THE INFLUENCE OF THE AMOUNT OF MATERIAL COMPENSATION PER EMPLOYEE ON THE COMPANY’S BUSINESS

Abstract

In order to evaluate the impact of the amount of material compensation per employee on the performance of the company, the authors systematically analysed amount of material compensation per employee, total income, total expenses, net profit margin and return on equity in small, medium and large companies in the five observed counties of the Republic of Croatia. The aim of the paper is to analyse the connection between the amount of material compensation of employees and the performance of the company. The research in the paper was conducted based on data provided by the Financial Agency, a leading Croatian company in the field of providing financial and electronic services. The research was conducted on a sample of 3,914 small, medium and large companies. In the research part of the paper, Spearman’s correlation coefficient which is a non-parametric equivalent of Pearson’s correlation coefficient (product of rank correlation), was used to assess the relationship between the variables of average monthly net wage and salary per employee, total income, total expenses, net profit margin, return on equity. The results indicate that there are significant differences between the size of the company and the observed parameters (average monthly net wages and salaries per employee, total income, total expenses, net profit margin, and return on equity). Based on an extensive analysis of data, obtained results indicate that the given correlation matrix of the connection between the average monthly net wage and salary per employee with the observed parameters for all years shows that all parameters are statistically significantly correlated. This paper provides an insight into the importance of human resources and their proper management on the company business, regardless of their size. Statistical analysis of research data was performed by statistical software MedCalc® Statistical Software and SPSS Statistics for Windows.