THE INFLUENCE OF COMPENSATION MANAGEMENT ON EMPLOYEES’ WORK PERFORMANCE (A STUDY OF UNILEVER NIGERIA PLC)

Background to the study

One of the most important aspects of personnel management is compensation management. It includes economic rewards such as wages and salaries and non-wage economic payments such as fringe benefits, indirect compensation, and supplementary pay. People in an industrial society where paid jobs are common seem to prefer monetary remuneration. Money can be used to purchase necessities; it can also be used to purchase power and social status, and it can be used as a motivator to work. Money is the only motivator for jobs that are neither challenging nor interesting, or that do not require much training and skill and do not offer a long-term career. A person in a paid managerial position typically has some motivation that drives him to spend his day at work. This motivation may take the form of an additional reward, the prospect of promotion, or other specific incentives that add value to his basic needs of reward and security. Compensation is recompense, reward, wage, or salary given by an organization to individuals or groups of individuals in exchange for work done, services rendered, or contributions made toward the achievement of organizational goals, and any organization that fails to adequately compensate its employees may not be able to achieve. It has a specific goal because a good compensation package is a good motivator. Hence, the Human Resources manager's primary responsibility is to ensure that the company's employees are fairly compensated.

Compensation catalyzes increased productivity. It is related to performance in which motivation determines their desire to complete job tasks. Compensation management is a fundamental task in human resource management. It is a complex task that occurs regularly, necessitates accuracy, and cannot be postponed. To achieve optimal organizational goals and objectives, compensation management necessitates the integration of employees' processes and information with business processes and strategies. Global competition is very essential to identify and retain the efficient, competent, and knowledgeable employees in the organization by developing and maintaining an effective compensation program for getting the best job performance from the employee (Akter and Moazzam, 2016). Employees are the organization's most valuable resource, and the ability of employers to attract, retain, and reward appropriately talented and competent employees determines an organization's success or failure. Employees' willingness to stay on the job largely depends on the compensation packages of the organization (Armstrong, 2016). Many people believe that an organization's most valuable asset is its human resources, which must be managed effectively to ensure increased productivity. It has also been stated that compensation management is an area of the corporate world that has received little attention, resulting in the extremely common industrial actions experienced in organizations. Compensation is critical in organizations that want to achieve their objectives and goals. Organizations that do not properly manage this aspect of human resource activity will harm their employees' overall performance and have an impact on productivity.

To achieve optimal organizational goals and objectives, compensation management necessitates the integration of employees' processes and information with business processes and strategies. Employers, their employees, and the organization and its shareholders are expected to have mutually beneficial relationships. The employer expects employees to give their all-in areas such as performance monitoring, learning to develop themselves, and adhering to rules and regulations in the performance of their assigned duties to increase productivity. They also expect their employees to be creative, to take the initiative, and to solve problems on their own. Employees, on the other hand, look to their employer or management to provide them with the tools and equipment they need to do their jobs and to compensate them fairly for the work they do and the other services they provide. It is based on the analysis that the study hopes to examine the influence of compensation management on employees’ work performance in Unilever Nigeria PLC.

1.2 Statement of the Problem

Unilever Nigeria plc revenue and profit were said to have dropped from year 2017 from 60.2 billion to 58.2 billion in 2019, down around 3.5% in 2 years. Despite growth across personal and home care segments, the Food & Refreshments segment saw revenue drop from $25.2 billion to $21.6 billion. Further, Unilever Nigeria plc were made to believe that their continued drop in profits and revenue was based on the lockdown in 2020 which led to their continued drop in profit and revenue to date.

Compensation practices include not only salary but also direct and indirect rewards and benefits provided to employees in exchange for their contributions to the organization. Most of the time, only good behavior is rewarded, while performance-based rewards are disregarded. Employee performance benefits include health insurance, disability income protection, retirement benefits, daycare, tuition reimbursement, sick leave, vacation (paid and unpaid), education funding, and flexible and alternative work arrangements.

Compensation is typically limited to cash, and as a result, employers have tunnel vision when it comes to employee compensation issues. Other aspects of compensation that contribute to the total compensation package for the employee are not given much consideration. Employees themselves fail to recognize that their compensation is a package that is not solely monetary. As a result of the above understanding of compensation, it is poorly managed and, most of the time hurts performance. Employees are bound to demonstrate less dedication than their human capability when they are not properly compensated at work, because adequate income increases morale, Inadequate pay hurts staff morale. Employee performance in an organization suffers as a result of a lack of motivation. When employees are unmotivated, they perform poorly at work. Workers also perform poorly when they are dissatisfied with their jobs. Job discontent is influenced by variables such as inadequate pay, a poor working environment, ineffective communication, and a lack of organizational commitment.

The question now is whether there is a reward system that can have a significant impact on worker performance. How frequently is this system reviewed? Would a fixed organizational compensation system produce the desired results? Is the system rewarding the right employees? Would the outlined reward solve workers' immediate problems to improve performance? Can the incentive system withstand the test of time?

Past studies on compensation management examined topics like leadership styles and eemployees' performance (Obasan, & Hassan, 2014), motivation and employees' performance (Yeti, 2020), leadership and employees' performance (Achmad, Farida, Reni, Dani, & Ifran, 2020), compensation strategies and employees' performance (Kimani, Thomas, & Arasa, 2017), compensation management practices and employees' job performance (Narayana, & Kathari, 2021), Training and Employee’s performance(Aidah, 2013), Job Satisfaction and Employee’s performance(Mohammed, 2016), Training, leadership skills and employee’s performance(Joyce, & Peter, 2018). This is why the study explores how compensation management affects employee work performance at Unilever Nigerian Plc. Some organizations misinterpret activity with action and reward those who appear to be busy, even though the quiet employees may have been doing the majority of the work. As a result, management must design its reward system around actual performance and actual levels of work, input, and productivity. As a result, the problem of trying to figure out these loopholes with the intent of closing them serves as the foundation for this research.