Introduction

1.1 Background of the Study

Compensation management is one of the most important human resource activities in
management and a major topic in the general field of management. This is not surprising given
that most, if not all, employees accept job prospects primarily because of the remuneration
package on offer. Employees are often driven to put in greater effort at work when they believe
that their employment offers them with the things that they value. Because one of the primary
goals of any business is to maximize profit, corporations are continuously looking for ways to
guarantee that employees are content with their positions so that they can give their all for the
firm. Organizations frequently utilize compensation management systems to recruit, motivate,
satisfy, and retain employees, as well as to ensure that people give their all and boost
productivity. The process of building an adequate compensation management system enables
firms to provide employees with both real and intangible value for the work they accomplish or
services they deliver.
Compensation represents both intrinsic and extrinsic rewards that employees receive for
performing their jobs. When an organization is ready to hire employees, it must develop a
process to reward those employees. This process is referred to as the compensation management
process
In today's competitive environment, no organization can achieve at optimal levels unless each
employee is committed to the firm's objectives and performs as an effective team member. The
workplace is changing rapidly, and the need for high-quality products is rising. The ability of the
organization to build a devoted workforce is more important than the ability to hire talented
individuals. According to Hancock et al. (2013), commitment is the most important predictor of
turnover and performance; thus, firms that care about their employees and wish to retain high-
performing individuals should explore boosting commitment. According to the literature, good
work-related behavior and attitudes are heavily influenced by employees' judgments of how
much their employer values their contribution and cares about their well-being (Allen et al,
2003).
Employee commitment is critical for being competitive in the face of these difficulties. There can
be no improvement in any business area without employee commitment. Organizations must
boost productivity at all levels to succeed in the face of increasing competition. This necessitates
commitment on the part of all employees, which can only be attained by improved management
techniques in the area of managing rewards and remuneration, as well as by instilling a sense of
justice through competitive wages and benefits. 2005 (Coetzee)
As organizations face ever-increasing competition and prepare for new challenges, reward and
compensation management is a critical component of survival in attracting, motivating, and
retaining the best employees, which leads to organizational efficiency and effectiveness,
resulting in high productivity and profitability (Milkovich and Newman, 2004). Devoted
employees perform better than uncommitted employees, and firms with committed people
outperform the competition financially. Employers must determine what is causing this
difference. Employees must fulfill given jobs consistently and be willing to engage in activities
outside of their position requirements for an organization to be productive. Employees'
willingness to contribute to organizational effectiveness appears to be influenced by their level of
commitment (Coetzee, 2005).

The glue that holds employees and employers together is compensation. Milkovich et al. (2004),
on the other hand, claim that a badly constructed remuneration package is a source of employee
unhappiness and attrition. When a reward and compensation package is perceived as unfair,
inequitable, or inconsistent, it fails to secure employee commitment. Employees are not attracted
to, retained by, or motivated by such pay. Employees who leave organizations cite insufficient or
unbalanced pay as a motivation for leaving. It just takes a few uncommitted personnel to keep a
company from growing and giving its competitors a significant edge. There is a widening gap
between employee expectations and what they are willing to do in many firms. There are several
explanations for this erosion, the most common of which is management failure in some
respects. Many research have looked into what influences employee commitment and turnover.
More satisfied employees will be more committed, according to Fossey and Havey's (2010)
study on finding and sustaining employment. Furthermore, a committed employee will stop
actively looking for other sources of income and generously offer full competence to the
organization. This, however, does not happen by itself and is dependent on factors that enhance
commitment. This shows that, in order to get a competitive advantage, compensation
management must be treated carefully (Vance, 2006). Because components of reward and
compensation are likely to influence employee commitment, the goal of this study was to
provide tea companies with a realistic way to improving staff commitment and productivity.

1.2 Problem statement

In these modern times, there is a lot of interest in the field of compensation management and
organizational commitment. Why because, employees are the most significant and valuable
resource in any organization therefore, ensuring that they are satisfied with their job and give the
organization their best is one of an organization’s main objective. There are several ways to
motivate the performance of employees; one of such ways is to build an effective compensation
management system.
Reward and pay are becoming increasingly important to firms around the world aiming to
achieve a competitive advantage as a strategy for increasing employee loyalty and retention
(Owens, 2006). Gallup's (2013) assessment on the condition of the American workplace found
that "70% of American workers are not committed or are actively disengaged from their
workplace." They are emotionally detached from their workplace and are therefore less likely to
be productive. According to the report, deliberately uncommitted workers cost the United States
between $450 billion and $ 550 billion in lost production each year. These data demonstrate the
critical relevance of having devoted and engaged workers at work.
Earlier research by Fossey and Havey (2010) practically concluded that more satisfied
employees will be more committed. Furthermore, a committed employee will stop actively
seeking other sources of income and generously offer full competence to the organization;
however, this does not happen by itself and is dependent on factors that enhance commitment.
Several empirical studies have offered substantial evidence that a good reward and compensation
system is a strategy for competitive advantage and increased employee engagement, whereas
competitive pay attracts, retains, and motivates talented applicants (Zaman et al, 2011; Vance,
2006; Dessler, 2005; Harter, 2002).
According to Milkovich et al. (2004), a badly structured pay package fails to guarantee employee
commitment, particularly when it is perceived as unfair, inequitable, and inconsistent, and is a
source of unhappiness and employee turnover. According to exit interviews, 70% of employees
who quit their employment do so because they are unsatisfied with their pay (Welch, 2006).
According to (Naicker, 2008), research of 350 daily workers in Ireland and New Zealand by (O'
Driscoll and Randall, 1999) found that rewards have a substantial effect on employee attitudes
regarding their occupations and employee commitment.
Scholars (Vance, 2006; Boon et al, 2006; Milkovich, 2004; Harter, 2002) believe that reward and
remuneration can positively effect commitment and is a competitive advantage approach that
promotes employee commitment, but inadequate or unbalanced compensation is the cause of job
discontent and turnover. However, the competitive corporate environment has had an impact on
employee commitment. Employees have become victims of unfulfilled promises as a result of
downsizing, restructuring, and casualization, making it difficult for firms to retain a devoted
workforce with no guarantee of continued employment (Coetzee, 2005).
According to Rashid et al. (2003), strong levels of dedication are visible in financially successful
firms. According to Braggs (2002), organizations that perform well financially outperform others
and have devoted employees; nevertheless, less than half of today's workforce is committed to
their employer. Employers must determine what is causing this difference. Observations from 54
recruited KTDA tea enterprises in Kenya reveal a significant variation in the average payment of
tea deliveries (bonus) during a three-year period (2009 to 2012). This is demonstrated by six (6)
selected factories from various counties. The difference in average compensation (high and poor)
among KTDA tea organizations has been related to varying degrees of employee dedication
(Tiampati, 2012; Cohen, 2007; Silverthorne, 2004).

1.3 Research objective

The main purpose of this study was to determine the influence of reward and compensation on
employee commitment: In order to achieve these objective, different aspects of reward and
compensation were identified namely: conditions for recognizing employee quality effort, team
and individual compensation, rewarding quality work, clear communication of rewards and
penalties and employee compensation programs
Specific Objectives
  To identify the factors that influence organizational commitment.
 To examine the relationship between compensation management and employee
commitment.
 To identify the overall aspects of compensation
 To describe compensation as a motivator tool for the employee commitment.
 To show some research framework to provide clear view on employee commitment and
compensation.

1.4 Significance of the Study

The study will be significant to a wide range of human resource management stakeholders,
organizations, government and other policymakers, academics, and researchers. By offering
more information through its contextual framework of organizations, the study will add a new
body of knowledge to previous contributions. Contextual research focuses on specific
organizations or situations, resulting in unique knowledge in addition to existing and generalized
knowledge. Organizations will find the study valuable in developing compensation standards and
policies that are linked with their HR strategy aimed at increasing commitment. This policy will
prioritize organizational competitiveness, equity, individual needs, transparency, and employee
participation.
HR professionals will find the report useful for designing appropriate remuneration plans aimed
at increasing employee commitment. Consultants will utilize the survey to compare employee
commitment and remuneration practices across their customers' firms. The research findings will
be reproduced in other organizations that experience a comparable environment to organizations.
HR policies aimed at enhancing commitment will be established by practitioners with the goal of
increasing organizational commitment. Employee involvement, empowerment, participation, and
leadership are examples of such policies.
Scholars and researchers, on the other hand, will utilize the findings as the foundation for
additional research. Gaps in pay policies discovered through comparisons with other
organizations' compensation policies will be investigated further in order to determine generality
of compensation and commitment theories. The report will be used by policymakers such as the
government and other agencies to establish policies that promote employee commitment.
Employee commitment will be integrated into remuneration plans by policymakers. In addition
to pay incentives, the policies will strive to have extrinsic and intrinsic motivation that influences
employee engagement. Pensions, training and career development, skills and performance-based
compensation will all be part of the new pay strategy. Employees will be viewed as human
capital rather than workers by organizations, resulting in increased commitment.