Evidence On The Links Between Compensation, Job Satisfaction And Task Performance

Abstract

Nurses play a vital role in the provision of healthcare services. They represent the bulk of the healthcare workforce and act as frontliners in serving patients particularly during the present Covid19 pandemic. Their performance at work is closely linked to the productivity and quality of care delivered by the healthcare organization. Compensation has a strategic role in fulfilling employees’ needs and desires. Compensation has been widely acknowledged as a precursor to job satisfaction and greatly impact employees' job performance. Therefore, this study aims to examine the links between compensation, job satisfaction, and task performance of nurses. Self-administered questionnaires were used to collect the survey data on 354 staff nurses working in public hospitals in Malaysia. Data was subsequently analysed using Partial Least Squares (PLS) method. Our results revealed that compensation has a positive relationship with job satisfaction. Likewise, job satisfaction has a positive relationship with task performance. Furthermore, satisfaction was found to significantly mediate the relationship between compensation and task performance. The present findings suggest that policy makers need to develop an attractive and fair compensation package so that nurses become satisfied with their jobs, which in turn, trigger them to exhibit superior nursing performance. Finally, useful insights to healthcare authorities are provided to further improve the contribution and reputation of the overall healthcare industry.

Keywords: Task performancejob satisfactioncompensationpublic hospitalsMalaysia

Introduction

The importance of healthcare workers has been increasing all around the world due to the rising demand for quality healthcare service delivery (Tourigny et al., 2010). As such, improving the performance and productivity of these healthcare personnel is paramount. Healthcare organizations have a responsibility of providing welfare to the public (Ismail & Abdullah, 2018). In Malaysia, there are two types of healthcare providers namely that of the public and private sector (Lee et al., 2018). Despite the growing demands for private healthcare services, a majority of the Malaysian population is still dependent upon the public healthcare hospitals managed by the Ministry of Health Malaysia (hereafter termed as MOH) for treatments (Yap & Tan, 2012). This is due to the fact that the treatment and services provided at public hospitals are cheaper compared to the private hospitals (Ismail & Abdullah, 2018). In terms of the workforce, approximately two-third of nurses in Malaysia work in the public sector (Barnett et al., 2010).

Nurses are the frontliners of healthcare organizations. They constitute the largest portion of healthcare professionals (Ledgister, 2003). A satisfactory level of nursing performance is necessary in order to avoid undesirable consequences, for instance, diminished standard of patient care, delay, negligence, and growing number of patient complaints, which could negatively affect the hospital’s reputation (Hee & Kamaludin, 2016). Task performance refers to activities or behaviours that are carried out by employees in accordance to their roles and responsibilities (Pongpearchan, 2016). For nurses, examples of their task performance include the planning, execution, and assessment of treatment plans for patients (Greenslade & Jimmieson, 2007).

Apart from the issue of job performance, job satisfaction of nurses is equally vital as high job satisfaction would translate into a pleasant demeanour, thus increasing patients’ satisfaction as well (Tsai & Wu, 2010). Job satisfaction denotes how much employees like their job (Agho et al., 1992). Employees who are satisfied with their job will be able to familiarize themselves with their job (Malhotra & Mukherjee, 2004). Not only that, nurses who are satisfied with their job would become more productive, exert more commitment, and contribute to higher quality of patient care (Gulavani & Shinde, 2014).

Remunerations have been identified as precursors to job satisfaction and performance. For instance, empirical evidence has shown that compensation plays an imperative role in determining both employees’ job satisfaction (Mabaso & Dlamini, 2017) and job performance (Wekesa & Nyaroo, 2013). Compensation refers to all forms of pay or rewards of either direct or indirect financial payment that an employee receives from his or her organization (Dessler, 2011). According to Upadhyaya (2014), compensation is essential in motivating employees because such rewards help employees fulfil their basic needs. Syahreza et al. (2017) asserted that compensation is expected to encourage motivation by fulfilling employees’ needs, which in turn, will further stimulate them to further improve their performance. In view of the fact that comparatively low wages has attracted the out-migration of Malaysian registered nurses to English-speaking countries such as the United Kingdom (Barnett et al., 2010), the goal of the current study is to examine the relationships between compensation, job satisfaction, and task performance in the context of public healthcare sector in Malaysia.

Problem Statement

Employees’ performance and satisfaction are vital elements in ensuring an organization’s good reputation and image (Mondy & Noe, 2008). This good performance can be maintained by rewarding the employees with an attractive compensation package. However, some organizations are known for not emphasizing too much on issues related to employees compensation and as a result, the employees will not be satisfied with their job and will reduce their effort in performing their job tasks (Morris et al., 2004). In addition, some organizations are known to utilize the “one program fits all” compensation system which led to job dissatisfaction and poor job performance among employees (Govindarajulu & Daily, 2004). Although compensation system has a critical role in enhancing employees’ job satisfaction and job performance, it is difficult to be implemented effectively in the organization (Bunning, 2004).

Bearing in mind the importance of a good compensation system, an improved understanding on its effect on employees’ job performance and job satisfaction is required. This mandatory need for greater awareness on the role of compensation in boosting satisfaction and performance is more so for nurses working in the Malaysian public healthcare sector given the overwhelming demands by Malaysians seeking treatments at public hospitals. This is proven by statistics for 2015 provided by the Ministry of Health Malaysia (2016) where a total of 2,465,727 patients were admitted to public hospitals compared to a total of 1,064,718 patients’ admission in private hospitals. Furthermore, 20,260,479 outpatients were given medical treatments and consultations at the public hospitals compared to 3,932,361 outpatients at the private hospitals (Ministry of Health Malaysia, 2016). These statistics show that public hospitals play an essential role in catering to the needs of Malaysians by providing medical treatments to the bulk of the population (Ismail & Abdullah, 2018). Therefore, this study intents to contribute to the literature by examining the links between compensation, job satisfaction and task performance among nurses in the context of Malaysian public hospitals.

Research Questions

• The following are the research questions for this study.

• Does compensation have a direct relationship with job satisfaction of nurses in Malaysian public hospitals?

• Does job satisfaction have a direct relationship with task performance of nurses from Malaysian public hospitals?

• Does job satisfaction mediate the relationship between compensation and task performance of nurses from Malaysian public hospitals?

Purpose of the Study

The purpose of this study was to investigate the direct relationships between compensation and job satisfaction, job satisfaction and task performance, as well as the indirect relationship between compensation and task performance via job satisfaction among staff nurses working in public hospitals in Peninsular Malaysia. This research used a cross sectional approach where all variables and data are collected over a set period of time. All variables for this study were measured at the individual level using self-administered questionnaires.

Research Methods

Findings

Measurement Model Results

Factor loadings, composite reliability (CR), and average variance extracted (AVE) were computed to measure convergence validity. As shown in Table 1 , all indicators ranged from 0.514 to 0.954, which exceeded Hair et al.’s (2010) minimum cut-off value of 0.5. Similarly, all latent constructs demonstrated adequate convergent validity with AVE values ranging from 0.593 to 0.701. Meanwhile, the CR values for the latent variables ranged from 0.894 to 0.942 and were above Hair et al.’s (2010) threshold value of 0.7, suggesting the existence of significant homogeneity. Therefore, the measurement model is considered reliable and displayed sufficient convergent validity.

See Full Size >

In this study, the discriminant validity was measured by the Heterotrait-Monotrait (HTMT) ratio of correlations between the study variables. As depicted in Table 2 , all HTMT values (which ranged from 0.140 to 0.605) did not surpass Gold et al.’s (2001) threshold value of 0.90, which corroborated the existence of discriminant validity.

See Full Size >

From our measurement model (see Figure 1 ), the R² values for job satisfaction and task performance were 0.015 and 0.318 respectively suggesting that 1.5% of the variance in job satisfaction, and 31.8% of the variance in task performance can be explained by compensation.

See Full Size >

Conclusion

This research studied the direct relationships between compensation and job satisfaction, and job satisfaction and task performance along with the indirect relationships between compensation and task performance via job satisfaction. Our sample comprised nurses from public hospitals in Malaysia. Our statistical results supported all 3 hypotheses. Given that nurses represent the largest component of healthcare professionals and their performance at work is crucial in determining the healthcare quality provided to patients, and since compensation positively affect nurses’ satisfaction and performance, hospital administrators and policy-makers should be more concerned regarding this issue by constantly reassessing the compensation systems in the public healthcare sector to ensure that it is attractive and fair. This would ensure that the public hospitals would continue to provide effective and efficient healthcare services.

Acknowledgments

The authors would like to express their appreciation to Universiti Sains Malaysia for providing the grant (1001/PMGT/8016050) to fund this research.

References

• Agho, A. O., Price, J. L., & Mueller, C. W. (1992). Discriminant validity of measures of job satisfaction, positive affectivity and negative affectivity. Journal of Occupational and Organizational Psychology, 65(3), 185-195.
• Armanu, A. (2017). The role of shared leadership and work environment in strengthening the influence of compensation on nurse’s performance. European Research Studies Journal, 20(3), 82-95.
• Barnett, T., Namasivayam, P., & Narudin, N.A.A. (2010). A critical review of the nursing shortage in Malaysia. International Nursing Review, 57(2), 32-39.
• Bozeman, B., & Gaughan, M. (2011). Job satisfaction among university faculty: Individual, work, and institutional determinants. The Journal of Higher Education, 82(2), 154-186.
• Bunning, R. L. (2004). Pay in the organic organisation. Journal of Management Development, 23(7), 648-663.
• Dessler, G. (2011). Fundamentals of Human Resource Management. Prentice Hall.
• Gold, A. H., Malhotra, A., & Segars, A.H. (2001). Knowledge management: An organizational capabilities perspective. Journal of Management Information Systems, 18(1), 185-214.
• Govindarajulu, N., & Daily, B. F. (2004). Motivating employees for environmental improvement. Industrial Management and Data Systems, 104(4), 364-372.
• Greenslade, J. H., & Jimmieson, N. L. (2007). Distinguishing between task and contextual performance for nurses: Development of a job performance scale. Journal of Advanced Nursing, 58(6), 602-611.
• Gulavani, A., & Shinde, M. (2014). Occupational stress and job satisfaction among nurses. International Journal of Science and Research, 3(4), 733-740.
• Hair, J. F., Black, W. C., Babin, B.J., & Anderson, R. E. (2010). Multivariate Data Analysis. Prentice Hall.
• Hameed, A., Ramzan, M., & Zubair, H. M. K. (2014). Impact of compensation on employee performance (empirical evidence from banking sector of Pakistan). International Journal of Business and Social Science, 5(2), 20-33.
• Hee, O. C., & Kamaludin, N. H. B. (2016). Motivation and Job Performance among Nurses in the Private Hospitals in Malaysia. International Journal of Caring Sciences, 9(1), 342-347.
• Ismail, N. I., & Abdullah, N. H. (2018). A systematic review of patient satisfaction on health information exchange in Malaysian public healthcare organizations. Journal of Physics: Conference Series, 1049(1), 1-8.
• Konrad, T. R., Williams, E. S., Linzer, M., McMurray, J., Pathman, D. E., Gerrity, M., ... & Douglas, J. (1999). Measuring physician job satisfaction in a changing workplace and a challenging environment. Medical Care, 37(11), 1174-1182.
• Ledgister, M. (2003). The nursing shortage crisis. International Journal of Healthcare Quality Assurance, 16(2), 11-19.
• Lee, K. H., Ariffin, R. N. R., & Abdullah, N. R. W. (2018). The implications of legislative controls on private hospitals in Malaysia. Institutions and Economies, 10(2), 62-94.
• Mabaso, C. M., & Dlamini, B. I. (2017). Impact of compensation and benefits on job satisfaction. Research Journal of Business Management, 11(2), 80-90.
• Malhotra, N., & Mukherjee, A. (2004). The relative influence of organisational commitment and job satisfaction on service quality of customer‐contact employees in banking call centres. Journal of services Marketing, 18(3), 162-174. https://doi.org/10.1108/08876040410536477
• Mathis, R. L., & Jackson, J. H. (2000). Human Resource Management. South Western College Publishing.
• Ministry of Health Malaysia (2016). www.moh.gov.my/images/gallery/publications/-Petunjuk%20Kesihatan%202016pdf
• Mondy, W., & Noe, R. (2008). Human Resource Management. Prentice Hall.
• Morris, D., Yaacob, A., & Wood, G. (2004). Attitudes towards pay and promotion in the Malaysian higher educational sector. Employee Relations, 26(2), 137-150.
• Neog, B. B., & Barua, M. (2014). Factors influencing employee’s job satisfaction: An empirical study among employees of automobile service workshops in Assam. The SIJ Transactions on Industrial. Financial & Business Management, 2(7), 305-316.
• Pongpearchan, P. (2016). Effect of transformational leadership and high-performance work system on job motivation and task performance: Empirical evidence from business schools of Thailand universities. Journal of Business and Retail Management Research, 10(3), 93-105.
• Qureshi, M. O., & Sajjad, S. R. (2015). An empirical analysis of the impact of compensation on job performance and work-family conflict in the Kingdom Of Saudi Arabia-A correlation model. European Scientific Journal, 11(4), 170-187.
• Syahreza, D. S. Lumbanraja, P., Dalimunthe, R. F., & Absah, Y. (2017). Compensation, employee performance and mediating role of retention: A study of differential semantic scales. European Research Studies Journal, 20(4), 151-159.
• Tessema, M. T., & Soeters, J. L. (2006). Challenges and prospects of HRM in developing countries: Testing the HRM-performance link in the Eritrean civil service. International Journal of Human Resource Management, 17(1), 86-105.
• Tourigny, L., Baba, V. V., & Wang, X. (2010). Burnout and depression among nurses in Japan and China: The moderating effects of job satisfaction and absence. The International Journal of Human Resource Management, 21(15), 2741-2761.
• Tsai, Y., & Wu, S. W. (2010). The relationships between organisational citizenship behaviour, job satisfaction and turnover intention. Journal of Clinical Nursing, 19(23‐24), 3564-3574.
• Upadhyaya, C. (2014). Application of the Maslow’s hierarchy of need theory: Impacts and implications on organizational culture, human resource and employees’ performance. International Journal of Education and Management, 4(4), 353-356.
• Vermeeren, B., Kuipers, B., & Steijn, B. (2014). Does leadership style make a difference? Linking HRM, job satisfaction, and organizational performance. Review of Public Personnel Administration, 34(2), 174-195.
• Wekesa, J. N., & Nyaroo, S. (2013). Effect of compensation on performance of public secondary school teachers in eldoret municipality Kenya. International Journal of Scientific and Research Publications, 3(6), 1-4.
• Williams, L. J., & Anderson, S. E. (1991). Job satisfaction and organizational commitment as predictors of organizational citizenship and in-role behaviors. Journal of Management, 17(3), 601-617.
• Yap, L. L., & Tan, C. L. (2012). The effect of service supply chain management practices on the public healthcare organizational performance. International Journal of Business and Social Science, 3(16), 216-224.