COMPENSATION PRACTICES AND EMPLOYEES’ PERFORMANCE IN THE INSURANCE COMPANIES IN NAIROBI CITY COUNTY, KENYA
Abstract
This study researched on the effect of compensation practices on employees’ performance in the insurance companies in Nairobi City County, Kenya. The study used the descriptive research design. The target population was drawn from a pool of insurance companies operating in Nairobi. The stratified random sampling method was employed in picking the sample size of 162 units from the target population of 270 units. The employees in the human resources, finance and sales departments of the insurance companies in Nairobi constituted the earmarked respondents to this study. This current study employed primary quantitative data which was collected via questionnaires. Several diagnostic tests such as the test for normality, linearity, autocorrelation and multicollinearity were carried out in this study. The study revealed that salaries and wages, professional allowances, individual incentives and fringe benefits had a positive significant effect on employees’ performance. The study concluded that offering competitive salaries helps attract top talent in a highly competitive industry. Professional allowances alleviate the financial burden of job-related expenses, leading to higher job satisfaction. Personalized incentives resonate more with employees, as they reflect individual preferences and values leading to higher levels of motivation and engagement, as employees feel their unique contributions are recognized and valued. The study recommended that the companies should conduct regular market surveys to ensure that salary offerings are competitive with industry standards. The companies should implement a structured bonus system tied to individual and team performance metrics. The companies should develop programs that reward employees for achieving specific performance metrics, such as sales targets or customer satisfaction scores. The companies should offer a strong health plans that cover a wide range of medical services, including mental health support.
Key Words: Salaries and Wages, Professional Allowances, Individual Incentives, Fringe Benefits
CITATION: Ali, M. M., & Kiiru, D. (2025). Compensation practices and employees’ performance in the insurance companies in Nairobi City County, Kenya. The Strategic Journal of Business & Change Management, 12 (2), 59 – 79. http://dx.doi.org/10.61426/sjbcm.v12i1.3199
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DOI: http://dx.doi.org/10.61426/sjbcm.v12i2.3199
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