Abstract:
The purpose of this study was to investigate the effect of employee compensation on organizational performance. The study covered Bomet Central Sub-County and was guided by the following objectives: To determine how basic pay rate affects employee performance, to determine how payment of allowances affects employee performance, to determine how disparities of salaries of employees across departments affects employee performance, to determine how time factor in compensation payment affects employee performance, the study also adopted a case study method; The researcher used questionnaires to collect the data and also consulted secondary sources and literature for comparison. After the collection of the data it was edited to identify inconsistencies and establish uniformity and then compiled to facilitate entry of the responses into the computer. Questionnaire was generated based on a combination of questions which was an open and closed ended, interviews and direct observation. The study targeted a population of 100 and a sample size of 30 employees which is 30% of the total population was picked using a simple random sampling. From the study it was established that compensation, allowances and incentives contributed positively to employee productivity, efficiency and effectiveness. Furthermore, it was established that disparities in salaries of employees in departments affect performance negatively. The research was set to benefit the organization itself in enhancing the compensating techniques to personnel’s in the organization. It is of great benefit to the organization in that the research provided them with suitable ways of decision making on how to manage their compensation methods. The research was also set to benefit the students of business because it adds the literature in the field of business activities and provide them with recommendations on the suitable ways of compensating employees in their firm/organization.
