<![CDATA[Organizational competition is becoming more competitive, requiring companies to manage their human resources effectively in order to retain high-quality employees who are highly committed to the organization. This study was conducted to examine the impact of performance-based compensation systems on employees’ organizational commitment. A literature review was conducted by analyzing ten relevant prior research articles, drawn from the contexts of private corporations, state-owned enterprises, and public organizations. The results of the review indicate that performance-based compensation systems generally have a positive and significant influence on building employees’ affective and normative commitment, acting as a direct or indirect driver through mediating variables such as job satisfaction. However, its effectiveness is highly dependent on a system design that is perceived as fair, transparent, and competitive. On the other hand, several studies reveal that the impact of compensation is not always significant when non-financial factors such as leadership, work environment, training, and recognition are prioritized by employees. Consequently, organizations need to integrate performance-based compensation systems with holistic human resource management strategies to sustainably enhance organizational commitment.]]>
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