Effects of Remuneration on Employee Performance; A Case of German Technical Corporation Uganda

ABSTRACT

This research was based on the investigation of the effects of remuneration on employee performance in German Technical Corporation Uganda (GTZ).

Remuneration is paramount to acquiring competent personnel as well as retaining the present employees, it also aids in securing internal and external equity meaning the

payment of similar wages for similar jobs within the organization or other comparable organizations. The comparisons of pay are uninfluenced by levels of aspirations and pay history, often they compare the pay of different employees with their skills, knowledge and performance.

Hence GTZ has been experiencing difficulties in rating the performance of their expatriate and local employees due to the introduction of a performance related pay system which doesn't have substantial impact on employee's performance. This has led to reduced motivation which impacts negatively on the achievement of both organizational and individual objectives. It also poses a challenge to management when

evaluating performance due to the laxity of employees to maintain the set standards of performance. From the administered study it was established that most employees perceived the organization's performance related pay (PRP) system as vague, complex and not transparent. They were of the opinion that it didn't effectively tie performance to pay,

that is, its contribution to the employee's attainment of their goals was low or minimal. Furthermore it was established that the benefits offered by GTZ were insufficient especially to expatriates with accompanying spouse and children due to the fact that their income was from on partner unlike back home where the spouse also worked. While, the single expatriates thought they were more than sufficient. It was recommended that GTZ review their PRP system in order to effectively tie performance to pay, while, at the same time implementing a 'holistic' induction program that minimizes the employee's prejudices. It was also established that there was need to carryout a study on the impact of remuneration on employee's motivation.

TABLE OF CONTENTS

Declaration .............................. . .. .. .. ... .. ... . .. ......................... .

Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Dedication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111

Acknowledgement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv

Abstract........ . .......... .. . .... . . ...... . . .. . .. . ............ ........ .... ............. v

Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. v1

List of Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. viii

CHAPTER 1 Introduction .................................................. .

1.0: Background to the study ....... ............................ .

I. 1: Statement of the problem. ......... . . ...... . .... . ........ .. 4

1.2: General objective .. . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . .. . . . . . . . 5

1.3: Research objectives............................................. 5

1.4: Research questions.. . .. .. . . ..... .. .. . .. .... .. ... .............. 5

1.5: Significance of the study............. ...................... .. 5

1.6: Scope of the study....... . ............. ................ ......... 6

1. 7: Conceptual framework...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

CHAPTER 2: LITERATURE REVIEW.

2.0 Introduction ........ . .. . .... .... .. ...... . .. . .............. .

2.1 The effects of basic salary on employee performance

2.2 The effects of performance related pay on employee performance 11

2.3 The effects of benefits on employee performance 13

2.4 Employee performance 17

CHAPTER 3: METHODOLOGY.

3.0 Introduction . .. . ..... . .................................. .. .

3.1 Research design ........ .. .. . .... . .... . ... . ..... . ........ .

3 .2 Study population ....... ........... ....................... .

3.3 Sample size ... .. ....................... .. ............ ..... .

3.4 Sampling technique . . ...................... .... ... ....... .

3.5 Data collection method and analysis . . .......... .. ... .

3.6 Data Processing and Analysis . ..... ...... . ... . ....... .

CHAPTER FOUR: PRESENTATION, ANANLYSIS AND INTERPRETATION

OF THE RESULTS

4.0 Introduction....... .... .. .... . .. ... .. ....... . ....... ....... 22

4. I The effects of basic salary on employee performance 22

4.2 The effects of performance related pay on employee performance 25

4.3 The effects of benefits on employee performance 32

CHAPTER 3: DISCUSSIONS, CONCLUSIONS AND RECOMMENDATION

5.0 Introduction . ........................................ .

5.1 Summary ..... . . ... ... ... ..... . .. .. .. .... . ..... . . .... ... .

5 .2 Conclusion .... ............................... .. .... .

5.3 Recommendation ........ .. .. .... . . ............... .

5.4 Areas for Further Research ........................ .

REFERENCES ................ ... .... . .. .. .. ... ...... . ... ............. .. ... .

APPENDIX I: QUESTIONNAIRE . .. . .. .... ......... .. . ........... .

APPENDIX II: PROPOSED BUDGET