Role of performance-based pay in enhancing employee organizational commitment: The case of civil servants in Putrajaya and Selangor, Malaysia

Performance-based reward with the vital elements of communication and participation is an important contemporary compensation system that may attract, retain and motivate competent employees .The capability of administrators to appropriately manage performance-based reward may thus lead to greater organizational commitment of employees. Despite its importance the role of performance-based reward as an effective predicting variable has not been given much emphasis in organizational reward models. This study evaluates the relationship between performance-based reward and employee organizational commitment. Primary data were gathered from 109 questionnaires completed by public servants of several government agencies in Putrajaya and Selangor, and analysed with Smart Partial Least Squares (SmartPLS) path model. The findings revealed that communication and participation, in the form of the ability of management to clarify and deliver information about performance-based reward,and to encourage employee participative decision making were important predictors of employee organizational commitment. The findings also revealed that performance appraisal was not an important predictor of employee organizational commitment. This may be due to respondents’ variegated personal and professional backgrounds.