INFLUENCE OF ORGANIZATIONAL PERFORMANCE ON CHIEF EXECUTIVE OFFICER’S COMPENSATION IN COMPANIES LISTED IN NAIROBI SECURITIES EXCHANGE IN KENYA
The management of human resources is seen as a foremost contributor towards helping
organizations deal with performance challenges by designing ways to effectively
increase employee’s productivity and commitment. One area of concern to human
resource managers is the implementation of employee compensation programs that
satisfy employees’ needs as well as contain the costs of labor for the firms. This paper
focuses on the organizational performance measures such as financial performance,
customer satisfaction and internal processes. They aim is to determine how they affect
CEOs compensation. A cross sectional design was adopted with a dataset of 42
companies. The companies are listed in the Nairobi securities exchange in Kenya, a
leading stock market exchange in the East and Central Africa. Using a well-structured
questionnaire and a census technique, satisfactory data was collected that helped derive
key findings. Primary data was gathered to capture the opinion of firms on factors that
determine levels of CEO’S compensation using semi structured questionnaire.
Secondary sources of data were used to gather information on financial performance
from the financial statement of the listed organizations for 2016-2017 financial periods.
Descriptive statistics, correlations, linear, multiple regression were applied in analyzing
and interpret the data that was collected. The research revealed that there was
significant and positive relationship amid financial performance, internal processes,
customer satisfaction and CEO’S compensation.
Key words: Organizational Performance, CEO’S Compensation