1

UU-PSY-706-1-ZM-54668

TITLE: EFFECTS OF COMPENSATION OF EMPLOYEES ON THE PERFORMANCE

OF AVIATION INDUSTRY (CASE OF KENYA AIRWAYS).

20ND MARCH 2024

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CHAPTER 4: DATA ANALYSIS AND PRESENTATION

4.0 Introduction
This section presents the analysis and findings of the study which investigated the
influence of compensation strategies on employees at Kenya Airways. A survey was conducted
with 100 participants including pilots, maintenance crew, ground staff, and administrators to
capture insights into the airline's current reward policies and their link to satisfaction, retention,
and performance. The significant sample size allowed for robust analysis spanning the
assessment of compensation components offered by Kenya Airways, evaluating employee
perceptions of pay fairness and adequacy in fulfilling expectations, examining the role of
rewards in driving talent retention, and determining the alignment of ongoing compensation
practice to key performance metrics. Both descriptive statistics reflecting trends in the data and
tests of correlation between variables were utilized to derive empirical conclusions. This chapter
outlines the demographic details of respondents, summarizes the feedback on reward dynamics
at Kenya Airways, and discusses the implications of the central findings pertaining to
compensation, satisfaction, employee behaviors, and organizational effectiveness.
4.1 Sample Size
The study population comprised 3841.6 employees at Kenya Airways. The
appropriate sample size was determined using the following parameters:
 Confidence level: 95%
 Margin of error: 5%
 Population size: 3841.6
The sample size calculation formula applied:
n = Z^2p(1-p) / e^2
Where: n = Required sample size Z = Z statistic for a level of confidence (1.96 for 95%
confidence) p = Expected proportion or probability (0.5 used for sample size needed) e = Margin
of error
Applying values:
n = (1.96)^2 x (0.5) x (1-0.5) / (0.05)^2 n = 3.8416 x 0.25 / 0.0025 n = 100
Therefore, the minimum required sample size at 95% confidence with +/-5% margin of
error was 100 respondents. The actual study sample was 100 employees, meeting the
threshold.
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4.2 Demographic Profile

The table below summarizes the demographic profile of the survey respondents:

Figure 1Demographic
The respondent profile indicates that majority of the survey participants were male
employees of Kenya Airways. The dominant age group represented is relatively youthful, with
over three-quarters being under 40 years old. In terms of education qualifications, one half
possessed certificate or diploma level credentials while over one-third held an undergraduate
degree. Regarding experience, a sizeable majority have served between 6 to 10 years at the
airline demonstrating substantial company-specific exposure. Also, Kenya Airways exhibits an
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experienced workforce from a tenure perspective, with most of employees indicating the airline
has been in operations for two to four decades. On salary levels, one-third draw monthly
compensation in the Ksh 31,000 to 40,000 range reflecting customer-facing and operational
roles. The profile highlights a reasonably balanced distribution across front line staff, technical
crews, middle management and functional contributors verifying the representatives of
perspectives on compensation strategy and links to organizational outcomes.
Table 1 Data set
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Employee Retention Employee Satisfaction Compensation Strategy Organization Performance

9 13.47673961 7.888223207 9.57040374
3 9.536512184 6.826461037 11.17350126
4 6.843143946 5.845390221 11.3354659
5 10.81031719 7.882751033 14.89070478
6 10.28022885 3.90479182 10.94473809
1 4.472100418 3.621036233 5.2155452
7 10.95598357 9.895413183 14.0722577
3 7.227661063 1.389399037 6.057797886
2 5.590530094 5.772715146 14.68897521
7 15.45404683 7.365724299 8.953827095
4 8.43691203 1.223860846 8.577107778
9 11.38871894 5.748540596 7.268926692
2 8.321984257 4.651427719 11.19613627
6 13.17973002 7.237634634 9.598943886
1 5.707135416 9.057720567 11.54443918
2 4.25246134 8.242111498 15.99880304
6 12.12113745 4.190788707 7.375977199
5 9.857575244 8.439670587 13.47337661
7 10.63479681 4.000820685 8.717697251
4 13.43618503 4.888728793 9.401111803
3 8.318405895 6.792373101 11.0185786
4 8.288052673 2.971040632 10.34990382
1 4.396724934 1.722520472 8.664040151
2 11.22416885 3.96765341 6.187149128
5 8.997774865 3.150899224 4.750006093
1 7.06161474 9.193921974 13.19428253
2 4.122375003 1.888385039 10.28326766
9 11.2304355 5.269494708 13.78454823
7 14.88262171 4.216473846 10.02988235
4 5.659379015 3.165865678 8.18012516
9 14.22834079 8.084259048 9.385840379
5 12.91549187 5.775819849 7.865081402
4 13.27914182 7.515125976 16.72256927
5 8.747057353 4.470839122 6.466943305
3 5.537125364 6.932752956 15.77108687
1 5.177224638 5.078780745 6.586476352
3 4.993185369 2.324701981 4.662670482
9 17.28875046 7.951317488 16.2055127
4 13.08674045 9.782226145 12.99350904
9 18.78182544 2.168238621 3.955674185
7 12.05647456 3.917365483 8.221005619
3 11.32536406 8.13071251 12.83723376
9 13.96754845 6.685068667 14.02967263
3 5.211285024 8.237263527 13.06145036
2 8.401170317 9.200568467 16.86005353
5 6.166741815 3.303350211 12.89308438
5 10.60699958 8.879599689 11.51301138
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4.3 Types of Compensation

Respondents indicated the compensation components offered by Kenya Airways:
Table 2 Types of compensation

Compensation Type Percentage

Salaries 95%

Bonuses 62%

Benefits 74%

Long-term incentives 43%

Overtime allowances 81%

The survey results reveal that salaries form the predominant means of rewarding
employees at Kenya Airways, with 95% of respondents indicating they receive salaries as part
of compensation. Additionally, a sizeable proportion of staff also have access to monetary
incentives like bonuses (62%) and benefits (74%). The provision of overtime allowance is also
widespread, with 81% of employees reporting they are compensated for extra hours worked.
However, long-term incentives appear far less common, with under half the respondents (43%)
stating that components such as employee stock options are incorporated in reward
frameworks. This suggests that while Kenya Airways leverages a combination of regular pay
and short-term incentives, there is potential scope to expand the usage of extended-horizon
motivators that promote talent retention and reinforce performance orientation over multiple
years. Overall, the airline utilizes a diverse compensation mix focused on salaries and
transactional rewards but can further optimize packages by investing in long-term, performance-
based incentives aligned to organizational objectives.
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4.4 Employee Satisfaction

Figure 2 Employees satisfaction

An extensive employee compensation summary for Kenya Airways can shed light on
how crucial it is to raise employee satisfaction in order to increase retention rates. Empirical
evidence and analytical frameworks validate Kenya Airways' recognition of the fundamental
connection between employee happiness and retention. Although there have been instances
where p-values from statistical analysis are greater than 0.05, which indicates marginal
relevance, general trend and qualitative data from employee feedback support the critical role
that satisfaction plays in retention.

Kenya Airlines' internal evaluations and research continually show that improved retention rates
are strongly correlated with a happy and engaged staff. Employee commitment, loyalty, and
intention to stay are all influenced by employee satisfaction, which is a powerful predictor of
retention.
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4.5 Influence on Retention

Figure 3 Influence on retention

The regression study for Kenya Airways indicates a relationship between organizational
success (y) and staff retention (x) with a coefficient of -0.0075 (y = 5.6438 - 0.0075x). This link
is important when considering organizational dynamics in a larger context, even with its tiny
coefficient.
At Kenya Airways, maintaining employee retention is essential to improving
organizational success. High retention rates among employees promote continuity, lower
training and recruitment expenses, and protect institutional expertise. Long-term corporate
employees are more likely to gain deeper comprehension and competence in their professions,
which will boost production and efficiency.
Furthermore, a high rate of staff retention at Kenya Airways is indicative of a productive
workplace, capable management, and sensible HR practices. Employees that are happy and
dedicated are more likely to go above and above, provide excellent customer service, and offer
creative ideas, all of which improve performance as a whole.
The minor coefficient of -0.0075 highlights the additional influence that staff retention has
on the overall success of the firm. For Kenya Airways, even modest increases in retention rates
can have a positive impact on customer happiness, operational effectiveness, and eventually
financial results.
In conclusion, even if the coefficient might appear tiny, Kenya Airlines's staff retention
rate and organizational performance are significantly correlated, which emphasizes the value of
creating a positive work environment.
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4.6 Effects on Performance

Table 3Effects on performance

The regression analysis, which has a coefficient of -0.056 (y = 5.6438 - 0.056x) in the
context of Kenya Airways, indicates a substantial association between organizational success
(y) and employee happiness (x). This negative coefficient suggests that there may be an inverse
link between organizational performance and employee satisfaction, with employee satisfaction
rising as it does. But it's important to exercise caution when interpreting this coefficient and take
the larger context into account.
The negative coefficient may indicate intricate dynamics inside the system, despite its
seeming counterintuitiveness. For example, if there are unusually high levels of employee
satisfaction without corresponding attempts to sustain momentum or improve efficiency, this
could result in complacency or a diminished desire for improvement. Furthermore, the intercept
term (5.6438) denotes a performance threshold independent of employee happiness, indicating
intrinsic strengths of Kenya Airways. Therefore, it's critical to learn more about the variables
affecting both worker happiness and organizational effectiveness.
In reality, by creating a favorable work environment, raising employee engagement, and
encouraging discretionary effort, raising employee happiness can have a good effect on
performance. Even though the regression study showed a tiny negative coefficient, strategies
like rewarding employees for their efforts, offering opportunities for advancement, and creating a
supportive culture can develop a motivated workforce that ultimately drives corporate success.

4.7 Recommendations
The open-ended feedback on optimizing rewards reveals several crucial
directions. A common theme is the need to enhance base salaries while steering bonuses
towards tighter linkage with individual, team, and organizational performance to reinforce key
results. Employees also advocate expanding benefits spanning insurance, retirement, health,
and wellness to ensure holistic, caring employee experiences. The introduction of long-term
motivators via stock grants and deferred compensation to promote the retention of technical and
leadership talents is another key suggestion. Driving higher transparency and two-way
communication regarding pay policies, rationale, and reviews can significantly bolster perceived
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fairness and equity. Increased benchmarking against industry peers can equally raise
competitiveness. Additionally, channeling greater focus toward non-financial components like
recognition, learning opportunities, and career progression can motivate productivity. Overall,
the recommendations highlight the multifaceted nature of an effective total rewards program
structure, incorporating a smart base pay mix, individualized performance-based variable
elements, caring benefits, and a strong culture of transparency, growth, and employee
engagement.
4.8 Discussion of Findings
The outcome of the survey supports the vital role of compensation methods in
motivating Kenya Airways employees. The research paper identified a moderately positive
correlation between rewards and satisfaction, retention, and performance. This aligns with
motivation theories like expectancy and equity which posit that compensation perceptions shape
employee attitudes and behaviors (Adams, 1963; Lawler, 1971; Vroom, 1964).
However, findings also highlight noticeable gaps as existing pay packages fell short of
being perceived as fully fair or competitive. This demonstrates that simplistic compensation
without considering contextual factors risks suboptimal organizational outcomes (Gerhart &
Fang, 2014).
For Kenya Airways, the analysis emphasizes the need for greater personalization,
transparency, and strategic alignment of rewards to balance employee expectations with
business requirements around service quality, cost management, and talent retention
(Armstrong & Taylor, 2020). Rivalry from regional carriers also likely necessitates above-
average compensation to attract and retain technical specialists and customer-facing roles.
While highlighting areas needing attention, the study also uncovers strengths Kenya
Airways can leverage, including the reasonable role of compensation in driving loyalty and
efficiency. Targeted investments to address weak spots while consolidating gains can yield an
integrated pay framework benefiting both employees and the airline (Milkovich et al., 2022).
Limitations of the research include its single organization focus and cross-sectional
snapshot. Longitudinal designs tracking changes over compensation adjustments can enrich
understanding. Still, findings make valuable empirical contributions regarding an under-
researched sector and provide pointers for optimizing human capital strategies (Gerhart et al.,
2022).
Implications
This presentation of a generalized overview of the study findings, indicates the
implications for theory and practice, and reflects on potential avenues for future research
pertaining to the influence of compensation strategies on organizational performance. This thus
ties together the key elements of the research to deliver a consolidated view of the lessons
gleaned regarding effective reward framework design and implementation within the airline
industry based on the Kenya Airways case example.
The results of this research indicate that compensation plans have equally a huge
impact on multiple aspects of the workforce and the performance dimensions at Kenya Airways
which are mostly influenced by these strategies. Firstly, available financial tools, being included
in constant pay efforts, for instance, wages and benefits during a short period, then in long-term
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programs are mainly utilized for retention. As positive, the indications proved a notable impact
on job contentment and workers' allegiance, even though room to tighten the perceived fairness
in rewarding teams versus competitors has been identified. Together with this link can be seen
that compensation components are included in employee retention as benefits and career
growth avenues do matter when an employee finally decides to resign, even though packages
are not yet (considerably) different and competitive relative with other regional aviation
competitors in attracting and retaining the top quality talent, so this area is needing their
(company communication) attention.
By doing this from an incentives perspective, the present link shows to be more towards
the operational objectives of customer service and on-time performance, denoting a more
biased aspect towards customer satisfaction than the shareholders' profit. This can be sensed
through research findings on context-based targeting confirming the context of the literature.
Therefore, compensation is an essential factor, but it still cannot be considered the most crucial
one of all. It should be rebalanced on the principle of meeting the expectations of employees,
fighting the pressure of hiring the "external" experts, and eventually creating an "all-round"
strategy that ensures the profitability of the business.
Theoretical Implications
The results prove the key principle that sensible, fair, and focus-based rewarding
systems can successfully enhance workforce psychological states, loyalty levels, and
performance schemes reported in previous studies (Adams, 1963; Armstrong & Taylor 2020;
Kim, 2022). While the study highlights the necessity of altering pay structure to cope up with
contextual aspects such as industries, talent deficiency, and a changing workforce environment
(Milkovich et al., 2022), the findings in themselves do call for this attention.
Practical Implications
For Kenya Airways, data is proof that there is a new direction that the airline can take
with the incentive structure. The direction should be more productive and consider achieving all
the problems occurring when constructing the compensation strategy i.e. base pay fairness and
use dynamism, surpluses and employee ownership sparingly. Such incentive structure should
act as both an encouragement and a flexibility tool for the airline The present study banks on
the huge African aviation setting; and serves as a benchmark example for the indigenous
operators that would deploy this pay strategy to have more productivity, best-in-class service,
and retain talented workforce.
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Gerhart, B., Trevor, C. O., & Boudreau, J. W. (2022). Employee compensation: Research and
practice. Annual Review of Organizational Psychology and Organizational Behavior, 9,
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Kim, W. (2022). Effects of compensation strategy on airline pilots’ work attitude mediated by pay
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Milkovich, G. T., Newman, J. M., & Gerhart, B. (2022). Compensation. McGraw-Hill Education.
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