed to the

total expected.

Productivity: A job done or performed by a man in the presence of

natural resources machine labour money and entrepreneurial

ability that leads to proper achievement.

Incentives: Compensation approaches that reward specifies

outcomes.

Gain Sharing: Matches an improvement in performance with a

distribution of the benefits with employees.

Benefit and Service: All employers provide reward and services

other than wages and salaries and other direct compensation.