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Mary Ijaya Mmbusa - Master of Business Administration (Human Resource Management), Kenyatta University, Kenya

Dr. David Kiiru (PhD) - Department of Business Administration, Kenyatta University, Kenya


Compensation plays an important role in determining employees’ job satisfaction and thus performance. The perception of being paid what one is worth predicts job satisfaction. Health Workers in Kenya have always downed their tools lamenting about their compensation which raises concern about their job satisfaction. However it is not clear the influence compensation has on employees performance to cause the many stand offs. This study therefore sought to establish the effects of compensation on employees’ performance in the Public Health Sector in Nairobi City County Kenya. The objectives of the study were to determine the effects of both financial and nonfinancial compensation on employees’ performance. The study employed a descriptive research design. Stratified random sampling was used to select a sample size of 110 employees drawn from the target population of 1100. Responses were collected through administration of questionnaire. The validity and reliability of the questionnaire was enhanced through a pilot study carried out in selected Hospitals in Nairobi City County. To ensure the validity of the instruments, both face and content validity was used. Data collected was categorized coded and then tabulated using SPSS. The qualitative data was analyzed using descriptive statistics, means frequency tables and percentage. The study established that competitive salaries, incentives, indirect compensation and rewards had a positive and significant influence on employees’ performance. The study concludes that a competitive salary package can improve employee motivation, reduce employee turnover and increase productivity, incentive plans motivate workers for higher efficiency and productivity. It can improve the work-flow and work methods, indirect compensation is a non-monetary benefits offered and provided to employees in lieu of the services provided by them to the organization and that that employees become more engaged when their performance is properly recognized by their employer. The study recommends that paying a competitive salary is crucial for companies wishing to recruit and retain top talent, the organization should review existing reward programs and determining their effectiveness in meeting the organization’s objectives, employees should be provided with the adequate allowances and facilities during their overtime, if they happened to do so, such as transport facilities, overtime pay, etc. allowances to get their regular check-ups and that the organization should align employee reward strategies with business strategy.

Full Length Research (PDF Format)