THE IMPACT OF REWARDS AND COMPENSATION ON EMPLOYEES’ PERFORMANCE

Abstract

While employees need reasonable amounts of disposable income on their side, organisations need super profits for their sustenance hence the paradoxical nature of compensation administration. This study is meant to ascertain the relationship between compensation and employees’ performance. The study aims to find out how satisfactory compensation enhances employee performance. Quantitative survey techniques used for key informants in a sample drawn from five small and medium size organizations in Jeddah city, Saudi Arabia employees. The study found that there was positive correlation between the employee’s compensation and their performance. The impact of reward administration on worker performance can be appropriate to those who develop their inspiration from it. Consequently, to say that reward influence workforces to perform may be fictitious and overstatement. Human requirements are dynamic in nature. For the sustainability, a compensation strategy should also illuminate the connexion between remunerations, salaries and reimbursements to the crucial success dynamics of the businesses. Against such a complex background of varied effects of compensation on employee performance several arguments can be put forward: A remuneration policy should entail other components of variable pay that is pay, which is linked to the performance of employees. This inevitably results in the direct correlation between pay and performance. Thus, employees must be made to believe that greater efforts result in greater rewards.