CHAPTER ONE
BACKGROUND OF THE STUDY
1.1 INTRODUCTION
Organizations are established with primary aim of making profit and a secondary aim of effective utilization of available human and non-human resources. Among these resources is human, which is commonly seen as the most valuable asset an organization could use to earn competitive advantage and achieve its objective, hence the need for human resources management to ensure optimum productivity and organizational continuous existence.
Human resource has been tagged the most valued asset of any organization. Its strategic approach emphasized a “tight fit” between individual needs, rights, ambitions, and goals within the organization which make compensation system central in the affairs of emerging students, scholars and HRM practitioners in the world over. The emergence of human resource management posed great threat to the conventional personnel management and industrial relation because it evolved from the core approach or organization relationship. It is an asset that should be invested upon so as to provide long-term commitment and high performance in an organization. As organizations strive to achieve one or more objectives through exhaustive utilization of human capital, so also, the employees aim toward achieving individual purpose (objective) while working for the organization.
Reward system is the instrument used to increase employees’ productivity. It seeks to attract and retain suitable employees, encourages good management – employee relationship and commitment and minimizes tension and conflict as it deals with all forms of final returns, tangible service and mechanism for good relationship. Furthermore, the major case of industrial conflict is based on the fact that employees feel their benefit are denied or about to be denied thus the importance of compensation system is to provide a good platform for equity and farness. This provides a challenging environment and increase productivity of employees. The compensation system ensures that both intrinsic and extrinsic needs of employee at all levels are adequately provided for compensation develops organizational integrity, policy, procedures and practices capable of improving organizational productivity. Reward and compensation is concerned with employees and organization performance development through which better result can be achieved by understanding and managing reward and compensation within an agreed framework, planned goals, and standard and competency requirements.
However, the success of the industry rests so much on its human resources capability, which is the most valuable asset of any sources capability, which is the most valuable asset of any organization. The challenging tasks of every manager at all level are how to build a befitting reward and compensation system to incorporate both organizational goals and individual needs, thus, have a motivated workforce and improve productivity. Therefore, this research work seeks to look into reward and compensation system and its implication on workers’ efficiency in the financial industry (Skye Bank Plc as case study). The industry has proved to be one of the most valuable in Nigerian economy and the productivity of the industry cannot be refrained from as well as its rewards and compensation structure, directly or indirectly.
This study examines the impact of reward and compensation system on organizational productivity, the base of good reward and compensation structure, employees’ expectation at different levels and how the compensation structure is based on performance of individual(s) or job requirement of employees. The researcher therefore tends to draw attention of management of organization to the need for effective and efficient reward and compensation system capable of improving employees’ performance and enhance organizational productivity.
