Effects of Comprehensive Compensation Systems on Safety Compliance, Safety Participation, and Perceived Safety Outcomes in High-Risk Industries in Lagos State, Nigeria

Effects of Comprehensive Compensation Systems on Safety Compliance, Safety Participation, and Perceived Safety Outcomes

Abstract

This study evaluates the association of comprehensive employee compensation systems with three key safety outcomes in high-risk industries operating in Lagos State, Nigeria. Nigeria, as a developing country characterized by weak regulatory enforcement, high economic volatility, and an underdeveloped health surveillance infrastructure, distinguishes itself from the developed countries, therefore making it contextually relevant for this study. The regulatory and economic conditions in Nigeria may influence the dynamics of the association between employee compensation and employee safety differently from those observed in industrialized countries, making context-specific evidence essential. The study is grounded in the Job Demands-Resources (JD-R) model, which conceptualizes employee compensation systems as critical job resources that buffer workplace demands. A cross-sectional research design is adopted in the study, with data collected using a structurally validated and reliable instrument (Cronbach's α = 0.82). A response rate of 62% was achieved. The data analysis method employed was ordinary least squares (OLS) regression with the HC3 robust standard error estimator. The results reveal that comprehensive employee compensation systems have a positive, statistically significant association with all three safety outcomes - safety compliance, safety participation, and perceived safety outcomes. However, the results revealed that comprehensive compensation systems have the strongest effect on perceived safety outcomes (R² = 0.298) and small to moderate effects on both safety compliance (R² = 0.118) and safety participation (R² = 0.127). The study concludes that compensation systems have a dual function: as a tool for employee remuneration and as a strategic safety intervention that can shape both behavioral and perceptual safety outcomes, but cautions that organizations should be mindful about adopting these recommendations as standalone solutions. This study makes three contributions to the body of knowledge, among them the application of a theoretical framework developed in an advanced-economy setting to an under-researched subject in a developing-economy context.