An effective employee is one of the biggest challenges
for most entrepreneurs. According to them, keeping employees motivated and
loyal can be particularly difficult during the early stages of a startup. Argued
that those employees who feel that they are cared for by their organization and
managers not only have higher levels of commitment, but that they are more
conscious about their responsibilities, have greater involvement in the
organization, and are more innovative and productive. They suggested that
managers and organizations must reward and support their employees for the work
that they do because this perceived support allows for more trust and job
satisfaction in the organization. These observations brings to the fore the
relevance of employee motivation in ensuring productivity. It is an undeniable
fact that productivity of an organization depends upon the satisfaction level
of its workforce and even more, on the compensation of employees. As a result
there has been a great interest in the assessment of compensation variables of
employee as they impacts on productivity. According to the study, the concept
of compensation has attracted considerable attention over recent years and has
become a central objective of human resource management. He indicated that
Human Resource Management policies are now being designed to maximize
organizational integration, employee commitment, flexibility and quality of
work. It is observed that compensation and employee satisfaction drive
productivity, indirectly creating profit for an organization. To them, these
are also prerequisites for staff retention. They also observed that
organizations with higher staff retention rates are naturally better at
retaining knowledge, which can lead to better performance and profit for the
business. Accordingly, compensation variables improve employee satisfaction,
reduce the cost of staff turnover, build brand loyalty with staff and position
the company as an employer of choice that attracts talented people to the
organization. It is common knowledge that most employees agitate for better
conditions of service, while employers complain of low productivity. Employees
are always on the lookout for advertisements on what they describe as better
jobs. These employees are ready to leave their jobs for other jobs. Others use
their present jobs to develop the necessary skills and experience, a
requirement for most jobs. Employers also put in several enticing conditions of
service and try to create healthy working conditions in an effort to gain the
commitment of employees. To remain competitive in today’s market place an
organization must retain its employees in order to increase productivity.
Retaining employees means offering competitive compensation (both direct and
indirect) which will encourage its employees to work well and increase productivity
on the market. Age, education, job experience, job fulfillment, marital status
and family size are all considerations that determine the attractiveness of
fringe benefits. Different benefits appeal to different people. It is important
for organizations to remember that the needs of employees differ. For example,
a younger employee might be motivated by having the use of a company car
whereas an older person may want more status like a title or a professional
association membership. To achieve maximum value, organizations have to tailor
the benefits to suit both the employee and the job as well as to the business
requirements and financial capability. The question that one may want to ask is
whether there is any relationship between compensation and productivity.

1.2     
STATEMENT
OF THE PROBLEM