Effect of Compensation Management on Employee Performance

Document Type:Thesis

Subject Area:Management

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It requires your personal information. ) DEDICATION (Please fill in this field. It requires your personal information. ) ACKNOWLEDGEMENT (Please fill in this field. It requires your personal information. 2 Statement of the problem…………………………………………………………………………………8 1. 3 Objective of the study …………………………………………………………………………………. 1 Main objectives………………………………………………………………………………. 2 Specific objectives……………………………………………………………………………. 4 Research questions………………………………………………………………………………………. CHAPTER III – METHODOLOGY 3. 0 Introduction………………………………………………………………………………………………. 1 Quantitative and qualitative analysis ……………………………………………………………………. 2 Data collection……………………………………………………………………………………………14 3. 3 Research design…………………………………………………………………………………………. 4 Relevance of Subject matter to organization…………………………………………………. CHAPTER IV – DATA PRESENTATION AND DISCUSSION OF FINDINGS 4. 0 Introduction……………………………………………………………………………………………19 4. 1 Type of respondents…………………………………………………………………………………. 2 Background of the respondent by sex………………………………………………………………. 2 Inefficient communication about compensation packages………………………………. 3 Nonexistence of pattern to measure employee performance……………………………. 4 Errors in compensation management……………………………………………………. 5 Lack of communal events and other non-financial compensation………………………. 6 Lack of suitable grouping on compensation packages……………………………………29 5. 31 APPENDICES ………………………………………………………………………. 33 List of figures…………………………………………………………………………6 List of tables and major symbols……………………………………………………. 6 LIST OF FIGURES Figure 3.

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1 the research model Figure 4. 1 type of respondent Figure 4. 1 Background of the study The main reason for this study is to evaluate the effect of compensation management on employee performance, taking Capital Hospital Kathmandu as a case study. The study was done in Nepal with the workers of Capital Hospital Kathmandu, Nepal. Capital Hospital was established in 2000 AD, being a clinic known as Lata’s clinic. It had six categories of staffs completing of practical and non- practical staffs. Nurses and helpers were hired only when a patient was admitted. ii) Fringe benefits: this benefits boosts the morale of employees and instills into them a sense of belonging and spurs them into adding more effort to their work. It is as a result of decent relationship with the employer.

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Fringe benefit include housing allowance, transport allowance, meal, and leave allowance, pension and retirement benefits among others. Workers in Capital Hospital complained of not been given some of this benefits despite having worked for several years with this hospital. This has led to low motivation and hence a decrease in yield of the employee. 2 Specific Objectives I) to determine the effect of compensation management on employee performance in Capital Hospital Kathmandu, Nepal. ii) To identify the compensation packages available in Capital Hospital Kathmandu, Nepal. iii) To investigate problems and challenges associated with compensation management in Capital Hospital Kathmandu, Nepal. iv) To identify other forms of compensation and recommend ways of addressing challenges in compensation management at Capital Hospital Kathmandu, Nepal. 4 Research questions The following are the questions that the research seeks to discover rejoinders to.

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Time factor is also a limitation since data may be collected through personal interview and the respondent may not devote all the time needed to the work or may not even be willing to unveil all pertinent data. 8 Definition of Terms Compensation- a reward given to a worker to increase morale and heighten productivity in the organization. Productivity- a measure of lower efficient given sit of resources ids used to produce goods and services simply put in the ratio of output and input. Employee –a person employed for wages in the organization. Employer-a person of firm which hires the services of another person. We will evaluate how performance can be measured as anticipated by additional scholars. In this review, the scholar pursues to explore different works linked to the study area and endeavor to inaugurate a correlation amid the study area and the work outputs of employees.

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1 Overview about Compensation Management in Capital Hospital Kathmandu According to Dessler (2011), compensation can be divided into direct and indirect compensation. Direct compensation is limited to direct cash benefit received by the employees for the services they render to the organization. According to Armstrong (2009) indirect compensation are elements of remuneration given in addition to the various forms of cash pay. 4 Challenges Associated with Compensation Management According to Aswathappa (2007) the chief delinquent with indirect reimbursement is the deficiency of employees’ compensation. For example older female workers feel that maternity benefits are not needed. The homogeneousness of benefits fails to recognize workforce variety. Lack of knowledge on benefits causes employees to request for more benefits to satisfy their wants. It is unfluctuating shoddier, employee confusion can lead to complains and dissatisfaction which could highly affect their performance resulting to low productivity.

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The head sector of the questionnaire entailed bio information of the respondents. That is their position in the organization, age, sex and their interval of working in the organization. The final sections capture data on the other definite aims of the study. Interviews were used as support to the questionnaire to seek clarification on some responses and to a certain from key persons the existence of certain compensation packages. 3 Research Design A survey which was cross sectional in nature was employed for this study. In the latter stage, I will do employees progress, in search of estimation and payment effect, employee performance would be verified (Hypothesis 3) Figure 3. 1 below exemplifies the research model. Figure 3. 0 research model 3. Study Population The entire Capital Hospital; Kathmandu was the sample population for this study but for efficiency in management the researcher used a cross section of 200 permanent staff of the hospital.

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9 Research Hypothesis I) There are no influence of motivation in the company. ii) There are influence of motivation in the company iii) There are no influence on worker performance. Iv) There are impacts on employee performance. 10 Organizational Profile 3. 1 History of Organization Capital Hospital was established in 2000 AD, being a clinic known as Lata’s clinic. Services , ENT , Specialty services for Orthopedic & Trauma Maternity & Gynecology Burn & Plastic , General Surgery ,Pediatric & Neuro Medicine , Dental , Cardiovascular , Anesthesiology , Physiotherapy and Radiology. The hospital entails departments like: gynecology and obstetrics, orthopedic, cardiology, general physician, dermatology, pathology, physiotherapy, radiology, surgery and pediatric. The hospital hosts a 50 bed facility and one emergency observation. The hospital includes the following 24 hour emergency services: specialist on capital, ambulance services, 24 hour center, clinical laboratory, emergency care and observation.

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3 Staffing Situation Capital hospital is currently made of twenty five doctors. 2 Background of the Respondent by sex Figure 4. 2: classification of respondents by gender From the table above there were more female employees (65%) than male (35%). This is expected because the institution is a hospital and it is dominated by female in nurse profession. 3 classification of respondents by age From the figure below age of respondents was classified into four. 20-30 (56%), 31-40 (27%), 41-50 (7%) and 51-60 (10%). 49% of the respondent see the role of compensation in the organization as a step in meeting the organization obligation towards employees. Table 4. 2 to encourage employee to work hard/type of respondent Responses Management staff Senior non-management staff Middle level staff Junior staff total No Yes 0 8 4 38 10 48 12 80 26 174 total 8 42 58 92 200 The table states that 91% of senior respondent, 83% of middle level staff and 87%of junior staff sided with the opinion whether they thought compensation was a means to encourage employees to work hard.

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This ties in with literature reviewed by Paul and Anantharaman (2003) that compensation packages were associated to active functioning performance. Table 4. Free medical insurance – the hospital provides free medical services for its employees but insist that every employee should register under a health insurance cover. Employees get reimbursed for any medical bills they incur during their time of service. IV. Maternity leave – once female employees deliver, they are given a 3 month leave and 1 hour per day off work for 12 months to nurse their baby. V. II. Paternity leave - it is provided to the male workers whose wife’s have delivered. It’s a maximum of 5 working day. III. Free morgue services – the hospital has a morgue that offers free services to its workers.

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11 2 Examination leave 3. 16 3 Free medical insurance 5. 49 4 Maternity leave 5. 01 5 Sick leave 4. 81 6 Extra duty allowance 2. 52 4 The managers of compensation packages are well trained 3. 81 5 I do not understand what is happening as far as compensation is concerned 3. 06 Total 3. 92 Using the range of 1. 00 to 5. IV. Unavailability of policy manuals that contain compensation packages. V. Lack of proper training for the direct implementer of the compensation packages. VI. 5 Lack of communal events and other non-financial compensation There was no social event for employees to interact with employers and subordinates. 6 Lack of suitable grouping on compensation packages Equity issues related to compensation packages were noted among employees. 2 conclusion The outcomes of the research have drawn a link between compensation management and employee performance. Employees do not clearly know their requirements related to compensation which could be as an outcome of lack of manuals from employers among other reasons.

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An effective compensation management which is not available in various institutions including Capital Hospital goes a long way to ensure equity in the distribution of compensation packages. 6 Lack of suitable classification on compensation packages It was found out the administration did not have a cut off of compensation packages. It hence a recommendation that the management comes up with manuals clearly illustrating the categorization of compensation packages and their administrative procedure. 4 Recommendations for further research The study was based on the employees of Capital Hospital Kathmandu, Nepal only. Other studies to various populations and varied time frames would be welcomed to ensure strong empirical conclusions on how compensation management impacts on employee performance. REFERENCES Anitha, J. " Family Business Review 30. Hameed, Abdul, Muhammad Ramzan, and Hafiz M.

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Kashif Zubair. "Impact of compensation on employee performance (empirical evidence from banking sector of Pakistan). " International Journal of Business and Social Science 5. Mone, Edward M. , and Manuel London. Employee engagement through effective performance management: A practical guide for managers. Routledge, 2018. Rizal, Muhamad, M. "Effect of Training, Compensation and Work Discipline against Employee Job Performance (Studies in the Office of PT. PLN (Persero) Service Area and Network Malang). " Review of European studies 7. 11 (2015): 23 Rizwan Q. D and Ali U. Sarvadi, P. The best way to reward employees. Solutions for growing Business. Retrieved February 27, 2005, from http:www. entrepreneur. , Delhi: Dhanpat Rai & Co. (P) Ltd. view of Economic Studies 71, pp. Dessler, Gary (2005), “Human Resource Management”, 10th Edition, Chapter 6, Part 2 “Recruitment and Replacement”, Employee Testing and Selection, @2005 prentice Hall Inc.

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Larbi, Tetteh-Annor Larbi (2014). Faisal Ahammad, Mohammad, et al. "Behavioral ambidexterity: The impact of incentive schemes on productivity, motivation, and performance of employees in commercial banks. " Human Resource Management 54. S1 (2015): s45-s62. APPENDICES Appendix A: cover letter (Please write your school address) Dear respondent, I am delighted to notify you that I am a student in Business School. How long have you worked for Capital Hospital ◦ <5 year5-10 years 10-15 years 15-20 years >20 years 5. How would you describe staff motivation at Capital Hospital ◦ High  Moderate high  Not sure  Moderately low Low Indicate the degree to which you agree with the following statements by ticking as appropriate 1 Strongly agree 2 Agree 3 Not sure 4 Disagree 5 Strongly disagree Table 1;importance of compensation management on employees performance 1 2 3 4 5 1 To meet the employers legal obligation 2 To help employees meet basic needs 3 To encourage employees to work hard 4 To enhance the organization image Table 2; awareness of compensation packages 5 I am aware of the compensation policy according to the hospital’s manual 6 I am aware of who the compensation packages are administered Table 3; the following compensation packages exists in this organization 7 Vacation leave Examination leave Free medical insurance Maternity leave Sick leave Extra duty allowance Study leave Free training workshop Rent allowance Table 4; challenges in the management of compensation 8 Compensation packages are not well managed 9 No adequate information on any changes related to compensation packages 10 Compensation packages are not equally distributed 11 Managers of compensation packages are not well trained 12 Poor communication of issues concerning available compensation packages Table 4; strategy 13 Provide manuals based on compensation packages 14 Give clear information in case of changes in compensation packages 15 Train compensation package managers.

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