The Effect of Non-Financial Compensation on Employee Performance of Micro-Finance Institutions: A Case of Wakenya Pamoja Sacco, Kisii County, Kenya

Abstract

. A compensation system is based on the expectancy theory, which suggests that employees are more likely to be motivated to perform when they perceive that there is a strong link between their performance and the reward they receive (Fey and Bjorkman, 2001; Guest, 2002; Mendonca, 2002). Aspects of non-financial compensation include workplace environment, career development, training, employee empowerment and participation. This study aimed at establishing the effect of non-financial compensation on employee performance of micro finance institutions in Kenya with special reference to WakenyaPamoja Sacco in Kisii County - Kenya. The study was guided by the following objectives: to establish the different forms of non-financial compensation at WakenyaPamoja Sacco-Kisii, to determine how aspects of non-financial compensation promotes employees performance at WakenyaPamoja Sacco-Kisii, to find out how non-financial incentives contributes to better employee performance, and to find out the extent to which WakenyaPamoja Sacco- Kisii has benefited from non-financial compensation. It was the intention of this study that upon realization of the objectives, the findings of this research study would be of great significance to researchers and scholars, the government and the existing body of knowledge related to the field of study in improving the overall employee performance and operations of the microfinance institutions. This study was done in the month of December 2015. It targeted microfinance institutions in Kenya with specific reference to WakenyaPamoja Sacco in Kisii County. The target population was determined using a census survey method since the population under study was small. All the 65 employees of WakenyaPamoja Sacco-Kisii participated in the study. To collect data, the researcher used questionnaires which were distributed to all respondents. To ensure validity, a pilot study was done. For reliability, questions were discussed with the supervisors prior to collection of data. The data was then analyzed both quantitatively and qualitatively. The study established that indeed the Micro finance industry especially WakenyaPamoja Sacco-Kisii, does employ Non-financial compensation and incentives to motivate employees, drive up their performance as well as to retain staff.