IMPACT OF EMPLOYEE COMPENSATION ON ORGANISATIONAL EFFECTIVENESS

Abstract

In today’s era, in order to sustain and be lucrative, an organization must be ambitious. Organizations achieve their objectives through their workforce. Human resources are the pivot of organizational effectiveness and the greatest asset that an organization can possess. In fact, employee compensation is the vital ingredient underlying organizational competitiveness. Compensation of an organization plays a key role in attracting and retaining high yielding employees. The purpose of this research is to provide insight into the impact of compensation on employee performance and productivity leading to organizational effectiveness. The study describes the relationship between compensation and employee satisfaction, motivation and performance. It was found that compensation has great impact on organizational effectiveness. The findings of the study suggest that in order to implement their strategies, organizations design and implement reward system to focus employees attention on the specific behaviors that are consistent with strategic goals. A compensation strategy that fulfills the employee requirements not only provides a competitive edge to the organization but also is an important determinant of their satisfaction and forthcoming performances. The study draws strong conclusions that compensation has significant effect on employees satisfaction, motivation and performance and that the pay and reward system of an organization impacts employee performance positively and boost organizational performance and profitability.