INFLUENCE OF ORGANIZATIONAL PERFORMANCE ON CHIEF EXECUTIVE OFFICER’S COMPENSATION IN COMPANIES LISTED IN NAIROBI SECURITIES EXCHANGE IN KENYA

Abstract

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