UTILIZATION OF EMPLOYEE COMPENSATION PRACTICES BY MANAGERS OF SMALL AND MEDIUM SCALE ENTERPRISES FOR IMPROVED BUSINESS PERFORMANCE IN DELTA STATE, NIGERIA

Abstract

The need to improve performance of small and medium scale enterprises (SMEs) prompted this study to determine the employee compensation practices utilized by Managers of SMEs in Delta State. One research question guided the study and two null hypotheses were tested. Descriptive survey research design was adopted in the study. The study was carried out in Delta State, Nigeria. The decision to use Delta State for the study is informed by the fact that it has many SMEs which are experiencing reduction in business size, slow expansion rate and even business failures. The population for the study consisted of 420 managers of SMEs in the general business service sector operating in Delta State. The entire population was studied because the number was manageable. . A five-point rating scale questionnaire containing 10 items which was validated by experts in the field was used to collect data for the study. The reliability of the instrument was analyzed using Cronbach Alpha reliability method. The coefficient value obtained was 0.79. Mean and standard deviation were used to answer the research question and determine the closeness of the respondents’ responses to the mean while Analysis of Variance (ANOVA) and t-test were used in testing the null hypotheses at 0.05 level of significance. Findings revealed that operators of SMEs in Delta State utilized employee compensation practices to a moderate extent. It was also revealed that years of business experience and gender of the respondents did not significantly influence their mean ratings on their utilization of employee compensation practices for improved performance. It was concluded that SMEs managers’ level of utilization of employee compensation practices is not enough to boost staff moral and motivation for improved productivity and could be a major contributory factor to the poor business performance they are witnessing. Based on these findings, the researchers recommended among others that managers of SMEs should make concerted efforts to involve employees in taking decisions on the issues relating to their salaries, wages and benefits in order to be aware of their worries. It was also recommended that the managers should employ financial and human resource management experts to help determine employees benefits that are commensurate to their roles and responsibilities based on the financial standing of the SMEs.