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International Journal of Economics & Business ISSN: 2717-3151, Volume 1, Issue 1, page 147 - 160
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Mulugeta, W., & Mokonnon, R.. Effects of Compensation on Employee Job Performance..................... 147
Effects of Compensation on
Employee Job Performance: The
Case of Oromia Agricultural
Research Institute
Wakgari Mulugeta1 & Robsan Mokonnon
2
1Dr. Wakgari Mulugeta &
2Dr. Robsan Mokonnon
(Assistant Prf.) 1Oromia Agricultural Research Inistitite, Addis Ababa, Ethiopia
2College of Business and Economics, Haramaya University, Haramaya, Ethiopia
Abstract: Human Resource Development is concerned with the provision of learning, development and training
opportunities in order to improve individual, team and organizational performance. Compensation is one of the
most important elements which motivate employees to contribute their best effort to generate innovative ideas that
lead to better business functionality and further improve organizational performance both financially and non-
financially. The purpose of this study is to assess the compensation management strategy and its relationship to
employee performances in Oromia Agricultural Research Institute within the headquarter located at Gotera,
Nifas Silk Lafto Sub-city, near Special Zone of Oromia and in its centers found at 17 different places in Oromia
Regional State. A total of 286 sample respondents were selected using sample technique; of which 29 and 257
are from head office and centers, respectively. A semi-structured questionnaire was used to collect primary data.
Additionally, secondary data were also gathered from previous research works in the sector and different
published and unpublished manuscripts. The data were analyzed using SPSS statistical software version 20.
Ordinal logistic regression was employed to analyze the relationship between compensation management and
employee’s job performance. The analysis of this paper focused on the three compensation employee direct
compensation, indirect compensation and employee job performance. Policy implication drawn from this study
revealed that responsible governmental organization should adjustment the compensation management strategy
and Special attention must also be given to all employees. In addition, the organization has to create
opportunities that allow its employees to take a different advanced position as to utilize their maximum
performances.
Keywords: Compensation, Employee, Job Performance.
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Mulugeta, W., & Mokonnon, R.. Effects of Compensation on Employee Job Performance..................... 148
1. INTRODUCTION Compensation is one of the most important elements which employees to contribute their best share
to generate innovative ideas that lead to better business functionality and further improve organizational
performance both financially and non-financially. According to Dewhurst et al. (2010), there are
employees that do not just focus on financial compensation.
Employee compensations refer to all forms of pay or reward going to employees and arising from
their employment. Rewards include direct compensation, indirect compensation, and nonfinancial reward.
Developing an effective and appropriate compensation system is an important part of the human resource
process. An effective and appropriate compensation system can help, attract and retain competent and
talented individuals who can help the organization accomplish its mission and goals (Dessler, 2002).
Compensation implies having a compensation structure in which the employees who perform better
are paid more than the average performing employees (Pearce, 2010). Compensation processes are based
on compensation philosophies and strategies and contain arrangement in the shape of policies and
strategies, guiding principles, structures and procedures which are devised and managed to provide and
maintain appropriate types and levels of pay, benefits and other forms of compensation (Bob, 2011).
Compensation as a concept according to Bernadin, (2007) refers to all forms of financial returns and
tangible benefits that employee receives as part of the employment relationship. Compensation includes
issues regarding wage or salary programs and structures accruing from job descriptions, merit-based
programs, bonus-based programs, commission based programs and so on, while benefits typically refer to
retirement plans, health life insurance, disability insurance, vacation, employee stock ownership plan and
so on.
Compensation is a fundamental component of human resource management and covers economic
reward in the form of wages and salaries as well as benefits, indirect compensation or supplementary pay.
Compensation emanates basically from the fact that it provides income to workers and constitutes an
important cost item to the employer ( Martochio, 2011).
Rajagop (2010) argues that compensation, as well as sales territory design, influences the
effectiveness of the sales forces. According to Kraft et al. (2012) compensation is used as a mechanism for
directing sales force energy, activity, and performance. Compensation is a form of remuneration awarded
for a responsibility carried out or strength exerted to accomplish a target which assists as a motivational
factor that emboldens an individual to put more vitality or commitment into his or her job ( Armache,
2012; Ederer and Manso, 2013; Qureshi, 2013). The fundamentals of inspiration were stated as that which
is imperative to an individual, advancing it as a replacement, and the preferred comportment (Shaw, 2014).
Compensation is all tangible and intangible rewards provided by the employer to an employee receive as
part of the employment relationship. The Society for Human Resource Management (SHRM, 2012) has
defined compensation as a systematic approach to providing monetary value to employees in exchange for
work performed.
Compensation is one of the key drivers of motivation because humans are naturally inclined to
perform better when they perceive that they got sufficient payment or returns from their efforts. While
people exert effort for different reasons, today’s competitive economic environment coupled with the
consumer society has made compensation arguably the most important motivation factor. Most people are
motivated by money at least for their basic needs and want. Compensation in any form is the most obvious
extrinsic reward; it provides the carrot that most people want (Amstrong, 2008). Denisi and Griffins (2008)
define compensation as the set of rewards that organizations provide to individuals in return for their
willingness to perform various jobs and tasks within the organization.
According to Brown (2003) Armstrong (2008), compensation employee is ultimately a way of
thinking that you can apply to any reward issue arising in your organization, to see how you can create
value from it. They need clearly define goals and a well-defined link to business objectives, there need to
be well-designed pay and reward programs tailored to the needs of the organization and its people and
consistent and integrated with one another and perhaps most important and most neglected, there need to
be effective and supporting human resources and reward process in place.
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Mulugeta, W., & Mokonnon, R.. Effects of Compensation on Employee Job Performance..................... 149
Many indicate that the implementation of the new compensation policy has brought about huge
improvements in the conditions of service including compensation. A human resource management
function, compensation deals with every type of reward employees receive in exchange for performing a
job (John, 2003). Even more, compensation is not just a free gift, but pay or a reward received during
employment (Dessler, 2004). Therefore, the compensation that employees receive can be provided in
different forms. Researchers argue that compensation often include: bonuses, profit sharing, overtime pay,
recognition rewards and checks, sales commission, health insurance, company-paid car, stock options,
company-paid housing, and other non-monetary but taxable income items (Zingheim and Schuster, 2008;
Navita et al., 2010; Heath field, 2011).
Compensations received by employees are purposeful. Navita et al. (2010) argue that organizations,
both public and private should design compensation policy and strategies to increase employees’ job
satisfaction and job performance. Compensation relates positively to increased life satisfaction (Judge et
al, 2001) and eventually increases employee’s job performance (Armstrong and Baron, 2004). These
motivational theorists simply argue that employee’s satisfaction must subsequently lead to higher job
performance.
Objective of the Study;
a. To identify the compensation of employee available at Oromia Agricultural Research Institute
b. To examine the impact (effect) of compensation of Oromia Agricultural Research Institute on its
employee job performance
c. To investigate the problems and challenges associated with the compensation system of Oromia
Agricultural Research Institute.
2. RESEARCH DESIGN AND METHODOLOGY
The study was conducted in selected centers under Oromia Agricultural Research Institute (OARI).
The head office of the institute is found at Addis Ababa /Finfinne/, located at Gotera, Nifas Silk Lafto Sub-
city, near Special Zone of Oromia. It has about 17 research centers spread throughout the region. Each of
the centers has their own management. The centers are located in West Showa, East shoa zones and South
of Oromia Regional State. Holeta town, where one of the centers is found, is about 45 km west of Addis
Ababa at an altitude of 2400 meters above sea level; It is found at 9º4’North and 38º30’east. Other centers
are located in Batu town which is 163km south of Addis Ababa at an altitude of 1500 to 2000 meters
above sea level on the main road from Addis to Hawasa and located at 7° 40’ North and 380 53’ East.
Another town is Bako research center which is located at 258 km west of the capital, Addis Ababa,
8 km away from the nearest town; Bako is 4 km from highway road to Nekemte town, western Ethiopia.
BARC lies between 90
6‘N latitude and 37
0 9’E longitudes at an altitude of 1650 masl. Agro-ecology is
mid-altitude with high ran fall of 1238mm year-1 and hot humid weather 13.30C minimum and 28
0C
Maximum annum-1 and Yabello Pastoral and Dryland Agricultural Research Center the district is located
at 570 km south of Addis Ababa on the road to Moyale at an altitude of 1750masl with annual mean
precipitation of 500mm and mean annual temperature varied from 190C-240
0C.
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Mulugeta, W., & Mokonnon, R.. Effects of Compensation on Employee Job Performance..................... 150
Figure 1.Map of study area
Source: Own sketch from GIS 2016
2.1 Sample Size and Sampling Procedure
The actual population of this study is the entire staff research directors, center managers, research
team leaders and process managers and other employees from both researchers and support staff members
of Oromia Agricultural Research Institute. Stratified random sampling was employed by the researchers.
To draw sample respondents the simplified formula provided by Yamane, (1967) was employed to
determine the required sample size at 95% confidence level with degree of variability = 0.5 and level of
precision (e) =5%.
21 eN
Nn
286~
)05.0(10101
10102
1
Where n is the sample size, N is the population size and e-is the level of error.
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Mulugeta, W., & Mokonnon, R.. Effects of Compensation on Employee Job Performance..................... 151
Selected Office
Total
staff
numbers
Sample size
Total number of
staff/ type of job/
office
Sample size/
type of job
/office
Oromia Agricultural Research Institute 104 29 Core= 18 5
Support= 86 24
Adami Tulu Agricultural Research Center 272 77 Core= 90 25
Support= 182 52
Bako Agricultural Research Center 229
65
Core= 74 21
Support= 154 44
Holeta Bee Research Center 107
30
Core= 46 13
Support= 61 17
Ziway Soil Research Center 35
10
Core= 17 5
Support= 17 5
Ziway Fisheries Resource Research Center 54
15
Core= 18 5
Support= 36 10
Yabello Pastoral and Dry land Agricultural
Research Center 127 36
Core= 47 13
Support= 80 23
Bako Mechanization Agricultural Research
Center 82 23
Core= 40 11
Support= 42 12
Total 1010 286 286
2.2 Methods of Data Analysis
The descriptive statistics involves frequency table in analyzing the data obtained from the interview,
narrative approaches including quotations from respondents and SPSS version 20 was used and ordinal
logistic regression is used when the dependent or outcome variable has more than two categories are a
multivariate statistical technique that is used for studying the relationship between dependent variable and
independent variables. It provides a method to the changes in the dependent variable in response to
changes in more than one independent variable. Hence, it allows the researcher to determine the relative
importance of each predictor as well as to ascertain the collective contribution of the independent
variables. The model of multiple ordinal logistic regressions was stated as:
Whereas;
Represents employee job performance of employee in Institute ;
Represents direct compensation;
Represents indirect compensation of employee in Institute ,
Represent the measured characteristics of the household including age, gender and level of education
and
Represent the stochastic error term capturing all unmeasured attributes of the sample employees.
3. RESULTS AND DISCUSSIONS
3.1 Descriptive Analysis
As the study result depicts, 173 of the respondents representing 60.5% were males, 113 respondents
representing 39.5% were females. This implies that the involvement of women compared with their
counterparts in the indicated institutional management is low.
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Mulugeta, W., & Mokonnon, R.. Effects of Compensation on Employee Job Performance..................... 152
Sex Frequency Percent
Male 173 60.5
Female 113 39.5
Total 286 100
Source: Own survey computed data, 2016.
Considering indicate table 4 also, 116 respondents fall below the ages of 30 representing 40.6%, 111
respondents fall between 30-39 years representing 38.8%, 36 respondents fall between 40-49 years
representing 12.59% while 23 respondents with the ages of 50 and above represent 8.04%. This shows
that there is more matured, active and productive age workforce in the organization. The organization
must, therefore, put in place very good staff retention systems to retain them.
Age categories Frequency Percent
<30 116 40.56
30-39 111 38.81
40-49 36 12.59
≥50 23 8.04
Total 286 100
Source: Own survey computed data, 2016
Level of educational qualification, 6(2.10%) respondents completed their high school, 20(7%)
respondents had certificates, 58 respondents (20.28%) had diploma, 148 respondents (51.75%) had first
degrees,44 respondents (15.38%) had masters while 10 respondents (3.50%) had PhD. This implies that
the organization has men and women of high education standard that can help in achieving the set
objectives for the organization.
Educational status Frequency Percent
High School 6 2.10
Certificate 20 7.00
Diploma 58 20.28
Degree 148 51.75
Masters 44 15.38
PhD 10 3.50
Total 286 100
Source: Own survey computed data, 2016
Out of the total of 286 respondents, 99(34.6%) had served in the organization for 1-5 years, while
91(31.8%) had served for 6-10 years. Moreover, 36(12.6%), 33(11.5%), 17(5.9%) and 10(3.5%) of
respondents indicated tenure with the organization of less than 1, 11-15, 16-20 and more than 20 years,
respectively. Therefore, this information indicates that most of the respondents were well experienced and
they can provide essential information regarding the practice and challenges of compensation provided by
the institute. Besides to this, it shows that the need for at retire compensation management programs to
motivate to work and to keep them updated with their treatment as well as the supporting organizations
developments, for example, technological, salary, organizational management, and developments so as to
improve their performance, this shows that the organization has men and women with vast experience.
This agrees with the trend in environments where the unemployment rate is high; people are expected to
stay longer in one job as compared with other environments where the unemployment rate is relatively
lower and the turnover rate is higher due to the ease with which people can find employment.
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Mulugeta, W., & Mokonnon, R.. Effects of Compensation on Employee Job Performance..................... 153
Working experiences Frequency Percent
<1 years 36 12.59
1-5 years 99 34.62
6-10 years 91 31.82
11-15 years 33 11.54
16-20 years 17 5.94
> 20 years 10 3.50
Total 286 100
Source: Own survey computed data, 2016
As indicated that the majority of the respondent's salary range fall between 2500 to 4000 birr scale
representing 33.6% while the next scale range fall between 4000 to7000 birr scale representing 29.4%. The
remaining salary range fall 1500-2500, less than 1500, 10,000-15,000, 7000-9999 and greater than 15,0000
representing 22.4%, 7%,4.2%,3.2% and 0.3%, respectively. This indicates the presence of good salary
range in Oromia Agricultural Research Institutes suggesting as salary is one of the compensation strategies
in the organization.
Salary range Frequency Percent
<1500 birr 27 7.0
1500-2500 birr 64 22.4
2500-4000birr 96 33.6
4000-7000birr 84 29.4
7000-10000 birr 9 3.2
10000-15000birr
>15000 birr
12
1
4.2
0.3
Total 286 100
Source: Own survey computed data, 2016
As indicates that, of the respondents’ position are researchers representing 30.6% while research
director and process manager represent 4.2 and 6.4% respectively. The next respondents in the
organization are followed by field and technical assistant that represent 11.1%. This domination is due to
nature of the organization since its focus on researching agricultural problems and provides a solution by
generating, introducing, and disseminating new agricultural technologies to farmers. The remaining
respondent are supporting staff which are assigned on different position to facilitate conducive
environment for researchers such as senior accountants (9.8%), senior auditor (7.7%), human resource
performer (6.6%), planning experts (3.5%), programmer experts (1.7%), and others lower staff assigned
(daily labour and guard, cleaners and other) that accounts 18.5% of respondents.
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Mulugeta, W., & Mokonnon, R.. Effects of Compensation on Employee Job Performance..................... 154
Position of the respondent Frequency Percent
Research Director 12 4.2
Process manager 18 6.4
Assistant researcher 19 6.6
Senior researcher 34 12
Junior researcher
Human resource performer
Senior Auditor
Senior Accountant
Planning expert
Programmer Expert
Field assistant
Technical assistant
Others position
34
19
22
28
10
5
15
17
53
12
6.6
7.7
9.8
3.5
1.7
5.2
5.9
18.5
Total 286 100
Source: Own survey computed data, 2016
As the study results show that since the nature of the organization is an agricultural research majority
of staff are researchers with the field of specializations such as Plant science, Animal production,
Entomology, Agronomy, Soil science, Pathology, Agricultural Economics, and Rural &Agricultural
Development that represents 38%. The others fields of specialization of the respondents are Accounting,
Management, Law, Business administration, Business management, Computer science, and other fields
that represent 15.2, 7.4, 3.2, 2.8, 1.8, 2.5, and 22.7% respectively.
Specialization of field Frequency Percent
Accounting 43 15.2
Management 21 7.4
Plant science 21 7.4
Animal production
Entomology
Agronomy
Soil science
Economics
Rural and agricultural
development
Law
Business administration
Computer science
Pathology
Business management
19
14
14
12
12
11
9
8
7
5
5
6.7
5.0
5.0
4.3
4.3
3.9
3.2
2.8
2.5
1.8
1.8
Other 64 22.7
Total 286 100
Source: Own survey computed data, 2016
As indicated in Table 10, 261 of the respondents’ total working time is 8 hours per day which
represents 91.3% of the table respondents. This is similar to the nations working time policy. The others
working time were 9, 10, 11 and 12 hours per day that accounts 1.4, 2.8, 2.4 and 2.1% respectively, this is
due nature of the research condition that needs time especially Apiculture that needs additional time at
night time.
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Mulugeta, W., & Mokonnon, R.. Effects of Compensation on Employee Job Performance..................... 155
Total work Frequency Percent
8 hours 261 91.3
9 hours 4 1.4
10 hours 8 2.8
11hours 7 2.4
12 hours 6 2.1
Total 286 100
Source: Own survey computed data, 2016
3.2 Measurement of Variables (Ordinal Measurements)
The findings in tables largely conform to most important measures of model fit information
identified in the literature. All the measures were perceived to be significant in measuring the model in
fitness. The measures include both compensation and employee based compensation management
measures; employee job performances are highest levels significant measures.
Model - 2Log Likelihood Chi-Square df Significance
Intercept Only 1950.328 _ _ _
Final 1635.185 315.143 84 .000
Source: Own survey computed data, 2016
3.3 Goodness of fits
It can be deduced from the table 12 that the value of chi-Square for Pearson is (1144.916) the value
of chi-Square for Deviance is (1573.098) and significant at 1 percent level. People work for satisfying their
needs but also desire that their efforts must be compensation employee significant at 1.00 levels. It shows
that compensation managements are positively and significantly associated with employee job
performance at Oromia Agricultural Research Institute. The basic objective of any public organization is
that to compensate employees.
Model Chi-Square df Significance
Pearson 11440.916 9551 1.000
Deviance 1573.098 9551 1.000
Source: Own survey computed data, 2016
3.4 Pseudo R-square
As Table shows the significant results with the values of Cox and Snell of 0.668 which is greater
than the value of alpha 0.05. The value of adjusted R square is 0.668. The results are justified. Analysis of
data showed that the groups of pseudo-R-Square, the independent variables, are how to regress on the
variables of satisfaction affected by compensation management employee, variables in their performance,
According to Table 12 below the purpose of the employee job performance for 66.8% highest
performances in the Oromia Agricultural Research Institute.
Items Value
Cox and Snell 0.668
Nagel kerke 0.668
McFadden 0.156
Source: Own survey computed data, 2016
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Mulugeta, W., & Mokonnon, R.. Effects of Compensation on Employee Job Performance..................... 156
3.5 Determinants of variables and definitions
The variable types and definitions of the compensation employee variable is correlated with
employees’ job performance age of respondent employee in the years, gender of the employee ,1 =male
and 0=for female, education level of the respondent employee in years of schooling, direct compensation
are continuous, an index of the average values of direct compensation indicators, indirect compensation
are continuous, an index of the average values of indirect compensation indicators and employee job
performance continuous, an index of the average values of employee job performance indicators including
high level, medium level and low level
Variables Variable type and definition
Age Continuous, age of the respondent employee in years
Gender Dummy, gender of the respondent employee, 1=male; 0=female
Education Continuous, education level of the respondent employee in years of
schooling
Direct Compensation Continuous, an index of the average values of direct compensation
indicators including salary, house rent allowance, conveyance,
leave travel allowance, medical reimbursements ,special
allowances, bonus.
Indirect Compensation Continuous, an index of the average values of indirect
compensation indicators including Leave policy, Overtime policy,
Car policy, Hospitalization, Insurance, Leave travel Assistance,
Retirement benefits, Holiday
Employee job performance Continuous, an index of the average values of employee job
performance indicators including high level, medium level and low
level.
Sources: Own survey computed data, 2016.
3.7 Effects of compensation on employee job performance
In this study, the direct compensation and indirect compensation variable is correlated with
employees’ job performance at the value of 0.000. The results are significant. In this study, employee-
based compensation management variable is correlated with employees’ job performance at the value of
0.000. The results are significant, the results are significant, and Employee job performances with
relationship to the compensation management at Oromia Agricultural Research Institute are significant at
the level of 0.000. Employee’s job performance is highly implementations.
Variables Coefficient Standard
error
Direct Compensation 0.4358*** 0.0629 6.92 0.000 0.0312 0.0559
Indirect
Compensation 0.2290***
0.0510 4.49 0.000 0.0128 0.0329
Age 0.0240433 0.0500 0.48 0.631 0.0743 0.0122
Gender 0.1490796 0.0958 1.56 0.121 0.0395 0.0337
Education 0.0853317* 0.0496 1.72 0.086 0.0123 0.0184
Constant -0.4900** 0.0233 2.11 0.036 0.0322 0.0957
R-squared 0.3001
Adj R-squared 0.2876
Observations
*** p<0.01, ** p<0.05, * p<0.1.
Sources: Own survey computed data, 2016.
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Mulugeta, W., & Mokonnon, R.. Effects of Compensation on Employee Job Performance..................... 157
3.8 Reliability tests
The value of Cronbach’s Alpha for direct compensation is 0.875 which clearly indicates that the
results. The reliability indicator shows that it must be more than .7 and these results are visible in this
study. The value of Cronbach's Alpha for employee job performance is 0.875 which clearly indicates that
the results are reliable. The reliability indicator shows that it must be more than .7 and these results are
visible in this study. The value of Cranach Alpha for indirect compensation management 0.875 which
clearly indicates that the results are reliable. The value of Cranach Alpha for is Respondent attitude
employee job performance 0.849 which clearly indicates that the results are reliable. The reliability
indicator shows that it must be more than 0.7 and these results are visible in this study.
Variables
Direct compensation
Indirect compensation on employee
Employee job performance
Sources: Own survey computed data, 2016
3.9 The challenges associated with the compensation employees
a. Issues concerning compensation in the organization were not communicated effectively to all
employees at all levels in the Institute.
b. There was no proper performance compensation management system and an evaluation system in place
to facilitate compensation management.
c. There was no forum to discuss issues of compensation with all employees.
d. The policy manuals that contain the compensation packages were not readily available to the entire
population.
e. The management and review of compensation packages were not abreast with the current economic
situation in the county and therefore their intended effect is not fully felt.
f. There was no proper training for the direct implementers of the compensation policy and letters.
g. There was very minimum or no employee involvement in the formulation and implementation of
compensation correspondence.
3.10 Validity test in the factor loading
The factor, which seems to index competence, loads most strongly on the first three items, with
loadings Q2 in the direct compensation 0.766 .second of the items indexed competence and had loadings
respondent attitude employee job performance Q9 with loading factor 0.756. The second factor, which
seemed to index motivation, was composed of the three items with loadings in Q10 for factor loading
0.734. Factor loading, but had a cross-loading on the competence factor. The least factor loading, which
seemed to index (low) pleasure from factor loading, comprised the items with loadings in the three items.
Q3 for loading factor was 0.727, Q8 loading factor was 0.717 and Q4 loading factor 0.717.
Sources: Own survey computed data, 2016.
No Variables Items /Questions Factor loading
1 Direct compensation employee Q2 0.766
2 Respondent attitude towards employee
job performance
Q3 0.727
Q4 0.710
Q8 0.717
Q9 0.756
Q10 0.734
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4. CONCLUSION AND RECOMMENDATIONS
The purpose of the study was to determine the effect of employee compensation on employee job
performance the case of Oromia Agricultural Research Institute. Based on the findings of the study, the
following conclusions were drawn on the three key and specific objectives of the study.
The effects of compensation employee on Oromia Agricultural Research Institute /OARI/ when the
research was carried weren’t consistent with standard compensation described in management literature
and the institute faced some challenges of inadequate budgetary allocations and compensation
management strategy in implementing its employees’ job performance.
In their compensation should be served, employees placed administrative purposes in the rank of
priority, on the other hand, they found a system of employees’ job performance which was being operated
in Oromia Agricultural Research Institute (OARI) to be primarily administration in purpose. It would be,
therefore, realized that the current system of compensation management strategy has been operated to
accomplish the purpose which is contrary to what employees’ job performance would have expected to be.
The current compensation is not periodically updated and evaluated for effectiveness. Furthermore,
the existing benefits are not well communicated to employees. Both salary and benefits available in the
institutions were rated mostly unfavorably. According to the 60% of the respondents, the Institutions are
being not paying the payment also differs from one employee to other for the same job and educational
qualifications.
Based on the findings of the study, the following recommendations are forwarded.
a. Creating links between compensation management strategy, with the employees’ job performance,
standards, organizational goals and bringing out the initial job performance aid criteria of a job was
easily determined the difference between success and failure.
b. To make compensation management more effective, Oromia Agricultural Research Agricultural
Institute should have to plan /specific compensation schedule/and have to follow systematic
compensation programs. While most of the benefits derived from compensation are easily attained
when compensation is planned and an organization needs to have a continuous plan of training and
retraining of employees. The institute should also provide adequate training to employees that enable
them to perform the work as required by searching for various financial sources.
c. The OARI should improve compensation management activities by solving those multiple constraints
through taking effective measures. A key to obtaining consistent success with compensation programs
the management should have a systematic approach. Therefore, compensation program of the institute
should be systematic in that it is specifically designed, planned and implemented to meet defined needs.
Thus, OARI should have the compensation management strategy unit and experts. Besides to this,
management should search various financial sources which can contribute to compensation
management strategy to employees’ job performance activities of the Institute
5. REFERENCES 1. Anyebe, A (2003).The Nigerian Civil Service, Issues in structures and operation, Journal of Professional
Administration. 5;11-17
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