Factors influencing employee perception of equity in compensation among medium sized commercial banks in Nairobi

Abstract

The main of purpose of the study was to investigate factors influencing employee perception of equity in compensation in medium sized commercial banks in Nairobi. Employees perceive equity in compensation when their input output ratio is equal compared to other reference group. On the other hand perception is a complex process by which people select, organize and interpret sensory into stimulation into a meaningful and coherent picture of the world. Compensation includes direct monetary payment, indirect payments in the form of employee benefits and incentives to motivate employees to strive for higher levels of productivity. The population of this study consisted of all the employees in the thirteen (13) commercial medium sized banks in Nairobi. This was a cross sectional descriptive survey design since data was collected and provided insight into the research problem by describing the variables of interest among the units of study. The study found out that perception of fairness in compensation affects the relationship with your colleagues as well as perception of fairness in compensation influence your motivation to work, external equity influence on wages over internal equity influence, workers often rank job security, working conditions, advancement opportunities, management appreciation, relations with co-workers, and flexibility of hours or job assignment ahead of compensation. It recommended that further research should be done on the relationship between perception of equity and job satisfaction under the other financial institutions.