THE EFFECT OF COMPENSATION PRACTICE ON EMPLOYEE JOB PERFORMANCE: THE CASE OF HORRA CORPORATE GROUP

Abstract

The main research objective is aimed at finding out the extent to which the institution gives focus on compensating its employees in order to encourage them and thus assist it to reach its goals and visions. Purpose of this study is therefore, to assess the effect of compensation practice on employee job performance within the Horra corporate group, Ethiopia. The researcher used both descriptive and explanatory research approach which describes and explains the effect of employee compensation on employee job performance using both qualitative and quantitative mechanisms. Information was gathered from a sample of 93 employees using both questionnaire and interview as a data gathering tool using convenience and purposive sampling methods. Labour unions, company’s ability to pay, cost of living, labor market and Government policy were identified as the independent variable and employee’s job performance as the dependent variable. Data obtained from the respondents was then analyzed. The Findings obtained through the use of descriptive , correlation and multiple regression were applied for data analysis and concluded that there is positive relationship between the three dimensions of employee’s compensation practice (i.e. company’s ability to pay, the effect of labor market and the effect of government policy) were important determinants of employee’s job performance and also the government policy has significant contribution to employee’s job performance which sets provision of training and development under the employee’s compensation policy, proposing new personnel policies and human resource management policies. Finally, it is recommended that the company should come up with effective compensation plans especially in investing the various aspects of human capital so as to remain competitive and maintain long run survival.