The effect of equitable compensation strategy on job performance in Al-Hassan Industrial Estate (HIE)

Abstract

This study aimed to investigate employees’ perceptions of equity in their compensation for the work they perform, comparing it to other jobs within the organization, and to examine its impact on their performance. The study utilized quantitative research methods to study the connections between the independent, dependent, and mediating variables. Previous research in the field, particularly in developing countries like Jordan, has identified a notable gap in knowledge. This gap prompted the researcher to undertake this study with the aim of addressing this deficiency. The study is based on Adam’s equity theory. Data was collected via a self-administered questionnaire from 353 employees within the target population. Structural equation modelling (SEM) was utilized to analyze and explore the relationships between the study variables using Analysis of Moment Structures (AMOS) and the Statistical Package for the Social Sciences (SPSS). The study findings unveiled a significant and positive correlation between compensation system and job performance, equity and job performance, as well as between compensation and equity. Furthermore, the results indicated that equity serves as a mediator in the relationship between job performance and compensation. The anticipated outcomes of the study are expected to address the literature gap effectively and subsequently enhance employee performance. The findings demonstrate the importance of equitable compensation in improving the employees’ performance.