Abstract:
Purpose: Compensation system is very common problem nowadays, employees has also to deal
with such kind of situations where they feel stress due to compensation system. The purpose of
this study was to determine the variables which can impact on employee retention. The objective
of this study was to check the impact of compensation system among the employees in
educational sector in Karachi, Pakistan.
Method and Design: The sample size that was selected was 265, and questionnaires that were
distributed was 300, out of which 271 people responded to that questionnaires. Data is collected
from the different sectors in Karachi. The questionnaire contains 15 questions with the Likert
rating scale. The data is analyzed using IBM SPSS software version 22.
Findings: The results show that direct compensation is significant relationship with the
employee retention (0.000, p<0.05), has significant relationship with employee retention as the
value is (0.020, p<0.05), job security has the value (0.000,p<0.05) which shows significant
relationship with employee retention, and motivation has the value (0.021,p<0.05) which shows
significant relationship with employee retention.
Implications: The study concluded that direct compensation, indirect compensation, job security
and motivation all ofthese have relationship or effects employee retention, due to which they are
not being able to perform up to the mark. Stress and anxiety may affect employees mentally and
physically due to this their performance is affected.
Recommendations: Organizations should focus on employee’s well-being, because if employee
is in stress, they will not be able to perform well. Management should clearly tell about their role
and work processes. Work should be given according to the capability of the employee so that
they can perform and can leads to organization excellence.
