Effect of Direct and Indirect Compensation on Employees’ Job Satisfaction of Selected Microfinance Banks in Ilorin Metropolis

Abstract

The most important resource of an organization is human resource. In an overall performance of an organization, it is very important to retain an efficient and effective workforce. Motivated employees can add value to an organization by successfully achieving its targets. This study therefore examined the effects of direct and indirect compensation on the employees’ job satisfaction of selected Microfinance banks in Ilorin Metropolis. The specific objectives are to: (i) assess the effect of rewards on employees’ job satisfaction. (ii) evaluate the effect of indirect compensation on employees’ job satisfaction. The study adopted a descriptive design Questionnaire was the used to elicit information from the employees of selected five microfinance banks in Ilorin metropolis. These microfinance banks are: Balogun Fulani Microfinance bank, Balogun Gambari Microfinance bank, Balogun Ajikobi microfinance bank, Ilorin microfinance bank and University of Ilorin microfinance
bank. Twenty (20) copies of questionnaire were distributed to each of the Microfinance banks using a convenience and simple random sampling technique to avoid bias as much as possible. A total of 100 employees of these five (5) microfinance banks were chosen as sample size. Findings from the study revealed that; there is a significant relationship between rewards/salary and the employees’ job satisfaction in selected microfinance banks in Ilorin metropolis (R =0.245, R2 =0 .060, P < .05). Also, there is a significant relationship between indirect compensation and employees’ job satisfaction in selected microfinance in Ilorin metropolis (R = 0.560, R2 = 0.314, P< .05). The study concluded that, there is a positive and direct relationship between rewards/salary and employees’ job satisfaction. This shows that employees of microfinance banks observe clear link between rewards for their work and job satisfaction along with career progression. The study also concluded that if Microfinance banks in Ilorin offer fringe benefits including gratuity, pension payment, and medical benefits, there will be employees’ job satisfaction because they are tools of motivation in organizations. The study therefore recommended that The study recommended that Microfinance banks needs to focus a lot on the wellbeing of its most precious assets that is Human resources. Healthy balance between employee’s work life and life outside the work need imperative importance. The study recommended that bonus systems may be injected in microfinance banks to reward efficient and hardworking employees so that they can be retained. More so, culture of praise and verbal appreciation should be encouraged in bank branches from the manager and senior officers to help in motivating the employees and keep them determined towards their work.