THE EFFECT OF COMPENSATION ON EMPLOYEE PERFORMANCE IN NIGERIA

THE EFFECT OF COMPENSATION ON EMPLOYEE PERFORMANCE IN NIGERIA

CIVIL SERVICE: A STUDY OF RIVERS STATE BOARD OF INTERNAL REVENUE SERVICE

Okwudili, B. E.*, Edeh Friday Ogbu**

*Department of Industrial Relations & Personnel Management College of Management Sciences, Michael Okpara University of Agriculture, Umudike, Nigeria.

**Department of Industrial Relations & Personnel Management College of Management Sciences, Michael Okpara University of Agriculture, Umudike, Nigeria.

Email: edeh.ogbu@gmail.com

Abstract The present study examines the effect of compensation on employee performance in Rivers State Board of Internal Revenue. It adopted a cross-sectional research survey. Target population comprises employees of Rivers State Board of Internal Revenue Service. Accessible population for this study is 45. Sample size is 40 using Krejcie and Morgan (1970) sample size determination table. Only 32 questionnaires were completed and returned. Convenience sampling technique was adopted. Spearman Rank Order Correlation Coefficient was used with the aid of Statistical Package for Social Sciences (SPSS) version 20.0. The finding of this study revealed that direct compensation is positively associated with employee performance. Secondly, indirect compensation was found to significantly associate with employee performance. The study concludes that civil service should see compensation as a tool that will enhance employee performance. The study recommended that civil service commission should employ qualified human resource personnel that will oversee the affairs of employee compensation as this will remove the bottleneck surrounding the non-implementation of employees’ compensation. Secondly, allowances due to workers should be promptly paid to them to avoid ineffectiveness in the civil service.

Keywords: Compensation, Direct Compensation, Indirect Compensation, Extrinsic Rewards, Intrinsic Rewards, Employee Performance

Introduction

Compensation is one aspect of human resource management that has generated a lot of controversies over the years. This is as a result of its significance in employee motivation and organisational progress. Compensation plays a major role in attracting new talents. This implies that what is giving to existing workers will determine how new job seekers will be attracted to the organisation. Motivation of an employee is directly proportional to the compensation he/she receives. There is a saying that even in freetown, nothing is free which in other words mean that, no compensation no effort. It has been contended in many quarters thatretention of talents cannot be possible if management does not compensate them continually. This implies that effective compensation packages help in employee retention, which has become essential for sustaining firms’ competitive advantage (Bhattacharyya, 2007). It has also been shown that talents tend to match their commitment to the compensation they

 

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