The effect of remuneration on employees’ performance in Uganda, a case study of kyenjojo district local government

Abstract

The study investigated the effect of remuneration on employees’ performance in Kyenjojo District Local Government, Uganda. It was guided by three specific objectives to; assess the effect of salary and wages on employees’ performance in Kyenjojo District Local Government, examine the effect of benefits and allowances on employees’ performance in Kyenjojo District Local Government, and investigate the effect of bonuses and incentives on employees’ performance in Kyenjojo District Local Government. The study employed a cross-sectional survey design. The target population was 410 people, from which a sample size of 264 respondents was selected. Data were collected through self-administered questionnaires and interviews. Descriptive statistics was used to present the data while correlation and regression analysis were used to explain the relationship between two variables. The study reveals that financial incentives significantly influence employee performance in Kyenjojo District Local Government, with correlation coefficients of 0.543 for salary and wages, 0.612 for benefits and allowances, and 0.684 for bonuses and incentives, all significant at p = 0.000. Regression analyses show that salary and wages explain 29.5% (R² = 0.295), benefits and allowances account for 37.5% (R² = 0.375), and bonuses and incentives explain 46.8% (R² = 0.468) of performance variability. The standardized coefficients (β) range from 0.543 to 0.684, indicating strong predictive relationships. These findings highlight the critical role of financial motivators, with incentives having the strongest influence, but acknowledging that other factors also contribute to employee performance in the public sector context. The study concludes that financial incentives, namely salary and wages, benefits and allowances, and bonuses and incentives, significantly influence employee performance in Kyenjojo District Local Government. Bonuses and incentives have the strongest impact, explaining up to 48% of performance variation, emphasizing the importance of well-structured incentive schemes to motivate staff and enhance organizational outcomes within the public sector. The study recommends that the government and management implement comprehensive and regularly reviewed incentive schemes, including competitive salaries, benefits, and bonuses, tailored to performance metrics. It emphasizes the importance of transparent communication, integrating financial rewards with non-monetary incentives such as training and improved work environments. Additionally, policymakers should adopt holistic approaches by aligning incentives with organizational goals and supporting continuous skill development to sustain motivation, enhance performance, and foster organizational success in the public sector.