Employee Attitudes Towards Performance Based Compensation System At Cooperative Bank Of Kenya Limited

Abstract

The competitiveness of an organization in the present day business environment will be anchored on the capacity of the firm to motivate its employees and the capacity of these employees to consider them as being adequately compensated for the effort they are putting in. Indeed, the issue of employees‟ performance in the furtherance of organisational objectives has occupied management attention for long and how to achieve full effort is still important to realization of organizations objective. Differences in levels of performance have been attributed to differences in skills and abilities on the one hand, and to different theories of money on the other. The study sought to establish the effect employee attitudes towards performance based compensation system at cooperative bank of Kenya limited. The main research instrument was the questionnaire and the study adopted a descriptive research design whereby the target respondents were 70 employees of the bank that consisted of senior and middle level management as well as the Unionisable employees. The study found that performance based reward was a variable pay, anchored to a measurement of performance implying that employees should be rewarded according to their job performance, with those performing better being offered a greater proportion of the available rewards and vice versa. In addition, it was found that the success of a performance based rewards in an organization will depend on the employee‟s attitude towards the performance based compensation that the employer is providing. Further, it was found that adoption of the performance based compensation system by the bank has had some unintended consequences on the employees that include development of less regards for unrewarded tasks, doubts on whether indeed the performance based compensation will indeed motivate the employees and also costs of implementing the schemes has been found to be high. The study recommends that organisations wishing to adopt a performance based compensation system should have clear objectives for it. The objectives should be clearly spelt out and discussed with employees in an integrative and positive way. Attempts should be made through employee involvement to allay any fears, suspicion and mistrust that staff may have towards the system. The main limitation of the study is that it could not cover all commercial banks in Kenya within the target population, due to time and financial constraints. In this respect, the interpretation of the results of the study should not be over-generalized