Does Compensation Matters in Predicting Performance of Public Sector Employees? Empirical Evidence from Nigeria

The study examined the relationship between compensation practice and employees’ task, contextual and adaptive performance in the context of public sector organizations.Using social exchange theory the study focused on the data collected from 274 participants drawn from Nigerian public sector.Partial Least Square Structural Equation Modeling (PLS – SEM) was employed in analyzing the data.The data revealed that compensation practice had a significant positive relationship with all the three dimensions of employee performance; task, adaptive and contextual.Although all the relationships are significant, the relationship between compensation and task performance was found to be the strongest followed by adaptive performance then lastly contextual performance. The findings suggested that compensation practice is an important HRM practice that induces employees to exhibit high performance that enables organizations to achieve their objective efficiently and effectively