INTRODUCTION:

Keeping "The best" and most desired staff is a major difficulty for organizations today. The alarming trend of government employees jumping from one organization to another may be caused by compensation packages offered by several organizations in an effort to attract skilled workers (Michael et al., 2016). One of the biggest issues facing companies of all sizes is employee retention. Pay is one of the most significant elements that affects employee retention out of all the others.

Besides, a good compensation also helps increase the employee’s performance. However, there is neither an official study nor research to determine the factors that create the employee’s performance of those who work in the bank industry and the effect of employee’s performance on retention at a workplace in Danang city.

Stems from the need to conduct research on theories about Compensation Package, identify the impact of factors on employee’s performance, find the relationship between working employee’s performance and retention, and make recommendations to increase the employee’s performance of bank employees. A group of authors had researched "Impact of Compensation Package on Employee’s Performance and Rentention among Bankers in Da Nang City".

LITERATURE REVIEW:

Compensation Packages:

Pay packages comprise essential aspects like salary, bonuses, incentives, allowances, promotions, and recognition that tend to keep people happy in their jobs. Each of these significantly affects how well employees perform. However, the compensation plan and job measurement that will motivate employees to deliver the essential performance must be clearly conveyed to them in order to prevent erroneous perceptions and debate among them. The aforementioned raises questions about how educators view their jobs and how satisfied or unsatisfied they are with them (Osibanjo et al., 2014).

Osibanjo et al. (2014) employees are an organization's most valuable asset, and their ability to draw in, keep, and compensate highly skilled workers is a major factor in whether an organization succeeds or fails. The remuneration packages offered by the company have a significant influence on employees' willingness to stay on the work. Goergen et al. (2011) showed that especially in light of the two divergent opinions of its primary motivator. Managerial compensation is perceived as the outcome of a market-driven structure that guarantees managers sufficient incentives to optimize shareholder value. However, it is thought to be a way for self-serving CEOs to expropriate shareholders and siphon off corporate earnings.

Employee’s Performance:

All organizations, be they public or private, manufacturing or service-oriented, large or small, in terms of space, time, and location, strive to enhance performance in qualitative and quantitative concepts using methods of performance. The High-Performance Work System combines theoretical frameworks with pragmatic methods, supporting the organization's "how, why, what, and when to plan" decisions. It is thought to be a completely win-win strategy because employers and employees benefit from minor adjustments to current policies, practices, and systems (Punia et al., 2014)

Performance appraisals involve documenting and planning specific behavioral and personality traits of the employee, as well as their effectiveness on the work and contribute to the attainment of corporate objectives. (Rajput, 2015)

Rentention:

Every corporation wants to have highly qualified and potential employees who can give the business a competitive edge (Sonia, 2017). It has been demonstrated that maintaining human resources is essential to the growth and achievement of the organization's goals and objectives. In order to generate an influx of knowledge and skills to grow and sustain their competitiveness, organizations must be able to attract and retain the right knowledge workers. The quality of an organization's human resources is more crucial to its capacity to compete in the global marketplace as economic globalization has grown in intensity. Many businesses rely on employee experience to provide them a competitive edge in global markets. Retaining valuable personnel has become a critical strategy for corporate leaders and human resources managers in this economic climate. (P. Vakula Kumari et al., 2013)

Retaining employees is essential to controlling the flow of human resources. Today's best talent needs an environment that supports their success, and organizations need to provide it in this period of uncertain organizational and market developments. After receiving training, people frequently leave an organization in search of greater opportunities. A competitive income, flexible scheduling, improved atmosphere, and opportunities for advancement are a few of the things that drive an employee to seek a change (Arora, 2016)

Employee retention is a critical component in managing human resource flow (Ritu, 2016). Talent retention is improved when the company's employees are informed of its distinctive attraction. (Sindhu, 2016)

Benefits are one of the most effective tools for keeping talent on staff, yet businesses sometimes ignore this fact in favor of cost-cutting measures. As employees are the ones who help the company serve the final client, HR professionals in the age of consumerization need to consider how to give their staff a consumer-style experience in order to improve the employee experience. (Singh at al, 2017)

Over time, talent management has become a crucial instrument for handling these shifts. Talent management is aligning an individual with a position that best suits his innate abilities, characteristics, and personality. Each person has a certain talent that fits a certain job profile; they won't feel comfortable in any other role. Important tasks including workforce planning, performance management, incentive and reward systems, motivation, succession planning, and leadership development are all included in talent management. (Deshmukh, 2012)

Previous studies on Employee’s Performance and Retention:

The problem of Employee’s Performance and Retention has also been studied by many scholars around the world.

Mahajan et al. (2016) studied The Performance Appraisal System. The primary goals of the research are to gauge employee happiness with the performance appraisal system and determine the correlation between system fairness and employee satisfaction. The study's organization is the Jalandhar educational institutes. The faculty members of the educational institutions are the study's employees. To perform the study, 200 respondents are selected as a sample. The association between employee satisfaction on the performance appraisal system and the fairness of the system is determined using the correlation technique. According to the results, the majority of respondents—faculty members—are happy with their performance appraisal system. The results also showed a favorable correlation between the system's fairness and employee satisfaction with the performance appraisal system.

Bibi et al. (2016) looked into the connection between pay, job security, and employee retention. Additionally, the moderating influence of the work environment on the relationships between pay, job security, and employee retention was also examined in this study. Data from 353 faculty members employed by Pakistani public universities was gathered through a survey. To examine the data, partial least squares PLS path modeling was used. The findings showed a critical association between employee retention and pay and job security. Furthermore, the findings also showed that the work environment influences the associations between pay, job security, and employee retention.

Osibanjo et al. (2014) looked at how pay packages affected workers' job performance and retention at a particular private university in Ogun State, South-West Nigeria. One hundred and eleven valid questionnaires filled out by university academics and non-academic workers were used to create and evaluate a model. The obtained data were thoroughly examined to investigate potential correlations and hypotheses between the variables under investigation using simple percentage analysis backed by structural equation modeling. The findings demonstrated a significant correlation between pay packages and staff retention and performance. The results summary shows that the tested dependent and independent variables (salary, bonus, incentives, allowances, and fringe benefits) have a substantial association with one another.

Research model and hypotheses:

Based on the researches of Mahajan et al. (2016); Palwasha et al (2016); Omotayo et al (2014) a conceptual model was developed which consisted of thee determinants of Employee’s Performance and the relationship between Employee’s Performance and Retention, the hypotheses are proposed:

Hypothesis H1: Salary variable has a positive impact on Employee’s Performance.

Hypothesis H2: Allowances variable has a positive impact on Employee’s Performance.

Hypothesis H3: Incentives variable has a positive impact on Employee’s Performance.

Hypothesis H4: Bonus variable has a positive impact on Employee’s Performance.

Hypothesis H5: Employee’s Performance has a positive impact on Retention.

RESEARCH METHODOLOGY:

The research was carried out through 2 phases: Preliminary research and formal research. The preliminary research was carried out by group discussion with 10 people who are working in different departments at different banks, including the human resources department, customer service department, sales department, accounting department, and public relations departments to explore the factors that influence Employee’s Performance. Based on combining with observed variables in previous studies on Employee’s Performance and Retention that the author has synthesized, proceed to build a draft scale, based on a draft scale, the author conducted a discussion with a group of staff to discover additional new variables and remove the ones that the group members do not agree to influence their working stress, and unify the composition of the preliminary scale. In the quantitative research phase, the survey questionnaire method was used with a valid number of observations of 305. The quantitative analysis methods that will be used for the data analysis part include:

Testing the reliability of the scale by Cronbach's Alpha: This test reflects the degree of correlation between the observed variables in the same factor. The standard to test the reliability of the scale is that the measurement variables have the total correlation coefficient of Corrected Item - Total Correlation ≥ 0.3, then the variable meets the requirements.

Exploratory Factor Analysis (EFA): This method helps to evaluate two important types of values of the scale: convergent value and discriminant value. The condition for exploratory factor analysis is to satisfy the following requirements: Factor loading > 0.5; KMO (Kaiser-Meyer-Olkin) in the range 0.5 ≤ KMO ≤ 1, Bartlett test has statistical significance (Sig. < 0.05).

Confirmatory factor analysis (CFA): is one of the techniques that allow testing how well the measured variables represent the factors. The CFA method is used to confirm the univariate, multivariate, convergent, and discriminant validity of the factor scale.

Linear Structural Model (SEM): This model is used to analyze complex relationships in causal models. SEM is used to estimate the measurement models and the structural model of the multivariable theory problem. The criteria to evaluate the overall goodness of fit when analyzing actual data are the Chi-square test with p > 0.05, TLI and CFI values from 0.8 or more, Chi-square/df < 3, RMSEA < 0.08.

RESEARCH FINDINGS AND RESULTS

Testing the Reliability of Scale by Cronbach's Alpha:

After testing Cronbach's Alpha for 4 independent variables, 1 intermediate variable, and 1 dependent variable in the research model (Table 1), all factors have Cronbach's Alpha coefficients that meet the requirements (>0.5) and no observed variables were excluded. The results of testing the reliability of the scale are summarized in Table 1. After testing the reliability coefficient of Cronbach's Alpha, all observed variables meet the requirements for EFA analysis.

Table 1: Cronbach's Alpha test results

Concept	Factor	Number of observed variables	Reliability
	Salary	4	0.908
	Allowances	3	0.820
	Incentives	3	0.825
	Bonus	3	0.863
Employee’s Performance		3	0.907
Retention		4	0.918

Source: Processing results from survey data, 2023

Exploratory factor analysis (EFA):

The results of EFA analysis are shown in Table 2 with the KMO coefficient = 0.845; the Bartlett test value is significant (Sig < 0.05), all observed variables have factor loading coefficients greater than 0.5 so no variables are excluded.

Table 2: EFA results of the scale

Items	Factors
Items	1	2	3	4	5	6
SA4	0.860
SA2	0.838
SA1	0.742
SA3	0.741
AL2		0.920
AL1		0.912
AL3		0.909
IN1			0.900
IN2			0.858
IN3			0.854
BO2				0.912
BO1				0.864
BO3				0.798
EP2					0.908
EP3					0.900
EP1					0.888
EP4					0.838
RE3						0.915
RE1						0.912
RE4						0.882
RE2						0.877

Source: Processing results from survey data, 2023

Confirmatory Factor Analysis (CFA):

After exploratory factor analysis, the author adjusted the scale and performed confirmatory factor analysis (CFA) to check the scale again. Confirmatory factor analysis was used to retest the measurement model that we found from the EFA analysis. After analyzing the CFA, we obtained indicators to assess the fit of the measurement model with the actual data: The model has Chi-square/df = 1.618; CFI = 0.982; TLI = 0.976; GFI = 0.956 and RMSEA = 0.045; these indexes both satisfy the requirements when assessing the overall fit. Therefore, we can conclude that the model fits the actual data.

Figure 2: Result of confirmatory factor analysis (CFA)

Testing research hypothesis using SEM:

Evaluate the fit of the model by linear structural model SEM:

After the measurement model has been validated by confirmatory factor analysis (CFA), we determined the linear structural model (SEM). The data processing results are used to analyze the factors affecting employee’s performance at the banks and the relationship between Employee’s Performance and Retention. The processing results are presented in Table 4 and Figure 3. The model has 59 degrees of freedom and Chi-square/df = 2.618; CFI = 0.953; TLI = 0.938; GFI = 0.926 and RMSEA = 0.073. These indexes all satisfy the requirements when assessing general suitability.

Testing theoretical model estimation using Bootstrap:

The study used a sample size of N=305. The averaged sample with the deviation is presented in Table 3. It is found that although the deviation occurs, the absolute value is always less than or equal to 1.5; we can say the deviation is very small, not statistically significant. Thus, it can be concluded that the estimates in the model (see Figure 3) can be trusted.

The cause-and-effect relationship between the factors in the research model:

Estimation results by Bootstrap in the analysis of the linear structural model show that the relationships in the research model are presented in Table 4.

Figure 3: Linear structure model

The cause-and-effect relationship between the factors in the research model:

Estimation results by Bootstrap in the analysis of the linear structural model show that the relationships in the research model are presented in Table 4.

Table 3: Estimation results using Bootstrap

	Relationship		SE-SE	Mean	Bias	SE-Bias
Employee’s Performance	<---	Salary	0.001	0.129	0.001	0.002
Employee’s Performance	<---	Allowances	0.002	0.154	0.007	0.002
Employee’s Performance	<---	Incentives	0.001	0.015	0.000	0.002
Employee’s Performance	<---	Bonus	0.002	0.331	-0.001	0.002
Retention	<---	Employee’s Performance	0.002	0.223	0.000	0.002

Source: Processing results from survey data, 2023

Table 4: Results of testing the cause-and-effect relationship between research concepts

	Relationship		Unstandardized Estimates	S.E.	C.R.	P
Employee’s Performance	<---	Salary	0.115	0.054	2.119	0.034
Employee’s Performance	<---	Allowances	0.134	0.059	2.290	0.022
Employee’s Performance	<---	Incentives	0.017	0.064	0.266	0.790
Employee’s Performance	<---	Bonus	0.348	0.068	5.138	0.000
Retention	<---	Employee’s Performance	0.249	0.70	3.580	0.000

Source: Processing results from survey data, 2023

Table 4: Results of testing the cause-and-effect relationship between research concepts

	Relationship		Unstandardized Estimates	S.E.	C.R.	P
Employee’s Performance	<---	Salary	0.115	0.054	2.119	0.034
Employee’s Performance	<---	Allowances	0.134	0.059	2.290	0.022
Employee’s Performance	<---	Incentives	0.017	0.064	0.266	0.790
Employee’s Performance	<---	Bonus	0.348	0.068	5.138	0.000
Retention	<---	Employee’s Performance	0.249	0.70	3.580	0.000

Source: Processing results from survey data, 2023

Standardized results of the SEM linear structure model show that there are three positive impact factors on Employee’s performance. Bonus is the strongest impact factor (β = 0.348). Allowances affects Employee’s performance in second (β = 0.134). Finally, the Salary variable affects Employee’s performance with β = 0.115.

Employee’s performance has a positive effect on Retention to the organization with β = 0.249. The results of verification of research hypotheses are summarized as follows:

Table 5: Summary of hypothesis testing

Hypothesis	Result
Hypothesis H1: Salary has a positive impact on Employee’s Performance	Accept H1
Hypothesis H2: Allowances has a positive impact on Employee’s Performance	Accept H2
Hypothesis H3: Incentives has a positive impact on Employee’s Performance	Reject H3
Hypothesis H4: Bonus has a positive impact on Employee’s Performance	Accept H4
Hypothesis H5: Employee’s Performance has a positive impact on Retention	Accept H5

DISCUSSION:

The research shows that three factors are affecting the Employee’s Performance of bankers, including Salary, Allowances and Bonus. This result completely coincides with the studies of Mahajan et al. (2016); Palwasha et al (2016); Omotayo et al (2014).

In addition, the study also shows that the Incentives has a negative influence on the Employee’s Performance of bankes. However, this result is completely consistent with the current conditions of banks in Danang because Incentive may put staff under excessive strain. When the demand is out of proportion to their capabilities and resources, individuals could feel overwhelmed and unable to fulfill their objectives. Additionally, employees may feel unfairly treated and underappreciated if incentives are not given out in a fair and disproportionate manner. This may lower their morale and motivation.

Research also shows that Employee’s Performance is the cause of Retention. Here are some suggestions to solve this problem:

Paying appropriate compensation raises on a regular basis based on an employee's performance, abilities, and experience is an effective approach to keep them on staff. They feel acknowledged and valued as a result. Besides, provide incentive schemes that are both efficient and transparent, along with methods for evaluating employee performance. Workers will be more driven if they believe that their accomplishments and efforts will be recognized and rewarded.

Allowances are a crucial component of a company's benefits program and a useful tool for improving staff retention. Allowances for bankers who are required to work overtime, on the weekends, or on holidays. Employees feel more justly and appropriately valued for their efforts at work than they would otherwise. Employees who are responsible for caring for members of their families, such as small children, the elderly, or those with impairments, should also be eligible for an allowance program. Encourage and assist staff members in striking a balance between work and personal life.

CONCLUSIONS:

Finally, Employee’s Performance is caused by many factors and it can lead to Retention. Therefore, banks need to focus on implementing solutions to increase Employee’s Performance and thus increase Retention. For employees, time management that works: establish the order of importance for the work: Prioritize and order your work so that you may concentrate on the most crucial tasks first. Employ time-management strategies: Make advantage of strategies like the Pomodoro method, which involves setting aside time for focused work intervals followed by a break, making a work schedule, and assigning trivial jobs to others. Additionally, workers must cultivate their personal talents, which include learning from others, documents, and courses, as well as continuously improving their professional and technology skills. Gaining management skills will help you communicate more effectively at work and manage your time and workload better.

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Received on 20.04.2024 Revised on 29.06.2024

Accepted on 10.08.2024 Published on 06.12.2024

Available online on December 31, 2024

Asian Journal of Management. 2024;15(4):301-307.

DOI: 10.52711/2321-5763.2024.00047