Influence of Compensation Practices on Performance of Employees in the Saving and Credit Institutions in Nairobi City County

Abstract

Saving and Credit Cooperative societies (SACCOs) are adopting human resources practices such as compensation that are more attractive to employees of microfinance institutions. The business of credit institutions is unique in aspects such as group lending and therefore the loss of one employee through poaching or suitable replacement for effective on portfolio management. Sacco‟s institutions are facing competition in the market and this influence hiring competent employees. Despite adoption of human resource practices by SACCOs, so little but scanty study had been done focusing on compensation practices of performance on employee in SACCOs. The objective of the study was to determine influence of compensation practices on employee in regulated SACCO sector in Nairobi City County. The research done was descriptive research design in nature. The population targeted was comprised 33 SASRA SACCOs in Nairobi City County. The information collected was through questionnaires which could both quantitative and qualitative information data. The research revealed that regulated SACCOs had adopted various employee compensation programs such as direct remuneration and indirect payment for services rendered by the employee through commission, allowances and bonus, insurances schemes for health, dental, life, disability and vision and retirement benefits. It was found that compensation programs implemented by SACCOs focus on influencing employee performance as agreed.it was concluded that regulated SACCOs had adopted variable compensation pay program in rewarding of employees to improve performance. The study concluded that regulated SACCOs adopted equity-based compensation programs such as salary variation which influence long-term employee‟s productivity. The study concluded that regulated SACCOs adopted competency based pay which the productivity of the SACCO to a very great extent. The study concluded that adopted compensation practices which were matching with financial payment in improving productivity. The study concluded that regulated SACCOs implemented incentive pay compensation programs such as allowances, eliminate pay inequalities, pay employees on leave motivating employees paying overtime, paying compression as optimal on strict efficiency grounds influencing employee motivation