AN ASSESSMENT OF THE EFFECTS OF COMPENSATION AND REWARDS SYSTEM ON PERFORMANCE OF AN ORGANIZATION: A CASE STUDY OF KUMASI METROPOLITAN ASSEMBLY

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.