insurance firms

Compensation is a complex and controversial subject. Researchers, academicians and consultants have devoted much time and efforts to understand the innumerable factors that underlie top management compensation. Of more importance to this study is how compensation imparts on firms' performance. For some time now, executive compensation has been a matter of concern to corporate policy makers. Studies have shown that compensation is one of the most important strategies in human resource management; as it influences the productivity and growth of organizations. There is also a public outcry that insurance companies in Nigeria do not settle claims promptly; and in most cases only with the intervention of the regulatory bodies. There are many published issues on compensation that focus on organizational differences; there is little on whether compensation has any significant linkage with performance. Besides, improvement of corporate governance standards has been at the forefront of international debate in recent times. Compensation of directors and executives is one of the key issues in this debate. This study aimed at finding out if there is any relationship between remuneration and incentive systems on Nigerian insurance firms' productivity. The net claims paid to contributors depict a measure of productivity as perceived by the insured, while the returns on assets depict productivity from the shareholders perspective. The two represent the dependent variable for study. Introduction Compensation is a well debated topic. Sarkar and Jafar (2012) point out that researchers, academicians and those in practice have devoted much time and effort to understand the innumerable factors, which underlie top management compensation; particularly how it is related to firm performance. In the words of Yablon (1999), executive compensation has been a matter of concern to corporate law policy makers. However, Obasan (2012) is of the view that compensation is one of the most important strategies in the human resource management; as it influences the productivity and growth of an organization. According to him, though literatures abound on compensation that focuses on organizational differences, there is little debate on whether compensation has any significant linkage with performance. Yatim (2012) opines that remuneration and incentive systems have been shown to play a key role in influencing risk taking behaviours of managers in recent years. Improvement of corporate governance standards and disclosures has been at the forefront of international debate in recent times and compensation of directors and executives is one of the key issues in this debate. Compensation could define as rewards that employees earn on the basis of the value of their jobs, their personal contributions, and their performances (Obasan 2012). The reward could be monetary or otherwise. It could be indirect or direct rewards too. Obasan further states that the growing suspicion that compensation promotes productivity is in agreement with the early work of Peter Drucker. In 1956, Peter Drucker had written that 'happy workers are productive workers.' In line with this, Darmadi (2011) stated that compensation scheme is significant in motivating labour to perform their managerial duties; in line with the best interest of the shareholders. In regard of this, Erick et al (2014) explain that good compensation schemes motivate directors to make prudent decisions that maximize shareholders' wealth. In other words, compensation serves as a motivating force that encourages individuals within an organization to perform their duties effectively and efficiently.