Compensation Practices and Employee Performance in Five (5) Selected Biscuit Manufacturing Companies in Nairobi City County, Kenya
Nzyoka, Christopher Muthusi
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Employee performance is of high importance in any organization as it determines productivity and future direction, In order to maintain peak performance, organizations use compensation practice as one of the ways to build a competitive strategy for attracting, retaining suitable employees as well as maintaining peak performance. Various compensation practices have been set up in the organizations in pursuit of increased performance and the general growth to ensure sustainability. However, despite the setup, the organizations are still struggling at the marketplace as they have not established the effect of these compensation practices on employee performance. The general objective of this study was to establish the effect of compensation practices and employee performance in the biscuit manufacturing companies within Nairobi city-county, Kenya. Specifically, the study determined the effect of basic pay, examined the effect of employee benefits, effect of skill development, established the effect of work-life balance and the moderating effect of organizational culture on the relationship between total compensation practices and employee performance in the biscuit manufacturing companies in Nairobi city-county, Kenya. The descriptive research design was used and stratified random sampling technique was used to select a sample size of 320 respondents from the target population of 1,600 employees within the Biscuit manufacturing companies in Nairobi City County. Primary data was collected using semi-structured questionnaires. Content, construct and criterion validity was ensured while reliability of data collection instruments was tested using cronbach’s alpha value. To avoid bias in data, diagnostic tests were done in form of normality tests by use of rule of thumb, linearity test using Pearson’s correlation where all variables showed positive correlation, multicollinearity test using variance inflation factor revealing VIF≤3 meaning no multicollinearity and finally homoscedasticity test to measure variance between dependent independent variables using levene’s test. Descriptive statistics in form of mean, mode, percentages and standard deviations were used to present data. Inferential statistics using a multiple regression model was used to analyse the relationship between compensation practices and employee performance. Statistical Package for Social Sciences (SPSS) computer package for windows version 21.0 was used to aid in the analysis. Results were presented using tables. The findings indicate that there was a significant positive relationship between compensation practices and employee performance in the biscuit manufacturing companies in Nairobi County, Kenya with work life balance being most significant at 0.873 and employment benefits least significant at 0.663. From the findings, the study concluded that compensation practices having significant effect on employee performance need to be taken seriously, biscuit manufacturing companies need to improve on some practices like basic pay and commutate their policies well. The study recommends a salary survey for biscuit manufacturing companies in Nairobi County and consideration of other practices with more impact like competency based pay.