Influence of remuneration strategies on business performance of the sugar industries in Western Kenya

Abstract

The purpose of this study was to investigate the influence of remuneration strategies on the business performance of Kenya sugar industries in western Kenya region. The study was to be guided by the following objectives: To determine how total reward strategy influences the performance of the sugar industries in western Kenya, To assess how performance based reward strategy influences the performance of sugar industries in western Kenya, To establish how competence based reward strategy influences the performance of sugar industries in western Kenya and, To find out how traditional reward strategy influences the performance of sugar industries in western Kenya. The study adopted a descriptive survey design and applied both qualitative and quantitative approaches to research. The target population were full time staff from the four sugar industries in western Kenya: Sony, Mumias, Muhoroni and Nzoia. The total population is 1,318 ,using Krejcie and Morgan (2007) sample determination formular, the sample is determined as 274 .Stratified random sampling method was used to select the respondents. The test retest technique was used to ensure reliability of research instruments while validity was ensured through pilot testing and reviews. Data was analyzed through descriptive (frequencies and percentages) and inferential statistics (hypothesis testing using chi-square), the findings were presented as frequencies and percentage tables and cross-tabulations. Data analysis was be aided by a computer package; Statistical Package for Social Sciences (SPSS). The findings were that financial reward was preferred to non-financial rewards in the sugar. Majority of the respondents at 136(49.60%) had financial rewards included in their pay, 70(25.50%). The most common financial reward among the industries were basic pay given to 268(97.8%), leave allowance given to 258(94.2%) and pension allowance given to 224(81.8%) respondents. There was a strong significant relationship between total reward and business performance; p-value (N=274,C.I.=0.05) = 0.000.Fixed pay component is common in the sugar industry as said by 237(86.50%) of the respondents. It was established that there was strong significant relationship between performances based pay system and business performance; p-value (N=274,C.I.=0.05) = 0.000.Competency based reward system is minimally applied by the sugar industry, majority of the respondents at 156(56.90) were not paid based on their ability to undertake an assignment. There was a strong significant relationship between competency based pay system and business performance; p-value (N=274,C.I.=0.05) = 0.000.Traditional pay strategy is the most used in the sugar industry; most respondents at 236(86.1%) had their pay based on the job done. It was established that the relationship between traditional pay system and business performance was weak and insignificant, p-value (N=274, C.I.=0.05) = 0.211.It was concluded that the companies have not embraced total reward strategy; as a result its implementation has been done in piecemeal hence ineffectiveness in terms of enhancing business performance. Performance based reward strategy has not been consistently applied by the firms in the sugar industry; consequently its outcomes have not been realized. Competency based reward system is minimally applied by the sugar industry and the competency bands are rarely applied in the sugar industry. Traditional pay strategy is the most used in the sugar industry. The researcher recommends that: There is need for company specific assessment on the suitable remuneration strategies for adoption and implementation for better business performance outcomes, There is need for keener thought and consistency in the application of the remuneration strategies chosen by the companies and there is need for greater participation of staff in the formulation and implementation of the remuneration strategies