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http://dx.doi.org/10.5762/KAIS.2017.18.2.356

An Empirical Study on the Performance-oriented remuneration system in the public companies of thermal power generation effects on Organization Commitment and Organizational Performance  

Leen, Jae-Mahn (Graduate School of Venture, Hoseo University)
Ha, Kyu-Soo (Graduate School of Venture, Hoseo University)
Publication Information
Journal of the Korea Academia-Industrial cooperation Society / v.18, no.2, 2017 , pp. 356-373 More about this Journal
Abstract
The purpose of this study is to empirically analyze whether performance-oriented remuneration systems in public thermal power generation companies substantially induces organizational commitment of employees, and contributes to organizational performance. According to the study, adequacy of salary and individual work evaluation have significant effects on organizational commitment, whereas external and internal evaluations for pay-for-performance remuneration systems do not have a significant effect. Annual salary for performance and pay-for-performance systems have a significant influence on organizational performance. In addition, because annual salary and individual work evaluation of the performance-oriented remuneration system have significant effects on both the indirect effect, through organizational commitment, as well as the direct effect on organizational performance, there exists a partially mediated effect on organizational commitment. Conversely, because external and internal evaluations do not significantly affect organizational commitment, there is no means of verifying the mediating effect. Studies suggest that a fair annual salary system for performance employed in conjunction with a pay-for-performance system will provide positive impacts on organizational performance and employee loyalty.
Keywords
annual salary-for-performance; appraisal; evaluation system; external evaluation; individual work evaluation; internal evaluation; organization commitment; organizational performance; pay-for-performance; performance management; public enterprise performance;
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