Title: Human Capital Investment And Executive Compensation: Analyzing The Relationship With Financial Performance In Nigeria's Banking Sector
Authors: Ahmed, Abubakar Zik-Rullahi PhD and Abdullahi, Bashir Muhammed
Volume: 8
Issue: 9
Pages: 89-101
Publication Date: 2024/09/28
Abstract:
This study investigates the relationships between human capital investment, executive compensation, and financial performance in Nigeria's banking sector. Utilising a survey methodology, data were collected from 286 banking professionals to explore their perceptions of the significance of human capital strategies and compensation structures. The findings indicate that a substantial majority of respondents (over 70%) regard human capital investment as a vital contributor to financial performance, emphasizing the importance of training and development initiatives. Additionally, performance bonuses emerged as the most influential component of executive compensation, with 41.9% of participants identifying them as key motivators for employee engagement. The study also highlights the critical role of regulatory frameworks and corporate governance, with more than 66% of respondents rating their influence as high or very high. Transparency in decision-making was identified as the most significant aspect of governance affecting the integration of human capital investment and executive compensation. These insights underscore the need for banks to enhance their human capital investment strategies, revise compensation structures, and strengthen governance practices to foster a motivated workforce and achieve sustainable financial performance. The recommendations provided aim to guide banking institutions in aligning their strategies with these findings for improved organizational effectiveness.