Performance Related Pay and Organizational Commitment – evidence from Nigeria

Aim/purpose – The study examined the causal relationship between Performance Related Pay (PRP) and Organizational Commitment (OC) in the Nigerian insurance industry. Design/methodology/approach – The study adopted a quantitative research approach to validate the relationship; through the administration of structured self-report questionnaire to the senior staff in Nigerian insurance industry. A sample size of 217 respondents completed the questionnaire and data was quantitatively analyzed using descriptive statistics, Pearson correlation and multiple regression analysis. Findings – Results of the study show that PRP components, like Merit-Based Pay (MBP) Performance Appraisal (PA) and Supervisor’s Support (SS) were correlated moderately and positively with affective OC, at 95% confidence level. In addition, the regression analysis revealed that variances in OC dimensions – affective, continuance and normative-respectively, were explained by the variance in PRP components (MBP, PA, and SS). Research implications/limitation – The study revealed that PRP is positively correlated with OC in the Nigerian insurance industry. Thus, insurance management should motivationally reward their talented employees to earn their commitment. However, the study only focused on insurance industry. Originality/value/contribution – Empirically, the study attempted to quantify the causal relationship between PRP and OC in Nigeria. The results of the study suggest that PRP strongly predicts OC in the Nigerian insurance industry.