Investigating the relationship between Pay for Individual Performance and Work Engagement in Banking Industry of Pakistan

Abstract

The aim of this research is to determine the relationship between Pay for Individual Performance and Work Engagement through a mediating variable; pay satisfaction. Work engagement is a crucial variable for having highly productive employees. The research on work engagement from the financial perspective is limited, thus this topic was chosen. Money is a very strong motivator so; this research has selected pay for individual performance as its independent variable to study its effect on work engagement with a mediating role of Pay satisfaction. This research has been conducted on the banking industry of Pakistan, with the sample taken from banks in Islamabad. This is a quantitative and cross sectional study which has used survey research method for data collection and SPSS software for analysis. Regression and correlation analysis were used to determine the relationship between variables while mediating effect was measured through Process Plugin of SPSS. The research identified a weak positive relationship between pay for individual performance and work engagement. The indirect effect measured through pay satisfaction was also found to be positive but insignificant. The analysis shows a weak relationship between variables giving rise to the fact that just implementing pay for individual performance system will not have much effect of work engagement. A lot needs to be done to identify other impactful variables which can be used by employers to keep their employees engaged and satisfied. Moreover, the research should be done with a larger sample to validate and generalize its finding. It can be extended to other economic sectors of the country to increase the scope of study. A number of other variables can be used to study the effect on work engagement.