Impact of Rewards on Employee Job Satisfaction and Performance: A Multi-Dimensional Analysis across Various Organizations in Pakistan

Abstract

The objective of the research is to discuss the relationship between multidimensional employee reward system and employee performance mediated by job satisfaction especially in the Pakistani context of organizations. Despite the fact that the topic of rewards and performance has been widely studied earlier, the results are inconclusive, especially when it comes to the relative significance of various aspects of rewards and the mechanism in which they happen. This is the gap specifically resolved in this study that claims rewards positively influence performance but their impact is attitudinal based and not transactional. The research design was quantitative and cross-sectional with survey data analysis being used based on the employees operating in Pakistani organizations. Partial least squares structural equation modeling was used to test the proposed model (PLS-SEM). There were several dimension of reward, which were: financial rewards, non-financial rewards, fairness, distributing the rewards, linking rewards to performance and benefits, which were explored with job satisfaction and performance of the employees. As controls, demographic variables were present and a measure of modulation effects was determined. The findings suggest that benefits () and being linked to performance (β = 0.366, p =0.001) have significant positive predictors of job satisfaction, whereas financial and non-financial rewards do not significantly predict job satisfaction. Job satisfaction is also a strong predictor of employee performance (β = 0.322, p < 0.001) and stands between rewards and performance. The model can describe 75.1% and 77.0 percent of job satisfaction and employee performance respectively. The importance of this study is that it empirically confirms the attitudinal mediation model, and it exemplifies the fact that process-oriented rewards are more effective to motivate performance than monetary rewards. The results present practical implications to the development of efficient reward system design, as well as offer the solid basis of future longitudinal and cross-cultural studies.