IMPACT OF COMPENSATION ON EMPLOYEES' PERFORMANCE: BANKING SECTOR, KARACHI PAKISTAN A CASE IN POINT

Abstract

Purpose This study aims to explain the relationship compensation and employee performance. This study investigates the predictor-criterion relationship by targeting employees from the banking industry of Karachi, Pakistan. Methodology & Design Banking sector employees have served as the research population for this study. Using a purposive sampling technique of non-probability method, this study has collected primary data from the banking sector employees of Karachi, Pakistan. The survey data is based on responses collected from 370 employees. This study has tested the hypothesized relationships by running multiple linear regression analysis. Findings The overall compensation has positive impact on employee’s performance. Salary and rewards which is part of direct compensation have positive relation with employee’s performance. Indirect compensation and recognition also affects employee’s performance. Recognition have positive relation with employee’s performance. Limitations Firstly, limited generalizability ofthe findings as the sample subject was Karachi based only, hence, findings cannot be generalized to other regions ofthe country. Secondly, the present study deals with the banks of Karachi, Pakistan only, therefore it is not conceivable to predict the scenarios ofother industries by applying the findings ofthe present study. In the end, this study has only focused on current employees only. Recommendations The compensation program must be fair so the employees got motivated and perform high. If the salary of an employee is less than fill this space through indirect compensation, and recognition.