Employee Compensation and Retention & Performance

Subject: Employee Management
Pages: 1
Words: 299
Reading time:
2 min
Study level: College

Employee compensation is one of the crucial elements of employee relationships. There are various discussions on the matter of how employee compensation should be calculated and how it affects job satisfaction, employee retention, and performance. The article “The effect of compensation on satisfaction and employee performance” (2017) by Darma and Supriyanto collected data from PT Telekomunikasi Indonesia in the form of questionnaires to see how compensation influences job satisfaction and performance and whether job satisfaction can correlate with the effect of compensation has on performance.

First of all, I agree with the emphasis that the article puts on the importance of job satisfaction and employee compensation on the success of the company. Indeed, successful companies heavily rely on talents and employee retention, which allows them to develop and gain an advantage over their competitors. Through the surveys performed on the employees of PT Telekomunikasi Indonesia, the authors tested a hypothesis that compensation directly affects employee performance variables. After the analysis of survey results, the hypothesis was approved. I was expecting the hypothesis to be true as well, as after being an employee myself, I could see the direct correlation between my salary and motivation to perform well. The higher the compensation – the better my co-workers and I performed and vice versa – low compensation caused the performance and job satisfaction to be low.

The research described in the article had some limitations. As such, the term employee compensation is a flexible term, which can encompass different aspects of rewarding a worker (Khalid & Nawab, 2018). The study examined only general financial compensation, which motivated employees directly. However, some organizations may utilize non-financial or indirect compensations to motivate their employees. It would be interesting to compare and contrast the effect of different compensation approaches on employee satisfaction and performance.


Darma, P. S., & Supriyanto, A. S. (2017). The effect of compensation on satisfaction and employee performance. Management and Economics Journal (MEC-J), 1(1). Web.

Khalid, K., & Nawab, S. (2018). Employee participation and employee retention in view of compensation. SAGE Open, 8(4), Web.