The impact of compensation system on employee performance: The Islamic perspectives

Abstract

Compensation system is very vital for organizational development especially in terms of employee’s performance. This study intends to determine the impact of compensation system on employee performance from Islamic perspectives. Primary data was collected and SmartPLS 3 version was used for the analysis. The study respondents comprise of senior and junior staff of Health Services Management Board and Specialist Hospital Sokoto, Nigeria. Survey questionnaire was administered to 400 employees through simple random sampling and only 254 were used. The study found that there is significant relationship between compensation system and employee’s performance. This study is intended to benefit the level managers of various organizations in ensuring the existence of efficient compensation system based on Islamic values and the rules of the organization for the betterment of employees’ performance. This research is significant as it complements the existing literature on Islamic perspective linking the impact of compensation system to employees’ performance. While this paper sets the stage, there is however, the need for future research on other variables that enhances the employee performance in the organization.