CHAPTER ONE
INTRODUCTION
1.1   Background to the Study
Pay constitutes an integral part of the success of any organization. It motivates employees to put in more effort in their services in the organisation and this in turn reflects positively on the efficiency and productivity of the organization. It is the single most important motivator used in the workplace. Pay is an important process in human resources management covering economic rewards in form of wages and salaries and various forms of non-wage economic payments called fringe benefits, indirect compensation or supplementary pay (Martocchio, 2011).
The significance of pay emanates mainly from the fact that it provides income to workers and constitutes an important cost item to the employer. It is the single largest cost for many organizations. It provides means of satisfying wants and needs for the workers. Pay is a major component of the compensation process, which is aimed at reimbursing employees for their work and motivating them to perform to the best of their abilities (Fapohunda, 2015).
Herzberg (1979) identifies pay as a satisfier and a hygienic factor. Pay motivates workers to achieve desired performance and improve morale and complies with labour contract and governmental regulations. Pay is a major factor in attracting individuals to an organization, persuading them to remain and inducing them to contribute positively to achieve corporate goals.
The role of pay system in shaping the live of an organization cannot be overemphasized. Pay system has been described as the development, implementation, maintenance, communication and evaluation of compensation processes (Galanou, Georgakopolous, Sotiropoulous and Dimitris, 2010). Ordinarily, the management of people at work is an integral part of the management process, put differently managers need to understand the critical importance of people in their organizations so as to recognize that the human element and the organization are synonymous (Popoola and Ayeni, 2007). Therefore, it is imperative and morally worthwhile to have a sound pay system in place.
Cascio (2012) asserted that because of the importance that pay and rewards holds on people's lifestyle and self esteem, individuals are very concerned about what they are paid. While on the other hands organizations are concerned with what they pay because it motivates important decisions of employees about job satisfaction and overall corporate performance.
The happier people are with their jobs, the more satisfied they are said to be (Odunlade, 2012). The perception of being paid what one is worth predicts job satisfaction. Job satisfaction is perceived as an individual’s attitude and behavior towards aspects of his own job. Personal job satisfaction is an affective or emotional response toward various facets and outcomes of one’s job; meaning that personal satisfaction in relation to a job is not unitary, as a person may be satisfied with one aspect of his or her job and may be dissatisfied with the rest (Bozeman and Gaughan, 2011).