EARNINGS INCENTIVES AND EMPLOYEE PERFORMANCE OF LISTED INSURANCE FIRMS IN NIGERIA

Abstract

Despite decades of reform in Nigeria’s insurance industry, optimizing compensation structures to drive employee productivity remains a persistent challenge, with empirical clarity still lacking on which incentives are most effective. The study investigated the effect of salaries and wages, bonuses and commissions, and allowances and benefits on employee performance of listed Nigerian insurance firms. The study employed secondary data and ex post facto research design. The population of the study consists of 28 insurance companies, with a sample size of 22 insurance firms with 220 observations were selected using a purposive sampling technique because data for the study were directly obtained from audited financial reports of insurance firms on the Nigerian Exchange Group between 2015 and 2024. The data were analyzed using descriptive statistics such as kurtosis, skewness, mean, median, standard deviation, and pooled ordinary least squares regression analysis. This study’s findings revealed that salaries and wages with a coefficient of 1.160 and a p-value of 0.001 positively affect employee performance. This highlights the centrality of competitive base pay in fostering organizational performance.  Bonuses and commissions with a coefficient of 0.010 and a p-value of 0.409 positively and insignificantly affect employee performance. This result indicates that, within the sampled firms, variations in bonuses and commissions are not systematically associated with changes in employee performance. Allowances and benefits with a coefficient of 0.009 and a p-value of 0.053 positively and marginally significantly affect employee performance. This suggests that higher allocations to non-wage financial benefits are linked to modest improvements in revenue per employee. The study recommended that industry regulators and policymakers promote greater transparency in compensation reporting and to develop guidelines that support the adoption of evidence-based incentive schemes across the sector.