This research study focused on remuneration system for state civil service using civil service commission, Uyo as a case study. A remuneration system for state civil service is a computerized system that facilitates the recording of remuneration or compensation details of civil servants so that it will be easy to retrieve remuneration information whenever it is needed. Remuneration also known as compensations simply refers to the wages paid directly for time worked as well as more indirect benefits that employees receive as part of their job or employment relationship with an organization. Remuneration Management as the name suggests, implies having a compensation structure in which the employees who perform better are paid more than the average performing employees. The advantages of the system are that it saves time and facilitates the retrieval of information as opposed to the manual system. The software development methodology adopted to carry out the study is the spiral development model and the programming language used is Visual BASIC. Useful recommendations were also offered such as;
This chapter is concerned with the literature review, the contributions of other scholars pertaining to the subject is examined in this chapter.
2.1 Overview of compensation management
The term “compensation” simply refers to the wages paid directly for time worked as well as more indirect benefits that employees receive as part of their job or employment relationship with an organization (Otobo, 1987). Wages or salaries paid are typically payments made in cashable (naira) form that reflect work done and related remunerations such as base pay or bonuses such as paid workers during the end of the year (e.g. New Year packages and the like). Benefits are forms of compensation beyond wages, for time worked including various:
(1) protection plans e.g. health insurance or life insurance;
(3) pay for time not worked e.g. vacations or sick leave;
(4) income supplements such as stock ownership plans.
Compensation management is one of the central pillars of human resources management (HRM). It is concerned with the formulation and implementation of strategies and policies that aim to compensate people fairly, equitably and consistently in accordance with their value to the organization (Armstrong, 2005). Compensation Management as the name suggests, implies having a compensation structure in which the employees who perform better are paid more than the average performing employees (Hewitt, 2009). This encourages top-performers to work harder and helps to build a competitive atmosphere in the organization. Armstrong and Brown (2005) postulate that compensation management is an integral part of HRM approach to managing people and as such it supports the achievement of business objectives and it is strategic in the sense that it addresses longer term issues relating to how people should be valued for what they want to achieve; It is therefore integrated with other HRM functions, especially those concerned with human resources development. Armstrong (2005) in his own analysis says compensation management is all about developing a positive employment relationship and psychological contract that adopts a total compensation approach which recognizes that there are a number of ways in which people can be compensated. Other writers (Anyebe 2003) see compensation management as being based on a well articulated philosophy- a set of beliefs and guiding principles that are consistent with the values of the organization which recognizes the fact that if HRM is about investing in human capital from which a reasonable return is required, then it is proper to compensate people differently according to their contribution. This emphasizes the development of the skills and competencies of employees in order to increase the resource-based capability of the organization. Harrison and Liska (2008) in their study posit that reward is the centre piece of the employment contract-after all it is the main reason why people work. This includes all types of rewards, both intrinsic and extrinsic, that are received as a result of employment by the organization. In another study, Brown (2003) sees compensation as a return in exchange between their employees and themselves as an entitlement for being an employee of the organization, or as a reward for a job well done. Employees’ pay does not depend solely on the jobs they hold. Instead organizations vary the amount paid according to differences in performance of the individual, group, or whole organization as well as differences in employee qualities such as seniority, educational levels and skills.
Remuneration does not simply compensate employees for their efforts- it also has an impact on the recruitment and retention of talented people according to Milkovich and Newman (2001).World at work (2000) argues that compensation philosophies and objectives must reflect the overall culture, philosophies and strategic plans of the organization. He posits that there are two basic compensation philosophies, which should be seen as opposite ends of a continuum. At one end of the continuum is the entitlement philosophy, at the other end, the performance-oriented philosophy.
Employees and managers who subscribe to the entitlement philosophy believe that
individuals who have worked another year are entitled to a rise in base pay and that all incentives and benefit programs should continue unchanged regardless of changing industry or economic conditions. On the other hand, in case of performance-oriented approach, no one is guaranteed compensation just for adding another year to organizational service instead pay and incentives are based on performance differences among employees. Employees and those who do not perform satisfactorily receive little or no increase in compensation. It is therefore critical that organizations align their compensation practice with performance to enhance the achievement of organizational goals and enhance competitive advantage.
According to Ojo (1997) there are three components of employees’ compensation in an organization which arc (i) the basic pays (ii) the fringe benefits and (iii) performance incentives or bonus. The basic pay is the basic wage in form of salary; fringe benefits are supplementary compensation awarded to employers over and above the basic wage or salary. Since the coming of the term “Fringe Benefits” during World War II, the scope of employees’ benefits has widened markedly in bath developed and developing countries. Such benefit covers a wide range of rewards which provides security, deferred remuneration and various services for employees. The significance of the subject matter, Compensation emanate mainly from the fact that it provides income to workers and constitutes an important cast item to the employers, the largest single cast item for many organizations. For the workers, wage provides the means of satisfying their wants and needs.
2.2 Need for compensation and good payment of employees
David Belcher in Nwachukwu (2000) has advised that prior to embarking on policy regarding wages and salaries, the organization should bear in mind the following 17 assumptions:
(1) Pay is an incentive job performance.
(2) Pay in the form of money has more incentive value than pay in the form benefits.
(3) Employee satisfaction with pay is evidence of its incentive value.
(4) Consistent treatment of employees in the matter of pay is a prerequisite to obtaining incentive value from pay.
(5) Incentive value is lost when employees are ores paid.
(6) Employees react negatively to pay inequalities.
(7) Pay inequalities are similarly defined by all types and levels of employees.
(8) Employees regard internal pay inequalities as more serious than external inequalities.
(9) Employees react only to gross external inequalities.
(10) Employees comparisons of pay are made first in terms of jobs, and second in terms of performance on jobs.
(11) Employees compare their pay with that of people in similar jobs.
(12) Employees comparisons of pay are uninfluenced by levels of aspiration and pay history.
(13) Managers make pay comparisons that are essentially similar to those of rank-and-file employees.
(14) Professional employees make external rather than internal comparisons.
(15) Employees accept the concept of hierarchy of jobs and pay.
(16) Employees’ determinants of the job hierarchy are similar to managements’ determinants.
(17) Employees agree with management on what they are paid for and weigh the factors.
According to Adeneyi (2013), one of the fundamental tasks in human resources management is compensation management. It is a complex task that occurs periodically, demand accuracy and must not be delayed. Compensation management requires integrating employees’ processes and information with business process and strategies to achieve optimal organizational goals and objectives. This can be attributed to the fact that compensation management is an essential tool to “integrate individual efforts with strategic business objectives by encouraging employees to do the right things with ever improving efficiency”. (ASH.1993,4). In other words, compensation management is’ a powerful means of focusing attention within an organization. They send clear .messages to all employees of the, organization informing them about expected attitudes and behaviors (Schell and Solomon, 1997, 4). Furthermore, researchers have argued that compensation management system can create and sustain a competitive advantage for organizations (Milkovich and newsman, 2002,4). In recent years, the inclusion of non-financial measures has gained some popularity in compensation management, while some schools demonstrate positive effects of incorporating non- financial measures in to the compensation management system empirically (Widmier, 2002). He further states that, human resources model of compensation generally assume that higher performance requires greater effort or that is in some other ways associated with disutility on the part of workers. In other to provide incentives, these models predict the existence of reward systems that structure compensation so that a worker expected utility increase with’ observed productivity. This reward can take many different forms including praise from suspensor and co-workers, implicit promise of future promotion opportunities, feelings of self-esteem that comes from superiors’ achievement and recognition and current and future cash rewards related to performance. Koln (1993), argues that failure of compensation system is due to inadequate assumption about human motivation, reason for this can be attributes rather to the measurement of employee satisfaction and employee loyalty’ to the organization, Hence, there is a strong need for the development of a holistic reward and performance measurement model enabling an organization to derive company specific success drivers and identify cause and effect relationship when linking rewards to measure such as employees satisfaction and loyalty. Thus, Dalton McFarland (1998), asserted that among the various devices for eliciting the loyalty. Cooperation and effort of individuals are the various forms of economic rewards’
2.3 Trends in Salary Structure in civil service: Nigerian Universities
According to Agburu (2012), based on the most agreement between the Federal Government of Nigeria and the Academic Staff Union of Nigeria (ASUU) in a document to this effect dated October 2009, it has been agreed that there shall be a
separate salary structure for University Academic Staff to be known as Consolidated University Academic Salary Structure II (CONUASS II). The CONUASS II consists of three components thus:
(1) The Consolidated Salary Structure for Academic Staff (CONUASS) approved by the Federal Government of Nigeria (FGN) effective 1st January 2007.
(2) Consolidated Peculiar University Academic Allowances (CONPUAA) exclusively for university teaching staff and derived from allowances not adequately reflected or not consolidated in CONUASS.
(3) Rent as approved by the FGN effective 1st January 2007. Perhaps one of the most interesting features of the current trends in the wage and salary administration as pertains essentially to the university system can be seen to reside in the realization by the Re-negotiation Committee that Nigerian University Academic represent the crucial mass of scholars in the society (AFGNASUU 2009:10), “with the potential for transforming it”. In the light of this, the Committee felt that academic deserve unique conditions of service which will motivate them like the intellectuals in other parts of the world to attain greater efficiency and effectiveness in service delivery with regard to teaching, research and community and thereby stem the “brain drain” (AFGN-ASUU, 2009:10). The new university salary structure indicates that the basic pay has increased by 50%.
Trends in Academic Allowances
With the most recent development, it has been agreed that the entitled academic staff shall be paid a number of allowances. These allowances include those of Postgraduate Supervision; Teaching Practice/ Industrial Supervision/ Field Trip Allowances; Honoraria for External/Internal Examiner (Postgraduate Thesis);
Honoraria for External Moderation of Undergraduate and Postgraduate Examinations; and Postgraduate Study Grant. Apart from the foregoing other allowances include those for External Assessment of Readers or Professors; Call Duty/Clinical Hazard Responsibility Allowance and Excess Workload Allowance.
Apart from the above basic pay structure, the trends indicate some non-salary conditions of service. Specifically, the following fringe benefits are approved and be subject to further improvement over time. These include:
(1) Vehicle Loan/ Car Refurbishing Loan. Among other things, the loan is repayable over 4 years
period with a 2% charge as administrative cost.
(2) Housing Loan. A loan that is equivalent to at least 8 times the staff annual salary.
(3) Research Leave. An academic staff is entitled to a research leave of 26 working days per annual.
(4) Sabbatical Leave.
(5) Annual Leave.
(6) Sick Leave.
(7) Maternity Leave.
(8) Injury Pension.
(9) Staff Schools.
(10) Provision of Office Accommodation and Facilities.
2.4 Benefits of remuneration system
According to Armstrong (2008), an organizational compensation management system includes anything an employee’s value and desire that an employer is able and willing to offer in exchange for employee’s contribution. More specifically such compensation includes financial and non-financial rewards. Financial rewards include direct payment (e.g. salary) plus indirect payments in the form of employee’s benefits. Non- financial reward includes everything in a work environment that enhances a worker sense of self-respect and esteem by others (e.g. work environments that are physically, socially and mentally healthy; opportunities for training and personal development; effective super Vision and recognition). In the word of Milkovich (2008), reward bridges the gap between organizational objectives and individual expectations and aspirations. To him, for an organization to be effective, organizational compensation system should provide four things:
- A sufficient level of rewards to fulfill basic needs
- Equity with the external labour market
III. Equity within the organization and
- Treatment of each member of the organization In terms of his or her needs.
More broadly Bowman in work scope (2009), asserted that compensation system are design to attract, retain and motivates employees. Much of the design of’ compensation management systems involve working out trade off among More or less seriously conflicting objectives. Perhaps the most important objective of any compensation system is fairness and equity.
Folayan (2006), Describe benefits as the component of a compensation package provided in addition to cash pay. He goes on to look at the impacts that benefits can have in employees attraction, retention and motivation and to identify the three main type of employees benefits, namely; welfare benefits which includes pension and health insurance; family friendly benefits which might include family leave and child care vouchers and job related benefits which might include company car or product discounts. Armstrong (2008),’ states that the main aims of any benefit systems are: To contribute to the provision of a competitive compensation management system, to provide for the need of the employees in terms, of their security and sometimes their requirement for special financial help, this demonstrating to them that they are members of a carrying organization, to increase the, commitment of employees to the organization and to provide a tax efficient method of remuneration.
SYSTEM ANALYSIS AND DESIGN
This chapter presents the research methodology, system design, input file specification and program flow chart.
3.1 Research Methodology
A software development methodology or system development methodology is a frame work that is used to structure, plan and control the process of developing an information system. The methodology employed for the development of the system is the spiral development. The spiral development model comprises the elements of both design and prototyping. The model has four stages namely:
The data used for the development of the research was gotten from the internet, textbooks and articles. The contributions of other researchers on the subject were examined so as to gather relevant information. The case study also provided useful information for the development of the system. The necessary fields involve in recording court cases was retrieve from the case study
3.2 System Analysis
System analysis entails examining a system in order to understand its step by step operations so as to identify its benefits and areas of limitation that require improvements.
3.2.1 Analysis of the existing system
The existing system is such that the remuneration record is manually recorded for each employee
3.2.2 Problems of the existing system
A major problem of the existing system is that it is manually recorded. And the computerized system overcomes this challenge by making capturing of records and retrieval of records easier.
3.2.3 Analysis of the proposed system
The proposed system is such that the remuneration record is computerized alongside the employee information
18.104.22.168 Advantages of the proposed system
The advantages of the proposed system is that it will provide an easy way to capture and retrieve employee renumeration details
22.214.171.124 Disadvantages of the proposed system
The disadvantage of the proposed system is that the software system may be corrupted by a computer virus and the system can only be used with a computer system.
3.3 System Design
The system design pertains to the layout of the system and it consists of the input and output layout.
3.3.1 Input Layout
3.3.2 Output Layout
See Appendix C
3.3.3 Program flowchart
See Appendix A
SYSTEM IMPLEMENTATION AND DOCUMENTATION
This chapter presents the system flow chart, analysis of modules, choice of programming language and programming environment.
4.1 System Design Diagram
4.2 Choice of Programming Language
The programming language chosen for the development of the system is visual basic 6.0. The language was chosen because it enables the creation of applications with a graphical user interface, containing controls such as text fields, combo box, labels, command buttons etc.
4.3 Analysis of Modules
The program is made up of four (4) main modules namely;
- Personnel renumeration record
Personnel Remuneration record: This module enables the remuneration record of employees to be captured and saved.
Report: This module enables records to be queried.
Quit: This module terminates the program
4.4 Programming Environment
The programming environment used for the development of the application is windows 7 operating system. The hardware requirements are;
- Pentium iv computer system
- Super video graphic array monitor
- 512 MB RAM
- Uninterruptible power supply (UPS)
The software requirements are:
- Microsoft Visual Basic 6.0
Implementation is the process of replacing the old system with the new system. There are four different ways of replacing the old system with the new system. The reasons for choosing one implementation type over another depend upon; how quickly must the changeover happen? How important is it to prevent data loss? What will the cost of the changeover be?
Direct changeover: In this system the old system is no longer available and everything must run on the new system. Problems with the new system can cause major problems for the business, only suitable for non-critical systems.
Phased implementation: Takes longer to complete the implementation but the risks to the business are less than for direct changeover. The new system can be split into separate working parts e.g sales, marketing, payroll etc. part of the old system is replaced with the new one until the replaced part is working properly. Continue the process until the entire old system has been replaced by the new system.
Pilot Running: If the business has many different offices or sites then this is an option. One single site is chosen and the old system is replaced with the new system in the same way as direct changeover but only on one site, the rest of the business continue to use the old system. Once the new system is shown to work well in that one ‘pilot’ site then the new system can replace the old one in the rest of the company.
Parallel Running: Highly fault tolerant, new system and the old system are used with extra staffs recruited to run the new system but it is very expensive. Both systems continue to run until the new system is working properly then the old one is discarded.
The system implementation method recommended and chosen by the system developer is the parallel running so as to prevent data loss.
SUMMARY, CONCLUSION AND RECOMMENDATION (S)
This chapter presents the summary, conclusion, constraints of the study and offers useful recommendations.
5.1 Constraints of the study
In carrying out the research work, some challenges were faced that limited the study such as:
Time: The time given for the completion of the research work was too short hence the researcher had speed up the research work to meet up and this has an impact on the study.
Limited Materials: few materials were found pertaining to the research area and this limited the bulk of the literature review.
Finance: The high cost of textbooks, internet browsing and transportation to different libraries to gather materials stood as a constraint to the research work.
Remuneration simply refers to the wages paid directly for time worked as well as more indirect benefits that employees receive as part of their job or employment relationship with an organization. remuneration are forms of compensation beyond wages, for time worked including various: protection plans, health, insurance or life insurance, services, pay for time not worked e.g. vacations or sick leave, income supplements such as stock ownership plans. remuneration management is one of the central pillars of human resources management (HRM). It is concerned with the formulation and implementation of strategies and policies that aim to compensate people fairly, equitably and consistently in accordance with their value to the organization.
Adopting the computer system to store remuneration details makes it easier to manage the compensation details of employees. In addition, updating the employee record is easier with a specialized software for remuneration.
- The remuneration records of personnel in the civil service should be computerized to facilitate updating.
- Computer professionals such as database administrators and programmers should be employed in the state civil service to automate remuneration and personnel records
PROGRAM FLOW CHART
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COMPENSATION MANAGEMENT AS TOOL FOR IMPROVING ORGANIZATIONAL
PERFORMANCE IN THE PUBLIC SECTORS:
A STUDY OF THE CIVIL SERVICE OF ANAMBRA STATE OF NIGERIA
IDEMOBI Ellis I.1
ONYEIZUGBE Chinedu U.1
AKPUNONU Evans O.1
1Faculty of Management Sciences
Anambra State University, Igbariam, Nigeria