The relationship between pay-for-performance and turnover intention

Abstract

Orientation: The current business environment is highly competitive, and organisations use reward strategy as a strategic tool to motivate employees to remain in the organisation and exceed set performance standards. Therefore, keeping them would require sound reward strategies, which may come as competitive pay-for-performance.
Research purpose: Informed by the expectancy theory, the study sought to critically investigate the relationship between pay-for-performance and turnover intention.
Motivation for the study: While the need for a sound compensation system cannot be over-emphasised, the debate on the relationship between pay-for-performance and turnover intention remains inconclusive. Hence, spurring the attention of researchers.
Research approach/design and method: Using a quantitative research approach, data were collected from 176 participants utilising a closed-ended questionnaire. A convenience sampling technique nested in a non-probability method was employed to select participants from the largest bank in Lesotho.
Main findings: The regression analysis results indicated that pay-for-performance has a significant relationship with turnover intention. The findings indicated that pay-for-performance helps in minimising turnover intention.
Practical/managerial implications: Management should strengthen the reward strategy for long-term pay-for-performance. The management should allow employees to participate in the development of pay-for-performance, so that, from the outset, they understand the difference between outstanding and acceptable performance.
Contribution/value-add: The study contributes to the scarce empirical evidence on the interplay between pay-for-performance and turnover intention, filling a gap in the existing literature by focusing exclusively on the unique dynamics in the banking sector.