International Journal of Trend in Research and Development, Volume 3(2), ISSN: 2394-9333

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Employee perception on Compensation Management and Benefit
Policy at commercial bank of Ethiopia
(A case study on commercial banks in Dessie Town, Ethiopia)
1
Dr.Ponduri SB and 2Dr.Aravind Soudikar,
1
Associate Professor, Department of Management, College of Business and Economics,
Wollo Univeristy, Dessie, Ethiopia
2
Assocaite Professor, School of Management & Accounting, Hawasa Univerisity, Hawasa, Ethiopia

Abstract: The aim of the study is to examine employees‟ Objectives of the study
perception on compensation management and benefit
 To examine the perception of employees on
policy at selected Commercial Banks in Dessie town,
current compensation system and benefit policy.
Wollo region, Ethiopia. To meet the objectives researcher
adopted descriptive research design by using quantitative  To identify the most favored type of benefit policy
and qualitative data interpretation. From the total 12 available with the organization.
licensed commercial banks currently operating in Dessie  To observe the difference between qualification
town the sample areas of the study has selected from two and experience in perceiving compensation and
branches of public commercial banks and the two braches benefit policy.
private commercial banks by using purposive sampling  To describe the role of employees in
techniques. The primary data was collected through compensation, benefit decisions and degree of
questionnaire from a sample of 100 clerical employees of communications about and benefit practices.
the banks and interviews from human resource department.
The data has been analyzed by using descriptive statistics Significance of the Study
frequency, tables and charts. From the research it is
observed that employees perception towards current Every organization should build an effective compensation
compensation and benefits are unfair, not distributed management system in order to sustain in the competitive
between supervisor and clerical employees. Employees are world. It may be financial and non-financial compensation.
not participating in compensation and benefits decision and It is useful to attract, retain and motivate individuals
also the compensation system not communicated to towards higher performance. In order to get work done by
employees. the employees and workers organizations need to pay the
required amount of wages and salaries in the form of
Keywords: Employees’ perception, compensation compensation. This system is important for every country
management, benefits policy, commercial bank, Selected and industry and Ethiopian banking industry is not an
Banks, purposive sampling. exception. The current research initiated to examine the
perception of employees on current compensation
INTRODUCTION management system and benefit policy in commercial
Compensation is the remuneration received by an banks at Dessie town, Ethiopia.
employee in return to his/her contribution to the
organization. It is considered to be the most important task Scope of the Study
in any human resource management process. It occurs
periodically, demand accuracy and must not be delayed. It The scope of the study is to examine the employees‟
is also concerned with the formulation and implementation perception on compensation management systems and
of strategies and policies that aim to compensate people benefit policy in the selected commercial banks in Dessie
fairly, equitably and consistently in accordance with their town. They are Commercial Bank of Ethiopia,
value to the organization. It requires integrating human Construction and Business bank, Dashen Bank, and
resource information with business process and strategies Wugagen bank. As compensation system and benefits are
to achieve the organizational goals and objectives. Fair and implemented on permanent employees the study is
reasonable compensation will always help the organization delimited to the data obtained from clerical staff of selected
to retain the employees to get desired goals and objectives. branches of public and private commercial banks.
This practice helps in maintaining good industrial relations
by providing monetary and non-monetary benefits to all the Literature review
employees. A fair compensation system always helps the
organization in enhancing the satisfaction, productivity, Human resources are the most vital resources for every
performance, attendance and retention of employees. organization. Pay has a significant impact on employee
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 International Journal of Trend in Research and Development, Volume 3(2), ISSN: 2394-9333
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behavior, performance and effectiveness in organizations. as follows: Creating a fun, challenging empowering work
(Edwards and Gilman, 1999 as cited by Fitsum environment in which individual are able to use their
Ghebregiorgis and Karsten, 2006). According to Bowman abilities to do meaningful jobs for which they are shown
(2006), compensation management can be defined as all appreciation is likely to be a more certain way to enhance
the employers‟ available tools that may be used to attract, motivation and performance even though creating such an
retain, motivates and satisfy employees. This encompasses environment may be more difficult and take more time
every single investment that an organization makes in its than merely turning the reward lever. According to Brown
people and everything its employees value in the in Armstrong (2008), Compensation strategy defines what
employment relationship. It is also useful in recruitment, the organization intends to do in the longer term to develop
job performance and job satisfaction. The notion of and implement reward policies and process that will further
compensation management just says that there is more' to the achievement of its business goals. It establishes
rewarding the people than throwing money at them. priorities for developing reward plan that can be aligned to'
Understanding the construct of compensation systems, its business and human resources strategies. According to
impact upon the organization's structure, strategies, and Brown in Armstrong (2008), compensation strategy is
employees has been an important area. Popoola and Ayeni ultimately a way of thinking that you can apply to any
(2007) to use compensation as a motivator effectively, reward Issue arising in your organization, to see how you
personnel managers must consider four major components can create value from it. To him, it is necessary to
of a pay structures in an organization these are: (a) Job rate, recognize that effective compensation strategies have three
which is the importance the organization attaches to each components: The compensation management is concerned
job; (b) Payment, which encourages employees by with the financial aspects of needs, motivation and
rewarding them according to their performance; (c) rewards. Managers, therefore, analyze and interpret the
Personal or special allowances and (d) Fringe benefits such needs of their employees so that reward can be individually
as holidays with pay, pensions, and so on. Akintoye (2000) designed to satisfy these needs. For it has been rightly said
the success in attaining goals in human resource planning that people do what they do to satisfy some need. Before
related to attracting and recruiting human capital is directly they do anything, they look for a reward or pay-off. The
linked to compensation offered. Also, the ability to reward may be money or promotion, but more likely it will
motivate workers and retain desired employees is largely be some pay-off-a smile, acceptance by a peer, receipt of
influenced by compensation offered Dulebohn and Werling information, a kind word of recognition etc.(world at work,
(2007). Mulis and Watson in Armstrong (2008) put it "the 2008). Thus, Rao and Rao in workforce management
monetary value in the compensation package is still matter (2008), asserted that the main objective of job evaluation
but they are not only the factor". They also stress that are: To gather data and information relating to job
compensation policies are based on “building a much description, job specification and employee specifications
deeper understanding of the employee agenda across all of various jobs in an organization, to compare the duties,
elements of reward". In the words of Brown as quoted by responsibilities and demands of a job with that of other job,
Armstrong (2008) compensation and reward process are to determine the hierarchy and place of various jobs in an
flow of events that determine the level, differentials of organization and to ensure fair and equitable wages on the
financial rewards, fringe benefits and non-financial basis of relative worth or value of jobs. According to
rewards received by each member of the organization. In Armstrong (2008), an organizational compensation
recent years, the inclusion of non-financial measures has management system includes anything an employee's value
gained more popularity in compensation management and desire that an employer is able and willing to offer in
systems. Some scholars demonstrate positive effects of exchange for employee's contribution. More specifically
incorporating non- financial measures into the such compensation includes financial and non-financial
compensation management system. Empirically (world at rewards. Compensation management is an integral part of
work, 2008). Thus Dalton McFarland asserted that "among human resource management that helps in motivating the
the various devices for eliciting the loyalty, corporation employees and improving organizational effectiveness
and effort of individuals are the various forms of (Naukrihub 2009, 37). They are responsible for each
economics reward both financial and non-financial". decision taken, work done and for every results. The
Compensation includes direct cash payments, indirect proficiency of employees plays a vital role in the context of
payments in the form of employee benefits & incentives to diverse challenges faced by the modern organizations. It is
motivate employees to strive for higher level of an organized practice that involves balancing the work-
productivity are critical component of employment employee relation by providing monetary and non-
relationship. Compensation is affected by many factors like monetary benefits to employees. Bhattacharya (2009) says
labor market factors, collective bargaining, government that balancing the cost of compensation and retaining
legislation & top management philosophy regarding pay employees has now become the most important priority for
benefits (world at work, 2008) The compensation today‟s organization (pp.2). The most previous studies
management process was summed up by work force (2008) focus on the relationship between compensation and
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human resources outcomes like satisfaction, productivity, and how these will be fulfilled. So, the researcher initiated
performance, attendance, and retention. According to to evaluate the employees‟ perception towards the current
Naukrihub (2009) compensation provided to an employees compensation management practices and benefit policy in
can be direct in the form for monetary benefits and or some selected commercial banks in Dessie town.
indirect in the form of non-monetary benefits known as
Methods and Methodology
perks, time off etc. compensation does not include only
salary but it is the sum total of all rewards and allowances The study used both qualitative and quantitative research
provided to the employees in return for their' services. If approach to obtain the desired objectives. It includes both
the compensation is effectively managed, it contributes to primary and secondary data. Primary sources are used to
high organizational productivity. Bob (2011) described in get first-hand information collected from the employees of
his study that compensation processes are based on public and private commercial banks working at Dessie
compensation philosophies and strategies. These contain town. The secondary sources are also used to strengthen
arrangement in the shape of policies, strategies, guiding the primary sources includes books, journals, articles,
principles, structures and procedures. These are devised websites and other published information from the banks.
and managed to provide appropriate types, levels of pay, From the total 12 licensed commercial banks in Dessie
benefits and other forms of compensation. Faheem town a sample of 100 respondents is selected by using
Ghazanfar (2011) Relationship between Satisfaction with purposive sampling techniques. These banks include
Compensation and Work Motivation: There is no firm commercial bank of Ethiopia, Construction and business
basis for the assumption that paying people more will bank, Dashen bank and Wegagen bank. Before analyzing
encourage them to do better work or even, in the long run, the collected data they were checked for accuracy, utility
more work. Bob (2011) Compensation processes are based and completeness, compatibility with the purpose of the
on Compensation Philosophies and strategies and contain study. To reduce the chance of confusion and ensuring the
arrangement in the shape of Policies and strategies, guiding validity and correctness, some pilot tests were taken by
principles, structures and procedures which are devised and distributing the questionnaires in order to reduce the
managed to provide and maintain appropriate types and irrelevant and redundant questions before going for final
levels of pay, benefits and other forms of compensation. data collection.
Adekoya Ismaeel Adeniyi (2013) “Compensation Data analysis and interpretation
management and Employees‟ Performance in Public
Sector” (Case Study of Nigeria Port Authority) Finally the Data analysis and interpretation is necessary in order to
analysis of data collected from respondents shows that understand the perception of employees towards the
compensation management system has impacts on present compensation and benefit policy of the selected
employees performance and also there are other factors banks. Before going for final analysis of the data the
apart from monetary factor that influence the performance researcher has done reliability and validity test to check the
of employees either positively or negatively. accuracy of the data. According to Sekaran (2001), a
response rate of thirty percent is acceptable for most
Research Gap studies. The response rate for this study was 100% which is
Ethiopian banking industry is suffering with high labour fully sufficient.
turnover and has high flow of employees from one bank to Table -1 Reliability test or validity test
another bank to facilitate their life style by comparing their
bank pay scale and benefit package with other banks. Cronbach's Cronbach's Alpha based on No of
Employees are also finding the most preferred or perceived Alpha standardized items items
compensation and benefit management system this may 0.883 0.883 35
affect the productivity of the organization. From the earlier
Table -2 questionnaire response rate by organization
researches it is observed that compensation management is
mainly to improve the behavior, productivity, performance Organization Respondents Percentage
and effectiveness. It is also useful to retain, motivate, CBB 15 15.0
satisfy and improves the attendance of the employees. It CBE 50 50.0
focuses mainly on the core function of human resource DB 20 20.0
management such as recruitment, performance, satisfaction WB 15 15.0
and relationship. Some opinioned that it is not throwing Total 100 100.0
money on the employees. It should be focused on the
employee agenda like what for the employee is working Demographic profile of respondents
and their desires. Some focused on differential rewards, The respondent‟s demographic profile includes gender,
fringe benefits and non-financial rewards. Some observed education, age, work experience, category of the job. From
in balancing the cost of compensation. But no research has the total respondents 71% have BA/BSc degree, 17%
focused on the internal desires and wants of the employees respondents diploma holders, 6% of the respondents were
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masters and rest 6% were technical school graduate. In the 16 % ranging from 1201-3000 and the rest 6% were
job category 81% of those respondents are from officers between 501-1200.
and the rest are supervisors. Majority of the sample 69%
Employee’s perception of the effectiveness of
were male and female were 31%. 49% of the respondents
compensation and benefits
are aged between 25-34years, 21% were under 25 years
and 20% was between the age of 35 to 44 and the rest 7% Employees perception towards compensation and benefits
and 3% of the respondents were 45-54 years and above 55 adequacy, compensation equitability, fairness, compliance
years respectively. Work experience is another important with government regulations, motivation and incentives,
factor decides the loyalty of the employees towards the attraction and retention, keeping balance between cost of
organization. From the data collected 62% serve less than 4 employer and employees contribution, securing from
years, 27% serve between 5-9 years, 8% serve between 10- unemployment and provision of opportunity to attain self-
19 years and the rest 3% serve for 20-30 years. Coming to interest.
the compensation of the employees 54% of the sample
were between 4001-5000, 24% was between 3001-4000,

Table - 3 Demographic profiles of respondents

Variable Category Respondents Clerical employees(N=100)
Frequency Percent (%)
Gender Male 69 69
Female 31 31
Education Technical school graduate 6 6
College Diploma 17 17
BA/Bsc Degree 71 71
Master‟s Degree 6 6
Age (N=100) Under 25 21 21
25-34 49 49
35-44 20 20
45-54 7 7
55 and above 3 3
Work experience 0-4 62 62
5-9 27 27
10-19 8 8
20-30 3 3
Salary 501-1200 6 6
1201-3000 16 16
3001-4000 24 24
4001-5000 54 54
Above 5000 6 6
Supervisor 19 19
Job Category Officer 81 81
Total 100 100
(Source: Own survey 2015)
Table - 4 Perception towards the effectiveness of compensation and benefits
Item of perception (n=100) Likert‟s rating score
1. Opinion Strongly Agree No Opinion Disagree Strongly
Agree Disagree
2. Respondents Number Number Number Number Number (%)
(%) (%) (%) (%)
3. Compensation and benefits 25(25.0) 48(48%) 12(12%) 15(15%) 0(0.0%)
adequacy
4. Compensation equitability 19(19%) 51(51%) 12(12%) 15(15%) 3(3%)
5. Compensation fairness 21(21%) 35(35%) 20(20%) 20(20%) 4(4%)
6. Compliance-Government 23(23%) 49(49%) 22(22%) 4(4%) 2(2%)
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regulations
7. Incentives for better 24(24%) 34(34%) 20(20%) 20(20%) 2(2%)
performance
8. Attract and retain competent 21(21%) 31(31%) 17(17%) 29(29%) 2(2%)
employees
9. Balance between organization 14(14%) 33(33%) 23(23%) 24(24%) 6(6%)
cost and employees
contribution.
10. Secure employees from being 36(36%) 40(40%) 13(13%) 8(8%) 3(3%)
exposed to unemployment
11. Provide opportunity to attain 16(16%) 35(35%) 9(9%) 24(24%) 16(16%)
self-interest
(Source: Own survey 2015)

From the above table – 4, 73% of the respondents strongly 51% of the respondents were agreed and strongly agreed,
agree and agree, 15% disagree and 12% have no opinion 30% disagree and strongly disagree, and rest 9 % have no
on the current compensation and benefit package are opinion towards the compensation available is capable of
adequate. The current compensation is equitability 70% securing employees from being exposed to
strongly agree and agree 12% of them have no opinion and unemployment‟. Compensation and benefit package
18% of the respondents disagree or strongly disagree for offered by the organization provide an opportunity to attain
the current compensation equitability. Fairness of the self-interest like constructing a house, buying car, paying
compensation 56% strongly agree and agree 20% are children school fee and others. The number of respondents
disagreeing, no opinion and 4% are strongly disagreeing. either disagree and strongly disagree were 40%, 51% agree
Towards government regulation and compliance 72% agree and strongly agree, 9% have no opinion. It is concluded
and strongly agree, 22% have no opinion and remaining that from the above analysis benefit packages are not
6% disagree and strongly disagree. Compensation and adequate, not fair and equitable, not gaining self interest
benefit package in both types of banks motivates and and not able to meet their basic costs of life.
provide incentives for better performance. 58% of them
agree and strongly agree, 20% no opinion, and 22% Employee’s perception on compensation, benefit
disagree and strongly disagree. Attracting and retaining the decision and administration process
employees is important for every organization, 31% of
The items included in this category includes periodic
respondents disagree and strongly disagree, 17% of
updating and communicating, employees participation,
respondents decline from expressing their opinion and 52%
existence of written compensation and benefit policy,
of them agree and strongly agree. Compensation system
periodic evaluation of effectiveness, link to organizational
keeps balance between government cost and employee
strategic plan, knowledge of source of information, and
contribution, 47% agree and strongly agree, 30% disagree
flexible benefit options.
and strongly disagree and remaining 23% have no opinion.
Table-5 Perception towards compensation and benefit decision and administration
Item of perception (n=100) Likert‟s rating score
1. Opinion Strongly Agree No Disagree Strongly
Agree Opinion Disagree
2. Respondents Number Number Number Number Number
(%) (%) (%) (%) (%)
3. Periodically updated and communicated 12(12%) 37(37%) 29(29%) 16(16%) 6(6%)
4. Employees participation in compensation decision 8(8%) 15(15%) 34(34%) 23(23%) 20(20%)
process
5. The organization has written compensation and 33(33%) 42(42%) 18(18%) 7(7%) 0(0%)
benefit policy
6. Periodic evaluation of effectiveness 14(14%) 34(34%) 29(29%) 17(17%) 6(6%)
7. Link to organization‟s strategic plan 11(11%) 48(48%) 33(33%) 6(6%) 2(2%)
8. Knowledge of where to go for information related to 20(20%) 50(50%) 19(19%) 9(9%) 2(2%)
benefits
9. Understanding of how retirement benefits calculated 18(18%) 33(33%) 18(18%) 23(23%) 8(8%)

Provision of flexible benefit options 19(19%) 38(38%) 17(17%) 23(23%) 3(3%)

(Source: Own survey 2015)
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Table - 5 shows that 49% agree and strongly agree 29 % know where to go for information related to benefits.
has no opinion and 22 % disagree and strongly disagree Understanding towards how the retirement benefit policies
with the statement that the compensation and benefits are being calculated 51% agrees and strongly agree, 18%
available in their organization is periodically updated and has no opinion and only 31% disagree and strongly
communicated to employees. Employee participation in disagree. Flexible benefit policy is always good for the
compensation decision process 43% disagree and strongly organization to motivate the competent employees. 57%
disagree 23% strongly agree and agree and rest 34% have are agreed and strongly agreed 17% have no response 26%
no opinion. It is due to lack of time to participate in the have disagreed and strongly disagreed.
compensation and benefits decision processes.
Organization has a written compensation and benefit policy Employee’s perception towards overall compensation
75% of the employees agree and strongly agree 18% have and benefit policies
no opinion and 7% disagree and strongly disagree.
Eight items included in this part namely, performance
Effectiveness of compensation and benefit policy package
based payment, appropriate payment for experience and
is periodically evaluated 48% have strongly agree and
qualification, adequate payment for responsibility
agree 29% have neither nor 17% have disagree and 6%
discharged, effect on employee‟s productivity, comparison
have strongly disagree. Employees do not believe that they
with other sector, potential for supporting and facilitating
linked to organization‟s strategic plan 59% agree and
organizational goals, gap between what is and what
strongly agree 33% has no opinion and 8 % disagree and
employees think should be, and the need for revision and
strongly disagree. Moreover, 70% agree 11 % disagree and
rationalization.
strongly disagree 19 % have no opinion that employees

Table -6 Employees‟ perception towards overall compensation and benefit policies

Item of perception Likert‟s rating score
1. Opinion Strongly Agree No opinion Disagree Strongly
Agree Disagree

2. Respondents Number (%) Number Number (%) Number (%) Number (%)
(%)
3. Payments based on 12(12%) 30(30%) 20(20%) 30(30%) 8(8%)
performance
4. Appropriate payments for 19(19%) 33(33%) 27(27%) 19(19%) 2(2%)
experience and qualification
5. Adequate payments for 20(20%) 37(37) 20(20%) 18(18%) 5(5%)
responsibility discharged
6. Payments have positive effect 25(25%) 40(40%) 16(16%) 13(13%) 6(6%)
on employees productivity
7. The benefits are as good as 19(19%) 38(38%) 17(17%) 23(23%) 3(3%)
other sector
8. Support and facilitate 28(28%) 50(50%) 14(14%) 6(6%) 2(2%)
achievement of organizational
goals
9. Comparable to what 11(11%) 56(56%) 15(15%) 14(14%) 4(4%)
employees think should be
Current compensation system 6(6%) 34(34%) 26(26%) 21(21%) 13(13%)
fulfills the psychological and
self-actualization needs of
employees.
Current compensation 24(24%) 32(32%) 19(19%) 20(20%) 5(5%)
management system allows
employees to take up higher
responsibilities.
(Source: Own survey 2015)

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The above table - 6 indicates that the majority of the they claim to have a negative effect on quality of
respondents (38%) disagree/strongly disagree and (20%) of education, particularly clerical staff . On the other hand, the
the respondents has no opinion and the rest 42% majority of respondents (57%) agree with the idea that the
agree/strongly agree with the statement that „I am being compensation and benefits available in their organization is
paid based on may performance‟ and only few of the as good as other sector and 26% of the total respondents
respondents agree with the statement. Moreover, about disagree /strongly disagree only 16% of the respondents
52% of the respondents agree/strongly agree with the have no opinion. In relation with statement „the current
statement that says „Appropriate payments for experience compensation and benefits are comparable with what you
and qualification employees have and about 21% of the think should be‟ 66% of the respondents agree/strongly
respondents disagree with the statement, and the rest 27 % agree, 18% agree and 18% have no opinion. This implies
have no opinion. Similarly, the half of respondents there is a gap between some employee‟s expectation and
agree/strongly agrees (57%) with statement „there are the actual compensation and benefits. Moreover, the
adequate payments for responsibility discharged‟, 20% majority of respondents agree/strongly agree (40%), 26%
show no opinion and the rest 23% disagree/strongly have no opinion, and 24% disagree with statement „Current
disagree. Therefore, there is a need to design compensation compensation system fulfills the psychological and self-
and benefits taking in to account the performance, actualization needs of employees; there is a need to satisfy
experience, and qualification of employees. In the open employees why greater than half of the respondents half no
ended question asked to suggest the solution to the problem opinion and disagree. As the respondents level their
available in their organization they state that there were perception on the above listed the majority of the
differential pay systems for managerial position clerical respondents have the perception as they do not agree and
employeesand clerical officer those who are experienced, no opinion this shows that employees‟ perceive that the
attractive position and house allowance. Furthermore, current payment is doing not consider the qualification and
about 65% of the respondents agree/strongly agree, 16% experience of employees, and also they declare as there is
have no opinion, and the remaining 18% disagrees with the pay difference between clerical employees those who are
statement „the current compensation and benefit package doing on managerial position (supervisor) and clerical
has positive effect on employee‟s productivity‟. This officers.
implies that how much 65% of the respondents believe as it Employee’s perception towards pay mix and pension
has affect the but the rest of the respondents disagree with plan
compensation and benefit being offered to the employees
This category contains items related with pay mix and
have positive effect and force employees to look for
pension planning issues and respondent‟s perception.
additional employment outside their organization which
Table- 7 Perception towards pay mix and pension plan
Item of perception Likert‟s rating score
Opinion Strongly Agree No opinion Disagree Strongly
Agree Disagree
Respondents Number Number Number Number (%) Number (%)
(%) (%) (%)
Giving more cash and letting pension 8(8%) 43(43%) 38(38%) 9(9%) 2(2%)
planning for the employees

Option to choose cash component 8(8%) 48(48%) 34(34%) 8(8%) 2(2%)

against non- monetary benefits
cash component in the pay packet 22(22%) 37(37%) 35(35%) 6(6%) -
should be much more than the non-
monetary benefits
There is a pressing need to review and 24(24%) 35(35%) 33(33%) 8(8%) -
rationalize the pay structure to improve
employee efficiency
(Source: Own survey 2015)

Table-7 shows the items regarding the perception of employees‟, 38 % have no opinion, and 11%
employees towards the pay mix and pension plan. (51%) of disagree/strongly disagree with statement. Moreover, 56%
the respondents agree/strongly agree with the statement of the respondents agree/strongly agree with the statement
„giving more cash and letting pension planning to „Organization should give the option to choose cash
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component against non-monitory benefits‟, but, 10% either It can be observed from the above table almost half of
disagree or strongly disagree where as 34% show no respondents only rate the current salary and benefits either
opinion. This analysis shows almost half of the respondents most favorable/favorable 58% of the respondents rate the
were did not accept it. Similarly, 46.9% disagree/strongly current salary as either most favorable/favorable, 23% have
disagree with the statement „pay should focus more on cash no opinion, or only 19% rate it as unfavorable. Similarly,
and let retirement planning for employees‟, 31.3% have no (59%) rate the benefit package as most favorable/favorable,
opinion. However, majority of respondents (59%) agree or 20% show no opinion, and the remaining 11% rate it
strongly agree with the statement „pay packet should focus favorable. As it stated above somewhat the respondents
on cash than non-monitory benefits, 35% have no opinion, value their opinion as the same
and only 6% disagree. Finally, respondents argue strongly Perception towards the favorableness of benefits
towards the statement „There is a pressing need to review
For the question asked to specify the best and least favored
and rationalize the pay structure to improve employee
among the benefits listed in instrument and others that can
efficiency, however the majority of respondents
be added by the respondents.
agree/strongly agree (59%), 33% have no opinion, and 8%
Table - 10 Indicates Perception towards the best
disagree with statement „there is a need to review and
favorableness of benefits
rationalize the pay structure and benefit packages, Why
because the above description indicates that generally Benefits instrument Best favored Best
employees argue against letting pension planning for favored
employees. But, need pay packet is more of cash and Insurance (Health, life, (76%) 76
flexible benefit package. disability)
Employee’s rating of salaries and benefits Paid leave (Training, sick (11%) 11
leave, vacation)
Table- 8 Perception towards pay mix and pension plan Legal Advice - -
Question Response Frequency percentage Elderly and child care - -
Do you have a Yes 65 (65%) Social security and saving (9%) 9
clear plan
No 35 35%
understanding of Others* (4%) 100
Total 100 100%
how compensation (Source: Own survey 2015)
and benefits As we can observe from the figure the best favored benefit
instruments are type (76%) was insurance (health, life, disability) followed
determined by paid leave (training, sick leave, vacation) (11%), and
(Source: Own survey 2015) social security and saving plan were level their opinion as
From table 8 it can be observed that the greater than half 9% of the respondents then the rest 4% of the respondents
of respondents (65%) understand how compensation and value their benefit instruments as others and also some
benefit instruments are determined whereas the remaining respondents list other benefit instruments as house
(35%) do not understand so, the management body should allowance, mortgage loan, automobile loan and
give awareness how compensation and benefits representative and fuel allowance. The response to this
determined. question provide important clue for benefit decision
Table - 9 Employees response on current benefit packages makers regarding which benefit instrument if included in
Question Likert scale the package can satisfy the interest of the majority of
Most Favor No Unfavor Least employees.
favora able opini able unfavor Table - 11 Indicates Perception towards the least
ble on able favorableness of benefits
Rate your 10(10 48(48 23(23 (16%) (3%) Benefits instrument Least favored Best favored
current %) %) %) Insurance (Health, life, (1%) 1
base disability|)
pay/Salary/ Paid leave (Training, sick (2%) 1
wage leave, vacation)
Opinion on (11%) (48%) (20% (19%) (2%) Legal Advice (39%) 39
current ) Elderly and child care (39%) 39
benefit Social security and saving (5%) 5
package plan
(Source: Own survey 2015) Others* (4%) 100
(Source: Own survey 2015)

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And also Employees were asked to specify the benefit they  The focus of restructuring compensation and benefit
have received so far among those specified in the policy should include the base pay between officers
questionnaire including insurance policies(health, l and supervisors or managerial staff.
training, seek days, vacation, holydays etc.), legal advice,  The new benefit package should include incentives
child and elderly care, social security and saving plan. The like insurance coverage particularly health insurance
response of the respondents from both public and private for both the employee and their family.
commercial banks indicates that tangible number of  It is proved and suggested that employee participation
respondents favored so far some of benefit instruments as in decision making process gives good results.
the table indicates same 39% of the respondents value their Modern organizations makes the employees as a part
response as they least favored the legal advice and elderly of their decision making process to attain the goals
child care in addition to this there are also number of and objectives.
respondents those who list their idea on the option others as  Employees need more information about pay and
their organization not keep their family care example child benefit practices, it is essential to educate and
care, family and also other coverage of fees. .i.e.: tuition communicate employee about compensation and
fee for children of staff, medical payment for family of benefits time to time.
staff and sick leave for family treatments were the types of  Furthermore, it was observed that only limited number
benefits what the respondents declare on open ended of respondents understood the existence of policy,
question. rules and regulation, so the organization needs to
CONCLUSION periodically communicate the policies, rules and
regulations pertaining to compensation and benefit
Based on the major findings, the following conclusions packages.
were drawn. Many employees believe that the current  About the pension benefits employees need to
compensation and benefit is not fair and banks need to sensitized and educated with regard to purpose and
cope-up with ongoing cost of life. Compensation and use of pension benefits. There should be a possibility
benefit packages are not periodically updated and of borrowing from their pension benefits in case of
evaluated for effectiveness. Furthermore, the existing serious problems to ease their financial burden. With
benefits are not well communicated to employees. The this the employee get dual benefit, may not deplete
respondents claim that the compensation and benefit their pension. At the same time relieve their financial
package should be reviewed. When employees are burden.
participating on compensation process banks need to take
 Promotion and selection of employees, the
factors like market condition, nature of the jobs,
organization should give high value for outstanding
competitors, government regulations and also the internal
performance rather keeping the seniority with low
factors like values of the job grades through job analysis.
education back ground. This will enhance the loyalty
Some employees feel that organizations considering
of the employees, increase the performance and
seniority than performance. This may affect the perception
reduces the turnover.
of employees towards compensation management system
and benefit policy. Majority of the employees are officers. References
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