THE IMPACT OF REMUNERATION ON EMPLOYEES' PERFORMANCE IN SOUTHERN SUDAN (THE CASE STUDY OF ) (MAIN BRANCH)

BY PEKU MARTIN ALEX BIB/10019/81/DF

A RESEARCH PROPOSAL SUBMITTED TO SCHOOL OF BUSINESS AND MANAGEMENT IN PARTIAL FULFILMENT FOR THE AWARD OF A BACHELOR DEGREE IN INTERNATIONAL BUSINESS ADMINISTRATION OF INTERNATIONAL UNIVERSITY

MARCH 2011 DECLARATION

I PEKU MARTIN ALEX do here by declare that this research dissertation is my original work and has never been presented by anyone else for the award of academic qualification.

Name: PEKU MARTIN ALEX

Registration number BIB/10019/81/DF

Signature...... J4..0J......

Date: ....O.!f. /. ~.S... .. 2.o.. 11 ... :...... APPROVAL

This is to certify that this research dissertation has been prepared under my supervision, at Kampala International University.

Supervisor's name: Mr. RUTEGANDA MICHAEL

Signature: ~ ------o~\io3.\,, ,, Date: ......

ii DEDICATION

This research dissertation is dedicated to my brother Gamal Charles Sabit and my mother Alice Khamisa Yatoma for been supportive always when I needed financial support, moral support and inspiring me with the spirit of self reliance for these reasons a give you this desertion as a price of your hard work.

iii ACKNOWLEDGEMENTS

I am grateful to my University Supervisor Mr. Michael Ruteganda for showing great faith in my work and working hard to ensure that I put together a quality work. I truly appreciate your commitment.

My gratitude also extends to my friends Simon Lupai Lemi, Captain Laguya Joseph Samuelson, and Anna Yawa Menea.

With the spirit of humility and determination, my appreciations to you is beyond measure, I owe all of you a great debt, for supporting me financial, moral, and parental and been my role model in many aspects of life and academic excellence , I will live to remember you.

Thank you please.

iv TABLE OF CONTENTS DECLARATION ...... i

APPROVAL ...... ii

TABLE OF CONTENTS ...... v

ABSTRACT: ...... ix

CHAPTER ONE

1.0 Introduction ...... ]

1.1 Background of the study: ...... 1

1.2 Back ground of the case study Kenya Commercial Bank Sudan ...... 1

1.3 Problem Statement: ...... 2

1.4 General Objective: ...... 3

1.5 Specific Objectives: ...... 3

1.6 Research Question: ...... 4

1. 7 Hypothesis: ...... 4

1.8 Significance of the study: ...... 4

1.9 Scope of the Study: ...... 5

1.10 The Conceptual Frame work: ...... 5

CHAPTER TWO

LITERATURE REVIEW ...... 13

2.0 Introduction: ...... 13

2.1 Remuneration ...... 13

2.1.1 Definition: ...... 13

2.1.2 Terminology and Concept: ...... 14

V 2.1.3 Characteristics of remuneration system: ...... 16

2.1.4 Importance of fair Compensation to Organizations: ...... , ...... 17

2.1.5 Factors influencing Remuneration ...... 18

2.2 Skill based pay: ...... 18

2.3 Job- based pay: ...... 18

2. 4 Host based pay: ...... 19

2.5 Home- Based pay: ...... 19

2.6 Economic theories explaining pay levels: (Other studies) ...... 20

2. 7 Other types of Pay: ...... 20

CHAPTER THREE

METHODOLOGY ...... 22

3.0 Introduction ...... 22

3.1 Research design: ...... 22

3.2 The study Population: ...... 22

3.3 Sampling design and size ...... 23

3.3.1 Sampling Techniques ...... 23

3.3.2 Sample size ...... 23

3.4 Data Source ...... 24

3.5 Data Collection methods and instruments ...... 24

3.5.1 Data collection ...... 24

3.5.2 Instruments ...... 24

3.5.2.1 Questionnaire ...... 24

3.5.2.2 Interviews ...... : ...... 24

3.5.2.3 Focus Group discussions: ...... 25 vi 3.5.2.4 Document Analysis ...... 25

3.5.3 Research Procedure ...... 25

3.6 Validity and reliability of the research instruments: ...... 25

3. 7 Data Analysis ...... 26

3.8 Assumptions and Limitations ...... 26

3.9 Ethical considerations ...... 27

CHAPTER FOUR

PRESENTATION, ANALYSIS AND FINDINGS ...... 28

4.0 Introductions ...... 28

4.1 Profile of respondents distribution ...... 28

4.1.1 Respondents by age, gender, nationality and department ...... 28

4.2 Skilled - based pay...... 32

4.3 Job -based pay...... 33

4.4 Home based pay ...... 35

4.5. Kenya Commercial Bank (KCB) employees get the following benefits the following ··············· .. ········································ ...... 36

4. 6 Host- based pay ...... 37

CHAPTER FIVE

SUMMARY OF FINDING CONCLUSION AND RECOMMANDATION: ...... 38

5.0 Introduction ...... 38

5.1 Summary of finding: ...... 38

5.1.1 Skilled based pay...... 38

5.2 Job based pay: ...... 39

vii 5.3 Home based pay: ...... 39

5.4 Host based pay: ...... 40

5.5 Conclusion ...... 41

5.6 Recommendation: ...... 42

REFERENCES ...... 43

APPENDIX A: QUESTIONNAIRE ...... 45

APPENDIX B: TIME FRAME OF STUDY ...... 50

Budget for the study: ...... 50

viii ABSTRACT:

Remuneration play a very important role, as to why most individuals seek employment, however it has been discovered that no single policy is available for allocating it for employees as such managers are faced with a abroad challenges of designing a remuneration policy that is widely accepted by all employees which will enable the organizations achieve its strategic objectives with its unique macro environment, because lack of a good policy negatively affect employees economical, sociological and psychological welfare, therefore as such the core aim of this research was to find out the contribution remuneration gives towards employees performance in organizations.

This study reviled that employees need to be motivated well through a good remuneration policy that requires justice in distribution of resources basing on individual skills because this will encourage employees be hardworking persons, building careers for further opportunities. If an individual achieves his personal objectives, this indirectly contributes towards the overall organization objectives. Therefore study discovers that salaries should be based on factors as skills, seniority, and experience to demonstrate fairness in organizations.

This research was analyzed using Microsoft excel, Microsoft word, through table, graphs, frequencies distribution and pie charts this methodology enable the research have detail knowledge regarding the variables in the study.

ix CHAPTER ONE

1.0 Introduction. This chapter will attempt to analyze the case under study into these divisions, background of the study, problem statement, general objective, specific objectives, research hypothesis, research questions, significance of the study; limitations of the study and conceptual frame work, all these efforts are directed towards understanding the impacts of incentive on employee's performance.

1.1 Background of the study: Remunerations are usually decided based on the managers or supervisors' recommendation in most organization; however supervisors are subjective in nature rather than objective when it comes to decision regarding performance appraisal of employees. This fact has led many to conclude that performance appraisal is full of errors, since managers' or supervisors judgment are influence by stereotypes and other personal beliefs and perceptions.

Organizations conduct performance appraisals for administrative and developmental purpose, the ability of organization having right information enable the organization determine work condition, promotion, termination, and incentives.

Although no single best method exists to motivate employee, all these efforts are geared towards meeting the organization objectives and improving the employees performance through the use of suitable remuneration system. A basic knowledge of motivation theory is a prerequisite to Understanding compensation's role in contemporary organizations

1.2 Back ground of the case study Kenya Commercial Bank Sudan Limited was incorporated in December 2005 as a wholly owned subsidiary of Kenya Commercial Bank. It becomes part of the KCB Group, which comprises KCB Kenya, KCB and Savings and Loan (S&L) Kenya, KCB l Limited and KCB and is backed by the financial stability and favorable heritage of Kenya's longest established banking organization that has been in operation for over 100 years.

KCB Kenya, KCB Tanzania, KCB Sudan, KCB Uganda and KCB Rwanda offer a wide range of banking and , specializing in the provision of medium and long-term finance whereas S&L specializes in mortgage financing. KCB Sudan now has 11 branches. Few to mention are KCB Juba main branch, KCB Buluk, KCB Malakia, and KCB Branches in the states of Southern Sudan

KCB Sudan Limited as quality services since Sudan is recovering from the effect of the civil war, and there are no many reputable financial institutions offering the current financial services.

KCB (Sudan) is the major player in the financial services, been the first to operate as a foreign bank, this have given them the competitive advantage of customers base, others banks being Equity, Ivory bank, Buffalo bank, and Nile Commercial banks all striving to have market share. Foreign Exchange Products: KCB buy or sell foreign banknotes over the counter in any of branches countrywide. This is available for all major currencies (dollar, euro and sterling pound) in mint condition, denomination of choice.

1.3 Problem Statement: An employee paycheck is certainly important for its purchasing power. In most societies, however, the amount of money an individual earns serves as an indicator of power, prestige and feeling of self- worth.

Remuneration affects a person economically, sociologically, and psychologically. For this reason, mishandling compensations allocation process is likely to have a strong negative impact on employee and ultimately on the organization performance. No single best format exists to enable mangers design remuneration system that will favour all employees since employees

2 motivation are different according to their different hierarchy of needs as stated by Abraham Maslow.

The wide variety of pay polices and procedures available to organizations presents mangers with two- pronged challenges, to design a remuneration system that enable the organization achieve its strategic objectives, and to mold the compensation system that will meet the organizations' unique characteristics and the environment. Failure to find lasting solution to these challenges negatively affect employees' performance since compensation is the chief reason why most employees seek employment.

According to Tropman, 2001, a basic knowledge of motivation theory is a prerequisite to understanding compensation's role m contemporary organizations. Without an awareness of what motivation is and how it relates to monetary and non-monetary rewards, there is little possibility of designing a compensation program that simultaneously satisfies the needs of the employing institution and the needs of its worker

1.4 General Objective: The aim of this study was to find out the contribution remuneration give towards the employees performance in an organizations.

1.5 Specific Objectives: 1. To find out how skilled- based pay influences employee's performance m organizations. 2. To find out how job- based pay contribute towards employee's performance in an organizations. 3. To find out how home- base pay contribute towards the employee's performance in an organization.

3 4. To find out how Host- based pay contribute towards the employee's performance in an organizations.

1.6 Research Question: 1. What is the effect of skilled- based pay on employee's performance in an organization. 2. What is the effect of Job- based pay on the employees' performance in an organization. 3. What extent do home- based pay contribute towards employees Performance in an organization 4. What is the effect of host- based pay on the employees performance in an organization

1. 7 Hypothesis: Poor compensation package do negatively contribute towards employees performance in organizations.

1.8 Significance of the study:

❖ This study will help the organization establish a good remuneration policy that will positively contribute to improvement in employee's performance.

❖ The finding will be useful to the Ministry of Labour and social development in understanding the work conditions, of employees' in organizations.

❖ The copy of this study will be available at the library of Southern Sudan Legislative Assembly to assist the members of parliament in policy formulation about compensation.

❖ This study will be a source of great experience and contribution to the academic career of the researcher for the award of Bachelors' degree in International Business administration.

4 ❖ This copy of this research finding will be kept in library Kampala International University for reference purpose.

1.9 Scope of the Study: The study was conducted in Southern Sudan Juba Capital at Kenya Commercial Bank (KCB) main branch this study included the employees in Kenya Commercial Bank present in the pay sheet.

1.10 The Conceptual Frame work: Independent Variable Dependent variable

Skilled- based

Job- based pay " r Employees Performance in Home- based an organization pay

Host- based pay. I I ►

Intervening variable

• Government institutions . • Cost of living . • Union pressure . • Economic Conditions • Lobar Market .

5 Intervening Variables

Government Influence:

According to John, (2001) the government directly affect compensation through wage controls and guideline which prohibit an increase in compensation for certain workers at certain time and laws that establish minimum wage rate and regulations and prevent discriminations .

Union Pressure:

According to John, (2001) another important external influence on an employer's compensation program is labour unionization; unionized workers work longer hours and make more than non unionized worker. Union have an effect whether or not the organization's employees are unionized because union roles is demanding for pay increase, benefit and improve working conditions.

Economic conditions:

According to John, (2001) Economic conditions of the industry, especially the degree of competitiveness affects the organizations ability to pay high wages. The more competitive situation, the less able the organization to pay higher wages and pay and pay also depend on the relative productivity of the organization, industry, or sector. If the firm is very productive, it can pay higher wages. Advance m technology increase productivity by more efficient operating methods leading to less operating cost, hence higher pay.

The Lobour Market:

According to John, (2001), many people feel, that human labour should not be regulated by forces such as supply and demand, but that is not true, in times of full employment, wages and salaries have to be higher to attract and retain enough qualified eµiployees, while in time of depression, pay can be lower and

6 this can also be witness in high pay if few skilled employees are available in the market.

Cost of living:

Places where the cost of living is very expensive, worker demand more pay, however if the cost of living is very low employees never complain although paid little money, cost of living are things like price of food.

Independent Variable

Remuneration:

Skilled based pay:

This is the system where employees are paid on the bases of the talents they have that can be successfully applied to a variety of tasks and situations. This skilled based pay can also be called individual pay system.

Job based pay:

This is the system where employees are paid based on the type of job they perform or employees are paid for the unit produced. This job based pay system is also known as team/group pay.

Home based pay:

Home based approach aims to ensure that the value of the salary of an expatriate is the same as in their home country. Home based salary is used as the foundation upon which the total remuneration package is build.

Host based pay:

Host based pay approach provides expatriates with salaries and benefits in line with those given to national of host country holding similar position, this

7 system is also known as market rate system, which ensure that the salaries of expatriates match the market levels of pay in the host country.

Dependent Variable:

Employee performance:

According to Armstrong, (2006) Performance can be defined as a systematic process for improving organizational performance by developing the performance of individuals and teams. It is a means of getting better results by understanding and managing performance within agreed framework of planned goals, standards and competency requirements.

According http://www.ehow.com,Employee performance management is a process that companies use to ensure their employees are contributing to producing a high quality product or service.

Employee performance management encourages the employee to get involved in the planning for the company, and therefore anticipates by having a role in the process the employee will be motivated to perform at a high level.

Aims of Performance Management:

According to Armstrong (2006) the overall aims of performance management is to establish a higher performance culture in which individuals and teams take responsibility for the continuous improvement of business process and for their own skills and contributions within a framework provided by effective leadership.

► Empowering, motivating and rewarding employees to do their best

► Focusing employee's task on the right things and doing them right. Aligning everyone individual goals to the goals of the organization.

8 ► Productivity managing and resource performance against agreed accountabilities and objectivities

► The process and behavior by which by which mangers manage the performance of their people to deliver a high achieving organization.

► Maximizing the potentials of individuals and teams to benefit themselves and the organization focusing on achievement of their objectives.

Characteristics of Performance Management:

According to Armstrong, (2006) since performance management is a planned process of which the primary elements are agreement, measurement, feedback, positive reinforcement and dialogue. It is concerned with measuring outputs into the shape of delivered performance compared with expectation expressed as objectives.

► Focus on target.

► Standard, performance improvement and personal development plans.

► Setting ongoing dialogue, about performance.

► Concerned with inputs values. The input here are the knowledge, skills and behavour required to produce the expected results

► Continuous and flexible process which involves managers and those they manage acting as partners within the framework to achieve the required results

► Relies on consensus and cooperation rather than control or coercion.

► Focuses on future performance planning and improvement rather than on retrospective performance appraisals.

► It should act as a continuous and evolutionary process, in which performance improves over time.

9 ► Provision of feedback and recognition and identification of opportunities for growth.

► It should associate with contribution related to pay, but its development aspects are much more important.

Performance Management as a process:

Performance management should be regarded as flexible process, not as a "system" the use of the term "system" implies a rigid, standardized and bureaucratic approach that is inconsistent with the concept of performance management as a flexible and evolutionary

Employee performance management encourages the employee to get involved in the planning for the company, and therefore anticipates by having a role in the process the employee will be motivated to perform at a high level.

The Planning Process:

The planning process is the first step in employee performance management. It allows employees to have input into how the company should structure its policies and procedures in anticipation of producing a final product or service. The planning process defines what is expected of the employee and his goals as a team member in producing the final product of the company.

Monitoring Performance:

Monitoring performance of the employees and the process is the second step in employee performance management. It is an ongoing process that involves checking the progress of the product or the service at predetermined and random times in the process. Based on the analysis of the progress made, the

10 employee is given continual feedback on what he is doing well and what he can improve in to improve the company's product or service.

Developing Employees

The third step of employee performance management is development. This is very important for a company as it can improve the employee's performance and show the company has an interest in the employee's success. It is important to determine areas that the employee needs to improve in, and also opportunities for the employee to advance within the company. An employee should be offered the opportunity to attend training both to improve in his current role and to expand his future opportunity with the company for promotion.

Rating

Rating an employee is the fourth step in employee performance management. Rating an employee goes hand-in-hand with the monitoring process. The rating step is more formal though, as it involves a written review of the employee's performance. The employee is allowed to provide input on how he feels he is doing in the job and to rate himself as well. The manager and the employee then review the ratings provided and address any areas where their ratings are significantly different so that the employee can understand why he was rated in that manner.

Rewards

Providing a reward is the final step in the employee performance management cycle. The reward an employee receives can vary greatly. It could include a promotion or a raise, it might also just include a verbal acknowledgment of the good job the employee is doing at the time. The presentation of the reward can 11 occur after a formal rating, but can also be offered at any time during the employee performance management cycle that management feels is appropriate.

Performance Management Cycle:

Performance &

Development agreement

Performance Review Managing performance

Source Armstrong page 503,

Figure 33.1

According to Armstrong, (2006) this cycle describe performance as a continuous self- renewing cycle.

12 CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction: This chapter analysis the major issues of the existing literature on remuneration and the factors leading to the importance of compensation in the organizations. According to vanous studies by scholars, the word compensation is used interchangeable by either reward, or remuneration to mean the same thing all together. This fact is justified through the existing literature found in several text books, journals, and the internet.

2.1 Remuneration

2.1.1 Definition: Remuneration

According to Subba (2009), is the amount of remuneration paid by the employer to the employees in return to their services and contribution to the company.

According to Robert ( 1997) remuneration refers to the base wage and salaries employees receive.

According to wikipaedia.org remuneration is a systematic approach to providing monetary value to employees in exchange for work performed.

According to Blinder (2000) Compensation cost encompasses all expenses incurred on workers including wages, the firm's portion of employment or unemployment insurance contributions, retirement and pension benefits to workers, accident insurance, and all other aspects of such payroll taxes. The total compensation cost per unit of output gives the unit labor cost of production. International comparisons of unit labor costs are then used as the indicator of relative international competitiveness of countries. Even before the 13 recent spate of literature on the new economics of personnel, many had recognized that the employment contract was a complex exchange.

Compensation:

According to www.businessdictionary.com Remuneration is Reward of employment as pay, salary, or wage, including allowances, benefits (such as company car, medical plan, pension plan), bonuses, cash incentives, and monetary value of the non-cash incentives.

2.1.2 Terminology and Concept: According to Subba wage and salary are often discussed in a loosed sense as they are used interchangeably.

According to ILO (International labor Organization) define the term wage as the remuneration paid by the employer for services of hourly, daily, weekly and fortnightly employees. It also means that remuneration paid to production and maintenance or blue collar employees.

Salary: The term salary is defined as the remuneration paid to the clerical and managerial personal employed on monthly or annual basis according to Subba.

Subba (200) defined earnings as the total amount of remuneration received by an employee during a given period. This include salary (pay) dearness allowance, house rent allowance, city compensatory allowance, overtime and other allowance.

Nominal wage: according to Subba (2009) this is a wage paid or received in monetary terms. It is also known as money wage.

Real wage: According to Subba (2009) real wage is the amount of wage arrived after discounting normal wage by the living cost.

14 Take home salary: According to Subba (2009) take home salary is the amount of salary left to the employee after making out deduction like insurance premium, income tax and charges.

Minimum wage: According to Subba (2009) minimum wage is the amount of remuneration which could meet the normal needs of an average employee, regarded as a human being in a civilized society or it is defined as amount or remuneration which may be sufficient to enable a worker to live in a reasonable cost of living regard to all obligations to which an average worker would ordinarily be subjected to

Statutory Minimum wage: According to statutory wages (1948) it is the amount of remuneration fixed according to the provision of the minimum wages act.

The Living wage: According to the committee on fair wages the living wage is the amount of remuneration and naturally it could include the amenities which a citizen living in a modern civilized society is entitled to expect, when the economy of the country is sufficiently advance and the employer is able to meet the expanding aspirations of his workers.

Fair wage: According to Armstrong (2006) fair wage are equal to that receive by workers performing work of equal skill, difficulty or unpleasantness.

Incentive wage: According to Subba (2009) incentive wage is the amount of remuneration paid to a worker over above normal wage as contribution to the increased production.

Wage rate: According to Subba (2009) wage rate is the amount of remuneration for the unit of time excluding incentives overtime pay.

15 Standard Wage: According to Subba (2009) Standard wage is the amount of wage for fixed for a unit of time, fixed on the basis of job evaluation standards.

According to Subba (2009) there are several principles of wage and salary plan, policies and practices. The important among them are:

Wage and salary plan and policies should be sufficiently flexible

Job evaluation must be done sufficiently.

Wage and salary administration plans and programs should be in conformity with the social and economic objectives of the country like attainment of equality in income distribution and controlling inflationary trends.

Wage and salary administration plans must always be consistent with overall organization plans and programs.

Wage and salary administration plan and programs should be responsive of the changing local and national conditions

2.1.3 Characteristics of remuneration system:

❖ According www.google.com the following below are the characteristics of remuneration system that should exist within the organization.

❖ Remuneration system should be well defined and uniform. It will be apply to all the levels of the organization as a general system.

❖ Remuneration system should be simple and flexible so that every employee would be able to compute his own compensation receivable.

❖ Remuneration should be easy to implement, should not result m exploitation of workers.

❖ Remuneration system should also solve disputes between the employee union and management. The system should follow the management principle of equal pay.

❖ These plans should simplify and expedite other administration processes.

16 2.1.4 Importance of fair Compensation to Organizations: According to www.google.com an ideal compensation system will have positive impact on the efficiency and results produced by employees. It will encourage the employees to perform better and achieve the standards fixed.

It will enhance the process of job evaluation. It will also help in setting up an ideal job evaluation and the set standards would be more realistic and achievable. Such a system should be well defined and uniform. It will be apply to all the levels of the organization as a general system.

It will raise the morale, efficiency and cooperation among the workers. It, being just and fair would provide satisfaction to the workers. Such system would help management in complying with the various labor acts.

It should motivate and encouragement those who perform better and should provide opportunities for those who wish to excel. Sound Compensation or Reward System brings peace in the relationship of employer and employees.

It aims at creating a healthy competition among them and encourages employees to work hard and efficiently. The system provides growth and advancement opportunities to the deserving employees.

The perfect compensation system provides platform for happy and satisfied workforce. This minimizes the labour turnover and the organization enjoys the stability.

The organization is able to retain the best talent by providing them adequate compensation thereby stopping them from switching over to another job. The business organization can think of expansion and growth if it has the support of skillful, talented and happy workforce.

17 The sound compensation system is hallmark of organization's success and prosperity. The success and stability of organization is measured with pay­ package it provides to its employees.

2. 1.5 Factors influencing Remuneration

Source: www.google.ocm

2.2 Skill based pay: According to Subba (2009) Remuneration system is the system in which employees are paid wages on the basis of number of job skills they have acquired

According to www.citeman.com, Skill-based pay, (also sometimes called competency-based pay) sets pay levels on the basis of how many skills employees have or how many jobs they can do.

2.3 Job- based pay: According to Subba (2009) this is the system where employees are paid based on the type of job they perform or employees are paid for the unit produced, this system is also known as team or group pay.

18 2.4 Host based pay: According to Armstrong(2006) host based pay approach provides expatriates with salaries and benefits in line with those given to national of the host country holding similar position, this system is also known as market rate system which ensure that the salaries of expatriate match the market level of pay in the host country.

According to Armstrong (2006) host- based pay provides expatriates with salaries and benefits such as company cars and holidays that are in line with those given to nationals of the host country in similar jobs. This method ensures equity between expatriates and host country nationals.

2.5 Home- Based pay: Home- based pay according to Armstrong (2006) approach aims to ensure that the value of the salary of expatriates is the same as in their home country. The home- based salary may be national one for long- term assignment. Home­ based salary is used as the foundation upon which the total remuneration package is built; it is some times called as build- up or balance sheet approach. According to Armstrong (2006) some or all of the following allowance may be added to this salary.

❖ Incentive to work abroad premium.

❖ Housing and utilities.

❖ Hardship and location.

❖ Rest and recuperation leave.

❖ School fees.

19 2.6 Economic theories explaining pay levels: (Other studies) The law of supply and demand:

According to Armstrong (2006) other things being equal, if there is a surplus of labour, and the supply exceeds the demands, pay level go down, and if there is scarcity of labour and demand exceeds the supply, pay goes up.

Efficiency wage theory:

According to Armstrong (2006) firms will pay more than the market rate because they believe that the high levels of pay will contribute to increase in productivity by motivating superior performance, attracting better candidates reducing labour turnover and persuading workers that they are being treated fairly. This theory is also known as the economy of high wage.

Human Capital Theory:

According to Armstrong (2006) a worker has a set of skills develop by education and training which generate a stock of productive capital. Employees and employers each derive benefit from investment in creating human capital. The level of pay should supply both parties with a reasonable return on that investment

2. 7 Other types of Pay: Strategic Compensation planning:

According to H. John etal, (2006) it is a compensation of employees in ways that enhance motivation and growth and aligning their efforts with the objectives of the organization.

Pay for performance: According to Bohlander etal (1995) pay for performance is the standards by which managers tie compensation to employees effort and performance. 20 Open pay: According to Comez (1995) open pay is situation where pay information level of employees are communicated open to other co- workers. This gives the advantage of limiting employees' access to compensation that leads to dissatisfaction because employees overestimate the pay of co- workers and supervisors. Force managers to be more fair and effective in administering compensation, because bad decisions can not be hidden and good information can serve as motivation to the best workers.

Secret pay: According to Comez (1995) secret pay is the situation where a firm requires employees to sign an oath that they will not divulge their pay information to co-worker, the penalty of breaking the oath is termination.

Fixed Pay: According to Luis (1995) fix pay is where the employee receives a high proportion of total compensation in form of base pay.

Variable Pay: According to Luis (1995) a variable pay is a system where employees receive a pay that fluctuate according to the marketing condition

21 CHAPTER THREE

METHODOLOGY

3.0 Introduction For this research to be effective, research design, data collection and analysis were used to arrange the information in such a way that enabled the researchers to come up with the reliable recommendations and conclusions. The following were the methodologies employed starting with the Research design, study Population and sample, Sampling Techniques, Data Source and Collection, and research Instruments and Data Analysis.

3.1 Research design: Orodho (2003) defines it as the scheme, outline or plan that is used to generate answers to research problems. Research design can be regarded as an arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance with the research purpose. It was the conceptual structure within which research was conducted. It constituted the blueprint for the collection, measurement and analysis of data.

3.2 The study Population: This study was conducted in Juba Southern Sudan at Kenya Commercial bank and targeted the employees currently working with the bank. Kenya commercial bank was taken as the study population because, its one of the leading commercial banks in the country that include both expatriates and the national. The different nationalities and backgrounds will help the researcher understand the different motivations pattern of the employees, the organization has approximately 60 employees working full time in the main office Juba branch.

22 3.3 Sampling design and size

3.3.1 Sampling Techniques According to Orodho and Kombo, (2002), sampling is the procedure researcher uses to gather people, places or things to study. It is a process of selecting a number of individuals or objects from a population such that the selected group contains elements representative of the characteristics found in the entire group.

Simple random sampling this method is referred to as simple random sampling as no complexities is involved. This study employed simple Random sampling techniques, because it was easy to use basing on the research experience

This ensured that each sub-group characteristic were represented in the sample thus raising the external validity of the study.

Simple random techniques were used to ensure that each member of the target population had an equal and independent chance of being included in the sample. This method produces a random sample.

3.3.2 Sample size The sample consisted of 24 respondents from various department selected from the population 60 employees currently working at Kenya Commercial bank in the main office juba branch.

The 24 respondents were distributed as questionnaires randomly in the major departments, because the researchers believed that they were more informed concerning the topic under study, and they have been in the study environment for a long period of time.

This number (60) had been chosen according to Amin, using tables to determine the sample size.

23 3.4 Data Source The researcher collected both primary and secondary data. Primary data were collected from respondents through questionnaires, interviews and informal group discussions while secondary data were obtained from books, journals, internet and other documents.

3.5 Data Collection methods and instruments

3.5.1 Data collection The study used questionnaires, document analysis, interviews and informal group discussions as the main tools for collecting data. The selection of these tools has been guided by the nature of data to be collected, the time available as well by the objectives of the study. The overall aim of this study was to find out the contribution remuneration give towards employee's performance.

3.5.2 Instruments

3.5.2.1 Questionnaire Questionnaires were used to collect primary data from the respondents, in form of writing to express their views.

Questionnaires were used since the study was concerned with variables that cannot be directly observed such as views, opinions, perceptions and feelings of the respondents.

3.5.2.2 Interviews The researchers used interviews as a follow-up to the questionnaires in order to collect information that were not directly obtained or were difficult to put down in writing.

Interviews were useful to capture the meaning beyond the words. This technique has been chosen because it helped the researchers gain control over the line of questioning.

24 3.5.2.3 Focus Group discussions: This is a special type of group in terms of its purpose, size, composition and procedures. A focus group was usually composed of 6-8 individuals who share certain characteristics, which were relevant for the study.

The discussion was carefully planned and designed to obtain information on the participations beliefs and perceptions on defined area of interest.

3.5.2.4 Document Analysis The researcher critically examined public and/or private recorded information relating to contribution of remuneration towards the employee performance the researchers was able to obtained data that were thoughtful. The researcher was able to access data at their own convenient time; this was through distributing the respondent's questionnaires so that be filled according to their freedom.

3.5.3 Research Procedure Both qualitative and quantitative data were collected from the 24 respondents from the targeted population of 60 employees working in Kenya Commercial bank March - April period, using questionnaires, interviews, informal group discussion and document analysis The data was collected by the researcher himself so that he understands the importance of the issue at hand into details.

3.6 Validity and reliability of the research instruments: Amin, 2005) no interviewers are alike and the same person may provide different answers to different interviewer, the manner in which the questions were formulated were simple most questions were closed ended. This was intended to provide right answers to the particular questions, for the case of this study the research avoided asking personal harmful questions that could hindered the respondent from replying, 80% of the data collected were considered reliable. 25 According Donald etal, (2006) reliability is a measure of how consistent the results from a test are, if you administer a test to a subject twice do you get the same score on the second administration as you did on the first? The reliability of the test is the answer to this question.

To establish the validity, the instruments will be given to an expert to evaluate the relevance of each item in the instruments to the objectives.

3.7 Data Analysis Data collected were edited and analyzed using percentages, tables of frequencies and graphs and pie charts modules like frequency distribution to examine the feeling of employees regarding compensation they receive. Quantitative data analysis were performed in relation to research questions.

Statistical finding were interpreted in relation to the research objectives and conclusion were made based on that.

3.8 Assumptions and Limitations Assumptions

The researchers assumed that the respondents would provide them with correct information. The researchers also assumed that the employees were not under any influence; internal or external that may hinder them giving right information during the answering the questionnaires.

Limitation

The major limitation of this study was financial constrain, that would facilitate the movement of researcher from Kampala to Juba, and the inability of some respondent who had not use English as their major language of instruction during school, this gave the researcher a challenge of translating the question to be understood, and despite giving them opportunity to fill the questionnaire at their freedom still others employees needed researchers guidance.

26 Due to the nature of work in the financial institutions like bank, the employees were busy taking long time answering research questions. were not possible that was why it was given to them to be filled at home during their leisure time.

The researcher tried his best that the questions were short and direct, so that respondents had time answering these questions.

3.9 Ethical considerations. The problem that the researcher encountered in this study was the privacy and confidentiality of the respondents at all time since, the study was regarding employees' compensation and most people do not want their financial status to be disclosed; therefore as such the researcher accepted to avoid personal question but prefer asking general questions, and promised to them that this study was meant for academic purpose only.

27 CHAPTER FOUR

PRESENTATION, ANALYSIS AND FINDINGS

4.0 Introductions This study investigated the impact of remuneration on employees' performance. This was in light of the remuneration policy in most organization that affects employees to performance, economically, sociologically and psychologically. The wide variety of pay polices and procedures available to organizations presents mangers with two- pronged challenges, to design a remuneration system that enable the organization achieve its strategic objectives, and to mold the compensation system that will meet the organizations' unique characteristics and the environment. Failure to find lasting solution to these challenges will negatively affect employees' performance since compensation is the chief reason why most employees seek employment.

The data collected was analyzed using percentages, tables of frequencies and graphs and simple statistical, frequency distribution to examine each objective and the overall objective of impact of remuneration on employees' performance. Quantitative data analysis was performed in relation to research objectives. Statistical finding was interpreted in relation to the research objectives and conclusion was made based on that. This chapter presents the results of the analysis.

4.1 Profile of respondents distribution

4.1.1 Respondents by age, gender, nationality and department. The researcher sought to analyze the respondents using the above categories.

28 Table 1. Respondents by gender categories

Gender Frequency Percentages

Male 11 45.83

Female 13 54.17

Total 24 100

Source: primary data

!!!Male

■ Female

The results show that the majority of the respondents 54% were women and 46% were men, this shows that women are highly trusted with money that was why most employees randomly chose were women because banks consider women of high integrity, objectivity and independence compared to men.

29 Table 2. Respondent by age group

Age group Frequency percentages

18-21 years 0 0

22-25 years 3 12.5

26-30 years 10 41.7

31-34 years 11 45.83

Total 24 100

Source: primary data

From the above statistical analysis it is easy to know that the highest number of the respondents were aged between 31- 34 years, constituting (46%) of the total respondents. This shows that most of the respondents are within the aged group people compared to (0%) who are from 18-21 years.

This result has helped the researcher discovered that most people in Sudan don't finish their studies at the early age, because the aged group from 18- 21 year were zero, they might be still in secondary school, collage or university as such they age group were not found working despite being the majority in Sudan.

Table 3: Respondent by Nationality

Nationality Frequency Percentages

Kenyan 6 25%

Sudanese 18 75%

Total 24 100%

30 Source: Primary data.

The results shows that most of the employees are Sudanese constituting 75% while 25% are Kenyans working in Sudan as expatriates in the main office as the bank is from Kenya they brought some of the workers from Kenya.

Table 4. Respond by departments.

Department Frequency Percentages

Cash 6 25%

Banking 4 16.67%

Advance 3 12.50%

Current account 4 16.67%

Remittance 2 8.33%

Customer care 2 8.33%

Others 3 12.50%

Total 24 100%

Source: Primary data.

Kenya Commercial bank being the financial institution, has more worker working in the department of cash, the random selection amount to 25% of the respondents for the cash department while 16.67% respondents interviewed were from the current account department.

31 Department

30%~= 25% - 20% - 15% - 10% 5% - 0% -.

4.2 Skilled - based pay. Table 5.

Statement Strongly Agree disagree Strongly Total Mean disagree Agree

Employees are to be paid 8 8 4 4 24 3.14 salary based on their skills

Payment based on skills 8 12 2 2 24 3.08 motivates employees to build career

I will be encourage to work 10 6 4 4 24 2.29 hard when payment is based on skills

Frequency (f) 26 26 12 12 76

32 Percentages (%) 34.2 34.2 15.7 15.7 100

Total Response 72 24 96

Total percentages 86.4 31.4 100

Source: Primary data

The first objective of this study was to find out how skilled- based pay influences employee's performance in an organization. To find these specific objective respondents were asked in their view how does skilled- based pay effects employee's performance in an organization, the data collected was analyzed based under the question. "What is the effect of skilled based pay on employees' performance in an organization?"

According to the data analyzed, the result showed that 0.32% of the respondents strongly agree that organization need to adopt payment based on skills and 0.36% said that payment based on skills will motivate employees in an organization to work hard so that they build careers because it determines how much skilled person earn. Generally 86.4% of the respondents said they would prefer payment based on skills due to the fact that work becomes easy as it's their area on specialization hence earn more money.

4.3 Job -based pay. Table 6.

Statement Strongly Disagree Strongly Total Mean agree Agree disagree

Work done per hour 4 12 2 6 24 1.4

Experience 8 10 6 0 24 3.08

33 Gender 0 0 6 18 24 1.25

Seniority 4 10 4 6 24 2.5

Frequency (f) 16 32 18 30 96

Percentage(%) 16.7 33.3 18.8 31.3 100

Total Responses 48 48 96

Total Percentages 50 49.3 100

Source: pnmary data

Graph showing job based pay system:

18 16 14 12 CWork done per hour 10 ■ Experience 8 6 □ Gender 4 a Seniority 2 0

This study showed that most of the people 49.3 disagree that organizations should use gender as a factor for setting remuneration policy but should rather used experience, seniority and work done per hour be the bases for considering

34 how much an employees earned, this is according to 50% of the respondent basing on the data analysis.

4.4 Home based pay Statement Yes No

All employees are to be paid salary 16 8 in Sudanese pound

Percentage 66.67 33.33

Source: primary data.

Graph showing Dollars and Sudanese Pound I

Home based payment I 80" I 70 60" 50" GJ Statement 40 lll!!I Sudanese Pound

30 □ US Dollar 20" 10 " o" 1 2 3 4 5

The analyzed data showed that 66.67% of the response showed employees are to be paid their salary in local currency the Sudanese pound, these mostly the local or the known as the national staff, however 33.33% of the respondent preferred that they be paid in international Currency the United states dollars

35 The studies showed that Kenya Commercial bank offer some benefit to its employee, the majority agree that staffs buy share, meaning that the company include them having shares in order to motivate them and take the company at heart, however they do not pay children school fees, but give the following, benefits medical allowance, insurance and give bonus to the employees, thus motivate working hard.

4.6 Host- based pay Statement Strongly Agree Strongly Agree Total Mean

Agree disagree

In an organization expatriates 8 4 4 8 24 3.7 are to be paid the same as the national Staffs

Frequency (f) 8 4 4 8 24

Percentage 33.3 16.7 16.7 33.3 100

Total response 12 12 24

Total percentage 50 50 100

Source: Primary data.

According to the views of the employees 50% of them said workers are the be paid the same regardless of where there are coming from whether national or expatriate since they both worked under the same situation and have the same hardship in the field of operation. But all the expatriates said they should be paid more than the national since working as expatriates' involves much of sacrifice of leaving ones country in order to work in a foreign country hence its necessary for them to be paid more than the national employees.

37 CHAPTER FIVE

SUMMARY OF FINDING CONCLUSION AND RECOMMANDATION:

5.0 Introduction This chapter summarizes the whole research process; it first provides a brief summary of the whole study with a particular reference to the research problem, methodology, results and the main contributions of the research and recommendations for the future work.

5.1 Summary of finding:

5.1.1 Skilled based pay. The first objectives of the study was to find out how skilled- based pay influences employee's performance in organizations.

The finding show that 86.4% of the respondents agreed that employees should be paid salary based on their skills because this would motivate them to build careers, total of 2.7% strongly agree with the statement that employees should be paid basing on their skills and 1.5 only agree that when they are paid based on their skills this will positively influence them build careers and work hard.

Again the data analyzed from the table 5 showed that when employees are paid based on skills obtained during their studies, or professions they will be encouraged to work hard because their duties are within their competencies of specialization amounting to acceptance level of 1.7% strongly agree, and 0.7% only agrees. However despite the majority generally accepting payment based on skills, 0.03% disagreed that payment be based on skills and 0.08 strongly disagree with the statement that employees are to be paid based gn their skills.

Generally according to the first objective, the finding in table 5 justified that 86.4% accepted payment based on skills, mean of 3.14 and 3.08 because this will influence them build careers, and work hard respectively.

38

5.2 Job based pay: The second objective was to find out how job- based pay contributes towards employee's performance in an organization.

The study showed that 0.7 % strongly agree that employees should be paid salary based on the kind of the job they perform, mean of 1.4 and 1.3 strongly agree constitute 3.08.

The primary data analyzed reviled that gender is of less importance factor for determining salary, results proved that at 0% according to table 6 above. Although 54% of the respondents involved in the study were female, they equally disagree for gender to be determining factor for allocating remuneration. However the data analyzed showed that organizations rather than using gender organization have to use factors like seniority 07% strongly agree, 1.2 agreed saying that it's better for organization when using job based pay to use seniority compared to gender. This study according to the second objective, enabled the researcher discovered that, although employees are to be paid based on the type of each job they performed, but emphasis should be made on seniority, than gender, asking organizations base their remuneration policy on factors as experience mean 3.08, seniority 2.5 mean. In light of this analysis experience, seniority, are considered the major factor compared to gender only at mean 1.5.

According to priorities, employees opinion in table 6 can be summarized that employees consider experience, seniority, work done per hour, more important than gender study has enabled the researcher understood that, experience and seniority pay a major role in job based pay and it dose not have major influence on the employees performance.

5.3 Home based pay: The third objective was to find out how home- base pay contributes towards the employee's performance in an organization. 39 The study analyzed showed that 66.67% of the employees agree in favor of their salary be paid in Sudanese pound this is because the majority of the respondent interviewed were national staff have trust in their local currency. However despite foreigners employed as expatriate on constitute 25% of the respondents interviewed, but the result reviled that all expatriate disagree payment in the Sudanese pound, rather considering united dollars a better option.

The data also reviled 5% increase in the total number of employees demanding their payment in the major international currency like Untied States Dollars, Euro. This means that 5% of the national disagreed to be paid in Sudanese pound but consider dollars more important.

Expatriates prefer payment in major international currencies because, its easy for them to transfer, money to their families in the home country, and the 5% national demanding payment in major international curren,cy may mean that they might have families abroad or have brothers or people there are sponsoring outside Sudan, because Sudanese pound have depreciated against the major international currency, they consider it good for them be paid in major international currencies.

5.4 Host based pay: The fourth objective was to find out how Host- based pay contributes towards the employee's performance in an organization.

The data analyzed showed that 1.33% of the respondents strongly agree that expatriates should be paid the same as the national staff regardless of whether they are national staff, or working as expatriates. The total of 0.33% of the respondents strongly disagrees with the statement that the nationals are to be received the same salary as expatriates. This study has enabled the researcher discovered that basing on the data computed the mean of 3.7 both strongly

40 agree, agree, strongly disagree and agree that both should be paid the same salary.

However all the national staff strongly agreed that expatriate should be paid the same as the national since they all work in the same condition, but the expatriates strongly disagreed because working expatriate requires more sacrifice of leaving ones home country in order to work in the foreign country which imposes more challenges to them as such they required to be paid more than the salary. Generally national staffs are of the view that organizations should treat them equally with the expatriate, but the expatriates are strongly disagreeing with that they should be paid the same. Therefore the four objective that tried to find out how Host- based pay contribute towards the employee's performance in an organizations can be concluded that it's a 50% influence of each party in an organizations want the protect their own interest.

5.5 Conclusion Organizations faces the challenges of designing a remuneration policy that will enable it meet its strategic objective and motivate its employees work hard hence achieving the organization objective, however because no best format exist for designing a remuneration policy that are accepted by all employees, the researcher, through this study have found out that salary should be based on the skills an employee has, this will encourage them work hard and build more careers in the area, as supported in table 5 above.

This study also established the influence of remuneration on the employees performance, according to the data analysis, it reviled that remuneration is one of the reason why most employees seek employment 86.4%, of respondents strongly agreed that remuneration is important, these should however be based on the skills, as this will motivate employees to work hard, and build careers, thus remuneration have much influence on employees performance in organization.

41 5.6 Recommendation: I will suggest that more research be conducted on non monetary means of motivation in order to understand whether its influence on the employees' performance is more than the monetary which involves giving more financial rewards to employees so that managers are able to know which of the two has more influence on employees' performance in organization.

The researcher also recommend more research as to why female are employees are more than male in most financial institutions , since gander could not be used as the bases for determining their remuneration according to the finding of this research in table 1 and table 6 above respectively.

42 REFERENCES

Michael Armstrong, (2006). Human Resources Management, 10th edition, London University press, United Kingdom.

H. John, (1993). Human Resources Management, McGraw- Hill United States.

Randall S. Schuler, (1995) Managing Human Resource, West Publishing Company, Los Angels United States.

Fred K. Foulkes, (1980). Human Resource Management, ]st edition, Prentice Hall Englewood cliff. United States of America.

John M. Ivance Vich, (2001). Human Resource management,8th editions McGraw- Hill Companies, New York United States.

Gary Dessler, (1988). Personnel Management, 4 th editions, Prentice - Hall Inc, Englewood Clifs New Jersy, United States

S. Subba Rao, (2009). Essentials of Human Resource Management & Industrial Relations, Himalaya Publishing House, News Delhi India.

Bohlander, Snell et al (2001) Managing Human Resource, South- Western Collage Publishing, United States of America.

Donald Kisilu Kombo et al, (2006).Proposal and Thesis Writing, 7 th edition, Paulines Publications Africa, Kenya.

C.R. Kothar, (2004). Research Methodology & Techniques 1st edition, New Age International (P) Limited, Publishers Deli. www.Citeman.com

Gomez, (1995).Human Resource Management, United States

43 David A. Decenzo, Stephen P. Robbins, 3,

David C. Martin, Kathryn M. Bartol, (1998) management (3'd edition) Mc Graw-hill publishers. New York.

David L. Kurtz, Louis E. Boone, (2002) contemporary business (10th edition) Harcourt college publishers. New York USA www.wikipedia.com www.Businessdicationary.com. www.google.com www.Citeman.com http:/ /www.ehow.com

44 APPENDIX A: QUESTIONNAIRE

Dear respondents,

This questionnaire seeks to measure impact of remuneration on employees' performance.

Being a worker, you have been selected to participate in this study, the information provided here is only required for purely academic purpose only. This information will be held with utmost confidentially.

Demographic characteristics:

(1) Gender

Male Female

(2) Age

18-21 22-25 26-30 Above 30

(3) Nationality ......

(4) Department......

(5) Position ......

(6) How long have you been in above position? ......

Skilled-Based pay

(7) (A) Please tick only one ( V)

(4) Strongly Agree (3) Agree 2) Disagree (1) Strongly Disagree

45 4 3 2 1 (i) Employees are to be paid salary

based on their skills.

(ii) Payment based on skills motivates

employees to build career.

(iii) I will be encourage to work hard

when Payment is based on skills.

(7) (B) In your view how payment does based on skills influences

employee's performance ......

······································ ......

46 Job Based Pay or pay per unit:

(8) (A) In my organization, I am paid per

(4) Strongly Agree (3) Agree 2) Disagree (1) Strongly Disagree

4 3 2 1

(i) Work done (per hour)

(ii) Experience

(iii) Gender

(iv) Seniority

(B) Briefly explain how does payment per work done influences job performance? ...... ·····································································································································

Home based pay

(9) (A) All employees are to be paid in Sudanese Pounds

Yes No

(B) If no please state ......

47 (C) KCB employees get the following benefits.

Please tick Yes or No

Yes No

(i) Buy shares

(ii) Medical allowance

(iii) Children school fees

(iv) Insurance

(v) Bonus

48 Host-based pay

(10) (A) In an organization expatriates are to be paid the same as

nationals.

(i) (4) Strongly Agree

(ii) (3) Agree

(iii) (2) Disagree

(iv) (1) Strongly Disagree

In your view, how does host based pay influence employees performance

in an organization? ......

......

......

Thank you.

49 APPENDIX B: TIME FRAME OF STUDY

The researchers hope to conduct the study following the time schedule as indicated in table below. Table 1 Event Time /Duration Proposal writing November 2010 Designing interview guide and December 2010 necessary authorization Data collection January 2011 Report writing /Dissertation February 2011 Submitting March 2011

Budget for the study: The researcher came up with the budget as indicated in table below:

Table 2 Item Amount in Uganda shillings Stationary e.g. pens and papers 10,000 Hiring personnel and clerical 40,000 / Assistants Printing and typing 100,000 Collection of data 40,000 Literature collection 20,000 Miscellaneous 40,000 Total 290,000

50