Compensation plays an important role in determining employees’ job satisfaction and thus performance. The perception of being paid what one is worth predicts job satisfaction. However, it is not clear the influence compensation has on employee’s performance to cause the many stand offs. This study therefore sought to establish the effects of compensation on employees’ performance in private universities in north-central, Nigeria. The objective of the study was to explore the impact of compensation administration on employee’s performance in Private Universities in North Central Nigeria. The study employed a descriptive research design. Finite Sample size Determination formula and Simple random sampling was used to select a sample size of 1312 employees drawn from the target population of 1,903. Responses were collected through administration of questionnaire. The validity and reliability of the questionnaire was enhanced through a pilot study carried out in selected private universities. To ensure the validity of the instruments, both face and content validity was used. Data collected was categorized coded and then tabulated using SPSS. The qualitative data was analysed using descriptive statistics and multiple regression analysis. The study established that competitive salaries, indirect compensation and non-financial compensation had a positive and significant influence on employees’ performance. The study concludes that a competitive salary package can improve employee motivation, reduce employee turnover and increase productivity, incentive plans motivate workers for higher efficiency and productivity. It can improve the work-flow and work methods, indirect compensation is a non-monetary benefits offered and provided to employees in lieu of the services provided by them to the organization and that that employees become more engaged when their performance is properly recognized by their employer. The study recommends that Employee performance can be influenced by the universities administration by communicating to the employees that they value their contribution and also encouraging employee participation in the decision-making process of the compensation administration system at the universities. When employees feel that their opinions are valued at the organizations they work, they tend to exhibit loyalty and commitment due to the sense of belongingness and trust from the management.
Keywords: Job Satisfaction, compensation administration, direct financial compensation, indirect financial compensation
