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Impact of Compensation on Employees Job Satisfaction in Private sector of


Concept Note



Over the period of time it has been perceived that Job

satisfaction and commitment to the organization is directly linked with the

compensation pattern offered, however the same may not be applicable in
western context, but linking the same phenomenon in third world economies or to
be precise incase of pure Pakistani context, there might be a direct and positive
impact between the both variables. A well assertive compensation system being
followed is believed to have pivotal role and is of critical importance to success of
the individual as well as the organization.

Rewards play a significant role to enhance the job satisfaction and

commitment of an employee whether he is working in any type of organization.

All benefits are considered reward determinants that an employee receives from
their workplace. Salary is the best predictor of the individual experience within an
institution. However the same may not be true as many persons pursues the jobs
which will make them achieve self esteem through power but not having much
pay package i.e. in case of civil services or incase one opts to join armed forces.
This variation is expected to even persist in the private sector as well. An
endeavor shall be made to find out the relationship between the job satisfaction
and the compensation package, while the perception of self-esteems possible
linkage with the compensation is also to be linked in private sector.
Key words: Rewards Compensation Job Satisfaction Human Resource
Private Sector Pakistan Social Impacts



This study aims to examine the extent to which the

demographic and workrelated variables of educational level, gender, age, salary

level and organizational tenure are useful predictors of satisfaction with pay level,
benefits, raises concerning an specific compensation system in a unique settings
of Pakistani context.


It is intended to keep following factors as a variables:


Dependent variable.


Independent Variables

Job Satisfaction.

Compensation Package. All benefits are considered reward

determinants that an employee receives from their workplace.
Salary is the best predictor of the individual experience within
an institution. The extent, to which a job satisfaction is
dependent upon reasonable compensation package.


Social Impacts.

Our unique societal impacts where few

professions with lesser financial rewards are rated more than

other one. This includes certain demographics who may prefer
status over money or vice versa .

Education Level. Higher the education more would be the

clarity in according ones goals priority. Does education really
makes a difference in a third world economy like Pakistan
where majority may not have reasonable earning resources
but may be holding an higher degree. This IV may have mix
significance due to poor education standards.


Theory Linkage. In pursuance to the outcome of the research, would be

charged by following three theories of giving in plausible linkage:a.

Prospect Theory. A theory that people value gains and losses

differently and, as such, will base decisions on perceived gains
rather than perceived losses. Thus, if a person were given two equal
choices, one expressed in terms of possible gains and the other in
possible losses, people would choose the former.


Goal Setting Theory.

This theory refers to the effects of setting

goals on subsequent performance. Researcher Edwin Locke found

that individuals who set specific, difficult goals performed better than
those who set general, easy goals. Locke proposed five basic
principles of goal-setting: clarity, challenge, commitment, feedback,
and task complexity.

Expectancy theory.

This theory is about the mental processes

regarding choice, or choosing. It explains the processes that an

individual undergoes to make choices.
"This theory emphasizes the needs for organizations to relate
rewards directly to performance and to ensure that the rewards
provided are those rewards deserved and wanted by the recipients.
~ Victor Vroom

Base Paper.Following research is chosen as a base paper for this study:

The effects of pay level on organization-based self-esteem and performance: A

field study
Published in Journal of Occupational and Organizational Psychology (2004). The
British Psychological Society.