Abstract:
ABSTRACT
Employees are considered to the backbone of the organization. Employees helps the
organization to achieve its goals and objectives. This study examined the role of
compensation and rewards system on performance of an organization. The specific objectives
of the study include the following: examining the current strengths and weakness in the
current rewards and compensation system of the organization; examine the relationship
between reward system and performance of an organization and investigating the relationship
between compensation and performance of an organization. Basically, there are two types of
reward system. Among them include intrinsic and extrinsic reward system. The intrinsic
rewards are intangible benefits which employees receive in exchange for their efforts in the
organization. Extrinsic reward system refers to income and basic needs to survive, a feeling
of stability and consistency and recognition. The study employed Herzberg’s two factor
theory. The theory suggested that people have two sets of needs. Their needs as animals to
avoid pain. Their needs as humans to grow psychologically, Herzberg’s study consisted of a
series of interviews that sought to elicit responses to the questions. The study concludes that
human resource provides the basis for an organization to achieve sustainable competitive
advantage. Attracting and retaining competent workforce is a challenging task for every
organization. The study recommended that organization should set up good compensation
packages that would serve to encourage the good performance of the employees in all
organisations. The study further recommended that good compensation and reward policies
should be established to ensure equity pay. The study recommend that reward system can be
a cluster of different reward components, but it should be integrated with the organizational
business strategy which means aligning reward practice with both business goals and
employee values.
