Influence of compensation on employee productivity. A case study.

Somtel
Telecommunication company, Hargeisa Somaliland
ABAARSO TECH UNIVERSITY
FATHIA MAHAMED DEIRIE
SUPERVISOR
PHILLEMON TUBIE

A research proposal submitted to the Department of Business Administration,

Abaarso Tech University, in partial Fulfillment of the Award of Master Degree in
Business Administration

May 2023

Hargeisa Somaliland
introduction
 Compensation refers to the total rewards provided to employees
in exchange for their services. It includes financial rewards like
base pay, bonuses, and benefits as well as non-financial rewards
such as recognition and growth opportunities.
 Production bonuses and performance bonuses are based on
achieving specific targets and goals. They provide extrinsic
motivation to employees to increase productivity and effort.

 • Productivity refers to the ratio of output to input. Compensation

is a key driver of productivity because people tend to perform
better when they perceive that their efforts will be rewarded
sufficiently
Cont.….
 In Africa, production bonuses and financial rewards have been found to
significantly increase employee motivation, productivity and happiness
while reducing demotivation. Non-financial rewards like job satisfaction
also drive motivation and loyalty.

 • The government of Somaliland does not mandate the payment of

bonuses. Implementing an incentive scheme linked to productivity
could help attract and retain competent employees as well as increase
motivation and reduce absenteeism.
 • In summary, compensation plays an important role in employee
motivation, productivity, performance, satisfaction, and retention.
Developing a strategic compensation plan and using both financial and
non-financial incentives can benefit both organizations and employees.
Problem statement
 The gap is the lack of understanding about the influence of
compensation strategies on employee productivity in private
companies in Hargeisa, Somaliland. While it is known that a lack
of financial bonuses can contribute to low productivity, there is a
need to gain a clearer understanding of the effectiveness of
different compensation strategies in improving employee
productivity. This gap can be addressed through a study that
explores the experiences and perceptions of employees
regarding compensation strategies and their impact on
productivity, which can provide valuable insights for private
companies in Hargeisa, Somaliland, to develop more effective
compensation strategies that align with the needs and
expectations of employees.
Objectives of the study

 General objectives
 The general objective of the study is to determine Influence of
compensation Strategies on employee Performance. A case study
of somtel Telecommunication company. Hargeisa, Somaliland.
 Specific objectives
 To examine the role of financial bonus on employee productivity.
 To assess factors contributed the increase of employee
productivity.
 To determining The relationship between financial bonus and
employee productivity.
Scope of study
 Geographical scope: This study will carry out from Somtel
Telecommunication Company in Hargeisa Somaliland
 Time scope: The study will carry out from March to june, 2023
 Content scope: The content scope will define the variables and
factors that want to be considered; the content scope of the
study will the influence of compensation bonus on employee
productivity in Somtel Telecommunication Hargeisa, Somaliland
CHAPTER 2: LITERATURE REVIEW

 Theoretical Literature Review

 This literature review defines compensation as the combination of
all cash incentives and fringe benefits that employees receive from
a company in exchange for their services. It also discusses various
types of compensation, including financial and non-financial
compensation, as well as the use of incentives and rewards to
motivate employees and improve productivity. The review
highlights the importance of designing compensation packages that
meet employees' personal needs and recognize their contributions
to the organization. It also emphasizes the significance of frequent
and immediate rewards that are of significant value to the
employee. Overall, the literature suggests that effective
compensation administration is an integral part of managing people
and achieving business objectives.
Cont.…
 Empirical literature review
 The empirical literature review discusses various studies that examine the
relationship between rewards, motivation, and performance in organizations.
The review highlights that both intrinsic and extrinsic rewards play a
significant role in influencing employee performance, but the effectiveness
of compensation is dependent on the characteristics of the reward system,
the organization, the team, and the individual team members. The review
also emphasizes the importance of designing effective human resource
management practices, such as staffing, job design, performance and
compensation systems, managerial styles, and training to enhance
knowledge sharing and motivation. Additionally, the review suggests that
monetary incentives, such as bonus pay, can be effective in improving task
performance, but a composite approach that combines monetary and non-
monetary incentives produces even stronger results. Overall, the review
emphasizes the importance of creating effective incentive systems that
encourage productive and creative behavior, foster loyalty, and stimulate
innovation in organizations.
Conceptual Framework
CHAPTER 3: RESEARCH DESIGN
AND METHODOLOGY
 Research design: This study will be conducted through both
quantitative and qualitative approach specifically Descriptive
research Design. In this research, it will combine both primary
and secondary data; the primary data will be analyzed in the
form of empirical study, while the secondary data will be from the
literature review
 target population: The target population of this study will be
the employee of different business managers and staff private
companies in Hargeisa Somaliland. The target population are 50
employee comes from different business managers and staff
private company sectors.
Cont.….
 Sample size: The sample size for this study has been determined
using the Slovin's formula, which is a commonly used method for
calculating the appropriate sample size in research studies. The
formula is given as: n = N / (1 + N(e)^2). Therefore, a sample
size of 44 will be selected for this study
 Sampling techniques: This study will use both probability and
non-probability sampling, in probability sampling the researcher
will use Simple random sampling will applies as a typical method
of probability sampling technique to select operators and
employees of the enterprise as respondents
 Research Instrument: The study will use a semi-structured
questionnaire as the main data collection instrument. The
questionnaire will comprise both open-ended and close-ended
questions designed to solicit information on the factors influence
of compensation strategies on employee performance.
Cont.…
 Pilot Testing: The pilot test will be conducted to ensure that the
questionnaire is effective in gathering the necessary information
and to identify any potential issues that may arise during the
actual study. A small sample of employees 10 from Somtel
Telecommunication Company in Hargeisa, Somaliland will be
selected to participate in the pilot test . The pilot test will involve
administering the questionnaire to the selected employees and
collecting their feedback
 Cont.…
 Data Processing and Analysis: Data analysis is the process of
bringing order, structure and meaning to the mass of information
gathered. After collecting all the necessary data, these data will
code and edit, analyze and rephrase to eliminate errors and
ensure consistency. Data collected from the respondents will
enter into a computer and analyze with the use of statistical
packages for social scientists (SPSS)
THANK YOU