Managers' compensation preferences and the existing compensation schemes (a case study of the co-operative bank of Kenya)
Abstract
In an attempt to determine managers' compensation preferences and the relevance of the existing
compensation schemes in the Banking Industry of Kenya, this study was designed to take the
nature of a survey and focussed on a case study of the Cooperative Bank of Kenya. The
Secondary data that guided in the conceptual frame work took a motivation theory based approach
to the broad view of compensation. This enabled the development of the research instrument by
way of the items of compensation of both intrinsic and extrinsic nature categorized into either
economic or non economic rewards and incentives. Out of the 40 questionnaires given out, only 33
of them were responded to by an equivalent number of managers from the Bank. They were
required to respond to them by asserting their degree of importance of the items listed in a 5- point
Likert scale as well as their opinions towards the items of compensation. The instrument was found
to have high reliability and internal consistency of 0.77 measured by the Coefficient Alpha. The
findings of the study were analyzed using both parametric and non- parametric techniques of
Factor Analysis, Z- statistic and chi- square statistic respectively.
The results of the study showed that the managers have significant compensation preferences
which are weakly associated with the demographic variables of occupation and seniority and
relatively different across the items of compensation. Ten factors were extracted as the most critical
issues of concern for compensating the managers in the Bank, some of which are highly
correlated. Those non-economic items were relatively more preferred to the economic ones. It was
also found that the current compensation scheme of compensation is irrelevant with an expected
utility of zero with regard to the identified preferences of the managers. The irrelevance was
theoretically explained as not to be emanating from the items of the scheme per se, but from
reasons that touch on structural and administrative issues of these rewards that are incongruent with
the postulates of motivation theory to compensation. However, the study concluded by noting that
the sample size drawn was too small to generalize these findings across the entire Banking
industry and the Kenyan Economy at large.
Citation
Masters thesis University of Nairobi (1999)Publisher
University of Nairobi Faculty of Commerce
Description
Degree of Business and Administration