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This research is on Compensation on Employees Performance in an Organization. The purpose of this study is to examine the important roles compensation plays in motivating employees to performance as well as ways of administering the reward system in an organization. The techniques use in collecting data in this study is both primary and secondary techniques the primary techniques involves  collection of data through the consultation of textbooks, magazines and newspaper on the subject matter. The simple percentage method was used for the analysis of respondent while chi-square was used to test the hypothesis formulated. In the case of research, it was discovered that compensation contributes to effectiveness and efficiency of organization by motivating the workers to put in their maximum effort when discharging their assigned duties. It was also discovered that compensation encourages them to be more interested in their jobs. Recommendations were made to lay more emphasis on the importance or effects of compensation in an organization.  




1.1     Background to the Study

          The business world has gradually metamorphosed into a complex sector of the society; one of the primary objectives of any business organization is the survival and growth in its operations. For this to be achieved, every employee in the organization has to be compensated to motivate them to contribute their maximum effort to the achievement of organization objectives.

          The basic tool for attracting and retaining key people of superior caliber, is to encourage workers to strive for advancement and motivating employee to perform effectively is by adequately compensating them for the job they do in the organization workers are very sensitive to unfair treatment by management because they have private needs and goals which are unique to them individually (Herbert 1980).

          Therefore there is need for the organization to employ a good policy for compensating employees in order to meet their needs which will enable them to contribute maximally to the goals and objectives of the organization. As a result, one of the traditional personnel function is to determine employee compensation having known that employees satisfaction affect the organization productivity and their tendency to stay with the organization. Compensation of employees is planned and administered by top management in the personnel department. Compensation means all forms of reward in payment or otherwise which goes to employees at all organizational levels. (Colon 1996).

          Some of the types of compensation given to employees in an organization are monetary rewards such as bonuses, salaries, commission, paid vacation and holiday retirement, pay incentives etc. non monetary reward are good working condition, interesting job recognition etc each organization has a policy or pattern of reward system in compensating is employees.

          There are many reasons for compensating or rewarding employees but the most important of the which the researchers want to deliberate on motivating them to perform. Before employees can perform effectively, he ahs to be given incentives, adequate reward to satisfy their private needs that they can easily accept the burden posed on them by their employers or those superior and also willing to contribute their quota to the achievement of the organizations objectives.

          There is a direct relationship between compensation and employees performance in view of this, the researcher has chosen First Bank Plc , Ring Road (King’s Square) Benin City as a case study to examine the effect of compensation on employee’s performance in organizations.


1.2     Statement of the Problems

Compensation plays an important role in the success of any organization. In view of this, the researcher took interest in identifying how compensation will motivate employees to higher performance in order to achieve the organization’s objectives.  The major problem is emanating from the fact that some of the employee that are highly rewarded do perform low in organizations.

In other words high compensation does not commensurate with performance in organization. Again most workers compensations do not base on monetary terms. These had over the time generate conflict of interest in some organization between management and non-management staffs of organization. Based on the above mention problems, the researcher attempt to fill the gap of knowledge.

1.3     Research Questions

     The following research questions shall be provided answers to:

(1)     Do workers satisfactions with their organizational reward system motivate them to higher performed?

     (2)     Does the increase in motivation of employee leads to higher output?

     (3)     Can compensating employees enhance their standard of living?

  1.4   Objectives of the Study

          The specific objectives of the study are;

  • (1) To determine if worker satisfaction with their organizational reward system motivate them to higher performance.
  • (2) To investigate if the increase in motivation of the employee will lead to higher output.
  • (3) To examine if compensating employees will enhance their living standard.

1.5     Statement of Hypotheses

In order to achieve the purpose of this research, the following hypothesis which are in their null (Ho) forms shall be tested.

  • (1) Workers satisfaction with his organization reward system will not motivate him to higher performance.
  • (2) Increase in motivating of the employees will not lead to a higher output.
  • (3) Compensating employees will not enhance their standard of living.


1.6     Scope of the Study

The research work on the effect of compensation on employee’s performance in an organization using the First Bank of Nigeria Plc, Benin City as a case study.

Also this research will cover the nature, purpose of compensation as well as the relationship between compensating factors affecting compensation rate and its importance to the employees. Moreover, the research will also talk about government regulation of compensation and the problems of compensation in an organization. 

1.7     Significance of the Study

This research will be of great help to First Bank of Nigeria Plc in its administration of compensation policy or reward system so as to achieve its objectives.

It is also hoped that the study will be of great assistance to personnel managers in determining a better and more use of effective ways of motivation to enhance adequate performance.

This research will also broaden the knowledge of Business Administration Students that will be interested in making use of its and the findings and conclusion in this research and also will be useful to  any person who wishes to carry out a research on similar topic.

This work will also enrich and fertilize already existing literature on the effect of compensation on employee’s performance in an organization.

1.8     Limitation of the Study

There were many problems to this study in the course of carrying out this research. One of the greatest obstacles the researcher encountered was the reluctance of officials to give relevant information that would have been of important to this study.

Furthermore, many of the questionnaires administered only fifty were filled and returned. In addition, the researcher had problem of time due to the shortness of the semester and a lot of academic assignment.

Finally, the researcher also encountered the problem of financial constraint in the course of carrying out this research.

1.9     Operational Definition of Terms

The following terms are used in this research for a clear understanding the following definitions have been given.

Compensation: All forms of reward in payment or otherwise which goes to employees at all level of the organization and arising from the employment in a work place.

Motivation: These are complex forces which start and keep the individual at work and also stir them up for higher performance.

Incentive: A general term of compensation payment.

Satisfaction: Workers or employees contention with their job.

Salaries: These are payment made to employee other than those who are hourly rated.

Workers: The total workforce of employee in an organization who carryout specific function for which they are rewarded.

Objectives: Goals which the organizations want to achieve within a given time dimension by optimal allocation of its human and material resources.

Management: All those involve in social and economical process of utilizing resources and influencing human action to get the job done.

Reward system: The pattern or method of administration of the various techniques of workers compensation, which is adopted in an organization.

Monetary reward: These are reward made in cash to employees in an organization such as salaries and wages, bonuses, commission etc. 

Non-Monetary Reward: These are rewards that are not directly made in cash to employees in an organization. Examples of such are good working condition, interesting job, recognition, promotion opportunity etc.



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