Effect of Compensation Systems on Employees’ Productivity in Nestlé Plc, Ogun State, Nigeria: The Moderating Role of Perceived Fairness
DOI:
https://doi.org/10.56919/jbam.2621.005Keywords:
Compensation Systems, Financial Compensation, Non-Financial Compensation, Perceived Fairness, Employee ProductivityAbstract
This study examined the effect of compensation systems on employee productivity in a Nigerian manufacturingorganisation, focusing on financial compensation, non-financial compensation, incentive-based compensation, and perceived fairness. A quantitative cross-sectional survey design was adopted, and data were collected from 300 employees using structured questionnaires. Multiple regression and moderation analyses were conducted using SPSS version 27. The regression model was statistically significant (F = 182.448, p < .001) with R² = 0.814, indicating that the predictors explain 81.4% of the variance in employee productivity. Financial compensation, non-financial compensation, incentive-based compensation, and perceived fairness all exert significant positive effects on productivity. However, the interaction effects between perceived fairness and the compensation variables were insignificant, suggesting that fairness does not moderate the compensation–productivity relationship. The findings indicate that compensation components and fairness independently enhance productivity.The study concludes that compensation systems play a crucial role in enhancing employee productivity. The study recommends that organisations should implement competitive financial rewards, structured incentives, robust non-financial benefits, and transparent compensation policies to sustain productivity.
References
Adams, J. S. (1965). Inequity in social exchange. Advances in Experimental Social Psychology, 2, 267-299. DOI: https://doi.org/10.1016/S0065-2601(08)60108-2
Akuffo-Aduamah, C. C. N. (2025). The impact of compensation on employees' performance in organisations. International Journal of Multidisciplinary Studies and Innovative Research, 13(1), 57-69.
Alabi, O. A., Olonade, Z. O., Omotoye, O. O., & Odebode, A. S. (2022). Non-financial rewards and employee performance in money deposit banks in Lagos State, Nigeria. ABUAD Journal of Social and Management Sciences, 3(1), 58-77. DOI: https://doi.org/10.53982/ajsms.2022.0301.05-j
Amiruddin, N. Z. M., & Rodzalan, S. A. (2024). The relationship between compensation and job satisfaction. Research in Management of Technology and Business, 5(1), 145-154.
Armstrong, M. (2020). Armstrong's handbook of human resource management practice (15th ed.). Kogan Page.
Becker, B. E., & Huselid, M. A. (1998). High-performance work systems and firm performance. Academy of Management Journal, 41(1), 8-29.
Burns, T., & Stalker, G. M. (1961). The management of innovation. Tavistock.
Deci, E. L., & Ryan, R. M. (1985). Intrinsic motivation and self-determination in human behavior. Plenum. DOI: https://doi.org/10.1007/978-1-4899-2271-7
Deci, E. L., & Ryan, R. M. (2000). The "what" and "why" of goal pursuits. Psychological Inquiry, 11(4), 227-268. DOI: https://doi.org/10.1207/S15327965PLI1104_01
Dessler, G. (2020). Human resource management (16th ed.). Pearson.
Drucker, P. F. (2007). Management challenges for the 21st century. Routledge.
Enyindah, M. A., & Bagshaw, K. B. (2022). Compensation policy and employee productivity of manufacturing companies in Rivers State, Nigeria. International Academic Journal of Management & Marketing Annals, 8(1), 45-57.
Gomez-Mejia, L. R., Berrone, P., & Franco-Santos, M. (2014). Compensation and organisational performance: Theory, research, and practice. Routledge. DOI: https://doi.org/10.4324/9781315705477
Herzberg, F. (1959). The motivation to work. John Wiley & Sons.
Katabalo, C. V., & Mwita, K. M. (2024). The role of compensation on job satisfaction, employee performance and organisational performance. Science Mundi, 4(1), 137-148. DOI: https://doi.org/10.51867/scimundi.4.1.12
Katz, D., & Kahn, R. L. (1966). The social psychology of organizations. Wiley.
Kusumayadi, D., Hermanto, H., Noviyanti, M., Irawati, S., & Fitriansyah, R. (2024). The influence of compensation, motivation, job stress and job satisfaction on the performance of Social Service Employees in Bima Regency. Asian Journal of Management, Entrepreneurship and Social Science, 4(3), 1367-1386.
Mahato, S., & Kaur, R. (2023). Compensation and employee performance nexus. International Journal of Human Resource Studies, 11(2), 67-82.
Mayo, E. (1933). The human problems of an industrial civilisation. Macmillan.
Mbah, P. C., Nwatu, E. C., & Okwor, E. O. (2021). Compensation and employee performance of deposit money banks in South East, Nigeria. International Journal of Research Management (IJRM), 11(3), 2249-5908.
McMullen, T., & Berk, T. (2025). Linking rewards to successful performance management practices. The Journal of Total Rewards, 34(3), 1-1.
Norbaiti, H., Hamdilah, H., Husein, N. M., & Arifin, Z. (2022). The effect of wages and incentives on employee performance improvement. International Journal of Multi-Disciplinary Science (IJ-MDS), 5(2), 89. DOI: https://doi.org/10.26737/ij-mds.v5i2.3480
Okeke, M. N., & Ikechukwu, I. A. (2019). Compensation management and employee performance in Nigeria. International Journal of Academic Research in Business and Social Sciences, 9(2), 384-398. DOI: https://doi.org/10.6007/IJARBSS/v9-i2/5552
Omaliko, E. L., & Akwuobi, B. U. (2022). Effect of contemporary compensation schemes on corporate performance: Evidence from listed oil and gas firms in Nigeria. Journal of Global Accounting, 8(3), 1-13.
Parashakti, R. D. (2019, January). The impact of motivation, work satisfaction, and compensation on employees' productivity in coal companies. In Proceedings of the 2019 1st International Conference on Engineering and Management in Industrial Systems (ICOEMIS 2019).
Ratnawita, R., Fariz, L. A., Edward, Y. R., Rosita, R., & Putra, A. S. (2025). The influence of salary and job satisfaction on employee performance in customer-oriented business environments. Journal of Social Commerce, 5(1), 48-60. DOI: https://doi.org/10.56209/jommerce.v5i1.148
Rinny, P., Purba, C. B., & Handiman, U. T. (2020). The influence of compensation, job promotion, and job satisfaction on employee performance at Mercubuana University. International Journal of Business Marketing and Management (IJBMM), 5(2), 39-48.
Robbins, S. P., & Judge, T. A. (2017). Organizational behavior (17th ed.). Pearson.
Skinner, B. F. (1953). Science and human behavior. Macmillan.
Taylor, F. W. (1911). The principles of scientific management. Harper & Brothers.
Ullah, M. S., Islam, M. R., Amin, M. R., Amin, M. B., Rahman, M. M., & Erdey, L. (2024). The effects of compensation, organisational commitment, and job satisfaction on work productivity: Evidence from the readymade garments industry in an emerging economy. Journal of Infrastructure, Policy and Development, 8(13), 8494. DOI: https://doi.org/10.24294/jipd.v8i13.8494
Vroom, V. H. (1964). Work and motivation. Wiley & Sons.
Weber, M. (1922). Economy and society. University of California Press.
Welbeck, E., & Thelma, A. (2026). Employee motivation and job performance in Ghana. African Public Sector Review, 14(1), 1-19.
Yakubu, M. M. A., Abubakar, H., & Ogohi, D. C. (2023). Effect of compensation on employee job performance of deposit money banks in Kano State, Nigeria. International Journal of Economics, Business and Management Research, 7(6), 2456-7760.
Downloads
Published
Issue
Section
License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
