The Impact of Compensation Benefits on Employee's Performance in the Service Industries of Pakistan

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.