Influence of Monetary And Non-Monetary Rewards on Employee Performance
Abstract
This paper empirically investigates the impact of monetary rewards, non-monetary rewards, and organizational commitment on employee retention in the banking sector of Pakistan with the mediating role of employee engagement. The philosophy is positivism and follows a quantitative approach using deductive reasoning. The data has been collected with the help of structured questionnaires from employees working in the five top banks of Pakistan, based on convenience sampling. SmartPLS 4 has been used for measurement and structural model assessment with bootstrapping to check direct and indirect effects or mediation paths. Results prove significant positive impacts of monetary as well as non-monetary rewards on retention, where non-monetary rewards’ impact dominates slightly over monetary rewards’ impact, while organizational commitment does not have any significant direct effect on retention; thus partially supporting proposed paths. The model shows moderately high to high levels of explanation for employee engagement and employee retention. The limitations are that it is a cross-sectional study with self-reported responses collected on convenience sampling from one sector in one country, thus restricting the generalizability of the findings. Future research should apply a longitudinal design with probability sampling and articulate other possible explanatory mechanisms (for example, job satisfaction, burnout, perceived alternatives) to better reflect/understand retention dynamics within banking. Bank managers need to fine-tune their total reward systems by balancing both financial and non-financial components if they want an effective strategy for retaining employees. While monetary compensation remains significant as competition among banks intensifies over talent acquisition & retention; recognition, career development opportunities through training programs supported by supervisors play equally vital roles in sustaining high levels of involvement leading eventually toward lower intentions expressed about leaving jobs soon after joining organizations where such practices exist already institutionalized into HR policies/processes because this was found out during current study which identified engagement being main mechanism turning rewards offered into actual stays realized later on! This study provides sector-specific evidence from Pakistan by testing monetary and non-monetary rewards, and organizational commitment as predictors of employee retention while clarifying employee engagement as a key mediating mechanism within a PLS-SEM framework. The hypothesis is also explicitly framed that both dimensions of rewards have significant effects on employee retention, either directly or through other constructs in the proposed relationships.
Keywords: Monetary rewards; Non-monetary rewards; Organizational commitment; Employee engagement; Employee retention.
