Abstract:
The purpose of this study is to investigate the impact of compensation benefits on
employee’s performance. A sample size of 100 respondents was selected through survey
questionnaires from the four service industries of Pakistan Mobilink, Wi-tribe, MCB Bank
Limited and Hamza Army Public School. The respondents were located in the cities of
Rawalpindi and Islamabad. The research undertaken aimed to study the importance of
employee benefits in the compensation system and to identify the relationship of
compensation benefits and employee’s performance. Three independent variables under the
compensation benefits were used to measure their impact on the dependant variable
employee’s performance in the organizations. Research analysis was conducted through
SPSS software, independent sample t-test, one-way ANOVA, correlation and regression were
used to analyze and interpret the results. The results of this study show that there is a positive
relationship between the compensation benefits and employee’s performance. The employers
use compensation as an important tool to attract, retain and motivate the talented employees.
The important benefits like housing allowance, heath care and transportation facility,
retirement plans, pension pay, paid off time and work-life balance are provided by the
organizations to encourage their employees to perform well. The employees consider these
benefits as a security for themselves and their families. When the employees perceive that
they are being rewarded fairly this will improve their satisfaction level and motivation to
perform their job and duties in a better way which ultimately results in organizational
productivity. The compensation benefits are also significant for employers because it will
reduce the absenteeism and turnover rate of employees by initiating a sense of loyalty and
commitment with their organizations. The future research should be conducted on large
sample size in different cities of Pakistan and in various other organizations. The further
research needs to identify the importance of monetary rewards i.e. cash compensation along
with the benefits in total compensation system and to examine the difference of impact
between cash compensation and benefits on the employee’s performance.
