The Role Of Compensation Management In Enhancing Employee Retention In The Banking Sector At Pesawar, Khyber Pakhunkhwa

Abstract

This study examined the role of compensation management in enhancing employee retention in the banking sector of Khyber Pakhtunkhwa, with specific focus on selected private sector banks operating in Peshawar. Compensation management is considered an important human resource practice because it influences employees’ satisfaction, motivation, loyalty, and intention to remain with an organization. The study focused on compensation management, salary structure, incentives, bonuses, fairness, competitiveness, transparency, performance-based rewards, and recognition as key factors affecting employee retention. A quantitative research design was adopted for the study. The total number of employees in the selected banks was 230, out of which 165 employees working in officer, operations, customer service, cash, sales, and branch management positions were considered as the target population. Using Yamane’s formula, a sample size of 117 respondents was selected. Data were collected through a structured questionnaire consisting of demographic questions and Likert-scale items related to compensation management and employee retention. The data were analyzed through SPSS version 22 by applying descriptive statistics, reliability analysis, correlation analysis, regression analysis, independent sample t-test, and ANOVA. The findings showed that compensation management had a positive and significant relationship with employee retention. Salary structure also had a significant effect on retention, while incentives and bonuses showed a positive but comparatively weaker influence. The study concluded that fair, competitive, transparent, and performance-linked compensation practices can improve employee loyalty and reduce turnover intentions. The study recommends that private sector banks should strengthen salary fairness, improve reward transparency, and design practical incentive systems to enhance employee retention