Joint Moderating Effect of Perceived Equity and Supervisor Support on the Relationship between Employee Compensation and Employee Performance in Kenyan Chartered Public Universities

Abstract

Compensation is essential to the functioning of the relationship between the employee and employer and close to the heart of both the employer and the employee.  Perceived unfairness in compensation can be harmful to an organization. When employees believe that they are not paid equitably they will be dissatisfied with work which can lead to voluntary employee turn-over, regular absence from work, non-commitment to the organization and low-trust employee relations. Lack of clear criteria and unfairness in distributing incentives to academic staff and supportive supervisors could influence academic staff motivation and performance. There is need to consider fairness in distributing incentives and to have supportive supervisors who will motivate the academic staff and in turn improve their performance. The main objective of this study was to establish the joint effect of perceived equity and supervisor support on the relationship between employee compensation and employee performance in Kenyan chartered public universities. The study was based on three theories: Expectancy Theory, Equity Theory and Social Exchange Theory.  The study adopted positivist research philosophy. Descriptive cross-sectional design was adopted to enable the researcher discover the relationship between different variables. The study targeted academic staff in 23 Kenyan chartered public universities.  Multistage sampling technique was used to identify respondents from Kenyan Chartered Public Universities. The number of Faculties/Schools/Institutes sampled was 43 out of 246. A sample size of 370 academic staff was selected from a population of 2011 using easy sample size calculator. Data was collected on employee compensation, employee motivation, perceived equity, supervisor support and employee performance using a questionnaire. A pilot study was carried out at one university to validate the data collection instrument. Reliability results indicated a Cronbach Alpha value of 0.920. Out of 370 questionnaires administered, 247 were returned and analyzed, thus a response rate of 69 percent. Test of normality, linearity, multicollinearity and homoscedasticity revealed that the data was normally distributed, linear and independent of errors. Quantitative technique was used to analyze data. The study established that employee compensation and employee performance in Kenyan chartered public universities is jointly moderated by perceived equity and supervisor support (R²=0.37, p<0.05). The study concluded that the relationship between employee compensation and employee performance is jointly moderated by perceived equity and supervisor support. The study recommended in enhancing employee performance through employee compensation, perceived equity and supervisor support are crucial since they moderate the underlying relationship.

Keywords: Employee compensation, perceived equity, supervisor support, employee performance, academic staff, Kenyan chartered public universities